What changed in this filing

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Item 1. Business

2025-03-12 compared with 2024-03-14 · 187 added, 311 removed, 1482 unchanged (25% of the section changed)

11 unchanged sentences

urban and resort locations with favorable growth characteristics resulting from multiple demand generators.

We own 14 of our hotel properties directly, and the remaining two hotel properties through an investment in a majority-owned consolidated joint venture entity.

We are advised by Ashford LLC, a subsidiary of Ashford Inc., through an advisory agreement.

We own 14 of our hotel properties directly and the remaining hotel property through an investment in a majority-owned consolidated joint venture entity.

We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC” or the “Advisor”), a subsidiary of Ashford Inc., through an advisory agreement.

All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC.

Asset management functions include acquisition, renovation, financing and disposition of assets, operational accountability of managers, budget review, capital expenditures and property-level strategies as compared to the day-to-day management of our hotel properties, which is performed by our hotel managers.

hotel properties, which is performed by our hotel managers.

We do not have any employees.

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has an ownership interest.

These products and services include, but are not limited to, design and construction services, debt placement and related services, audio visual services, real estate advisory and brokerage services, insurance policies covering general liability, workers compensation and business automobile claims, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services, mobile key technology and broker-dealer services, and cash management services.

These products and services include, but are not limited to, design and construction services, debt placement and related services, audio visual services, real estate advisory and brokerage services, insurance policies covering general liability, workers compensation and business automobile claims, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services, mobile key technology, broker-dealer services, and cash management services.

See note 17 to our consolidated financial statements.

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include 360,000 shares owned by trusts.

has filed a Rule 13e-3 Transaction Statement on Schedule 13E-3 and, on July 29, 2024, effected a reverse and forward stock split as part of a plan to deregister Ashford Inc.’s common stock under the Exchange Act and delist its common stock from the NYSE American LLC (the “NYSE American”).

The last day of trading of Ashford Inc.

common stock on the NYSE American was July 26, 2024.

As of December 31, 2024, Mr.

Bennett, chairman of our board of directors and his father, Mr.

Archie Bennett, Jr., together owned approximately 3,059,526 shares of our common stock (including common units, long-term incentive plan (“LTIP”) units and performance LTIP units), which represented an approximate 4.1% ownership in the Company.

Archie Bennett, Jr., together owned approximately 3,056,996 shares of our common stock and common units (including long-term incentive plan (“LTIP”) units and performance LTIP units), which represented an approximate 4.1% ownership in the Company.

Our Investment and Growth Strategies

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Our strategy is to invest in premium-branded and high-quality independent luxury hotels and resorts that are anticipated to generate RevPAR at least twice the average RevPAR for the U.S.

lodging industry, as determined by STR, LLC and are located predominantly in North America.

lodging industry, as determined by STR, LLC and are located predominantly in the United States and its territories.

We intend to concentrate our investments in markets where we believe there are significant growth opportunities, taking into consideration the risk of additional supply.

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We cannot assure you that we will enter into definitive acquisition agreements with respect to any potential acquisitions.

Active Asset Management Strategy .

Asset Management Strategy .

We rely on Ashford LLC to asset-manage the hotel properties in our portfolio, and will rely on Ashford LLC to asset-manage any hotel properties we may acquire in the future, to help maximize the operating performance, cash flow and value of each hotel.

Asset management is intended to include actively “managing” the hotel managers and holding them accountable to drive top line and bottom-line operating performances.

Asset management includes working with the hotel managers and holding them accountable to drive top line and bottom-line operating performances.

Ashford LLC aims to achieve this goal by benchmarking each asset’s performance compared to similar hotel properties within our portfolio.

LLC also closely monitors all hotel operating expenses, as well as third-party vendor and service contracts.

Ashford LLC also monitors hotel operating

If expense levels are not commensurate with the property revenues, Ashford LLC works with the property manager to implement cost-cutting initiatives.

Ashford LLC is also very active in evaluating and proposing improved strategies for the sales, marketing and revenue management initiatives of the property manager as well as its ability to drive ancillary hotel revenues (e.g., spa, food and beverage, parking, and Internet).

In addition to supervising and directing the property manager, Ashford LLC works with the brands and management companies to negotiate favorable franchise agreement and hotel management agreement terms.

Ashford LLC also actively participates in brand advisory committee meetings to provide feedback and input on new hotel brand initiatives.

Ashford LLC also evaluates and proposes strategies to improve the sales, marketing and revenue management efforts of the property manager as well as its ability to drive ancillary hotel revenues (e.g., spa, food and beverage, parking, and Internet).

Further, Ashford LLC works with the brands and management companies to negotiate favorable franchise agreement and hotel management agreement terms.

Finally, Ashford LLC participates in brand advisory committee and industry advocacy association meetings to provide feedback and input on new hotel brand and industry initiatives.

Disciplined Capital Allocation Strategy .

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Ashford LLC utilizes its extensive industry experience and capital markets expertise to influence the timing of capital deployment and recycling, and we may selectively sell hotel properties that are no longer consistent with our investment strategy or as to which returns appear to have been maximized.

To the extent we sell hotel properties, we generally intend to redeploy the capital into investment opportunities that we believe will achieve higher returns or buy back our common stock or other securities.

To the extent we sell hotel properties, we generally intend to redeploy the capital into investment opportunities that we believe will achieve higher returns, repay debt, or buy back our common stock or other securities.

As of March 10, 2025, we own interests in a high-quality, geographically diverse portfolio of 15 hotel properties located in seven states, the District of Columbia, Puerto Rico and St.

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All of the hotel properties in our portfolio are generally located in markets that exhibit strong growth characteristics resulting from multiple demand generators.

Nine of the 16 hotel properties in our portfolio operate under premium brands affiliated with Marriott International, Inc.

Eight of the 15 hotel properties in our portfolio operate under brands affiliated with Marriott International, Inc.

(“Marriott”) and Hilton Worldwide, Inc.

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Net Income Hotel

Hilton La Jolla Torrey Pines (2)

La Jolla, CA 394 75 % 78.76 % $ 253.71 $ 199.82 $ 12,836 $ 17,289

Four Seasons Resort Scottsdale Scottsdale, AZ 210 100 % 53.76 % $ 888.24 $ 477.54 $ (452) $ 23,286

The Ritz-Carlton Sarasota Sarasota, FL 276 100 % 62.46 % 580.22 362.38 13,728 21,924

The Ritz-Carlton St.

Virgin Islands 180 100 % 63.79 % 1,071.81 683.69 9,312 20,620

The Ritz-Carlton Reserve Dorado Beach (4)

Puerto Rico 96 100 % 57.54 % 2,239.48 1,288.64 5,762 19,138

Capital Hilton Washington, D.C.

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Marriott Seattle Waterfront Seattle, WA 369 100 % 72.96 % 307.67 224.48 6,172 13,996

The Clancy San Francisco, CA 410 100 % 70.81 % 309.19 218.95 (462) 9,276

Pier House Resort & Spa Key West, FL 142 100 % 71.36 % 621.36 443.41 6,903 13,604

Park Hyatt Beaver Creek Resort & Spa Beaver Creek, CO 193 100 % 56.51 % 602.93 340.71 1,200 12,092

The Notary Hotel Philadelphia, PA 499 100 % 66.99 % 234.09 156.83 6,009 11,949

Sofitel Chicago Magnificent Mile Chicago, IL 415 100 % 72.54 % 253.68 184.01 1,178 5,742

The Clancy San Francisco, CA 410 100 % 66.29 % 301.79 200.05 (2,607) 5,733

The Ritz-Carlton Lake Tahoe (2)

Truckee, CA 170 100 % 52.16 % 761.68 397.33 (9,085) 5,087

The Ritz-Carlton Sarasota Sarasota, FL 276 100 % 62.98 % 587.54 370.04 11,171 22,381

Sofitel Chicago Magnificent Mile Chicago, IL 415 100 % 70.30 % 239.57 168.42 3,392 8,183

Pier House Resort & Spa Key West, FL 142 100 % 72.66 % 641.70 466.29 6,799 15,011

Bardessono Hotel and Spa (3)

Yountville, CA 65 100 % 60.96 % 1,016.30 619.52 876 4,436

The Ritz-Carlton St.

Virgin Islands 180 100 % 66.43 % 1,099.14 730.15 8,322 22,628

Park Hyatt Beaver Creek Resort & Spa Beaver Creek, CO 193 100 % 55.81 % 645.73 360.35 1,088 12,273

Hotel Yountville Yountville, CA 80 100 % 59.76 % 648.50 387.53 1,875 3,954

Cameo Beverly Hills

Los Angeles, CA 143 100 % 72.78 % 308.71 224.69 (4,222) 987

The Ritz-Carlton Reserve Dorado Beach (5)

Puerto Rico 96 100 % 63.00 % 2,126.17 1,339.53 13,480 20,924

Four Seasons Resort Scottsdale

Scottsdale, AZ 210 100 % 48.27 % 967.22 466.92 1,138 21,863

Cameo Beverly Hills Los Angeles, CA 143 100 % 66.95 % 274.33 183.67 (5,778) (1,485)

Total / Weighted Average (5)

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(1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for a reconciliation of Hotel EBITDA by property.

We own the Hilton La Jolla Torrey Pines and the Capital Hilton in a joint venture.

We own the Capital Hilton in a joint venture.

The Hilton La Jolla Torrey Pines, which was also part of the joint venture, was sold on July 17, 2024.

The operating results of the Hilton La Jolla Torrey Pines, including $9.1 million of hotel EBITDA, is excluded from the table above.

The Hotel EBITDA represents the total amount for each hotel during our period of ownership, not our pro rata amount based on our ownership percentage.

(2) Subject to a ground lease that expires in 2067.

The ground lease contains one extension option of either 10 or 20 years dependent upon capital investment spend during the lease term.

(2) The above information, excluding Hotel net income and Hotel EBITDA, does not include the operations of the voluntary rental program with respect to condominium units not owned by the Company.

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(5) Calculated on a portfolio basis for the 15 hotel properties in our portfolio as of December 31, 2024.

Hilton La Jolla Torrey Pines, La Jolla, California

We own a 75% partnership interest in Ashford HHC Partners III LP, which is subject to a ground lease in the Hilton La Jolla Torrey Pines expiring in 2067.

CHH Torrey Pines Hotel Partners LP, a subsidiary of Ashford HHC Partners III LP, leases the Hilton La Jolla Torrey Pines hotel to CHH Torrey Pines Tenant Corp.

The remaining 25% partnership interest in Ashford HHC Partners III LP is owned by Park Hotels & Resorts, Inc.

The hotel opened in 1989 and is comprised of 394 guest rooms, including 232 king rooms, 152 queen/queen rooms and 10 suites.

Approximately $34.1 million has been spent on capital expenditures since the acquisition of the hotel by Ashford HHC Partners III LP in 2007, which has included lobby, restaurant, meeting space and room renovations.

The hotel’s location attracts all three major demand segments:

corporate transient, group meetings and leisure transient.

The famous Torrey Pines Golf Course, located on the property’s western boundary, appeals to each demand segment and provides exclusive tee times to guests staying at the hotel.

Nearly every room has a private balcony or patio with ocean, garden or golf course views.

In addition to the attraction of the golf course, the hotel is located within walking distance of the Torrey Pines State Nature Reserve with access to a number of outdoor activities and Pacific Ocean beaches.

Numerous hospitals and research facilities are located within close proximity of the hotel.

Additional property highlights include:

• Meeting Space :

Approximately 60,000 square feet of event space, including:

• 21,000 square feet of function space in 21 rooms to accommodate up to 1,500 people;

• over 32,000 square feet of outdoor function space;

• the 6,203 square foot Fairway Pavilion Ballroom overlooking the 18th fairway of Torrey Pines Golf Course South Course.

