DiamondRock Hospitality Co

Previous wording

Our strategy is to apply aggressive asset management, prudent financial strategy, and disciplined capital allocation to high quality lodging properties in North American urban and resort markets with superior growth prospects and high barriers-to-entry. Our goal is to deliver long-term stockholder returns that exceed those generated by our peers through a combination of dividends and enduring capital appreciation.

Current wording

Our strategy is to apply aggressive asset management, prudent financial strategy, and disciplined capital allocation to high quality lodging properties in U.S. urban and resort markets with superior growth prospects and high barriers-to-entry. Our goal is to deliver long-term stockholder returns that exceed those generated by our peers through a combination of dividends and enduring capital appreciation.

Previous wording

Occupancy, ADR and RevPAR are commonly used measures within the hotel industry to evaluate operating performance. RevPAR, which is calculated as the product of ADR and occupancy percentage, is an important statistic for monitoring operating performance at the individual hotel level and across our business as a whole. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and regional basis. ADR and RevPAR include only room revenue. Room revenue comprised approximately 64% of our total revenues for the three months ended March 31, 2025 and is dictated by demand, as measured by occupancy percentage, pricing, as measured by ADR, and our available supply of hotel rooms.

Current wording

Occupancy, ADR and RevPAR are commonly used measures within the hotel industry to evaluate operating performance. RevPAR, which is calculated as the product of ADR and occupancy percentage, is an important statistic for monitoring operating performance at the individual hotel level and across our business as a whole. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and regional basis. ADR and RevPAR include only room revenue. Room revenue comprised approximately 64% of our total revenues for the six months ended June 30, 2025 and is dictated by demand, as measured by occupancy percentage, pricing, as measured by ADR, and our available supply of hotel rooms.

Previous wording

Like other companies in our industry, we are subject to changes in the macroeconomic, political, and regulatory environments, the potential impacts of recently proposed tariffs, and reductions in international travel to the United States. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, future results of operations and cash flow, which are dependent on future developments, including as a result of those risk factors discussed elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

Like other companies in our industry, we are subject to changes in the macroeconomic, political, and regulatory environments and the impacts of recently implemented and newly proposed tariffs. These factors have contributed to a decline in leisure transient and international travel to the United States. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, future results of operations and cash flow, which are dependent on future developments, including as a result of those risk factors discussed elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2024 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

Previous wording

The following tables set forth certain operating information for the three months ended March 31, 2025 for each of our hotels owned during the period.

Current wording

The following tables set forth certain operating information for the six months ended June 30, 2025 for each of our hotels owned during the period.

Previous wording

(1)The percentage change from 2024 RevPAR reflects the comparable period in 2024 to our 2025 ownership period for our 2024 acquisition and 2025 disposition.

Current wording

(1)The hotel was sold on February 19, 2025. The percentage change from 2024 RevPAR reflects the comparable period in 2024 to our 2025 ownership period.

Previous wording

(3)The hotel was closed for renovation during the three months ended March 31, 2025.

Current wording

(3)The hotel was closed for renovation from January 1, 2025 until May 15, 2025, during the six months ended June 30, 2025.

Previous wording

At both March 31, 2025 and 2024, we owned 36 hotels. All properties owned during these periods have been included in our results of operations during the respective periods since their date of acquisition or through their date of disposition, as applicable. Based on when a property was acquired or disposed, operating results for certain properties are not comparable for the three months ended March 31, 2025 and 2024. The properties detailed in the table below are hereinafter referred to as “non-comparable properties” and all other properties are referred to as “comparable properties”:

Current wording

All properties owned during the periods presented have been included in our results of operations during the respective periods since their date of acquisition or through their date of disposition, as applicable. Based on when a property was acquired or disposed, operating results for certain properties are not comparable for the three and six months ended June 30, 2025 and 2024. The properties detailed in the table below are hereinafter referred to as “non-comparable properties” and all other properties are referred to as “comparable properties”:

Previous wording

Revenue. Revenue consists primarily of the room, food and beverage and other operating revenues from our hotels, as follows (dollars in thousands):

Current wording

Revenue. Revenue consists of the following (dollars in thousands):

Previous wording

Rooms revenues decreased by $0.4 million from the three months ended March 31, 2024 to the three months ended March 31, 2025, $1.5 million of which was due to the acquisition and disposition of the non-comparable properties. The offsetting increase of $1.1 million was due to growth in the group and business transient segments, partially offset by lower leisure transient revenue.

