Chatham Lodging Trust

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Equity

Consolidated Statements of Cash Flows

(In thousands)

Supplemental disclosure of non-cash investing and financing information (dollars in thousands):

On* January15,* 2025, the Company issued 61,551 common shares to its independent trustees pursuant to the Company’s Equity Incentive Plan as compensation for services performed in2024. On* January16,* 2024, the Company issued 43,670 common shares to its independent trustees pursuant to the Company’s Equity Incentive Plan as compensation for services performed in2023.

As of* March 31, 2025*, the Company had accrued distributions payable of $6,595. As of* March 31, 2024*, the Company had accrued distributions payable of $5,580.

Accrued share-based compensation of $141 and $141 is included in accounts payable and accrued expenses as of* March 31, 2025and2024*, respectively.

Accrued capital improvements of $3,125 and $1,364 are included in accounts payable and accrued expenses as of* March 31, 2025and2024*, respectively.

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Notes to the Consolidated Financial Statements

Chatham Lodging Trust (“we,” “us” or the “Company”) was formed as a Maryland real estate investment trust on* October**26,* 2009. The Company is internally managed and invests primarily in upscale extended-stay and premium-branded select-service hotels. The Company has elected to be treated as a real estate investment trust for federal income tax purposes ("REIT").

The net proceeds from our share offerings are contributed to Chatham Lodging, L.P., our operating partnership (the “Operating Partnership”), in exchange for partnership interests. Substantially all of the Company’s assets are held by, and all operations are conducted through, the Operating Partnership. The Company is the sole general partner of the Operating Partnership and owns 100% of the common units of limited partnership interest in the Operating Partnership ("common units"). Certain of the Company’s executive officers hold vested and unvested long-term incentive plan units in the Operating Partnership ("LTIP units"), which are presented as non-controlling interests on our consolidated balance sheets.

As of* March 31, 2025*, the Company owned 35 hotels with an aggregate of 5,356 rooms located in 15 states and the District of Columbia.

To qualify as a REIT, the Company cannot operate the hotels. Therefore, the Operating Partnership and its subsidiaries lease the Company's hotels to taxable REIT subsidiary lessees (“TRS Lessees”), which are wholly owned by the Company’s taxable REIT subsidiary (“TRS”) holding company. Each hotel is leased to a TRS Lessee under a percentage lease that provides for rental payments equal to the greater of (i) a fixed base rent amount or (ii) a percentage rent based on hotel revenue. Lease revenue from each TRS Lessee is eliminated in consolidation.

The TRS Lessees have entered into management agreements with athird-party management company that provides day-to-day management for the hotels. As of* March 31, 2025*, Island Hospitality Management, LLC (“IHM”), which is 100% owned by Jeffrey H. Fisher, the Company's Chairman, President and Chief Executive Officer, managed all of the Company’s hotels.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. These unaudited consolidated financial statements, in the opinion of management, include all adjustments consisting of normal, recurring adjustments which are considered necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of equity, and consolidated statements of cash flows for the periods presented. Interim results arenot necessarily indicative of full year performance due to seasonal and other factors, including the timing of the acquisition or sale of hotels.

The consolidated financial statements include all of the accounts of the Company, the Operating Partnership (a variable interest entity) and its wholly owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited financial statements prepared in accordance with GAAP, and the related notes thereto as of* December 31, 2024*, which are included in the Company’s Annual Report on Form10-K for the year ended* December 31, 2024*.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Recently Issued Accounting Standards

In* November 2023,the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures ("ASU2023*-07"). The guidance requires incremental disclosures related to a public entity’s reportable segments. ASU2023-07 is effective for public entities for fiscal years beginning after* December 15, 2023,and interim periods in fiscal years beginning after December 15, 2024,with early adoption permitted. The Company adopted this ASU during the year ended December**31,* 2024 (See Note15).

In* December 2023,the FASB issued ASU2023*-09, “Improvements to Income Tax Disclosures (Topic740),” which requires entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes as well as additional information about reconciling items if certain quantitative thresholds are met. This ASU will require all entities to disclose income taxes paid, net of refunds, disaggregated by federal (national), state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold. All entities are required to apply the guidance prospectively, with the option to apply it retrospectively. The Company adopted this ASU on* January 1, 2025,*and is currently evaluating the potential impact on the annual income tax disclosures.

