PROCACCIANTI HOTEL REIT, INC.

Previous wording

Certain statements included in this Quarterly Report that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.

Current wording

Certain statements included in this Quarterly Report that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use

Previous wording

Substantially all of our business is conducted through the Operating Partnership. We are the sole general partner of the Operating Partnership. We are externally managed by PHA pursuant to an advisory agreement by and among us, our Operating Partnership and PHA, dated August 2, 2018 (as amended, the “Advisory Agreement”). PHA is an affiliate of our sponsor, Procaccianti Companies, Inc. (“Sponsor”).

Current wording

Substantially all of our business is conducted through the Operating Partnership. We are the sole general partner of the Operating Partnership. We are externally managed by PHA pursuant to an advisory agreement by and among us,

Previous wording

We intend to make reserve allocations as necessary to aid our objective of preserving capital for investors by supporting the maintenance and viability of properties we acquire in the future. If reserves and any other available income become insufficient to cover our operating expenses and liabilities, it may be necessary to obtain additional

Current wording

We intend to make reserve allocations as necessary to aid our objective of preserving capital for investors by supporting the maintenance and viability of properties we acquire in the future. If reserves and any other available income become insufficient to cover our operating expenses and liabilities, it may be necessary to obtain additional funds by borrowing, refinancing properties or liquidating our investment in one or more properties. There is no assurance that such funds will be available or, if available, that the terms will be acceptable to us.

Previous wording

Since the commencement of the Public Offering and through June 30, 2025, we received approximately $42,487,291 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 $2,126,282 of K Shares, $1,488,284 of K-I Shares and $72,561 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 our Public Offering. In addition, we allocated proceeds from the sale of A Shares in amounts that represent the difference between (i) the applicable estimated net asset value (“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.

Current wording

Since the commencement of the Public Offering and through September 30, 2025, we received approximately $42,695,781 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 $2,239,831 of K Shares, $1,583,226 of K-I Shares and $72,561 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 our Public Offering. In addition, we allocated proceeds from the sale of A Shares in amounts that represent the difference between (i) the applicable estimated net asset value (“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.

Previous wording

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 June 30, 2025 and 2024, the Sponsor requested reimbursement for $48,647 and $47,393, respectively, of such administrative service expenses. Of these amounts, $25,536 is included in due to related parties on the condensed consolidated balance sheet as of June 30, 2025.

Current wording

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

Previous wording

We incurred operating expenses of approximately $1,249,853 during the twelve months ended June 30, 2025, which was within the 2% of average invested assets and 25% of net income limitations (as defined in our charter).

Current wording

We incurred operating expenses of approximately $1,297,411 during the twelve months ended September 30, 2025, which was within the 2% of average invested assets and 25% of net income limitations (as defined in our charter).

Previous wording

Our operations have been and are expected to continue to be impacted by economic and market conditions. Persisting market and economic challenges, such as increases in interest rates, labor shortages, supply chain disruptions and high inflation, could affect (i) the value and performance of our investments, (ii) our ability to pay future distributions, (iii) the availability or terms of financings, (iv) our ability to make scheduled principal and interest payments, and (v) our ability to refinance any outstanding debt when contractually due.

Current wording

Our operations have been and are expected to continue to be impacted by economic and market conditions. Persisting market and economic challenges, such as increases in interest rates, labor shortages, supply chain disruptions and high inflation, could affect (i) the value and performance of our investments, (ii) our ability to pay future

Previous wording

While destination and leisure travel have rebounded and remain strong, business travel has been slower to recover. Ongoing headwinds including challenging interest rates, inflation, supply chain issues, insurance premiums, and labor costs present additional challenges which we believe may continue to hinder a full recovery of business travel throughout 2025.

Current wording

While destination and leisure travel have rebounded and remain strong, business travel has been slower to recover. Ongoing headwinds including challenging interest rates, inflation, supply chain issues, insurance premiums, political discord and increased labor costs present additional challenges which we believe may continue to hinder a full recovery of business travel throughout 2025.

