PRXA 10-K & 10-Q changes, risk factors and insider trading

No public market currently exists for our securities, and we have no current plans to list our shares on an exchange. If you are able to sell your securities, it is possible you would have to sell them at a substantial discount from the offeringprice price.at which you purchased them.

Because we are prohibited from operating hotel properties pursuant to certain tax laws relating to our qualification as a REIT, the entities through which we own the hotel properties will lease the hotel properties to one or more TRSs. We expect all or substantially all of these subsidiaries will enter into property management agreements with one or more affiliated property management companies. These affiliated property management companies may include TPG Hotels & Resorts, Inc., an affiliate of our Sponsor and PHA, and TPG’s wholly owned subsidiaries, which we collectively refer to as TPG, or other affiliates and/or designees of TPG. We refer to TPG and such other affiliates and/or designees collectively as our property manager. If we acquire a hotel property where we cannot use our property manager to manage the property, we may use a third-party property management company. Generally, however, we expect a substantial portion, if not all, of our hotel properties to be managed by our property manager.

Our primary focus of maintaining a diversified portfolio of commercial real estate consisting primarily of hospitality properties across the United States differs from that of certain existing investment funds, accounts or other investment vehicles that are or have been managed by affiliates of PHA or members of PHA’s investment committee or that are or have been sponsored by Procaccianti Companies or its affiliates. In addition, many of the previously sponsored investment programs by Procaccianti Companies were significantly different from us in terms of targeted assets, regulatory structure and limitations, investment strategy and objectives and investment personnel. Past performance is not a guarantee of future results, and there can be no assurance that we will achieve comparable results of those Procaccianti Companies affiliates. In addition, investors in our K Shares, K-I Shares and K-T Shares are not acquiring an interest in any such investment funds, accounts or other investment vehicles that are or have been managed by affiliates of PHA or members of PHAs investment committee or sponsored by Procaccianti Companies or its affiliates. We also cannot assure you that we will replicate the historical results achieved by members of the investment committee, and we caution you that our investment returns could be substantially lower than the returns achieved by them in prior periods. Additionally, all or a portion of the prior results may have been achieved in particular market conditions that may never be repeated.

For the year ended December 31, 2024,2025, we paid aggregate K share distributions of $3,790,474,$3,789,759, including $2,985,108$2,968,279 of distributions paid in cash and 78,46285,039 shares of our common stock issued pursuant to our DRIP for $805,366.$821,480. For the year ended December 31, 2024,2025, we had net income of $1,540,403,$1,537,203, we had funds from operations (“FFO”) of $5,219,613$5,014,790 and net cash provided by operations of $6,662,924.$6,110,733. For the year ended December 31, 2024,2025, we funded $3,790,474,$3,789,759, or 100%, of total K share distributions paid, including shares issued pursuant to our DRIP, from gross cash flow from operations at our hotel properties. On July 31, 2025, the Company paid $2,388,072 of accrued distributions to A Share stockholders partially sourced from proceeds from the refinancing of the Hilton Garden Inn Providence. Since inception, of the $18,845,484$25,023,315 in total distributions paid through December 31, 2024,2025, including shares issued pursuant to our DRIP, we funded $18,751,290$22,953,880 or 99%91.7% from cash flow from operations andoperations, $94,194 or 1%0.4% from notes payable.payable, and $1,975,241 or 7.9% from refinancings. For information on how we calculate FFOFFO, a non-GAAP financial measure, and the reconciliation of FFO to net loss, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Funds from Operations and Modified Funds from Operations.”

Our investments are concentrated in the hospitality sector. As a result, we are subject to risks inherent in investments in a single type of property. For example, the potential effects on our revenues, and as a result, on cash available for distribution to our stockholders, resulting from a downturn or slowdown in the hospitality sector, including as a result of, among other factors, a pandemic or inflation, could be more pronounced than if we had more fully diversified our investments. We could be subject to increased exposure from economic and other competitive factors shoulddue to a concentration of 40% of assets be held within anyTraverse particularCity, geographic area.Michigan. To the extent general economic conditions worsen in one or more of these markets, or if any of these areas experience a natural disaster, the value of our portfolio and our market rental rates could be adversely affected. As a result, our results of operations, cash flow, cash available for distribution, including cash available to pay distributions to our stockholders, and our ability to satisfy our debt obligations could be materially adversely affected.

PHA has the right, under the Advisory Agreement, to resign at any time upon not less than 60 days’ written notice, whether we have found a replacement or not. If PHA resigns, we may not be able to find a new advisor or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, and our financial condition, business and results of operations, as well as our ability to pay distributions, are likely to be adversely affected. In addition, the coordination of our management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by PHA and its affiliates. Even if we are able to retain comparable management, the integration of such management and its lack of familiarity with our investment objectives may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.

Our board of directors intends to adoptadopted a long-term incentive plan, pursuant to which we will be authorized to grant restricted stock, stock options, restricted or deferred stock units, performance awards or other stock-based awards to directors, employees and consultants selected by our board of directors for participation in the plan. We currently intend to continue to issue awards of restricted K Shares to our independent directors under our long-term incentive plan.plan annually upon their re-election to the board of directors. Our executive officers, as key personnel of PHA, also may be entitled to receive awards in the future under our long-term incentive plan. If we issue additional stock-based awards to eligible participants under our long-term incentive plan, the issuance of these stock-based awards will dilute your investment in our shares of capital stock purchased in our offering.

Our board of directors has adopted a share repurchase program available to holders of our K Shares, K-I Shares and K-T Shares, but there are significant conditions and limitations that limit stockholders’ ability to have their K Shares, K-I Shares or K-T Shares repurchased under the plan.program. Repurchases of our K Shares, K-I Shares and K-T Shares, when requested, are at our sole discretion and generally will be made quarterly. A holder of K Shares, K-I Shares or K-T Shares, as applicable, must have beneficially held its shares for at least one year prior to offering them for sale to us through our share repurchase program, unless the K Shares, K-I Shares or K-T Shares, as applicable, are being repurchased in connection with a stockholder’s death, qualifying disability or other exigent circumstance as determined by our board of directors in its sole discretion. The per share repurchase price will depend on the length of time the requesting stockholder has held such shares.

