Apple Hospitality REIT, Inc.

Previous wording

The Company is a Virginia corporation that has elected to be treated as a REIT for U.S. federal income tax purposes. The Company is self-advised and invests in income-producing real estate, primarily in the lodging sector, in the U.S. As of September 30, 2025, the Company owned 220 hotels with an aggregate of 29,687 guest rooms located in urban, high-end suburban and developing markets throughout 37 states and the District of Columbia, including four hotels with 367 guest rooms classified as held for sale which are expected to be sold in the fourth quarter of 2025. Substantially all of the Company’s hotels operate under Marriott or Hilton brands. The hotels are operated and managed under separate management agreements with 16 hotel management companies, none of which are affiliated with the Company. The Company’s common shares are listed on the NYSE under the ticker symbol “APLE.”

Current wording

The Company is a Virginia corporation that has elected to be treated as a REIT for U.S. federal income tax purposes. The Company is self-advised and invests in income-producing real estate, primarily in the lodging sector, in the U.S. As of March 31, 2026, the Company owned 217 hotels with an aggregate of 29,583 guest rooms located in urban, high-end suburban and developing markets throughout 37 states and the District of Columbia, including one hotel with 124 guest rooms classified as held for sale, which was sold in April 2026. Substantially all of the Company’s hotels operate under Marriott or Hilton brands. The hotels are operated and managed under separate management agreements with 15 hotel management companies, none of which are affiliated with the Company. The Company’s common shares are listed on the NYSE under the ticker symbol “APLE.”

Previous wording

The Company continually monitors market conditions and attempts to maximize shareholder value by investing in properties that it believes provide superior value over the long term. Consistent with this strategy and the Company’s focus on investing in rooms-focused hotels, during the nine months ended September 30, 2025, the Company acquired one hotel, an existing 126-guest-room Homewood Suites in Tampa, Florida, for a gross purchase price of approximately $18.8 million. As of September 30, 2025, the Company had outstanding contracts with unrelated parties for the potential purchase of two hotels, consisting of one hotel under development in Nashville, Tennessee (the “Nashville Motto”) and one hotel under development in Anchorage, Alaska (the “Anchorage AC Hotel”), for a total combined purchase price of approximately $163.7 million. The Nashville Motto is currently planned to be completed and opened for business in December 2025, at which time the Company expects to complete the purchase of this hotel. The Anchorage AC Hotel is currently planned to be completed and opened for business in the fourth quarter of 2027, at which time the Company expects to complete the purchase of this hotel. Although the Company is working towards acquiring these hotels, there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closings on these hotels will occur under their respective outstanding purchase contracts.

Current wording

The Company continually monitors market conditions and attempts to maximize shareholder value by investing in properties that it believes provide superior value over the long term. Consistent with this strategy and the Company’s focus on investing in rooms-focused hotels, as of March 31, 2026, the Company had one outstanding contract, which was entered into during the third quarter of 2025, for the potential purchase of a hotel in Anchorage, Alaska for an expected fixed purchase price of approximately $65.5 million. The hotel is under development as a 160-guest-room AC Hotel and is currently planned to be completed and opened for business in the fourth quarter of 2027. As of March 31, 2026, a $2.0 million contract deposit (refundable if the seller does not meet its obligations under the contract) had been paid. If the closing occurs, the Company plans to utilize its available cash or borrowings, including borrowings under its unsecured credit facilities available at closing, to purchase the hotel under contract. Although the Company is working towards acquiring this hotel, there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closing on this hotel will occur under the outstanding purchase contract. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the purchase contract and acquire this hotel. As this hotel is under development, at this time, the seller has not met all of the conditions to closing.

Previous wording

During the third quarter of 2025, the Company entered into a contract to develop a dual-branded property which will include an AC Hotel and a Residence Inn in Las Vegas, Nevada on land the Company owns that is adjacent to its SpringHill Suites. The Company expects to spend a total of approximately $143.7 million to develop the hotels, which are currently planned to be completed and opened for business in the second quarter of 2028.

Current wording

During the third quarter of 2025, the Company entered into a fixed-price contract with a third party to develop a dual-branded property, consisting of an AC Hotel and a Residence Inn, on Company-owned land in Las Vegas, Nevada, adjacent to its existing SpringHill Suites. The Company expects to spend a total of approximately $143.7 million to develop the hotels, which are currently planned to be completed and opened for business in the second quarter of 2028. Upon completion, the AC Hotel and Residence Inn are expected to contain approximately 237 and 160 guest rooms, respectively.

Previous wording

For its existing portfolio, the Company monitors each property’s profitability, market conditions and capital requirements and attempts to maximize shareholder value by disposing of properties when it believes that superior value can be provided from the sale of the property. As a result, during the nine months ended September 30, 2025, the Company sold three hotels to three unrelated parties for a combined gross sales price of approximately $37.0 million, resulting in a combined gain on the sales of approximately $7.9 million, net of transaction costs. The Company used a portion of the net proceeds from the sale of one of the hotels to complete a 1031 Exchange for the acquisition of the Homewood Suites in Tampa, Florida, which was completed in June 2025.

Current wording

For its existing portfolio, the Company monitors each property’s profitability, market conditions and capital requirements and attempts to maximize shareholder value by disposing of properties when it believes that superior value can be provided from the sale of the property. As a result, during the three months ended March 31, 2026, the Company entered into a purchase and sale agreement with an unrelated party for the sale of one hotel for a gross sales price of $8.7 million. Since the buyer under the contract completed its due diligence and made a non-refundable deposit, as of March 31, 2026, the Company classified this hotel as assets held for sale on its consolidated balance sheet at its carrying value (which is less than the contract price, net of costs to sell). The Company completed the sale of the hotel in April 2026.

Previous wording

See Note 2 titled “Investment in Real Estate,” Note 3 titled “Assets Held for Sale and Dispositions” and Note 10 titled “Contract Commitments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information concerning these transactions.