• Food and Beverage :

The Hilton La Jolla Torrey Pines hosts the Torreyana Grille and Lounge, an all-purpose, three-meal restaurant with 205 seats and the Horizons Coffee Cafe.

Both outlets overlook the golf course and the Pacific Ocean.

• Other Amenities :

The hotel has a fitness center, outdoor pool, outdoor whirlpool, tennis and pickleball courts, basketball court, business center, lush gardens and pathways, valet parking and a gift shop.

Location and Access.

The hotel is located near the Pacific Ocean in a secluded area of the famous Torrey Pines Golf Course.

The hotel is approximately 17 miles from the San Diego International Airport.

Operating History.

The following table shows certain historical information regarding the Hilton La Jolla Torrey Pines since 2021:

Year Ended December 31,

2023 2022 2021

Occupancy 78.8 % 77.3 % 57.8 %

$ 253.71 $ 250.95 $ 203.63

$ 199.82 $ 193.87 $ 117.70

Selected Financial Information.

The following tables show certain selected financial information regarding the Hilton La Jolla Torrey Pines since 2021 (dollars in thousands):

Year Ended December 31,

2023 2022 2021

Total Revenue

$ 50,715 $ 49,076 $ 25,816

Rooms Revenue

28,735 27,880 16,927

Hotel net income 12,836 13,162 1,915

Hotel net income margin 25.3 % 26.8 % 7.4 %

Hotel EBITDA (1)

17,289 17,328 6,235

Hotel EBITDA Margin (1)

34.1 % 35.3 % 24.2 %

__________________

(1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for a reconciliation of net income (loss) to Hotel EBITDA by property.

We own the Hilton La Jolla Torrey Pines in a joint venture.

The Hotel EBITDA amount for this hotel represents the total amount for this hotel, not our pro rata amount based on our 75% ownership percentage.

Capital Hilton, Washington, D.C.

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The transformed food and beverage outlets at The Clancy include completely reconfigured spaces to meet the requirements of today’s discerning traveler.

The Seven Square Tap Room, open for breakfast, lunch, dinner and cocktails, seats 118.

The Seven Square Tap Room, serves as the main dining option for the property and seats 118.

The dining area seats 78.

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During the conversion process, we commissioned two new outdoor murals, located in Block 9 and the Parklet and two sculptures, one located on a lobby wall and one on the exterior of the building.

The hotel’s original art

piece, a globe representing San Francisco’s unique position as a world class city, was moved from Block 9 to a prominent position in the Parklet.

The hotel’s original art piece, a globe representing San Francisco’s unique position as a world class city, was moved from Block 9 to a prominent position in the Parklet.

Location and Access .

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• Meeting Space :

Approximately 2,600 square feet of conference space and 2,000 square feet of wedding space overlooking the Gulf of Mexico.

Approximately 2,600 square feet of conference space and 2,000 square feet of wedding space overlooking the Gulf of America.

• Food and Beverage :

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Location and Access .

The hotel is located on a six-acre compound in the historic district of Key West, Florida, on Duval Street, at the Gulf of Mexico.

The hotel is located on a six-acre compound in the historic district of Key West, Florida, on Duval Street, at the Gulf of America.

Key West, which is the southernmost point of the Florida peninsula, is 160 miles south of Miami.

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On July 9, 2015, we acquired a 100% leasehold interest in the Bardessono Hotel and Spa in Yountville, California, which is subject to a ground lease that initially expires in 2065, with two 25-year extension options.

The Bardessono Hotel and Spa was built in 2009 and has 65 luxurious rooms and suites.

Built and operated with a primary focus on green practices and is LEED Platinum certified.

The Bardessono Hotel and Spa was built in 2009 and has 65 luxurious rooms and suites built and operated with a primary focus on green practices and is LEED Platinum certified.

In 2016 the meeting space was renovated.

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Capital investment was primarily focused on remediation and reconstruction effort due to damage sustained after Hurricane Irma.

The hotel operated as a 59-room Marriott-affiliated non-branded hotel for the majority of 2019 and re-opened as a full service Ritz-Carlton resort in late November 2019.

Additional property highlights include:

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and (iv) Coconut Cove, a second beachside 118-seat restaurant, on the grounds of the adjacent Ritz-Carlton Destination Club.

A new fresh service market, Southwind, opened in 2020, serving coffee, sandwiches, ice cream and other light fare.

A fresh service market, Southwind, opened in 2020, serving coffee, sandwiches, ice cream and other light fare.

• Other Amenities :

The resort offers a beachfront infinity-edge pool, as well as a children’s pool and hot tub, a 7,500 square foot full-service award-winning spa and a 2,000 square foot fitness center.

The resort also offers the Ritz Kids Club.

The resort offers a beachfront infinity-edge pool, as well as a children’s pool and hot tub, a 7,500 square foot full-service award-winning spa, a 2,000 square foot fitness center, the Topgolf Swing Suite and the Ritz Kids Club.

Location and Access .

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The Park Hyatt Beaver Creek Resort & Spa is an integral part of the Beaver Creek Village as the only full-service hotel with direct ski-in/ski-out access.

The Park Hyatt Beaver Creek Resort & Spa was built in 1989 and has 193 luxurious and spacious rooms, including 83 king rooms, 67 double/double rooms, 20 double/queen rooms, 22 suites and one suite parlor.

The Park Hyatt Beaver Creek Resort & Spa was built in 1989 and has 193 luxurious and spacious rooms, including 83 king rooms, 67 double/double rooms, 20 double/queen rooms, 19 suites and four suite parlors.

The hotel underwent a full lobby renovation in 2019, which included a new lobby bar and the addition of an epicurean market.

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• Other Amenities :

The resort offers an array of amenities, including the award-winning 30,000 square foot Exhale Spa, a heated outdoor pool and five outdoor hot tubs beneath a mountain waterfall, 24-hour state-of-the-art fitness club, ski valet service, outdoor fire pits, guest access to two private championship golf courses and the Beaver Creek Tennis Center.

The property also features over 18,800 square feet of fully leased, highly visible retail space in the heart of Beaver Creek.

The resort offers an array of amenities, including the award-winning 30,000 square foot Exhale Spa, a heated outdoor pool and five outdoor hot tubs, 24-hour state-of-the-art fitness club, ski valet service, outdoor fire pits, guest access to two private championship golf courses and the Beaver Creek Tennis Center.

The property also features over 18,800 square feet of highly visible retail space in the heart of Beaver Creek.

Location and Access .

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• Meeting Space :

The property has a 26,000-square-foot conference center, outdoor venues for up to 1,200 guests as well as venues overlooking the Gulf of Mexico.

The property has a 26,000-square-foot conference center, outdoor venues for up to 1,200 guests as well as venues overlooking the Gulf of America.

• Food and Beverage :

The property features four different restaurants, including the nautically inspired Jack Dusty and Ridley’s Porch, the relaxed beachfront Lido key Tiki Bar, as well as the Golf Club Grille overlooking the entire golf course.

The property features five different restaurants, including the nautically inspired Jack Dusty and Ridley’s Porch, the relaxed beachfront Lido key Tiki Bar, Rufa, as well as the Golf Club Grille overlooking the entire golf course.

• Other Amenities :

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In 2023, the guestrooms were completely renovated and the Alpine Exchange, a new retail shop and market, was added to the lobby as a new amenity.

In 2024, further capital investments were made to enhance the meeting space, fitness center, Manzanita restaurant and The Living Room.

The Ritz-Carlton Lake Tahoe was built in 2009 and has 170 luxurious and spacious rooms, including 17 suites.

The resort also offers an array of amenities, including ski-in/ski-out access to Northstar Ski Mountain, the ultra-luxury Lake Club on the shore of Lake Tahoe, a 17,000 square foot full-service spa, six food and beverage outlets, including the acclaimed Manzanita restaurant, over 37,000 square feet of flexible indoor/outdoor meeting space, two outdoor pools, state-of-the-art fitness club and yoga studio, and the Ritz Kids Club.

The resort also offers an array of amenities, including ski-in/ski-out access to Northstar Ski Mountain, the ultra-luxury Lake Club on the shore of Lake Tahoe, a 17,000 square foot full-service spa, six food and beverage outlets, including the acclaimed Manzanita restaurant, over 37,000 square feet of flexible indoor/outdoor meeting space, two outdoor pools and state-of-the-art fitness club and yoga studio.

Additional property highlights include:

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• Other Amenities :

The property offers 170 luxurious guest rooms and suites with in-room gas fireplaces and floor-to-ceiling windows, a 17,000 square foot slope-side spa with treatments themed around nature, the Ritz Kids children’s program, the Alpine Exchange retail shop and two Topgolf Swing Suites, two private firepits for an exclusive mountain experience and three Alpine-inspired luxury cabanas.

Location and Access .

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of flexible indoor/outdoor meeting space.

The 12 th floor ballroom features unparalleled 360-degree panoramic views of Los Angeles.

The 12 th floor ballroom features unparalleled 360-degree panoramic views of Beverly Hills.

• Food and Beverage :

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The property offers an outdoor pool terrace with daybeds and cabanas, state-of-the-art fitness center and a business center.

Additionally, the property includes five newly constructed and fully furnished residences which blend contemporary architecture with elegant, minimalistic design and range in size from 2,000 to 3,400 sq.

The residences are currently offered for extended-stay rentals.

Location and Access .

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The following table shows certain historical information regarding Cameo Beverly Hills since 2022:

Year Ended December 31, Year Ended

December 31, 2021 (combined) Period from

August 5, 2021 through

December 31, 2021 Period from

January 1, 2021 through

August 4, 2021

Year Ended December 31,

2024 2023 2022

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The following table shows certain selected financial information regarding Cameo Beverly Hills since 2022 (dollars in thousands):

Year Ended December 31, Year Ended

December 31, 2021 (combined) Period from

August 5, 2021 through

December 31, 2021 Period from

January 1, 2021 through

August 4, 2021

Year Ended December 31,

2024 2023 2022

Total Revenue

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__________________

(1) Hotel net income (loss) for the period before the Company’s ownership includes the predecessor hotel net income (loss) and adjustments for depreciation and interest as if the Company owned the hotel during the predecessor period.

The hotel operating results for the period from August 5, 2021 through December 31, 2021 represent the operating results since the acquisition of the hotel on August 5, 2021.

The hotel operating results for the period from January 1, 2021 through August 4, 2021 represent periods before our ownership and were obtained from the prior owner.

The Company performed a limited review of the information as part of its analysis of the acquisition.

No financial statements were prepared, audited or reviewed for the period from January 1, 2021 through August 4, 2021.

The Ritz-Carlton Reserve, Dorado, Puerto Rico

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The following table shows certain historical information regarding Ritz-Carlton Reserve Dorado Beach since 2022:

Year Ended December 31, 2023

December 31, 2022 (combined) Period from

March 11, 2022 through

December 31, 2022 Period from

Year Ended December 31, Year Ended December 31,

2022 (Combined)

Period from March 11, 2022 through December 31, 2022

January 1, 2022 through

March 10, 2022 Year Ended December 31, 2021

March 10, 2022

96 96 96 96 96

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The following table shows certain selected financial information regarding The Ritz-Carlton Reserve Dorado Beach since 2022 (dollars in thousands):

Year Ended December 31, 2023

December 31, 2022 (combined) Period from

March 11, 2022 through

December 31, 2022 Period from

Year Ended December 31, Year Ended

December 31, 2022 (Combined)

Period from March 11, 2022 through December 31, 2022

January 1, 2022 through

March 10, 2022 Year Ended December 31, 2021

March 10, 2022

Total Revenue

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The hotel operating results for the period from March 11, 2022 through December 31, 2022 represent the operating results since the acquisition of the hotel on March 11, 2022.

The hotel operating results for the period from January 1, 2022 through March 10, 2022 and for the year ended December 31, 2021 represent periods before our ownership and were obtained from the prior owner.