Current wording

Rooms revenues decreased by $5.3 million from the three months ended June 30, 2024 to the three months ended June 30, 2025, $5.8 million of which was from the non-comparable properties. The offsetting increase of $0.5 million was due to growth in the group and business transient segments, partially offset by lower leisure transient revenue.

Previous wording

Corporate expenses. Corporate expenses principally consist of employee-related costs, including payroll, bonus, restricted stock and benefits. Corporate expenses also include corporate operating costs, professional fees and directors' fees. Our corporate expenses decreased $1.2 million from the three months ended March 31, 2024 to the three months ended March 31, 2025, primarily due to the streamlined leadership structure we implemented in 2024 as well as the accelerated recognition of share based compensation related to the retirement of our former Executive Vice President, General Counsel and Corporate Secretary in 2024.

Current wording

Corporate expenses. Corporate expenses principally consist of employee-related costs, including payroll, bonus, restricted stock and benefits. Corporate expenses also include corporate operating costs, professional fees and directors' fees. Our corporate expenses decreased $19.1 million from the three months ended June 30, 2024 to the three months ended June 30, 2025, primarily due to severance expense recognized during the three months ended June 30, 2024, in connection with the leadership changes made in April 2024.

Previous wording

Interest expense. Our interest expense decreased $1.1 million from the three months ended March 31, 2024 to the three months ended March 31, 2025 and was comprised of the following (dollars in thousands):

Current wording

Interest expense. Our interest expense decreased $1.3 million from the three months ended June 30, 2024 to the three months ended June 30, 2025 and was comprised of the following (dollars in thousands):

Previous wording

The decrease in interest expense is primarily due to the maturity of the mortgage loan secured by the Courtyard New York Manhattan/Midtown East in the third quarter of 2024, as well as a decrease in SOFR.

Current wording

The decrease in interest expense is primarily due to the maturities of the mortgage loans secured by the Courtyard New York Manhattan/Midtown East in the third quarter of 2024 and the Worthington Renaissance Fort Worth Hotel in the second quarter of 2025, as well as a lower SOFR rate in 2025.

Previous wording

Other revenues, which primarily represent spa, parking, resort fees and attrition and cancellation fees, increased by $0.4 million from the three months ended March 31, 2024 to the three months ended March 31, 2025, $0.1 million of which was due the acquisition and disposition of the non-comparable properties. The remaining increase was primarily due to our implementation of a resort fee at the Bourbon Orleans Hotel and Hotel Champlain Burlington, as well as an increase in parking revenue.

Current wording

Other revenues, which primarily represent spa, parking, resort fees and attrition and cancellation fees, increased by $1.3 million from the six months ended June 30, 2024 to the six months ended June 30, 2025, $0.2 million of which was from the non-comparable properties. The remaining increase was primarily due to the implementation of a resort fee at the Bourbon Orleans Hotel and Hotel Champlain Burlington, as well as an increase in spa and parking revenue.

Previous wording

Our short-term liquidity requirements consist primarily of funds necessary to pay our scheduled debt service, near term debt maturities, operating expenses, ground lease payments, capital expenditures directly associated with our hotels, any share repurchases, distributions to our common and preferred stockholders, and the cost of acquiring additional hotels.

Current wording

Our short-term liquidity requirements consists primarily of funds necessary to pay our scheduled debt service, near term debt maturities, operating expenses, ground lease payments, capital expenditures directly associated with our hotels, any share repurchases, distributions to our common and preferred stockholders, and the cost of acquiring additional hotels.

Previous wording

-23- revolving credit facility. As of March 31, 2025, we had $400 million of borrowing capacity under our senior unsecured revolving credit facility.

Current wording

As of June 30, 2025, we had two mortgage loans with maturities in July and November of 2025. On July 3, 2025, we repaid the mortgage loan secured by the Hotel Clio, using proceeds from our senior unsecured revolving credit facility. We subsequently repaid the draw on our senior unsecured revolving credit facility using the proceeds from our Amended Credit Facility. In addition, we plan to use proceeds from our Amended Credit Facility to repay the remaining mortgage loan that matures in November 2025. As of June 30, 2025, we had $400.0 million of borrowing capacity under our senior unsecured revolving credit facility.

Previous wording

In August 2024, our board of directors approved an “at-the-market” equity offering program (the “ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million. We did not sell any shares under the ATM Program during the three months ended March 31, 2025 and 2024.

Current wording

In August 2024, our board of directors approved an “at-the-market” equity offering program (the “ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million. We did not sell any shares under the ATM Program during the three and six months ended June 30, 2025 and 2024.

