Sunstone Hotel Investors, Inc.

Previous wording

We own hotels in convention, urban, and resort destinations that benefit from significant barriers to entry by competitors and diverse economic drivers. As of March 31, 2025, we owned 15 hotels (the “15 Hotels”), which average 484 rooms in size. All of our hotels are operated under nationally recognized brands, except the Oceans Edge Resort & Marina, which has established itself in a resort destination market.

Current wording

We own hotels in convention, urban, and resort destinations that benefit from significant barriers to entry by competitors and diverse economic drivers. As of June 30, 2025, we owned 14 hotels (the “14 Hotels”), which average 500 rooms in size. All of our hotels are operated under nationally recognized brands, except the Oceans Edge Resort & Marina, which operates independently.

Previous wording

Room revenue. Room revenue increased $9.1 million, or 6.7%, in the first quarter of 2025 as compared to the first quarter of 2024 as follows:

Current wording

Room revenue. Room revenue increased $4.8 million, or 3.1%, in the second quarter of 2025 as compared to the second quarter of 2024 as follows:

Previous wording

Food and beverage revenue*.* Food and beverage revenue increased $5.8 million, or 9.4%, in the first quarter of 2025 as compared to the first quarter of 2024, as follows:

Current wording

Food and beverage revenue*.* Food and beverage revenue increased $6.7 million, or 9.3%, in the second quarter of 2025 as compared to the second quarter of 2024, as follows:

Previous wording

Other operating revenue. Other operating revenue increased $2.0 million, or 10.0%, in the first quarter of 2025 as compared to the first quarter of 2024 as follows:

Current wording

Other operating revenue. Other operating revenue increased $0.9 million, or 3.5%, in the second quarter of 2025 as compared to the second quarter of 2024 as follows:

Previous wording

Hotel operating expenses*.*Hotel operating expenses, which are comprised of room, food and beverage, advertising and promotion, repairs and maintenance, utilities, franchise costs, property tax, ground lease and insurance, and other hotel operating expenses increased $11.0 million, or 8.1%, in the first quarter of 2025 as compared to the first quarter of 2024 as follows:

Current wording

Hotel operating expenses*.*Hotel operating expenses, which are comprised of room, food and beverage, advertising and promotion, repairs and maintenance, utilities, franchise costs, property tax, ground lease and insurance, and other hotel operating expenses increased $10.8 million, or 7.5%, in the second quarter of 2025 as compared to the second quarter of 2024 as follows:

Previous wording

Other property-level expenses*.*Other property-level expenses increased $2.1 million, or 7.6%, in the first quarter of 2025 as compared to the first quarter of 2024 as follows:

Current wording

Other property-level expenses*.*Other property-level expenses increased $3.4 million, or 12.1%, in the second quarter of 2025 as compared to the second quarter of 2024 as follows:

Previous wording

Corporate overhead expense*.*Corporate overhead expense increased $1.4 million, or 18.4%, in the first quarter of 2025 as compared to the first quarter of 2024, primarily due to increased payroll and related expenses resulting from a severance payment related to the elimination of the Chief Operating Officer position in the first quarter of 2025 in connection with the restructuring of our executive team. The increase in corporate overhead expense was also due to increased due diligence fees, professional fees, and entity-level state franchise and minimum taxes. These increased expenses were partially offset by decreased deferred stock amortization expense.

Current wording

For the first six months of 2025, corporate overhead increased $1.6 million, or 10.0%, as compared to the first six months of 2024, primarily due to increased payroll and related expenses resulting from a severance payment related to the elimination of the Chief Operating Officer position in the first quarter of 2025 in connection with the restructuring of our executive team. The increase in corporate overhead expense was also due to increased professional fees, due diligence fees, entity-level state franchise and minimum taxes, and board of director expenses. These increased expenses were partially offset by decreased deferred stock amortization expense.

