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Item 1A. Risk Factors

2025-03-12 compared with 2024-03-14 · 60 added, 106 removed, 854 unchanged (16% of the section changed)

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Because economic conditions in the United States may affect demand within the hospitality industry, current and future economic conditions in the United States, including slower growth, stock market volatility and recession fears, could have a material adverse impact on our earnings and financial condition.

Economic conditions may be affected by numerous factors, including but not limited to, the pace of economic growth and/or recessionary concerns, inflation, increases in the levels of unemployment, energy prices, changes in currency exchange rates, uncertainty about government fiscal and tax policy, geopolitical events, the regulatory environment and the availability of credit and interest rates.

Economic conditions may be affected by numerous factors, including but not limited to, the pace of economic growth and/or recessionary concerns, inflation, increases in the levels of unemployment, energy prices, tariffs and trade barriers, changes in currency exchange rates, uncertainty about government fiscal and tax policy, geopolitical events, the regulatory environment and the availability of credit and interest rates.

President Trump has indicated that his administration is likely to impose significant tariffs on imported goods.

The imposition of such

tariffs may strain international trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported from the United States.

Our cash, cash equivalents and investments could be adversely affected if the financial institutions in which we hold our cash, cash equivalents and investments fail.

We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation (the “FDIC”) insurance limit.

The FDIC took control and was appointed receiver of Silicon Valley Bank, New York Signature Bank and First Republic Bank on March 10, 2023, March 12, 2023 and May 1, 2023, respectively.

The Company does not have any direct exposure to Silicon Valley Bank, New York Signature Bank or First Republic Bank.

However, if other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.

We did not pay dividends on our common stock in fiscal years 2020 and 2021 and we may not pay dividends on our common stock or preferred stock in the future.

The board of directors declared cash dividends on the Company’s 5.5% Series B Cumulative Convertible Preferred Stock, 8.25% Series D Cumulative Preferred Stock, Series E Redeemable Preferred Stock and Series M Redeemable Preferred Stock for each quarter of 2022 and 2023 in amounts that such holders of our preferred stock are entitled to receive.

We did not pay dividends on our common stock in fiscal years 2020 and 2021.

In March 2022, the board of directors approved an update to our previously announced dividend policy for 2022 to revise our then-expectation to pay a quarterly dividend of $0.01 per share of common stock during 2022.

Our board of directors declared quarterly cash dividends of $0.01 per diluted share for the Company’s common stock for the quarters ending March 30, 2022, June 30, 2022 and September 30, 2022.

On December 8, 2022, our board of directors increased the quarterly cash dividend from $0.01 per diluted share to $0.05 per diluted share beginning with the Company’s common stock dividend for the fourth quarter of 2022 and approved the Company’s dividend policy for 2023.

The Company paid a quarterly cash dividend of $0.05 per share for the Company’s common stock for 2023, or $0.20 per share on an annualized basis.

We regularly maintain cash balances at our banks in excess of the Federal Deposit Insurance Corporation (the “FDIC”) insurance limit.

If our banks enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.

We may not pay dividends on our common stock or preferred stock in the future.

The board of directors declared cash dividends on the Company’s 5.5% Series B Cumulative Convertible Preferred Stock and 8.25% Series D Cumulative Preferred Stock for each quarter of 2024 and 2023 and for the Company’s Series E Redeemable Preferred Stock and Series M Redeemable Preferred Stock for each month of 2024 and 2023.

The Company paid a quarterly cash dividend of $0.05 per share for the Company’s common stock for each of 2023 and 2024, or $0.20 per share on an annualized basis.

On December 10, 2024, our board of directors approved the Company’s dividend policy for 2025.

The approval of our dividend policy does not commit our board of directors to declare future dividends with respect to any quantity or the amount thereof and the board of directors may decide not to pay any dividends on our common stock and/or preferred stock.

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If we fail to pay dividends on our common stock or preferred stock, the market price of our common stock or preferred stock will likely be adversely affected.

