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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-12 · 162 added, 419 removed, 373 unchanged (61% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used in this Quarterly Report on Form 10-Q, unless the context otherwise indicates, the references to “we,” “us,” “our,” the “Company” or “Braemar” refer to Braemar Hotels & Resorts Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Braemar Hospitality Limited Partnership, a Delaware limited partnership, which we refer to as “our operating partnership” or “Braemar OP.” “Our TRSs” refers to our taxable REIT subsidiaries, including Braemar TRS Corporation, a Delaware corporation, which we refer to as “Braemar TRS,” and its subsidiaries, together with the two taxable REIT subsidiaries that lease our one hotel held in a consolidated joint venture and is wholly owned by the joint venture and the U.S.

Virgin Islands’ (“USVI”) taxable REIT subsidiary that owns The Ritz-Carlton St.

Thomas hotel.

“Ashford Trust” refers to Ashford Hospitality Trust, Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Limited Partnership, a Delaware limited partnership and Ashford Trust’s operating partnership, which we refer to as “Ashford Trust OP.” “Ashford Inc.” refers to Ashford Inc., a Nevada corporation and, as the context may require, its consolidated subsidiaries.

“Ashford LLC” or our “Advisor” refers to Ashford Hospitality Advisors LLC, a Delaware limited liability company and a subsidiary of Ashford Inc.

“Premier” refers to Premier Project Management LLC, a Maryland limited liability company and a subsidiary of Ashford LLC.

“Remington Hospitality” refers to the same entity after the acquisition was completed resulting in Remington Lodging & Hospitality, LLC becoming a subsidiary of Ashford Inc.

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains registered trademarks that are the exclusive property of their respective owners, which are companies other than us, including Marriott International®, Hilton Worldwide®, Sofitel®, Hyatt® and Accor®.

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• macroeconomic conditions, such as a prolonged period of weak economic growth, and volatility in capital markets;

• uncertainty in the business sector and market volatility due to the 2023 failures of Silicon Valley Bank, New York Signature Bank and First Republic Bank;

• catastrophic events or geopolitical conditions, such as the conflict between Russia and Ukraine and the more recent Israel-Hamas war;

• uncertainty in the business sector and market volatility;

• catastrophic events or geopolitical conditions, such as the conflict between Russia and Ukraine and the more recent Israel-Hamas war and changes to tariffs or trade policies;

• extreme weather conditions, which may cause property damage or interrupt business;

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We operate in the direct hotel investment segment of the hotel lodging industry.

As of September 30, 2024, we owned interests in 15 hotel properties in seven states, the District of Columbia, Puerto Rico and St.

As of March 31, 2025, we owned interests in 15 hotel properties in seven states, the District of Columbia, Puerto Rico and St.

Virgin Islands with 3,807 total rooms, or 3,667 net rooms, excluding those attributable to our joint venture partner.

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

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

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

We are advised by Ashford LLC through an advisory agreement.

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instead, we contractually engage hotel management companies to operate them for us under management contracts.

As of September 30, 2024, Remington Hospitality , a subsidiary of Ashford Inc., managed four of our 15 hotel properties.

As of March 31, 2025, Remington Hospitality , a subsidiary of Ashford Inc., managed four of our 15 hotel properties.

Third-party management companies managed the remaining hotel properties.

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has an ownership interest.

and brokerage services, insurance policies covering general liability, workers compensation and claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services, mobile key technology and cash management services.

Bennett, chairman and chief executive officer of Ashford Inc.

and, together with Mr.

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

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

and his father, Mr.

Archie Bennett, Jr.

(the “Bennetts”), as of September 30, 2024, hold a controlling interest in Ashford Inc.

(together, the “Bennetts”), as of March 31, 2025, hold a controlling interest in Ashford Inc.

The Bennetts owned approximately 809,937 shares of Ashford Inc.

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Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,402,390 shares of Ashford Inc.

common stock, which if converted as of September 30, 2024, would have increased the Bennetts’ ownership interest in Ashford Inc.

common stock, which if converted as of March 31, 2025, would have increased the Bennetts’ ownership interest in Ashford Inc.

The 18,758,600 shares of Series D Convertible Preferred Stock owned by Mr.

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include 360,000 shares owned by trusts.

As of September 30, 2024, Mr.

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

Archie Bennett, Jr., together owned approximately 3,116,271 shares of our common stock (including common units, long-term incentive plan (“LTIP”) units and performance LTIP units), which represented an approximate 4.2% ownership in the Company.

Additionally, Mr.

Bennett acquired voting rights over approximately 590,000 common shares, effective March 25, 2025.

As of March 31, 2025, Mr.

Bennett and Mr.

Archie Bennett, Jr., together owned approximately 3,114,613 shares of our common stock (including common units, LTIP and performance LTIP units), which represented an approximate 4.2% ownership in the Company.

Recent Developments

In February 2024, the Company and Ashford Inc.

approved funding up to an additional $1.0 million, in the aggregate, for OpenKey, allocated pro rata among them.

On July 1, 2024, the Company funded $79,000.

On July 2, 2024, Braemar, Ashford Trust and Ashford Inc.

(collectively with the Company, Ashford Trust and each of Ashford Inc.’s, the Company’s and Ashford Trust’s respective affiliates (including Stirling Hotels & Resorts, Inc.) and any entity advised by Ashford Inc., the “Company Group”) entered into a Cooperation Agreement (the “Agreement”) with Blackwells Capital LLC, Blackwells Onshore I LLC, Blackwells Holding Co.

LLC, Vandewater Capital Holdings, LLC, Blackwells Asset Management LLC, BW Coinvest Management I LLC and Jason Aintabi (collectively, the “Blackwells Parties”) regarding the withdrawal of the Blackwells Parties’ proxy campaign, dismissal of pending litigation involving the parties and certain other matters.

Pursuant to the Agreement, the Blackwells Parties have agreed to withdraw (i) the notice delivered to the Company on March 10, 2024 purporting to nominate four director candidates to the Company’s board of directors (the “Board”) and make certain other proposals and (ii) the definitive proxy statement filed with the U.S.

Securities and Exchange Commission (the “SEC”) on April 3, 2024 to solicit proxies from stockholders of the Company to vote in favor of the Blackwells Parties’ director nominees and proposals.

In connection therewith, the Blackwells Parties will cease to take any further action with respect to the Company’s 2024 Annual Meeting of Stockholders, except as otherwise provided for in the Agreement.

The Blackwells Parties have also agreed to specified standstill restrictions with respect to the Company Group, which will expire on July 2, 2034.

During the standstill period, the Blackwells Parties are required to (i) appear in person or by proxy at each meeting of stockholders of the members of the Company Group in which they beneficially own shares of stock and vote any Blackwells Parties’ shares then beneficially owned by them in accordance with the recommendation of the board of directors of such member of the Company Group on any proposals considered at such meeting and (ii) deliver consents or consent revocations in any action by written consent by stockholders of any member of the Company Group in which they beneficially own shares in accordance with the recommendation of the board of directors of such member of the Company Group.

The Agreement also provides for the voluntary dismissal, with prejudice, of the consolidated action previously pending in the U.S.

District Court for the Northern District of Texas to which the Company, Blackwells Capital LLC and certain of their respective related parties are parties (the “Consolidated Litigation”).

Pursuant to the Agreement, the Consolidated Litigation was voluntarily dismissed, with prejudice, on July 3, 2024.

The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable attorneys’ fees and expenses incurred in connection with the Consolidated Litigation and related matters.

Additionally, pursuant to the Agreement, the Board was required to take steps to identify and select one additional individual to be appointed to the Board as an independent director (the “Additional Board Member”).

The Board was required to promptly notify Blackwells Capital LLC of its selection of the Additional Board Member and to consider any input Blackwells Capital LLC may have with respect to the Additional Board Member.

In accordance with the Cooperation Agreement, on October 4, 2024, the Board increased the number of directors of the Company from eight to nine and appointed Mr.

Shah as the Additional Board Member to serve until the Company’s next annual meeting of stockholders and until his successor is duly elected and qualified.

The Agreement contains various other obligations and provisions applicable to the Company Group and the Blackwells Parties, including a mutual release of claims and mutual non-disparagement.

Concurrently and in connection with the Agreement, certain of the parties thereto have also entered into a Share Ownership Agreement (the “Share Ownership Agreement”) and a Loan Agreement (the “Loan Agreement”), pursuant to which agreements the Company will provide to BW Coinvest I, LLC (“Borrower”) an unsecured loan (the “Loan”).

The proceeds from the Loan will be used to reimburse Borrower for 70% of the amount expended by Borrower to purchase on the open market a total of 3,500,000 shares of the Company’s common stock (the “Purchased Shares”) within six months of the date of Loan Agreement, at a price per Purchased Share not to exceed $10 and subject to the other limitations set forth therein.

The Loan has a term of five years (the “Term”), is guaranteed by Jason Aintabi, Vandewater Capital Holdings, LLC, Blackwells Holding Co.

LLC, and Blackwells Asset Management LLC and shall bear payment-in-kind interest during the Term at a rate equal to the sum of (a) Term SOFR (as defined in the Loan Agreement) and (b) 3.00% (three hundred basis points) per annum.