Since January 2022, we have routinely received share repurchase requests that exceeded our DRIP funding limitation, and we may in the future continue to receive share repurchase requests in excess of the limitations under our share repurchase program. Most of our assets will consist of properties that cannot be readily liquidated without affecting our ability to realize full value upon their disposition. Therefore, we may not have sufficient liquid resources to satisfy all repurchase requests. The share repurchase program will terminate immediately if our K Shares, K-I Shares, K-T Shares or any successor securities are listed on any national securities exchange. In addition, our board of directors may amend, suspend (in whole or in part) or terminate the share repurchase program at any time upon 30 days’ notice. Further, our board of directors reserves the right, in its sole discretion, to reject any requests for repurchases. Even if we decide to satisfy all resulting repurchase requests, our cash flow and liquidity could be materially adversely affected, and we may incur additional leverage. In addition, if we determine to sell valuable assets to satisfy repurchase requests, our ability to achieve our investment objectives could be materially adversely affected.

We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We expect to pay such quarterly distributions within 45 days of the end of each calendar quarter. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or any increases in cash distributions. During 2020 and the first two quarters of 20212021, we did not make distributions within 45 days of quarter-end due to the impact of the COVID-19 pandemic. All accrued K Share distributions have nowsince been paidpaid, and we are current on all K Share distributions as of December 31, 2024.2025.

Furthermore, affiliates of Procaccianti Companies may perform services for us in connection with the selection and acquisition of investments and the management of our assets. They will be reimbursed for out-of-pocket expenses, which would be paid in addition to any acquisition fees and asset management fees payable to PHA. Payment or accrual of fees will result in immediate dilution to the value of stockholders’ investments, and any such current payments will reduce the amount of cash available to acquire investments. Payment of such fees and expenses increases the risk that the amount available for distribution to our stockholders would be less than the purchase price paid for the securities.

Our officers and directors serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do, or of investment funds managed by PHA or its affiliates. Similarly, PHA, property manager, or their affiliates may have other clients with similar, different or competing investment objectives. In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders. For example, our officers have, and will continue to have, management responsibilities for other investment funds, accounts or other investment vehicles managed or sponsored by PHA and its affiliates. Our investment objectives may overlap with the investment objectives of such affiliated investment funds, accounts or other investment vehicles. As a result, those individuals may face conflicts in the allocation of investment opportunities among us and other investment funds or accounts advised by or affiliated with PHA. PHA will seek to allocate investment opportunities among eligible accounts in a manner that is consistent with its allocation policy. However, despite the right of first offer we have, in the event PHA’s allocation policy does not require a definitive allocation of an opportunity among eligible accounts, we can offer no assurance that such opportunities to us in the most favorable mannermanner.

We have entered into thea joint venture and may enter into additional joint ventures to acquire or improve properties with some of the proceeds of our offering. Such investments may involve risks not otherwise present with other methods of investment in real estate, including, for example, the following risks:

Under various federal, state and local environmental laws, ordinances and regulations, a current or previous real property owner or operator may be liable for the cost of removing or remediating hazardous or toxic substances on, under or in such property. These costs could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose liens on property or restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent our property manager from operating such properties. Environmental laws provide for sanctions for noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos-containing materials and lead-based paint. Further, compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require us to incur material expenditures. Future laws, ordinances or regulations may impose material environmental liability. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances. The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could reduce the amounts available for distribution to you. We generally will obtain a Phase I environmental assessment for each property we intend to acquire. However, in certain circumstances, we may purchase a property without obtaining such assessment if PHA determined it is not warranted, specifically in circumstances where PHA determines to rely upon an assessment certified by, sought and secured by the sellers of the property. A Phase I environmental assessment or site assessment is an initial environmental investigation to identify potential liabilities associated with the current and past uses of a given property. In addition, we will attempt to obtain a representation from the seller that, to its knowledge, the property is not contaminated with hazardous materials.

WeProcaccianti wereHotel REIT, Inc. was formed on August 24, 2016, under the laws of Maryland to acquire and own a diverse portfolio of hospitality properties consisting primarily of select-service, extended-stay and compact full-service hotel properties throughout the United States. As of December 31, 2024,2025, we owned an interest in five select-service hotel properties. We elected to be taxed as, and currently operate as,as a REIT under the Code,Internal Revenue Code of 1986, as amended, commencing with our taxable year ended December 31, 2018. As a REIT, we generally will not be subject to U.S. federal income tax to the extent that we distribute qualifying dividends to our stockholders. If we fail to qualify as a REIT in any taxable year following the year we initially elect to be taxed as a REIT, we will be subject to U.S. federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year in which qualification is lost, unless the IRS grants us relief under certain statutory provisions. Failing to qualify as a REIT could materially and adversely affect our net income and results of operations.

To maintain our qualification as a REIT, the Company cannot operate its hotels. Therefore, the Operating Partnership and its subsidiaries lease our wholly owned hotels to taxable REIT subsidiary lessees TRS Lessees, which are wholly owned by the Company’s TRS holding company. Each hotel is leased to a TRS Lessee under a percentage lease that provides for rental payments equal to the greater of (i) a fixed base rent amount or (ii) a percentage rent based on hotel room revenue. Lease revenue from each TRS Lessee is eliminated in consolidation.consolidation for financial statement purposes. The TRS Lessees have entered into management agreements with third-party management companies that provide day-to-day management for the hotels. Because we are prohibited from operating hotel properties pursuant to certain tax laws relating to our qualification as a REIT, the entities through which we own hotel properties will lease the hotel properties to one or more TRSs. These may include TPG Hotels & Resorts, Inc., an affiliate of our Sponsor and PHA, or TPG Hotels & Resorts, Inc.’s wholly owned subsidiaries, which we collectively refer to as TPG, or other affiliates or designees of TPG. We expect ourOur property manager will operateoperates and managemanages all or substantially all of our hotel properties.

We anticipate that we will acquire properties with property management agreements that can be terminated with little or no cost. InWe such cases,anticipate our TRSs will enter into property management agreements with one or more property management companies affiliated with our Sponsor. We expect our property manager will operate and manage all or substantially all of our hotel properties. We collectively refer to TPG and other property management companies affiliated with our Sponsor as our property manager.