We are required to make minimum base advisory fee payments to our advisor, Ashford Inc., under our advisory agreement, which must be paid even if our total market capitalization and performance decline.

We are required to make minimum base advisory fee payments to our Advisor, Ashford LLC, under our advisory agreement, which must be paid even if our total market capitalization and performance decline.

Similarly, we are required to make minimum base hotel management fee payments under our hotel management agreements with Remington Hospitality, a subsidiary of Ashford Inc., which must be paid even if revenues at our hotels decline significantly.

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Our business is significantly influenced by the economies and other conditions in the specific markets in which we operate, particularly in the metropolitan areas where we have high concentrations of hotels.

Our hotels are located in the Washington, D.C., San Francisco, San Diego, Sarasota, Scottsdale, Seattle, Philadelphia, Chicago, Key West, Vail/Beaver Creek, Lake Tahoe, Los Angeles and St.

Our hotels are located in the Washington, D.C., San Francisco, Sarasota, Scottsdale, Seattle, Philadelphia, Chicago, Key West, Vail/Beaver Creek, Lake Tahoe, Los Angeles and St.

Thomas metropolitan areas.

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Stockton, Alex Rose, Deric S.

Eubanks, Justin Coe, and J.

Robison Hays III, and the extent and nature of the relationships they have developed with hotel franchisors, operators, and owners and hotel lending and other financial institutions are critically important to the success of our business.

Eubanks and Justin Coe, and the extent and nature of the relationships they have developed with hotel franchisors, operators, and owners and hotel lending and other financial institutions are critically important to the success of our business.

The loss of services of one or more members of Ashford LLC’s management team could harm our business and our prospects.

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The “G&A Ratio” will be calculated as the simple average of the ratios of total general and administrative expenses paid, less any non-cash expenses but including any dead-deal costs, in the applicable quarter by each member of a select peer group, divided by the total market capitalization of such peer group member (as provided in our advisory agreement).

Since the base management fee is subject to this minimum amount and because a portion of such fees are contingent on our performance, the fees we pay to our advisor may fluctuate over time.

Since the base management fee is subject to this minimum amount and because a portion of such fees are contingent on our performance, the

fees we pay to our Advisor may fluctuate over time.

However, regardless of our advisor’s performance, the total amount of fees and reimbursements paid to our Advisor as a percentage of market capitalization will never be less than the average of internalized expenses of our industry peers (as provided in our advisory agreement), and there may be times when the total amount of fees and incentives paid to our Advisor greatly exceeds the average of internalized expenses of our industry peers.

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If we do identify an appropriate acquisition candidate, we may not be able to successfully negotiate the terms of the acquisition.

In addition, we expect to finance future acquisitions through a combination of the use of retained cash flows, property-level debt, and offerings of equity and debt securities, which may result in additional leverage or dilution to our

stockholders.

Any delay or failure on our part to identify, negotiate, finance on favorable terms, consummate and integrate such acquisitions could materially impede our growth.

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Our joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on a co-venturer’s financial condition and disputes between us and our co-venturers.

We own interests in two hotels through a joint venture and we do not have sole decision-making authority regarding these two properties.

We own interests in one hotel through a joint venture and we do not have sole decision-making authority regarding this property.

In addition, we may continue to co-invest with third parties through partnerships, joint ventures or other entities, acquiring controlling or noncontrolling interests in, or sharing responsibility for, managing the affairs of a property, partnership, joint venture or other entity.

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Franchisors or managers may also require us to make certain capital improvements to maintain the hotel in accordance with system standards, the cost of which can be substantial.

A franchisor or manager could condition the continuation of branding and operational support based on the completion of capital improvements

that Ashford LLC or our board of directors determines is not economically feasible in light of general economic conditions, the operating results or prospects of the affected hotel or other circumstances.

A franchisor or manager could condition the continuation of branding and operational support based on the completion of capital improvements that Ashford LLC or our board of directors determines is not economically feasible in light of general economic conditions, the operating results or prospects of the affected hotel or other circumstances.