Previous wording

-24- price and general business and market conditions. The share repurchase program does not obligate us to acquire any particular amount of shares, and may be suspended or discontinued at any time at our discretion. The share repurchase program will expire on May 1, 2026. During the three months ended March 31, 2025, we repurchased 1,413,643 shares of common stock at an average price of $7.85 per share for a total purchase price of $11.1 million under this program. During the year ended December 2024, we repurchased 3,114,876 shares of common stock at an average price of $8.33 per share for a total purchase price of $26.0 million under this program. Subsequent to March 31, 2025, we repurchased 661,689 shares of common stock at an average price of $7.26 per share for a total purchase price of $4.8 million under this program. As of May 1, 2025, we have $158.1 million of authorized capacity remaining under the share repurchase program.

Current wording

On May 1, 2024, our board of directors authorized the repurchase of up to $200.0 million of our common stock under a share repurchase program. The timing and actual number of shares repurchased will depend on a variety of factors, including price and general business and market conditions. The share repurchase program does not obligate us to acquire any particular amount of shares, and may be suspended or discontinued at any time at our discretion. The share repurchase program will expire on May 1, 2026. During the six months ended June 30, 2025, we repurchased 3,097,942 shares of common stock at an average price of $7.64 per share for a total purchase price of $23.7 million under this program. During the six months ended June 30, 2024, we repurchased 2,454,307 shares of common stock at an average price of $8.39 per share for a total purchase price of $20.6 million under this program. Subsequent to June 30, 2025, we repurchased 466,919 shares of common stock at an average price of $7.64 per share for a total purchase price of $3.6 million under this program. As of August 7, 2025, we have $146.8 million of authorized capacity remaining under the share repurchase program.

Previous wording

We are party to a Sixth Amended and Restated Credit Agreement that provides us with a $400 million senior unsecured revolving credit facility and two term loan facilities in the aggregate amount of $800 million. The revolving credit facility matures on September 27, 2026, which we may extend for an additional year upon the payment of applicable fees and satisfaction of certain standard conditions. The term loan facilities consist of a $500 million term loan that matures on January 3, 2028 and a $300 million term loan that matures on January 3, 2026. We have the right to increase the aggregate amount of the facilities to $1.4 billion upon the satisfaction of certain standard conditions. As of March 31, 2025, we had $400 million of borrowing capacity under our senior unsecured revolving credit facility.

Current wording

As of June 30, 2025, we were party to a Sixth Amended and Restated Credit Agreement that provided us with a $400.0 million senior unsecured revolving credit facility and two term loan facilities in the aggregate amount of $800.0 million. The revolving credit facility was scheduled to mature on September 27, 2026, subject to customary extension options. The term loan facilities consisted of a $500.0 million term loan maturing on January 3, 2028 and a $300.0 million term loan maturing on January 3, 2026. We had the right to increase the aggregate amount of the facilities to $1.4 billion upon the satisfaction of certain standard conditions. As of June 30, 2025, we had $400.0 million of borrowing capacity under our senior unsecured

Previous wording

As of March 31, 2025, we had $100.6 million of unrestricted cash, $49.6 million of restricted cash and no outstanding borrowings on our senior unsecured credit facility.

Current wording

As of June 30, 2025, we had $52.4 million of unrestricted cash, $51.2 million of restricted cash and no outstanding borrowings on our senior unsecured credit facility.

Previous wording

Our net cash provided by operations was $27.6 million for the three months ended March 31, 2025. Our cash from operations generally consists of the net cash flow from hotel operations, offset by cash paid for corporate expenses, interest payments, and other working capital changes.

Current wording

Our net cash provided by operations was $101.2 million for the six months ended June 30, 2025. Our cash from operations generally consists of the net cash flow from hotel operations, offset by cash paid for corporate expenses, interest payments, and other working capital changes.

Previous wording

Our net cash provided by investing activities was $63.5 million for the three months ended March 31, 2025, which consisted of capital expenditures at our hotels offset by the proceeds from the sale of the Westin Washington, D.C. City Center.

Current wording

Our net cash provided by investing activities was $47.8 million for the six months ended June 30, 2025, which consisted of capital expenditures at our hotels offset by the proceeds from the sale of the Westin Washington, D.C. City Center.

Previous wording

Our net cash used in financing activities was $69.6 million for the three months ended March 31, 2025, which consisted of $48.6 million of distributions paid to holders of common stock and common OP units, $11.1 million of shares repurchased under our share repurchase program, $4.9 million paid to repurchase shares upon the vesting of restricted stock for the payment of tax withholding obligations, $2.5 million of distributions paid to holders of preferred stock and $2.1 million of scheduled mortgage debt principal payments.