The hotel operating results for the period from January 1, 2022 through March 10, 2022 represent the period before our ownership and were obtained from the prior owner.

The Company performed a limited review of the information as part of its analysis of the acquisition.

The financial statements as of and for the year ended December 31, 2021 were audited and included in an amendment to our Current Report on Form 8-K filed on March 11, 2022.

No financial statements were prepared, audited or reviewed for the period from January 1, 2022 through March 10, 2022.

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The following table shows certain historical information regarding the Four Seasons Resort Scottsdale since 2022:

Year Ended December 31, 2023

December 31, 2022 (combined) Period from

December 1, 2022 through

December 31, 2022 Period from

January 1, 2022 through

November 30, 2022 Year Ended December 31, 2021

Year Ended December 31, Year Ended December 31, 2022 (Combined)

Period from December 1, 2022 through December 31, 2022 Period from January 1, 2022 through November 30, 2022

210 210 210 210 210

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The following table shows certain selected financial information regarding the Four Seasons Resort Scottsdale Hotel since 2022 (dollars in thousands):

Year Ended December 31, 2023

December 31, 2022 (combined)

December 1, 2022 through

December 31, 2022 Period from

January 1, 2022 through

November 30, 2022 Year Ended December 31, 2021

Year Ended December 31, Year Ended December 31, 2022 (Combined)

Period from December 1, 2022 through December 31, 2022 Period from January 1, 2022 through November 30, 2022

Total Revenue

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The hotel operating results for the period from December 1, 2022 through December 31, 2022 represent the operating results since the acquisition of the hotel on December 1, 2022.

The hotel operating results for the period from January 1, 2022 through November 30, 2022 and for the year ended December 31, 2021 represent periods before our ownership and were obtained from the prior owner.

The hotel operating results for the period from January 1, 2022 through November 30, 2022 represent periods before our ownership and were obtained from the prior owner.

The Company performed a limited review of the information as part of its analysis of the acquisition.

The financial statements as of and for the year ended December 31, 2021 were audited and as of and for the nine months ended September 30, 2022 and 2021 were reviewed and included in our Current Report on Form 8-K filed on December 1, 2022.

The financial statements as of and for the nine months ended September 30, 2022 were included in our Current Report on Form 8-K filed on December 1, 2022.

No financial statements were prepared, audited or reviewed for the period from October 1, 2022 through November 30, 2022.

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The team of professionals provided by Ashford LLC proactively works with our third-party hotel management companies and Remington Hospitality to attempt to maximize profitability at each of our hotel properties.

The asset management team monitors the performance of our hotel properties on a daily basis and holds frequent ownership meetings with personnel at the hotel properties and with key executives of the brands and management companies.

The asset management team works closely with our third-party hotel management companies and Remington Hospitality on key aspects of each hotel’s operation, including, among others, revenue management, market positioning, cost structure, capital and operational budgeting as well as the identification of return on investment initiatives and overall business strategy.

The asset management team monitors the performance of our hotel properties and holds regular ownership meetings with personnel at the hotel properties and with key executives of the brands and management companies.

The asset management team works with our third-party hotel management companies and Remington Hospitality on key aspects of each hotel’s operation, including, among others, revenue management, market positioning, cost structure, capital and operational budgeting as well as the identification of return on investment initiatives and overall business strategy.

We believe that our strong asset management process helps to ensure that each hotel is being operated to our and our hotel management companies’ stated standards, that our hotel properties are being adequately maintained in order to preserve the value of the asset and the safety of the hotel to customers, and that our hotel management companies are maximizing revenue and enhancing operating margins.

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Hotel Management Agreements .

Twelve of our hotel properties are operated pursuant to a hotel management agreement with one of five brand management companies and four of our hotel properties are operated pursuant to a hotel management agreement with Remington Hospitality, a hotel management company acquired by Ashford Inc.

on November 6, 2019, from

Bennett, chairman of our board of directors and chairman, chief executive officer and a significant stockholder of Ashford Inc., and Mr.

Archie Bennett, Jr., chairman emeritus of Ashford Trust.

Eleven of our hotel properties are operated pursuant to a hotel management agreement with one of five brand management companies and four of our hotel properties are operated pursuant to a hotel management agreement with Remington Hospitality, a hotel management company and a subsidiary of Ashford Inc.

Each management company receives a base management fee and may also be eligible to receive an incentive management fee if hotel operating income, as defined in the respective management agreement, exceeds certain thresholds.

The incentive management fee is generally calculated as a percentage of hotel operating income after we have received a priority return on our investment in the hotel.

The incentive management fee is

generally calculated as a percentage of hotel operating income after we have received a priority return on our investment in the hotel.

See “Certain Agreements—Hotel Management Agreements.”

Franchise Agreements .

One of our hotel properties operates under a franchise agreement.

The management agreements with Marriott (or its affiliates), Hilton (or its affiliates), Four Seasons, Hyatt or Accor allow twelve of our hotel properties to operate under the Marriott, Autograph Collection, The Ritz-Carlton, Ritz-Carlton Reserve, Hilton, Four Seasons, Park Hyatt or Sofitel brand names, as applicable, and provide benefits typically associated with franchise agreements, including, among others, the use of Marriott’s (or its affiliates), Hilton’s (or its affiliates), Four Seasons’ (or its affiliates), Hyatt’s (or its affiliates) or Accor’s (or its affiliates), applicable, reservation system and guest loyalty and reward program.

The Cameo Beverly Hills operates under a franchise agreement.

The management agreements with Marriott (or its affiliates), Hilton (or its affiliates), Four Seasons, Hyatt or Accor allow eleven of our hotel properties to operate under the Marriott, Autograph Collection, The Ritz-Carlton, Ritz-Carlton Reserve, Hilton, Four Seasons, Park Hyatt or Sofitel brand names, as applicable, and provide benefits typically associated with franchise agreements, including, among others, the use of Marriott’s (or its affiliates), Hilton’s (or its affiliates), Four Seasons’ (or its affiliates), Hyatt’s (or its affiliates) or Accor’s (or its affiliates), applicable, reservation system and guest loyalty and reward program.

Any intellectual property and trademarks of Marriott (or its affiliates), Hilton (or its affiliates), Four Seasons (or its affiliates), Hyatt (or its affiliates) or Accor (or its affiliates), as applicable, are exclusively owned and controlled by the applicable manager (or its affiliates) and the management agreement with Marriott (or its affiliates), Hilton (or its affiliates), Four Seasons, Hyatt, and Accor grants the applicable manager the rights to use such intellectual property or trademarks with respect to the applicable hotel.

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The Advisory Agreement

We are advised by Ashford LLC, a subsidiary of Ashford Inc., pursuant to the Fifth Amended and Restated Advisory Agreement, dated as of April 18, 2018, as amended on January 15, 2019, and as further amended on August 16, 2021, among us, Braemar OP, Braemar TRS, Ashford Inc.

We are advised by Ashford LLC, a subsidiary of Ashford Inc., pursuant to the Fifth Amended and Restated Advisory Agreement, dated as of April 18, 2018, as amended, among us, Braemar OP, Braemar TRS, Ashford Inc.

and Ashford LLC.

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The advisory agreement provides that Ashford LLC has no responsibility other than to render the services and take the actions described in the advisory agreement in good faith and with the exercise of due care and will not be responsible for any action our board of directors takes in following or declining to follow any of Ashford LLC’s advice or recommendations.

The advisory agreement provides that Ashford LLC (including its officers,

directors, managers, employees and members) will not be liable for any act or omission by it (or them) performed in accordance with and pursuant to the advisory agreement, except by reason of acts constituting gross negligence, bad faith, willful misconduct or reckless disregard of duties under the advisory agreement.

The advisory agreement provides that Ashford LLC (including its officers, directors, managers, employees and members) will not be liable for any act or omission by it (or them) performed in accordance with and pursuant to the advisory agreement, except by reason of acts constituting gross negligence, bad faith, willful misconduct or reckless disregard of duties under the advisory agreement.

We have agreed to indemnify and hold harmless Ashford LLC (including its partners, directors, officers, stockholders, managers, members, agents, employees and each other person or entity, if any, controlling Ashford LLC) to the full extent lawful, from and against any and all losses, claims, damages or liabilities of any nature whatsoever with respect to or arising from Ashford LLC’s acts or omissions (including ordinary negligence) in its capacity as such, except with respect to losses, claims, damages or liabilities with respect to or arising out of Ashford LLC’s gross negligence, bad faith or willful misconduct, or reckless disregard of its duties under the advisory agreement (for which Ashford LLC will indemnify us).

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The base fee is payable on the fifth business day of each month.

“Net Asset Fee Adjustment” shall be equal to (i) the product of the Sold Non-ERFP Asset Amount (as more particularly defined in the advisory agreement, but generally equal to the net sales prices of real property (other than any Enhanced Return Hotel Assets (as defined in the ERFP Agreement)) sold or disposed of after the date of the ERFP Agreement, commencing with and including the first such sale) and 0.70% plus (ii) the product of the Sold ERFP Asset Amount (as more particularly defined in the advisory agreement, but generally equal to the net sales prices of Enhanced Return Hotel Assets sold or disposed of after the date of the ERFP Agreement, commencing with and including the first such sale) and 1.07%.

Asset Amount (as more particularly defined in the advisory agreement, but generally equal to the net sales prices of Enhanced Return Hotel Assets sold or disposed of after the date of the ERFP Agreement, commencing with and including the first such sale) and 1.07%.

The minimum base fee for Braemar for each month will be equal to the greater of:

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• Equity Compensation.

To incentivize employees, officers, consultants, non-employee directors, affiliates and representatives of Ashford LLC, or its affiliates, to achieve our goals and business objectives, as established by our board of directors, in addition to the base fee and the incentive fee described above, our board of directors has the authority to make equity awards to Ashford LLC or directly to employees, officers, consultants and non-employee directors of Ashford LLC, or its affiliates, based on our achievement of certain financial and other hurdles established by our board of directors.

by our board of directors.

These annual equity awards are intended to provide an incentive to Ashford LLC and its employees to promote the success of our business.

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however, if we materially change our investment guidelines without the express consent of Ashford LLC, Ashford LLC will use its best judgment to allocate investment opportunities to us and Ashford Trust, taking into account such factors as it deems relevant, in its discretion, subject to any then-existing obligations of Ashford LLC to other entities.

In the advisory agreement, we declared our initial investment guidelines to be hotel real estate assets primarily consisting of equity or ownership interests, as well as debt investments when such debt is acquired with the intent of obtaining an equity or ownership interest, in:

In the advisory agreement, we declared

our initial investment guidelines to be hotel real estate assets primarily consisting of equity or ownership interests, as well as debt investments when such debt is acquired with the intent of obtaining an equity or ownership interest, in:

• full-service hotels and resorts with trailing 12 month average RevPAR or anticipated 12 month average RevPAR of at least twice the then-current U.S.

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Thomas, which is owned by a TRS), which in turn have engaged hotel managers to manage our hotel properties.

Each of our hotel properties, other than the

Pier House Resort & Spa, the Bardessono Hotel and Spa, Hotel Yountville and Cameo Beverly Hills (which are operated by Remington Hospitality), are operated pursuant to a hotel management agreement with one of five independent hotel management companies:

Each of our hotel properties, other than the Pier House Resort & Spa, the Bardessono Hotel and Spa, Hotel Yountville and Cameo Beverly Hills (which are operated by Remington Hospitality), are operated pursuant to a hotel management agreement with one of five independent hotel management companies:

(1) Hilton Management LLC, (2) Marriott Hotel Services, LLC (or its affiliates, The Ritz-Carlton Hotel Company, L.L.C., Ritz-Carlton (Virgin Islands), Inc., and Luxury Hotels International of Puerto Rico, Inc.), (3) Four Seasons, (4) Accor, and (5) Hyatt.