Current wording

See Note 3 titled “Assets Held for Sale and Dispositions” and Note 10 titled “Contract Commitments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information concerning these transactions.

Previous wording

As of September 30, 2025, the New York Property was included in the Company’s hotel and guest room counts. On April 4, 2025, the Company recovered possession of this property and reinstated operations of the hotel's 209 guest rooms through a third-party manager engaged by the Company. From May 2023 through March 2025, the Company classified the property as a “non-hotel property” and excluded it from hotel and guest room counts, as it was leased to a third-party hotel operator. Following the third-party hotel operator's failure to make lease payments, the Company commenced legal proceedings in 2024 to remove the third-party hotel operator from possession of the property. In April 2025, the Company and the third-party hotel operator entered into an agreement to mutually release all claims, to terminate the lease and for the third-party hotel operator to voluntarily surrender possession of the property back to the Company.

Current wording

As of March 31, 2026, the Company’s independent boutique hotel in New York, New York (the “New York Property”) was included in the Company’s hotel and guest room counts. On April 4, 2025, the Company recovered possession of this property and reinstated operations of the hotel's 209 guest rooms through a third-party manager engaged by the Company. From May 2023 through March 2025, the Company classified the property as a “non-hotel property” and excluded it from hotel and guest room counts, as it was leased to a third-party hotel operator. Following the third-party hotel operator's failure to make lease payments, the Company commenced legal proceedings in 2024 to remove the third-party hotel operator from possession of the property. In April 2025, the Company and the third-party hotel operator entered into an agreement to mutually release all claims, to terminate the lease and for the third-party hotel operator to voluntarily surrender possession of the property back to the Company.

Previous wording

As of September 30, 2025, the Company owned 220 hotels, including four hotels classified as held for sale, with a total of 29,687 guest rooms as compared to 224 hotels with a total of 30,068 guest rooms as of September 30, 2024. Results of operations are included only for the period of ownership for hotels acquired or disposed of during the current reporting period and prior year. During the nine months ended September 30, 2025, the Company acquired one existing hotel on June 10, 2025 and sold three properties, including one property sold on February 12, 2025, one sold on March 19, 2025, and one sold on August 18, 2025. On April 4, 2025, the Company recovered possession from a third-party hotel operator and reinstated operations of its 209-guest-room New York Property through a third-party manager engaged by the Company. During the nine months ended September 30, 2024, the Company acquired two properties, including one existing hotel acquired on March 25, 2024 and one hotel acquired upon the completion of development on June 20, 2024. During the nine months ended September 30, 2024, the Company sold three properties, two on February 9, 2024 and one on May 21, 2024.

Current wording

As of March 31, 2026, the Company owned 217 hotels, including one hotel classified as held for sale, with a total of 29,583 guest rooms as compared to 219 hotels with a total of 29,558 guest rooms as of March 31, 2025. Results of operations are included only for the period of ownership for hotels acquired or disposed of during the current reporting period and the prior year. During the three months ended March 31, 2026, the Company did not acquire or dispose of any properties. During the three months ended March 31, 2025, the Company did not acquire any properties, but sold two properties, including one property sold on February 12, 2025 and one property sold on March 19, 2025. On April 4, 2025, the Company recovered possession from a third-party hotel operator and reinstated operations of its 209-guest-room New York Property through a third-party manager engaged by the Company.

Previous wording

The Company continuously evaluates the performance of each property and may transfer management responsibilities to a different third-party manager to improve operational efficiency and maximize asset value. In markets or regions where the Company owns multiple properties, it may consolidate hotels under specific third-party managers to leverage regional expertise, gain operating efficiencies, and enhance overall portfolio performance.

Current wording

The Company continually evaluates the performance of each property and may transfer management responsibilities to a different third-party manager to improve operational efficiency and maximize asset value. In markets or regions where the Company owns multiple properties, it may consolidate hotels under specific third-party managers to leverage regional expertise, gain operating efficiencies, and enhance overall portfolio performance. During the three months ended March 31, 2026, the Company transitioned the remaining nine hotels managed by affiliates of Marriott, as of December 31, 2025, to separate management companies that are not affiliated with Marriott, Hilton or Hyatt. In 2025, the Company transitioned the management responsibilities for nine other hotels to different third-party management companies with which it already had existing management agreements for other properties, a portion of which involved transitions from hotels previously managed by affiliates of Marriott to management companies unaffiliated with Marriott, Hilton, or Hyatt.

Previous wording

The following table reflects certain operating statistics for the Company’s 215 hotels owned and held for use as of September 30, 2025, and excludes the New York Property (“Comparable Hotels”). The Company defines metrics from Comparable Hotels as results generated by the 215 hotels owned and held for use as of the end of the reporting period, excluding the New York Property. For the hotels acquired during the reporting periods shown, the Company has included, as applicable, results of those hotels for periods prior to the Company’s ownership using information provided by the properties’ prior owners at the time of acquisition and not adjusted by the Company. For dispositions, assets held for sale and the New York Property, results have been excluded for the Company’s period of ownership.

Current wording

The following table reflects certain operating statistics for the Company’s 216 hotels owned and held for use as of March 31, 2026 (“Comparable Hotels”). The Company defines metrics from Comparable Hotels as results generated by the 216 hotels owned and held for use as of the end of the reporting period. For the hotels acquired during the reporting periods shown, the Company has included, as applicable, results of those hotels for periods prior to the Company’s ownership using information provided by the properties’ prior owners at the time of acquisition and not adjusted by the Company. For dispositions and assets held for sale, results have been excluded for the Company’s period of ownership.

Previous wording

The following table reflects certain operating statistics for the 212 hotels owned and held for use by the Company as of January 1, 2024 and during the entirety of the reporting periods being compared, excluding the New York Property (“Same Store Hotels”).