In that event, Ashford LLC or our board of directors may elect to allow the franchise or management agreement to lapse or be terminated, which could result in a termination charge as well as a change in branding or operation of the hotel as an independent hotel.

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One of those conditions is that the TRS must hire, to manage the hotels, an “eligible independent contractor” (“EIC”) that is actively engaged in the trade or business of managing hotels for parties other than the REIT.

An EIC cannot (i) own more than 35% of the REIT, (ii) be owned more than 35% by persons owning more than 35% of the REIT, or (iii) provide any income to the REIT (i.e., the EIC cannot pay fees to the REIT, and the REIT cannot own any debt or equity securities of the EIC).

An EIC cannot (i) own more than 35% of the REIT, (ii) be owned more than 35% by persons owning more than 35% of the REIT, or

(iii) provide any income to the REIT (i.e., the EIC cannot pay fees to the REIT, and the REIT cannot own any debt or equity securities of the EIC).

Accordingly, while we may lease hotels to a TRS that we own, the TRS must engage a third-party operator to manage the hotels.

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When we enter into or acquire properties subject to any such management agreements, we may be precluded from taking actions that we believe to be in our best interest and could incur substantial expense as a result.

Ten of our hotels currently operate under Marriott or Hilton brands;

Eight of our hotels currently operate under Marriott or Hilton brands;

therefore, we are subject to risks associated with concentrating our portfolio in just two brand families.

Ten of our 16 hotels utilize brands owned by Marriott (or its affiliates) or Hilton (or its affiliates).

Eight of our 15 hotels utilize brands owned by Marriott (or its affiliates) or Hilton (or its affiliates).

As a result, our success is dependent in part on the continued success of Marriott and Hilton and their respective brands (or the brands of their affiliates).

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if we are found to be in breach of a ground lease or are unable to renew a ground lease, our business could be materially and adversely affected.

Some of our hotels are on land subject to ground leases, two of which cover the entire property.

Accordingly, we only own a long-term leasehold or similar interest, rather than a fee interest, in those two hotels.

Some of our hotels are on land subject to ground leases, one of which cover the entire property.

Accordingly, we only own a long-term leasehold or similar interest, rather than a fee interest, in that hotel.

If we fail to make a payment on a ground lease or are otherwise found to be in breach of a ground lease, we could lose the right to use the hotel or the portion of the hotel property that is subject to the ground lease.

In addition, unless we can purchase the fee simple interest in the underlying land and improvements, or extend the terms of these ground leases before their expiration, we will lose our right to operate these properties and our interest in the improvements upon expiration of the ground leases.

In addition, unless we can purchase the fee simple interest in the underlying land and improvements, or extend the terms of these ground leases before their expiration, we will lose our right to operate that hotel property and our interest in the improvements upon expiration of the ground lease.

We may not be able to renew any ground lease upon its expiration, of if renewed, the terms may not be favorable.

Our ability to exercise any extension options relating to our ground leases is subject to the condition that we are not in default under the terms of the ground lease at the time we exercise such options.

If we lose the right to use a hotel due to a breach or non-renewal of the ground lease, we would be unable to derive income from such hotel and would need to purchase an interest in another hotel to attempt to replace that income, which could materially and adversely affect our business, operating results and prospects.

Our ability to exercise any extension options relating to our ground lease is subject to the condition that we are not in default under the terms of the ground lease at the time we exercise such options.

If we lose the right to use a hotel due to a breach or non-renewal of the ground lease, we would be unable to

derive income from such hotel and would need to purchase an interest in another hotel to attempt to replace that income, which could materially and adversely affect our business, operating results and prospects.

Our ability to refinance a hotel property subject to a ground lease may be negatively impacted as the ground lease expiration date approaches.

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Furthermore, if the state or federal government seizes a hotel subject to a ground lease under its eminent domain power, we may only be entitled to a portion of any compensation awarded for the seizure.

The expansion of our business into new markets outside of the United States will expose us to risks relating to owning hotels in those international markets.

As part of our business strategy, we may acquire hotels that meet our investment criteria and are located in international markets.