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Expiration Date Extension Options By Manager

Hilton La Jolla Torrey Pines

Two 10-year options

Capital Hilton

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Marriott Seattle Waterfront

Five 10-year options

Four 10-year options

10/1/2020 12/31/2032

Five 5-year options

Four 5-year options

The Notary Hotel

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Investment (2)

Hilton La Jolla Torrey Pines

3% 20% of operating cash flow (after deduction for capital renewals reserve and owner’s priority) Reimbursement of hotel’s pro rata share of group services 11.5% of owner’s total investment $117,465,746

Capital Hilton

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Marriott Seattle Waterfront

3% After payment of owner’s 1st priority, remaining operating profit is split between owner and manager, such that manager receives 30% of remaining operating profit that is less than the sum of $15,371,744 plus 10.75% of owner-funded capital expenses, and 50% of the operating profit in excess of such sum

Reimbursement of the hotel’s pro rata share of chain services, capped at 2.2% of gross revenues per fiscal year

3% After payment of owner’s 1st priority, remaining operating profit is split between owner and manager, such that manager receives 30% of remaining operating profit that is less than the sum of $15,113,000 plus 10.75% of owner-funded capital expenses, and 50% of the operating profit in excess of such sum Reimbursement of the hotel’s pro rata share of chain services, capped at 2.2% of gross revenues per fiscal year

Owner’s 1st Priority:

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The Clancy 5% 50% of the excess of operating profit (after deduction for contributions to the FF&E reserve) over owner’s priority up to the Spread Threshold of $3,000,000, reduced to 25% for Operating Profit exceeding the Spread Threshold.

1.5% of gross room sales $12,429,500, plus 11.5% of owner funded capital expenses

1.5% of gross room sales $12,478,067, plus 11.5% of owner funded capital expenses Not applicable

The Notary Hotel 4% 20% of the excess of operating profit over owner’s priority 1.5% of gross room sales $9,053,011 Plus 10.25% of owner-funded capital expenditures after the effective date, the amount of reserve shortfalls funded by Owner after the effective date, and the amount of owner-funded capital expenditures spent for completion of the conversion of the hotel to The Notary Hotel, up to $18,000,000

Not applicable

Sofitel Chicago Magnificent Mile 3% 20% of the amount by which the hotel’s annual net operating income exceeds a threshold amount (equal to 8% of our total investment in the hotel), capped at 2.5% of gross hotel revenues 2% of gross hotel revenues $13,891,288 plus 8% of all expenditures to fund capital improvements Not applicable

Hotel Management Fee (1)

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Investment (2)

Not applicable

Sofitel Chicago Magnificent Mile 3% 20% of the amount by which the hotel’s annual net operating income exceeds a threshold amount (equal to 8% of our total investment in the hotel), capped at 2.5% of gross hotel revenues 2% of gross hotel revenues $13,831,735 plus 8% of all expenditures to fund capital improvements

Not applicable

Pier House Resort & Spa Greater of $16,897.11

monthly or 3%

Pier House Resort & Spa Greater of $17,320 monthly or 3%

The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

Bardessono Hotel and Spa Greater of $16,897.11

monthly or 3%

Bardessono Hotel and Spa Greater of $17,320 monthly or 3%

The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

The Ritz-Carlton St.

Thomas 3.0%, comprised of a management fee of 0.4% and a royalty fee of 2.6% 20% of the excess, if any, of Operating Profit for such Fiscal Year over owner’s priority for such Fiscal Year 1.0% of gross revenues $10,634,277 plus 10.25% of the amount of owner-funded capital expenditures

Not applicable

Park Hyatt Beaver Creek Resort & Spa Greater of 3.0% or $2,487,332 on an annual basis (increased annually by lesser of CPI or 8% of prior year management fee)

12.5% Profit plus 15% of Profit less the Base Fee that is in excess of $4 million Not applicable Not applicable Not applicable

Hotel Yountville Greater of $16,897.11

monthly or 3%

Thomas 3.0%, comprised of a management fee of 0.4% and a royalty fee of 2.6% 20% of the excess, if any, of Operating Profit for such Fiscal Year over owner’s priority for such Fiscal Year 1.0% of gross revenues $11,097,622 plus 10.25% of the amount of owner-funded capital expenditures Not applicable

Park Hyatt Beaver Creek Resort & Spa Greater of 3.0% or $2,627,452 on an annual basis (increased annually by lesser of CPI or 8% of prior year management fee) 12.5% Profit plus 15% of Profit less the Base Fee that is in excess of $4 million Not applicable Not applicable Not applicable

Hotel Yountville Greater of $17,320 monthly or 3%

The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

The Ritz-Carlton Sarasota 3% 20% of Available cash flow defined as Net Operating Income minus the owner’s priority 1% of gross hotel revenues for each fiscal year, excluding member dues, initiation, or joining fees or deposits of Club members $7,471,325 plus 10.25% of the amount of future owner-funded capital expenditures

Not applicable

The Ritz-Carlton Sarasota 3% 20% of Available cash flow defined as Net Operating Income minus the owner’s priority 1% of gross hotel revenues for each fiscal year, excluding member dues, initiation, or joining fees or deposits of Club members $7,465,000 plus 10.25% of the amount of future owner-funded capital expenditures Not applicable

The Ritz-Carlton Lake Tahoe 3% The sum of (i) 15% of the amount by which Adjusted House Profit (“AHP”) for such Fiscal Year exceeds the owner’s priority;

provided, however, that in no event shall the total, aggregate sum of the Base Fee and the Incentive Fee paid to Operator in any given Fiscal Year exceed 6% of gross revenues for such Fiscal Year 1% of gross revenues for each fiscal year $8,226,742.04 plus 10% of the amount of certain owner-funded renovation expenditures, plus 10% of any other owner-funded capital expenditures after 1/1/2022 that were approved by manager, plus a varying additional credit based on the number of condominium units (which are to be constructed) in the voluntary rental program

Not applicable

Hotel Management Fee (1)

Incentive Fee Marketing Fee

Owner’s Priority (2)

Investment (2)

Cameo Beverly Hills

Greater of $16,897.11 monthly or 3% The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

The Ritz-Carlton Reserve Dorado Beach 3%, comprised of a management fee of 0.4% and a royalty fee of 2.6% $250,000 if Net House Profit exceeds Owner’s Priority plus 20% of the excess of Net House Profit over Owner’s Priority with annual true-up 1% of Gross Revenues plus allocation of reimbursable expenses $14,351,404 plus (a) 11% of any operating losses funded by owner, plus (b) 11% of certain non-routine capital expenditures incurred by manager and certain non-routine owner-funded capital expenditures, plus (c) $100,000 time the number of condominium units in the voluntary rental program at the beginning of each FY, plus (d) an amount negotiated at the beginning of each year for the West Beach Estates and East Beach Villas participating in the standard and flexible voluntary rental program

Not applicable

Four Seasons Resort Scottsdale

3% 7.5% of the amount of operating profit (after deducting property taxes, insurance premiums, and expenditures from the capital reserve) for a particular period, minus the Hurdle Amount applicable for the same period.

provided, however, that in no event shall the total, aggregate sum of the Base Fee and the Incentive Fee paid to Operator in any given Fiscal Year exceed 6% of gross revenues for such Fiscal Year 1% of gross revenues for each fiscal year $9,059,563 plus 10% of the amount of certain owner-funded renovation expenditures, plus 10% of any other owner-funded capital expenditures after 1/1/2022 that were approved by manager, plus a varying additional credit based on the number of condominium units (which are to be constructed) in the voluntary rental program Not applicable

Cameo Beverly Hills Greater of $17,320 monthly or 3% The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

The Ritz-Carlton Reserve Dorado Beach 3%, comprised of a management fee of 0.4% and a royalty fee of 2.6% $250,000 if Net House Profit exceeds Owner’s Priority plus 20% of the excess of Net House Profit over Owner’s Priority with annual true-up 1% of Gross Revenues plus allocation of reimbursable expenses $14,455,110 plus (a) 11% of any operating losses funded by owner, plus (b) 11% of certain non-routine capital expenditures incurred by manager and certain non-routine owner-funded capital expenditures, plus (c) $100,000 time the number of condominium units in the voluntary rental program at the beginning of each FY, plus (d) an amount negotiated at the beginning of each year for the West Beach Estates and East Beach Villas participating in the standard and flexible voluntary rental program Not applicable

Four Seasons Resort Scottsdale 3.5%, comprised of a management fee of 3.0% and a royalty fee of 0.5% 7.5% of the amount of operating profit (after deducting property taxes, insurance premiums, and expenditures from the capital reserve) for a particular period, minus the Hurdle Amount applicable for the same period.

If there is a negative incentive fee in any year, the negative balance will carry forward and operate as a hurdle to future incentive fees 1.47% of budgeted gross revenues.

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Any intellectual property and trademarks of Marriott (or its affiliates, including, without limitation, The Ritz-Carlton), Hilton (or its affiliates), Four Seasons (or its affiliates), Accor (or its affiliates), or Hyatt (or its affiliates), as applicable, are exclusively owned and controlled by the applicable manager or an affiliate of such manager who grants the manager rights to use such intellectual property or trademarks with respect to the applicable hotel.

Our hotel management agreements also require that we fund property-level operating costs including the hotel manager's payroll and related costs.

Below is a summary of the principal terms of the hotel management agreements with Marriott (or its affiliates), Hilton, Accor, Hyatt, Four Seasons, and Remington Hospitality.

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The remaining base term of each of our seven management agreements with Marriott (or its affiliates) ranges from approximately 6 to 42 years, expiring between December 31, 2030 and December 31, 2065.

Each of these agreements has remaining automatic extension options at the discretion of the manager, ranging from two 10-year extensions to five 10-year extensions.

Each of these agreements has remaining automatic extension options at the discretion of the manager, ranging from two 10-year extensions to four 10-year extensions.

Events of Default.

An “Event of Default” under the hotel management agreements with Marriott (or its affiliates) is generally defined to include the bankruptcy or insolvency of either party, the failure to make a payment under the hotel management agreement and failure to cure such non-payment after due notice, and a breach by either party of any other covenants or obligations in the hotel management agreement which continues beyond the applicable notice and cure period.

An “Event of Default” under the management agreements is generally defined to include the bankruptcy or insolvency of either party, the failure to make a payment under the management agreement and failure to cure such non-payment after due notice, and a breach by either party of any other covenants or obligations in the management agreement that continues beyond the applicable notice and cure period.

Termination Upon Event of Default.

A non-defaulting party may terminate the hotel management agreement upon an Event of Default (as defined in the applicable hotel management agreement) generally after the expiration of any notice and cure periods;

provided, however, the hotel management agreement may not be terminated by the non-defaulting party unless and until such Event of Default has a material adverse effect on the non-defaulting party.

In the case of The Notary Hotel, The

Clancy, and The Ritz-Carlton Reserve Dorado Beach, if the defaulting party contests such Event of Default or such material adverse effect, the non-defaulting party may not terminate unless a court of competent jurisdiction has issued a final, binding and non-appealable order finding that the Event of Default has occurred and that the default resulted in a material adverse effect.

A non-defaulting party may terminate the management agreement upon an Event of Default (as defined in the applicable management agreement) generally after the expiration of any notice and cure periods;

provided, however, the management agreement may not be terminated by the non-defaulting party unless and until such Event of Default has a material adverse effect on the non-defaulting party.

In the case of The Notary Hotel, The Clancy, and The Ritz-Carlton Reserve Dorado Beach, if the defaulting party contests such Event of Default or such material adverse effect, the non-defaulting party may not terminate unless a court of competent jurisdiction has issued a final, binding and non-appealable order finding that the Event of Default has occurred and that the default resulted in a material adverse effect.

Early Termination for Casualty .