Current wording

The following table reflects certain operating statistics for the 213 hotels owned and held for use by the Company as of January 1, 2025 and during the entirety of the reporting periods being compared, excluding the New York Property (“Same Store Hotels”).

Previous wording

As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality. During the first nine months of 2025, demand was modestly impacted across the portfolio by weather related travel disruption in January and February, reduced government travel and the impact of heightened macroeconomic uncertainty in the U.S. As a result, the Company’s Comparable Hotels and Same Store Hotels revenue and operating results generally decreased slightly during the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024. The Company expects similar results for the remainder of the year and expects RevPAR for the full year of 2025 to be slightly lower than 2024, assuming the current macroeconomic environment continues.

Current wording

As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality. The Company’s Comparable Hotels and Same Store Hotels revenue and operating results increased modestly for the three months ended March 31, 2026, compared to the same period in 2025, reflecting improvement in demand beyond the impact of prior-year headwinds, including reduced government travel following the current administration's efforts to curtail government spending and broader macroeconomic uncertainty in the U.S. The Company expects RevPAR to improve seasonally over the remainder of the year. Prior expectations were for full-year 2026 RevPAR to be in line with 2025, consistent with broader industry chain-scale outlooks; however, based on performance through the first quarter, the Company currently expects full-year 2026 RevPAR to modestly exceed 2025 levels, assuming no material changes in the macroeconomic environment.

Previous wording

The Company’s principal source of revenue is hotel revenue consisting of room, food and beverage, and other related revenue. For the three months ended September 30, 2025 and 2024, the Company had total revenue of $373.9 million and $378.8 million, respectively. For the nine months ended September 30, 2025 and 2024, the Company had total revenue of $1.1 billion in each period. For the three months ended September 30, 2025 and 2024, respectively, Comparable Hotels achieved combined average occupancy of 76.2% and 77.1%, ADR of $162.68 and $163.71, and RevPAR of $124.01 and $126.29. For the nine months ended September 30, 2025 and 2024, respectively, Comparable Hotels achieved combined average occupancy of 75.4% and 76.5%, ADR of $161.35 and $161.20, and RevPAR of $121.67 and $123.34. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR.

Current wording

The Company’s principal source of revenue is hotel revenue consisting of room, food and beverage, and other related revenue. For the three months ended March 31, 2026 and 2025, the Company had total revenue of $337.7 million and $327.7 million, respectively. For the three months ended March 31, 2026 and 2025, respectively, Comparable Hotels achieved combined average occupancy of 72.8% and 71.3%, ADR of $157.35 and $157.26, and RevPAR of $114.61 and $112.14. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR.

Previous wording

Hotel operating expense consists of direct room operating expense, hotel administrative expense, sales and marketing expense, utilities expense, repair and maintenance expense, franchise fees and management fees. Hotel operating expense for the three months ended September 30, 2025 and 2024 totaled $222.0 million and $219.9 million, respectively, or 59.4% and 58.1% of total revenue for the respective periods. For the nine months ended September 30, 2025 and 2024, hotel operating expense totaled $642.4 million and $633.5 million, respectively, or 59.2% and 57.7% of total revenue for the respective periods. The increases in hotel operating expense for the three and nine months ended September 30, 2025, as compared to the same periods in 2024, were primarily driven by increased labor costs, utility costs, repair and maintenance costs and general inflationary pressures throughout the overall economy. The Company continues to feel upward pressure on total payroll costs given a competitive labor market where the demand for strong hotel talent remains high. However, the rate of wage growth has slowed, and management companies have made progress in reducing their use of contract labor. For the remainder of 2025, the Company anticipates a similar operating expense environment. The Company continues to monitor its management companies’ efforts to realize operational efficiencies and mitigate the impact of cost pressures resulting from inflation and a tight labor market. The Company will continue to support its management companies to implement adjustments to the hotel operating model in response to continued changes in the operating environment and guest preferences, including their efforts to maximize operational efficiency.

Current wording

Hotel operating expense consists of direct room operating expense, hotel administrative expense, sales and marketing expense, utilities expense, repair and maintenance expense, franchise fees and management fees. For the three months ended March 31, 2026 and 2025, hotel operating expense totaled $206.9 million and $199.9 million, respectively, or 61.3% and 61.0% of total revenue for the respective periods. The increase in hotel operating expense for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily driven by higher occupancy levels, which resulted in increased variable operating expenses, including labor, utilities and administrative costs. While these costs naturally increase with improved operating performance, such expenses have been well controlled by the Company relative to the additional occupancy-driven activity. Additionally, ongoing inflationary pressures across the broader economy contributed to the increase in operational costs for the period. While payroll costs remain elevated due to a competitive labor market, wage growth has moderated, and management companies have continued to reduce their use of contract labor. For the remainder of 2026, the Company anticipates a similar operating expense environment. The Company continues to monitor its management companies’ efforts to realize operational efficiencies and mitigate the impact of cost pressures resulting from inflation and a tight labor market. The Company will continue to support its management companies to implement adjustments to the hotel operating model in response to continued changes in the operating environment and guest preferences, including their efforts to maximize operational efficiency.

Previous wording

Property taxes, insurance and other expense for the three months ended September 30, 2025 and 2024 was $22.4 million and $20.9 million, respectively, or 6.0% and 5.5% of total revenue for the respective periods. For the nine months ended September 30, 2025 and 2024, property taxes, insurance and other expense totaled $68.7 million and $63.9 million, respectively, or 6.3% and 5.8% of total revenue for the respective periods. The increases in property taxes, insurance and other expense for the three and nine months ended September 30, 2025, as compared to the same periods in 2024, were primarily due to increases in property taxes in certain markets and liability insurance premiums, partially offset by decreases in property insurance premiums. The Company will continue to proactively pursue tax assessment appeals in certain jurisdictions in an attempt to minimize tax increases, as warranted.