Current wording

Our net cash used in financing activities was $174.2 million for the six months ended June 30, 2025, which consisted of $71.1 million of mortgage debt repayments, $65.3 million of distributions paid to holders of common stock and common OP units, $23.7 million of shares repurchased under our share repurchase program, $4.9 million paid to repurchase shares upon the vesting of restricted stock for the payment of tax withholding obligations, $4.9 million of distributions paid to holders of preferred stock, $3.8 million of scheduled mortgage debt principal payments and $0.5 million of financing costs.

Previous wording

We currently anticipate our significant source of cash for the remainder of the year ending December 31, 2025 will be the net cash flow from hotel operations, potential dispositions, and proceeds from debt refinancing. We expect our estimated uses of cash for the remainder of the year ending December 31, 2025 will be loan maturities, potential acquisitions, scheduled debt service payments, capital expenditures, distributions to preferred and common stockholders, share repurchases and corporate expenses.

Current wording

We currently anticipate our significant source of cash for the remainder of the year ending December 31, 2025 will be the net cash flow from hotel operations, potential dispositions, and proceeds from a debt refinancing. We expect our estimated uses of cash for the remainder of the year ending December 31, 2025 will be mortgage loan maturities, potential acquisitions, scheduled debt service payments, capital expenditures, distributions to preferred and common stockholders, share repurchases and corporate expenses.

Previous wording

We have paid the following dividends to holders of our common stock during 2025:

Current wording

During 2025, we have paid the following dividends to holders of our common stock:

Previous wording

We have paid the following dividends to holders of our Series A Preferred Stock during 2025:

Current wording

During 2025, we have paid the following dividends to holders of our Series A Preferred Stock:

Previous wording

The management and franchise agreements for each of our hotels provide for the establishment of separate property improvement reserves to cover, among other things, the cost of replacing and repairing furniture, fixtures and equipment at our hotels and other routine capital expenditures. Contributions to the property improvement fund are calculated as a percentage of hotel revenues. In addition, we may be required to pay for the cost of certain additional improvements that are not permitted to be funded from the property improvement fund under the applicable management or franchise agreement. As of March 31, 2025, we have set aside $46.8 million for capital projects in property improvement reserves, which are included in restricted cash on our consolidated balance sheets.

Current wording

The management and franchise agreements for each of our hotels provide for the establishment of separate property improvement reserves to cover, among other things, the cost of replacing and repairing furniture, fixtures and equipment at our hotels and other routine capital expenditures. Contributions to the property improvement fund are calculated as a percentage of hotel revenues. In addition, we may be required to pay for the cost of certain additional improvements that are not permitted to be funded from the property improvement fund under the applicable management or franchise agreement. As of June 30, 2025, we have set aside $48.4 million for capital projects in property improvement reserves, which are included in restricted cash on our consolidated balance sheets.

Previous wording

We have invested approximately $25.6 million on capital improvements at our hotels during the three months ended March 31, 2025. In 2025, we expect to spend between $85 to $95 million on capital improvements at our hotels, however we are evaluating the timing and extent of certain projects that may be deferred or cancelled. Significant projects currently planned for 2025 include the following:

Current wording

We have invested approximately $41.3 million on capital improvements at our hotels during the six months ended June 30, 2025. In 2025, we expect to spend between $85.0 to $95.0 million on capital improvements at our hotels. Significant projects currently planned for 2025 include the following:

Previous wording

•Hilton Garden Inn New York/Times Square Central: We completed a renovation of the hotel's guestrooms during

Current wording

•Hilton Garden Inn New York / Times Square Central: The Company completed a renovation of the hotel's guestrooms during the first quarter of 2025.

Previous wording

•Orchards Inn Sedona: We commenced the repositioning of Orchards Inn as the Cliffs at L'Auberge on November 1,

Current wording

•Sedona Repositioning: The Company commenced the repositioning of Orchards Inn as the Cliffs at L'Auberge on November 1, 2024. The repositioning will integrate the hotel with the adjacent L'Auberge de Sedona and includes construction of a new hillside pool and path connecting the two properties, renovation of the guestrooms and creation of a new arrival experience and new outdoor event space. The renovation of the guestrooms, arrival experience and event space was completed in May 2025. The Company expects to complete the pool and path project in the third quarter of 2025, after which the two properties will operate as one resort.

Previous wording

•Courtyard New York Manhattan/Midtown East: We expect to commence a renovation of the hotel's

Current wording

•Courtyard New York Manhattan/Midtown East: The Company expects to commence a renovation of the hotel's guestrooms during the fourth quarter of 2025.