Previous wording

Depreciation and amortization expense*.*Depreciation and amortization expense increased $3.2 million, or 11.1%, in the first quarter of 2025 as compared to the first quarter of 2024 as follows:

Current wording

Depreciation and amortization expense*.*Depreciation and amortization expense increased $3.0 million, or 9.7%, in the second quarter of 2025 as compared to the second quarter of 2024 as follows:

Previous wording

Interest and other income*.*Interest and other income totaled $1.6 million and $5.5 million in the first quarters of 2025 and 2024, respectively.

Current wording

Interest and other income*.*Interest and other income totaled $2.3 million and $3.5 million in the second quarters of 2025 and 2024, respectively, and $3.9 million and $9.0 million in the first six months of 2025 and 2024, respectively.

Previous wording

During the first quarters of 2025 and 2024, we recognized interest income of $1.4 million and $5.5 million, respectively. Interest income decreased in the first quarter of 2025 as compared to the first quarter of 2024 due to decreases in our cash balances following our acquisition of the Hyatt Regency San Antonio Riverwalk in April 2024. In addition, during the first quarter of 2025, we recognized property insurance recoveries of $0.1 million related to 2023 fire damage at the Hilton San Diego Bayfront, as well as other miscellaneous income of $0.1 million.

Current wording

During the second quarters of 2025 and 2024, we recognized interest income of $1.4 million and $3.2 million, respectively. Interest income decreased in the second quarter of 2025 as compared to the second quarter of 2024 due to decreases in our cash balances following our acquisition of the Hyatt Regency San Antonio Riverwalk in April 2024. In addition, during the second quarter of 2025, we recognized a $0.9 million settlement for certain property-related claims at the Oceans Edge Resort & Marina, and during

Previous wording

The increase in interest expense during the first quarter of 2025 as compared to the same period in 2024 was primarily due to a $3.0 million noncash change in the fair market value of our derivatives, and a $0.1 million increase in the amortization of deferred financing costs due to costs incurred on Term Loan 4. These increases to interest expense were partially offset by $1.0 million of interest capitalized in the first quarter of 2025 related to the extensive renovation work at The Confidante Miami Beach as it transitions to Andaz Miami Beach, with no corresponding credit to interest expense in the first quarter of 2024. In addition, interest

Current wording

The increases in interest expense during the second quarter and first six months of 2025 as compared to the same periods in 2024 were primarily due to $0.4 million and $3.4 million noncash changes in the fair market value of our derivatives, respectively, and increases of $0.2 million and $0.3 million, respectively, in the amortization of deferred financing costs due to costs incurred to extend the maturity of Term Loan 3 and on the issuance of Term Loan 4. These increases to interest expense were partially offset by increases of $0.2 million and $1.2 million of interest capitalized in the second quarter and first six months of 2025, respectively, as compared to the same periods in 2024, related to the extensive renovation work at The Confidante Miami Beach as it transitioned to Andaz Miami Beach. In addition, interest incurred on our debt increased $0.1 million and decreased $0.3 million during the second quarter and first six months of 2025, respectively, as compared to the same periods in 2024, primarily due to our $27.0 million draw on our credit facility in April 2025, fluctuations in our variable rate debt, our December 2024 repayment of the $72.1 million loan secured by the JW Marriott New Orleans, and our draw of the $100.0 million available under Term Loan 4 in December 2024.

Previous wording

Our weighted average interest rate per annum, including our variable rate debt obligations and excluding capitalized interest, was approximately 5.5% and 5.8% at March 31, 2025 and 2024, respectively. Approximately 52.7% and 51.1% of our outstanding debt had fixed interest rates or had been swapped to fixed interest rates at March 31, 2025 and 2024, respectively.

Current wording

Our weighted average interest rate per annum, including our variable rate debt obligations and excluding capitalized interest, was approximately 5.5% and 5.8% at June 30, 2025 and 2024, respectively. Approximately 51.0% and 51.1% of our outstanding debt had fixed interest rates or had been swapped to fixed interest rates at June 30, 2025 and 2024, respectively.