In* November 2024,the FASB issued ASU2024*-03, “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses”, which requires disaggregated disclosures in the notes of the financial statements of certain categories of expenses that are included in expense line items on the face of the income statement. This ASU is effective for annual reporting periods beginning after* December 15, 2026,and interim periods within annual reporting periods beginning after December 15, 2027.Early adoption is permitted. The Company is currently evaluating the potential impact adopting ASU2024*-03 will have on the Company's consolidated financial statements and disclosures.

On* May 30, 2024,the Company acquired theHome2* Suites Phoenix Downtown ("Home2 Phoenix") hotel property in Phoenix, AZ for $43.3 million. The Company allocated the purchase price of the hotel property acquired based on the estimated fair values of the assets on the date of acquisition. The hotel property is classified as a finance lease for which the Company has recorded right-of-use ("ROU") assets and a lease liability (see Note12). The Company's ROU asset balance includes $0.3 million related to its lease liability and property acquisition costs of $0.1 million, which are all recorded within Investment in hotel properties, net.

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On* March 17, 2025,*the Company sold the Hampton Inn & Suites Houston-Medical Center ("HI Houston") hotel property in Houston, TX for $15.5 million and recognized a gain on sale of the hotel property of $1.8 million.

On* January**30,* 2025, the Company sold the Homewood Suites by Hilton Nashville-Brentwood ("HWS Brentwood") hotel property in Brentwood, TN for $15.0 million and recognized a gain on sale of the hotel property of $5.4 million.

On* December 16, 2024,*the Company sold the Homewood Suites by Hilton Minneapolis-Mall of America ("HWS Bloomington") hotel property in Bloomington, MN for $13.8 million and recognized a loss on sale of the hotel property of $0.8 million.

On* December 6, 2024,*the Company sold the Homewood Suites by Hilton Orlando-Maitland ("HWS Maitland") hotel property in Maitland, FL for $15.5 million and recognized a gain on sale of the hotel property of $6.7 million.

On* January 9, 2024,*the Company sold the Hilton Garden Inn Denver Tech Center ("HGI Denver Tech") hotel property in Denver, CO for $18.0 million and recognized a loss on sale of the hotel property of $0.2 million.

The sales didnot represent a strategic shift that had or will have a major effect on the Company's operations and financial results and didnot qualify to be reported as discontinued operations.

Investment in hotel properties, net

Investment in hotel properties, net as of* March 31, 2025* and* December 31, 2024* consisted of the following (in thousands):

The Company’s mortgage loans are collateralized byfirst-mortgage liens on certain of the Company’s properties. The mortgage loans are non-recourse except for instances of fraud or misapplication of funds. Mortgage, revolving credit facility, and unsecured term loan debt consisted of the following (dollars in thousands):

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On* October 28, 2022,the Company entered into a $215.0 million unsecured revolving credit facility and a $90.0 million unsecured delayed-draw term loan facility. The unsecured revolving credit facility has an initial maturity of October 28, 2026and providestwo six*-month extension options. The unsecured delayed-draw term loan facility has an initial maturity of* October 28, 2025and providestwo one*-year extension options. On* December 19, 2022,the Company executed an amendment to its unsecured revolving credit facility, increasing commitments by $45.0 million for a total borrowing capacity of $260.0 million. On May 3, 2024,the Company amended its funded unsecured term loan to increase its size from $90.0 million to $140.0 million, its current balance outstanding as of March 31, 2025*.

At* March31,* 2025 and* December 31, 2024,the Company had $240.0 million and $250.0 million, respectively, of outstanding borrowings under its revolving credit facility and unsecured term loan. At March31,* 2025, the aggregate maximum remaining borrowing availability under thetwo facilities was $160.0 million.

During thethree months ended* March 31, 2025,the Company repaid the maturing mortgage loan of $16.0 million on the Hampton Inn Houston hotel property. During the year ended December 31, 2024*, the Company repaid the maturing mortgage loans of $29.3 million on the Residence Inn Garden Grove hotel property, $34.9 million on the Residence Inn Mountain View hotel property, $27.6 million on the SpringHill Suites Savannah hotel property, $59.5 million on the Residence Inn Silicon Valley I hotel property, $65.0 million on the Residence Inn Silicon Valley II hotel property, $44.7 million on the Residence Inn San Mateo hotel property, $18.8 million on the Hilton Garden Inn Marina del Rey hotel property, and $14.2 million on the Homewood Suites Billerica hotel property. The Company utilized cash, borrowings under its unsecured credit facility and unsecured term loan, and proceeds from itseight new mortgage loans to repay these loans.