PHA and affiliated property managers will beare entitled to receive fees during the acquisition and operational stages of the Company, and PHA may be eligible to receive fees during the liquidation stage of the Company.

We raised the equity capital for our real estate investments through the Private Offering and the Public OfferingOffering, together with the Private Offering, the Offerings from September 2016 through August 2021, and we have offered shares through our DRIP pursuant to a Registrationthe StatementDRIP on Form S-3Offering since August 2021.

We terminated our Private Offering prior to the commencement of the Public Offering, and, as of such termination, received approximately $15,582,755 in gross proceeds from the sale of shares of K Shares and A Shares, including the Units (which were comprised of one K Share and one A Share), in the Private Offering. Of the $15,582,755 in gross proceeds received, $2,954,095 was from the sale of A Shares to THR, an affiliate of PHA, to fund organization and offering expenses associated with the K Shares and Units.

Since the commencement of the Public Offering and through December 31, 2024,2025, we received approximately $42,080,120$42,901,601 in gross proceeds from the sale of K Shares, K-I Shares and shares of K-T Shares in the Public Offering, inclusive of proceeds from the sale of $1,903,807$2,354,795 of K Shares, $1,303,590$1,674,082 of K-I Shares and $72,561 of K-T Shares pursuant to the DRIP. Additionally, on October 26, 2018, June 10, 2019 and January 19, 2021, we received $1,500,000, $690,000 and $440,000, respectively, from the sale of A Shares to THR in private placements, the proceeds of which were used to pay the selling commissions, dealer manager fees, stockholder servicing fees, and other organizational and offering expenses related to the K Shares, K-I Shares and K-T Shares sold in the primary offering portion of ourthe Public Offering. In addition, we allocated proceeds from the sale of A Shares in amounts that represent the difference between (i) the applicable estimated NAV per K-I Share and the applicable offering price of K-I Shares sold in ourthe primaryPublic offeringOffering and (ii) any discount to the applicable offering price of K Shares, K-I Shares and K-T Shares arising from reduced or waived selling commissions (other than reduced selling commissions for volume discounts) or dealer manager fees.

We intend to establish an Estimatedestimated Perper Shareshare NAV on at least an annual basis. Each Estimated Per Share NAV was determined by our board of directors after consultation with PHA and an independent third-party valuation firm. The Estimated Per Share NAV is not subject to audit by our independent registered public accounting firm. The following table outlines the established Estimated Per Share NAV as determined by our board of directors for the last five years as of each valuation date presented below (which were the Estimated NAV Per SharesShare NAV for the K Shares, K-I Shares and K-T Shares, unless otherwise indicated):

If we do not begin the process of achieving a liquidity event by the seventh anniversary of the termination of our Public Offering, our charter requires a majority of our board of directors, including a majority of our independent directors, to adopt a resolution declaring that a plan of liquidation of our Company is advisable and directing that the plan of liquidation be submitted for consideration at either an annual or special meeting of stockholders, unless the adoption of a plan of liquidation by our board of directors and submission of such plan to stockholders is postponed by a vote of a majority of our board of directors and a majority of the independent directors. If we submit a plan of liquidation to our stockholders, holders of A Shares, K-I Shares, K Shares and K-TK Shares, voting together as a single class, will each be entitled to one vote for each such share held as of the record data established by our board of such vote. If we have sought and failed to receive approval of such stockholders of a plan of liquidation, we will continue operating and, upon the written request of the holders of A Shares, K-I Shares, K Shares and K-TK Shares owning in the aggregate not less than 10% of the then outstanding A Shares, K-I Shares, K Shares and K-TK Shares, the plan of liquidation will be submitted for consideration by proxy statement to such stockholders up to once every two years.

While destination and leisure travel have rebounded and remain strong, business travel has been slowercontinues to recover.lag although showing signs of potential improvement. Ongoing headwinds includinginclude challenging interest rates, inflation, supply chain issues, insurance premiums, political discord and conflicts in the Middle East and its impacts on oil prices, and increased labor costs present additional challenges which we believe may continue to hinder a fullstifle recovery of business travel throughout 2025.2026.

Our board of directors may authorize payment of distributions in excess of those required for us to maintain REIT status as it deems appropriate. Our board of directors may reconsider our current distribution policy and may take further action with respect to distributions for our common stock, and could consider eliminating, suspending, or significantly reducing the payment of distributions in the future. The timing and amount of distributions will be determined by our board of directors, in its sole discretion, and may vary from time to time. Our board of directors’ discretion will be influenced in substantial part by its obligation to cause us to comply with the REIT requirements of the Code. We can provide no assurance that we will be able to pay distributions on our K Shares,Shares and K-I Shares or K-T Shares. However, distributions will continue to accumulate pursuant to our charter.

Our board of directors has adopted a policy to refrain from funding distributions with offering proceeds; instead, we plan to fund distributions from cash flows from operations and capital transactions (other than the Public Offering or other securities offerings but which may include the sale of one or more assets). However, our charter does not restrict us from paying distributions from any particular source, including proceeds from securities offerings, and our board of directors has the ability to change our policy regarding the source of distributions. However, in accordance with Maryland law, we may not make distributions that would: (1) cause us to be unable to pay our debts as they become due in the usual course of business; or (2) cause our total assets to be less than the sum of our total liabilities plus, unless our charter provides otherwise, senior liquidation preferences. Our charter currently provides that amounts that would be needed, if we were to dissolve at the time of such distributions, to satisfy the preferential rights upon dissolution of holders of K Shares, K-I Shares and K-TK-I Shares shall not be added to our total liabilities for these purposes. Subject to the preceding, our board of directors will determine the amounts of distributions we will pay to our stockholders. We have not established a minimum distribution level.

We have funded K Share distributions with operating cash flows from our hotel properties and with proceeds from loans from affiliates and from the issuance of common stock pursuant to the DRIP. To the extent we do not have sufficient earnings and profits, distributions paid will be considered a return of capital to stockholders. For information on the distributions paid during the years ended December 31, 20242025 and 2023,2024, refer to Note 8 – “Stockholders’ Equity” to our consolidated financial statements included herein.

