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

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 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.

Previous 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 September 30, 2025, we owned an interest in five select-service hotel properties. We elected to be taxed as, and currently operate as, a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2018.

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 March 31, 2026, we owned an interest in five select-service hotel properties. We elected to be taxed as, and currently operate as, a REIT under the Code, commencing with our taxable year ended December 31, 2018.

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,

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 the Advisory Agreement. PHA is an affiliate of our Sponsor.

Previous wording

Subscription proceeds from Class K common stock (“K Shares”), Class K-I common stock (“K-I Shares”) and Class K-T common stock (“K-T Shares”) in our Private Offering and our Public Offering, which terminated in August 2021, as discussed below, have been applied to investments in hotel properties or real estate-related investments relating to hotel properties.

Current wording

Subscription proceeds from Class K common stock (“K Shares”), Class K-I common stock (“K-I Shares”), and Class K-T common stock (“K-T Shares”) in our Private Offering and our Public Offering, which terminated in August

Previous wording

We raised the equity capital for our real estate investments through a private offering (the “Private Offering”) and a public offering (the “Public Offering”, together with the Private Offering, the “Offerings”) from September 2016 through August 2021, and we have offered shares through our distribution reinvestment plan (“DRIP”) pursuant to a Registration Statement on Form S-3 (the “DRIP Offering”) since August 2021.

Current wording

We raised the equity capital for our real estate investments through the Offerings from September 2016 through August 2021, and we have offered shares through our DRIP pursuant to 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 shares of Class K common stock (“K Shares”) and Class A common stock (“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 TPG Hotel REIT Investor, LLC (“THR”), an affiliate of PHA, to fund organization and offering expenses associated with the K Shares and Units.

Current wording

The Company terminated the 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 Class A common stock (“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.

Previous 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.

Current wording

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

Previous wording

On February 27, 2020, through a separate private placement and as partial consideration for our acquisition of the Hilton Garden Inn hotel property located in Providence, Rhode Island (“Hilton Garden Inn Providence”), the Operating Partnership issued 128,124 Class K units of limited partnership interests in the Operating Partnership ("Class K OP Units") at $10.00 per Class K OP Unit.

Current wording

On February 27, 2020, through a separate private placement and as partial consideration for our acquisition of the Hilton Garden Inn Providence, the Operating Partnership issued 128,124 Class K OP Units at $10.00 per share.

Previous wording

We intend to establish an estimated per share net asset value (“Estimated Per Share NAV”) on at least an annual basis. Each Estimated Per Share NAV is determined by our board of directors after consultation with our advisor 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 seven years as of each valuation date presented below (which were the Estimated Per Shares NAVs for the K Shares, K-I Shares and K-T Shares, unless otherwise indicated):

Current wording

We intend to establish an estimated per share net asset value (“Estimated Per Share NAV”) on at least an annual basis. Each Estimated Per Share NAV is determined by our board of directors after consultation with our advisor 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 Per Shares NAVs for the K Shares, K-I Shares and K-T Shares, unless otherwise indicated):

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

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 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 March 31, 2026 and 2025, the Sponsor requested reimbursement for $60,481 and $49,348, respectively, of such administrative service expenses. Of these amounts, $49,082 is included in due to related parties on the condensed consolidated balance sheet as of March 31, 2026.

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

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 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.

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, political discord and increased 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

The U.S. lodging industry has historically exhibited a strong correlation to U.S. GDP. CBRE (U.S. Hotels State of the Union Midyear Review) states that erratic U.S. trade policy, geopolitical uncertainty and risks associated with large, ongoing deficit spending have tempered business and consumer confidence. CBRE has lowered its forecast for annual GDP growth to 1.5% from between 2% and 2.5% in January but still expects the 10-year Treasury yield to end the year near 4.3%.

Current wording

The U.S. lodging industry has historically exhibited a strong correlation to U.S. GDP. CBRE (U.S. Hotels State of the Union Midyear Review) states that erratic U.S. trade policy, geopolitical uncertainty and risks associated with large, ongoing deficit spending have tempered business and consumer confidence. According to CBRE, concerns about the economic impact of tariffs have subsided. However, new concerns about overinvestment in artificial intelligence (AI), government debt levels and a softening labor market are building. GDP growth is expected to slow to 2.0% in 2026 from 2.3% in 2025 due to less business investment and consumer spending.

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. 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.

Current wording

Transportation Security Administration (“TSA”) throughput in early 2026 is reaching record levels, with 44.3 million travelers during the end-of-year holiday season (December 19, 2025 through January 4, 2026), peaking at approximately 2.86 million on December 28, 2025. Prior government shutdowns 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 shutdowns. According to the US Travel Association, there have been noticeable delays at some of the country’s major airports while smaller airports have fared better with security checkpoint delays and flight cancellations/delays remaining near normal during the government shutdown. We are unable to reasonably predict if any future government shutdowns will occur and if they do, how long the shutdown may continue and how it may impact our business operations.

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

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 management considers critical in that they involve significant management judgments, assumptions and estimates was included in our Annual Report.

Previous wording

Our board of directors may authorize distributions in excess of those required for us to maintain REIT status as it deems appropriate. Through the first quarter of 2020, we paid regular quarterly distributions to our stockholders. Our board of directors may reconsider our current distribution policy and may take further action with respect to distributions for our common stock, and could consider eliminating, suspending, or significantly reducing distributions in the future. The timing and amount of distributions will be determined by our board of directors, in its sole discretion, and may vary from time to time. Our board of directors’ discretion will be influenced in substantial part by its obligation to cause us to comply with the REIT requirements of the Code. We can provide no assurance that we will be able to pay distributions on our K Shares, K-I Shares or K-T Shares. However, distributions will continue to accumulate pursuant to our charter.