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• If the hotel suffers a total casualty (meaning the cost of the damage to be repaired or replaced would be equal to 30% or more of the then-total replacement cost in the case of the Marriott Seattle Waterfront, 33% or more of the then replacement cost in the case of The Ritz-Carlton Lake Tahoe and The Ritz-Carlton Sarasota, and 60% or more of the then-total replacement cost in the case of The Ritz-Carlton St.

Thomas, The Ritz-Carlton Reserve Dorado Beach, The Clancy and The Notary Hotel), then either party may terminate the hotel management agreement.

Thomas, The Ritz-Carlton Reserve Dorado Beach, The Clancy and The Notary Hotel), then either party may terminate the management agreement.

Early Termination for Condemnation.

If all or substantially all of the hotel (meaning 1/3 or more of the replacement cost therefor with respect to The Ritz-Carlton Lake Tahoe and The Ritz-Carlton Sarasota and 50% or more of the replacement value of the hotel with respect to The Ritz-Carlton St.

Thomas) is taken in any condemnation or similar proceeding, or a portion of the hotel is so taken, and the result is that it is unreasonable to continue to operate the hotel in accordance with the hotel management agreement, the hotel management agreement shall terminate (provided, however, with respect to The Ritz-Carlton Lake Tahoe and The Ritz-Carlton Sarasota the hotel management agreement will be terminated at our option or the manager’s option, and with respect to The Clancy and The Notary Hotel, the hotel management agreement will be terminated only at the manager’s option).

Thomas) is taken in any condemnation or similar proceeding, or a portion of the hotel is so taken, and the result is that it is unreasonable to continue to operate the hotel in accordance with the management agreement, the hotel management agreement shall terminate (provided, however, with respect to The Ritz-Carlton Lake Tahoe and The Ritz-Carlton Sarasota the management agreement will be terminated at our option or the manager’s option, and with respect to The Clancy and The Notary Hotel, the management agreement will be terminated only at the manager’s option).

Performance Termination.

All of the hotel management agreements with Marriott (or its affiliates) are structured to provide us with a right to terminate the hotel management agreement without the payment of a termination fee if the manager fails to achieve certain criteria relating to the performance of the applicable hotel.

All of the management agreements are structured to provide us with a right to terminate without payment of a termination fee if the manager fails to achieve certain criteria relating to the performance of the applicable hotel.

The performance period is measured with respect to any two consecutive fiscal years.

The performance criteria generally includes each of the following:

(i) operating profit for each such fiscal year is less than the applicable performance termination threshold (as defined in the hotel management agreement), which, (a) in the case of Marriott Seattle Waterfront is 9.5% of the approximate total investment in the hotel, (b) in the case of The Clancy is 82.6% of the owner’s priority return (as defined in the hotel management agreement), (c) in the case of The Notary Hotel is 85% of the owner’s priority return (as defined in the hotel management agreement), (d) in the case of The Ritz-Carlton St.

(i) operating profit for each such fiscal year is less than the applicable performance termination threshold (as defined in the management agreement), which, (a) in the case of Marriott Seattle Waterfront is 9.5% of the approximate total investment in the hotel, (b) in the case of The Clancy is 82.6% of the owner’s priority return (as defined in the management agreement), (c) in the case of The Notary Hotel is 85% of the owner’s priority return (as defined in the

management agreement), (d) in the case of The Ritz-Carlton St.

Thomas is $6,000,000, plus 85% of 10.25% of owner-funded capital expenditures incurred after November 20, 2019, (e) in the case of The Ritz-Carlton Sarasota is $6,000,000, (f) in the case of The Ritz-Carlton Lake Tahoe is $7,200,000 minus the annual amount of certain shared facilities expenses relating to offsite parcels that are deemed to gross operating expenses for a fiscal year, and (g) in the case of Dorado Beach, a Ritz-Carlton Reserve, it is 75% of the owner’s priority return (as defined in the hotel management agreement), (ii) the RevPAR penetration index of the hotel during each such fiscal year is less than the revenue index threshold (as such terms are defined in the hotel management agreements) which ranges from 0.65 to 1.191 (this item is currently being negotiated for Dorado Beach, a Ritz-Carlton Reserve), and (iii) the fact that the criteria set forth in (i) or (ii) is not the result of certain disruptive events, such force majeure, major renovation, or any default by us under the hotel management agreement.

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Limitation on Termination Rights.

Our ability to exercise termination rights is subject to certain limitations if the manager or any of its affiliates are providing certain credit enhancements, loans or fundings as described in the hotel management agreement, or in certain cases, if manager’s incentive management fee is outstanding.

Our ability to exercise termination rights is subject to certain limitations if the manager or any of its affiliates are providing certain credit enhancements, loans or fundings as described in the management agreement, or in certain cases, if manager’s incentive management fee is outstanding.

Assignment and Sale.

Each management agreement with Marriott (or its affiliates) contains restrictions on our ability to sell the applicable hotel property or engage in certain change of control actions if (i) we are in default under the hotel management agreement, (ii) the transferee is known to be of bad moral character or has been convicted of a felony or is in control of or is controlled by persons who have been convicted of felonies, (iii) the transferee does not (in the reasonable judgment of manager) have sufficient financial resources and liquidity to fulfill the owner’s obligations under the hotel management agreement, (iv) the transferee has an ownership interest, either directly or indirectly, in a brand or group of hotels that competes with the manager or any affiliate thereof, or (v) the transferee is a person designated by the U.S.

Each management agreement contains restrictions on our ability to sell the applicable hotel property or engage in certain change of control actions if (i) we are in default under the management agreement, (ii) the transferee is known to be of bad moral character or has been convicted of a felony or is in control of or is controlled by persons who have been convicted of felonies, (iii) the transferee does not (in the reasonable judgment of manager) have sufficient financial resources and liquidity to fulfill the owner’s obligations under the management agreement, (iv) the transferee has an ownership interest, either directly or indirectly, in a brand or group of hotels that competes with the manager or any affiliate thereof, or (v) the transferee is a person designated by the U.S.

Department of Treasury’s Office of Foreign Assets Control or other governmental entity from to time as a “specially designated national or blocked person” or similar status, is a person described in Section 1 of U.S.

Executive Order 13224, or is a person otherwise identified by any government or legal authority as being someone with whom Marriott is prohibited from transacting business.

The management agreements with Marriott (or its affiliates) may have additional restrictions on our ability to sell the applicable hotel property or engage in certain change of control actions.

The management agreements may have additional restrictions on our ability to sell the applicable hotel property or engage in certain change of control actions.

Any sale of the property (which includes any equity transfer, whether directly or indirectly) is subject to certain conditions, including the provision of notice of such sale to the manager.

Right of First Offer.

All of the management agreements with Marriott (or its affiliates) (except for the management agreement for The Ritz-Carlton Lake Tahoe) provide the manager with a right of first negotiation with respect to a sale of the hotel (which includes the equity transfer of a controlling interest in the owner of the hotel property, whether directly or indirectly).

All of the management agreements (except for the management agreement for The Ritz-Carlton Lake Tahoe) provide the manager with a right of first negotiation with respect to a sale of the hotel (which includes the equity transfer of a controlling interest in the owner of the hotel property, whether directly or indirectly).

A sale or transfer to an affiliate is specifically excluded from this right (except in the management agreement for The Ritz-Carlton Sarasota).

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The Ritz-Carlton Reserve Dorado Beach management agreements requires that the sale must occur within 18 months after the 30-day right of first negotiation period) or the notice of sale is deemed void and we must provide a new notice to the manager.

Hilton Management Agreements

The base term of each of our two management agreements with Hilton (or its affiliates) was 10 years, expiring December 31, 2013.

All of these agreements have been extended through December 31, 2033, and all of these agreements have two 10-year automatic extension options remaining, at the discretion of the manager.

Hilton Management Agreement

The base term of our management agreement with Hilton (or its affiliates) was 10 years, expiring December 31, 2013.

The agreement has been extended through December 31, 2033, and the agreement has two 10-year automatic extension options remaining, at the discretion of the manager.

Events of Default.

An “Event of Default” under the hotel management agreements with Hilton (or its affiliates) is generally defined to include the bankruptcy or insolvency of either party, the failure to make a payment under the hotel management agreement and failure to cure such non-payment after due notice, a breach by either party of any other covenants or obligations in the hotel management agreement which continues beyond the applicable notice and grace period, failure to maintain certain alcohol licenses and permits under certain circumstances, failure by us to provide manager with sufficient working capital to operate the hotel after due notice and a termination of our operating lease due to our default under the operating lease.

An “Event of Default” under the management agreement is generally defined to include the bankruptcy or insolvency of either party, the failure to make a payment under the management agreement and failure to cure such non-payment after due notice, a breach by either party of any other covenants or obligations in the management agreement that continues beyond the applicable notice and grace period, failure to maintain certain alcohol licenses and permits under certain circumstances, failure by us to provide manager with sufficient working capital to operate the hotel after due notice and a termination of our operating lease due to our default under the operating lease.

Termination Upon Event of Default.

If an event of default occurs and continues beyond any applicable notice and cure periods set forth in the hotel management agreement, the non-defaulting party generally has, among other remedies, the option of terminating the applicable hotel management agreement upon written notice to the defaulting party.

If an event of default occurs and continues beyond any applicable notice and cure periods set forth in the management agreement, the non-defaulting party generally has, among other remedies, the option of terminating the management agreement upon written notice to the defaulting party.

Performance Termination.

Each of the management agreements with Hilton (or its affiliates) provide us with a right to terminate the hotel management agreement without the payment of a termination fee if the manager fails to achieve certain criteria relating to the performance of the applicable hotel.

The management agreement provides us with a right to terminate without payment of a termination fee if the manager fails to achieve certain criteria relating to the performance of the applicable hotel.

The performance period is measured with respect to any two consecutive fiscal years.

The performance criteria are:

(i) the hotel’s operating cash flow (before deducting our priority return) does not equal or exceed 85% of our priority return (as defined in the hotel management agreement);

and (ii) the hotel’s yield index is below the base yield index (as such terms are defined in the hotel management agreement), which is 90%.

(i) the hotel’s operating cash flow (before deducting our priority return) does not equal or exceed 85% of our priority return (as defined in the management agreement);

and (ii) the hotel’s yield index is below the base yield index (as such terms are defined in the management agreement), which is 90%.

The manager has a right to avoid a performance termination by paying to us an amount within 30 days of due notice equal to the deficiency set forth in (i) above to cure such performance default, but in no event may the manager exercise such cure with respect to more than four full operating years during the initial term or with respect to more than four full operating years during any single extension term.

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Early Termination for Casualty .

If an applicable hotel is substantially damaged by fire or other casualty such that it cannot be restored within 240 days, or if our lender doesn’t provide adequate insurance proceeds to restore the hotel, we may terminate the hotel management agreement.

If the hotel is substantially damaged by fire or other casualty such that it cannot be restored within 240 days, or if our lender doesn’t provide adequate insurance proceeds to restore the hotel, we may terminate the hotel management agreement.

If we undertake to restore the hotel or if we are required to restore the hotel because it was not substantially damaged and fail to commence such repairs within 60 days of receiving sufficient insurance proceeds to complete such work, or fail to complete such repairs within 240 days of the casualty, the manager may terminate the agreement.

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Early Termination for Condemnation.

If all or substantially all of the applicable hotel is taken in any condemnation or similar proceeding which, in our reasonable opinion, makes it infeasible to restore or continue to operate the hotel in accordance with the hotel management agreement, the hotel management agreement shall terminate.

If all or substantially all of the hotel is taken in any condemnation or similar proceeding that, in our reasonable opinion, makes it infeasible to restore or continue to operate the hotel in accordance with the hotel management agreement, the management agreement will terminate.

If it is reasonably feasible to restore the premises and operate the hotel and we fail to complete the restoration within two years of the taking, the manager may terminate the agreement.

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Assignment and Sale.