Previous wording

In the first half of 2025, the Transportation Security Administration (the “TSA”) experienced a significant surge in travel, with six of the top ten busiest travel days in TSA history occurring that year. Several days in 2025 broke previous TSA records for passenger volume, including May 22, May 23, June 19, June 22, June 27, and June 29. Notably, June 22, 2025, became the busiest day ever recorded, with over 3 million people screened. While overall air travel remained relatively flat compared to 2024, the year saw a mix of trends, including a decrease in international travel and a surge in domestic travel during peak periods.

Current wording

In the first half of 2025, the Transportation Security Administration (the “TSA”) experienced a significant surge in travel, with six of the top ten busiest travel days in TSA history occurring that year. Several days in 2025 broke previous TSA records for passenger volume, including May 22, May 23, June 19, June 22, June 27, and June 29. Notably, June 22, 2025, became the busiest day ever recorded, with over 3 million people screened. The government shutdown may have ripple effects throughout the broader economy and the potential impact on travel should be noted. TSA agents and air traffic controllers are considered ‘essential workers’ therefore are required to report to work despite the shutdown. However, according to the US Travel Association, there have been noticeable delays at some of the country’s major airports including Dallas Fort Worth (TX) and Hartsfield International Airport (GA). Smaller airports like San Jose International Airport (CA) and Rhode Island International Airport (RI) have fared better with security checkpoint delays and flight cancellations/delays remaining near normal during the government shutdown. As the shutdown became the longest in American history in early November, the FAA placed restrictions on the number of flights able to depart at the nation’s largest airports. These restrictions have led to flight cancellations and extensive TSA checkpoint delays which could trigger postponements of travel plans for both business and leisure travelers.

Previous wording

Inflation remains elevated and its impact on the U.S. economy and the impact of any measures that may be taken by government officials to curb inflation remain uncertain. Inflation may adversely affect financial condition and results of operations. An increase in inflation could have an adverse impact on floating rate mortgages, credit facilities, property operating expenses, and general and administrative expenses, as these costs could increase at a rate higher than revenue. Inflation could also have an adverse effect on consumer spending, which could impact our revenues.

Current wording

Inflation remains elevated and its impact on the U.S. economy and the impact of any measures that may be taken by government officials to curb inflation remains uncertain. Inflation may adversely affect financial condition and results of operations. An increase in inflation could have an adverse impact on floating rate mortgages, credit facilities, property operating expenses, and general and administrative expenses, as these costs could increase at a rate higher than revenue. Inflation could also have an adverse effect on consumer spending, which could impact our revenues.

Previous wording

Our accounting policies have been established to conform with GAAP. The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments, assumptions and estimates was included in our Annual Report.

Current wording

Our accounting policies have been established to conform with GAAP. The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that

Previous wording

The following table shows K Share distributions paid during the six months ended June 30, 2025 and 2024:

Current wording

The following table shows K Share distributions paid during the nine months ended September 30, 2025 and 2024:

Previous wording

We paid quarterly K Share distributions with respect to all quarters of 2024 and the first two quarters of 2025, 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.

Current wording

We paid quarterly K Share distributions with respect to all quarters of 2024 and the first three quarters of 2025, 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.

Previous wording

We paid accrued A Share distributions from inception through June 30, 2024, funded from additional funds from the refinance of the Hilton Garden Inn Providence Note. Unpaid distributions will continue to accumulate pursuant to our charter.

Current wording

We paid accrued A Share distributions from inception through June 30, 2024, sourced from additional proceeds from the refinance of the Hilton Garden Inn Providence Note. Unpaid distributions will continue to accumulate pursuant to our charter.

Previous wording

The discussion that follows is based on our consolidated results of operations for the three and six months ended June 30, 2025 and 2024.

Current wording

The discussion that follows is based on our consolidated results of operations for the three and nine months ended September 30, 2025 and 2024.

Previous wording

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 $13,303,498 for the six months ended June 30, 2025 from $12,380,385 for the six months ended June 30, 2024. The net increase of $923,113, or 7.46%, was largely due to increases in ADR and occupancy.

Current wording

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 $10,136,523 for the three months ended September 30, 2025 from $9,759,659 for the three months ended September 30, 2024. The net increase of $376,864, or 3.86%, was largely due to increases in ADR and occupancy.

