Braemar Hotels & Resorts Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS (unaudited) BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in thousands, except share and per share amounts) June 30, 2025 December 31, 2024 ASSETS Investments in hotel properties, gross $ 2,272,364 $ 2,252,574 Accumulated depreciation ( 495,003 ) ( 473,888 ) Investments in hotel properties, net 1,777,361 1,778,686 Cash and cash equivalents 80,226 135,465 Restricted cash 55,463 49,592 Investment in securities (amortized cost of $ 17,279 and $ 42,279 , respectively) 17,134 41,535 Accounts receivable, net of allowance of $ 261 and $ 459 , respectively 32,673 31,754 Inventories 4,737 4,664 Note receivable 8,590 8,283 Prepaid expenses 5,504 5,116 Deferred costs, net 75 75 Investment in unconsolidated entity 145 145 Derivative assets 313 356 Operating lease right-of-use assets 34,524 34,852 Other assets 20,333 19,538 Intangible assets, net 2,936 3,125 Due from third-party hotel managers 24,232 22,873 Total assets $ 2,064,246 $ 2,136,059 LIABILITIES AND EQUITY Liabilities: Indebtedness, net $ 1,210,878 $ 1,210,018 Accounts payable and accrued expenses 131,142 143,566 Dividends and distributions payable 8,627 9,255 Due to Ashford Inc. 2,767 4,267 Due to related parties, net 636 1,055 Due to third-party hotel managers 1,919 1,476 Operating lease liabilities 20,000 19,984 Other liabilities 26,941 24,268 Total liabilities 1,402,910 1,413,889 Commitments and contingencies (note 15) 5.50 % Series B cumulative convertible preferred stock, $ 0.01 par value, 3,078,017 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively 65,426 65,426 Series E redeemable preferred stock, $ 0.01 par value, 13,391,250 and 14,910,521 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively 320,585 352,502 Series M redeemable preferred stock, $ 0.01 par value, 1,420,421 and 1,476,621 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively 35,524 36,916 Redeemable noncontrolling interests in operating partnership 17,994 29,964 Equity: Preferred stock, $ 0.01 par value, 80,000,000 shares authorized: 8.25 % Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at June 30, 2025 and December 31, 2024 16 16 Common stock, $ 0.01 par value, 250,000,000 shares authorized, 68,219,432 and 66,607,823 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively 682 665 Additional paid-in capital 727,002 718,536 Accumulated other comprehensive income (loss) ( 135 ) ( 684 ) Accumulated deficit ( 502,437 ) ( 477,804 ) Total stockholders’ equity of the Company 225,128 240,729 Noncontrolling interest in consolidated entities ( 3,321 ) ( 3,367 ) Total equity 221,807 237,362 Total liabilities and equity $ 2,064,246 $ 2,136,059 See Notes to Condensed Consolidated Financial Statements. 2 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 REVENUE Rooms $ 109,824 $ 116,227 $ 245,916 $ 254,779 Food and beverage 45,571 47,563 97,359 101,110 Other 23,682 23,797 51,622 50,777 Total hotel revenue 179,077 187,587 394,897 406,666 EXPENSES Hotel operating expenses: Rooms 27,285 27,476 55,504 55,740 Food and beverage 35,767 36,664 75,977 77,381 Other expenses 56,445 58,155 116,821 118,231 Management fees 5,541 6,068 12,451 13,044 Total hotel operating expenses 125,038 128,363 260,753 264,396 Property taxes, insurance and other 7,892 10,058 18,357 20,755 Depreciation and amortization 23,360 24,694 46,755 50,114 Advisory services fee 7,191 7,828 13,802 14,528 Corporate general and administrative ( 2,298 ) 4,469 596 2,231 Total operating expenses 161,183 175,412 340,263 352,024 OPERATING INCOME (LOSS) 17,894 12,175 54,634 54,642 Equity in earnings (loss) of unconsolidated entity — ( 85 ) — ( 134 ) Interest income 1,519 1,072 3,407 1,868 Other income (expense) ( 1,250 ) — ( 1,250 ) — Interest expense and amortization of discounts and loan costs ( 25,361 ) ( 27,285 ) ( 50,188 ) ( 53,776 ) Write-off of loan costs and exit fees ( 3 ) ( 82 ) ( 1,467 ) ( 803 ) Gain (loss) on extinguishment of debt — ( 22 ) — ( 22 ) Realized and unrealized gain (loss) on derivatives 15 326 ( 183 ) 1,258 INCOME (LOSS) BEFORE INCOME TAXES ( 7,186 ) ( 13,901 ) 4,953 3,033 Income tax (expense) benefit 345 114 ( 1,122 ) ( 1,338 ) NET INCOME (LOSS) ( 6,841 ) ( 13,787 ) 3,831 1,695 (Income) loss attributable to noncontrolling interest in consolidated entities ( 115 ) 303 ( 51 ) 1,046 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 1,489 1,919 1,751 1,623 NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY ( 5,467 ) ( 11,565 ) 5,531 4,364 Preferred dividends ( 8,992 ) ( 10,329 ) ( 18,261 ) ( 20,736 ) Deemed dividends on preferred stock ( 1,559 ) ( 26 ) ( 5,835 ) ( 2,024 ) NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 16,018 ) $ ( 21,920 ) $ ( 18,565 ) $ ( 18,396 ) INCOME (LOSS) PER SHARE - BASIC: Net income (loss) attributable to common stockholders $ ( 0.24 ) $ ( 0.33 ) $ ( 0.28 ) $ ( 0.28 ) Weighted average common shares outstanding – basic 67,279 66,501 67,013 66,478 INCOME (LOSS) PER SHARE - DILUTED: Net income (loss) attributable to common stockholders $ ( 0.24 ) $ ( 0.33 ) $ ( 0.28 ) $ ( 0.28 ) Weighted average common shares outstanding – diluted 67,279 66,501 67,013 66,478 See Notes to Condensed Consolidated Financial Statements. 3 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited, in thousands) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 NET INCOME (LOSS) $ ( 6,841 ) $ ( 13,787 ) $ 3,831 $ 1,695 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Unrealized gain (loss) on investment in securities ( 260 ) — 599 — Total other comprehensive income (loss) ( 260 ) — 599 — TOTAL COMPREHENSIVE INCOME (LOSS) ( 7,101 ) ( 13,787 ) 4,430 1,695 Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities ( 115 ) 303 ( 51 ) 1,046 Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership 1,519 1,919 1,701 1,623 COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY $ ( 5,697 ) $ ( 11,565 ) $ 6,080 $ 4,364 See Notes to Condensed Consolidated Financial Statements. 