We may have difficulty managing our expansion into new geographic markets where we have limited knowledge and understanding of the local economy, an absence of business relationships in the area, or unfamiliarity with local governmental and permitting procedures and regulations.

There are risks inherent in conducting business outside of the United States, which include risks related to:

• foreign employment laws and practices, which may increase the reimbursable costs incurred under our advisory agreement associated with international employees;

• foreign tax laws, which may provide for income or other taxes or tax rates that exceed those of the U.S.

and which may provide that foreign earnings that are repatriated, directly or indirectly, are subject to dividend withholding tax requirements or other restrictions;

• compliance with and unexpected changes in regulatory requirements or monetary policy;

• the willingness of domestic or international lenders to provide financing and changes in the availability, cost and terms of such financing;

• adverse changes in local, political, economic and market conditions;

• increased costs of insurance coverage related to terrorist events;

• changes in interest rates and/or currency exchange rates;

• regulations regarding the incurrence of debt;

• difficulties in complying with U.S.

rules governing REITs while operating outside of the United States.

Any of these factors could affect adversely our ability to obtain all of the intended benefits of expanding internationally.

If we do not effectively manage this expansion and successfully integrate the international hotels into our organization, our operating results and financial condition may be adversely affected.

Compliance with international laws and regulations may require us to incur substantial costs.

The operations of our international properties, if any, will be subject to a variety of U.S.

and international laws and regulations, including the United States Foreign Corrupt Practices Act (“FCPA”).

Before we invest in international markets, we will adopt policies and procedures designed to promote compliance with the FCPA and other anti-corruption laws, but we may not continue to be found to be operating in compliance with, or be able to detect violations of, any such laws or regulations.

In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international properties might be subject and the manner in which existing laws might be administered or interpreted.

Exchange rate fluctuations could adversely affect our financial results.

If we acquire hotels or conduct operations in an international jurisdiction, currency exchange rate fluctuations could adversely affect our results of operations and financial position.

If we have international operations, a portion of our revenue and expenses could be generated in foreign currencies such as the Euro, the Canadian dollar and the British pound sterling.

Any steps we take to reduce our exposure to fluctuations in the value of foreign currencies, such as entering into foreign exchange agreements or currency exchange hedging arrangements will not eliminate such risk entirely.

To the extent that we are unable to match revenue received in foreign currencies with expenses paid in the same currency, exchange rate fluctuations could have a negative impact on our results of operations and financial condition.

Additionally, because our consolidated financial results are reported in U.S.

dollars, if we generate revenues or earnings in other currencies, the conversion of such amounts into U.S.

dollars can result in an increase or decrease in the amount of our revenues or earnings.

We are increasingly dependent on information technology, and cyber-attacks, security problems or other disruption and expanding social media vehicles present new risks.

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Ashford LLC’s and hotel managers’ networks and storage applications could be subject to unauthorized access by hackers or others through cyber-attacks, which are rapidly evolving and becoming increasingly sophisticated, or by other means, or may be breached due to operator error, malfeasance or other system disruptions.

During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain employee personal information.

We have completed an investigation and have identified certain employee information that may have been exposed, but we have not identified that any customer information was exposed.

During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain personal information.

We have completed an investigation and have identified certain information that may have been exposed and notified potentially impacted individuals pursuant to applicable state guidelines.

All systems have been restored.

Privacy and information security risks have generally increased in recent years because of the proliferation of new

technologies, such as ransomware, and the increased sophistication and activities of perpetrators of cyber-attacks.

Privacy and information security risks have generally increased in recent years because of the proliferation of new technologies, such as ransomware, and the increased sophistication and activities of perpetrators of cyber-attacks.

Further, there has been a surge in widespread cyber-attacks during and since the COVID-19 pandemic, and the use of remote work environments and virtual platforms may increase our risk of cyber-attack or data security breaches.

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Our properties are susceptible to extreme weather conditions, which may cause property damage or interrupt business, which could harm our business and results of operations.