The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates. All of the Company's mortgage loans are fixed-rate. Rates take into consideration general market conditions, quality and estimated value of collateral and maturity of debt with similar credit terms and are classified within level3 of the fair value hierarchy. The estimated fair value of the Company’s fixed rate debt as of* March 31, 2025* and* December 31, 2024* was $146.8 million and $164.8 million, respectively.

The Company estimates the fair value of its variable rate debt by taking into account general market conditions and the estimated credit terms it could obtain for debt with similar maturity and is classified within level3 of the fair value hierarchy. As of* March 31, 2025*, the Company’s variable rate debt consisted of borrowings under its revolving credit facility and its unsecured term loan. The estimated fair value of the Company’s variable rate debt as of* March 31, 2025* and* December 31, 2024* was $240.0 million and $250.0 million, respectively.

Future scheduled principal payments of debt obligations as of* March 31, 2025*, for the current year and each of the nextfive calendar years and thereafter are as follows (in thousands):

The Company’s TRS is subject to federal and state income taxes. Income tax expense waszero for thethree months ended* March 31, 2025and2024*.

As of each reporting date, the Company's management considers new evidence, both positive and negative, that could impact management's view with regard to future realization of deferred tax assets. The Company's TRS continues to have cumulativethree-year pre-tax losses. As of* March 31, 2025*, the TRS continues to recognize a full valuation allowance equal to 100% of the net deferred tax assets. Management will continue to monitor the need for a valuation allowance.

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Common Dividends

The Company declared total dividends on common shares of $0.09 per share and distributions on LTIP units of $0.09 per unit for thethree months ended* March 31, 2025*. The Company declared total dividends on common shares of $0.07 per share and distributions on LTIP units of $0.07 per unit for thethree months ended* March 31, 2024*. The dividends on common shares and distributions on LTIP units were as follows:

Preferred Dividends

During thethree months ended* March 31, 2025and2024*, the Company declared total dividends of $0.41406 and $0.41406, respectively, per share of 6.625% Series A Cumulative Redeemable Preferred Shares. The preferred share dividends were as follows:

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Common Shares

The Company is authorized to issue up to 500,000,000 common shares of beneficial interest, $0.01 par value per share ("common shares"). Each outstanding common share entitles the holder toone vote on all matters submitted to a vote of shareholders. Holders of the Company’s common shares are entitled to receive dividends when authorized by the Company's Board of Trustees. As of* March 31, 2025*,48,982,638 common shares were outstanding.

In* January 2021,the Company established an "at-the-market" equity offering program (the "ATM Program") whereby, from time to time, the Company maypublicly offer and sell its common shares having an aggregate offering price of up to $100.0 million by means of ordinary brokers transactions on the New York Stock Exchange (the "NYSE"), in negotiated transactions or in transactions deemed to be “at-the-market” offerings as defined in Rule415* under the Securities Act of1933, as amended. Cantor Fitzgerald & Co., Barclays Capital Inc., BMO Capital Markets Corp., BofA Securities, Inc., BTIG, LLC, Citigroup Global Markets Inc., Regions Securities LLC, Stifel, Nicolaus & Company, Incorporated and Wells Fargo Securities act as sales agents under the ATM Program. The Company didnot issue any shares under the ATM Program during thethree months ended* March 31, 2025*. As of* March 31, 2025*, there was approximately $77.5 million in common shares available for issuance under the ATM Program.

In* December 2017,the Company established a $50.0 million dividend reinvestment and stock purchase plan (the "DRSPP") which renewed in December 2020and renewed again in January 2024.Under the DRSPP, shareholders maypurchase additional common shares by reinvesting some or all of the cash dividends received on common shares. Shareholders mayalso make optional cash purchases of the Company's common shares subject to certain limitations detailed in the prospectuses for the DRSPP. During thethree* months ended* March 31, 2025*, the Company issued 1,282 common shares under the DRSPP at a weighted-average price per share of $8.46, which generated $11 thousand of proceeds. As of* March 31, 2025*, there was approximately $49.9 million in common shares available for issuance under the DRSPP.

Preferred Shares

The Company is authorized to issue up to 100,000,000 preferred shares of beneficial interest, $0.01 par value per share, inone or more series.