4 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited, in thousands except per share amounts) 8.25 % Series D Cumulative Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income/(loss) Noncontrolling Interest in Consolidated Entities Total 5.50 % Series B Cumulative Convertible Preferred Stock Series E Redeemable Preferred Stock Series M Redeemable Preferred Stock Redeemable Noncontrolling Interests in Operating Partnership Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at March 31, 2025 1,600 $ 16 67,047 $ 669 $ 720,703 $ ( 482,575 ) $ 95 $ ( 3,431 ) $ 235,477 3,078 $ 65,426 13,910 $ 331,875 1,459 $ 36,489 $ 26,430 Purchase of common stock — — ( 293 ) ( 2 ) ( 699 ) — — — ( 701 ) — — — — — — — Equity-based compensation — — — — ( 35 ) — — — ( 35 ) — — — — — — ( 12 ) Issuance of preferred stock — — — — — — — — — — — 29 725 1 40 — Dividends declared – common stock ($ 0.05 /share) — — — — — ( 3,430 ) — — ( 3,430 ) — — — — — — — Dividends declared – preferred stock - Series B ($ 0.34 /share) — — — — — ( 1,058 ) — — ( 1,058 ) — — — — — — — Dividends declared – preferred stock - Series D ($ 0.52 /share) — — — — — ( 825 ) — — ( 825 ) — — — — — — — Dividends declared – preferred stock - Series E ($ 0.47 /share) — — — — — ( 6,354 ) — — ( 6,354 ) — — — — — — — Dividends declared – preferred stock - Series M ($ 0.53 /share) — — — — — ( 755 ) — — ( 755 ) — — — — — — — Contributions from noncontrolling interests — — — — — — — 2,120 2,120 — — — — — — — Distributions to noncontrolling interests — — — — — — — ( 2,125 ) ( 2,125 ) — — — — — — ( 271 ) Redemption/conversion of operating partnership units — — 1,465 15 7,033 — — — 7,048 — — — — — — ( 7,048 ) Net income (loss) — — — — — ( 5,467 ) — 115 ( 5,352 ) — — — — — — ( 1,489 ) Unrealized gain (loss) on investment in securities — — — — — — ( 230 ) — ( 230 ) — — — — — — ( 30 ) Redemption of preferred stock — — — — — — — — — — — ( 548 ) ( 13,574 ) ( 40 ) ( 1,005 ) — Redemption value adjustment – preferred stock — — — — — ( 1,559 ) — — ( 1,559 ) — — — 1,559 — — — Redemption value adjustment — — — — — ( 414 ) — — ( 414 ) — — — — — — 414 Balance at June 30, 2025 1,600 $ 16 68,219 $ 682 $ 727,002 $ ( 502,437 ) $ ( 135 ) $ ( 3,321 ) $ 221,807 3,078 $ 65,426 13,391 $ 320,585 1,420 $ 35,524 $ 17,994 8.25 % Series D Cumulative Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Noncontrolling Interest in Consolidated Entities Total 5.50 % Series B Cumulative Convertible Preferred Stock Series E Redeemable Preferred Stock Series M Redeemable Preferred Stock Redeemable Noncontrolling Interests in Operating Partnership Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at March 31, 2024 1,600 $ 16 66,477 $ 664 $ 718,606 $ ( 412,013 ) $ ( 9,677 ) $ 297,596 3,078 $ 65,426 16,163 $ 375,261 1,748 $ 43,694 $ 33,005 Equity-based compensation — — — — 296 — — 296 — — — — — — 839 Issuance of preferred stock — — — — — — — — — — 32 809 1 34 — Issuance of restricted shares/units — — 45 1 ( 1 ) — — — — — — — — — — Dividends declared – common stock ($ 0.05 /share) — — — — — ( 3,347 ) — ( 3,347 ) — — — — — — — Dividends declared – preferred stock - Series B ($ 0.34 /share) — — — — — ( 1,058 ) — ( 1,058 ) — — — — — — — Dividends declared – preferred stock-Series D ($ 0.52 /share) — — — — — ( 825 ) — ( 825 ) — — — — — — — Dividends declared – preferred stock - Series E ($ 0.47 /share) — — — — — ( 7,570 ) — ( 7,570 ) — — — — — — — Dividends declared – preferred stock - Series M ($ 0.52 /share) — — — — — ( 876 ) — ( 876 ) — — — — — — — Distributions to noncontrolling interests — — — — — — — — — — — — — — ( 368 ) Net income (loss) — — — — — ( 11,565 ) ( 303 ) ( 11,868 ) — — — — — — ( 1,919 ) Redemption of preferred stock — — — — — — — — — — ( 53 ) ( 1,249 ) ( 126 ) ( 3,159 ) — Redemption value adjustment – preferred stock — — — — — ( 26 ) — ( 26 ) — — — 26 — — — Redemption value adjustment — — — — — ( 22 ) — ( 22 ) — — — — — — 22 Balance at June 30, 2024 1,600 $ 16 66,522 $ 665 $ 718,901 $ ( 437,302 ) $ ( 9,980 ) $ 272,300 3,078 $ 65,426 16,142 $ 374,847 1,623 $ 40,569 $ 31,579 5 8.25 % Series D Cumulative Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income/(loss) Noncontrolling Interest in Consolidated Entities Total 5.50 % Series B Cumulative Convertible Preferred Stock Series E Redeemable Preferred Stock Series M Redeemable Preferred Stock Redeemable Noncontrolling Interests in Operating Partnership Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at December 31, 2024 1,600 $ 16 66,608 $ 665 $ 718,536 $ ( 477,804 ) $ ( 684 ) $ ( 3,367 ) $ 237,362 3,078 $ 65,426 14,911 $ 352,502 1,477 $ 36,916 $ 29,964 Purchase of common stock — — ( 312 ) ( 2 ) ( 750 ) — — — ( 752 ) — — — — — — — Equity-based compensation — — — — ( 68 ) — — — ( 68 ) — — — — — — ( 27 ) Issuance of preferred stock — — — — — — — — — — — 61 1,523 2 79 — Issuance of restricted shares/units — — 1 — 4 — — — 4 — — — — — — 498 Dividends declared – common stock ($ 0.10 /share) — — — — — ( 6,802 ) — — ( 6,802 ) — — — — — — — Dividends declared – preferred stock - Series B ($ 0.68 /share) — — — — — ( 2,116 ) — — ( 2,116 ) — — — — — — — Dividends declared – preferred stock - Series D ($ 1.04 /share) — — — — — ( 1,650 ) — — ( 1,650 ) — — — — — — — Dividends declared – preferred stock - Series E ($ 0.94 /share) — — — — — ( 12,970 ) — — ( 12,970 ) — — — — — — — Dividends declared – preferred stock - Series M ($ 1.05 /share) — — — — — ( 1,525 ) — — ( 1,525 ) — — — — — — — Contributions from noncontrolling interests — — — — — — — 2,120 2,120 — — — — — — — Distributions to noncontrolling interests — — — — — — — ( 2,125 ) ( 2,125 ) — — — — — — ( 615 ) Redemption/conversion of operating partnership units — — 1,922 19 9,280 — — — 9,299 — — — — — — ( 9,299 ) Redemption of operating partnership units for cash — — — — — — — — — — — — — — — ( 92 ) Net income (loss) — — — — — 5,531 — 51 5,582 — — — — — — ( 1,751 ) Redemption of preferred stock — — — — — — — — — — — ( 1,581 ) ( 39,275 ) ( 59 ) ( 1,471 ) — Unrealized gain (loss) on investment in securities — — — — — — 549 — 549 — — — — — — 50 Redemption value adjustment – preferred stock — — — — — ( 5,835 ) — — ( 5,835 ) — — — 5,835 — — — Redemption value adjustment — — — — — 734 — — 734 — — — — — — ( 734 ) Balance at June 30, 2025 1,600 $ 16 68,219 $ 682 $ 727,002 $ ( 502,437 ) $ ( 135 ) $ ( 3,321 ) $ 221,807 3,078 $ 65,426 13,391 $ 320,585 1,420 $ 35,524 $ 17,994 8.25 % Series D Cumulative Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Noncontrolling Interest in Consolidated Entities Total 5.50 % Series B Cumulative Convertible Preferred Stock Series E Redeemable Preferred Stock Series M Redeemable Preferred Stock Redeemable Noncontrolling Interests in Operating Partnership Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at December 31, 2023 1,600 $ 16 66,636 $ 666 $ 718,498 $ ( 412,199 ) $ ( 8,934 ) $ 298,047 3,078 $ 65,426 16,316 $ 377,035 1,833 $ 45,623 $ 32,395 Purchase of common stock — — ( 170 ) ( 2 ) ( 367 ) — — ( 369 ) — — — — — — — Equity-based compensation — — — — 768 — — 768 — — — — — — 1,494 Issuance of preferred stock — — — — — — — — — — 65 1,637 3 71 — Issuance of restricted shares/units — — 57 1 2 — — 3 — — — — — — 32 Forfeiture of restricted common shares — — ( 1 ) — — — — — — — — — — — — Dividends declared – common stock - ($ 0.10 /share) — — — — ( 6,692 ) — ( 6,692 ) — — — — — — — Dividends declared – preferred stock - Series B ($ 0.68 /share) — — — — — ( 2,116 ) — ( 2,116 ) — — — — — — — Dividends declared – preferred stock-Series D ($ 1.04 /share) — — — — — ( 1,650 ) — ( 1,650 ) — — — — — — — Dividends declared – preferred stock - Series E ($ 0.94 /share) — — — — — ( 15,170 ) — ( 15,170 ) — — — — — — — Dividends declared – preferred stock - Series M ($ 1.04 /share) — — — — — ( 1,800 ) — ( 1,800 ) — — — — — — — Distributions to noncontrolling interests — — — — — — — — — — — — — — ( 734 ) Net income (loss) — — — — — 4,364 ( 1,046 ) 3,318 — — — — — — ( 1,623 ) Redemption of preferred stock — — — — — — — — — — ( 239 ) ( 5,652 ) ( 213 ) ( 5,322 ) — Redemption value adjustment – preferred stock — — — — — ( 2,024 ) — ( 2,024 ) — — — 1,827 — 197 — Redemption value adjustment — — — — — ( 15 ) — ( 15 ) — — — — — — 15 Balance at June 30, 2024 1,600 $ 16 66,522 $ 665 718,901 $ ( 437,302 ) $ ( 9,980 ) $ 272,300 3,078 $ 65,426 16,142 $ 374,847 1,623 $ 40,569 $ 31,579 See Notes to Condensed Consolidated Financial Statements. BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 3,831 $ 1,695 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 46,755 50,114 Recognition of deferred income ( 336 ) — Equity-based compensation ( 95 ) 2,262 Bad debt expense 8 248 (Gain) loss on extinguishment of debt — 22 Amortization of loan costs, discounts and capitalized default interest 5,143 2,976 Write-off of loan costs and exit fees 1,467 803 Amortization of intangibles 214 238 Amortization of non-refundable membership initiation fees ( 1,275 ) ( 1,042 ) Interest expense accretion on refundable membership club deposits 286 310 Realized (gain) loss on sale of securities 1,250 — Realized and unrealized (gain) loss on derivatives 183 ( 1,258 ) Non-cash interest income ( 307 ) — Equity in (earnings) loss of unconsolidated entity — 134 Deferred income tax expense (benefit) ( 47 ) 8 Changes in operating assets and liabilities, exclusive of acquisitions, disposition of assets and hotel property: Accounts receivable and inventories ( 4,168 ) 4,655 Prepaid expenses and other assets ( 1,258 ) 2,921 Accounts payable and accrued expenses ( 13,907 ) ( 7,876 ) Operating lease right-of-use assets 114 290 Due to/from related parties, net ( 419 ) ( 968 ) Due to/from third-party hotel managers ( 916 ) 296 Due to/from Ashford Inc. ( 2,342 ) 2,769 Operating lease liabilities 16 ( 157 ) Other liabilities 3,998 1,716 Net cash provided by (used in) operating activities 38,195 60,156 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from property insurance 3,112 542 Proceeds from sale of investment in securities 23,750 — Acquisition of land ( 5,509 ) — Improvements and additions to hotel properties ( 33,012 ) ( 39,224 ) Net cash provided by (used in) investing activities ( 11,659 ) ( 38,682 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on indebtedness 363,000 62,000 Repayments of indebtedness ( 365,180 ) ( 30,000 ) Payments of loan costs and exit fees ( 8,855 ) ( 3,311 ) Payments for derivatives ( 508 ) ( 1,295 ) Proceeds from derivatives 424 3,275 Purchase of common stock ( 51 ) ( 369 ) Payments for dividends and distributions ( 24,202 ) ( 26,244 ) Contributions from noncontrolling interest in consolidated entities 306 — Redemption of operating partnership units ( 92 ) — Redemption of preferred stock ( 40,746 ) ( 10,974 ) Net cash provided by (used in) financing activities ( 75,904 ) ( 6,918 ) Net change in cash, cash equivalents and restricted cash ( 49,368 ) 14,556 Cash, cash equivalents and restricted cash at beginning of period 185,057 166,503 Cash, cash equivalents and restricted cash at end of period $ 135,689 $ 181,059 7 Six Months Ended June 30, 2025 2024 SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ 45,361 $ 51,021 Income taxes paid (refunded) 463 119 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Dividends and distributions declared but not paid $ 8,627 $ 9,333 Common stock purchases accrued but not paid 750 — Assumption of debt in acquisition of land 5,360 — Capital expenditures accrued but not paid 8,300 12,972 Distributions declared but not paid to a noncontrolling interest in a consolidated entity 