PROCACCIANTI HOTEL REIT, INC.

Previous wording

We were 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, 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. 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.

Current wording

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 December 31, 2025, we owned an interest in five select-service hotel properties. We elected to be taxed as, and currently operate as a REIT under the 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.

Previous wording

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 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. The TRS Lessees have entered into management agreements 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 or other affiliates or designees of TPG. We expect our property manager will operate and manage all or substantially all of our hotel properties.

Current wording

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 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. These may include TPG Hotels & Resorts, Inc., an affiliate of our Sponsor and PHA, or TPG Hotels &

Previous wording

We anticipate that we will acquire properties with property management agreements that can be terminated with little or no cost. In such cases, 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.

Current wording

We anticipate that we will acquire properties with property management agreements that can be terminated with little or no cost. We 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.

Previous wording

PHA and affiliated property managers will be 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.

Current wording

PHA and affiliated property managers are 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.

Previous wording

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

Current wording

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

Previous wording

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 K Shares and A Shares, including 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.

Current wording

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 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.

Previous wording

Since the commencement of the Public Offering and through December 31, 2024, we received approximately $42,080,120 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 $1,903,807 of K Shares, $1,303,590 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 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 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 December 31, 2025, we received approximately $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 $2,354,795 of K Shares, $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 the Public Offering. In addition, we allocated proceeds from the sale of A** **Shares in amounts that represent the difference between (i) the NAV per K-I Share and the applicable offering price of K-I Shares sold in the Public 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

We establish an Estimated Per Share 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 Shares for the K Shares, K-I Shares and K-T Shares, unless otherwise indicated):

Current wording

We intend to establish an estimated per share 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

Previous wording

As of December 31, 2024, our total outstanding indebtedness totaled $64,774,375, including mortgage notes and loans from affiliates. This amount did not exceed 300% of the value of our net assets.

Current wording

As of December 31, 2025, our total outstanding indebtedness totaled $67,408,843, including mortgage notes and loans from affiliates. This amount did not exceed 300% of the value of our net assets.

Previous wording

The determination of whether a particular property should be sold or otherwise disposed of before the end of the expected holding period for the property will be made after consideration of relevant factors (including prevailing economic conditions, and the performance or projected performance and appreciation of the property) with a view to achieving maximum capital appreciation. We cannot assure investors that this objective will be realized. In connection with our sales of properties, we may lend the purchaser all or a portion of the purchase price. In these instances, our taxable income may exceed the cash received in the sale. The terms of payment will be affected by custom in the area in which the property being sold is located and the then-prevailing economic conditions.

Current wording

The determination of whether a particular property should be sold or otherwise disposed of before the end of the expected holding period for the property will be made after consideration of relevant factors (including prevailing economic conditions, and the performance or projected performance and appreciation of the property) with a view to achieving maximum capital appreciation. We cannot assure investors that this objective will be realized. In connection with our sales of properties, we may lend the purchaser all or a

Previous wording

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-T 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-T Shares owning in the aggregate not less than 10% of the then outstanding A Shares, K-I Shares, K Shares and K-T Shares, the plan of liquidation will be submitted for consideration by proxy statement to such stockholders up to once every two years.

Current wording

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, and K 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, and K Shares owning in the aggregate not less than 10% of the then outstanding A Shares, K-I Shares, and K Shares, the plan of liquidation will be submitted for consideration by proxy statement to such stockholders up to once every two years.

Previous wording

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. As of December 31, 2020, PHA had forfeited its right to collect reimbursement for providing these administrative services provided through such date. In the year ended December 31, 2024, our Sponsor requested reimbursement for $180,839 of such administrative services provided through such date.

Current wording

S2K Financial LLC was the dealer manager for our offering and was responsible for the distribution of our common stock in our 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. As of December 31, 2020, PHA had forfeited its right to collect reimbursement for providing these administrative services provided through such date. In the year ended December 31, 2025, our Sponsor requested reimbursement for $185,318 of such administrative services provided through such date.

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 continues to lag although showing signs of potential improvement. Ongoing headwinds include 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 stifle recovery of business travel throughout 2026.