Previous wording

The decrease in rooms revenues of $54,048, or 3.55%, at the Springhill Suites Wilmington is primarily driven by a decrease in occupancy and ADR. Occupancy at the Springhill Suites Wilmington decreased from 86.32% for the three months ended June 30, 2024, to 85.25% for the three months ended June 30, 2025. The ADR at the Springhill Suites Wilmington decreased from $161.46 for the three months ended June 30, 2024, to $157.65 for the three months ended June 30, 2025, a decrease of 2.36%.

Current wording

The increase in rooms revenues of $48,376, or 3.60%, at the Springhill Suites Wilmington is primarily driven by an increase in ADR. The ADR at the Springhill Suites Wilmington increased from $157.12 for the three months ended September 30, 2024, to $164.79 for the three months ended September 30, 2025, an increase of 4.88%. Occupancy at the Springhill Suites Wilmington decreased from 77.62% for the three months ended September 30, 2024, to 76.62% for the three months ended September 30, 2025.

Previous wording

The decrease in rooms revenues of $80,717, or 5.63%, at the Staybridge Suites St. Petersburg is driven by a decrease in ADR. The ADR at the Staybridge Suites St. Petersburg decreased from $167.93 for the three months ended June 30, 2024, to $154.57 for the three months ended June 30, 2025, a decrease of 8.00%. Occupancy at the Staybridge Suites St. Petersburg increased from 80.18% for the three months ended June 30, 2024, to 80.87% for the three months ended June 30, 2025.

Current wording

The decrease in rooms revenues of $11,501, or 1.01%, at the Staybridge Suites St. Petersburg is driven by a decrease in ADR. The ADR at the Staybridge Suites St. Petersburg decreased from $143.29 for the three months ended September 30, 2024, to $131.87 for the three months ended September 30, 2025, a decrease of 7.97 %. Occupancy at the Staybridge Suites St. Petersburg increased from 72.15% for the three months ended September 30, 2024, to 77.74% for the three months ended September 30, 2025.

Previous wording

The increase in rooms revenues of $581,668, or 32.26%, at the Hilton Garden Inn Providence is driven by an increase in occupancy and ADR. Occupancy at the Hilton Garden Inn Providence increased from 68.73% for the three months ended June 30, 2024, to 81.52% for the three months ended June 30, 2025. The occupancy increase is attributed to a strike formed by unionized nurses within close proximity to the Hilton Garden Inn Providence. The ADR at the Hilton Garden Inn Providence increased from $210.15 for the three months ended June 30, 2024, to $234.63 for the three months ended June 30, 2025, an increase of 11.65%.

Current wording

The increase in rooms revenues of $146,515, or 6.87%, at the Hilton Garden Inn Providence is driven by an increase in occupancy. Occupancy at the Hilton Garden Inn Providence increased from 73.70% for the three months ended September 30, 2024, to 83.26% for the three months ended September 30, 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 decreased from $229.48 for the three months ended September 30, 2024, to $217.09 for the three months ended September 30, 2025, a decrease of 5.40%.

Previous wording

The decrease in rooms revenues of $29,432, or 2.93%, at the Cherry Tree Inn is primarily driven by an decrease in occupancy partially offset by an increase in ADR. Occupancy at the Cherry Tree Inn decreased from 68.96% for the three months ended June 30, 2024, to 59.21% for the three months ended June 30, 2025. The ADR at the Cherry Tree Inn increased from $202.53 for the three months ended June 30, 2024, to $238.36 for the three months ended June 30, 2025, an increase of 17.69%.

Current wording

The increase in rooms revenues of $45,503, or 2.28%, at the Cherry Tree Inn is primarily driven by an increase in ADR. The ADR at the Cherry Tree Inn increased from $336.40 for the three months ended September 30, 2024, to $358.79 for the three months ended September 30, 2025, an increase of 6.66%. Occupancy at the Cherry Tree Inn decreased from 84.30% for the three months ended September 30, 2024, to 81.54% for the three months ended September 30, 2025.

Previous wording

Food and beverage revenues increased to $705,152 for the three months ended June 30, 2025, from $628,305 for the three months ended June 30, 2024. These amounts are comprised of revenues realized in hotel food and beverage outlets as well as catering events. The $76,847 increase from the prior year period is primarily due to an increase in restaurant sales at the Hotel Indigo Traverse City and an increase in occupancy at the Hilton Garden Inn Providence.

