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

Our business strategy depends on achieving revenue and net income growth from demand for hotel rooms as part of a strong U.S. and global economy. Any economic slowdown or recession or weaker-than-anticipated growth or political actions and policies could negatively impact demand for our hotel rooms, which in turn could materially and adversely affect our business, financial performance and condition, operating results and cash flows. Even if the U.S. and global economies remain stable or grow in 2025,2026, we cannot provide any assurances that demand for hotel rooms will increase from current levels. If demand does not increase in the near future, or if demand weakens, our future results of operations and growth prospects could be materially and adversely affected.

In addition to market volatility, any future increases in inflation would pose a risk to us due to the possibility of increases in interest rates, which would adversely impact our outstanding variable rate debt and may result in higher interest rates on any new fixed rate debt we may incur. We have entered into interest rate swaps to limit our exposure to interest rate fluctuations related to a portion of our variable rate debt. However, in a high interest rate environment, the fixed rates we can obtain with such replacement fixed rate swap agreements, and the fixed rate on any new debt we may incur, will also continue to be high. Inflation may also have an adverse effect on our operating expenses, including, but not limited to, labor, supplies, repairs and maintenance, as these costs could increase at a rate higher than our revenues. Additionally, proposed or enacted tariffs on imported goods, including construction materials, furniture, and equipment, may further exacerbate inflationary pressures on renovation costs and limit the availability of certain supplies, thereby increasing the cost and/or delaying the timing of planned capital projects. Inflation could also have an adverse effect on consumer spending, which could impact Occupancy levelsdemand at our hotel properties and, in turn, our own results of operations.

Our hotels located in the Northern California, Southern California, South Florida, Chicago, Illinois, and Houston, Texas metropolitan areas accounted for approximately 13.2%,13.4%, 11.0%,11.1%, 9.0%,9.1%, 6.6%6.5% and 5.8%, respectively, of our total number of rooms available for the fiscal year ended December 31, 2024.2025. As a result, we are particularly susceptible to adverse market conditions in these areas, including industry downturns, relocation of businesses, constrained municipal budgets, any oversupply of hotel rooms, criminal activity, political and societal unrest, supply-chain issuesissues, labor-related issues, and inflationary pressures, or a reduction in lodging demand. Additionally, our hotels locatedmay inbe theimpacted Austin,by Texasperiodic metropolitanand area,prolonged whichclosures, accountedrenovations forand 3.0%expansion of ourconvention totalcenters numberthat are significant drivers of rooms available for the fiscal year ended December 31, 2024, face the risk of the anticipated closure of the Austin Convention Center in 2025, which could result in a decrease in lodging demand in this market.demand. Adverse economic developments in the markets in which we have a concentration of hotels, or in any of the other markets in which we operate, or any increase in hotel supply or decrease in lodging demand resulting from the local, regional or national business or political climate, could materially and adversely affect us.

In the event that any of our management agreements are terminated, we can provide no assurances that we could find a replacement manager or that our franchisors will consent to a replacement manager in a timely manner, or at all, or that any replacement manager will be successful in operating our hotels. Furthermore, if any of our third-party managers, including Aimbridge and/or Hilton, as our largest providers of management services, are financially unable or unwilling to perform their obligations pursuant to our management agreements, our ability to find a replacement manager or managers for ourthe Aimbridge- and/or Hilton-managedimpacted hotels could be challenging, costly and time consuming. Any adverse developments in Aimbridge'sany orof Hilton’sour third-party managers' business, financial strength or ability to operate our hotel properties efficiently and effectively could have a material adverse effect on our results of operations.

Our success depends in part upon our independent managers' ability to attract, motivate and retain a sufficient number of qualified employees. Qualified individuals needed to fill these positions are in short supply in some areas. The inability to recruit and retain these individuals may adversely impact hotel operations and guest satisfaction, which could harm our business. Additionally, competition for qualified employees has required us to pay meaningfully higher wages to attract enough employees than has historically been the case, and continued tightness in labor markets could result in continued escalation of labor costs. Changes in U.S. policies that discourage immigration, restrict the number of immigrants permitted into the U.S., or negatively impact certain types of work visas, may put further inflationary pressures on labor costs if there is a material decrease in available and/or willing workers. In addition, we could face some challenges meeting workforce requirements resulting from changes in workforce dynamics, such as higher standards and working remotely or needing more flexibility, which could result in increased labor costs in the future.