The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable due diligence expenses incurred on or prior to the date of the Share Ownership Agreement.

As of November 6, 2024, the Company has loaned approximately $7.0 million that has been used to purchase approximately 3.0 million shares of Braemar common stock.

On July 17, 2024, we sold the Hilton La Jolla Torrey Pines pursuant to an Agreement of Purchase and Sale, entered into effective May 6, 2024, for $165 million in cash, subject to customary pro-rations and adjustments.

The Company owned an indirect 75% equity interest in the hotel property.

Additionally, the Company repaid the $66.6 million mortgage loan secured by the hotel property.

On August 7, 2024, the Company closed on a refinancing involving five hotels.

The new loan totals $407 million and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2029.

The loan is interest only and provides for a floating interest rate of SOFR + 3.24%.

As part of this financing, the Company acquired a tranche of CMBS with a par value of $42.2 million and a rate of SOFR + 5.20%.

The loan is secured by five hotels:

Pier House Resort & Spa, Bardessono Hotel & Spa, Hotel Yountville, The Ritz-Carlton Sarasota, and The Ritz-Carlton St.

The new loan refinanced the $80.0 million loan secured by the Pier House Resort & Spa which had an interest rate of SOFR + 3.60% and had a final maturity date in September 2026, the $42.5 million loan secured by The Ritz-Carlton St.

Thomas which had an interest rate of SOFR + 4.35% and had a final maturity date in August 2026, and the $200.0 million secured credit facility secured by The Ritz-Carlton Sarasota, Hotel Yountville, and Bardessono Hotel & Spa which had an interest rate of SOFR + 3.10% and had a final maturity date in July 2027.

The Company, Braemar OP, Braemar TRS, Ashford Inc.

and Ashford Hospitality Advisors LLC (together with Ashford Inc., the “Advisor”), are parties to that certain Fifth Amended and Restated Advisory Agreement, dated as of April 23, 2018 (as amended, the “Advisory Agreement”).

The Company has a mortgage loan maturing in June 2025 with an outstanding principal balance of approximately $293 million (the “Loan”) secured by four hotel properties:

The Notary Hotel;

Sofitel Chicago Magnificent Mile;

and Marriott Seattle Waterfront (the “Hotel Properties”).

On August 8, 2024, the parties to the Advisory Agreement entered into a Limited Waiver Under Advisory Agreement (the “Waiver Agreement”) that provides, among other things, as follows:

(i) From August 8, 2024 until the earlier of (a) November 15, 2025 and (b) the refinancing of the Loan (the “Loan Outside Date”), the Advisor waives the operation of Section 12.4(a) of the Advisory Agreement that would permit the Advisor to terminate the Advisory Agreement occurring solely as a result from the sale or disposition of one or more of the Hotel Properties as a result of a mortgage foreclosure, deed-in-lieu of mortgage foreclosure, mezzanine loan foreclosure or an assignment in-lieu of a mezzanine loan foreclosure following the failure of the Company to pay, upon the maturity of the Loan, all amounts due and payable thereunder (the “Limited Waiver”);

(ii) Upon the satisfaction of certain conditions, the Company may request the Advisor agree to amend the Waiver Agreement to extend the Loan Outside Date for a period not to exceed ninety (90) days from November 15, 2025 and if the Advisor agrees to such amendment, the Advisor shall not be entitled to any further consideration in respect thereof;

(iii) If the members of the Board of Directors of the Company (the “Board”) change such that members who constitute the Board as of August 8, 2024 (the “Incumbent Board”) no longer constitute at least a majority of the Board (other than those whose election to the Board is approved or recommended to stockholders of the Company by a vote of at least a majority of the Incumbent Board), the Limited Waiver shall be null and void ab initio (but the consideration provided by the Company to the Advisor as described in item (iv) below shall remain in force);

(iv) In exchange for the Limited Waiver and the other agreements provided by the Advisor in the Waiver Agreement, the Company agrees to pay the Advisor an amount equal to the Advisor’s obligation under the Advisor’s current employment agreement with Richard J.

Stockton, the Company’s President and Chief Executive Officer (the “Stockton Employment Agreement”), to pay Mr.

Stockton a multiple of his Base Salary (as defined in the Stockton Employment Agreement) that becomes payable by the Advisor to Mr.

Stockton as the result of the occurrence of certain events as more fully described in the Waiver Agreement.

On January 14, 2025, the Company amended its mortgage loan secured by the 170-room Ritz-Carlton Lake Tahoe.

The terms of the amendment included a $10.0 million principal pay down, extending the current maturity date to July 2025, an interest rate reduction to SOFR + 3.25%, and one six-month extension option subject to satisfaction of certain conditions.

The mortgage loan had an initial maturity date in January 2025.

On March 7, 2025, the Company refinanced its $293.2 million mortgage loan secured by The Clancy, The Notary Hotel, Marriott Seattle Waterfront, and Sofitel Chicago Magnificent Mile, which had an interest rate of SOFR + 2.66% and a final maturity date in June of 2025 and its $62.0 million mortgage loan secured by The Ritz-Carlton Reserve Dorado Beach, which had an interest rate of SOFR + 4.75% and a final maturity date in March of 2026.

The new $363.0 million mortgage loan bears interest at a floating interest rate of SOFR + 2.52% and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions.

The mortgage loan is secured by five hotels:

The Clancy, The Notary Hotel, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, and The Ritz-Carlton Reserve Dorado Beach.

The $363.0 million mortgage loan amount represents an approximate 49% loan-to-value based on third-party appraisals completed by the lender.

The appraisals valued the hotels at approximately $742 million based on the sum of their “as-is” values.

On April 1, 2025, Ms.

Kellie Sirna was appointed to serve on our board of directors, effective immediately, to serve until the next annual meeting of stockholders of the Company or until her successor is duly elected and qualified.

The board of directors has determined that Ms.

Sirna is an independent director under NYSE listing standards and the Company’s corporate governance guidelines.

Sirna has not been appointed to serve on any committee of the board of directors.

On May 5, 2025, the Company completed the transition of the 415-room Sofitel Chicago Magnificent Mile from a brand-managed hotel to a franchise structure.

Under the franchise structure, the hotel will continue to be the Sofitel Chicago Magnificent Mile, but will be managed by Remington Hospitality under the existing terms of its Master Hotel Management Agreement.

The management agreement with Remington Hospitality is terminable upon sale of the hotel.

The Company plans to renovate the lobby, restaurant, and meeting space over the next two years.

Key Indicators of Operating Performance

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RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR.

For example, an increase in occupancy at a hotel would lead to additional variable operating costs (including housekeeping services, utilities and room supplies) and could also result in increased other operating department revenue and expense.

Changes in ADR typically have a greater impact on operating margins and profitability as they do not have a substantial effect on variable operating costs.

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RESULTS OF OPERATIONS

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

The following table summarizes changes in key line items from our condensed consolidated statements of operations for three months ended September 30, 2024 and 2023 (in thousands except percentages):

Three Months Ended September 30, Favorable (Unfavorable)

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

The following table summarizes changes in key line items from our condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024 (in thousands except percentages):

Three Months Ended March 31, Favorable (Unfavorable)

2025 2024 $ Change % Change

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Other 27,940 26,980 960 3.6

Total revenue 148,398 159,801 (11,403) (7.1)

Total hotel revenue 215,820 219,079 (3,259) (1.5)

Hotel operating expenses:

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Total expenses 179,080 176,612 (2,468) (1.4)

Gain (loss) on disposition of assets and hotel property

88,210 — 88,210

Operating income (loss) 36,740 42,467 (5,727) (13.5)

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Interest income 1,888 796 1,092 137.2

Other income (expense) — 293 (293) (100.0)

Interest expense and amortization of loan costs (27,911) (23,306) (4,605) (19.8)

Interest expense and amortization of discounts and loan costs (24,827) (26,491) 1,664 6.3

Write-off of loan costs and exit fees (1,464) (721) (743) (103.1)

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Net income (loss) attributable to the Company $ 10,998 $ 15,929 $ (4,931) 31.0 %

All hotel properties owned for the three months ended September 30, 2024 and 2023 have been included in our results of operations during the respective periods in which they were owned.

Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the three months ended September 30, 2024 and 2023.

The hotel property listed below is not a comparable hotel property for the periods indicated and all other hotel properties are considered comparable hotel properties.

All hotel properties owned for the three months ended March 31, 2025 and 2024 have been included in our results of operations during the respective periods in which they were owned.

Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the three months ended March 31, 2025 and 2024.

The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties.

The following disposition affects reporting comparability related to our condensed consolidated financial statements:

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July 17, 2024

The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the three months ended September 30, 2024 and 2023:

Three Months Ended September 30,

The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Occupancy 64.58 % 65.39 %

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Total hotel revenue (in thousands) $ 215,820 $ 219,079

The following table illustrates the key performance indicators of the 15 hotel properties that were owned for the full three months ended September 30, 2024 and 2023:

Three Months Ended September 30,

The following table illustrates the key performance indicators of the 15 comparable hotel properties that were owned for the full three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Occupancy 64.58 % 64.80 %

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Net Income (Loss) Attributable to the Company.