Previous wording

Gain on sale of assets, net. Gain on sale of assets, net totaled zero and $0.5 million for the first quarters of 2025 and 2024, respectively. In the first quarter of 2024, we recognized an additional $0.5 million net gain related to a contingency resolution at a hotel sold in a prior year.

Current wording

(Loss) gain on sale of assets, net. (Loss) gain on sale of assets, net totaled a loss of $8.8 million for both the second quarter and first six months of 2025, and zero and a net gain $0.5 million for the second quarter and first six months of 2024, respectively. In the second quarter and first six months of 2025, we recognized an $8.8 million loss on our sale of the Hilton New Orleans St. Charles. In the first six months of 2024, we recognized an additional $0.5 million net gain related to a contingency resolution at a hotel sold in a prior year.

Previous wording

Gain on extinguishment of debt. Gain on extinguishment of debt totaled zero and a nominal amount for the first quarters of 2025 and 2024, respectively. In the first quarter of 2024, we recorded a nominal gain associated with reassessments of the remaining potential employee-related obligations held in escrow associated with our assignment of a hotel to the hotel’s mortgage holder in 2020.

Current wording

Gain on extinguishment of debt. Gain on extinguishment of debt totaled zero for both the second quarter and first six months of 2025, and nominal amounts for the second quarter and first six months of 2024. In the second quarter and first six months of 2024, we recorded nominal gains associated with reassessments of the remaining potential employee-related obligations held in escrow associated with our assignment of a hotel to the hotel’s mortgage holder in 2020.

Previous wording

In the first quarter of 2025, we recognized a current income tax provision of $0.1 million, resulting from current state and federal income tax expenses.

Current wording

In the second quarter and first six months of 2025, we recognized net current income tax provisions of $37,000 and $0.1 million, respectively, resulting from current state and federal income tax expenses.

Previous wording

In the first quarter of 2024, we recognized a net current income tax benefit of $0.9 million, resulting from current state and federal income tax expenses, net of any refunds.

Current wording

In the second quarter and first six months of 2024, we recognized a current income tax provision of $0.3 million and a net current income tax benefit of $0.6 million, respectively, resulting from current state and federal income tax expenses, net of any refunds.

Previous wording

In the first two quarters of 2024, the annual dividend rate on the Series G preferred stock was the greater of 3.0% or the rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort. Beginning in the third quarter of 2024, the dividend rate increased to the greater of 4.5% or the rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort. In the third quarter of 2025, the dividend rate will increase to the greater of 6.5% or the rate equal to the Montage Healdsburg’s annual net operating income yield on the Company’s total investment in the resort.

Current wording

The annual dividend rate on the Series G preferred stock for the second quarter and first six months of 2025 was the greater of 4.5% or the rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort. For the second quarter and first six months of 2024, the annual dividend rate on the Series G preferred stock was 3.0% or the rate equal to the Montage Healdsburg’s annual net operating yield on our total investment in the resort. In the third quarter of 2025, the dividend rate will increase to the greater of 6.5% or the rate equal to the Montage Healdsburg’s annual net operating income yield on the Company’s total investment in the resort.

Previous wording

We present EBITDAre in accordance with guidelines established by the National Association of Real Estate Investment Trusts (“Nareit”), as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate.” We believe EBITDAre is a useful performance measure to help investors evaluate and compare the results of our operations from period to period in comparison to our peers. Nareit defines EBITDAre as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in

Current wording

We present EBITDAre in accordance with guidelines established by the National Association of Real Estate Investment Trusts (“Nareit”), as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate.” We believe EBITDAre is a useful performance measure to help investors evaluate and compare the results of our operations from period to period in comparison to our peers. Nareit defines EBITDAre as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates.