Previous wording

Our management and Board of Directors use EBITDA, EBITDAre, Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. The use of these non-GAAP financial measures has certain limitations. These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures. We compensate for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable U.S. GAAP financial measures, and our consolidated statements of operations and comprehensive income and consolidated statements of cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.

Current wording

Our management and Board of Directors use EBITDA, EBITDAre, Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. The use of these non-GAAP financial measures has certain limitations. These non-GAAP financial measures, as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures. We compensate for these limitations by

Previous wording

-27- our favorable and unfavorable contracts, originally recorded in conjunction with certain hotel acquisitions. We exclude these non-cash items because they do not reflect the actual cash amounts due to the respective lessors in the current period and they are of lesser significance in evaluating our actual performance for that period.

Current wording

•Non-Cash Lease Expense and Other Amortization: We exclude the non-cash expense incurred from the straight line recognition of expense from our ground leases and other contractual obligations and the non-cash amortization of our favorable and unfavorable contracts, originally recorded in conjunction with certain hotel acquisitions. We exclude these non-cash items because they do not reflect the actual cash amounts due to the respective lessors in the current period and they are of lesser significance in evaluating our actual performance for that period.

Previous wording

•Cumulative Effect of a Change in Accounting Principle: The Financial Accounting Standards Board promulgates new accounting standards that require or permit the consolidated statement of operations and comprehensive income to reflect the cumulative effect of a change in accounting principle. We exclude the effect of these adjustments, which include the accounting impact from prior periods, because they do not reflect the Company’s actual underlying performance for the current period.

Current wording

•Cumulative Effect of a Change in Accounting Principle: The Financial Accounting Standards Board promulgates new accounting standards that require or permit the consolidated statement of operations and comprehensive income to reflect the cumulative effect of a change in accounting principle. We exclude the effect of these adjustments,

Previous wording

•Other Items: From time to time we incur costs or realize gains that we consider outside the ordinary course of business and that we do not believe reflect the ongoing performance of the Company or our hotels. Such items may include, but are not limited to, the following: non-cash realized gains or losses on our deferred compensation plan assets; management or franchise contract termination fees; gains or losses from legal settlements; costs incurred related to natural disasters; and gains on property insurance claim settlements, other than income related to business interruption insurance.

Current wording

•Other Items: From time to time we incur costs or realize gains that we consider outside the ordinary course of business and that we do not believe reflect the ongoing performance of the Company or our hotels. Such items may include, but are not limited to, the following: non-cash realized gains or losses on our deferred compensation plan assets; management or franchise contract termination fees; terminated transaction costs; gains or losses from legal settlements; costs incurred related to natural disasters; and gains on property insurance claim settlements, other than income related to business interruption insurance.

Previous wording

(2)Amount includes $0.7 million of non-cash realized gains related to our deferred compensation plan for the three months ended March 31, 2025.

Current wording

(2)For each of the three months ended June 30, 2025 and 2024, amounts include less than $0.1 million of non-cash realized gains related to our deferred compensation plan. For the six months ended June 30, 2025 and 2024, amounts include $0.7 million and less than $0.1 million, respectively, of non-cash realized gains related to our deferred compensation plan.

Previous wording

Our unaudited consolidated financial statements include the accounts of DiamondRock Hospitality Company and all consolidated subsidiaries. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. We evaluate our estimates and judgments, including those related to the impairment of long-lived assets, on an ongoing basis. We base our estimates on experience and on various assumptions that are believed to be reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies, are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to our critical accounting policies since the year ended December 31, 2024.

Current wording

-33- estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. We evaluate our estimates and judgments, including those related to the impairment of long-lived assets, on an ongoing basis. We base our estimates on experience and on various assumptions that are believed to be reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies, are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to our critical accounting policies since the year ended December 31, 2024.

Previous wording

During the first quarter of 2025, inflation remained above the Federal Reserve’s long-term target, though it has moderated from the peak levels observed in recent years. The Federal Reserve maintained its benchmark interest rate during the quarter, signaling a cautious approach to future rate cuts as it monitors ongoing inflation trends. Any increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty, and increasing the cost of new indebtedness and servicing our outstanding variable rate debt.

Current wording

During the first half of 2025, inflation remained above the Federal Reserve’s long-term target, though it has moderated from the peak levels observed in recent years. The Federal Reserve maintained its benchmark interest rate during the first half of the year, signaling a cautious approach to future rate cuts as it monitors ongoing inflation trends. Any increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty, and increasing the cost of new indebtedness and servicing our outstanding variable rate debt.