Current wording

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

Previous wording

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

Current wording

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

Previous 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.

Current wording

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

Previous 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.

Current wording

On July 31, 2025, we paid $2,388,072 of distributions that had accrued from inception through June 30, 2024, to A Share stockholders, 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 nine months ended September 30, 2025 and 2024.

Current wording

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

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 $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.

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 decreased to $4,478,821 for the three months ended March 31, 2026 from $5,214,341 for the three months ended March 31, 2025. The net decrease of $735,520, or 14.1%, was largely due to decreases in ADR and occupancy.

Previous 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.

Current wording

The decrease in rooms revenues of $72,363 or 8.50%, at the Springhill Suites Wilmington is primarily driven by a decrease in occupancy. Occupancy at the Springhill Suites Wilmington decreased from 68.73% for the three months ended March 31, 2025, to 63.16% for the three months ended March 31, 2026. The ADR at the Springhill Suites Wilmington decreased from $114.65 for the three months ended March 31, 2025, to $114.16 for the three months ended March 31, 2026, a decrease of 0.43%.

Previous 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.

Current wording

The decrease in rooms revenues of $466,018, or 22.06%, at the Staybridge Suites St. Petersburg is driven by a decrease in both ADR and occupancy. The ADR at the Staybridge Suites St. Petersburg decreased from $214.80 for the three months ended March 31, 2025, to $195.97 for the three months ended March 31, 2026, a decrease of 8.77 %. Occupancy at the Staybridge Suites St. Petersburg decreased from 91.83% for the three months ended March 31, 2025,

Previous 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%.

Current wording

The increase in rooms revenues of $22,963, or 2.11%, at the Hilton Garden Inn Providence is driven by an increase in ADR. The ADR at the Hilton Garden Inn Providence increased from $163.38 for the three months ended March 31, 2025, to $173.14 for the three months ended March 31, 2026, an increase of 5.97%. Occupancy at the Hilton Garden Inn Providence decreased from 53.92% for the three months ended March 31, 2025, to 51.95% for the three months ended March 31, 2026.

Previous 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.

Current wording

The decrease in rooms revenues of $100,148 or 24.48%, at the Cherry Tree Inn is primarily driven by a decrease in both ADR and occupancy. The ADR at the Cherry Tree Inn decreased from $133.55 for the three months ended March 31, 2025, to $119.46 for the three months ended March 31, 2026, a decrease of 10.55%. Occupancy at the Cherry Tree Inn decreased from 44.78% for the three months ended March 31, 2025, to 37.81% for the three months ended March 31, 2026. The decrease in occupancy for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily driven by inclement weather in the three months ended March 2026, causing guest reservation cancellations.

Previous 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.

Current wording

Food and beverage revenues increased to $359,861 for the three months ended March 31, 2026, from $359,086 for the three months ended March 31, 2025. 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 $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.

Current wording

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

Previous 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.

Current wording

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

Previous 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.

Current wording

Food and beverage expenses were $358,092 and $338,392 for the three months ended March 31, 2026 and 2025, respectively. The $19,700 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 99.5% and 94.2% of food and beverage revenues for the three-month period ended March 31, 2026 and 2025, respectively.

Previous 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.

Current wording

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

Previous 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.

Current wording

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

Previous 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.

Current wording

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

Previous 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.

Current wording

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

Previous 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.

Current wording

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

Previous 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.

Current wording

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

Previous 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.

Current wording

Interest income on interest-bearing cash accounts was $38,360 and $56,274 for three months ended March 31, 2026 and 2025, 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 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.

Current wording

For the three months ended March 31, 2026 and 2025, we recorded a net loss of $1,810,747 and $933,641, respectively. The increase in net loss of $877,106 is the result of the revenue and expense changes discussed above.

Previous 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.

Current wording

For the three months ended March 31, 2026 and 2025, we recorded net income relating to noncontrolling interests of $49,154 and $252,679, 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

We paid quarterly distributions with respect to all four quarters of 2024 and the first three quarters of 2025, with operating cash flow, consistent with prior distributions. 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, K-I Share, and OP Unit distributions with respect to all four quarters of 2025 and the first quarter of 2026, with operating cash flow, consistent with prior distributions. 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

In addition, in a normal operating environment, we expect to use debt financing as a source of capital. Our charter provides that the maximum amount of our total indebtedness shall not exceed 300% of our total “net assets” (as defined in accordance with Statement of Policy Regarding Real Estate Investment Trusts revised and adopted by the North American Securities Administrators Association on May 7, 2007) as of the date of any borrowing, which is generally expected to be approximately 75% of the cost of our investments; however, we may exceed that limit if approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for exceeding such limit. This charter limitation, however, does not apply to individual real estate assets or investments. In addition, it is currently our intention to limit our aggregate borrowings to 50% of the aggregate fair market value of our assets, unless borrowing a greater amount is approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for borrowing such a greater amount. This limitation, however, will not apply to individual real estate assets or investments. At the date of acquisition of each asset, we anticipate that the cost of investment for such asset will be substantially similar to its fair market value. However, subsequent events, including changes in the fair market value of our assets, could result in our exceeding these limits.

Current wording

In addition, in a normal operating environment, we expect to use debt financing as a source of capital. Our charter provides that the maximum amount of our total indebtedness shall not exceed 300% of our total “net assets” (as defined in accordance with Statement of Policy Regarding Real Estate Investment Trusts revised and adopted by the North American Securities Administrators Association on May 7, 2007) as of the date of any borrowing, which is generally expected to be approximately 75% of the cost of our investments; however, we may exceed that limit if approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for exceeding such limit. This charter limitation, however, does not apply to individual real estate assets or investments. In addition, it is currently our intention to limit our aggregate borrowings to