8683 of the 9693 hotel properties that we owned as of December 31, 20242025 utilizewere affiliated with brands owned by Marriott, Hilton or Hyatt. As a result, our success is dependent in part on the continued success of Marriott, Hilton and Hyatt and their respective brands. We believe that building brand value is critical to increasing demand and building customer loyalty. Consequently, if market recognition or the positive perception of Marriott, Hilton or Hyatt is reduced or compromised, the brand value associated with the Marriott-, Hilton-, or Hyatt-branded hotels in our portfolio may be adversely affected. Furthermore, if our relationship with Marriott, Hilton or Hyatt were to deteriorate or terminate as a result of disputes regarding the management of our hotels or for other reasons, Marriott, Hilton or Hyatt could, under certain circumstances, terminate our current franchise licenses with them or decline to provide franchise licenses for hotels that we may acquire in the future. If any of the foregoing were to occur, it could have a material adverse effect on us.

Our hotel properties have an ongoing need for renovations and other capital improvements, including the replacement of furniture, fixtures and equipment ("FF&E"), franchisor-required improvements, and renovation or redevelopment of acquisitions. Our lenders also generally require that we set aside annual amounts for capital improvements to our hotel properties. The costs of these capital improvements may increase due to ongoing supply-chain disruptions anddisruptions, increased construction costs, and proposed or enacted tariffs on imported goods, including construction materials and FF&E, and could materially and adversely affect us. In addition, duein tothe event of any supply-chain constraints and disruptions, we could face difficulties sourcing the goods and services in a timely manner, which could adversely affect us.

Our existing indebtedness contains customary and financial covenants that may limit our ability to capitalize on business opportunities. These covenants place restrictions on, among other things, our ability to incur additional indebtedness, incur liens on certain assets, engage in certain mergers, liquidations or consolidations, sell certain assets, make restricted payments (including the payment of dividends and other distributions), engage in certain transactions with affiliates, enter into sale and leaseback transactions, make investmentscertain andtypes capitalof expenditures, and acquire real estate assets.investments.

TechnologyTechnology, potentially including artificial intelligence, is used in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm the business.

We, and our hotel managers and franchisors, rely on information technology networks and systemssystems, potentially including artificial intelligence ("AI"), to process, transmit and store electronic information, including personal or confidential information, and to manage or support a variety of business processes. These information technology networks and systems can be vulnerable to threats or risks arising from a cybersecurity incident, such as system, network or internet failures; computercyber hackingattacks (including malware attacks, unauthorized access attempts and denial of service and other unintentional intrusions or businessmalicious disruptioncyber attacks); cyber-terrorism; viruses,social wormsengineering (including phishing); cyber extortion (including ransomware) or other maliciousfraudulent software programsschemes; and intentional or unintentional intrusions or interruptions. Such cybersecurity incidents or other disruptions may be caused by individuals within our organization (including by employee error, negligence or fraud.fraud), individuals outside our organization with authorized access or unauthorized individuals from outside our organization. Although we believe we and our hotel managers and franchisors have taken commercially reasonable steps to protect the security of our systems, there can be no assurance that such security measures will prevent failures, inadequacies or interruptions in system services, or that system security will not be breached. Further, adoption of AI tools by us or by third parties may pose new cybersecurity challenges. Threat actors may use AI tools to automate and enhance cybersecurity attacks against us. We use software and platforms designed to detect such cybersecurity threats, including AI-based tools, but these threats could become more sophisticated and harder to detect and counteract, which may pose significant risks to our data security and systems.

We maintain comprehensive property insurance on all of our hotel properties and we intend to maintain comprehensive property insurance on any hotels that we acquire in the future, including fire, terrorism, and extended coverage. Our comprehensive property insurance program has a $250,000 deductibleself-insured retention per claim. In addition to the comprehensive property insurance, we maintain general liability insurance at all of our hotel properties. Our general liability insurance program has no deductible. Certain types of catastrophic losses, such as windstorms, earthquakes, floods, and losses from foreign and domestic terrorist activities may not be insurable or may not be economically insurable. Even when insurable, these policies may have high deductiblesretentions and/or high premiums. Certain of our coastal hotel properties each have a deductibleretention of 5% of total insured value for a named storm, and our hotels located in areas susceptible to earthquakes have deductiblesretentions of up to 5% of total insured value. Our lenders may require such insurance and our failure to obtain such insurance could constitute a default under the loan agreements, which could have a material and adverse effect on us.