2,125 3,723 Non-cash preferred stock dividends 1,602 1,708 Unsettled proceeds from derivatives 57 297 Non-cash common stock/unit dividends 502 35 Non-cash redemption of common units 9,284 — Non-cash consideration for acquisition of land 1,814 — SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH Cash and cash equivalents at beginning of period $ 135,465 $ 85,599 Restricted cash at beginning of period 49,592 80,904 Cash, cash equivalents and restricted cash at beginning of period $ 185,057 $ 166,503 Cash and cash equivalents at end of period $ 80,226 $ 114,607 Restricted cash at end of period 55,463 52,339 Cash, cash equivalents and restricted cash at end of period $ 135,689 $ 166,946 Cash and cash equivalents at end of period included in assets held for sale — 5,711 Restricted cash at end of period included in assets held for sale — 8,402 Cash, cash equivalents and restricted cash at end of period (including cash, cash equivalents and restricted cash held for sale) $ 135,689 $ 181,059 See Notes to Condensed Consolidated Financial Statements. 8 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Organization and Description of Business Braemar Hotels & Resorts Inc., together with its subsidiaries (“Braemar”), is a Maryland corporation that invests primarily in high revenue per available room (“RevPAR”) luxury hotels and resorts. High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S. national average RevPAR for all hotels as determined by STR, LLC. Braemar has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Braemar conducts its business and owns substantially all of its assets through its operating partnership, Braemar Hospitality Limited Partnership (“Braemar OP”). Terms such as the “Company,” “we,” “us” or “our” refer to Braemar Hotels & Resorts Inc. and, as the context may require, all entities included in its condensed consolidated financial statements. We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC” or the “Advisor”) through an advisory agreement. Ashford LLC is a subsidiary of Ashford Inc. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC. We do not operate any of our hotel properties directly; instead, we contractually engage hotel management companies to operate them for us under management contracts. Remington Lodging & Hospitality, LLC (“Remington Hospitality”), a subsidiary of Ashford Inc., manages five of our 15 hotel properties as of June 30, 2025. Third-party management companies manage the remaining hotel properties. Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. 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 business automobile claims, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and cash management services. The accompanying condensed consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of June 30, 2025, own 15 hotel properties in seven states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands (“USVI”). The portfolio includes 14 wholly-owned hotel properties and one hotel property that is owned through a partnership in which Braemar OP has a controlling interest. These hotel properties represent 3,807 total rooms, or 3,667 net rooms, excluding those attributable to our partner. As a REIT, Braemar is required to comply with limitations imposed by the Code related to operating hotels. As of June 30, 2025, 14 of our 15 hotel properties were leased by wholly-owned or majority-owned subsidiaries that are treated as taxable REIT subsidiaries (“TRS”) for federal income tax purposes (collectively, the TRS entities are referred to as “Braemar TRS”). One hotel property, located in the USVI, is owned by our USVI TRS. Braemar TRS then engages third-party or affiliated hotel management companies to operate the hotel properties under management contracts. Hotel operating results related to the hotel properties are included in the condensed consolidated statements of operations. As of June 30, 2025, 13 of the 15 hotel properties were leased by Braemar’s wholly-owned TRS and the one hotel property majority-owned through a consolidated partnership was leased to a TRS wholly-owned by such consolidated partnership. Each leased hotel is leased under a percentage lease that provides for each lessee to pay in each calendar month the base rent plus, in each calendar quarter, percentage rent, if any, based on hotel revenues. Lease revenue from Braemar TRS is eliminated in consolidation as of June 30, 2025. The hotel properties are operated under management contracts with Marriott Hotel Services, LLC (“Marriott”), Hilton Management LLC (“Hilton”), Four Seasons Hotels Limited (“Four Seasons”), Hyatt Corporation (“Hyatt”), The Ritz-Carlton Hotel Company, L.L.C. and its affiliates, each of which is also an affiliate of Marriott (“Ritz-Carlton”), and Remington Hospitality, which are eligible independent contractors under the Code. 2. Significant Accounting Policies Basis of Presentation and Principles of Consolidation —The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These condensed consolidated financial statements include the accounts of Braemar Hotels & Resorts Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest. All intercompany accounts and transactions between consolidated entities have been eliminated in these condensed consolidated financial statements. We have condensed 9 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2024 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 12, 2025. Braemar OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance. A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has: (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance; and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. All major decisions related to Braemar OP that most significantly impact its economic performance, including but not limited to, operating procedures