Current wording

Property taxes, insurance and other expense for the three months ended March 31, 2026 and 2025 totaled $22.5 million and $23.4 million, respectively, or 6.6% and 7.1% of total revenue for the respective periods. The decrease in property taxes, insurance and other expense for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to decreases in property insurance premiums and successful appeals of real estate tax assessments from prior periods in certain jurisdictions. The Company will continue to proactively pursue tax assessment appeals in certain jurisdictions in an attempt to minimize tax increases, as warranted.

Previous wording

General and administrative expense for the three months ended September 30, 2025 and 2024 was $7.5 million and $9.2 million, respectively, or 2.0% and 2.4% of total revenue for the respective periods. For the nine months ended September 30, 2025 and 2024, general and administrative expense was $24.8 million and $30.8 million, respectively, or 2.3% and 2.8% of total revenue for the respective periods. The principal components of general and administrative expense are payroll and related benefit costs, executive incentive compensation, legal fees, accounting fees and reporting expenses. The decreases in general and administrative expense for the three and nine months ended September 30, 2025, as compared to the same periods in 2024, were primarily due to decreased accruals for anticipated performance under the Company’s executive incentive compensation plan.

Current wording

General and administrative expense for the three months ended March 31, 2026 and 2025 was $10.8 million and $9.2 million, respectively, or 3.2% and 2.8% of total revenue for the respective periods. The principal components of general and administrative expense are payroll and related benefit costs, executive incentive compensation, legal fees, accounting fees and reporting expenses. The increase in general and administrative expense for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to increased accruals for anticipated performance under the Company’s executive incentive compensation plan.

Previous wording

Depreciation and amortization expense for the three months ended September 30, 2025 and 2024 was $48.1 million in each period. For the nine months ended September 30, 2025 and 2024, depreciation and amortization expense was $144.1 million and $142.7 million, respectively. Depreciation and amortization expense primarily represents expense of the Company’s hotel buildings and related improvements, and associated personal property (furniture, fixtures, and equipment) for the respective periods owned. For the three months ended September 30, 2025, depreciation and amortization expense was relatively unchanged compared to the same period in 2024. The increase of approximately $1.4 million for the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to the capitalization of newly acquired hotels in 2024 and the first three quarters of 2025, which had higher purchase prices compared to the carrying values of the hotels disposed of during the same period, as well as renovations completed throughout 2024 and the first three quarters of 2025. Additionally, the timing of the acquisitions, disposals and renovations impacted depreciation, as assets acquired or placed into service earlier in the year contributed more to each respective year’s depreciation than those acquired or renovated later or disposed of earlier.

Current wording

Depreciation and amortization expense for the three months ended March 31, 2026 and 2025 was $49.5 million and $47.9 million, respectively. Depreciation and amortization expense primarily represents expense of the Company’s hotel buildings and related improvements, and associated personal property (furniture, fixtures, and equipment) for the respective periods owned. For the three months ended March 31, 2026, depreciation and amortization expense slightly increased by approximately $1.6 million as compared to the same period in 2025, primarily due to the acquisitions of two hotels in the second and fourth quarters of 2025, which had higher purchase prices compared to the carrying values of the seven hotels disposed of in 2025, as well as renovations completed throughout 2025 and the first quarter of 2026.

Previous wording

Interest and other expense, net for the three months ended September 30, 2025 and 2024 was $21.4 million and $21.2 million, respectively. For the nine months ended September 30, 2025 and 2024, interest and other expense, net was $61.7 million and $57.9 million, respectively. Interest and other expense, net for the nine months ended September 30, 2025 and 2024 is net of approximately $1.0 million and $0.7 million, respectively, of interest capitalized associated with renovation projects.

Current wording

Interest and other expense, net, for the three months ended March 31, 2026 and 2025 was $20.1 million and $19.4 million, respectively. Interest and other expense, net, for the three months ended March 31, 2026 and 2025 is net of approximately $0.8 million, in each respective period, of interest capitalized associated with renovation projects.

Previous wording

Interest expense related to the Company’s debt instruments for the three and nine months ended September 30, 2025 increased compared to the same periods of 2024 as a result of higher average borrowings associated with variable-rate debt and higher average interest rates on the Company's variable-rate debt. The Company anticipates interest expense for the remainder of 2025 will be relatively similar to the interest expense for the same period of 2024 as a result of increased borrowings being offset by lower average interest rates. The proportion of variable-rate debt that is fixed by interest rate swaps was lower over the nine months ended September 30, 2025 compared to the same period of 2024, as the Company had three interest rate swaps in effect on $150.0 million of variable-rate debt mature during the first nine months of 2025 and six interest rate swaps in effect on $285.0 million of variable-rate debt mature during 2024. However, this was partially offset as the Company entered into two new interest rate swaps in effect on $100.0 million of variable-rate debt during the third quarter of 2025 and four new interest rate swaps in effect on $200.0 million of variable-rate debt during 2024, but at higher fixed rates than the swap agreements that expired. If the Company continues to replace expiring interest rate swaps in the current interest rate environment with new agreements, the Company anticipates those new agreements to be at higher rates than the expiring swap agreements.

Current wording

Interest expense related to the Company’s debt instruments for the three months ended March 31, 2026 increased slightly compared to the same period of 2025 as a result of higher average borrowings associated with variable-rate debt, partially offset by lower average interest rates on the Company's fixed and variable-rate debt and lower average borrowings associated with fixed-rate debt. The Company anticipates interest expense for the remainder of 2026 will be relatively similar to the interest expense for the same period of 2025 as a result of increased borrowings being offset by lower average interest rates. The proportion of variable-rate debt that is fixed by interest rate swaps was lower over the three months ended March 31, 2026 compared to the same period of 2025, as the Company had three interest rate swaps in effect on $150.0 million of variable-rate debt mature during 2025. However, this was partially offset as the Company entered into two new interest rate swaps in effect on $100.0 million of variable-rate debt during the third quarter of 2025, but at higher fixed rates than the swap agreements that expired. If the Company continues to replace expiring interest rate swaps in the current interest rate environment with new agreements, the Company anticipates those new agreements to be at higher rates than the expiring swap agreements.