Each management agreement with Hilton (or its affiliates) provides that we cannot sell the applicable hotel to any unrelated third party, which includes the transfer of an equity interest, or engage in certain change of control actions (i) if such party has an ownership interest, either directly or indirectly, in a brand of hotels totaling at least 10 hotels and such brand competes with the manager or any affiliate thereof;

The management agreement provides that we cannot sell the hotel to any unrelated third party, which includes the transfer of an equity interest, or engage in certain change of control actions (i) if such party has an ownership interest, either directly or indirectly, in a brand of hotels totaling at least 10 hotels and such brand competes with the manager or any affiliate thereof;

(ii) if such party is known to be of ill repute or an unsuitable business associate (per gaming industry regulations where the manager holds a gaming license);

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Right of First Offer.

Each of the management agreements with Hilton (or its affiliates) provides the manager with a right of first negotiation with respect to a sale of the hotel (which includes any equity transfer, whether directly or indirectly) or lease of the hotel (if applicable).

The management agreement provides the manager with a right of first negotiation with respect to a sale of the hotel (which includes any equity transfer, whether directly or indirectly) or lease of the hotel (if applicable).

After notice of a proposed sale or lease to the manager, the manager has 30 days to elect or decline to exercise its right to purchase or lease.

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Events of Default.

An “event of default” under the hotel management agreement with Four Seasons is generally defined to include the bankruptcy or insolvency of either party, the failure to make a payment under the hotel management agreement and failure to cure such non-payment after due notice, a breach by either party of any material covenants or obligations in the hotel management agreement which continues beyond the applicable notice and grace period.

An “event of default” under the management agreement is generally defined to include the bankruptcy or insolvency of either party, the failure to make a payment under the hotel management agreement and failure to cure such non-payment after due notice, a breach by either party of any material covenants or obligations in the management agreement that continues beyond the applicable notice and grace period.

Termination Upon Event of Default.

If an event of default occurs and continues beyond any applicable notice and cure periods set forth in the management agreement, the non-defaulting party generally has, among other remedies, the option of terminating the applicable management agreement upon written notice to the defaulting party.

Performance Termination.

The hotel management agreement with Four Seasons provides us with a right to terminate the hotel management agreement without the payment of a termination fee if the manager fails to achieve certain criteria relating to the performance of the applicable hotel.

The hotel management agreement provides us with a right to terminate without payment of a termination fee if the manager fails to achieve certain criteria relating to the performance of the hotel.

The performance period is measured with respect to any two consecutive fiscal years.

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(i) the hotel’s RevPAR for such fiscal years is less than the RevPAR of the top three hotels (a) having substantially the same number of rooms as the Four Seasons Resort Scottsdale, (b) located in the Phoenix metropolitan area, (c) having substantially similar operating philosophy and components as the Four Seasons Resort Scottsdale, and (d) competing for substantially similar market segments as the Four Seasons Resort Scottsdale during the same fiscal years (ranked in terms of achieved room revenue);

and (ii) the gross operating profit for the Four Seasons Resort Scottsdale is less than 80% of the amount of budgeted gross operating profit.

and (ii) the gross operating profit for the hotel is less than 80% of the amount of budgeted gross operating profit.

Four Seasons has a right to avoid a performance termination by paying to us an amount equal to the amount by which the Four Seasons Resort Scottsdale failed to achieve 80% of budgeted gross operating profit for either or both of the fiscal years during the test period, but if Four Seasons pays such amount with respect to only one fiscal year of the applicable test period, the other fiscal year in the test period and the fiscal year immediately following the applicable test period will be deemed to constitute the next test period.

Four Seasons may not exercise its cure right twice during each 20-year extension term.

Notwithstanding the foregoing, we will not have the right to terminate this agreement if during either fiscal year during an applicable test period, one or more of the following events occurs and, in their totality, after giving effect to proceeds received from any applicable business interruption insurance, they adversely affect gross operating

profit or RevPAR:

casualty, condemnation, a force majeure event, a capital refurbishing program affecting 20% or more of the Four Seasons Resort Scottsdale.

Four Seasons may exercise its cure right only twice during each 20-year extension term.

casualty, condemnation, a force majeure event, a capital refurbishing program affecting 20% or more of the hotel.

Early Termination for Casualty.

If the Four Seasons Resort Scottsdale is damaged by fire or other casualty and the cost to repair, rebuild, or replace the hotel that is not covered by insurance would exceed 20% of the replacement cost of the hotel, then we may terminate the hotel management agreement.

We may also terminate the hotel management agreement if the casualty occurs in the last five years of the last extension term and the cost to repair, rebuild, or replace the hotel is estimated to exceed 20% of the replacement cost of the hotel.

Operator may have the right to reinstate the hotel management agreement if Owner commences the repair, rebuilding, or replacement of the hotel within five years after the termination of the hotel management agreement as a result of a fire or other casualty.

If the hotel is damaged by fire or other casualty and the cost to repair, rebuild, or replace the hotel that is not covered by insurance would exceed 20% of the replacement cost of the hotel, then we may terminate the hotel management agreement.

We may also terminate the management agreement if the casualty occurs in the last five years of the last extension term and the cost to repair, rebuild, or replace the hotel is estimated to exceed 20% of the replacement cost of the hotel.

Operator may have the right to reinstate the hotel management agreement if Owner commences the repair, rebuilding, or replacement of the hotel within five years after the termination of the management agreement as a result of a fire or other casualty.

Early Termination for Condemnation.

If all or substantially all of the Four Seasons Resort Scottsdale is taken in any condemnation or similar proceeding which, in ours and Four Season’s opinion, makes it imprudent or unreasonable to continue to operate the remaining portion of the hotel in accordance with the hotel management agreement, the hotel management agreement shall terminate.

If all or substantially all of the hotel is taken in any condemnation or similar proceeding that, in ours and Four Season’s opinion, makes it imprudent or unreasonable to continue to operate the remaining portion of the hotel in accordance with the management agreement, the management agreement will terminate.

Assignment and Sale.

The hotel management agreement with Four Seasons provides that we cannot, without Four Seasons’ prior written consent, sell, assign, transfer, or otherwise dispose of the Four Seasons Resort Scottsdale, which includes the transfer of an equity interest, or engage in certain change of control actions, if the buyer, assignee, transferee, or other recipient (i) is, or is an affiliate of, an individual or entity (either on its own or in conjunction with its affiliates) that has as a primary business (a) the operation and management of hotels or resorts, (b) the ownership and operation and management of hotels and resorts, or (c) the ownership of hotels or resorts on an active basis (as distinguished from the ownership of hotels or resorts on a passive basis) and can be foreseen to be a competitor of Four Season or any of its affiliates in the operation and management of hotels or resorts;

The management agreement provides that we cannot, without Four Seasons’ prior written consent, sell, assign, transfer, or otherwise dispose of the hotel, which includes the transfer of an equity interest, or engage in certain change of control actions, if the buyer, assignee, transferee, or other recipient (i) is, or is an affiliate of, an individual or entity (either on its own or in conjunction with its affiliates) that has as a primary business (a) the operation and management of hotels or resorts, (b) the ownership and operation and management of hotels and resorts, or (c) the ownership of hotels or resorts on an active basis (as distinguished from the ownership of hotels or resorts on a passive basis) and can be foreseen to be a competitor of Four Season or any of its affiliates in the operation and management of hotels or resorts;

(ii) does not have adequate financial capacity to perform its obligations under hotel management agreement;

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Accor Management Agreement

In connection with our acquisition of the Sofitel Chicago Magnificent Mile, our TRS lessee, as lessee of the hotel, assumed a management agreement (as amended, the “Accor management agreement”) with Accor that allows us to operate under the Sofitel brand name and utilize Accor’s services and experience in connection with the management and operation of the Sofitel Chicago Magnificent Mile.

The material terms of the Accor management agreement are summarized as follows:

The initial term of the Accor management agreement expires on December 31, 2030 and automatically renews for three consecutive 10-year renewal terms, unless the manager terminates the agreement by written notice at least 180 days prior to the expiration of the then-current term.

The initial term of the Sofitel Chicago Magnificent Mile management agreement expires on December 31, 2030 and automatically renews for three consecutive 10-year renewal terms, at the discretion of the manager.

Events of Default.

An “Event of Default” is generally defined to include the failure to make a payment under the Accor management agreement and failure to cure such non-payment after the applicable notice and cure period, the bankruptcy or insolvency of either party, a failure by either party to maintain at all times all of the insurance required to be maintained by such party and failure to cure such default after the applicable notice and cure period, the failure by either party to perform any of the material covenants in the Accor management agreement which continues beyond the applicable notice and cure period and a transfer of the Accor management agreement by either party in violation of the provisions of the Accor management agreement.

The occurrence of an Event of Default prevents the defaulting party from transferring the Accor management agreement without the consent of the non-defaulting party.

A non-defaulting party may terminate the Accor management agreement if the defaulting party (i) has breached any material representation or fails to perform any material provision of the Accor management agreement or (ii) becomes insolvent or bankrupt, in each case after the expiration of any applicable notice and cure period.

An “Event of Default” is generally defined to include the failure to make a payment under the Accor management agreement and failure to cure such non-payment after the applicable notice and cure period, the bankruptcy or insolvency of either party, a failure by either party to maintain at all times all of the insurance required to be maintained by such party and failure to cure such default after the applicable notice and cure period, the failure by either party to perform any of the material covenants in the Accor management agreement that continues beyond the applicable notice and cure period and a transfer of the Accor management agreement by either party in violation of the provisions there of.

The occurrence of an Event of Default prevents the defaulting party from transferring the management agreement without the consent of the non-defaulting party.

A non-defaulting party may terminate the management agreement if the defaulting party (i) has breached any material representation or fails to perform any material provision of the Accor management agreement or (ii) becomes insolvent or bankrupt, in each case after the expiration of any applicable notice and cure period.

In addition, the manager may terminate the Accor management agreement if we default under a mortgage relating to the hotel and fail to cure such default within the times provided.

Performance Termination.

We have the right to terminate the Accor management agreement without the payment of a termination fee if the manager fails to achieve certain criteria relating to the performance of the hotel managed by Accor.

We have the right to terminate the management agreement without payment of a termination fee if the manager fails to achieve certain criteria relating to the performance of the hotel.

The performance period is measured with respect to any two consecutive operating years.

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(i) the RevPAR for the hotel is less than 90% of the RevPAR for the hotel’s competitive set for each such operating year and (ii) the adjusted net operating income (meaning the net operating income less the hurdle amount of approximately $13.9 million plus 8% of any amounts we spent on capital expenditures) is a negative number (i.e.

less than zero) for each such operating year, provided that for any operating year in which the operation of the hotel is materially and adversely affected by a force majeure

event, a refurbishing program or major capital improvements, the RevPAR for the hotel and the adjusted net operating income for such operating years shall be adjusted equitably.

less than zero) for each such operating year, provided that for any operating year in which the operation of the hotel is materially and adversely affected by a force majeure event, a refurbishing program or major capital improvements, the RevPAR for the hotel and the adjusted net operating income for such operating years shall be adjusted equitably.

The manager will have a right up to three times in any eight-year period to avoid a performance termination by paying to us a cure amount that equals, for any operating year, the lower of (i) the amount by which the adjusted net operating income is less than zero and (ii) the amount that we would have been entitled to receive as a distribution from the hotel had the hotel not had a RevPAR shortfall.

Early Termination for Condemnation.

If all of the hotel, or a portion of the hotel that in our reasonable opinion makes it imprudent or unsuitable to use and operate the remaining portion of the hotel in accordance with the standards maintained by the Sofitel brand, is taken in any condemnation or similar proceeding, we may terminate the Accor management agreement.

Early Termination for Casualty .

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If we elect to restore the hotel, we must commence such process within 120 days after the date of the casualty and diligently proceed with the restoration of the hotel so that it meets the standards maintained by the Sofitel brand.