Certain of our hotels are located in areas that may be subject to extreme weather conditions, including, but not limited to, hurricanes, floods, tornados and winter storms in the United States and the Caribbean.

Certain of our hotels are located in areas that may be subject to extreme weather conditions, including, but not limited to, hurricanes, floods, tornados, fires and winter storms in the United States and the Caribbean.

Such extreme weather conditions may interrupt our operations, damage our hotels, and reduce the number of guests who visit our hotels in such areas.

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Over time, these conditions could result in declining hotel demand, significant damage to our properties or our inability to operate the affected hotels at all.

We believe that our properties are adequately insured, consistent with industry standards, to cover reasonably anticipated losses that may be caused by hurricanes, earthquakes, tornados, floods and other severe weather conditions and natural disasters.

We believe that our properties are adequately insured, consistent with industry standards, to cover reasonably anticipated losses that may be caused by hurricanes, earthquakes, tornados, floods, fires and other severe weather conditions and natural disasters.

Nevertheless, we are subject to the risk that such insurance will not fully cover all losses and, depending on the severity of the event and the impact on our properties, such insurance may not cover a significant portion of the losses including but not limited to the costs associated with evacuation.

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Generally, our mortgage debt carries maturity dates or call dates such that the loans become due prior to their full amortization.

It may be difficult to refinance or extend the maturity of such loans on terms acceptable to us, or at all.

It may be difficult to refinance or extend the maturity of such loans on terms

acceptable to us, or at all.

These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.

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however, our board will have only ten business days to make a determination with respect to such opportunity prior to it being available to Ashford Trust.

The above mentioned dual responsibilities may create conflicts of interest for our officers that could result in decisions or allocations of investments that

may benefit Ashford Trust more than they benefit our company, and Ashford Trust may compete with us with respect to certain investments that we may want to acquire.

The above mentioned dual responsibilities may create conflicts of interest for our officers that could result in decisions or allocations of investments that may benefit Ashford Trust more than they benefit our company, and Ashford Trust may compete with us with respect to certain investments that we may want to acquire.

Ashford LLC and its employees, some of whom are our executive officers, face competing demands relating to their time and this may adversely affect our operations.

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We may not receive the necessary support and assistance we require or would otherwise receive if we were internally managed by persons working exclusively for us.

We provide funds to Ashford Inc.

to fund the formation, registration and ongoing funding needs of Ashford Securities, which could result in certain conflicts of interest.

There can be no assurance Ashford Securities will continue to be successful in helping us raise capital.

In connection with the formation of Ashford Securities by Ashford Inc.

in September of 2019, we and Ashford Trust entered into a contribution agreement to provide funds to Ashford Inc.

to fund the formation, registration and ongoing funding requirements of Ashford Securities.

As a result, Ashford Securities’ operation and management may be influenced or affected by conflicts of interest arising out of its relationship with us, and Ashford Trust.

Additionally, the agreements between us and our related parties, including Ashford Securities, may not be arm's-length agreements and may not be as favorable to our investors as would be the case if the parties were operating at arm’s-length.

There can be no assurance that Ashford Securities will continue to be successful in helping us to raise capital.

Conflicts of interest with Remington Hospitality and Premier, each of which is a subsidiary of Ashford Inc., could result in our management acting other than in our stockholders’ best interest.

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We expect Premier will also provide design and construction services to us in the future.

Conflicts of interest in general and specifically relating to Remington Hospitality and Premier may lead to management decisions that are not in our stockholders’ best interest.

Bennett and Mr.

Archie Bennett, Jr., beneficially owned 100% of Remington Lodging prior to its acquisition by Ashford Inc.

on November 6, 2019.

Conflicts of interest in general and

specifically relating to Remington Hospitality and Premier may lead to management decisions that are not in our stockholders’ best interest.

As of December 31, 2024, Mr.