Previous wording

The Company calculates MFFO by further adjusting FFO for the exclusion of amortization of finance ground lease assets, amortization of favorable and unfavorable operating leases, net and non-cash straight-line operating ground lease expense, as these expenses do not reflect the underlying performance of the related hotels. The Company presents MFFO when evaluating its performance because it believes that it provides further useful supplemental information to investors regarding its ongoing operating performance. In addition, MFFO is a component of a key compensation measure of operational performance within the 2025 Incentive Plan.

Current wording

The Company calculates MFFO by further adjusting FFO for the exclusion of amortization of finance ground lease assets, amortization of favorable and unfavorable operating leases, net, non-cash straight-line operating ground lease expense and share-based compensation expense, as these expenses do not reflect the underlying performance of the related hotels. The Company presents MFFO when evaluating its performance because it believes that it provides further useful supplemental information to investors regarding its ongoing operating performance. In addition, MFFO is a component of a key compensation measure of operational performance within the 2026 Incentive Plan.

Previous wording

The following table reconciles the Company’s GAAP net income to FFO and MFFO for the three and nine months ended September 30, 2025 and 2024 (in thousands):

Current wording

The following table reconciles the Company’s GAAP net income to FFO and MFFO for the three months ended March 31, 2026 and 2025 (in thousands):

Previous wording

The Company also considers the exclusion of non-cash straight-line operating ground lease expense from EBITDAre useful, as this expense does not reflect the underlying performance of the related hotels (Adjusted EBITDAre).

Current wording

The Company also considers the exclusion of non-cash straight-line operating ground lease expense and share-based compensation expense from EBITDAre useful, as these expenses do not reflect the underlying performance of the related hotels (Adjusted EBITDAre).

Previous wording

The Company further excludes actual corporate-level general and administrative expense for the Company as well as Adjusted EBITDAre from the non-hotel property (the New York Property) from Adjusted EBITDAre (Adjusted Hotel EBITDA) to isolate property-level operational performance over which the Company’s hotel operators have direct control. The Company believes Adjusted Hotel EBITDA provides useful supplemental information to investors regarding operating performance and it is used by management to measure the performance of the Company’s hotels and effectiveness of the operators of the hotels. In addition, Adjusted EBITDAre and Adjusted Hotel EBITDA are both components of key compensation measures of operational performance within the 2025 Incentive Plan.

Current wording

The Company further excludes corporate expense, defined as actual corporate-level general and administrative expense, excluding share-based compensation expense, for the Company as well as Adjusted EBITDAre from the non-hotel property (the New York Property) from Adjusted EBITDAre (Adjusted Hotel EBITDA) to isolate property-level operational performance over which the Company’s hotel operators have direct control. The Company believes Adjusted Hotel EBITDA provides useful supplemental information to investors regarding operating performance and it is used by management to measure the performance of the Company’s hotels and effectiveness of the operators of the hotels. In addition, Adjusted EBITDAre and Adjusted Hotel EBITDA are both components of key compensation measures of operational performance within the 2026 Incentive Plan.

Previous wording

The following table reconciles the Company’s GAAP net income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA for the three and nine months ended September 30, 2025 and 2024 (in thousands):

Current wording

The following table reconciles the Company’s GAAP net income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA for the three months ended March 31, 2026 and 2025 (in thousands):

Previous wording

As of September 30, 2025, the Company owned 220 hotels with an aggregate of 29,687 guest rooms located in 37 states and the District of Columbia, including four hotels with 367 guest rooms classified as held for sale which are expected to be sold in the fourth quarter of 2025. The following tables summarize the number of hotels and guest rooms by brand and by state:

Current wording

As of March 31, 2026, the Company owned 217 hotels with an aggregate of 29,583 guest rooms located in 37 states and the District of Columbia, including one hotel with 124 guest rooms classified as held for sale which was sold in April 2026. The following tables summarize the number of hotels and guest rooms by brand and by state:

Previous wording

The following table summarizes the location, brand, manager, date acquired or completed and number of guest rooms for each of the 220 hotels that the Company owned as of September 30, 2025. As noted below, as of September 30, 2025, 14 of the Company’s properties are subject to ground leases and 12 of its hotels are encumbered by mortgages securing associated loan obligations.

Current wording

The following table summarizes the location, brand, manager, date acquired or completed and number of guest rooms for each of the 217 hotels that the Company owned as of March 31, 2026. As noted below, as of March 31, 2026, 14 of the Company’s properties are subject to ground leases and 10 of its hotels are encumbered by mortgage debt.

Previous wording

Property is subject to ground lease.

Current wording

Property is subject to a ground lease.

Previous wording

Hotel is encumbered by mortgage.

Current wording

Hotel is encumbered by a mortgage.

Previous wording

Hotels are classified as held for sale as of September 30, 2025, and are expected to be sold in the fourth quarter of 2025.

Current wording

Hotel is classified as held for sale as of March 31, 2026, and was sold in April 2026.

Previous wording

The Company’s principal short-term sources of liquidity are the operating cash flows generated from the Company’s properties and availability under its Revolving Credit Facility. Over the long term, the Company may receive proceeds from strategic additional secured and unsecured debt financing, dispositions of its hotel properties and offerings of the Company’s common shares, including pursuant to the Company’s current at-the-market offering program. Macroeconomic pressures, including inflation, increases in interest rates and general market uncertainty, could impact the Company’s ability to raise debt or equity capital to fund long-term liquidity requirements in a cost-effective manner.

Current wording

The Company’s principal short-term sources of liquidity are the operating cash flows generated from the Company’s properties and availability under its Revolving Credit Facility. Over the long term, the Company may receive proceeds from strategic additional secured and unsecured debt financing, dispositions of its hotel properties and offerings of the Company’s common shares, including pursuant to the ATM Program. Macroeconomic pressures, including inflation, increases in interest rates and general market uncertainty, could impact the Company’s ability to raise debt or equity capital to fund long-term liquidity requirements in a cost-effective manner.