If we fail to complete the restoration within two years after the date of the casualty, then for so long as such failure continues, the manager may terminate the Accor management agreement.

If we fail to complete the restoration within two years after the date of the casualty, then for so long as such failure continues, the manager may terminate the management agreement.

If we or the manager terminate the Accor management agreement because of a casualty, or if we have not restored the hotel and desire to lease or sell it, we must first offer to sell the hotel to the manager.

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Assignment and Sale.

So long as we are not in default under the Accor management agreement and any advances made by the manager on our behalf would be repaid in connection with the sale, we may sell the Sofitel Chicago Magnificent Mile and assign the Accor management agreement (including as a result of a change of control) without the consent of the manager to any of our affiliates or to any person that (i) is not a competitor of the manager (as defined in the Accor management agreement), (ii) is not generally recognized in the community as being a person of ill repute or with whom a prudent business person would not wish to associate in a commercial venture, and (iii) has a minimum net worth required by the Accor management agreement, if the assignee expressly assumes the Accor management agreement.

So long as we are not in default under the management agreement and any advances made by the manager on our behalf would be repaid in connection with the sale, we may sell the Sofitel Chicago Magnificent Mile and assign the Accor management agreement (including as a result of a change of control) without the consent of the manager to any of our affiliates or to any person that (i) is not a competitor of the manager (as defined in the management agreement), (ii) is not generally recognized in the community as being a person of ill repute or with whom a prudent business person would not wish to associate in a commercial venture, and (iii) has a minimum net worth required by the management agreement, if the assignee expressly assumes the Accor management agreement.

Park Hyatt Beaver Creek Resort & Spa Management Agreement

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Events of Default.

An “Event of Default” under the Park Hyatt Beaver Creek Resort & Spa hotel management agreement is generally defined to include the failure to make a payment under the hotel management agreement and failure to cure such non-payment after due notice and a breach by either party of any other covenants or obligations in the hotel management agreement which continues beyond the applicable notice and grace period.

An “Event of Default” under the management agreement is generally defined to include the failure to make a payment under the hotel management agreement and failure to cure such non-payment after due notice and a breach by either party of any other covenants or obligations in the management agreement which continues beyond the applicable notice and grace period.

Termination Upon Event of Default.

Early Termination for Casualty.

If the applicable hotel is substantially damaged by fire or other casualty, and if, in connection with any casualty, the cost of restoring the hotel equals or exceeds 25% of the replacement cost of the hotel in the case that the casualty is covered by insurance, or 10% of the replacement cost of the hotel in the case that the casualty is not covered by insurance, then we may elect, by providing notice to Hyatt within 90 days of the occurrence of the casualty to not restore the hotel and to terminate the agreement.

If the hotel is substantially damaged by fire or other casualty, and if, in connection with any casualty, the cost of restoring the hotel equals or exceeds 25% of the replacement cost of the hotel in the case that the casualty is covered by insurance, or 10% of the replacement cost of the hotel in the case that the casualty is not covered by insurance, then we may elect, by providing notice to Hyatt within 90 days of the occurrence of the casualty to not restore the hotel and to terminate the agreement.

Early Termination for Eminent Domain.

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Assignment and Sale.

The agreement provides that we cannot sell or assign our interest in the hotel without the prior approval of Hyatt, which shall not be unreasonably withheld.

The agreement provides that we cannot sell or assign our interest in the hotel without the prior approval of Hyatt, which may not be unreasonably withheld.

Hyatt’s approval of a sale or assignment is based on the following factors:

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Remington Hospitality Master Hotel Management Agreement

In 2013, we entered into a master hotel management agreement with Remington Lodging governing the terms of Remington Lodging’s provision of hotel management services and design and construction services with respect to hotels owned or leased by us.

In connection with Ashford Inc.’s acquisition of Premier from Remington Lodging in August 2018, we amended and restated the original master hotel management agreement to provide only for hotel management services to be provided to our TRS lessees by Remington Lodging by entering into the Amended and Restated Hotel Master Management Agreement dated as of August 8, 2018, which agreement we refer to below as the “master hotel management agreement.” In connection with Ashford Inc.’s acquisition of the hotel management business of Remington Lodging on November 6, 2019, Remington Hospitality became a subsidiary of Ashford Inc., and the master hotel management agreement between Remington Hospitality and us remains in effect.

Pursuant to the master hotel management agreement, Remington Hospitality currently manages the Pier House Resort & Spa, the Bardessono Hotel and Spa, Hotel Yountville and Cameo Beverly Hills Hotel.

We are party to an Amended and Restated Hotel Master Management Agreement, dated August 8, 2018 with Remington Hospitality, which agreement we refer to below as the “master hotel management agreement.” Pursuant to the master hotel management agreement, Remington Hospitality currently manages the Pier House Resort & Spa, the Bardessono Hotel and Spa, Hotel Yountville and Cameo Beverly Hills.

The master hotel management agreement will also govern the management of hotels we acquire in the future that are managed by Remington Hospitality, which has the right to manage and operate hotel properties we acquire in the future unless our independent directors either (i) unanimously elect not to engage Remington Hospitality, or (ii) by a majority vote, elect not to engage Remington Hospitality because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in our best interest not to engage Remington Hospitality for the particular hotel, or (B) based on the prior performance of Remington Hospitality, another manager or developer could perform the management duties materially better than Remington Hospitality for the particular hotel.

See “Certain Agreements—Mutual Exclusivity Agreements—Remington Hospitality Hotel Management MEA—Exclusivity Rights of Remington Hospitality.” Prior to its acquisition by Ashford Inc.

on November 6, 2019, Remington Lodging was owned 100% by Mr.

Bennett, chairman of our board of directors and the chairman, chief executive officer and significant stockholder of Ashford Inc.

Archie Bennett, Jr.

See “Certain Agreements—Mutual Exclusivity Agreements—Remington Hospitality Hotel Management MEA—Exclusivity Rights of Remington Hospitality.”

The master hotel management agreement provides for an initial term of 10 years as to each hotel governed by the agreement.

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The incentive management fee, if any, for each hotel will be due annually in arrears within 90 days of the end of the fiscal year and will be equal to the lesser of (i) 1% of gross revenues and (ii) the amount by which the actual house profit (gross operating profit of the applicable hotel before deducting management fees or franchise fees) exceeds the target house profit as set forth in the annual operating budget approved for the applicable fiscal year, except with respect to hotels where Remington Hospitality takes over management upon our acquisition, in which case, for the first five years, the incentive management fee to be paid to Remington Hospitality, if any, is the amount by which the hotel’s actual house profit exceeds the projected house profit for such calendar year as set forth in our acquisition pro forma.

If, however, based on actual operations and revised forecasts from time to time, it is reasonably anticipated that the incentive fee is reasonably expected to be earned, the TRS lessee will consider payment of the incentive fee pro rata on a quarterly basis.

If, however, based on actual operations and revised

forecasts from time to time, it is reasonably anticipated that the incentive fee is reasonably expected to be earned, the TRS lessee will consider payment of the incentive fee pro rata on a quarterly basis.

The incentive fee is designed to encourage Remington Hospitality to generate higher house profit at each hotel by increasing the fee due to Remington Hospitality when the hotels generate house profit above certain threshold levels.

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If the consultant’s determination is in the affirmative, then Remington Hospitality must engage such consultant to assist with the cure of such performance failure for the second year of the cure period after that failure.

If the consultant’s determination is in the negative, then Remington Hospitality will be deemed not to be in default under the performance test.

If the consultant’s determination is in the negative, then Remington

Hospitality will be deemed not to be in default under the performance test.

The cost of such consultant will be shared by the TRS lessee and Remington Hospitality equally.

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Upon termination, neither the TRS lessee nor Remington Hospitality will have any further rights, remedies, liabilities or obligations under the master hotel management agreement with respect to such hotel.

If any partial taking of a property does not make it unreasonable to continue to operate the hotel, there is no right to terminate the master hotel management agreement.

If any partial taking of a property does not make it unreasonable to continue to operate the hotel, there is

no right to terminate the master hotel management agreement.

If there is an event of force majeure or any other cause beyond the control of Remington Hospitality that directly involves a hotel and has a significant adverse effect upon the continued operations of that hotel, then the master hotel management agreement may be terminated by the TRS lessee.

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The master hotel management agreement provides that not less than 45 days prior to the beginning of each fiscal year during the term of the master hotel management agreement, Remington Hospitality will submit to the TRS lessee for each of the hotels, an annual operating budget setting forth in detail an estimated profit and loss statement for each of the next 12 months (or for the balance of the fiscal year or a partial first fiscal year), including a schedule of hotel room rentals and other rentals and a marketing and business plan for each of the hotels.

The budget is subject to the TRS lessee

approval, which may not be unreasonably withheld.

The budget is subject to the TRS lessee approval, which may not be unreasonably withheld.

The budget may be revised from time to time, taking into account such circumstances as the TRS lessee deems appropriate or as business and operating conditions shall demand, subject to the reasonable approval of Remington Hospitality.

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To minimize conflicts between us and Remington Hospitality on matters arising under the master hotel management agreement, the Company’s Corporate Governance Guidelines provide that any waiver, consent, approval, modification, enforcement matters or elections which the Company may make pursuant to the terms of the master hotel management agreement shall be within the exclusive discretion and control of a majority of the independent members of the board of directors (or higher vote thresholds specifically set forth in such agreements).

In addition, our board of directors has established a Related Party Transactions Committee comprised solely of independent members of our board of directors to review all related party transactions that involve conflicts.

In addition, our board of directors has established

a Related Party Transactions Committee comprised solely of independent members of our board of directors to review all related party transactions that involve conflicts.

The Related Party Transactions Committee may make recommendations to the independent members of our board of directors (including rejection of any proposed transaction).

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Premier Master Project Management Agreement

In connection with Ashford Inc.’s acquisition of Premier from Remington Lodging in August 2018, Braemar OP, our TRSs and Premier entered into an agreement for design and construction services to be provided to us by

Premier, solely in order to effect the transfer of the design and construction business to Premier, by entering into the Master Project Management Agreement dated as of August 8, 2018, which agreement we refer to below as the “master project management agreement.” Pursuant to the master project management agreement, Premier currently provides design and construction services to all of our hotels.

We are a party to a Master Project Management Agreement dated August 8, 2018 with Premier, which agreement we refer to below as the “master project management agreement.” Pursuant to the master project management agreement, Premier currently provides design and construction services to all of our hotels.

The master project management agreement will also govern the provision of design and construction services to hotels we acquire in the future, as Premier has the right to provide design and construction services to hotel properties we acquire in the future, to the extent we have the right and/or control the right to direct the development and construction of and/or capital improvements to or refurbishment of, such hotels, unless our independent directors either (i) unanimously elect not to engage Premier, or (ii) by a majority vote, elect not to engage Premier because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in our best interest not to engage Premier for the particular hotel, or (B) based on the prior performance of Premier, another manager or developer could perform the project management, project related services or development duties materially better than Premier for the particular hotel.

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• For Convenience.

Premier with respect to the applicable hotel for the full current fiscal year in which such termination is to occur (but in no event less than the design and construction fees and market service fees for the preceding full fiscal year) and (ii) nine.

With respect to any hotel project-managed by Premier pursuant to the master project management agreement, if the TRS lessee elects for convenience to terminate the project management of such hotel, at any time, including during any renewal term, the TRS lessee must pay a termination fee to Premier, equal to the product of (i) 65% of the aggregate design and construction fees and market service fees for such hotel estimated to be payable to Premier with respect to the applicable hotel for the full current fiscal year in which such termination is to occur (but in no event less than the design and construction fees and market service fees for the preceding full fiscal year) and (ii) nine.

Implementation of Capital Improvement Budget.