In the years ended December 31, 20242025 and 2023,2024, we paid the following K Share, K-I Share, and OP unit distributions, including those paid pursuant to the DRIP:

The tax composition of our K Share, K-I Share, and OP unit distributions declared for the years ended December 31, 20242025 and 2023,2024, was as follows:

Although a portion of the tax composition of such distributions may be a return of capital, distributions for the years ended December 31, 20242025 and 20232024 were paid for with gross cash flow from operations. To the extent we do not have taxable income, distributions paid will be considered a return of capital to stockholders.

We paid quarterly K Share distributions with respect to all four quarters of 20232024 and 2024,2025, fundedsourced from the operations of our hotel properties and proceeds received pursuant to the DRIP, consistent with prior distributions. We paid accrued A Share distributions from inception through June 30, 2024,partially sourced from proceeds from the refinancing of the Hilton Garden Inn Providence Note. Unpaid distributions will continue to accumulate pursuant to our charter. Our board of directors will make determinations as to the payment of future distributions on a by quarter basis; however, distributions will continue to accumulate pursuant to our charter.

We are not aware of any material trends or uncertainties, other than national and global economic conditions affecting real estate generally and those risks listed in Part I Item 1A “Risk Factors” herein that may be reasonably expected to have a material impact, favorable or unfavorable, on revenues or income from the acquisition, management and operation of our properties.

We expect the majority of our revenues to be derived from the operation of our hotel properties. Rooms revenues are the product of the number of rooms sold and the average daily room rate. Rooms revenues increased to $28,552,605 for the year ended December 31, 2025 from $28,130,637 for the year ended December 31, 2024 from $26,406,988 for the year ended December 31, 2023.2024. The $1,723,649$421,968 net increase was principally due to increases in both occupancy and ADR.

The increasedecrease in rooms revenues of $454,672,$205,572, or 10.71%,4.37%, at the Springhill Suites Wilmington is primarily driven by ana increasedecrease in occupancy compared to the prior year. Occupancy at the Springhill Suites Wilmington increaseddecreased from 68.02% for the year ended December 31, 2023 to 76.12% for the year ended December 31, 2024.2024 to 72.07% for the year ended December 31, 2025. The ADR at the Springhill Suites Wilmington decreasedincreased from $142.46 for the year ended December 31, 2023 to $140.56 for the year ended December 31, 2024,2024 ato decrease$142.36 for the year ended December 31, 2025, an increase of 1.33%.1.28%.

The increasedecrease in rooms revenues of $413,296,$441,071, or 7.44%,7.39%, at the Staybridge Suites St. Petersburg is primarily driven by an increasedecreases in both occupancy and ADR compared to the prior year. Occupancy at the Staybridge Suites St. Petersburg increaseddecreased from 74.70% for the year ended December 31, 2023 to 78.98% for the year ended December 31, 2024.2024 to 77.40% for the year ended December 31, 2025. The ADR at the Staybridge Suites St. Petersburg increaseddecreased from $171.17 for the year ended December 31, 2023 to $173.48 for the year ended December 31, 2024,2024 anto increase$164.38 for the year ended December 31, 2025, a decrease of 1.34%.5.25%.

The decreaseincrease in rooms revenues of $40,784$295,254 or 0.58%,4.23%, at the Hotel Indigo Traverse City is primarily driven by aan decreaseincrease in occupancyADR compared to the prior year. occupancyOccupancy at the Hotel Indigo Traverse City decreased from 76.10% for the year ended December 31, 2023 to 73.58% for the year ended December 31, 2024.2024 to 71.65% for the year ended December 31, 2025. The ADR at the Hotel Indigo Traverse City increased from $236.23 for the year ended December 31, 2023 to $242.23 for the year ended December 31, 2024,2024 to $260.01 for the year ended December 31, 2025, an increase of 2.53%.7.34%.

The increase in rooms revenues of $749,341,$784,046, or 13.10%,12.12%, at the Hilton Garden Inn Providence is primarily driven by an increaseincreases in both occupancy and ADR compared to the prior year. Occupancy at the Hilton Garden Inn Providence increased from 59.12% for the year ended December 31, 2023 to 64.09% for the year ended December 31, 2024.2024 to 69.46% for the year ended December 31, 2025. The occupancy increase is attributed to a strike formed by unionized hospital employees within close proximity to the Hilton Garden Inn Providence. The ADR at the Hilton Garden Inn Providence increased from $193.47 for the year ended December 31, 2023 to $201.28 for the year ended December 31, 2024,2024 to $208.80 for the year ended December 31, 2025, an increase of 4.04%.3.74%.

The increasedecrease in rooms revenues of $147,124,$10,689, or 3.80%,0.27%, at the Cherry Tree Inn is primarily driven by ana increasedecrease in occupancy compared to the prior year. Occupancy at the Cherry Tree Inn increaseddecreased from 59.97% for the year ended December 31, 2023 to 63.06% for the year ended December 31, 2024.2024, to 59.68% for the year ended December 31, 2025. The ADR at the Cherry Tree Inn decreasedincreased from $232.56 for the year ended December 31, 2023 to $228.94 for the year ended December 31, 2024,2024 ato decrease$241.94 for the year ended December 31, 2025, an increase of 1.56%.5.68%.

Food and beverage revenues decreasedincreased to $2,792,525 for the year ended December 31, 2025 from $2,359,189 for the year ended December 31, 2024 from $2,464,385 for the year ended December 31, 2023.2024. The decreaseincrease of $105,196$433,336 is primarily due to aan decreaseincrease in banquets and functions at the Hotel Indigo Traverse City and Hilton Garden Inn Providence. These amounts are comprised of revenues realized in hotel food and beverage outlets as well as catering events.

Other operating revenues increased to $1,497,334 for the year ended December 31, 2025 from $1,394,051 for the year ended December 31, 2024 from $1,108,881 for the year ended December 31, 2023.2024. These amounts include ancillary hotel revenues and other items primarily driven by occupancy such as telephone/internet, parking, gift shops, resort fees and other guest services. The $285,170$103,283 increase from the prior year period is primarily due to increases in resort fees and parking revenues infor the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024.