Net income (loss) attributable to the Company changed $34.6 million, from a net loss of $22.0 million for the three months ended September 30, 2023 (the “2023 quarter”) to net income of $12.6 million for the three months ended September 30, 2024 (the “2024 quarter”), as a result of the factors discussed below.

Net income attributable to the Company decreased $4.9 million from $15.9 million for the three months ended March 31, 2024 (the “2024 quarter”) to $11.0 million for the three months ended March 31, 2025 (the “2025 quarter”), as a result of the factors discussed below.

Rooms Revenue .

Rooms revenue decreased $8.3 million, or 8.3%, to $92.4 million during the 2024 quarter compared to the 2023 quarter.

During the 2024 quarter, we experienced a 13 basis point increase in occupancy and a 1.0% decrease in room rates.

Rooms revenue decreased $2.5 million to $136.1 million during the 2025 quarter compared to the 2024 quarter primarily due to the sale of the Hilton La Jolla Torrey Pines in July 2024.

During the 2025 quarter, our 15 comparable hotel properties experienced an increase of 4.4% in room rates and a 22 basis point decrease in occupancy compared to the 2024 quarter.

Fluctuations in rooms revenue between the 2025 quarter and the 2024 quarter are a result of the changes in occupancy and ADR between the 2025 quarter and the 2024 quarter as reflected in the table below (dollars in thousands):

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Rooms Revenue Occupancy

(change in bps) ADR (change in %)

(change in bps) ADR

(change in %)

Capital Hilton (2)

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The Notary Hotel 974 564 11.0 %

The Clancy (1,371) (949) (4.2) %

882 (102) 12.8 %

Sofitel Chicago Magnificent Mile (239) (468) 3.1 %

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Hotel Yountville (1)

(392) (1,391) 11.3 %

The Ritz-Carlton Sarasota (2)

(1,611) (215) (7.9) %

Bardessono Hotel and Spa (2)

237 688 (3.1) %

The Ritz-Carlton Lake Tahoe

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Non-comparable

Hilton La Jolla Torrey Pines (7,074) (3) (6.4) %

Hilton La Jolla Torrey Pines $ (6,295) n/a n/a

(1) This hotel was under renovation during the 2025 quarter.

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Food and beverage revenue decreased $1.8 million, or 3.3%, to $51.8 million during the 2025 quarter compared to the 2024 quarter.

This decrease is attributable to a decrease of $1.9 million at nine comparable hotel properties and a decrease of $3.2 million at the Hilton La Jolla Torrey Pines as a result of its sale on July 17, 2024.

These decreases were partially offset by an aggregate increase of $1.3 million at The Ritz-Carlton St.

Thomas, The Notary Hotel, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, Pier House Resort & Spa and Hotel Yountville.

We experienced an aggregate decrease in food and beverage revenue of $1.3 million at seven comparable hotel properties as well as a decrease of $4.1 million due to the sale of Hilton La Jolla Torrey Pines.

These decreases were partially offset by an aggregate increase of approximately $3.6 million at The Ritz-Carlton Lake Tahoe, Four Seasons Resort Scottsdale, The Ritz-Carlton Reserve Dorado Beach, The Notary Hotel, Marriott Seattle Waterfront, The Ritz-Carlton Sarasota, Pier House Resort & Spa and Bardessono Hotel and Spa.

Other Hotel Revenue .

Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, increased $664,000, or 3.2%, to $21.2 million during the 2024 quarter compared to the 2023 quarter.

This increase is attributable to an aggregate increase in other hotel revenue of $2.6 million at 11 comparable hotel properties, partially offset by an aggregate decrease of $583,000 at The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton St.

Thomas, Park Hyatt Beaver Creek Resort & Spa, and Pier House Resort & Spa, as well as a decrease of $1.4 million at Hilton La Jolla Torrey Pines.

Other hotel revenue, which consists mainly of condominium management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, increased $960,000, or 3.6%, to $27.9 million during the 2025 quarter compared to the 2024 quarter.

This increase is attributable to higher other hotel revenue of $2.8 million at 11 comparable hotel properties.

These increases were partially offset by a decrease of $1.4 million due to the sale of Hilton La Jolla Torrey Pines as well as an aggregate decrease of approximately $477,000 at Park Hyatt Beaver Creek Resort & Spa, The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton Lake Tahoe and The Ritz-Carlton St.

Rooms Expense .

Rooms expense decreased $45,000, or 0.2%, to $28.2 million in the 2025 quarter compared to the 2024 quarter.

This decrease is primarily attributable to an aggregate decrease of $665,000 at five comparable hotel properties as well as a decrease of $1.1 million at Hilton La Jolla Torrey Pines, partially offset by an aggregate increase of $1.4 million at The Ritz-Carlton Lake Tahoe, Capital Hilton, Marriott Seattle Waterfront, The Notary Hotel, Sofitel Chicago Magnificent Mile, Park Hyatt Beaver Creek Resort & Spa, The Ritz-Carlton St.

Thomas, Cameo Beverly Hills, Four Seasons Resort Scottsdale, and Pier House Resort & Spa.

This decrease is attributable to an aggregate decrease in rooms expense of $137,000 at Sofitel Chicago Magnificent Mile, Hotel Yountville, The Ritz-Carlton Sarasota and Pier House Resort & Spa, as well as a decrease of $1.3 million due to the sale of Hilton La Jolla Torrey Pines.

These decreases were partially offset by an aggregate increase of $1.4 million at 11 comparable hotel properties.

Food and Beverage Expense .

Food and beverage expense decreased $507,000, or 1.2%, to $40.2 million during the 2025 quarter compared to the 2024 quarter.

This decrease is attributable to an aggregate decrease of $306,000 at six comparable hotel properties as well as a decrease of $1.7 million at Hilton La Jolla Torrey Pines, partially offset by an aggregate increase of $1.2 million at the Marriott Seattle Waterfront, The Ritz-Carlton St.

Thomas, Capital Hilton, The Ritz-Carlton Sarasota, Sofitel Chicago Magnificent Mile, Park Hyatt Beaver Creek Resort & Spa, The Notary Hotel, The Clancy, and Pier House Resort & Spa.

This decrease is attributable to lower aggregate food and beverage expense of approximately $232,000 at The Ritz-Carlton St.

Thomas, Sofitel Chicago Magnificent Mile, Hotel Yountville and Park Hyatt Beaver Creek Resort & Spa, as well as a decrease of $2.1 million due to the sale of Hilton La Jolla Torrey Pines.

These decreases were partially offset by an aggregate increase of approximately $1.9 million at 11 comparable hotel properties.

Other Operating Expenses .

Other operating expenses decreased $1.4 million, or 2.7%, to $51.3 million in the 2024 quarter compared to the 2023 quarter.

Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees.

We experienced an increase of $219,000 in direct expenses and a decrease of $1.6 million in indirect expenses and incentive management fees in the 2024 quarter as compared to the 2023 quarter.

Other operating expenses increased $300,000, or 0.5%, to $60.4 million in the 2025 quarter compared to the 2024 quarter.

Other operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees.

We experienced a decrease of $311,000 in direct expenses and an increase of $611,000 in indirect expenses and incentive management fees in the 2025 quarter compared to the 2024 quarter.

Direct expenses were 4.4% of total hotel revenue in the 2025 quarter and 4.5% in the 2024 quarter.

The decrease in indirect expenses comprises decreases in:

(i) general and administrative costs of $540,000 comprising an aggregate increase of $71,000 at our 15 comparable hotel properties and a decrease of $611,000 at the one disposed hotel property;

(ii) repairs and maintenance of $109,000 comprising an aggregate increase of $147,000 at our 15 comparable hotel properties and a decrease of $256,000 at the one disposed hotel property;

(iii) lease expense of $903,000 comprising an aggregate increase of $60,000 at our 15 comparable hotel properties and a decrease of $963,000 at the one disposed hotel property;

(iv) incentive management fees of $252,000 comprising an aggregate decrease of $140,000 at our 15 comparable hotel properties and a decrease of $112,000 at the one disposed hotel property;

and (v) energy costs of $293,000 comprising an aggregate increase of $185,000 at our 15 comparable hotel properties and a decrease of $478,000 at the one disposed hotel property.

The decreases were partially offset by an increase in marketing costs of $448,000 comprising an aggregate increase of $1.0 million at our 15 comparable hotel properties and a decrease of $600,000 at the one disposed hotel property.

The decrease in direct expenses is associated with lower direct expenses of approximately $409,000 at nine comparable hotel properties, as well as $217,000 due to the sale of Hilton La Jolla Torrey Pines.

These decreases were partially offset by higher direct expenses of $315,000 at The Ritz-Carlton Sarasota, Four Seasons Resort Scottsdale, The Notary Hotel, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile and Cameo Beverly Hills.