Previous wording

As of September 30, 2025, the Company had $1.5 billion of total outstanding debt consisting of $215.2 million of mortgage debt and $1.3 billion outstanding under its unsecured credit facilities, excluding unamortized debt issuance costs and fair value adjustments. As of September 30, 2025, the Company had available corporate cash on hand of approximately $50.3 million, and unused borrowing capacity under its Revolving Credit Facility of approximately $647.9 million after taking a $2.1 million letter of credit into account. On July 24, 2025, the Company repaid all amounts outstanding under the $225 million term loan facility and entered into a new term loan facility with a principal amount of $385 million and a maturity date of July 31, 2030. Proceeds from the $385 million term loan facility were also used to repay the balance outstanding under the Revolving Credit Facility.

Current wording

As of March 31, 2026, the Company had $1.6 billion of total outstanding debt consisting of $182.7 million of mortgage debt and $1.4 billion outstanding under its unsecured credit facilities, excluding unamortized debt issuance costs. As of March 31, 2026, the Company had available corporate cash on hand of approximately $7.8 million, and unused borrowing capacity under its Revolving Credit Facility of approximately $558.8 million after taking into account a $2.1 million letter of credit.

Previous wording

The credit agreements governing the unsecured credit facilities contain customary affirmative and negative covenants and events of default. The credit agreements require that the Company comply with various covenants, which include, among others, a minimum tangible net worth, maximum debt limits, minimum interest and fixed charge coverage ratios, and restrictions on certain investments. The Company was in compliance with the applicable covenants as of September 30, 2025.

Current wording

The credit agreements governing the unsecured credit facilities contain customary affirmative and negative covenants and events of default. The covenants include, among others, a minimum tangible net worth, maximum debt limits, minimum interest and fixed charge coverage ratios, and restrictions on certain investments. The Company was in compliance with the applicable covenants as of March 31, 2026.

Previous wording

On February 23, 2024, the Company entered into an equity distribution agreement pursuant to which the Company may sell, from time to time, up to an aggregate of $500 million of its common shares under the ATM Program. No common shares were sold under the Company’s ATM Program during the three and nine months ended September 30, 2025 or during the year ended December 31, 2024. The Company plans to use future net proceeds from the sale of shares under the ATM Program, or a similar successor program, for general corporate purposes, which may include, among other things, acquisitions of additional properties, the repayment of outstanding indebtedness, capital expenditures, improvement of properties in its portfolio and working capital. The Company may also use the future net proceeds to acquire another REIT or other company that invests in income-producing properties. Future offerings will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company’s common shares and opportunities for uses of any proceeds.

Current wording

On February 23, 2024, the Company entered into an equity distribution agreement pursuant to which the Company may sell, from time to time, up to an aggregate of $500 million of its common shares under the ATM Program. No common shares were sold under the Company’s ATM Program during the three months ended March 31, 2026 or during the year ended December 31, 2025. As of March 31, 2026, $500 million remained available for issuance under the ATM Program. The Company plans to use future net proceeds from the sale of shares under the ATM Program, or a similar successor program, for general corporate purposes, which may include, among other things, acquisitions of additional properties, the repayment of outstanding indebtedness, capital expenditures, improvement of properties in its portfolio and working capital. The Company may also use the future net proceeds to acquire another REIT or other company that invests in income-producing properties. Future offerings will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company’s common shares and opportunities for uses of any proceeds.

Previous wording

The Company generally must distribute annually at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, in order to maintain its REIT status. On September 18, 2025, the Company declared a monthly cash distribution of $0.08 per common share, paid on October 15, 2025, to shareholders of record as of September 30, 2025. For the three and nine months ended September 30, 2025, the Company paid distributions of $0.24 and $0.77 per common share, respectively, for a total of $56.8 million and $183.5 million, respectively. Subsequent to quarter end, on October 20, 2025, the Company declared a monthly cash distribution of $0.08 per common share, payable on November 17, 2025, to shareholders of record as of October 31, 2025.

Current wording

The Company generally must distribute annually at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, in order to maintain its REIT status. On March 19, 2026, the Company declared a monthly cash distribution of $0.08 per common share, paid on April 15, 2026, to shareholders of record as of March 31, 2026. For the three months ended March 31, 2026, the Company paid distributions of $0.24 per common share for a total of $56.6 million. Subsequent to quarter end, on April 20, 2026, the Company declared a monthly cash distribution of $0.08 per common share, payable on May 15, 2026, to shareholders of record as of April 30, 2026.

Previous wording

The Company's current annual distribution rate, payable monthly, is $0.96 per common share. As it has done historically, due to seasonality, the Company may use its Revolving Credit Facility to maintain the consistency of the monthly distribution rate, taking into consideration any acquisitions, dispositions, capital improvements and economic cycles. While management currently expects monthly cash distributions to continue at $0.08 per common share, any distribution will be subject to approval of the Company’s Board of Directors, and there can be no assurance of the classification, timing or duration of distributions at any particular distribution rate. The Board of Directors monitors the Company’s distribution rate relative to the performance of its hotels on an ongoing basis and may make adjustments to the distribution rate as determined to be prudent in relation to other cash requirements of the Company or to the extent required to maintain the Company’s REIT status. If cash flows from operations and the Revolving Credit Facility are not adequate to meet liquidity requirements, the Company may utilize additional financing sources to make distributions. Although the Company has relatively low levels of debt, there can be no assurance it will be successful with this strategy, and it may need to reduce its distributions to minimum levels required to maintain its qualification as a real estate investment trust. If the Company were unable to extend its maturing debt in future periods or if it were to default on its debt, it may be unable to make distributions.