Rooms expenses were $6,018,897$6,017,057 and $5,842,776$6,018,897 for the years ended December 31, 20242025 and 2023,2024, respectively. The $176,121 net increase in rooms expenses is primarily due to increased housekeeping and complimentary breakfast expenses resulting from the overall increase in occupancy. Rooms expenses are typically primarily driven by the corresponding revenue account and occupancy. Rooms expenses of $6,018,897$6,017,057 and $5,842,776$6,018,897 represent 21.4%21.07% and 22.1%21.40% of rooms revenues for the years ended December 31, 20242025 and 2023,2024, respectively.

Food and beverage expenses were $1,613,437$1,832,610 and $1,602,021$1,613,437 for the years ended December 31, 20242025 and 2023,2024, respectively. Food and beverage expenses are primarily driven by the corresponding revenue account and occupancy. Food and beverage expenses represent 68.4%65.63% and 65.0%68.39% of food and beverage revenues for the years ended December 31, 20242025 and 2023,2024, respectively. The percentage increase is primarily due to the rise in labor and consumable costs.

Other property expenses were $11,149,871$11,429,960 and $10,579,777$11,149,871 for the years ended December 31, 20242025 and 2023,2024, respectively. The $570,094$280,089 increase in other property expenses is primarily driven by the rise in franchise fees, management fees,utilities, and labor costs. These amounts include maintenance, utilities, sales and marketing, and general and administrative expenses of the hotel properties, as well as net franchise fees, property taxes and other taxes.

Property management fees to affiliates were $956,558$985,488 and $899,516$956,558 for the years ended December 31, 20242025 and 2023,2024, respectively. Property management fees are property level expenses equal to 3% of the hotel properties’ gross revenuesrevenues, and we expect them to fluctuate accordingly.

Corporate, general and administrative expenses were $1,260,039$1,360,323 and $1,409,838$1,260,039 for the years ended December 31, 20242025 and 2023,2024, respectively. The $100,284 increase is primarily due to an increase in legal fees and outside services. Corporate general and administrative expenses consist primarily of transfer agent fees, fees paid to the board of directors, audit and tax fees, and other professional services fees.

Other fees to affiliates were $908,599$924,067 and $865,230$908,599 for the years ended December 31, 20242025 and 2023,2024, respectively. Other fees to affiliates include asset management fees due to PHA that are paid quarterly in arrears equal to one-fourth of 0.75% of the adjusted cost of our assets. Asset management fees increased to $738,748 for the year ended December 31, 2025 from $727,761 for the year ended December 31, 2024 from $718,135 for the year ended December 31, 2023.2024. Other fees to affiliates also includes certain administrative fees charged to us by our Sponsor. Such administrative fees were $180,839$185,318 and $147,095$180,839 infor the years ended December 31, 20242025 and 2023,2024, respectively.

Interest expense, net, was $3,733,207$4,124,807 and $2,939,204$3,733,207 for the years ended December 31, 20242025 and 2023,2024, respectively. Interest expense includes monthly payments on the outstanding mortgage notes payable balances, accrued interest on the outstanding asset management fees, acquisition fees and promissory notesnotes. fromFor PHAthe andyear ourended Sponsor,December and31, 2025, we recognized $256,639 of interest expense relating to the amortization of deferred financing costscosts, andoffset by $22,052 relating to the amortization of the fair value of debt discountspremium. or premiums. Additionally, duringFor the year ended December 31, 2024, we incurredrecognized $184,165 of interest expense relating to the amortization of deferred financing costs and debt discounts, offset by $132,318 relating to the amortization of the fair value of debt premium. During the year ended December 31, 2023, we incurred $127,251 of interest expense relating to the amortization of deferred financing costs and debt discounts, offset by $132,315 relating to the amortization of the fair value of debt premium.

Gain on our interest rate swap was $0 and $7,237 for the yearyears ended December 31, 2024.2025 Unrealizedand loss2024, on our interest rate cap was $183,370 for the year ended December 31, 2023.respectively. The interest rate swap was terminated in connection with the June 6, 2024 refinancing of the note secured by the Hotel Indigo Traverse City (the “TCI Note”).

Income tax benefit (expense)

We had income tax expense of $300,475 for the year ended December 31, 2025, and income tax benefit of $106,253 for the year ended December 31, 2024, and income tax benefit of $149,374 for the year ended December 31, 2023.2024. Income taxes relate to taxable income at the TRSs.

For the year ended December 31, 2024,2025, we had net income of $2,067,159$1,857,691 compared to net income of $1,756,289$2,067,159 for the year ended December 31, 2023.2024. The increasedecrease in net income of $310,870$209,468 over the comparable prior year period was the result of the changes in revenues and expenses discussed above.

Net income or loss attributable to noncontrolling interest

Our sources of funds are primarily funds equal to amounts reinvested in the DRIP, operating cash flows and borrowings. Our principal demands for funds will be for improvement costs, the payment of our operating and administrative expenses, continuing debt service obligations and distributions to and repurchases from our stockholders. Should we acquire additional assets, we intend to use cash and mortgage or other debt. PHA and its affiliates have agreed to purchase A Shares in a private placement in order to provide us with funds sufficient to pay the selling commissions, dealer manager fees, stockholder servicing fees, and other organizational and offering expenses related to the K Shares, K-I Shares and K-T Shares sold in the primary offering portion of our Public Offering. In addition, we will allocate proceeds from the sale of A Shares in amounts that represent the difference between (i) the applicable estimated NAV per K-I Share and the applicable offering price of K-I Shares sold in our primary offering and (ii) any discount to the applicable offering price of K Shares, K-I Shares and K-T Shares arising from reduced or waived selling commissions (other than reduced selling commissions for volume discounts) or dealer manager fees.

We believe that cash and restricted cash on hand, cash from operations after implementing cost reduction proceduresoperations, and borrowings from other sources, including advances from PHA and our Sponsor, if necessary, will be sufficient to fund our operating and administrative expenses and continuing debt service obligations over the next twelve months.