The increase in indirect expenses is comprised of increases in:

(i) general and administrative costs of $1.0 million comprising an aggregate increase of $1.8 million at our 15 comparable hotel properties partially offset by a decrease of $748,000 at the one disposed hotel property;

(ii) incentive management fees of $379,000 at our 15 comparable hotel properties;

and (iii) repairs and maintenance of $148,000 comprising an aggregate increase of $431,000 at our 15 comparable hotel properties partially offset by a decrease of $283,000 at the disposed hotel property.

These increases are partially offset by decreases in:

(i) lease expense of $631,000 comprising of a decrease of $679,000 at the one disposed hotel property partially offset by an aggregate increase of $48,000 at our 15 comparable hotel properties;

(ii) marketing costs of $207,000 comprising an aggregate increase of $725,000 at our 15 comparable hotel properties partially offset by a decrease of $932,000 at the one disposed hotel property;

and (iii) energy costs of $107,000 comprising a decrease of $460,000 at the one disposed hotel property partially offset by an aggregate increase of $353,000 at our 15 comparable hotel properties.

Management Fees .

Base management fees decreased $66,000, or 0.9%, to $6.9 million in the 2025 quarter compared to the 2024 quarter.

Base management fees decreased by $249,000 at seven comparable hotel properties and by $349,000 at the one disposed hotel property.

These decreases were partially offset by an aggregate increase of $391,000 at The Notary Hotel, Capital Hilton, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, The Ritz-Carlton Sarasota, Four Seasons Resort Scottsdale, and Park Hyatt Beaver Creek Resort & Spa.

Management fees decreased $80,000 at six comparable hotel properties and $352,000 due to the sale of Hilton La Jolla Torrey Pines.

These decreases were partially offset by an aggregate increase of $366,000 at The Ritz-Carlton Reserve Dorado Beach, The Notary Hotel, Capital Hilton, Four Seasons Resort Scottsdale, The Clancy, Marriott Seattle Waterfront, Bardessono Hotel and Spa, Pier House Resort & Spa and Cameo Beverly Hills.

Property Taxes, Insurance and Other .

Property taxes, insurance and other decreased $220,000, or 2.1%, to $10.5 million in the 2025 quarter compared to the 2024 quarter.

The decrease is primarily attributable to an aggregate decrease of approximately $1.1 million at eight comparable hotel properties as well as a decrease of $634,000 at the one disposed hotel property.

These increases were partially offset by an aggregate increase of approximately $1.2 million primarily at the Sofitel Chicago Magnificent Mile, The Clancy, Cameo Beverly Hills, Marriott Seattle Waterfront, Four Seasons Resort Scottsdale, Capital Hilton, and Hotel Yountville.

This decrease is primarily attributable to a decrease of $789,000 due to the sale of Hilton La Jolla Torrey Pines and an aggregate decrease of $344,000 at six comparable hotel properties.

These decreases were partially offset by an aggregate increase of approximately $913,000 at nine comparable hotel properties.

Depreciation and Amortization .

Depreciation and amortization increased $2.4 million, or 10.5%, to $25.1 million in the 2024 quarter compared to the 2023 quarter.

There was an aggregate increase of $4.3 million at 12 comparable hotel properties, partially offset by an aggregate decrease of $1.0 million at The Notary Hotel, The Clancy, and Pier House Resort & Spa, primarily due to fully depreciated assets, as well as a decrease of $873,000 at the one disposed hotel property.

Depreciation and amortization decreased $2.0 million, or 8.0%, to $23.4 million for the 2025 quarter compared to the 2024 quarter.

This decrease is comprised of a decrease of $1.1 million due to the sale of Hilton La Jolla Torrey Pines and an aggregate decrease of $3.1 million at Capital Hilton, The Notary Hotel, The Clancy, Pier House Resort & Spa, The Ritz-Carlton St.

Thomas, Sofitel Chicago Magnificent Mile, Marriott Seattle Waterfront.

These decreases were partially offset by an aggregate increase of $2.1 million at eight comparable hotel properties.

Advisory Services Fee.

Advisory services fee increased $1.6 million, or 22.9%, to $8.6 million in the 2024 quarter compared to the 2023 quarter due to increases of $1.5 million in the incentive fee, $1.2 million in reimbursable expenses, and $112,000 in the base advisory fee, partially offset by a decrease of $1.2 million in equity-based compensation.

In the 2024 quarter, we recorded an advisory services fee of $8.6 million, which included a base advisory fee of $3.5 million, reimbursable expenses of $3.2 million, incentive fee of $1.5 million and equity-based compensation of $427,000.

Advisory services fee decreased $89,000, or 1.3%, to $6.6 million in the 2025 quarter compared to the 2024 quarter due to lower equity-based compensation of $1.2 million, partially offset by higher reimbursable expenses of $736,000, higher base advisory fee of $249,000 and a higher incentive fee of $82,000.

In the 2025 quarter, we recorded an advisory services fee of $6.6 million, which included a base advisory fee of $3.6 million, reimbursable expenses of $3.0 million, an incentive fee of $82,000 and a credit to expense of $48,000 associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.

In the 2024 quarter, we recorded an advisory services fee of $6.7 million, which included a base advisory fee of $3.3 million, reimbursable expenses of $2.3 million and $1.1 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.

Corporate General and Administrative .

Corporate general and administrative expense was $8.9 million in the 2024 quarter as compared to $2.5 million in the 2023 quarter.

The increase in corporate general and administrative expense is due to increases of professional fees of $776,000, miscellaneous expenses of $415,000, public company costs of $97,000 and reimbursed legal costs of $6.0 million recorded in the 2024 quarter, partially offset by a decrease of reimbursed operating expenses of Ashford Securities of $921,000.

Gain (loss) on disposition of assets and hotel property .

In the 2024 quarter, we recorded a gain of approximately $88.2 million related to the sale of Hilton La Jolla Torrey Pines.

There was no such gain (loss) recorded for 2023 quarter.

Equity in Earnings (Loss) of Unconsolidated Entity .

In the 2024 quarter and 2023 quarter, we recorded equity in loss of unconsolidated entity of $80,000 and $60,000, respectively, related to our investment in OpenKey.

Interest Income .

Interest income was $2.7 million and $1.0 million in the 2024 quarter and 2023 quarter, respectively.

The increase in interest income in the 2024 quarter was primarily attributable to higher cash balances in the 2024 quarter compared to the 2023 quarter as well as interest income associated with a tranche of CMBS included in investment in securities.

Other Income (Expense).

In the 2023 quarter, we recorded $293,000 of miscellaneous income.

Interest Expense and Amortization of Loan Costs .

Interest expense and amortization of loan costs increased $4.6 million, or 19.8%, to $27.9 million in the 2024 quarter compared to the 2023 quarter.

This increase is primarily due to higher interest expense from higher average interest rates.

The average SOFR rates for the 2024 quarter and the 2023 quarter were 5.17% and 5.08%, respectively.

Write-off of Loan Costs and Exit Fees.

Write-off of loan costs and exit fees was $5.3 million in the 2024 quarter, primarily related to various loan refinances and modifications.

Write-off of loan costs and exit fees was $2.6 million in the 2023 quarter, primarily related to various loan modifications and costs associated with the $200 million secured credit facility.

Realized and Unrealized Gain (Loss) on Derivatives .

Realized and unrealized loss on derivatives of $735,000 for 2024 quarter consisted of an unrealized loss on interest rate caps of approximately $1.7 million, partially offset by a realized gain of $1.0 million associated with payments received from counterparties on in-the-money interest rate caps.

Realized and unrealized gain on derivatives of $223,000 for 2023 quarter consisted of an unrealized gain on warrants of approximately $154,000 and a realized gain of $2.0 million associated with payments received from counterparties on in-the-money interest rate caps.

These gains were partially offset by an unrealized loss on interest rate caps of approximately $1.9 million.

Income Tax (Expense) Benefit .

Income tax benefit decreased $326,000, from $1.2 million in the 2023 quarter to $864,000 in the 2024 quarter.

This decrease was primarily due to an increase in the valuation allowance on certain of our TRS deferred tax assets in the 2024 quarter compared to the 2023 quarter.

(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities.

Our noncontrolling interest partner in consolidated entities was allocated income of $27.4 million and $1.8 million in the 2024 quarter and the 2023 quarter, respectively.

The allocated income for the 2024 quarter includes our partner’s share of gain on the sale of the Hilton La Jolla Torrey Pines.

At September 30, 2024, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity.

At September 30, 2023, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership.

Noncontrolling interests in operating partnership were allocated a net loss of $124,000 and $2.4 million in the 2024 quarter and the 2023 quarter, respectively.