Current wording

Food and beverage revenues increased to $1,188,443 for the three months ended September 30, 2025, from $990,011 for the three months ended September 30, 2024. These amounts are comprised of revenues realized in hotel food and beverage outlets as well as catering events. The $198,432 increase from the prior year period is primarily due to an increase in restaurant sales at the Hotel Indigo Traverse City and an increase in occupancy at the Hilton Garden Inn Providence.

Previous wording

Other operating revenues increased to $378,411 for the three months ended June 30, 2025, from $365,110 for the three months ended June 30, 2024. These amounts include ancillary hotel revenues and other items primarily driven by occupancy such as telephone/internet, parking, gift shops, and other guest services. The $13,301 increase from the prior year period is primarily due to an increase in parking revenues at the Staybridge Suites St. Petersburg and at the Hilton Garden Inn Providence.

Current wording

Other operating revenues increased to $516,640 for the three months ended September 30, 2025, from $450,203 for the three months ended September 30, 2024. These amounts include ancillary hotel revenues and other items primarily driven by occupancy such as telephone/internet, parking, gift shops, and other guest services. The $66,437 increase from the prior year period is primarily due to an increase in parking revenues at the Staybridge Suites St. Petersburg and at the Hilton Garden Inn Providence.

Previous wording

Rooms expenses decreased to $1,545,287 for the three months ended June 30, 2025, from $1,568,087 for the three months ended June 30, 2024. The $22,800 net decrease in rooms expenses is primarily due to a decrease in amenities expense. Rooms expenses are typically primarily driven by the corresponding revenue account and occupancy. Rooms expenses of $1,545,287 and $1,568,087 represent 19.10% and 20.79% of rooms revenues for the three-month period ended June 30, 2025 and 2024, respectively.

Current wording

Rooms expenses decreased to $1,686,009 for the three months ended September 30, 2025, from $1,730,483 for the three months ended September 30, 2024. The $44,474 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 $1,686,009 and $1,730,483 represent 16.6% and 17.7% of rooms revenues for the three-month period ended September 30, 2025 and 2024, respectively.

Previous wording

Food and beverage expenses were $435,986 and $423,543 for the three months ended June 30, 2025 and 2024, respectively. The $12,443 increase in food and beverage expenses is primarily due to an increase in the cost of food. Food and beverage expenses are historically primarily driven by the corresponding revenue account and occupancy. Food and beverage expenses represent 61.83% and 67.41% of food and beverage revenues for the three-month period ended June 30, 2025 and 2024, respectively.

Current wording

Food and beverage expenses were $640,005 and $564,890 for the three months ended September 30, 2025 and 2024, respectively. The $75,115 increase in food and beverage expenses is primarily due to an increase in the cost of food and food preparation. Food and beverage expenses are historically primarily driven by the corresponding revenue account and occupancy. Food and beverage expenses represent 53.9% and 57.1% of food and beverage revenues for the three-month period ended September 30, 2025 and 2024, respectively.

Previous wording

Other property expenses were $2,941,912 and $2,847,263, for the three months ended June 30, 2025, and 2024, 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 $94,649 increase in other property expenses is primarily driven by an increase in franchise fees.

Current wording

Other property expenses were $3,198,274 and $3,152,258, for the three months ended September 30, 2025, and 2024, 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 $46,016 increase in other property expenses is primarily driven by an increase in franchise fees.

Previous wording

Property management fees to affiliates were $275,311 and $256,105 for the three months ended June 30, 2025 and 2024, respectively. Property management fees are property level expenses equal to 3% of the hotel properties’ gross revenues and we expect them to fluctuate accordingly.

Current wording

Property management fees to affiliates were $355,250 and $335,856 for the three months ended September 30, 2025 and 2024, respectively. Property management fees are property level expenses equal to 3% of the hotel properties’ gross revenues and we expect them to fluctuate accordingly.

Previous wording

Corporate general and administrative expenses were $350,851 and $366,800 for the three months ended June 30, 2025 and 2024, 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.

Current wording

Corporate general and administrative expenses were $327,566 and $280,147 for the three months ended September 30, 2025 and 2024, 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.