Previous wording

The following table reconciles our unaudited net income to EBITDAre and Adjusted EBITDAre for the three months ended March 31, 2025 and 2024 (in thousands):

Current wording

The following table reconciles our unaudited net income to EBITDAre and Adjusted EBITDAre for the three and six months ended June 30, 2025 and 2024 (in thousands):

Previous wording

The following table reconciles our unaudited net income to FFO attributable to common stockholders and Adjusted FFO attributable to common stockholders for the three months ended March 31, 2025 and 2024 (in thousands):

Current wording

The following table reconciles our unaudited net income to FFO attributable to common stockholders and Adjusted FFO attributable to common stockholders for the three and six months ended June 30, 2025 and 2024 (in thousands):

Previous wording

Adjusted FFO attributable to common stockholders increased $4.0 million, or 10.6%, in the first quarter of 2025 as compared to the first quarter of 2024 primarily due to the same reasons noted in the discussion above regarding Adjusted EBITDAre.

Current wording

Adjusted FFO attributable to common stockholders decreased $0.9 million, or 1.6%, and increased $3.1 million, or 3.3%, in the second quarter and first six months of 2025, respectively, as compared to the same periods in 2024 primarily due to the same reasons noted in the discussion above regarding Adjusted EBITDAre.

Previous wording

During the periods presented, our sources of cash included our operating activities and working capital, as well as proceeds from property insurance. Our primary uses of cash were for capital expenditures for hotels and other assets, operating expenses, repurchases of our common stock, repayments of notes payable, and dividends and distributions on our preferred and common stock. We cannot be certain that traditional sources of funds will be available in the future.

Current wording

During the periods presented, our sources of cash included our operating activities and working capital, as well as proceeds from a hotel disposition, our credit facility, key money, and property insurance. Our primary uses of cash were for capital expenditures for hotels and other assets, the acquisition of a hotel, operating expenses, repurchases of our common stock, repayments of notes payable, payment of deferred financing costs, and dividends and distributions on our preferred and common stock. We cannot be certain that the sources of funds we have relied on in the past will be available in the future.

Previous wording

provided by operating activities was $32.0 million in the first three months of 2025 as compared to $38.5 million in the first three months of 2024. The net decrease in cash provided by operating activities during the first three months of 2025 as compared to the same period in 2024 was primarily due to decreases in interest income resulting from our lower cash balances and increases in corporate-level expenses, partially offset by additional operating cash provided by the increase in travel demand benefiting our hotels as well as the acquisition of the Hyatt Regency San Antonio Riverwalk.

Current wording

Operating activities*.* Our net cash provided by or used in operating activities fluctuates primarily as a result of changes in the net cash generated by our hotels, offset by the cash paid for corporate expenses. Our net cash provided by or used in operating activities may also be affected by changes in our portfolio resulting from hotel acquisitions, dispositions or renovations. Net cash provided by operating activities was $90.8 million in the first six months of 2025 as compared to $93.3 million in the first six months of 2024. The net decrease in cash provided by operating activities during the first six months of 2025 as compared to the same period in 2024 was primarily due to decreases in interest income resulting from our lower cash balances and increases in corporate-level expenses, partially offset by additional operating cash provided by the increase in travel demand benefiting our hotels as well as the acquisition of the Hyatt Regency San Antonio Riverwalk and the post-renovation ramp-up of the Marriott Long Beach Downtown.

Previous wording

Investing activities. Our net cash provided by or used in investing activities fluctuates primarily as a result of acquisitions, dispositions and renovations of hotels and other assets. Net cash used in investing activities during the first three months of 2025 as compared to the first three months of 2024 was as follows (in thousands):

Current wording

Investing activities. Our net cash provided by or used in investing activities fluctuates primarily as a result of acquisitions, dispositions and renovations of hotels and other assets. Net cash used in investing activities during the first six months of 2025 as compared to the first six months of 2024 was as follows (in thousands):

Previous wording

During the first three months of 2024, we invested $27.7 million for renovations and additions to our portfolio and other assets.