To qualify as a REIT, we must ensure that we meet the gross income tests annually and that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified real estate assets. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, no more than 20% of the value of our total assets (25% of the value of our total assets for taxable years beginning after December 31, 2025) can be represented by securities of one or more TRSs, and no more than 25% of the value of our total assets may be represented by debt instruments issued by publicly offered REITs that are "nonqualified" (i.e., not secured by real property or interests in real property). If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate from our portfolio, or contribute to a TRS, otherwise attractive investments in order to maintain our qualification as a REIT. These actions could have the effect of reducing our income and amounts available for distribution to our shareholders. In addition, we may be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution, and may be unable to pursue investments that would otherwise be advantageous to us. Thus, compliance with the REIT requirements may hinder our ability to make, and, in certain cases, maintain ownership of, certain attractive investments.

The IRS, the United States Treasury Department and Congress frequently review U.S. federal income tax legislation, regulations and other guidance. In addition, according to publicly released statements, a top legislative priority of the current administration and Congress may be significant reform of the Code, including significant changes to taxation of business entities. We cannot predict whether, when or to what extent new U.S. federal tax laws, regulations, interpretations or rulings will be adopted. Further, from time to time, changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. Any legislative action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect our taxation or taxation of our shareholders.

We are a self-advised and self-administered Maryland REIT that owns primarily premium-branded, rooms-oriented, high-margin, focused-service and compact full-service hotels located within heart of demand locations. OurWe own a geographically diversified portfolio of hotels are concentratedlocated in urban markets that we believe exhibit multiple demand generators and attractive long-term growth prospects. We believe premium-branded,that focused-serviceour andinvestment compactstrategy full-serviceallows hotelsus with these characteristicsto generate high levels of RevPAR, strong operating margins and attractive returns. Focused-serviceOur focused-service and compact full-service hotels typically generate most of their revenue from room rentals, have limited food and beverage outlets and meeting spacespace, and require fewer employees than traditional full-service hotels. We believe these types of hotels have the potential to generate attractive returns relative to other types of hotels due to their ability to achieve RevPAR levels at or close to those achieved by traditional full-service hotels,hotels while achieving higher profit margins due to their more efficient operating model and less volatile cash flows.

The majority of our hotels consist of premium-branded, focused-service and compact full-service hotels. As a result of this property profile, the majority of our customers are transient in nature. Transient business typically represents individual business or leisure travelers. The majority of our hotels are located in business districts within major metropolitan areas.areas Accordingly,which businessbenefit travelersfrom representa thewide majorityrange of the transient demand atsources, ourincluding hotels.corporate, educational, government, leisure and international, among others. As a result, macroeconomic factorsor impactingpolitical businessactions travelthat impact these areas may have a greatersignificant effect on our business than factors impacting leisure travel.business.

•Demand — The overall demand for lodging, especially business travel,lodging generally fluctuates with theeconomic overall economy.performance. Historically, periods of declining demand are followed by extended periods of relatively strong demand, which typically occurs during the growth phase of the lodging cycle.

We expect that our ADR, Occupancy and RevPAR performance will be impacted by macroeconomic factors and government policies such as regional and local employment growth, government spending, personal income and corporate earnings, office vacancy rates, business relocation decisions, airport activity, business and leisure travel demand, new hotel construction and the pricing strategies of our competitors.competitors, as well as any changes in inbound international travel as a result of visa policies. In addition, our ADR, Occupancy and RevPAR performance are dependent on the continued success of the Marriott, Hilton and Hyatt hotel brands.