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Remington Hospitality Hotel Management MEA

In 2013, we entered into a mutual exclusivity agreement with Remington Lodging.

Remington Lodging gave us a first right of refusal to purchase any lodging-related investments identified by Remington Lodging and any of its affiliates that met our initial investment criteria, and we agreed to engage Remington Lodging to provide hotel management, project management and development services for hotels we acquired or invested in, to the extent that we had the right or controlled the right to direct such matters, subject to certain conditions.

In connection with Ashford Inc.’s acquisition of Premier from Remington Lodging in August 2018, we amended and restated the original mutual exclusivity agreement to provide that Remington Lodging gave us a first right of refusal to purchase any lodging-related investments identified by Remington Lodging and any of its affiliates that met our initial investment criteria, and we agreed to engage Remington Lodging to provide hotel management for hotels we acquired or invested in, to the extent that we had the right or controlled the right to direct such matters.

As a result, concurrently with Ashford Inc.’s acquisition of Premier, we, Braemar OP and Remington Lodging entered into the Amended and Restated Mutual Exclusivity Agreement dated as of August 8, 2018, which agreement we refer to below as the “hotel management MEA.” In connection with Ashford Inc.’s acquisition of the hotel management business of Remington Lodging on November 6, 2019, Remington Hospitality became a subsidiary of Ashford Inc., and the mutual exclusivity agreement between Remington Hospitality and us remains in effect.

The initial term of the hotel management MEA is 10 years from November 19, 2013.

We are a party to an Amended and Restated Mutual Exclusivity Agreement dated August 8, 2018 with Remington Hospitality, which agreement we refer to below as the “hotel management MEA.”

The initial term of the hotel management MEA was through November 19, 2023.

This term automatically extends for three additional renewal periods of seven years each and a final renewal period of four years, for a total of up to 35 years.

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If investment opportunities are identified and are subject to the hotel management MEA, and we have not materially modified our initial investment guidelines without the written consent of Remington Hospitality, then Remington Hospitality, Mr.

Bennett and their affiliates, as the case may be, will not pursue those opportunities (except as described below) and will give us a

written notice and description of the investment opportunity, and we will have 10 business days to either accept or reject the investment opportunity.

If we reject the opportunity, Remington Hospitality may then pursue such investment opportunity, subject to a right of first refusal in favor of Ashford Trust pursuant to an existing agreement between Ashford Trust and Remington Hospitality, on materially the same terms and conditions as offered to us.

Bennett and their affiliates, as the case may be, will not pursue those opportunities (except as described below) and will give us a written notice and description of the investment opportunity, and we will have 10 business days to either accept or reject the investment opportunity.

Remington Hospitality, on materially the same terms and conditions as offered to us.

If the terms of such investment opportunity materially change, then Remington Hospitality must offer the revised investment opportunity to us, whereupon we will have 10 business days to either accept or reject the opportunity on the revised terms.

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Premier Project Management MEA

In connection with Ashford Inc.’s acquisition of Premier from Remington Lodging in August 2018, we entered into the Mutual Exclusivity Agreement dated as of August 8, 2018 with Braemar OP and Premier, which agreement we refer to below as the “project management MEA,” pursuant to which Premier gave us a first right of refusal to purchase any lodging-related investments identified by Premier and any of its affiliates that met our initial investment criteria, and we agreed to engage Premier to provide project management for hotels we acquired or invested in, to the extent that we had the right or controlled the right to direct such matters.

The initial term of the project management MEA is 10 years from November 19, 2013.

In August 2018 we entered into the Mutual Exclusivity Agreement dated as of August 8, 2018 with Braemar OP and Premier, which agreement we refer to below as the “project management MEA,” pursuant to which Premier gave us a first right of refusal to purchase any lodging-related investments identified by Premier and any of its affiliates that met our initial investment criteria, and we agreed to engage Premier to provide project management for hotels we acquired or invested in, to the extent that we had the right or controlled the right to direct such matters.

The initial term of the project management MEA was through November 19, 2023.

This term automatically extends for three additional renewal periods of seven years each and a final renewal period of four years, for a total of up to 35 years.

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Instead, Premier shall allocate investment opportunities it identifies pursuant to the terms of our advisory agreement.

A material modification for

this purpose means any modification of our initial investment guidelines to be competitive with Ashford Trust’s investment guidelines.

A material modification for this purpose means any modification of our initial investment guidelines to be competitive with Ashford Trust’s investment guidelines.

Our Exclusivity Rights.

Premier and its affiliates have granted us a first right of refusal to pursue certain lodging investment opportunities identified by Premier and its affiliates (including Mr.

Bennett), including opportunities to buy hotel properties, to buy land and build hotels, or to otherwise invest in hotel properties that satisfy our initial investment guidelines and are not considered excluded transactions pursuant to the project management MEA.

Bennett), including opportunities to buy hotel

properties, to buy land and build hotels, or to otherwise invest in hotel properties that satisfy our initial investment guidelines and are not considered excluded transactions pursuant to the project management MEA.

If investment opportunities are identified and are subject to the project management MEA, and we have not materially modified our initial investment guidelines, then Premier and its affiliates, as the case may be, will not pursue those opportunities (except as described below) and will give us a written notice and description of the investment opportunity, and we will have 10 business days to either accept or reject the investment opportunity.

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Three of the hotels we acquired from Ashford Trust in connection with the spin-off are owned by our operating partnership and leased to subsidiaries of Braemar TRS.

Two of our hotels are held in a joint venture in which we have a 75% equity interest.

The two hotels owned by the joint venture are leased to subsidiaries of the joint venture, which two subsidiaries we

have elected to treat as TRSs.

Two of our hotels have been held in a joint venture in which we have a 75% equity interest, until one of the hotels was sold in July 2024.

The two hotels owned by the joint venture are leased to subsidiaries of the joint venture, which two subsidiaries we have elected to treat as TRSs.

Since 2013 Braemar TRS has formed multiple subsidiaries which lease acquired hotels.

Braemar TRS has elected to be treated as a TRS.

Generally, we intend to lease all hotels we acquire in the future, other than pursuant to sale-leaseback transactions with unrelated third parties, to a TRS lessee, pursuant to the terms of leases that are generally similar to the terms of the existing leases, unless not appropriate based on relevant regulatory factors.

relevant regulatory factors.

Ashford LLC will negotiate the terms and provisions of each future lease, considering such things as the purchase price paid for the hotel, then current economic conditions and any other factors deemed relevant at the time.

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Each TRS lessee is responsible for all routine repair and maintenance of the hotels, and our operating partnership will be responsible for non-routine capital expenditures.

We own substantially all personal property (other than inventory, linens, ERFP FF&E and other nondepreciable personal property) not affixed to, or deemed a part of, the real estate or improvements on our hotels, unless ownership of such personal property would cause the rent under a lease not to qualify as “rents from real property” for REIT income test purposes.

We own substantially all personal property (other than inventory, linens and other nondepreciable personal property) not affixed to, or deemed a part of, the real estate or improvements on our hotels, unless ownership of such personal property would cause the rent under a lease not to qualify as “rents from real property” for REIT income test purposes.

Insurance and Property Taxes.

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However, regardless of insurance coverage, if damage or destruction rendering the property unsuitable for its primary intended purpose occurs within 24 months of the end of the lease term, we may terminate the lease with 30 days’ notice.

If the lease remains in effect and the damage does not result in a reduction of gross revenues at the hotel, the TRS lessee’s obligation to pay rent will be unabated.

lease remains in effect and the damage does not result in a reduction of gross revenues at the hotel, the TRS lessee’s obligation to pay rent will be unabated.

If, however, the lease remains in effect but the damage does result in a reduction of gross revenues at the hotel, the TRS lessee will be entitled to a certain amount of rent abatement while the hotel is being repaired.

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This cure period may be extended or certain specified, unavoidable delays.

Ground Leases

Two of our hotels are subject to ground leases that cover all of the land underlying the respective hotels.

Hilton La Jolla Torrey Pines.

The Hilton La Jolla Torrey Pines is subject to a ground lease with the City of San Diego and expires May 31, 2067.

The lease term may be extended by either 10 years or 20 years depending on the amount of capital spent at the hotel.

If 5% of gross income is spent on capital expenditures during the lease term, the term may be extended by 10 years.

If 6% of gross income is spent on capital expenditures during the lease term, the term may be extended by 20 years.

Rent is payable monthly and is the greater of minimum rent or percentage rent, determined monthly, with an annual true-up.

Commencing January 1, 1993 and every five years thereafter, minimum rent is adjusted to be 80% of the annual average of actual rents paid or accrued during the preceding five-year period, but in no event may such rent be adjusted downwards.

Percentage rent is determined from a percentage of room and banquet rental revenue, food and beverage sales, alcohol sales, lobby, gift shop and coin operated machine and telephone sales and other authorized uses.

Percentage rent is adjusted at least six months prior to the end of (December 31, 2027) and thereafter at least six months prior to each 10th year by mutual agreement to provide fair rental to landlord.

The lease may be assigned with the landlord’s prior written consent.

Upon any assignment or a sublease of a majority of the premises, 2% of the gross amounts paid for the assignment or sublease are payable to the landlord except in the instances of a transfer to an affiliate or a mortgage foreclosure.

In addition, 2% of the net proceeds are payable to the landlord in the event of a refinancing.

One of our hotels is subject to ground lease that cover all of the land underlying the hotel.

Bardessono Hotel and Spa.

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Rent is payable monthly and is the greater of minimum rent or percentage rent with an annual true-up on October 1.

Each year, annual base minimum rent is increased (but never decreased) by an amount equal to the percentage increase in CPI Index during the prior 12-month period that starts on September 1 and ends on August 31.

Each year, annual base minimum rent is increased (but never decreased) by an amount equal to the percentage increase in CPI Index during the prior 12-month period that starts on September 1 and

ends on August 31.

In no event will the index percentage be less than 101.5% nor more than 103.5% multiplied by the annual base minimum rent payable by tenant during the lease year just ending.

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These costs could be substantial and liability under these laws may attach without regard to whether the owner or operator knew of, or was responsible for, the presence of the contaminants, and the liability may be joint and several.

presence of contamination or the failure to remediate contamination at our hotels may expose us to third-party liability or materially and adversely affect our ability to sell, lease or develop the real estate or to incur debt using the real estate as collateral.

The presence of contamination or the failure to remediate contamination at our hotels may expose us to third-party liability or materially and adversely affect our ability to sell, lease or develop the real estate or to incur debt using the real estate as collateral.

Our hotels are subject to various federal, state, and local environmental, health and safety laws and regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from emergency generators, storm water and wastewater discharges, lead-based paint, mold and mildew and waste management.

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In addition, the presence of significant mold or other airborne contaminants could expose us to liability from guests or employees at our hotels and others if property damage or health concerns arise.

We carry comprehensive general liability, “All Risk” property, business interruption, cybersecurity, directors and officers, rental loss coverage and umbrella liability coverage on all of our hotels and earthquake, wind, flood and hurricane coverage on hotels in areas where we believe such coverage is warranted, in each case with limits of liability that we deem adequate.

hotels in areas where we believe such coverage is warranted, in each case with limits of liability that we deem adequate.

Similarly, we are insured against the risk of direct physical damage in amounts we believe to be adequate to reimburse us, on a replacement basis, for costs incurred to repair or rebuild each hotel, including loss of rental income during the reconstruction period.

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All of our filed reports can also be obtained at the SEC’s website at www.sec.gov.

In addition, our Code of Business Conduct and Ethics, Code of Ethics for the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, Corporate Governance Guidelines, and Board Committee Charters are also available free-of-charge on our website or can be made available in print upon request.

available free-of-charge on our website or can be made available in print upon request.

A description of any substantive amendment or waiver of our Code of Business Conduct and Ethics or our Code of Ethics for the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer will be disclosed on our website under the Corporate Governance section.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business