Redeemable noncontrolling interests in Braemar OP represented ownership interests of 8.05% and 6.63% as of September 30, 2024 and 2023, respectively.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

The following table summarizes changes in key line items from our condensed consolidated statements of operations for the nine months ended September 30, 2024 and 2023 (in thousands except percentages):

Nine Months Ended September 30, Favorable (Unfavorable)

2024 2023 $ Change % Change

Rooms $ 347,206 $ 355,402 $ (8,196) (2.3) %

Food and beverage 135,891 138,541 (2,650) (1.9)

Other 71,967 67,866 4,101 6.0

Total hotel revenue 555,064 561,809 (6,745) (1.2)

Hotel operating expenses:

Rooms 81,288 79,962 (1,326) (1.7)

Food and beverage 109,379 108,854 (525) (0.5)

Other expenses 169,531 171,317 1,786 1.0

Management fees 17,913 17,661 (252) (1.4)

Total hotel operating expenses 378,111 377,794 (317) (0.1)

Property taxes, insurance and other 30,740 27,983 (2,757) (9.9)

Depreciation and amortization 75,192 67,791 (7,401) (10.9)

Advisory services fee 23,155 23,183 28 0.1

Corporate general and administrative 11,105 9,222 (1,883) (20.4)

Total expenses 518,303 505,973 (12,330) (2.4)

Gain (loss) on disposition of assets and hotel property

88,210 — 88,210

Operating income (loss) 124,971 55,836 69,135 123.8

Equity in earnings (loss) of unconsolidated entity (214) (208) (6) (2.9)

Interest income 4,528 5,389 (861) (16.0)

Other income (expense) — 293 (293) (100.0)

Interest expense and amortization of discounts and loan costs (81,687) (69,779) (11,908) (17.1)

Write-off of loan costs and exit fees (6,095) (2,848) (3,247) (114.0)

Gain (loss) on extinguishment of debt (22) 2,318 (2,340) (100.9)

Realized and unrealized gain (loss) on derivatives 523 918 (395) (43.0)

Income (loss) before income taxes 42,004 (8,081) 50,085 619.8

Income tax (expense) benefit (474) (1,064) 590 55.5

Net income (loss) 41,530 (9,145) 50,675 554.1

(Income) loss attributable to noncontrolling interest in consolidated entities (26,317) (1,715) (24,602) (1,434.5)

Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 1,747 3,018 (1,271) (42.1)

Net income (loss) attributable to the Company $ 16,960 $ (7,842) $ 24,802 316.3 %

All hotel properties owned for the nine months ended September 30, 2024 and 2023 have been included in our results of operations during the respective periods in which they were owned.

Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the nine months ended September 30, 2024 and 2023.

The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties.

The following disposition affects reporting comparability related to our condensed consolidated financial statements:

Hotel Property Location Type Date

Hilton La Jolla Torrey Pines

La Jolla, California

July 17, 2024

The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

Occupancy 68.91 % 68.06 %

ADR (average daily rate) $ 446.95 $ 453.87

RevPAR (revenue per available room) $ 308.00 $ 308.88

Rooms revenue (in thousands) $ 347,206 $ 355,402

Total hotel revenue (in thousands) $ 555,064 $ 561,809

The following table illustrates the key performance indicators of the 15 hotel properties that were owned for the full nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

Occupancy 68.16 % 66.77 %

ADR (average daily rate) $ 463.81 $ 478.22

RevPAR (revenue per available room) $ 316.13 $ 319.31

Rooms revenue (in thousands) $ 331,705 $ 333,050

Total hotel revenue (in thousands) $ 527,163 $ 523,840

Net Income Attributable to the Company.

Net income (loss) attributable to the Company changed $24.8 million from a net loss of $7.8 million for the nine months ended September 30, 2023 (the “2023 period”) to net income of $17.0 million for the nine months ended September 30, 2024 (the “2024 period”), as a result of the factors discussed below.

Rooms Revenue .

Rooms revenue decreased $8.2 million to $347.2 million during the 2024 period compared to the 2023 period.

During the 2024 period, we experienced a 85 basis point increase in occupancy and a decrease of 1.5% in room rates compared to the 2023 period.

Fluctuations in rooms revenue between the 2024 period and the 2023 period are a result of the changes in occupancy and ADR between the 2024 period and the 2023 period as reflected in the table below (dollars in thousands):

Hotel Property Favorable (Unfavorable)

Rooms Revenue Occupancy

(change in bps) ADR

(change in %)

Capital Hilton (1) (2)

$ 3,881 471 5.0 %

Marriott Seattle Waterfront

1,601 193 3.9 %

The Notary Hotel 1,936 501 1.7 %

(1,307) (299) (1.5) %

Sofitel Chicago Magnificent Mile 1,718 238 5.0 %

Pier House Resort & Spa (1,240) (308) (3.1) %

The Ritz-Carlton St.

Thomas (2,378) (262) (3.0) %

Park Hyatt Beaver Creek Resort & Spa (989) 144 (7.9) %

Hotel Yountville (809) 3 (9.1) %

The Ritz-Carlton Sarasota (1) (2)

769 285 (2.1) %

Bardessono Hotel and Spa (1)

(1,439) (482) (4.9) %

The Ritz-Carlton Lake Tahoe (1) (2)

(933) (270) — %

Cameo Beverly Hills

(1,784) (498) (13.9) %

The Ritz-Carlton Reserve Dorado Beach (1,069) (311) 2.1 %

Four Seasons Resort Scottsdale 698 634 (10.1) %

Total $ (1,345) 139 (3.0) %

Non-comparable

Hilton La Jolla Torrey Pines (6,851) (148) (2.6) %

(1) This hotel was under renovation during the 2024 period.

(2) This hotel was under renovation during the 2023 period.

Food and Beverage Revenue .

Food and beverage revenue decreased $2.7 million, or 1.9%, to $135.9 million during the 2024 period compared to the 2023 period.

We experienced an aggregate decrease in food and beverage revenue of $6.1 million at seven comparable hotel properties as well as a decrease of $1.7 million at Hilton La Jolla Torrey Pines.

These decreases were partially offset by an aggregate increase of approximately $5.2 million at Four Seasons Resort Scottsdale, The Ritz-Carlton St.

Thomas, The Notary Hotel, Sofitel Chicago Magnificent Mile, Marriott Seattle Waterfront, The Clancy, Hotel Yountville, and Pier House Resort & Spa.

Other Hotel Revenue .

Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, increased $4.1 million, or 6.0%, to $72.0 million during the 2024 period compared to the 2023 period.

This increase is attributable to higher other hotel revenue of $6.8 million at 12 comparable hotel properties.

These increases were partially offset by an aggregate decrease of approximately $1.3 million at The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton Lake Tahoe, and The Ritz-Carlton St.

Thomas, as well as a decrease of $1.5 million at Hilton La Jolla Torrey Pines.

Rooms Expense .

Rooms expense increased $1.3 million, or 1.7%, to $81.3 million in the 2024 period compared to the 2023 period.

This increase is attributable to an aggregate increase in rooms expense of $2.9 million at nine comparable hotel properties.

These increases were partially offset by an aggregate decrease of approximately $669,000 at the Hotel Yountville, The Ritz-Carlton St.

Thomas, The Clancy, Park Hyatt Beaver Creek Resort & Spa, Bardessono Hotel and Spa, and Cameo Beverly Hills, as well as a decrease of $951,000 at Hilton La Jolla Torrey Pines.

Food and Beverage Expense .

Food and beverage expense increased $525,000, or 0.5%, to $109.4 million during the 2024 period compared to the 2023 period.

This increase is attributable to higher food and beverage expense of $3.9 million at ten comparable hotel properties.

These increases were partially offset by an aggregate decrease of approximately $2.2 million at The Ritz-Carlton Lake Tahoe, Cameo Beverly Hills, Bardessono Hotel and Spa, Park Hyatt Beaver Creek Resort & Spa, and The Ritz-Carlton Reserve Dorado Beach, as well as a decrease of $1.2 million at Hilton La Jolla Torrey Pines.

Other Operating Expenses .

Other operating expenses decreased $1.8 million, or 1.0%, to $169.5 million in the 2024 period compared to the 2023 period.

Other operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees.

We experienced an increase of $808,000 in direct expenses and a decrease of $2.6 million in indirect expenses and incentive management fees in the 2024 period compared to the 2023 period.

Direct expenses were 4.5% of total hotel revenue in the 2024 period and 4.3% in the 2023 period.

The increase in direct expenses is associated with higher direct expenses of approximately $1.5 million at eight comparable hotel properties.

These increases were partially offset by lower direct expenses of $434,000 at The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton Lake Tahoe, Cameo Beverly Hills, Hotel Yountville, The Clancy, The Notary Hotel, and Capital Hilton, as well as $238,000 at Hilton La Jolla Torrey Pines.

The decrease in indirect expenses comprises decreases in:

(i) incentive management fees of $1.4 million comprising an aggregate decrease of $1.4 million at our 15 comparable hotel properties and an increase of $3,000 at the one disposed hotel property;

(ii) lease expense of $1.4 million comprising an aggregate decrease of $35,000 at our 15 comparable hotel properties and a decrease of $1.3 million at the one disposed hotel property;

(iii) general and administrative costs of $1.1 million comprising an aggregate decrease of $536,000 at our 15 comparable hotel properties and a decrease of $529,000 at the one disposed hotel property;

and (iv) energy costs of $812,000 comprising an aggregate decrease of $318,000 at our 15 comparable hotel properties and a decrease of $494,000 at the one disposed hotel property.