On* June 30, 2021,the Company issued 4,800,000 6.625% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (the “Series A Preferred Shares”), and received net proceeds of approximately $115.9 million. The Series A Preferred Shares rank senior to common shares with respect to the payment of dividends and distributions of assets in the event of a liquidation, dissolution, or winding up. The Series A Preferred Shares donot* have any maturity date and arenot subject to mandatory redemptions or sinking fund requirements. The distribution rate is 6.625% per annum of the $25.00 liquidation preference, which is equivalent to $1.65625 per annum per Series A Preferred Share. Distributions on the Series A Preferred Shares are payable quarterly in arrears. The Company* may**not* redeem the Series A Preferred Shares before* June 30, 2026except in limited circumstances to preserve the Company's status as a REIT for federal income tax purposes and upon the occurrence of a change of control. On and after June 30, 2026,the Company may,at its option, redeem the Series A Preferred Shares, in whole or from time to time in part, by paying $25.00 per share, plus any accrued and unpaid distributions to, butnot* including, the date of redemption. Upon the occurrence of a change of control, as defined in the Company's declaration of trust, the result of which common shares and the common securities of the acquiring or surviving entity arenot listed on the New York Stock Exchange, the NYSE American or NASDAQ, or any successor exchanges, the Company* may,at its option, redeem the Series A Preferred Shares in whole or in part within120* days following the change of control by paying $25.00 per share, plus any accrued and unpaid distributions through the date of redemption. If the Company doesnot exercise its right to redeem the Series A Preferred Shares upon a change of control, the holders of Series A Preferred Shares have the right to convert some or all of their shares into a number of common shares based on defined formulas subject to share caps. The share cap on each Series A Preferred Share is 3.701 common shares. As of* March 31, 2025*,4,800,000 Series A Preferred Shares were issued and outstanding. During thethree months ended* March 31, 2025*, the Company paid preferred share dividends of $2.0 million.

Operating Partnership Units

Holders of common units in the Operating Partnership, if and when issued, will have certain redemption rights, which will enable the unit holders to cause the Operating Partnership to redeem their units in exchange for, at the Company’s option, cash per unit equal to the market price per common share at the time of redemption or for common shares on aone-for-one basis. The number of shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of share splits, mergers, consolidations or similar pro-rata share transactions, which otherwise would have the effect of diluting the ownership interests of limited partners or shareholders. As of* March 31, 2025*, there were 2,224,905 vested LTIP units held by current and former employees.

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Thetwo-class method is used to determine earnings per share because unvested restricted shares and unvested LTIP units are considered to be participating shares. The LTIP units held by the non-controlling interest holders, which* maybe converted to common shares, have been excluded from the denominator of the diluted earnings per common share calculation as there would beno* effect on the amounts since limited partners' share of income or loss would also be added back to net income or loss. Unvested restricted shares, unvested long-term incentive plan units and unvested Class A Performance LTIP units that could potentially dilute basic earnings per common share in the future wouldnot be included in the computation of diluted loss per common share, for the periods where a loss has been recorded, because they would have been anti-dilutive for the periods presented. For thethree months ended* March 31, 2025and2024*, the Company excluded 881,780 and 335,621, respectively, of unvested shares and units as their effect would have been anti-dilutive.

The following is a reconciliation of the amounts used in calculating basic and diluted net income per common share (in thousands, except share and per share data):

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The Company maintains its Equity Incentive Plan to attract and retain independent trustees, executive officers and other key employees. The plan provides for the grant of options to purchase common shares, share awards, share appreciation rights, performance units and other equity-based awards. The plan was amended on* May 24, 2022to increase the maximum number of shares available under the plan by 1,600,000 shares and extend the term of the plan to March 22, 2032.Share awards under this plan generally vest over three tofive years, though compensation for the Company’s independent trustees includes share grants that vest immediately. The Company pays dividends on unvested shares and units, except for performance-based units, for which 10% of dividends on unvested performance-based units are paid and the remaining 90% of dividends are accrued andnot* paid until those units vest. Certain awards* mayprovide for accelerated vesting if there is a change in control. In January**2025* and2024, the Company issued 61,551 and 43,670 common shares, respectively, to its independent trustees as compensation for services performed in2024 and2023, respectively. As of* March 31, 2025*, there were 121,462 common shares available for issuance under the Equity Incentive Plan.

Restricted Share Awards

From time to time, the Company* may*award restricted shares under the Equity Incentive Plan as compensation to officers, employees and non-employee trustees. The Company recognizes compensation expense for the restricted shares on a straight-line basis over the vesting period based on the fair market value of the shares on the date of issuance.