with respect to business affairs and any acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Braemar OP General Partner LLC, its general partner. As such, we consolidate Braemar OP. The following items affect reporting comparability of our historical condensed consolidated financial statements: • Historical seasonality patterns at some of our hotel properties cause fluctuations in our overall operating results. Consequently, operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. • On July 17, 2024, we sold the Hilton La Jolla Torrey Pines. The operating results of the hotel property were excluded from our results of operations as of the disposition date. Use of Estimates —The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Recently Issued Accounting Standards —In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The amendments in this ASU may be applied prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or the amendments may be applied retrospectively by providing the revised disclosures for all periods presented. As of June 30, 2025, the Company has not adopted this ASU. The adoption of this ASU is expected to only impact disclosures with respect to the Company’s consolidated financial statements. In November 2024, the FASB issued ASU 2024-03 , Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses that requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the statement of operations. In January 2025, the FASB issued ASU 2025-01 which amends the effective date of the new disaggregation of income statement expenses standard to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is still permitted. The amendments may be applied either: (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU: or (2) retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact this ASU will have on our disclosures. 10 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 3. Revenue The following tables present our revenue disaggregated by geographical areas (dollars in thousands): Three Months Ended June 30, 2025 Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total California 5 $ 22,788 $ 7,530 $ 3,980 $ 34,298 Puerto Rico 1 11,695 4,616 2,803 19,114 Arizona 1 9,758 7,270 2,252 19,280 Colorado 1 1,470 1,506 1,539 4,515 Florida 2 15,173 9,725 7,126 32,024 Illinois 1 8,511 2,522 587 11,620 Pennsylvania 1 8,565 1,690 701 10,956 Washington 1 8,879 1,486 974 11,339 Washington, D.C. 1 12,818 4,472 1,155 18,445 USVI 1 10,167 4,754 2,565 17,486 Total 15 $ 109,824 $ 45,571 $ 23,682 $ 179,077 Three Months Ended June 30, 2024 Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total California 5 $ 21,746 $ 5,166 $ 3,777 $ 30,689 Puerto Rico 1 9,931 4,238 2,576 16,745 Arizona 1 8,733 6,075 2,425 17,233 Colorado 1 1,912 1,768 1,715 5,395 Florida 2 14,924 8,636 6,515 30,075 Illinois 1 8,347 2,348 650 11,345 Pennsylvania 1 8,642 1,786 326 10,754 Washington 1 8,786 1,407 774 10,967 Washington, D.C. 1 13,511 5,549 906 19,966 USVI 1 11,863 5,788 2,655 20,306 Sold hotel property 1 7,832 4,802 1,478 14,112 Total 16 $ 116,227 $ 47,563 $ 23,797 $ 187,587 Six Months Ended June 30, 2025 Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total California 5 $ 49,651 $ 14,865 $ 8,148 $ 72,664 Puerto Rico 1 32,062 10,245 6,183 48,490 Arizona 1 24,046 16,068 5,052 45,166 Colorado 1 15,294 6,725 4,899 26,918 Florida 2 35,584 20,785 15,465 71,834 Illinois 1 11,646 3,228 1,064 15,938 Pennsylvania 1 14,035 3,369 1,234 18,638 Washington 1 13,460 2,514 1,661 17,635 Washington, D.C. 1 23,623 9,750 2,379 35,752 USVI 1 26,515 9,810 5,537 41,862 Total 15 $ 245,916 $ 97,359 $ 51,622 $ 394,897 11 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) Six Months Ended June 30, 2024 Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total California 5 $ 47,390 $ 11,851 $ 7,809 $ 67,050 Puerto Rico 1 28,926 9,225 5,804 43,955 Arizona 1 22,848 14,150 4,928 41,926 Colorado 1 15,093 7,421 5,463 27,977 Florida 2 36,972 19,293 13,509 69,774 Illinois 1 11,721 3,284 1,070 16,075 Pennsylvania 1 13,138 2,907 617 16,662 Washington 1 13,245 2,144 1,281 16,670 Washington, D.C. 1 22,643 10,985 1,795 35,423 USVI 1 28,676 10,982 5,644 45,302 Sold hotel property 1 14,127 8,868 2,857 25,852 Total 16 $ 254,779 $ 101,110 $ 50,777 $ 406,666 4. Investments in Hotel Properties, net Investments in hotel properties, net consisted of the following (in thousands): June 30, 2025 December 31, 2024 Land $ 643,526 $ 630,842 Buildings and improvements 1,423,269 1,430,096 Furniture, fixtures and equipment 172,547 158,470 Construction in progress 20,276 20,420 Residences 12,746 12,746 Total cost 2,272,364 2,252,574 Accumulated depreciation ( 495,003 ) ( 473,888 ) Investments in hotel properties, net $ 1,777,361 $ 1,778,686 Impairment Charges During the three and six months ended June 30, 2025 and 2024, no impairment charges were recorded. Land Acquisition On April 4, 2025, the Company acquired an eight acre parcel of land with an estimated fair value of $ 12.6 million. The consideration consisted of cash of approximately $ 5.5 million and a 25 % equity interest in the acquiring entity (“CR JV”) with an estimated fair value of $ 1.8 million. CR JV also assumed a mortgage loan for the land with an estimated fair value of $ 5.4 million. We accounted for this acquisition as an asset acquisition because substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets. The cost of the acquisition including transaction costs was allocated to the individual asset acquired and liabilities assumed on a relative fair value basis, which is considered a Level 3 valuation technique. 5. Hotel Disposition On July 17, 2024, the Company sold the Hilton La Jolla Torrey Pines 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. The sale resulted in a gain of approximately $ 88.1 million for the year ended December 31, 2024. 