These decreases were partially offset by increases in:

(i) repairs and maintenance of $1.0 million comprising an aggregate increase of $1.2 million at our 15 comparable hotel properties and a decrease of $206,000 at the one disposed hotel property;

and (ii) marketing costs of $989,000 comprising an aggregate increase of $1.6 million at our 15 comparable hotel properties and a decrease of $583,000 at the one disposed hotel property.

Management Fees .

Base management fees increased $252,000, or 1.4%, to $17.9 million in the 2024 period compared to the 2023 period.

Management fees increased $1.0 million at six comparable hotel properties.

These increases were partially offset by an aggregate decrease of $486,000 at The Ritz-Carlton Lake Tahoe, Cameo Beverly Hills, The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton St.

Thomas, Bardessono Hotel and Spa, The Clancy, Pier House Resort & Spa, Park Hyatt Beaver Creek Resort & Spa, and Hotel Yountville, as well as a decrease of $302,000 at Hilton La Jolla Torrey Pines.

Property Taxes, Insurance and Other .

Property taxes, insurance and other increased $2.8 million, or 9.9%, to $30.7 million in the 2024 period compared to the 2023 period.

This increase is primarily attributable to an increase of $2.4 million at the Sofitel Chicago Magnificent Mile related to a property tax refund received in the 2023 quarter and an aggregate increase of

$2.6 million at 12 hotel properties.

These increases were partially offset by an aggregate decrease of approximately $1.8 million at two hotel properties, as well as a decrease of $417,000 at Hilton La Jolla Torrey Pines.

Depreciation and Amortization .

Depreciation and amortization increased $7.4 million, or 10.9%, to $75.2 million for the 2024 period compared to the 2023 period.

This increase is comprised of an aggregate increase of $11.0 million at 11 comparable hotel properties.

These increases were partially offset by an aggregate decrease of $2.8 million at The Notary Hotel, The Clancy, Pier House Resort & Spa, and Sofitel Chicago Magnificent Mile, primarily due to fully depreciated assets, as well as a decrease of $795,000 at Hilton La Jolla Torrey Pines.

Advisory Services Fee.

Advisory services fee decreased $28,000, or 0.1%, to $23.2 million in the 2024 period compared to the 2023 period due to lower equity-based compensation of $4.0 million and base advisory fee of $532,000, partially offset by higher reimbursable expenses of $2.4 million and a higher incentive fee of $2.1 million.

In the 2024 period, we recorded an advisory services fee of $23.2 million, which included a base advisory fee of $10.2 million, reimbursable expenses of $8.5 million, $2.4 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.

and an incentive fee of $2.1 million.

In the 2023 period, we recorded an advisory services fee of $23.2 million, which included a base advisory fee of $10.7 million, $6.4 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc, and reimbursable expenses of $6.1 million.

Corporate General and Administrative .

Corporate general and administrative expense was $11.1 million in the 2024 period compared to expense of $9.2 million in the 2023 period.

The increase in corporate general and administrative expenses is primarily attributable to higher professional fees of $5.1 million and $6.0 million of reimbursed legal costs in the 2024 period.

These increases were partially offset by lower miscellaneous expenses of $268,000, lower public company costs of $215,000.

and lower reimbursed operating expenses of Ashford Securities of $8.8 million.

The decrease in Ashford Securities reimbursed operations expenses was related to a revision to the estimated contribution amount associated with the Fourth Amended and Restated Contribution Agreement with Ashford Securities that resulted in a $5.6 million credit to expense in 2024.

Gain (loss) on disposition of assets and hotel property .

In the 2024 period, we recorded a gain of approximately $88.2 million related to the sale of Hilton La Jolla Torrey Pines.

There was no such gain (loss) recorded for the 2023 period.

Corporate general and administrative expense was $2.9 million in the 2025 quarter compared to $(2.2) million in the 2024 quarter.

The increase in corporate general and administrative expenses is primarily attributable to a revision to the estimated contribution amount associated with the Fourth Amended and Restated Contribution Agreement with Ashford Securities that resulted in a $5.6 million expense reduction in the 2024 quarter as well as higher public company costs of $149,000 and higher miscellaneous expenses of $488,000 in the 2025 quarter.

These increases were partially offset by lower professional fees of $1.1 million.

Equity in Earnings (Loss) of Unconsolidated Entity .

In the 2024 period and the 2023 period, we recorded equity in loss of unconsolidated entity of $214,000 and $208,000, respectively, related to our investment in OpenKey.

Other Income (Expense).

In the 2023 period, we recorded $293,000 of miscellaneous income.

In the 2024 quarter we recorded equity in loss of unconsolidated entity of $49,000 related to our investment in OpenKey.

There was no equity in earnings (loss) in the 2025 quarter as a result of impairing the OpenKey investment in the fourth quarter of 2024.

Interest Income .

Interest income was $4.5 million and $5.4 million in the 2024 period and the 2023 period, respectively.

The decrease in interest income in the 2024 period was primarily attributable to lower average excess cash balances in the 2024 period compared to the 2023 period, partially offset by interest income associated with a tranche of CMBS included in investment in securities.

Interest income was $1.9 million and $796,000 in the 2025 quarter and the 2024 quarter, respectively.

The increase in interest income in the 2025 quarter was primarily attributable to interest income associated with a tranche of CMBS included in investment in securities in the 2025 quarter compared to the 2024 quarter, partially offset by lower excess cash balances.

Interest Expense and Amortization of Discounts and Loan Costs .

Interest expense and amortization of discounts and loan costs increased $11.9 million, or 17.1%, to $81.7 million for the 2024 period compared to the 2023 period.

The increase is primarily due to higher interest expense from higher average interest rates in the 2024 period.

The average SOFR rates for the 2024 period and the 2023 period were 5.27% and 4.78%, respectively.

Interest expense and amortization of discounts and loan costs decreased $1.7 million, or 6.3%, to $24.8 million for the 2025 quarter compared to the 2024 quarter.

The decrease is primarily due to lower interest expense from lower average interest rates in the 2025 quarter partially offset by higher amortization of loan costs of approximately $821,000 in the 2025 quarter compared to the 2024 quarter.

The average SOFR rates for the 2025 quarter and the 2024 quarter were 4.32% and 5.33%, respectively.

Write-off of Loan Costs and Exit Fees.

Write-off of loan costs and exit fees was $6.1 million in the 2024 period related to various loan refinances and modifications.

Write-off of loan costs and exit fees was $2.8 million in the 2023 period related to related to various loan modifications.

Gain (loss) on Extinguishment of Debt.

In the 2024 period, we recognized a loss of $22,000 attributable to the discount associated with the Cameo Beverly Hills mortgage loan that was repaid on April 9, 2024.

Gain on extinguishment of debt was $2.3 million in the 2023 period due to the payoff of The Ritz-Carlton Reserve Dorado Beach mortgage loan.

The gain was primarily attributable to the premium that was recorded upon the assumption of the mortgage loan when the hotel was acquired.

Write-off of loan costs and exit fees was $1.5 million in the 2025 quarter related to various loan refinances and modifications.

Write-off of loan costs and exit fees was $721,000 in the 2024 quarter related to related to various loan modifications.

Realized and Unrealized Gain (Loss) on Derivatives .

Realized and unrealized gain on derivatives of $523,000 for the 2024 period consisted of an unrealized gain on warrants of $12,000 and a realized gain of $4.2 million associated with payments received from counterparties on in-the-money interest rate caps, partially offset by an unrealized loss on interest rate caps of approximately $3.7 million.

Realized and unrealized gain on derivatives of $918,000 for the 2023 period consisted of unrealized gain on warrants of $273,000 and a realized gain of $6.2 million associated with payments received from counterparties on in-the-money interest rate caps.

These gains were partially offset by an unrealized loss on interest rate caps of approximately $5.5 million.

Realized and unrealized loss on derivatives of $198,000 for the 2025 quarter consisted of an unrealized loss on interest rate caps of $386,000, partially offset by a realized gain of $188,000 associated with payments received from counterparties on in-the-money interest rate caps.

Realized and unrealized gain on derivatives of $932,000 for the 2024 quarter primarily consisted of a realized gain of $1.7 million associated with payments received from counterparties on in-the-money interest rate caps, partially offset by an unrealized loss on interest rate caps of approximately $751,000.

Income Tax (Expense) Benefit .

Income tax expense decreased $590,000, from $1.1 million in the 2023 period to $474,000 in the 2024 period.

This decrease was primarily due to a decrease in the taxable income of certain of our TRS entities in the 2024 period compared to the 2023 period.

Income tax expense increased $15,000, from $1.5 million in the 2024 quarter to $1.5 million in the 2025 quarter.

(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities .

Our noncontrolling interest partner in consolidated entities was allocated income of $26.3 million and $1.7 million in the 2024 period and the 2023 period, respectively.

The allocated income for the 2024 period includes our partner’s share of gain on the sale of the Hilton La Jolla Torrey Pines.

At September 30, 2024, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity.

At September 30, 2023, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.

Our noncontrolling interest partner in consolidated entities was allocated a loss of $64,000 and $743,000 in the 2025 quarter and the 2024 quarter, respectively.

As of March 31, 2025, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity.

As of March 31, 2024, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership.