Current wording

During the first six months of 2025, we invested $56.0 million for renovations and additions to our portfolio and other assets. This cash outflow was partially offset by $46.3 million of proceeds received from the sale of the Hilton New Orleans St. Charles, $4.0

Previous wording

During the first three months of 2025, we invested $28.2 million for renovations and additions to our portfolio and other assets and received $0.1 million in property insurance proceeds related to 2023 fire damage at the Hilton San Diego Bayfront.

Current wording

During the first six months of 2024, we paid $229.3 million to acquire the Hyatt Regency San Antonio Riverwalk, including closing costs and prorations and we invested $68.7 million for renovations and additions to our portfolio and other assets. These cash outflows were slightly offset by $0.2 million in property insurance proceeds received related to 2023 fire damage at the Hilton San Diego Bayfront.

Previous wording

Financing activities. Our net cash provided by or used in financing activities fluctuates primarily as a result of our dividends and distributions paid, issuance and repurchase of common stock, issuance and repayment of debt, including draws on our credit facility and term loans, and issuance and redemption of other forms of capital, including preferred equity. Net cash used in financing activities during the first three months of 2025 as compared to the first three months of 2024 was as follows (in thousands):

Current wording

Financing activities. Our net cash provided by or used in financing activities fluctuates primarily as a result of our dividends and distributions paid, issuance and repurchase of common stock, issuance and repayment of debt, including draws on our credit facility and term loans, and issuance and redemption of other forms of capital, including preferred equity. Net cash used in financing activities during the first six months of 2025 as compared to the first six months of 2024 was as follows (in thousands):

Previous wording

During the first three months of 2025, we paid $8.0 million to repurchase 821,771 shares of our outstanding common stock, $4.3 million to repurchase common stock to satisfy the tax obligations in connection with the vesting of restricted common stock issued to employees and $23.1 million in dividends and distributions to our preferred and common stockholders.

Current wording

During the first six months of 2025, we paid $98.5 million to repurchase 11,122,861 shares of our outstanding common stock, $4.3 million to repurchase common stock to satisfy the tax obligations in connection with the vesting of restricted common stock issued to employees, $0.5 million in deferred financing costs related to the extension of Term Loan 3’s maturity, and $44.3 million in dividends and distributions to our preferred and common stockholders. These cash outflows were partially offset by a $27.0 million draw on our credit facility.

Previous wording

During the first three months of 2024, we paid $3.2 million to repurchase common stock to satisfy the tax obligations in connection with the vesting of restricted common stock issued to employees, $0.5 million in scheduled principal payments on the loan secured by the JW Marriott New Orleans and $29.8 million in dividends and distributions to our preferred and common stockholders.

Current wording

During the first six months of 2024, we paid $3.6 million to repurchase 359,008 shares of our common stock, $3.2 million to repurchase common stock to satisfy the tax obligations in connection with the vesting of restricted common stock issued to employees, $1.1 million in scheduled principal payments on the loan secured by the JW Marriott New Orleans, and $47.2 million in dividends and distributions to our preferred and common stockholders.

Previous wording

We expect our primary uses of cash to be for operating expenses, capital investments in our hotels, repayment of principal on our debt and credit facility, interest expense, repurchases of our common stock, distributions on our common stock, dividends on our preferred stock, and acquisitions of hotels or interests in hotels.

Current wording

We expect our primary uses of cash to be for operating expenses, capital investments in our hotels, repayment of principal on our debt and credit facility, interest expense, repurchases of our common and preferred stock, distributions on our common stock, dividends on our preferred stock, and acquisitions of hotels or interests in hotels.