We rely on the performance of our hotel properties to increase revenues to keep pace with inflation. Generally, our hotel management companies possess the ability to adjust room rates daily, except for group or corporate rates contractually committed to in advance, although competitive pressures may limit the ability of our operators to raise rates faster than the rate of inflation or even at the same rate. High inflation may also have an adverse effect on our operating expenses, including, but not limited to, labor, supplies, repairs and maintenance, as these costs could increase at a faster rate than any increase in our revenues. Additionally, proposed or enacted tariffs on imported goods, including construction materials, furniture, and equipment, may further exacerbate inflationary pressures on renovation costs and limit the availability of certain supplies, thereby increasing the cost and/or delaying the timing of planned capital projects. Inflation could also have an adverse effect on consumer spending, which could impact Occupancy levelsdemand at our hotel properties and, in turn, our own results of operations.

•Sold twothree hotel properties for a combined sales price of approximately $20.8$73.7 million.

At December 31, 20242025 and 2023,2024, we owned 9693 and 9796 hotel properties, respectively. Based on when a hotel property is acquired or sold, the operating results for certain hotel properties are not comparable for the years ended December 31, 20242025 and 2023.2024. The non-comparable properties include twofive hotel properties that were sold in 2025 and 2024 and one hotel property that was acquired in 2024.

Total revenues increaseddecreased $43.9$19.6 million to $1.4$1,349.9 billionmillion for the year ended December 31, 2024,2025, from $1.3$1,369.4 billionmillion for the year ended December 31, 2023.2024. The increasedecrease was athe result of a $26.6$28.3 million increasedecrease in room revenue, anoffset $11.5by a $5.1 million increase in food and beverage revenue, and a $5.8$3.6 million increase in other revenue.

Room revenue increaseddecreased $26.6$28.3 million to $1.1$1,093.3 billionmillion for the year ended December 31, 2024,2025, from $1.1$1,121.6 billionmillion for the year ended December 31, 2023.2024. The increasedecrease was the result of a $25.6$21.6 million increasedecrease in room revenue attributable to the comparable properties and a $6.7 million decrease in room revenue attributable to the non-comparable properties. The decrease in room revenue from the comparable properties was primarily due to ana increasedecrease in international, government, corporate and group travel.

Food and beverage revenue increased $11.5$5.1 million to $158.2 million for the year ended December 31, 2025, from $153.1 million for the year ended December 31, 2024, from $141.6 million for the year ended December 31, 2023.2024. The increase in food and beverage revenue was primarily due to increases in banquet and outlet revenue and banquetthe ramping up of our recently converted and cateringrenovated revenue.hotels.

Other revenue, which includes revenue derived from ancillary sources such as parking fees, resort fees, gift shop sales and other guest service fees, increased $5.8$3.6 million to $98.4 million for the year ended December 31, 2025, from $94.7 million for the year ended December 31, 2024, from $88.9 million for the year ended December 31, 2023.2024. The increase in other revenue was primarily due to an increase in gift shop sales, parking and resort fees.

Property operating expenses increased $43.3$9.6 million to $887.5 million for the year ended December 31, 2025, from $877.9 million for the year ended December 31, 2024, from $834.7 million for the year ended December 31, 2023.2024. The increase was due to a $41.0$14.9 million increase in property operating expenses attributable to the comparable properties andoffset by a $2.3$5.3 million increasedecrease in property operating expenses attributable to the non-comparable properties.

The increase in property operating expenses attributable to the comparable properties was primarily due to increases in wages and benefits, as well as increases in room expenses and food and beverage expenses,expenses and increases in other operating expenses, primarily due toincluding increases in sales and marketing,marketing utilities,expenses, utilities and administrativegeneral expenses.liability insurance coverage. This was offset by a decrease in management and franchise fee expense, which was due to lower revenues as well as recently amended management and franchise agreements.

Property tax, insurance and other expense increaseddecreased $6.8$5.7 million to $101.3 million for the year ended December 31, 2025, from $107.0 million for the year ended December 31, 2024, from $100.2 million for the year ended December 31, 2023.2024. The increasedecrease was primarily attributable to increasesa decrease in property taxinsurance assessmentspremiums and propertya insurancedecrease premiums.in real estate tax expense including the beneficial impact of successful real estate tax appeals.