A summary of the Company’s restricted share awards for thethree months ended* March 31, 2025* and the year ended* December 31, 2024* is as follows:

As of* March 31, 2025* and* December 31, 2024*, there were $92 thousand and $33 thousand, respectively, of unrecognized compensation costs related to restricted share awards. As of* March 31, 2025*, these costs were expected to be recognized over a weighted-average period of approximately 2.5 years. For thethree months ended* March 31, 2025and2024*, the Company recognized approximately $7 thousand and $13 thousand, respectively, of expense related to the restricted share awards.

Long-Term Incentive Plan Awards

LTIP units are a special class of partnership interests in the Operating Partnership which* maybe issued to eligible participants for the performance of services to or for the benefit of the Company. Under the Equity Incentive Plan, each LTIP unit issued is deemed equivalent to an award ofone* common share thereby reducing the number of shares available for other equity awards on aone-for-one basis.

A summary of the Company's LTIP unit awards for thethree months ended* March 31, 2025* and the year ended* December 31, 2024* is as follows:

Time-Based LTIP Awards

On* March 1, 2025,the Company’s Operating Partnership, upon the recommendation of the Compensation Committee, granted 253,722 time-based LTIP unit awards (the“2025* Time-Based LTIP Unit Award”). The grants were made pursuant to award agreements that provide for time-based vesting (the "LTIP Unit Time-Based Vesting Agreement").

Time-based LTIP unit awards will vest ratably provided that the recipient remains employed by the Company through the applicable vesting date, subject to acceleration of vesting in the event of the recipient’s death, disability, termination without cause or resignation with good reason, or in the event of a change of control of the Company. Prior to vesting, a holder is entitled to receive distributions on the LTIP units that comprise the2025 Time-Based LTIP Unit Awards and the prior year LTIP unit awards set forth in the table above.

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Performance-Based LTIP Awards

On* March 1, 2025,the Company's Operating Partnership, upon the recommendation of the Compensation Committee, also granted 380,571 performance-based LTIP unit awards (the"2025* Performance-Based LTIP Unit Awards"). The grants were made pursuant to award agreements that have market-based vesting conditions. The Performance-Based LTIP Unit Awards are comprised of Class A Performance LTIP Units that will vest only if and to the extent that (i) the Company achieves certain long-term market-based total shareholder return ("TSR") criteria established by the Compensation Committee and (ii) the recipient remains employed by the Company through the applicable vesting date, subject to acceleration of vesting in the event of the recipient’s death, disability, termination without cause or resignation with good reason, or in the event of a change of control of the Company. Compensation expense is based on an estimated value of $9.37 per2025 Performance-Based LTIP Unit Award, which takes into account that the number of units that ultimately* mayvest will depend on the achievement of long-term market-based TSR criteria. The2025* Performance-Based LTIP Unit Awards have an absolute negative TSR modifier which* may*reduce payout percentages if the absolute TSR over the measurement period is negative.

The2025 Performance-Based LTIP Unit Awards* maybe earned based on the Company’s relative TSR performance for thethree-year period beginning on March 1, 2025and ending on February**29,* 2028. The2025 Performance-Based LTIP Unit Awards, if earned, will be paid out between 50% and 200% of target value as follows:

Payouts at performance levels in between the hurdles will be calculated by straight-line interpolation.

The Company estimated the aggregate compensation cost to be recognized over the service period determined as of the grant date under ASC718, excluding the effect of estimated forfeitures, using a Monte Carlo approach. In determining the discounted value of the LTIP units, the Company considered the inherent uncertainty that the LTIP units would never reach parity with the other common units of the Operating Partnership and thus have an economic value ofzero to the grantee. Additional factors considered in estimating the value of LTIP units included discounts for illiquidity, expectations for future dividends, risk free interest rates, stock price volatility, and economic environment and market conditions.

The grant date fair values of the LTIPs and the assumptions used to estimate the values are as follows:

(1) In* February 2024,*following the end of the measurement period, the Company’s TSR met certain criteria and based on the Company’s TSR over the measurement period,170,173 LTIP units vested.

(2) In* February 2025,*following the end of the measurement period, the Company’s TSR met certain criteria and based on the Company’s TSR over the measurement period,142,905 LTIP units vested.