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To the extent we have the right or control the right to direct such matters, the hotel management MEA requires us to engage Remington Hospitality to provide, under the master hotel management agreement, hotel management services for all future properties that we acquire, unless our independent directors either (i) unanimously vote not to hire Remington Hospitality, or (ii) based on special circumstances or past performance, by a majority vote, elect not to engage Remington Hospitality because they have determined, in their reasonable business judgment, that it would be in our best interest not to engage Remington Hospitality or that another manager or developer could perform the duties materially better.

The project management MEA and master project management

agreement with Premier contains similar provisions.

The project management MEA and master project management agreement with Premier contains similar provisions.

A beneficial owner of a significant position in Ashford Inc.

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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.

If we reject such an investment opportunity, either Ashford Trust or Remington Hospitality could pursue the opportunity and compete with us.

If we reject such an investment opportunity, either

Ashford Trust or Remington Hospitality could pursue the opportunity and compete with us.

In such a case, Mr.

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has an interest.

In connection with this policy, our board of directors has established a Related Party Transactions Committee (consisting of Messrs.

Vaziri and Rinaldi and Ms.

In connection with this policy, our board of directors has established a Related Party Transactions Committee (consisting of Mr.

Rinaldi and Ms.

Carter), which is empowered to deny a new proposed interested party transaction or recommend the transaction for approval by a majority of the independent directors.

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In addition to general economic conditions, new hotel room supply is an important factor that can affect the lodging industry’s performance, and overbuilding has the potential to further exacerbate the negative impact of an economic recession.

Room rates and occupancy, and thus RevPAR, tend to increase when demand growth exceeds supply

Room rates and occupancy, and thus RevPAR, tend to increase when demand growth exceeds supply growth.

An adverse change in lodging fundamentals could result in returns that are substantially below our expectations or result in losses, which could have a material adverse effect on our business and operating results.

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Furthermore, labor agreements may limit the ability of our hotel managers to reduce the size of hotel workforces during an economic downturn because collective bargaining agreements are negotiated between the hotel managers and labor unions.

Our ability, if any, to

have any material impact on the outcome of these negotiations is restricted by and dependent on the individual management agreement covering a specific property, and we may have little ability to control the outcome of these negotiations.

Our ability, if any, to have any material impact on the outcome of these negotiations is restricted by and dependent on the individual management agreement covering a specific property, and we may have little ability to control the outcome of these negotiations.

In addition, changes in labor laws may negatively impact us.

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In addition, our hotel properties may be subject to environmental liabilities.

An owner or operator of real property can face liability for environmental contamination created by the presence or discharge of hazardous substances on the property.

operator of real property can face liability for environmental contamination created by the presence or discharge of hazardous substances on the property.

We may face liability regardless of:

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Our environmental insurance policies may not provide sufficient coverage for any environmental liabilities at our properties.

In addition, if environmental liabilities are discovered during the underwriting of the insurance policies for any

property that we acquire in the future, we may be unable to obtain insurance coverage for the liabilities at commercially reasonable rates or at all.

In addition, if environmental liabilities are discovered during the underwriting of the insurance policies for any property that we acquire in the future, we may be unable to obtain insurance coverage for the liabilities at commercially reasonable rates or at all.

We may experience losses as a result of any of these events.

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government or an award of damages to private litigants, or both.

In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes, and other land use regulations as they may be adopted by governmental agencies and bodies and become applicable to our properties.

applicable to our properties.

Any requirement to make substantial modifications to our hotel properties, whether to comply with the ADA or other changes in governmental rules and regulations, could be costly.

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Subject to the terms of any outstanding classes or series of preferred stock, these actions can be taken without obtaining stockholder approval.

of additional classes of common stock or preferred stock could have the effect of delaying or preventing someone from taking control of us, even if our stockholders believe that a change in control was in their best interests.

Our issuance of additional classes of common stock or preferred stock could have the effect of delaying or preventing someone from taking control of us, even if our stockholders believe that a change in control was in their best interests.

Certain provisions in the partnership agreement for our operating partnership may delay or prevent unsolicited acquisitions of us.