Noncontrolling interests in operating partnership were allocated a net loss of $1.7 million in the 2024 period and $3.0 million in the 2023 period.

Redeemable noncontrolling interests represented ownership interests in Braemar OP of approximately 8.05% and 6.63% as of September 30, 2024 and 2023, respectively.

Noncontrolling interests in operating partnership were allocated a net loss of $262,000 in the 2025 quarter and net income of $296,000 in the 2024 quarter.

Redeemable noncontrolling interests represented ownership interests in Braemar OP of approximately 9.33% and 7.75% as of March 31, 2025 and 2024, respectively.

LIQUIDITY AND CAPITAL RESOURCES

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• dividends on our preferred stock;

• redemptions of our non-traded preferred stock;

• capital expenditures to improve our hotel properties.

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The success of our business strategy will depend, in part, on our ability to access these various capital sources.

While management cannot provide any assurances, management believes that our cash flow from operations and our existing cash balances will be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity principal payments and paydowns for extension tests), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S.

While management cannot provide any assurances, management believes that our cash flow from operations, our existing cash balances and investment in securities will be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity principal payments and paydowns for extension tests), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S.

federal income tax purposes.

Our hotel properties will require periodic capital expenditures and renovation to remain competitive.

Our hotel properties will require periodic capital expenditures and renovations to remain competitive.

In addition, acquisitions, redevelopments or expansions of hotel properties may require significant capital outlays.

We may not be able to

fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains.

We may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains.

As a result, our ability to fund capital expenditures, acquisitions or hotel redevelopment through retained earnings is very limited.

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Our loan that is in a cash trap may remain subject to the cash trap provisions for a substantial period of time which could limit our flexibility and adversely affect our financial condition or our qualification as a REIT.

As of September 30, 2024, the mortgage loan secured by The Ritz-Carlton Lake Tahoe was in a cash trap.

The amount of cash in the cash trap as of September 30, 2024 was $0.

As of September 30, 2024, the Company held cash and cash equivalents of $168.7 million and restricted cash of $48.5 million, the vast majority of which is comprised of lender and manager-held reserves.

As of September 30, 2024, $19.9 million was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs.

At September 30, 2024, our net debt to gross assets was 41.0%.

As of March 31, 2025, the mortgage loan secured by The Ritz-Carlton Lake Tahoe was in a cash trap.

The amount of cash in the cash trap as of March 31, 2025 was $0.

As of March 31, 2025, the Company held cash and cash equivalents of $81.7 million and restricted cash of $54.5 million, the vast majority of which is comprised of lender and manager-held reserves.

As of March 31, 2025, $25.5 million was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs.

As of March 31, 2025, our net debt to gross assets was 42.3%.

The Company’s cash and cash equivalents are primarily comprised of corporate cash invested in short-term U.S.

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The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale.

As of November 6, 2024, the Company has sold approximately 4.7 million shares of common stock under the Virtu July 2021 EDA and received gross proceeds of approximately $24.0 million.

As of May 6, 2025, the Company has sold approximately 4.7 million shares of common stock under the Virtu July 2021 EDA and received gross proceeds of approximately $24.0 million.

On May 3, 2024, our board of directors approved a new share repurchase program, pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share, having an aggregate value of up to $50 million.

The Company intends to begin share repurchases as soon as practicable and may repurchase shares through open market transactions, privately negotiated transactions or other means.

The Company may repurchase shares through open market transactions, privately negotiated transactions or other means.

The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions, and the program may be suspended or terminated at any time by the Company at its discretion without prior notice.

The board of directors’ authorization replaced any previous repurchase authorizations.

As of September 30, 2024, the Company has not repurchased any common stock pursuant to the plan.

As of May 6, 2025, the Company has not repurchased any common stock pursuant to the plan.

Debt Transactions

On January 3, 2024, the Company extended the mortgage loan secured by the Pier House Resort & Spa in Key West, Florida.

The mortgage loan has an initial maturity date of September 2025 with one one-year extension option, subject to the satisfaction of certain conditions, continues to have a balance of $80.0 million, and bears interest at a floating interest rate of SOFR + 3.60%.

On January 29, 2024, the Company extended the mortgage loan secured by The Ritz-Carlton St.

Thomas in St.

Thomas, USVI.

The mortgage loan has an initial maturity date of August 2025 with one one-year extension option, subject to the satisfaction of certain conditions, continues to have a balance of $42.5 million, and bears interest at a floating interest rate of SOFR + 4.35%.

On February 5, 2024, the Company amended the mortgage loan secured by the Hilton La Jolla Torrey Pines.

At the time, the hotel property remained encumbered by the original mortgage loan, which had been partially paid down to a remaining balance of $66.6 million.

The lender also provided a six-month extension.

The mortgage loan bore an annual fixed interest rate of 9.0%.

On March 7, 2024, the Company closed on a $62.0 million non-recourse loan secured by the Ritz-Carlton Reserve Dorado Beach.

The mortgage loan has a two-year term, is interest only and provides for a floating interest rate of SOFR + 4.75%.

In April 2024, the Company repaid the $30.0 million mortgage loan secured by the Cameo Beverly Hills hotel.

On July 17, 2024, the Company sold the Hilton La Jolla Torrey Pines pursuant to an Agreement of Purchase and Sale, entered into effective May 6, 2024, for $165 million in cash, subject to customary pro-rations and adjustments.

The Company owned an indirect 75% equity interest in the hotel property.

Additionally, the Company repaid the $66.6 million mortgage loan secured by the hotel property.

On August 7, 2024, the Company closed on a refinancing involving five hotels.

The new loan totals $407 million and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2029.

The loan is interest only and provides for a floating interest rate of SOFR + 3.24%.

As part of this financing, the Company acquired a tranche of CMBS with a par value of $42.2 million and a rate of SOFR + 5.20%.

The loan is secured by five hotels:

Pier House Resort & Spa, Bardessono Hotel & Spa, Hotel Yountville, The Ritz-Carlton Sarasota, and The Ritz-Carlton St.

On January 14, 2025, the Company amended its mortgage loan secured by the 170-room Ritz-Carlton Lake Tahoe.

The mortgage loan had an initial maturity date in January 2025.

The $43.4 million current mortgage loan amount represents an approximate 27% loan-to-value based on a third-party appraisal completed by the lender.

The appraisal valued the hotel at $160 million based on its “as-is” value.

The mortgage loan is secured by five hotels:

The Clancy, The Notary Hotel, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, and The Ritz-Carlton Reserve Dorado Beach.

The $363.0 million mortgage loan amount represents an approximate 49% loan-to-value based on third-party appraisals completed by the lender.

The appraisals valued the hotels at $742 million based on the sum of their “as-is” values.

Sources and Uses of Cash

We had approximately $168.7 million and $85.6 million of cash and cash equivalents at September 30, 2024 and December 31, 2023, respectively.

We had approximately $81.7 million and $135.5 million of cash and cash equivalents at March 31, 2025 and December 31, 2024, respectively.

We anticipate that our principal sources of funds to meet our cash requirements will include cash on hand, positive cash flow from operations and capital market activities.

Net Cash Flows Provided by (Used in) Operating Activities.

Net cash flows provided by operating activities were $60.2 million and $73.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Cash flows from operations were impacted by changes in hotel operations and the disposition of a hotel property.

Cash flows from operations are also impacted by the timing of working capital cash flows, such as collecting receivables from hotel guests, paying vendors, settling with derivative counterparties, settling with related parties and settling with hotel managers.

Net cash flows provided by operating activities were $15.1 million and $36.0 million for the three months ended March 31, 2025 and 2024, respectively.

Cash flows from operations were impacted by changes in hotel operations and the disposition of a hotel property in the third quarter of 2024.

Cash flows from operations are also impacted by the timing of working capital cash flows, such as collecting receivables from hotel guests, paying vendors, settling with related parties and settling with hotel managers.

Net Cash Flows Provided by (Used in) Investing Activities .

For the nine months ended September 30, 2024, net cash flows provided by investing activities were $52.7 million.

The cash inflows were primarily attributable to $155.6 million from the

sale of Hilton La Jolla Torrey Pines, partially offset by cash outflows of $42.3 million from the purchase of securities, $54.8 million of capital improvements made to various hotel properties, $5.8 million from the issuance of a note receivable and a $79,000 loan to OpenKey.

For the three months ended March 31, 2025, net cash flows used in investing activities were $14.2 million.

The cash outflows were primarily attributable to $15.3 million of capital improvements made to various hotel properties, partially offset by cash inflows of $1.1 million from property insurance proceeds.

Our capital improvements consisted of approximately $10.5 million of return on investment capital projects and approximately $4.8 million of renewal and replacement capital projects.

For the nine months ended September 30, 2023, net cash flows used in investing activities were $55.6 million.

These cash outflows were primarily attributable to $55.6 million of capital improvements made to various hotel properties and a $237,000 loan to OpenKey partially offset by cash inflows of $327,000 related to proceeds from property insurance.

For the three months ended March 31, 2024, net cash flows used in investing activities were $22.8 million.

These cash outflows were primarily attributable to $23.3 million of capital improvements made to various hotel properties partially offset by cash inflows of $504,000 related to proceeds from property insurance.