The Company recorded $1.5 million and $1.5 million in compensation expense related to the LTIP units for thethree months ended* March 31, 2025and2024*, respectively. As of* March 31, 2025* and* December 31, 2024*, there was $10.7 million and $6.8 million, respectively, of total unrecognized compensation cost related to LTIP units. This cost is expected to be recognized over approximately 2.2 years, which represents the weighted-average remaining vesting period of the LTIP units.

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The Company is the lessee under ground, property, air rights, garage and office lease agreements for certain of its properties. The Company's leases are classified as operating or finance leases. The Company recognizes a ROU asset and lease liability at the estimated present value of the minimum lease payments over the lease term. These leases typically provide multi-year renewal options to extend the term as lessee at the Company's option. Option periods are included in the calculation of the lease obligation liability only when options are reasonably certain to be exercised.

In calculating the Company's lease obligations under the various leases, the Company uses discount rates estimated to be equal to what the Company would have to pay to borrow on a collateralized basis over a similar term, for an amount equal to the lease payments, in a similar economic environment. Lease obligations are based on contractually required cash payments, while lease expense is recognized on a straight-line basis for its operating leases and as interest expense on the lease liability for its finance lease.

Operating Leases

The Residence Inn Gaslamp hotel property is subject to a ground lease with an expiration date of* January 31, 2065* with an extension option by the Company of up tothree additional terms often years each. Monthly payments are currently approximately $49 thousand per month and increase 10% every five years. The hotel is subject to annual supplemental rent payments calculated as 5% of gross revenues during the applicable lease year, minus12 times the monthly base rent scheduled for the lease year.

The Residence Inn New Rochelle hotel property is subject to an air rights lease and garage lease that each expire on* December 1,*2104. The lease agreements with the City of New Rochelle cover the space above the parking garage that is occupied by the hotel as well as 128 parking spaces in a parking garage that is attached to the hotel. The annual base rent for the garage lease is the hotel’s proportionate share of the city’s adopted budget for the operations, management and maintenance of the garage and established reserves to fund for the cost of capital repairs. Aggregate rent for2025 is approximately $31 thousand per quarter.

The Hilton Garden Inn Marina del Rey hotel property is subject to a ground lease with an expiration date of* December**31,* 2067. Minimum monthly payments are currently approximately $47 thousand per month and a percentage rent payment less the minimum rent is due in arrears equal to 5% to 25% of gross income based on the type of income.

The Company entered into a corporate office lease in* September 2015.The lease is for a term of 11 years and includes a 12-month rent abatement period and certain tenant improvement allowances. The Company has a renewal option of up totwo* successive terms offive years each. On* June 1, 2023,the Company executed an amendment to the corporate office lease to vacate and surrender possession of 7,374 rentable square feet in exchange for an early termination payment of $0.1 million. The partial termination of this lease required the Company to apply ASC842* and remeasure the right of use asset and lease liability and recognize those adjustments in the consolidated statement of operations. The Company shares the space with a related party and is reimbursed for the pro-rata share of rentable space occupied by the related party.

The Company entered into a new 10-year corporate office lease in* May 2024,which was subsequently amended in September 2024,that will commence when the Company takes possession of the space for leasehold improvements, on or before September 1, 2026.*Annual base rent will range from $0.6 million to $0.7 million over the term of the lease. The new office lease will be shared with a related party and the Company will be reimbursed for the pro-rata share of rentable space that will be occupied by the related party.

For thethree months ended* March 31, 2025*, the Company made $0.3 million of fixed lease payments and $0.2 million of variable lease payments, which are included in property taxes, ground rent and insurance in our consolidated statement of operations. For thethree months ended* March 31, 2025*, the Company made $0.2 million of fixed lease payments related to its corporate office lease, which is included in general and administrative expense in our consolidated statement of operations.

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Finance Leases

TheHome2 Phoenix hotel property is subject to a Government Property Lease Excise Tax ("GPLET") agreement with the City of Phoenix. As part of the agreement, title of the hotel property was conveyed to the City of Phoenix and leased back to the Company for a term of 8 years with fixed annual rent payments ranging from $26 thousand to $81 thousand. Title of the hotel property will be re-conveyed to the Company atno cost at the expiration of the 8-year lease term. The GPLET agreement can be terminated by the lessee at any time for a fee of $0.1 million and title of the hotel property would be re-conveyed back to the Company.