Previous wording

Other fees to affiliates were $233,100 and $225,212 for the three months ended June 30, 2025 and 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 $184,454 for the three months ended June 30, 2025, from $181,576 for the three months ended June 30, 2024. Other fees to affiliates also includes certain administrative fees charged to us by our Sponsor. Such administrative fees were $48,647 and $44,706 during the three months ended June 30, 2025 and 2024, respectively.

Current wording

Other fees to affiliates were $227,691 and $230,795 for the three months ended September 30, 2025 and 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 $184,958 for the three months ended September 30, 2025, from $182,165 for the three months ended September 30, 2024. Other fees to affiliates also includes certain administrative fees charged to us by our Sponsor. Such administrative fees were $42,733 and $48,630 during the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Depreciation and amortization expenses were $983,663 and $1,067,970 for the three months ended June 30, 2025 and 2024, respectively. These amounts include depreciation on our hotel buildings, improvements, furniture, fixtures and equipment, along with amortization of our franchise fees and certain intangibles.

Current wording

Depreciation and amortization expenses were $968,312 and $1,079,125 for the three months ended September 30, 2025 and 2024, respectively. These amounts include depreciation on our hotel buildings, improvements, furniture, fixtures and equipment, along with amortization of our franchise fees and certain intangibles.

Previous wording

Interest expense, net, was $1,001,140 and $988,461 for the three months ended June 30, 2025 and 2024, respectively. The increase of $12,679 is attributable to the refinancing of the St. Petersburg Note, the Wilmington Note, and the TCI 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 June 30, 2025, we recognized $76,321 of interest expense relating to the amortization of deferred financing costs. For the three months ended June 30, 2024, we recognized $49,267 of interest expense relating to the amortization of deferred financing costs and debt discounts, offset by $33,081 relating to the amortization of the fair value of debt premium.

Current wording

Interest expense, net, was $1,102,268 and $986,900 for the three months ended September 30, 2025 and 2024, respectively. The increase of $115,368 is attributable to the refinancing of the St. Petersburg Note, the Wilmington Note, 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 September 30, 2025, we recognized $64,363 of interest expense relating to the amortization of deferred financing costs. For the three months ended September 30, 2024, we recognized $53,170 of interest expense relating to the amortization of deferred financing costs and debt discounts, offset by $33,079 relating to the amortization of the fair value of debt premium.

Previous wording

Interest income on interest-bearing cash accounts was $48,591 and $58,378 for three months ended June 30, 2025 and 2024, respectively. Interest income is presented as a reduction of the total interest expense on the consolidated statement of operations.

Current wording

Interest income on interest-bearing cash accounts was $55,250 and $80,208 for three months ended September 30, 2025 and 2024, respectively. Interest income is presented as a reduction of the total interest expense on the consolidated statement of operations.

Previous wording

For the three months ended June 30, 2025 and 2024, we had net income of $1,413,202 and $790,241, respectively. The increase in net income of $622,961 is the result of the revenue and expense changes discussed above.

Current wording

For the three months ended September 30, 2025 and 2024, we recorded net income of $2,797,167 and $2,577,617, respectively. The increase in net income of $219,550 is the result of the revenue and expense changes discussed above.

Previous wording

Net income relating to noncontrolling interests was $219,612 and $184,249 for the three months ended June 30, 2025 and 2024, respectively. This amount includes net income or losses attributable to a third-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.

Current wording

For the three months ended September 30, 2025 and 2024, we recorded net income relating to noncontrolling interests of $121,856 and $80,429, respectively. This amount includes net income or losses attributable to a third-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.

Previous wording

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Current wording

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Previous wording

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

Current wording

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 $23,440,021 for the nine months ended September 30, 2025 from $22,140,044 for the nine months ended September 30, 2024. The net increase of $1,299,977 or 5.87%, was largely due to increases in ADR and occupancy.