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• subject to the terms of our charter, prevent the ownership, transfer and/or accumulation of shares in order to protect our status as a REIT or for any other reason deemed to be in the best interests of us and our stockholders;

• subject to the terms of any outstanding classes or series of preferred stock, issue additional shares without obtaining stockholder approval, which could dilute the ownership of our then-current stockholders;

• subject to the terms of any outstanding classes or series of preferred stock, issue additional shares of common stock and/or common units without obtaining stockholder approval, which could dilute the ownership of our then-current stockholders;

• subject to the terms of any outstanding classes or series of preferred stock, amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series, without obtaining stockholder approval;

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In addition, our charter eliminates our directors’ and officers’ liability to us and our stockholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or a judgment of active and deliberate dishonesty that was material to the cause of action.

Our charter requires us to indemnify our directors and officers and to advance expenses prior to the final disposition of a proceeding to the maximum extent permitted by Maryland law for liability actually incurred in connection with any proceeding to which they may be made, or threatened to be made, a party, except to the extent that the act or omission of the director or officer was material to the matter giving rise to the proceeding and was either committed in bad faith or was the result of active and deliberate dishonesty, the director or officer actually received an improper personal benefit in money, property or services,

or, in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist under common law.

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Our TRSs are subject to federal, state and local income tax on their taxable income, which consists of the revenues from the hotel properties leased by our TRS lessees, or, in the case of The Ritz-Carlton St.

Thomas hotel, owned by our TRS, net of the operating expenses for such hotel properties and, in the case of hotel properties leased by our TRS lessees, rent payments to us.

Thomas hotel, owned by our TRS, net of the operating expenses for such hotel properties and, in the case of hotel properties leased by our TRS lessees, rent payments to

Accordingly, although our ownership of our TRS allows us to participate in the operating income from our hotel properties in addition to receiving rent, the net operating income is fully subject to income tax.

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In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation.

also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis.

The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis.

Finally the 100% excise tax also applies to the underpricing of services by a TRS to its parent REIT in contexts where the services are unrelated to services for REIT tenants.

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If our hotel managers, including Ashford Hospitality Services LLC (“AHS”) and its subsidiaries (including Remington Hospitality), do not qualify as “eligible independent contractors,” we would fail to qualify as a REIT.

Each of the hotel management companies that enters into a management contract with our TRS lessees must qualify as an “eligible independent contractor” under the REIT rules in order for the rent paid to us by our TRS lessees to be qualifying income for our REIT income test requirements.

income test requirements.

Among other requirements, in order to qualify as an eligible independent contractor a manager must not own more than 35% of our outstanding shares (by value) and no person or group of persons can own more than 35% of our outstanding shares and the ownership interests of the manager, taking into account only owners of more than 5% of our shares and, with respect to ownership interests in such managers that are publicly-traded, only holders of more than 5% of such ownership interests.

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The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.

by securities of one or more TRSs and no more than 25% of the value of our total assets can be represented by certain publicly offered REIT debt instruments.

In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, no more than 20% of the value of our total assets can be represented by securities of one or more TRSs and no more than 25% of the value of our total assets can be represented by certain publicly offered REIT debt instruments.

If we fail to comply with these requirements at the end of any calendar quarter, we must correct such failure within 30 days after the end of the calendar quarter to avoid losing our REIT status and suffering adverse tax consequences.

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Preferred stock and preferred units, if issued, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability to make a distribution to the holders of our common stock.

Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we

cannot predict or estimate the amount, timing, or nature of our future offerings.

Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future offerings.

Thus, our stockholders bear the risk of our future offerings reducing the market price of our securities and diluting their securities holdings in us.

19 unchanged sentences

We are not required to repurchase shares under the repurchase program, and the board of directors may modify, suspend or terminate the repurchase program at any time for any reason.

As of March 12, 2024, we have completed the $25.0 million repurchase authorization.

As of March 10, 2025, we have not repurchased any shares of our common stock under the current $50.0 million repurchase authorization.

We cannot predict the impact that future repurchases, if any, of our common stock under this program will have on our stock price or earnings per share.

2 unchanged sentences

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 1A. Risk Factors