Previous wording

Our board of directors, including our independent directors, has reviewed our investment policies described in this Annual Report and our Registration Statement and determined that they are in the best interests of our stockholders because: (1) they increase the likelihood that we will be able to acquire a diversified portfolio of income producing properties, thereby reducing risk in our portfolio; (2) there are sufficient property acquisition opportunities with the attributes that we seek; (3) the executive officers, directors and affiliates of PHA have expertise with the type of real estate investments we seek; and (4) borrowings should enable us to purchase assets and earn income more quickly, thereby increasing our likelihood of generating income for our stockholders and preserving stockholder capital.

Current wording

Our board of directors, including our independent directors, has reviewed our investment policies described in this Annual Report and determined that they are in the best interests of our stockholders.

Previous wording

We elected to be taxed as, and currently qualify as, a REIT under the Code and have operated as such commencing with our taxable year ended December 31, 2018. To qualify as a REIT for tax purposes, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to our stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). We must also meet certain asset and income tests, as well as other requirements. As a REIT, we will not be subject to U.S. federal income tax to the extent we make distributions to our stockholders equal to or in excess of our taxable income. We will monitor the business and transactions that may potentially impact our REIT status. If we fail to qualify as a REIT in any taxable year following 2018, we would be subject to U.S. federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate income tax rates and generally would not be permitted to qualify for

Current wording

We elected to be taxed as, and currently qualify as, a REIT under the Code and have operated as such commencing with our taxable year ended December 31, 2018. To qualify as a REIT for tax purposes, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to our stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). We must also meet certain asset and income tests, as well as other requirements. As a REIT, we will not be subject to U.S. federal income tax to the extent we make distributions to our stockholders equal to or in excess of our taxable income. We will monitor the business and transactions that may potentially impact our REIT status. If we fail to qualify as a REIT in any taxable year following 2018, we would be subject to U.S. federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate income tax rates and generally would not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for the four taxable years following the year during which qualification is lost unless the IRS grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders. However, we are, and intend to continue to be, organized and operated in such a manner as to qualify for treatment as a REIT.

Previous wording

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, K-I Shares or K-T Shares. However, distributions will continue to accumulate pursuant to our charter.

Current wording

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 and K-I Shares. However, distributions will continue to accumulate pursuant to our charter.

Previous wording

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-T 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.

Current wording

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 and K-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.

Previous wording

We have funded 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, 2024 and 2023, refer to Note 8 – “Stockholders’ Equity” to our consolidated financial statements included herein.

Current wording

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, 2025 and 2024, refer to Note 8 – “Stockholders’ Equity” to our consolidated financial statements included herein.

Previous wording

In the years ended December 31, 2024 and 2023, we paid the following distributions, including those paid pursuant to the DRIP:

Current wording

In the years ended December 31, 2025 and 2024, we paid the following K Share, K-I Share, and OP unit distributions, including those paid pursuant to the DRIP:

Previous wording

The tax composition of our distributions declared for the years ended December 31, 2024 and 2023, was as follows:

Current wording

The tax composition of our K Share, K-I Share, and OP unit distributions declared for the years ended December 31, 2025 and 2024, was as follows:

Previous wording

Although the tax composition of such distributions may be a return of capital, distributions for the years ended December 31, 2024 and 2023 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.

Current wording

Although a portion of the tax composition of such distributions may be a return of capital, distributions for the years ended December 31, 2025 and 2024 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.

Previous wording

We paid quarterly distributions with respect to all four quarters of 2023 and 2024, 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 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 four quarters of 2024 and 2025, sourced 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.

Previous wording

We are not aware of any material trends or uncertainties, other than national 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.

Current wording

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.

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 $28,130,637 for the year ended December 31, 2024 from $26,406,988 for the year ended December 31, 2023. The $1,723,649 net increase was principally due to increases in both occupancy and ADR.

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 $28,552,605 for the year ended December 31, 2025 from $28,130,637 for the year ended December 31, 2024. The $421,968 net increase was principally due to increases in ADR.