12 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) We included the results of operations for this hotel property through the date of disposition in net income (loss) as shown in our condensed consolidated statements of operations for the three and six months ended June 30, 2024. The following table includes the condensed consolidated financial information from this hotel property (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2024 Total hotel revenue $ 14,112 $ 25,852 Total hotel operating expenses ( 8,374 ) ( 15,567 ) Property taxes, insurance and other ( 766 ) ( 1,555 ) Depreciation and amortization ( 1,059 ) ( 2,149 ) Operating income (loss) 3,913 6,581 Interest income 110 210 Interest expense and amortization of loan costs ( 1,846 ) ( 3,538 ) Write-off of loan costs and exit fees — ( 101 ) Income (loss) before income taxes 2,177 3,152 Income from consolidated entities attributable to noncontrolling interests ( 1,021 ) ( 1,728 ) (Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership ( 93 ) ( 114 ) Income (loss) before income taxes attributable to the Company $ 1,063 $ 1,310 6. Indebtedness, net Indebtedness, net consisted of the following (dollars in thousands): Indebtedness Collateral Current Maturity Final Maturity (10) Interest Rate June 30, 2025 December 31, 2024 Mortgage loan (2) (3) The Notary Hotel June 2025 June 2025 SOFR (1) + 2.66 % $ — $ 293,180 The Clancy Sofitel Chicago Magnificent Mile Marriott Seattle Waterfront Mortgage loan (4) The Ritz-Carlton Lake Tahoe July 2025 January 2026 SOFR (1) + 3.25 % 43,413 53,413 Mortgage loan (5) Park Hyatt Beaver Creek Resort & Spa February 2026 February 2027 SOFR (1) + 2.86 % 70,500 70,500 Mortgage loan (3) The Ritz-Carlton Reserve Dorado Beach March 2026 March 2026 SOFR (1) + 4.75 % — 62,000 Term Loan (6) Land March 2026 March 2026 WSJ Prime Rate 5,360 — Convertible Senior Notes Equity June 2026 June 2026 4.50 % 86,250 86,250 Mortgage loan (7) Bardessono Hotel & Spa August 2026 August 2029 SOFR (1) + 3.24 % 407,000 407,000 Hotel Yountville The Ritz-Carlton Sarasota Pier House Resort & Spa The Ritz-Carlton St. Thomas Mortgage loan (8) Four Seasons Resort Scottsdale December 2026 December 2028 SOFR (1) + 3.75 % 140,000 140,000 Mortgage loan (9) Capital Hilton December 2026 December 2028 SOFR (1) + 3.75 % 110,600 110,600 Mortgage loan (3) The Notary Hotel March 2027 March 2030 SOFR (1) + 2.52 % 363,000 — The Clancy Sofitel Chicago Magnificent Mile Marriott Seattle Waterfront The Ritz-Carlton Reserve Dorado Beach 1,226,123 1,222,943 Deferred loan costs, net ( 14,629 ) ( 11,985 ) Premiums/(discounts), net ( 616 ) ( 940 ) Indebtedness, net $ 1,210,878 $ 1,210,018 __________________ (1) SOFR rates were 4.32 % and 4.33 % at June 30, 2025 and December 31, 2024, respectively. (2) This mortgage loan had five one-year extension options, subject to satisfaction of certain conditions, of which the fifth was exercised in June 2024. (3) On March 7, 2025, we refinanced two mortgage loans into a new $ 363.0 million mortgage loan. The new mortgage loan is interest only and bears interest at a rate of SOFR + 2.52 %, has a two-year initial term, and has three one-year extension options, subject to the satisfaction of certain conditions. 13 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) (4) On January 14, 2025, we amended this mortgage loan. Terms of the amendment included a $ 10.0 million principal pay-down, current maturity date extension to July 2025, interest rate reduction to SOFR + 3.25 %, and one six-month extension option subject to satisfaction of certain conditions. On July 25, 2025, we amended this mortgage loan. Terms of the amendment included extending the maturity date from July 2025 to July 2026. (5) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the second was exercised in February 2025. (6) On April 4, 2025, we assumed a $ 5.4 million term loan secured by an eight acre parcel of land. The assumed term loan is interest only, bears interest at WSJ Prime Rate, and matures in March 2026. This term loan has a floor of 4.99 %. See note 4. (7) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. Braemar holds a tranche of Commercial Mortgage-Backed Securities (“CMBS”), which is secured by the five hotel properties that serve as collateral for the new mortgage loan and has a par value of $ 17.2 million and $ 42.2 million at June 30, 2025, and December 31, 2024, respectively, and a rate of SOFR + 5.20 %. The CMBS is reported as “investment in securities” on the condensed consolidated balance sheet. (8) This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 1.00 %. (9) This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 2.00 %. (10) The final maturity date assumes all available extension options will be exercised. Convertible Senior Notes For the three and six months ended June 30, 2025, the Company recorded coupon interest expense of $ 970,000 and $ 1.9 million, respectively. For the three and six months ended June 30, 2024, the Company recorded coupon interest expense of $ 970,000 and $ 1.9 million, respectively. For the three and six months ended June 30, 2025, the Company recorded discount amortization of $ 163,000 and $ 324,000 , respectively, related to the initial purchase discount, with the remaining discount balance to be amortized through June 2026. For the three and six months ended June 30, 2024, the Company recorded discount amortization of $ 154,000 and $ 306,000 respectively, related to the initial purchase discount, with the remaining discount balance to be amortized through June 2026. The convertible senior notes are convertible at any time prior to the close of business on the business day immediately preceding the maturity date for cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the election of the Company. As of June 30, 2025, the conversion rate is 188.6054 shares per $1,000 principal amount of notes. If we violate covenants in any debt agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of the consolidated group. As of June 30, 2025, we were in compliance with all covenants. Interest Rate Derivatives —We use interest rate caps to hedge our debt and our cash flows, which are recorded at fair value. Payments from counterparties on in-the-money interest rate caps are recognized as realized gains on our condensed consolidated statements of operations. See note 8 . 