General and administrative expense decreased $4.2$7.2 million to $47.6 million for the year ended December 31, 2025, from $54.8 million for the year ended December 31, 2024, from $59.0 million for the year ended December 31, 2023.2024. The decrease was primarily attributable to a decrease in non-cash compensation expenseexpense, including the impact of a $1.6 million benefit as a result of the performance unit forfeitures related to the departure of Company executives during the year ended December 31, 2025. In addition, there were certain share-based awards granted during 2021 that became fully vested during the second quarter of 2024.

Other income, net increaseddecreased $1.0$1.9 million to $3.5 million for the year ended December 31, 2025, from $5.3 million for the year ended December 31, 2024, from $4.4 million for the year ended December 31, 2023.2024. The increasedecrease was primarily attributable to anthe increasereceipt inof certain one-time COVID-19 relief awards during the year ended December 31, 2024.

Interest income decreased $2.4$3.7 million to $13.6 million for the year ended December 31, 2025, from $17.3 million for the year ended December 31, 2024, from $19.7 million for the year ended December 31, 2023.2024. The decrease was attributable to the combination of lower interest rates and lower average cash balances,balances partiallyin offset by higher interest rates.2025.

Interest expense increased $12.6$0.9 million to $112.3 million for the year ended December 31, 2025, from $111.4 million for the year ended December 31, 2024, from $98.8 million for the year ended December 31, 2023. The increase was attributable to higher base interest rates on our unhedged variable rate debt combined with an increase in the amount of our debt that was unhedged.2024. The components of our interest expense for the years ended December 31, 20242025 and 20232024 were as follows (in thousands):

Gain (Loss) Gain on Sale of Hotel Properties, net

During the year ended December 31, 2025, we sold three hotel properties for a combined sales price of $73.7 million and recorded a net loss on the sales of approximately $1.5 million. During the year ended December 31, 2024, we sold two hotel properties for a combined sales price of approximately $20.8 million and recorded a net gain on the sales of approximately $8.3 million. There were no hotels sold during the year ended December 31, 2023.

Our principal uses of capital for the year ended December 31, 20242025 were our acquisition of a fee simple interest in our Wyndham Boston Beacon Hill hotel property, the purchase of a hotel property, capital improvements and additions to hotel properties, repayment of athe portionfull ofoutstanding balance on our Revolver, repaymentspaydown of a Term Loan and a mortgage loan, the repurchase of common shares under our share repurchase programs, and distributions on common and preferred shares. Our principal sources of capital for the year ended December 31, 20242025 were cash generated from operations, the sales of twothree hotel properties, and borrowings under our Revolver and on a newterm Term Loan.loan.

The net cash flow used in investing activities totaled $275.7$57.4 million for the year ended December 31, 20242025 primarily due to a $122.8 million acquisition of a fee simple interest in our Wyndham Boston Beacon Hill hotel property, a $35.9 million acquisition of a hotel property, and $136.5$126.4 million in capital improvements and additions to our hotel properties and other assets. The net cash flow used in investing activities was partially offset by $19.5$69.0 million in net proceeds from the sales of twothree hotel properties.

The net cash flow used in investing activities totaled $134.7$275.7 million for the year ended December 31, 20232024 primarily due to $132.3a $122.8 million acquisition of a fee simple interest in our Wyndham Boston Beacon Hill hotel property, a $35.9 million acquisition of a hotel property, and $136.5 million in capital improvements and additions to our hotel properties and other assetsassets. andThe anet purchasecash depositflow used in investing activities was partially offset by $19.5 million in net proceeds from the sales of $2.4two million.hotel properties.

As of MarchJune 31,30, 2026, we owned 9392 hotel properties with approximately 20,80020,600 rooms, located in 23 states and the District of Columbia. We owned, through wholly-owned subsidiaries, a 100% interest in 9190 of our hotel properties, a 95% controlling interest in one hotel property, and a 50% non-controlling interest in an entity owning one hotel property. We consolidate our real estate interests in the 9291 hotel properties in which we hold a controlling interest, and we record the real estate interest in the one hotel property in which we hold an indirect 50% non-controlling interest using the equity method of accounting. We lease 9291 of the 9392 hotel properties to our TRSs, of which we own a controlling financial interest.

For U.S. federal income tax purposes, we elected to be taxed as a REIT commencing with our taxable year ended December 31, 2011. Substantially all of our assets and liabilities are held by, and all of our operations are conducted through our Operating Partnership. We are the sole general partner of the Operating Partnership. As of MarchJune 31,30, 2026, we owned, through a combination of direct and indirect interests, 99.5% of the units of limited partnership interest in the OP units.