Previous wording

A comparison of hotel rooms revenues for the six months ended June 30, 2025 and 2024 is as follows:

Current wording

A comparison of hotel rooms revenues for the nine months ended September 30, 2025 and 2024 is as follows:

Previous wording

The decrease in rooms revenues of $119,337, or 4.90%, at the Springhill Suites Wilmington is primarily driven by a decrease in occupancy and ADR. Occupancy at the Springhill Suites Wilmington decreased from 79.61% for the six months ended June 30, 2024, to 77.03% for the six months ended June 30, 2025. The ADR at the Springhill Suites Wilmington decreased from $140.22 for the six months ended June 30, 2024, to $138.57 for the six months ended June 30, 2025, a decrease of 1.18%.

Current wording

The decrease in rooms revenues of $70,962, or 1.88%, at the Springhill Suites Wilmington is primarily driven by a decrease in occupancy. Occupancy at the Springhill Suites Wilmington decreased from 78.94% for the nine months ended September 30, 2024, to 76.90% for the nine months ended September 30, 2025. The ADR at the Springhill Suites Wilmington increased from $145.77 for the nine months ended September 30, 2024, to $147.38 for the nine months ended September 30, 2025, an increase of 1.10%.

Previous wording

The increase in rooms revenues of $318,442, or 10.12%, at the Staybridge Suites St. Petersburg is driven by an increase in occupancy. Occupancy at the Staybridge Suites St. Petersburg increased from 76.18% for the six months ended June 30, 2024, to 86.32% for the six months ended June 30, 2025. The occupancy increase is driven by extended stay guests displaced by the 2024 hurricanes and restoration contractors who are assisting with post-hurricane efforts. The ADR at the Staybridge Suites St. Petersburg decreased from $190.78 for the six months ended June 30, 2024, to $186.43 for the six months ended June 30, 2025, a decrease of 2.28%.

Current wording

The increase in rooms revenues of $306,941, or 7.17%, at the Staybridge Suites St. Petersburg is driven by an increase in occupancy. Occupancy at the Staybridge Suites St. Petersburg increased from 74.83% for the nine months ended September 30, 2024, to 83.43% for the nine months ended September 30, 2025. The occupancy increase is driven by extended stay guests displaced by the 2024 hurricanes and restoration contractors who are assisting with post-hurricane efforts. The ADR at the Staybridge Suites St. Petersburg decreased from $175.49 for the nine months ended September 30, 2024, to $169.30 for the nine months ended September 30, 2025, a decrease of 3.52%.

Previous wording

The increase in rooms revenues of $129,476, or 5.11%, at the Hotel Indigo Traverse City is driven by an increase in ADR. The ADR at the Hotel Indigo Traverse City increased from $187.33 for the six months ended June 30, 2024 to $203.71 for the six months ended June 30, 2025, an increase of 8.74%. Occupancy at the Hotel Indigo Traverse City decreased from 69.45% for the six months ended June 30, 2024, to 67.50 % for the six months ended June 30, 2025.

Current wording

The increase in rooms revenues of $277,449, or 4.88%, at the Hotel Indigo Traverse City is driven by an increase in ADR. The ADR at the Hotel Indigo Traverse City increased from $254.79 for the nine months ended September 30, 2024 to $272.45 for the nine months ended September 30, 2025, an increase of 6.93%. Occupancy at the Hotel Indigo Traverse City decreased from 76.09% for the nine months ended September 30, 2024, to 74.88 % for the nine months ended September 30, 2025.

Previous wording

The increase in rooms revenues of $574,313, or 19.83%, at the Hilton Garden Inn Providence is driven by an increase in occupancy and ADR. Occupancy at the Hilton Garden Inn Providence increased from 62.04% for the six months ended June 30, 2024 to 67.79% for the six months ended June 30, 2025. The ADR at the Hilton Garden Inn Providence increased from $187.25 for the six months ended June 30, 2024, to $206.45 for the six months ended June 30, 2025, an increase of 10.25%.

Current wording

The increase in rooms revenues of $720,827, or 14.34%, at the Hilton Garden Inn Providence is driven by an increase in occupancy and ADR. Occupancy at the Hilton Garden Inn Providence increased from 65.95% for the nine months ended September 30, 2024 to 73.01% for the nine months ended September 30, 2025. The ADR at the Hilton Garden Inn Providence increased from $203.09 for the nine months ended September 30, 2024, to $210.54 for the nine months ended September 30, 2025, an increase of 3.66%.