Proceeds from the sale of common stock in the Private Offering and Public Offering were partially used to fund our investments in hotel properties and the related costs associated with the transactions. The remaining proceeds are held in liquid cash accounts.

During the years ended December 31, 20242025 and 2023,2024, we owned an interest in five hotel properties. During the years ended December 31, 20242025 and 2023,2024, net cash provided by operating activities was $6,662,924$6,110,733 and $6,449,101,$6,662,923, respectively. Our operating cash flows during the year ended December 31, 2025 were the result of our net income, offset by adjustments for non-cash expenses, including depreciation and amortization, and by adjustments for receivables, other assets, amounts due to and from related parties, and accounts payable and accrued liabilities. Our operating cash flows during the year ended December 31, 2024 were the result of our net income, offset by adjustments for non-cash expenses, including depreciation and amortization, the change in fair value of the interest rate swap/cap agreementsagreement and by adjustments for receivables, other assets, amounts due to and from related parties, and accounts payable and accrued liabilities. Our operating cash flows during the year ended December 31, 2023 were the result of our net income, offset by adjustments for non-cash expenses, including depreciation and amortization; the change in fair value of the interest rate swap/cap agreements; and by adjustments for receivables, other assets, gain on loan extinguishment, loss on disposal of fixed assets, amounts due to and from related parties, and accounts payable and accrued liabilities.

Cash FlowsFlow Used in Investing Activities

We intend to maintain amounts outstanding under long-term debt arrangements or lines of credit so that we will have more funds available for investment in properties.property improvements. However, the percentage of debt financing we utilize at any given time will be dependent upon various factors to be considered in the sole discretion of our board of directors, including, but not limited to, our ability to pay distributions, the availability of properties meeting our investment criteria, the availability of debt financing, and changes in the cost of debt financing. To help finance our initial acquisitions, we may utilize short-term borrowings. However, after our initial property acquisitions, as a general principle, we anticipate that the term of any debt financing we utilize will correspond to the anticipated holding period for the respective property.

The TCI Note was refinanced as of June 6, 2024. The TCI Note bears interest at a fixed per annum rate equal to 7.025% during the initial three yearthree-year term. This rate is calculated to 2.50% in excess of the yield on United States Treasury Securities adjusted to a constant maturity of three years as made available by the Federal Reserve Board. The TCI Note provides for interest only monthly payments for the initial three yearthree-year term. After the interest only period, principal will be amortized over a 30-year amortization schedule at a fixed per annum rate of interest equal to 2.50% in excess of the yield on United States Treasury Securities adjusted to a constant maturity of one year as made available by the Federal Reserve Board thereafter to maturity on June 6, 2028.2027. The loan agreement allows for two one-year extensions. The TCI Note is collateralized by the Hotel Indigo Traverse City, including equipment, and is guaranteed by the Company.Company (pursuant to a customary carveout/bad acts guaranty). As of December 31, 2024,2025, we believe the Operating Partnership and its subsidiary for the Hotel Indigo Traverse City were in compliance with the loan requirements, including applicable covenants, and all required payments have been made as agreed.

There have been no material changes from the risk factors set forth in our Annual Report.Report on Form 10-K for the year-ended December 31, 2025. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company.

Factors that could have a material adverse effect on our operations and future prospectusprospects include, but are not limited to:

Other risks include those described under the section entitled Item 1A. “Risk Factors” of Part I of our Annual Report and subsequent quarterly reports. Any of the assumptions underlying forward-looking statements could be inaccurate. You are cautioned not to place undue reliance on any forward-looking statements included in this Quarterly Report. All forward-looking statements are made as of the date of this Quarterly Report and the risk that actual results will differ materially from the expectations expressed in this Quarterly Report will increase with the passage of time. These risks and uncertainties may be amplified by macroeconomic events, including but not limited to the conflict between Russia and Ukraine, Iran and Israel, the Hamas-Israel war, international trade relations and trade policy, including those related to tariffs, rising interest rates and inflation. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this Quarterly Report, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Quarterly Report will be achieved.

Procaccianti Hotel REIT, Inc. was formed on August 24, 2016, under the laws of Maryland to acquire and own a diverse portfolio of hospitality properties consisting primarily of select-service, extended-stay and compact full-service hotel properties throughout the United States. As of MarchJune 31,30, 2026, we owned an interest in five select-service hotel properties. We elected to be taxed as, and currently operate as, a REIT under the Code, commencing with our taxable year ended December 31, 2018.

Since the commencement of the Public Offering and through MarchJune 31,30, 2026, the Company received approximately $43,102,414$43,294,634 in gross proceeds from the sale of K Shares, K-I Shares, and K-T Shares in the Public Offering, inclusive of proceeds from the sale of $2,470,556$2,580,063 of K Shares, $1,759,134$1,841,847 of K-I Shares and $72,561 of K-T Shares pursuant to the DRIP. Additionally, on October 26, 2018, June 10, 2019 and January 19, 2021, the Company received $1,500,000, $690,000 and $440,000, respectively, from the sale of A Shares to THR in private placements, the proceeds of which were used to pay the selling commissions, dealer manager fees, stockholder servicing fees, and other organizational and offering expenses related to the K Shares, K-I Shares and K-T Shares sold in the primary offering portion of the Public Offering. In addition, the Company allocated proceeds from the sale of A Shares in amounts that represent the difference between (i) the applicable estimated NAV per K-I Share and the applicable offering price of K-I Shares sold in the primary offering and (ii) any discount to the applicable offering price of K Shares, K-I Shares and K-T Shares arising from reduced or waived selling commissions (other than reduced selling commissions for volume discounts) or dealer manager fees.

S2K Financial LLC was the dealer manager for our Public Offering and was responsible for the distribution of our common stock in our Public Offering. PHA is our advisor and is an affiliate of our Sponsor. Subject to certain restrictions and limitations, PHA manages our day-to-day operations and our portfolio of properties and real estate-related assets. PHA sources and presents investment opportunities to our board of directors and provides investment management, marketing, investor relations and other administrative services on our behalf. We have no paid employees and rely on PHA to provide substantially all of our services. Pursuant to our Advisory Agreement with PHA, we will reimburse PHA for costs incurred in providing these administrative services. PHA will be required to allocate the cost of such services to us based on objective factors such as total assets, revenues and/or time allocations. At least annually, our board of directors will review the amount of administrative services expense reimbursable to PHA to determine whether such amounts are reasonable in relation to the services provided. During the three months ended MarchJune 31,30, 2026 and 2025, the Sponsor requested reimbursement for $60,481$49,993 and $49,348,$48,647, respectively, of such administrative service expenses. Of these amounts, $49,082$27,243 is included in due to related parties on the condensed consolidated balance sheet as of MarchJune 31,30, 2026.