Our capital improvements consisted of approximately $17.6 million of return on investment capital projects and approximately $5.7 million of renewal and replacement capital projects.

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Net Cash Flows Provided by (Used in) Financing Activities.

For the nine months ended September 30, 2024, net cash flows used in financing activities were $62.2 million.

Cash outflows primarily consisted of $184.1 million of repayments of indebtedness, $39.0 million of dividend and distribution payments, $1.3 million to purchase interest rate caps, $15.4 million of payments of loan costs and exit fees, $27.0 million distributions to noncontrolling interest in consolidated entities, and $36.3 million for cash redemptions of Series E and Series M preferred stock.

These cash outflows were partially offset by cash inflows of $234.0 million from borrowings on indebtedness, $4.4 million of proceeds from in-the-money interest rate caps and $3.0 million of contributions from noncontrolling interest in consolidated entities.

For the nine months ended September 30, 2023, net cash flows used in financing activities were $126.3 million.

Cash outflows primarily consisted of repayments of indebtedness of $390.2 million, $39.4 million of dividend and distribution payments, $19.3 million of payments to repurchase common stock, payments of $7.2 million for the redemption of operating partnership units, $4.0 million to purchase interest rate caps, $2.0 million of distributions to a noncontrolling interest in consolidated entities, $3.3 million payments of loan costs and exit fees, and $4.8 million for cash redemptions of Series E and Series M preferred stock.

These cash outflows were partially offset by cash inflows of $236.0 million from borrowings on indebtedness, $97.9 million from the issuance of preferred stock, $4.1 million of contributions from a noncontrolling interest in consolidated entities and $6.0 million of proceeds from in-the-money interest rate caps.

For the three months ended March 31, 2025, net cash flows used in financing activities were $49.8 million.

Cash outflows primarily consisted of $365.2 million of repayments of indebtedness, $26.2 million for cash redemptions of Series E and Series M preferred stock, $12.2 million of dividend and distribution payments, $8.9 million of payments of loan costs and exit fees, $508,000 to purchase interest rate caps, and $92,000 from the redemption of operating partnership units.

These cash outflows were partially offset by cash inflows of $363.0 million from borrowings on indebtedness, and $244,000 of proceeds from in-the-money interest rate caps.

For the three months ended March 31, 2024, net cash flows provided by financing activities were $39.7 million.

Cash inflows primarily consisted of cash inflows of $62.0 million from borrowings on indebtedness and $1.6 million of proceeds from in-the-money interest rate caps.

These cash inflows were partially offset by cash outflows primarily consisting of $13.1 million of dividend and distribution payments, $991,000 to purchase interest rate caps, $3.2 million of payments of loan costs and exit fees, and $6.6 million for cash redemptions of Series E and Series M preferred stock.

Dividend Policy

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The Company expects to pay a quarterly cash dividend of $0.05 per share for the Company’s common stock for 2025, or $0.20 per share on an annualized basis.

On July 10, 2024, our board of directors declared a quarterly cash dividend of $0.05 per diluted share, for the third quarter of 2024.

On October 3, 2024, our board of directors declared a quarterly cash dividend of $0.05 per diluted share, for the fourth quarter of 2024.

On January 13, 2025, our board of directors declared a quarterly cash dividend of $0.05 per diluted share for the first quarter of 2025.

On April 2, 2025, our board of directors declared a quarterly cash dividend of $0.05 per diluted share for the second quarter of 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.

The board of directors will continue to review our dividend policy on a quarter-to-quarter basis and make announcements with respect thereto.

The board of directors will continue to review its dividend policy on a quarter-to-quarter basis.

For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof.

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Actual results could differ from those estimates.

Our accounting policies that are critical

or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K.

Our accounting policies that are critical or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Form 10-K.

There have been no material changes in these critical accounting policies.

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In addition, we exclude impairment on real estate, (gain) loss on disposition of assets and hotel property and the Company’s portion of EBITDAre of OpenKey from EBITDA to calculate EBITDA for real estate, or EBITDAre, as defined by NAREIT.

We then further adjust EBITDAre to exclude certain additional items such as amortization of favorable (unfavorable) contract assets (liabilities), transaction and conversion costs, other income/expense, write-off of loan costs and exit fees, gain/loss on insurance settlements, advisory and settlement costs, advisory services incentive fee, gain/loss on extinguishment of debt, stock/unit-based compensation and the Company’s portion of adjustments to EBITDAre of OpenKey and non-cash items such as unrealized gain/ loss on derivatives.

We then further adjust EBITDAre to exclude certain additional items such as amortization of favorable (unfavorable) contract assets (liabilities), transaction and conversion costs, other income/expense, write-off of loan costs and exit fees, gain/loss on insurance settlements, legal, advisory and settlement costs, advisory services incentive fee, gain/loss on extinguishment of debt, stock/unit-based compensation and the Company’s portion of adjustments to EBITDAre of OpenKey and non-cash items such as unrealized gain/ loss on derivatives.

We present EBITDA, EBITDAre and Adjusted EBITDAre because we believe they are useful to an investor in evaluating our operating performance because they provide investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business.

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EBITDA, EBITDAre and Adjusted EBITDAre as calculated by us may not be comparable to EBITDA, EBITDAre and Adjusted EBITDAre reported by other companies that do not define EBITDA, EBITDAre and Adjusted EBITDAre exactly as we define the terms.

EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as determined by GAAP as an indicator of liquidity.

as an indicator of performance or as an alternative to cash flows from operating activities as determined by GAAP as an indicator of liquidity.

The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands) (unaudited):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net income (loss) $ 10,672 $ 15,482

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(Gain) loss on disposition of assets and hotel property

(88,210) — (88,210) —

EBITDAre 60,361 68,837

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Advisory services incentive fee 82 —

(Gain) loss on extinguishment of debt — — 22 (2,318)

Other (income) expense

— (293) — (293)

Company’s portion of adjustments to EBITDAre of OpenKey — — 3 —

Adjusted EBITDAre $ 63,003 $ 66,192

FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses on insurance settlement and disposition of assets, plus impairment charges on real estate, depreciation and amortization of real estate assets, and after redeemable noncontrolling interests in the operating partnership and adjustments for unconsolidated entities.

__________________

(1) Includes amounts associated with funding certain expenses of Ashford Securities LLC, which in 2024 included a true up of these expenses based on capital raised.

FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses on disposition of assets, plus impairment charges on real estate, depreciation and amortization of real estate assets, and after redeemable noncontrolling interests in the operating partnership and adjustments for unconsolidated entities.

NAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the basis determined by GAAP.

Our calculation of Adjusted FFO excludes transaction and conversion costs, other income/expense, write-off of loan costs and exit fees, legal, advisory and settlement costs, advisory services incentive fee, stock/unit-based compensation, severance, gain/loss on insurance settlements, gain/loss on extinguishment of debt, and non-cash items such as deemed dividends on redeemable preferred stock, interest expense accretion on refundable membership club deposits, amortization of loan costs, unrealized gain/loss on derivatives and the Company’s portion of adjustments to FFO of OpenKey.

Our calculation of Adjusted FFO excludes transaction and conversion costs, other income/expense, write-off of premiums, loan costs and exit fees, legal, advisory and settlement costs, stock/unit-based compensation, severance, gain/loss on insurance settlements, gain/loss on extinguishment of debt, and non-cash items such as deemed dividends on redeemable preferred stock, interest expense accretion on refundable membership club deposits, amortization of loan costs, unrealized gain/loss on derivatives and the Company’s portion of adjustments to FFO of OpenKey.

FFO and Adjusted FFO exclude amounts attributable to the portion of a partnership owned by the third party.

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The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands) (unaudited):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net income (loss) $ 10,672 $ 15,482

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Equity in (earnings) loss of unconsolidated entity — 49

(Gain) loss on disposition of assets and hotel property (1)

(61,970) — (61,970) —

Company’s portion of FFO of OpenKey — (67)

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Deemed dividends on preferred stock

4,151 516 6,175 3,271

Transaction and conversion costs (2)

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Amortization of loan costs (1)

1,741 858 4,268 2,258

Advisory services incentive fee 82 —

(Gain) loss on extinguishment of debt — — 22 (2,318)

Other (income) expense

— (293) — (293)

Company’s portion of adjustments to FFO of OpenKey — — 3 —

Adjusted FFO available to common stockholders and OP unitholders $ 29,114 $ 30,260

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The following table presents the amounts of the adjustments for noncontrolling interests for each line item:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Depreciation and amortization on real estate $ (719) $ (1,240)

Amortization of loan costs (35) (103)

Gain (loss) on disposition of assets and hotel property

26,240 — 26,240 —

The following table presents certain information related to our hotel properties as of September 30, 2024:

(2) Includes amounts associated with funding certain expenses of Ashford Securities LLC, which in 2024 included a true up of these expenses based on capital raised.

The following table presents certain information related to our hotel properties as of March 31, 2025:

Hotel Property Location Total Rooms % Owned Owned Rooms

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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-Q

Item 2. Management’s Discussion and Analysis