•The completion of athe series2026 ofRefinancing refinancingTransactions, transactionswhich that will allowallowed us to repay the 2026 Senior Notes prior toat maturity inon July 1, 2026, including:

•The refinancing of a term loan to extend the scheduled maturity to February 2031 and upsize it to a $569.0 million delayed draw term loan, of which $225.0 million has beenwas funded in February 2026 and $344.0 million of commitments remain available to bewas drawn byon us.June 30, 2026.

•The issuance of a new $150.0 million delayed draw term loan which was fully drawn on June 30, 2026 and matures in February 2033.

Our revenues are primarily derived from the operation of hotels, including the sale of rooms, food and beverage revenue and other revenue, which consists of parking fees, resortamenity fees, gift shop sales and other guest service fees.

At MarchJune 31,30, 2026 and 2025, we owned 9392 and 95 hotel properties, respectively. Based on when a hotel property is acquired or sold, the operating results for certain hotel properties are not comparable for the three and six months ended MarchJune 31,30, 2026 and 2025. The non-comparable properties include threefour hotel properties that were sold in 2026 and 2025.

Comparison of the three months ended MarchJune 31,30, 2026 to the three months ended MarchJune 31,30, 2025

Total revenues increased $11.9$19.9 million to $340.0$383.0 million for the three months ended MarchJune 31,30, 2026 from $328.1$363.1 million for the three months ended MarchJune 31,30, 2025. The increase was the result of a $7.6$15.7 million increase in room revenue, a $2.2$1.8 million increase in food and beverage revenue and a $2.1$2.4 million increase in other revenue.

Room revenue increased $7.6$15.7 million to $275.3$311.8 million for the three months ended MarchJune 31,30, 2026 from $267.7$296.1 million for the three months ended MarchJune 31,30, 2025. The increase was the result of a $12.5$19.8 million increase in room revenue attributable to the comparable properties andpartially offset by a $4.9$4.1 million decrease in room revenue attributable to the non-comparable properties. The increase in room revenue from the comparable properties was driven by an increase in leisureleisure, corporate and corporategovernment travel, in addition to the ramp up of our recently renovated hotels.

Food and beverage revenue increased $2.2$1.8 million to $39.7$43.7 million for the three months ended MarchJune 31,30, 2026 from $37.5$41.9 million for the three months ended MarchJune 31,30, 2025. The increase in food and beverage revenue was primarily due to increases in banquet and outlet revenue.

Other revenue increased $2.1$2.4 million to $25.0$27.5 million for the three months ended MarchJune 31,30, 2026 from $23.0$25.1 million for the three months ended MarchJune 31,30, 2025. The increase in other revenue was primarily due to an increase in gift shop sales, parking and amenity fees.

Property operating expenses increased $7.9$13.0 million to $225.0$239.1 million for the three months ended MarchJune 31,30, 2026 from $217.1$226.1 million for the three months ended MarchJune 31,30, 2025. The increase was due to a $11.7$15.9 million increase in property operating expenses from the comparable properties partially offset by a $3.8$3.0 million decrease in property operating expenses from the non-comparable properties.

The increase in property operating expenses from the comparable properties was primarily due to increases in wages and benefits, as well as increases in room expenses and food expenses and increases in other operating expenses, including increases in sales and marketing, administrative and general, and utilities. In addition, there was an increase in fees and costs based on revenue, including management and franchise fees.

Depreciation and amortization expense increased $1.4$1.1 million to $47.2$47.5 million for the three months ended MarchJune 31,30, 2026 from $45.8$46.4 million for the three months ended MarchJune 31,30, 2025. The increase in depreciation and amortization expense was primarily related to our recently renovated hotels.

Property tax, insurance and other expense decreasedincreased $0.2$0.3 million to $27.0$26.8 million for the three months ended MarchJune 31,30, 2026 from $27.2$26.5 million for the three months ended MarchJune 31,30, 2025. An increase in property taxes, including due to higher property tax appeal benefits recognized in the prior period compared to the current period, was offset by lower property insurance premiums in the current period.