During each of the twelve months ended March 31, 2026 and June 30, 2026, our total operating expenses were less than 2% of our average invested assets but exceeded 25% of our net income. During each of the twelve months ended December 31, 2025, September 30, 2025, June 30, 2025, and March 31, 2025, our total operating expenses were less than 2% of our average invested assets and 25% of our net income. We incurred operating expenses of approximately $1,370,725 and incurred an Excess Amount of approximately $218,113 during the twelve months ended June 30, 2026. We incurred operating expenses of approximately $1,385,531 and incurred an Excess Amount of approximately $122,157 during the twelve months ended March 31, 2026. Our board of directors (including a majority of our independent directors) determined that the Excess Amount for the twelve months ended June 30, 2026 and March 31, 2026 was justified as unusual and non-recurring.

While destination and leisure travel have rebounded and remain strong,resilient, business travel continues to lagrecover althoughat a more measured pace. Corporate travel is showing signs of potentialimprovement, improvement.although the recovery remains uneven across markets and customer segments. Ongoing headwinds—including include challengingelevated interest rates, inflation, supply chain issues,higher insurance premiums, political discord and conflicts in the Middle East and its impacts on oil prices, and increased labor costscosts, presentgeopolitical additionaluncertainty, challengesand whichenergy-price we believe may volatility—continue to stiflepressure corporate travel budgets and hotel operating margins. These factors are likely to result in a gradual rather than rapid recovery ofin business travel throughout the remainder of 2026.

We have reviewed tax positions under GAAP guidance that clarify the relevant criteria and approach for the recognition and measurement of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the financial statements if it is more likely than not that the tax position will be sustained upon examination. We had no material uncertain tax positions at MarchJune 31,30, 2026.

Our board of directors may authorize distributions in excess of those required for us to maintain REIT status as it deems appropriate. Our board of directors may reconsider our current distribution policy and may take further action with respect to distributions for our common stock, and could consider eliminating, suspending, or significantly reducing distributions in the future. The timing and amount of distributions will be determined by our board of directors, in its sole discretion, and may vary from time to time. Our board of directors’ discretion will be influenced in substantial part by its obligation to cause us to comply with the REIT requirements of the Code. We can provide no assurance that we will be able to pay distributions on our K Shares, K-I Shares or K-TK-I Shares. However, distributions will continue to accumulate pursuant to our charter.

For information on distributions paid during the three months ended MarchJune 31,30, 2026, refer to Note 6 – “Stockholders’ Equity” to our unaudited interim condensed consolidated financial statements included in this Quarterly Report.

The following table shows K Share, K-I Share, and OP Unit distributions paid during the three months ended MarchJune 31,30, 2026 and 2025:

Although a portion of the tax composition of such distributions may be a return of capital, distributions for the threesix months ended MarchJune 31,30, 2026 and 2025 were paid for with gross cash flow from operations. To the extent we do not have taxable income, distributions paid will be considered a return of capital to stockholders.

On March 3, 2020, our stockholders approved to amendamending our charter (1) to increase the rate at which cash distributions on K Shares, K-I Shares and K-T Shares automatically accumulate under our charter from 6% to 7% per annum of the K Share Distribution Base of such K Share, K-I Share Distribution Base of such K-I Share and K-T Share Distribution Base of such K-T Share, respectively, and (2) to increase the maximum rate at which distributions on A Shares may be authorized by our board of directors and declared by us from 6% to 7% of the stated value of an A Share ($10.00) from income and cash flow from ordinary operations on a cumulative basis. The changes pursuant to the Articles of Amendment to our charter became effective beginning with distributions that accumulated on March 31, 2020.

We paid quarterly K Share, K-I Share, and OP unit distributions with respect to all quarters of 2025 and the first quartertwo quarters of 2026, funded from the operations of our hotel properties and proceeds received pursuant to the DRIP, consistent with prior distributions. Unpaid distributions will continue to accumulate pursuant to our charter. Our board of directors will make determinations as to the payment of future distributions on a quarter by quarter basis; however, distributions will continue to accumulate pursuant to our charter.

The discussion that follows is based on our consolidated results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

We expect the majority of our revenues to be derived from the operation of our hotel properties. Rooms revenues are the product of the number of rooms sold and the average daily room rate. Rooms revenues decreased to $4,478,821$7,624,728 for the three months ended MarchJune 31,30, 20262026, from $5,214,341$8,089,157 for the three months ended MarchJune 31,30, 2025. The net decrease of $735,520,$464,429, or 14.1%,5.74%, was largely due to decreases in ADR and occupancy.

The following presents the hotel operating results for the three months ended MarchJune 31,30, 2026:

The following presents the hotel operating results for the three months ended MarchJune 31,30, 2025:

A comparison of hotel rooms revenues for the three months ended MarchJune 31,30, 2026 and 2025 is as follows:

The increase in rooms revenues of $22,963,$10,816, or 2.11%,0.74%, at the HiltonSpringhill GardenSuites Inn ProvidenceWilmington is driven by an increaseincreases in ADR.both ADR and occupancy. The ADR at the HiltonSpringhill GardenSuites Inn ProvidenceWilmington increased from $163.38$157.65 for the three months ended MarchJune 31,30, 2025, to $173.14$161.83 for the three months ended MarchJune 31,30, 2026, an increase of 5.97%.2.65%. Occupancy at the HiltonSpringhill GardenSuites InnWilmington Providence decreasedincreased from 53.92%85.25% for the three months ended MarchJune 31,30, 2025, to 51.95%83.65% for the three months ended MarchJune 31,30, 2026.