Previous wording

The increase in rooms revenues of $454,672, or 10.71%, at the Springhill Suites Wilmington is primarily driven by an increase in occupancy compared to the prior year. Occupancy at the Springhill Suites Wilmington increased from 68.02% for the year ended December 31, 2023 to 76.12% for the year ended December 31, 2024. The ADR at the Springhill Suites Wilmington decreased from $142.46 for the year ended December 31, 2023 to $140.56 for the year ended December 31, 2024, a decrease of 1.33%.

Current wording

The decrease in rooms revenues of $205,572, or 4.37%, at the Springhill Suites Wilmington is primarily driven by a decrease in occupancy compared to the prior year. Occupancy at the Springhill Suites Wilmington decreased from 76.12% for the year ended December 31, 2024 to 72.07% for the year ended December 31,

Previous wording

The increase in rooms revenues of $413,296, or 7.44%, at the Staybridge Suites St. Petersburg is primarily driven by an increase in both occupancy and ADR compared to the prior year. Occupancy at the Staybridge Suites St. Petersburg increased from 74.70% for the year ended December 31, 2023 to 78.98% for the year ended December 31, 2024. The ADR at the Staybridge Suites St. Petersburg increased from $171.17 for the year ended December 31, 2023 to $173.48 for the year ended December 31, 2024, an increase of 1.34%.

Current wording

The decrease in rooms revenues of $441,071, or 7.39%, at the Staybridge Suites St. Petersburg is primarily driven by decreases in both occupancy and ADR compared to the prior year. Occupancy at the Staybridge Suites St. Petersburg decreased from 78.98% for the year ended December 31, 2024 to 77.40% for the year ended December 31, 2025. The ADR at the Staybridge Suites St. Petersburg decreased from $173.48 for the year ended December 31, 2024 to $164.38 for the year ended December 31, 2025, a decrease of 5.25%.

Previous wording

The decrease in rooms revenues of $40,784 or 0.58%, at the Hotel Indigo Traverse City is primarily driven by a decrease in occupancy compared to the prior year. occupancy 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. 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, an increase of 2.53%.

Current wording

The increase in rooms revenues of $295,254 or 4.23%, at the Hotel Indigo Traverse City is primarily driven by an increase in ADR compared to the prior year. Occupancy at the Hotel Indigo Traverse City decreased from 73.58% for the year ended December 31, 2024 to 71.65% for the year ended December 31, 2025. The ADR at the Hotel Indigo Traverse City increased from $242.23 for the year ended December 31, 2024 to $260.01 for the year ended December 31, 2025, an increase of 7.34%.

Previous wording

The increase in rooms revenues of $749,341, or 13.10%, at the Hilton Garden Inn Providence is primarily driven by an increase 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. 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, an increase of 4.04%.

Current wording

The increase in rooms revenues of $784,046, or 12.12%, at the Hilton Garden Inn Providence is primarily driven by increases in both occupancy and ADR compared to the prior year. Occupancy at the Hilton Garden Inn Providence increased from 64.09% for the year ended December 31, 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 $201.28 for the year ended December 31, 2024 to $208.80 for the year ended December 31, 2025, an increase of 3.74%.

Previous wording

The increase in rooms revenues of $147,124, or 3.80%, at the Cherry Tree Inn is primarily driven by an increase in occupancy compared to the prior year. Occupancy at the Cherry Tree Inn increased from 59.97% for the year ended December 31, 2023 to 63.06% for the year ended December 31, 2024. The ADR at the Cherry Tree Inn decreased from $232.56 for the year ended December 31, 2023 to $228.94 for the year ended December 31, 2024, a decrease of 1.56%.

Current wording

The decrease in rooms revenues of $10,689, or 0.27%, at the Cherry Tree Inn is primarily driven by a decrease in occupancy compared to the prior year. Occupancy at the Cherry Tree Inn decreased from 63.06% for the year ended December 31, 2024, to 59.68% for the year ended December 31, 2025. The ADR at the Cherry Tree Inn increased from $228.94 for the year ended December 31, 2024 to $241.94 for the year ended December 31, 2025, an increase of 5.68%.

Previous wording

functions at the Hilton Garden Inn Providence. These amounts are comprised of revenues realized in hotel food and beverage outlets as well as catering events.