TheHome2 Phoenix ROU assets are recorded as finance lease assets within Investment in hotel properties, net and the lease liability is recorded within Lease liability in the Company’s consolidated balance sheet. Expenses related to the finance lease are included in depreciation and amortization and interest expense, in the Company’s consolidated statement of operations.

The following table includes information regarding the ROU assets and lease liabilities of the Company as of* March 31, 2025* and* December 31, 2024* (in thousands):

The following table includes information regarding the Company's total minimum lease payments for which it is the lessee, as of* March 31, 2025*, for each of the nextfive calendar years and thereafter (in thousands):

Litigation

The Company is subject to various claims, lawsuits and legal proceedings, including routine litigation arising in the ordinary course of business, regarding the operation of its hotels, its managers and other Company matters. While it isnot possible to ascertain the ultimate outcome of such matters, the Company believes that the aggregate identifiable amount of such liabilities, if any, willnot have a material adverse impact on its financial condition or results of operations.

Management Agreements

The management agreements with IHM have an initial term offive years and automatically renew fortwo five-year periods unless IHM provides written notice to usno later than90 days prior to the then current term’s expiration date of its intentnot to renew. The IHM management agreements provide for early termination at the Company’s option upon sale of any IHM-managed hotel forno termination fee, withsix months advance notice. The IHM management agreements* may*be terminated for cause, including the failure of the managed hotel to meet specified performance levels. Base management fees are calculated as a percentage of the hotel's gross room revenue. If certain financial thresholds are met or exceeded, an incentive management fee is calculated as 10% of the hotel's net operating income less fixed costs, base management fees and a specified return threshold. The incentive management fee is capped at 1% of gross hotel revenues for the applicable calculation.

Management fees totaled approximately $2.3 million and $2.3 million for thethree months ended* March 31, 2025and2024*, respectively.

Franchise Agreements

The fees associated with the franchise agreements are calculated as a specified percentage of the hotel's gross room revenue. Franchise and marketing fees totaled approximately $5.4 million and $5.5 million for thethree months ended* March 31, 2025and2024*, respectively. The initial term of the agreements range from 10 to 30 years with the weighted-average expiration being* June 2034.*

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As of* March 31, 2025*, Jeffrey H. Fisher, the Company's Chairman, President and Chief Executive Officer, owns 100% of IHM. As of* March 31, 2025*, the Company had hotel management agreements with IHM to manage all 35 of its hotels. Hotel management, revenue management and accounting fees accrued or paid to IHM for the hotels owned by the Company for thethree months ended* March 31, 2025and2024* were $2.3 million and $2.3 million, respectively. At* March 31, 2025* and* December 31, 2024*, the amounts due to IHM were $0.6 million and $0.5 million, respectively.

Cost reimbursements from related parties revenue represent reimbursements of costs incurred on behalf of IHM. These costs relate primarily to office expenses shared with IHM. Various shared office expenses and rent are paid by the Company and allocated to IHM based on the amount of square footage occupied by each entity. As the Company records cost reimbursements based upon costs incurred withno added markup, the revenue and related expense hasno impact on the Company’s operating income or net income. Cost reimbursements are recorded based upon the occurrence of a reimbursed activity.

15. Segment Information

Management evaluates the Company's hotels as a single reportable segment as a result of aggregating multiple operating segments, because all of the Company's hotels have similar economic characteristics and provide similar services to similar types of customers. Our single reportable segment comprises the structure used by our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, who collectively have been determined to be our Chief Operating Decision Maker ("CODM"), to make key operating decisions and assess performance. Our CODM evaluates our single reportable segment's operating performance based on individual hotel property net income (loss) before interest expense, income tax expense, depreciation and amortization, corporate general and administrative expense, impairment loss, loss on early extinguishment of debt, other charges, interest and other income, and gains or losses on sales of hotel properties ("Adjusted Hotel EBITDA"). Our single reportable segment's assets are consistent with total assets included in the Company's consolidated balance sheets.

The following table includes revenue, significant hotel operating expenses, and Adjusted Hotel EBITDA for the Company’s hotels, reconciled to Net income (loss) (in thousands):

(1) The difference between total hotel property level revenue and total revenue on the consolidated statements of operations is due to reimbursable costs from related parties of $0.3 million and $0.3 million for thethree months ended* March 31, 2025and2024,* respectively.

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16. Subsequent Events

On* April**22,* 2025, the Company sold the Courtyard Houston hotel property in Houston, TX for approximately $23.5 million.

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