General and administrative expense increased $0.3$2.3 million to $13.0$13.4 million for the three months ended MarchJune 31,30, 2026 from $12.6$11.1 million for the three months ended MarchJune 31,30, 2025. The increase was primarily due to higher compensation expense compared with the prior year, which included a $1.6 million benefit from forfeited performance units related to the departure of Company executives during the three months ended June 30, 2025.

Other income, net decreased $0.1$0.2 million to $0.8$1.0 million for the three months ended MarchJune 31,30, 2026 from $0.9$1.1 million for the three months ended MarchJune 31,30, 2025.

Interest income decreased $0.3$0.1 million to $2.9 million for the three months ended March 31, 2026 from $3.3 million for the three months ended MarchJune 31,30, 2026 from $3.4 million for the three months ended June 30, 2025.

Interest expense increased $0.1$0.2 million to $27.7$28.1 million for the three months ended MarchJune 31,30, 2026 from $27.6$27.9 million for the three months ended MarchJune 31,30, 2025. The components of our interest expense for the three months ended MarchJune 31,30, 2026 and 2025 were as follows (in thousands):

During the threesix months ended MarchJune 31,30, 2026, we sold one hotel property for a sales price of $13.2 million and recorded a $3.6 million net loss on the sale of a$3.8 hotel property, due to the fair value write down related to the sale that is expected to close during the second quarter of 2026.million. During the threesix months ended MarchJune 31,30, 2025, we sold one hotel property for a sales price of $24.3 million and recorded a net gain on the sale of $1.3$0.9 million.

The following table is a reconciliation of our GAAP net (loss) income to FFO attributable to common shareholders and unitholders and Adjusted FFO attributable to common shareholders and unitholders for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

The following table is a reconciliation of our GAAP net (loss) income to EBITDA, EBITDAre and Adjusted EBITDA for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

The net cash flow provided by operating activities totaled $26.2$140.8 million and $16.3$117.6 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Our cash flows provided by operating activities generally consist of the net cash generated by our hotel operations, the cash paid for corporate expenses and other working capital changes. Refer to the "Results of Operations" section for further discussion of our operating results for the threesix months ended MarchJune 31,30, 2026 and 2025.

The net cash flow used in investing activities totaled $23.7$36.4 million for the threesix months ended MarchJune 31,30, 20252026 primarily due to $46.8$49.0 million in capital improvements and additions to our hotel properties and other assets and a purchase deposit of $1.0 million.assets. The net cash flow used in investing activities was partially offset by $24.1$12.6 million in proceeds from the sale of a hotel property.

The net cash flow usedprovided inby financing activities totaled $52.4$426.9 million for the threesix months ended MarchJune 31,30, 2026 primarily due to $5.4$494.0 million in borrowings on term loans and $23.4 million in borrowings on a mortgage loan. The net cash flow provided by financing activities was partially offset by $13.8 million in repayments of mortgage loans, $29.6$58.8 million in distributions to shareholders and unitholders, $3.1$3.5 million paid to repurchase common shares to satisfy employee tax withholding requirements, and $14.4$14.5 million in deferred financing cost payments.

The net cash flow used in financing activities totaled $53.6$91.6 million for the threesix months ended MarchJune 31,30, 2025 primarily due to $20.8$100.0 million in repayment of our Revolver, $27.2 million paid to repurchase common shares under aour share repurchase program,programs, $29.6$58.8 million in distributions to shareholders and unitholders, and $3.1$3.6 million paid to repurchase common shares to satisfy employee tax withholding requirements.requirements, and $2.1 million in deferred financing cost payments. The net cash flow used in financing activities was partially offset by $100.0 million in borrowings on a term loan.

With respect to some of our hotels that are operated under franchise agreements with major national hotel brands and for some of our hotels subject to first mortgage liens, we are obligated to maintain FF&E reserve accounts for future capital expenditures at these hotels. The amount funded into each of these reserve accounts is generally determined pursuant to the management agreements, franchise agreements and/or mortgage loan documents for each of the respective hotels, and typically ranges between 4.0% and 5.0% of the respective hotel’s total gross revenue. As of MarchJune 31,30, 2026, approximately $34.4$35.8 million was held in FF&E reserve accounts for future capital expenditures.