Current wording

Food and beverage revenues increased to $2,792,525 for the year ended December 31, 2025 from $2,359,189 for the year ended December 31, 2024. The increase of $433,336 is primarily due to an increase 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.

Previous wording

Other operating revenues increased to $1,394,051 for the year ended December 31, 2024 from $1,108,881 for the year ended December 31, 2023. 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 increase from the prior year period is primarily due to increases in resort fees and parking revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023.

Current wording

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. 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 $103,283 increase from the prior year period is primarily due to increases in parking revenues for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Previous wording

Rooms expenses were $6,018,897 and $5,842,776 for the years ended December 31, 2024 and 2023, 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 and $5,842,776 represent 21.4% and 22.1% of rooms revenues for the years ended December 31, 2024 and 2023, respectively.

Current wording

Rooms expenses were $6,017,057 and $6,018,897 for the years ended December 31, 2025 and 2024, respectively. Rooms expenses are typically primarily driven by the corresponding revenue account and

Previous wording

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

Current wording

Food and beverage expenses were $1,832,610 and $1,613,437 for the years ended December 31, 2025 and 2024, respectively. Food and beverage expenses are primarily driven by the corresponding revenue account and occupancy. Food and beverage expenses represent 65.63% and 68.39% of food and beverage revenues for the years ended December 31, 2025 and 2024, respectively.

Previous wording

Other property expenses were $11,149,871 and $10,579,777 for the years ended December 31, 2024 and 2023, respectively. The $570,094 increase in other property expenses is primarily driven by the rise in franchise fees, management fees, 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.

Current wording

Other property expenses were $11,429,960 and $11,149,871 for the years ended December 31, 2025 and 2024, respectively. The $280,089 increase in other property expenses is primarily driven by the rise in franchise 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.

Previous wording

Property management fees to affiliates were $956,558 and $899,516 for the years ended December 31, 2024 and 2023, 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 $985,488 and $956,558 for the years ended December 31, 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 $1,260,039 and $1,409,838 for the years ended December 31, 2024 and 2023, 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 $1,360,323 and $1,260,039 for the years ended December 31, 2025 and 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.

Previous wording

Other fees to affiliates were $908,599 and $865,230 for the years ended December 31, 2024 and 2023, 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 $727,761 for the year ended December 31, 2024 from $718,135 for the year ended December 31, 2023. Other fees to affiliates also includes certain administrative fees charged to us by our Sponsor. Such administrative fees were $180,839 and $147,095 in the years ended December 31, 2024 and 2023, respectively.

Current wording

Other fees to affiliates were $924,067 and $908,599 for the years ended December 31, 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 $738,748 for the year ended December 31, 2025 from $727,761 for the year ended December 31, 2024. Other fees to affiliates also includes certain administrative fees charged to us by our Sponsor. Such administrative fees were $185,318 and $180,839 for the years ended December 31, 2025 and 2024, respectively.

Previous wording

Depreciation and amortization expenses were $4,289,600 and $4,104,607 for the years ended December 31, 2024 and 2023, 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 $4,009,986 and $4,289,600 for the years ended December 31, 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 $3,733,207 and $2,939,204 for the years ended December 31, 2024 and 2023, 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 notes from PHA and our Sponsor, and the amortization of deferred financing costs and debt discounts or premiums. Additionally, during the year ended December 31, 2024, we incurred $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.

Current wording

balances, accrued interest on the outstanding asset management fees, acquisition fees and promissory notes. For the year ended December 31, 2025, we recognized $256,639 of interest expense relating to the amortization of deferred financing costs, offset by $22,052 relating to the amortization of the fair value of debt premium. For the year ended December 31, 2024, we recognized $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.

Previous wording

Interest income on interest-bearing cash accounts was $274,207 and $258,725 for years ended December 31, 2024 and 2023, respectively. Interest income is presented as a reduction of the total interest expense on the consolidated income statement.

Current wording

Interest income on interest-bearing cash accounts was $219,006 and $274,207 for years ended December 31, 2025 and 2024, respectively. Interest income is presented as a reduction of the total interest expense on the consolidated income statement.