Previous wording

While inflation began to decrease in 2024, the recent uncertainty in the market in connection with certain international economic and political relationships, including political disputes and the imposition of tariffs affecting commodity costs, has had a negative effect on our operations. Prior to the recently announced tariffs, we experienced increases in wages, employee-related benefits, food costs, commodity costs, including those used to renovate or reposition our hotels, property taxes, liability insurance, utilities, and borrowing costs. The imposition of recently announced tariffs could exacerbate existing cost pressures and create additional inflationary pressures that could further impact our results of operations. The ability of our hotel operators to adjust rates has historically mitigated the impact of increased operating costs on our financial position and results of operations. In addition, any

Current wording

While inflation began to decrease in 2024, the recent uncertainty in the market in connection with certain international economic and political relationships, including political disputes and the imposition of tariffs affecting commodity costs, has had a negative effect on our operations. Prior to the recently announced tariffs, we experienced increases in wages, employee-related benefits, food costs, commodity costs, including those used to renovate or reposition our hotels, property taxes, liability insurance, utilities, and borrowing costs. The imposition of recently announced tariffs could exacerbate existing cost pressures and create additional inflationary pressures that could further impact our results of operations. The ability of our hotel operators to adjust rates has historically mitigated the impact of increased operating costs on our financial position and results of operations. In addition, any increases in interest rates by the Federal Reserve Board in response to increases in inflation will negatively affect our variable rate debt, resulting in increased interest payments.

Previous wording

Cash Balance. As of March 31, 2025, our unrestricted cash balance was $72.3 million. We believe that our current unrestricted cash balance and our ability to draw the $500.0 million capacity available for borrowing under the unsecured revolving credit facility will enable us to successfully manage our Company.

Current wording

Cash Balance. As of June 30, 2025, our unrestricted cash balance was $73.6 million. We believe that our current unrestricted cash balance and our ability to draw the $473.0 million capacity available for borrowing under the unsecured revolving credit facility will enable us to successfully manage our Company.

Previous wording

Debt. As of March 31, 2025, we had $845.0 million of debt, $148.8 million of cash and cash equivalents, including restricted cash, and total assets of $3.1 billion. We believe that by maintaining appropriate debt levels, staggering maturity dates, and maintaining a highly flexible structure, we will have lower capital costs than more highly leveraged companies, or companies with limited flexibility due to restrictive covenants.

Current wording

Debt. As of June 30, 2025, we had $872.0 million of debt, $144.9 million of cash and cash equivalents, including restricted cash, and total assets of $3.0 billion. We believe that by maintaining appropriate debt levels, staggering maturity dates, and

Previous wording

In April 2025, we exercised our option to extend the maturity date of Term Loan 3 from May 2025 to May 2026. In addition, in April 2025, we drew down $27.0 million on our credit facility. We intend to use the proceeds for general corporate purposes and to repay all, or substantially all, of the draw in the second quarter of 2025.

Current wording

In April 2025, we exercised our option to extend the maturity date of Term Loan 3 from May 2025 to May 2026. In addition, in April 2025, we drew down $27.0 million on our credit facility, and used the proceeds for general corporate purposes.

Previous wording

As of March 31, 2025, 52.7% of our outstanding debt had fixed interest rates or had been swapped to fixed interest rates, including our unsecured corporate-level Term Loan 1 and Term Loan 4, which totaled $275.0 million, and our two unsecured corporate-level senior notes, which totaled $170.0 million.

Current wording

As of June 30, 2025, 51.0% of our outstanding debt had fixed interest rates or had been swapped to fixed interest rates, including our unsecured corporate-level Term Loan 1 and Term Loan 4, which totaled $275.0 million, and our two unsecured corporate-level senior notes, which totaled $170.0 million.

Previous wording

The Company’s floating rate debt as of March 31, 2025 included our unsecured corporate-level Term Loan 2 and Term Loan 3 which totaled $400.0 million.

Current wording

Our floating rate debt as of June 30, 2025 included our unsecured corporate-level Term Loan 2 and Term Loan 3, which totaled $400.0 million, and the $27.0 million draw on our credit facility.

Previous wording

We may in the future seek to obtain mortgages on one or more of our 15 unencumbered hotels (subject to certain provisions under our unsecured term loans and senior notes), all of which were held by subsidiaries whose interests were pledged to our credit facilities as of March 31, 2025. Should we obtain secured financing on any or all of our unencumbered hotels, the amount of capital available through our credit facility or future unsecured borrowings may be reduced.