Current wording

The Company’s current annual distribution rate, payable monthly, is $0.96 per common share. As it has done historically, due to seasonality, the Company may use its Revolving Credit Facility to maintain the consistency of the monthly distribution rate, taking into consideration any acquisitions, dispositions, capital improvements and economic cycles. While management currently expects monthly cash distributions to continue at $0.08 per common share, any distribution will be subject to approval of the Company’s Board of Directors, and there can be no assurance of the classification, timing or duration of distributions at any particular distribution rate. The Board of Directors monitors the Company’s distribution rate relative to the performance of its hotels on an ongoing basis and may make adjustments to the distribution rate as determined to be prudent in relation to other cash requirements of the Company or to the extent required to maintain the Company’s REIT status. If cash flows from operations and the Revolving Credit Facility are not adequate to meet liquidity requirements, the Company may utilize additional financing sources to make distributions. Although the Company has relatively low levels of debt, there can be no assurance it will be successful with this strategy, and it may need to reduce its distributions to minimum levels required to maintain its qualification as a REIT. If the Company were unable to extend its maturing debt in future periods or if it were to default on its debt, it may be unable to make distributions.

Previous wording

In May 2025, the Company’s Board of Directors approved a one-year extension of its existing Share Repurchase Program, authorizing share repurchases up to an aggregate of $262.6 million. The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July 2026 if not terminated or extended earlier. The Company previously entered into and expects to continue to enter into written trading plans as part of the Share Repurchase Program that provide for share repurchases in open market transactions that are intended to comply with Rule 10b5-1 under the Exchange Act. During the three months ended September 30, 2025, the Company purchased, under its Share Repurchase Program, approximately 0.2 million of its common shares at a weighted-average market purchase price of approximately $11.99 per common share for an aggregate purchase price, including commissions, of approximately $2.0 million, bringing the total share repurchases for the nine months ended September 30, 2025, to approximately 3.5 million common shares at a weighted-average market purchase price of approximately $12.79 per common share for an aggregate purchase price, including commissions, of approximately $45.2 million. Purchases under the Share Repurchase Program have been funded, and the Company intends to fund future share repurchases, with cash on hand, proceeds from dispositions or availability under its unsecured credit facilities, subject to applicable restrictions under the Company’s unsecured credit facilities (if any). The timing of share repurchases and the number of common shares to be purchased under the Share Repurchase Program will also depend upon prevailing market conditions, regulatory requirements and other factors. As of September 30, 2025, approximately $255.6 million remained available for purchase under the Share Repurchase Program.

Current wording

In May 2025, the Company’s Board of Directors approved a one-year extension of its existing Share Repurchase Program, authorizing share repurchases up to an aggregate of $262.6 million. The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July 2026 if not terminated or extended earlier. The Company previously entered into, and expects to continue to enter into, written trading plans as part of the Share Repurchase Program that provide for share repurchases in open market transactions that are intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company did not repurchase any common shares during the three months ended March 31, 2026. During the three months ended March 31, 2025, the Company purchased, under its Share Repurchase Program, approximately 1.9 million of its common shares at a weighted-average market purchase price of approximately $13.61 per common share for an aggregate purchase price, including commissions, of approximately $26.3 million. Purchases under the Share Repurchase Program have been funded, and the Company intends to fund future share repurchases, with cash on hand, proceeds from dispositions or availability under its unsecured credit facilities, subject to applicable restrictions under the Company’s unsecured credit facilities (if any). The timing of share repurchases and the number of common shares to be purchased under the Share Repurchase Program will also depend upon prevailing market conditions, regulatory requirements and other factors. As of March 31, 2026, approximately $242.5 million remained available for purchase under the Share Repurchase Program.

Previous wording

Management routinely monitors the condition and operations of its hotels and plans renovations and other improvements as it deems prudent. The Company is committed to maintaining and enhancing each property’s competitive position in its market. The Company has invested in and plans to continue to reinvest in its hotels. Under certain loan and management agreements, the Company is required to place in escrow funds for the repair, replacement and refurbishing of furniture, fixtures, and equipment at the applicable hotels, based on a percentage of the hotel’s gross revenues, provided that such amount may be used for the Company’s capital expenditures with respect to those hotels. As of September 30, 2025, the Company held approximately $31.7 million in reserves related to these properties. During the nine months ended September 30, 2025, the Company invested approximately $49.6 million in capital expenditures. The Company anticipates spending approximately $80 million to $90 million during 2025, which includes various comprehensive renovation projects for approximately 20 properties, however, inflationary pressures, supply chain shortages or tariffs, among other issues, may result in increased costs and delays for anticipated projects.

Current wording

Management routinely monitors the condition and operations of its hotels and plans renovations and other improvements as it deems prudent. The Company is committed to maintaining and enhancing each property’s competitive position in its market. The Company has invested in and plans to continue to reinvest in its hotels. Under certain loan agreements, the Company is required to place in escrow funds for the repair, replacement and refurbishment of furniture, fixtures, and equipment at the applicable hotels, based on a percentage of the hotel’s gross revenues, provided that such amount may be used for the Company’s capital expenditures with respect to those hotels. As of March 31, 2026, the Company held approximately $8.8 million in reserves related to these properties. During the three months ended March 31, 2026, the Company invested approximately $27.5 million in capital expenditures. The Company anticipates spending approximately $80 million to $90 million during 2026, which includes various comprehensive renovation projects for approximately 21 properties, however, inflationary pressures, supply chain shortages or tariffs, among other issues, may result in increased costs and delays for anticipated projects.

Previous wording

During the third quarter of 2025, the Company entered into a contract to develop a dual-branded property which will include an AC Hotel and a Residence Inn in Las Vegas, Nevada on land the Company owns that is adjacent to its SpringHill Suites. The Company expects to spend a total of approximately $143.7 million to develop the hotels, which are currently planned to be completed and opened for business in the second quarter of 2028.