The decreaseincrease in rooms revenues of $100,148$110,402, or 24.48%,8.16%, at the CherryStaybridge TreeSuites InnSt. Petersburg is primarily driven by a decreaseincreases in both ADR and occupancy. The ADR at the CherryStaybridge TreeSuites InnSt. decreasedPetersburg increased from $133.55$154.57 for the three months ended MarchJune 31,30, 2025, to $119.46$165.25 for the three months ended MarchJune 31,30, 2026, aan decreaseincrease of 10.55%.6.91%. Occupancy at the CherryStaybridge TreeSuites InnSt. decreasedPetersburg increased from 44.78%80.87% for the three months ended MarchJune 31,30, 2025, to 37.81%81.81% for the three months ended MarchJune 31,30, 2026. The decrease in occupancy for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily driven by inclement weather in the three months ended March 2026, causing guest reservation cancellations.

Food and beverage revenues increased to $359,861$811,931 for the three months ended MarchJune 31,30, 2026, from $359,086$705,152 for the three months ended MarchJune 31,30, 2025. These amounts are comprised of revenues realized in hotel food and beverage outlets as well as catering events. The increase of $106,779 is primarily driven by an increase in catering and beverage revenues at the Hotel Indigo Traverse City.

Other operating revenues decreasedincreased to $273,261$462,922 for the three months ended MarchJune 31,30, 2026, from $273,547$378,411 for the three months ended MarchJune 31,30, 2025. These amounts include ancillary hotel revenues and other items primarily driven by occupancy such as telephone/internet, parking, gift shops, and other guest services.

Rooms expenses decreased to $1,241,255$1,541,186 for the three months ended MarchJune 31,30, 2026, from $1,367,983$1,545,287 for the three months ended MarchJune 31,30, 2025. The $126,728 net decrease in rooms expenses is primarily due to a decrease in travel agent commissions. Rooms expenses are typically primarily driven by the corresponding revenue account and occupancy. Rooms expenses of $1,241,255$1,541,186 and $1,367,983$1,545,287 represent 27.7%20.21% and 26.2%19.10% of rooms revenues for the three-month period ended MarchJune 31,30, 2026 and 2025, respectively.

Food and beverage expenses were $358,092$526,797 and $338,392$435,986 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The $19,700$90,811 increase in food and beverage expenses is primarily due to an increase in thebeverage cost of food and food preparation.revenues. Food and beverage expenses are historically primarily driven by the corresponding revenue account and occupancy. Food and beverage expenses represent 99.5%64.88% and 94.2%61.83% of food and beverage revenues for the three-month period ended MarchJune 31,30, 2026 and 2025, respectively.

Other property expenses were $2,572,278$2,976,063 and $2,553,061,$2,941,912, for the three months ended MarchJune 31,30, 2026, and 2025, respectively. These amounts include maintenance, utilities, sales and marketing, and general and administrative expenses of the hotel properties, as well as net franchise fees, property taxes and other taxes. The $19,217 increase in other property expenses is primarily driven by an increase in snow removal expenses at the Hilton Garden Inn Providence due to severe snowstorms.

Property management fees to affiliates were $153,310$265,989 and $175,662$275,311 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Property management fees are property level expenses equal to 3% of the hotel properties’ gross revenues and we expect them to fluctuate accordingly.

Corporate general and administrative expenses were $310,441$336,045 and $284,776$350,851 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Corporate general and administrative expenses consist primarily of transfer agent fees, fees paid to the board of directors, audit and tax fees, and other professional services fees.

Other fees to affiliates were $246,370$236,571 and $233,113$233,100 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Other fees to affiliates include asset management fees due to PHA that are paid quarterly in arrears equal to one-fourth of 0.75% of the adjusted cost of our assets. Asset management fees increased to $185,889$186,579 for the three months ended MarchJune 31,30, 2026, from $183,765$184,454 for the three months ended MarchJune 31,30, 2025. Other fees to affiliates also includes certain administrative fees charged to us by our Sponsor. Such administrative fees were $60,481$49,993 and $49,348$48,647 during the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Depreciation and amortization expenses were $954,594$954,306 and $1,091,161$983,663 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. These amounts include depreciation on our hotel buildings, improvements, furniture, fixtures and equipment, along with amortization of our franchise fees and certain intangibles.

Interest expense, net, was $1,084,750$1,070,069 and $953,354$1,001,140 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase of $131,396$68,929 is attributable to the refinancing of the TCI Note, and the HGI Note at increased interest rates. Interest expense includes monthly fixed rate and variable rate payments on the outstanding mortgage notes payable balance, accrued interest on the outstanding asset management fees, acquisition fees and promissory notes from PHA and our Sponsor, and the amortization of deferred financing costs and debt discounts or premiums. For the three months ended MarchJune 31,30, 2026, we recognized $64,364 of interest expense relating to the amortization of deferred financing costs. For the three months ended MarchJune 31,30, 2025, we recognized $51,591$76,321 of interest expense relating to the amortization of deferred financing costs and debt discounts, offset by $22,052 relating to the amortization of the fair value of debt premium.costs.

Interest income on interest-bearing cash accounts was $38,360$32,138 and $56,274$48,591 for three months ended MarchJune 31,30, 2026 and 2025, respectively. Interest income is presented as a reduction of the total interest expense on the consolidated statement of operations.

For the three months ended MarchJune 31,30, 2026 and 2025, we recorded a net lossincome of $1,810,747$987,555 and $933,641,$1,413,202, respectively. The increasedecrease in net lossincome of $877,106$425,647 is the result of the revenue and expense changes discussed above.

For the three months ended MarchJune 31,30, 2026 and 2025, we recorded net income relating to noncontrolling interests of $49,154$252,256 and $252,679,$219,612, respectively. This amount includes net income or losses attributable to a third-party’sthird party’s 49% ownership interest in PCF and will fluctuate accordingly with any increases or decreases to net income of PCF. This amount also includes net income or losses attributable to the noncontrolling Class K OP Units issued as part of the Hilton Garden Inn Providence acquisition. The noncontrolling Class K OP Units are allocated net income or loss attributable to the Operating Partnership based on the total outstanding Class K OP Units as a percentage of all our outstanding common stock.