Current wording

We may in the future seek to obtain mortgages on one or more of our 14 unencumbered hotels (subject to certain provisions under our unsecured term loans and senior notes), all of which were held by subsidiaries whose interests were pledged to our credit facilities as of June 30, 2025. Should we obtain secured financing on any or all of our unencumbered hotels, the amount of capital available through our credit facility or future unsecured borrowings may be reduced.

Previous wording

We believe we maintain each of our hotels in good repair and condition and in general conformity with applicable franchise and management agreements, ground lease, laws, and regulations. Our capital expenditures primarily relate to the ongoing maintenance of our hotels and are budgeted in the reserve accounts described in the following paragraph. We also incur capital expenditures for cyclical renovations, hotel repositionings, and development. We invested $28.2 million and $27.7 million in our portfolio and other assets during the first three months of 2025 and 2024, respectively. As of March 31, 2025, we have contractual construction commitments totaling $51.3 million for ongoing renovations. If we renovate additional hotels in the future, our capital expenditures will likely increase.

Current wording

We believe we maintain each of our hotels in good repair and condition and in general conformity with applicable franchise and management agreements, ground lease, laws, and regulations. Our capital expenditures primarily relate to the ongoing maintenance of our hotels and are budgeted in the reserve accounts described in the following paragraph. We also incur capital expenditures for cyclical renovations, hotel repositionings, and development. We invested $56.0 million and $68.7 million in our portfolio and other assets during the first six months of 2025 and 2024, respectively. As of June 30, 2025, we have contractual construction commitments totaling $53.9 million for ongoing renovations. If we renovate additional hotels in the future, our capital expenditures will likely increase.

Previous wording

With respect to our hotels that are operated under management or franchise agreements with major national hotel brands, we are obligated to maintain an FF&E reserve account for future planned and emergency-related capital expenditures at these hotels. The amount funded into each of these reserve accounts is determined pursuant to the management and franchise agreements for each of the respective hotels, ranging between 3.0% and 5.5% of the respective hotel’s applicable annual revenue. As of March 31, 2025, our balance sheet includes restricted cash of $76.3 million, which was held in FF&E reserve accounts for future capital expenditures at the majority of our hotels. According to certain management agreements, reserve funds are to be held by the managers in restricted cash accounts, and we are not required to spend the entire amount in such reserve accounts each year.

Current wording

respective hotels, ranging between 3.0% and 5.5% of the respective hotel’s applicable annual revenue. As of June 30, 2025, our balance sheet includes restricted cash of $71.2 million, which was held in FF&E reserve accounts for future capital expenditures at the majority of our hotels. According to certain management agreements, reserve funds are to be held by the managers in restricted cash accounts, and we are not required to spend the entire amount in such reserve accounts each year.

Previous wording

Quarterly revenue also may be adversely affected by renovations and repositionings, our managers’ effectiveness in generating business and by events beyond our control, such as economic and business conditions, including a U.S. recession or increased inflation, trade conflicts and tariffs, changes impacting global travel, regional or global economic slowdowns, any flu or disease-related pandemic that impacts travel or the ability to travel, weather patterns, the adverse effects of climate change, the threat of terrorism, terrorist events, civil unrest, government shutdowns, events that reduce the capacity or availability of air travel, increased competition from other hotels in our markets, new hotel supply or alternative lodging options and unexpected changes in business, commercial travel, leisure travel, and tourism.

Current wording

Quarterly revenue also may be adversely affected by renovations and repositionings, our managers’ effectiveness in generating business and by events beyond our control, such as economic and business conditions, including a U.S. recession or increased inflation, trade conflicts and tariffs, changes impacting global travel, regional or global economic slowdowns, any flu or disease-related pandemic that impacts travel or the ability to travel, weather patterns, the adverse effects of climate change, the threat of terrorism, terrorist events, civil unrest, government shutdowns, events that reduce the capacity or availability of air travel, increased competition from other hotels in our markets, new hotel supply or alternative lodging options and unexpected changes in commercial or leisure travel.