Current wording

During the third quarter of 2025, the Company entered into a fixed-price contract to develop a dual-branded property which will include an AC Hotel and a Residence Inn in Las Vegas, Nevada on land the Company owns that is adjacent to its SpringHill Suites. The Company expects to spend a total of approximately $143.7 million to develop the hotels, which are currently planned to be completed and opened for business in the second quarter of 2028.

Previous wording

As of September 30, 2025, the Company had approximately $257.2 million of principal and interest payments due on its debt over the next 12 months. Included in this total is a $29.4 million mortgage covering two properties, which was repaid in full on its maturity date, October 1, 2025, a $19.7 million mortgage that matures in the second quarter of 2026, and a $130.0 million unsecured term loan that matures in the third quarter of 2026. The Company plans to pay outstanding amounts and service payments due upon the upcoming debt maturity dates using one or a combination of any of the following: funds from operations, borrowings under its Revolving Credit Facility, proceeds from new financing, available credit extensions under its unsecured credit facilities or by refinancing the maturing debt. The Company may also pursue amendments with its lenders to extend the maturity date of any expiring loans. The $130 million term loan facility matures on July 25, 2026, but it can be extended up to one year, subject to certain conditions including covenant compliance and payment of additional fees. The Company presently has the ability to exercise this extension. The Revolving Credit Facility, which has a zero balance as of September 30, 2025, matures on July 25, 2026, but it can be extended up to one year, subject to certain conditions including covenant compliance and payment of additional fees. The Company presently has the ability to exercise this extension. Interest expense related to the Company’s unsecured credit facilities over the next 12 months is expected to be similar to the previous 12 months as a result of increased borrowings offset by lower average interest rates. The proportion of variable-rate debt that is fixed by interest rate swaps was lower over the nine months ended September 30, 2025 compared to the same period of 2024, as the Company had three interest rate swaps in effect on $150.0 million of variable-rate debt mature during the first nine months of 2025 and six interest rate swaps in effect on $285.0 million of variable-rate debt that matured during 2024. However, this was partially offset as the Company entered into two new interest rate swaps in effect on $100.0 million of variable-rate debt during the third quarter of 2025 and four new interest rate swaps in effect on $200.0 million of variable-rate debt during 2024, but at higher fixed rates than the swap agreements that expired. If the Company continues to replace expiring interest rate swaps in the current interest rate environment with new agreements, the Company anticipates those new agreements to be at higher rates than the expiring swap agreements. See Note 4 titled “Debt” and Note 5 titled “Fair Value of Financial Instruments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q for more detail regarding future maturities of the Company’s debt instruments and interest rate swap agreements…

Excerpt shortened here; the source contains the full paragraph.

Current wording

As of March 31, 2026, the Company had approximately $359.7 million of principal and interest payments due on its debt over the next 12 months. Included in this total is a $19.5 million mortgage that matures in the second quarter of 2026, a $51.0 million mortgage covering three properties that matures in the fourth quarter of 2026, an $89.1 million Revolving Credit Facility balance at March 31, 2026, and a $130.0 million unsecured term loan, both of which mature in the third quarter of 2026. The Company plans to pay outstanding amounts and service payments due upon the upcoming debt maturity dates using one or a combination of any of the following: funds from operations, borrowings under its Revolving Credit Facility, proceeds from new financing, available credit extensions under its unsecured credit facilities or by refinancing the maturing debt. The Company may also pursue amendments with its lenders to extend the maturity date of any expiring loans. Both the $130 million term loan facility and the Revolving Credit Facility mature on July 25, 2026, but they can be extended up to one year, subject to certain conditions including covenant compliance and payment of additional fees. The Company presently has the ability to exercise both of these extensions; however, it plans to pursue refinancing of the maturing debt.

Previous wording

As of September 30, 2025, the Company had outstanding contracts with unrelated parties for the potential purchase of two hotels, consisting of one hotel under development in Nashville, Tennessee and one hotel under development in Anchorage, Alaska, for a total combined purchase price of approximately $163.7 million. The Nashville Motto is currently planned to be completed and opened for business in December 2025, at which time the Company expects to complete the purchase of this hotel. The Anchorage AC Hotel is currently planned to be completed and opened for business in the fourth quarter of 2027, at which time the Company expects to complete the purchase of this hotel. Although the Company is working towards acquiring these hotels, there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closings on these hotels will occur under their respective outstanding purchase contracts.

Current wording

As of March 31, 2026, the Company had one outstanding contract, which was entered into during the third quarter of 2025, for the potential purchase of a hotel in Anchorage, Alaska for an expected fixed purchase price of approximately $65.5 million. The hotel is under development as a 160-guest-room AC Hotel and is currently planned to be completed and opened for business in the fourth quarter of 2027. As of March 31, 2026, a $2.0 million contract deposit (refundable if the seller does not meet its obligations under the contract) had been paid. If the closing occurs, the Company plans to utilize its available cash or borrowings, including borrowings under its unsecured credit facilities available at closing, to purchase the hotel under contract. Although the Company is working towards acquiring this hotel, there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closing on this hotel will occur under the outstanding purchase contract. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the purchase contract and acquire this hotel. As this hotel is under development, at this time, the seller has not met all of the conditions to closing.

Previous wording

As mentioned in the “Capital Improvements” section above, during the third quarter of 2025, the Company entered into a contract to develop a dual-branded property which will include an AC Hotel and a Residence Inn in Las Vegas, Nevada on land the Company owns that is adjacent to its SpringHill Suites. See Note 10 titled “Contract Commitments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q for more detail regarding this development project.

Current wording

As mentioned in the “Capital Improvements” section above, during the third quarter of 2025, the Company entered into a fixed-price contract with a third party to develop a dual-branded property, consisting of an AC Hotel and a Residence Inn, on Company-owned land in Las Vegas, Nevada, adjacent to its existing SpringHill Suites. See Note 10 titled “Contract Commitments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q for more detail regarding this development project.