7. Note Receivable On July 2, 2024, Braemar, Ashford Hospitality Trust, Inc. (“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. 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 14 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 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 June 30, 2025, the Company has advanced approximately $ 8.1 million that has been used to purchase 3.5 million shares of Braemar common stock. The note receivable is summarized in the table below (dollars in thousands): Line Item Interest Rate June 30, 2025 December 31, 2024 Note receivable SOFR + 3.00 % $ 8,590 $ 8,283 We recognized interest income as presented in the table below (in thousands): Three Months Ended June 30, Six Months Ended June 30, Line Item 2025 2024 2025 2024 Interest income $ 155 $ — $ 307 $ — We review receivables for impairment each reporting period. Under the model, the Company estimates credit losses over the entire contractual term of the instrument from the date of initial recognition of that instrument and is required to record a credit loss expense (or reversal) in each reporting period. Our assessment of impairment is based on considerable management judgment and assumptions. No impairment charges were recorded for the three and six months ended June 30, 2025. 8. Fair Value Measurements Fair Value Hierarchy —Our financial instruments measured at fair value either on a recurring or a non-recurring basis are classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs in the marketplace as discussed below: • Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. • Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. • Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. The fair value of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rose above the strike rates of the caps. Variable interest rates used in the calculation of projected receipts and payments on the caps are based on an expectation of future interest rates derived from observable market interest rate curves (SOFR forward curves) and volatilities (Level 2 inputs). We also incorporate credit valuation adjustments (Level 3 inputs) to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk. When a majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. However, when the valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties, which we consider significant ( 10 % or more) to the overall valuation of our derivatives, the derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy. Transfers of inputs between levels are determined at the end of each reporting period. In determining the fair values of our derivatives at June 30, 2025, the SOFR interest rate forward curve (Level 2 inputs) assumed a downtrend from 4.322 % to 3.130 % for the remaining term of our derivatives. Credit spreads (Level 3 inputs) used in determining the fair values derivatives assumed an uptrend in nonperformance risk for us and all of our counterparties through the maturity dates. Investment in securities includes mortgage-backed securities. These securities are classified as available for sale and are generally reported at fair value utilizing Level 2 inputs where the Company obtains fair value measurements from an external pricing vendor. Prices received from the vendor are analyzed based on various sources of observable market data. If prices are 15 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) not within certain tolerance levels that are based on the asset type’s characteristics, the exception is researched and, if the price is not able to be validated, an alternate pricing vendor is utilized. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands): Quoted Market Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total June 30, 2025 Assets CMBS $ — $ 17,134 $ — $ 17,134 (1) Derivative assets: Interest rate derivatives - caps — 313 — 313 (2) Total $ — $ 17,447 $ — $ 17,447 Quoted Market Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total December 31, 2024 Assets CMBS $ — $ 41,535 $ — $ 41,535 (1) Derivative assets: Interest rate derivatives - caps — 356 — 356 (2) Total $ — $ 41,891 $ — $ 41,891 __________________ (1) Reported as “investment in securities” in our condensed consolidated balance sheet. (2) Reported as “derivative assets” in our condensed consolidated balance sheets. 16 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) Effect of Fair Value Measured Assets and Liabilities on Condensed Consolidated Statements of Operations The following table summarizes the effect of fair value measured assets and liabilities on our condensed consolidated statements of operations (in thousands): Gain (Loss) Recognized in Income Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Assets Derivative assets: Interest rate derivatives - caps $ 15 $ 326 $ ( 183 ) $ 1,246 Total derivative assets $ 15 $ 326 $ ( 183 ) $ 1,246 Non-derivative assets: Investment in securities $ ( 1,250 ) $ — $ ( 1,250 ) $ — Total $ ( 1,235 ) $ 326 $ ( 1,433 ) $ 1,246 Liabilities Derivative liabilities: Warrants $ — $ — $ — $ 12 Net $ ( 1,235 ) $ 326 $ ( 1,433 ) $ 1,258 Total combined Interest rate derivatives - caps $ ( 165 ) $ ( 1,213 ) $ ( 551 ) $ ( 1,964 ) Warrants — — — 12 Unrealized gain (loss) on derivatives $ ( 165 ) (1) $ ( 1,213 ) (1) $ ( 551 ) (1) $ ( 1,952 ) (1) Realized gain (loss) on interest rate caps 180 (1) (2) 1,539 (1) (2) 368 (1) (2) 3,210 (1) (2) Realized gain (loss) on investment in securities ( 1,250 ) (3) — ( 1,250 ) (3) — Net $ ( 1,235 ) $ 326 $ ( 1,433 ) $ 1,258 ________ (1) Reported in “realized and unrealized gain (loss) on derivatives” in our condensed consolidated statements of operations. (2) Represents settled and unsettled payments from counterparties on interest rate caps. (3) Reported in “other income (expense)” in our condensed consolidated statements of operations. The amortized cost of the CMBS at June 30, 2025 and December 31, 2024, was $ 17.3 million and $ 42.3 million, respectively. The unrealized gain (loss) recognized as a change in other comprehensive income (loss) for the three and six months ended June 30, 2025 was $( 260,000 ) and $ 599,000 , respectively. During the three and six months ended June 30, 2025, the Company sold a portion of the CMBS with a par value of $ 25 million resulting in a realized loss of approximately $ 1.3 million included in “other income (expense)” on the condensed consolidated statements of operations . As a result of the sale, $ 68,000 of unrealized gain was reclassified to realized loss in the three and six months ended June 30, 2025. There was no unrealized gain (loss) recognized as a change in other comprehensive income (loss) for the three and six months ended June 30, 2024. 9. Summary of Fair Value of Financial Instruments Determining the estimated fair values of certain financial instruments such as indebtedness requires considerable judgment to interpret market data. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled. 17 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The carrying amounts and estimated fair values of financial instruments were as follows (in thousands): June 30, 2025 December 31, 2024 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Financial assets measured at fair value: Investment in securities $ 17,134 $ 17,134 $ 41,535 $ 41,535 Derivative assets 313 313 356 356 Financial assets not measured at fair value: Cash and cash equivalents $ 80,226 $ 80,226 $ 135,465 $ 135,465 Restricted cash 55,463 55,463 49,592 49,592 Accounts receivable, net 32,673 32,673 31,754 31,754 Note receivable 8,590 8,590 8,283 8,283 Due from third-party hotel managers 24,232 24,232 22,873 22,873 Financial liabilities not measured at fair value: Indebtedness $ 1,225,507 $ 1,226,123 $ 1,222,003 $ 1,207,420 Accounts payable and accrued expenses 131,142 131,142 143,566 143,566 Dividends and distributions payable 8,627 8,627 9,255 9,255 Due to Ashford Inc., net 2,767 2,767 4,267 4,267 Due to related parties, net 636 636 1,055 1,055 Due to third-party hotel managers 1,919 1,919 1,476 1,476 Cash, cash equivalents and restricted cash . These financial assets have maturities of less than 90 days and most bear interest at market rates. The carrying value approximates fair value due to their short-term nature. This is considered a Level 1 valuation technique. Accounts receivable, net, due to/from related parties, net, accounts payable and accrued expenses, dividends and distributions payable, due to Ashford Inc and due to/from third-party hotel managers . The carrying values of these financial instruments approximate their fair values due to the short-term nature of these financial instruments. This is considered a Level 1 valuation technique. Investment in securities . See note 8 for a complete description of the methodology and assumptions utilized in determining fair values. Note receivable. The carrying amount of note receivable approximates its fair value. This is considered a Level 2 valuation technique. Derivative assets . See note 8 for a complete description of the methodology and assumptions utilized in determining fair values. Indebtedness, net. Fair value of indebtedness is determined using the loan terms, collateral value and financial data such as loan-to-value ratios, debt service coverage ratios, and interest rates for comparable loans. We estimated the fair value of the total indebtedness to be approximately 100.1 % of the carrying value of $ 1.2 billion as of June 30, 2025, and approximately 98.8 % of the carrying value of $ 1.2 billion as of December 31, 2024. These fair value estimates are considered a Level 2 valuation technique. 18 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 10. Income (Loss) Per Share The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income (loss) attributable to common stockholders - basic and diluted: Net income (loss) attributable to the Company $ ( 5,467 ) $ ( 11,565 ) $ 5,531 $ 4,364 Less: dividends on preferred stock ( 8,992 ) ( 10,329 ) ( 18,261 ) ( 20,736 ) Less: deemed dividends on preferred stock ( 1,559 ) ( 26 ) ( 5,835 ) ( 2,024 ) Less: dividends on common stock ( 3,411 ) ( 3,326 ) ( 6,764 ) ( 6,650 ) Less: dividends on unvested performance stock units ( 19 ) ( 21 ) ( 38 ) ( 42 ) Undistributed net income (loss) allocated to common stockholders ( 19,448 ) ( 25,267 ) ( 25,367 ) ( 25,088 ) Add back: dividends on common stock 3,411 3,326 6,764 6,650 Distributed and undistributed net income (loss) - basic and diluted $ ( 16,037 ) $ ( 21,941 ) $ ( 18,603 ) $ ( 18,438 ) Weighted average common shares outstanding: Weighted average common shares outstanding – basic and diluted 67,279 66,501 67,013 66,478 Income (loss) per share - basic and diluted: Net income (loss) allocated to common stockholders per share $ ( 0.24 ) $ ( 0.33 ) $ ( 0.28 ) $ ( 0.28 ) Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income (loss) allocated to common stockholders is not adjusted for: Income (loss) allocated to unvested performance stock units 19 21 $ 38 $ 42 Income (loss) attributable to redeemable noncontrolling interests in operating partnership ( 1,489 ) ( 1,919 ) ( 1,751 ) ( 1,623 ) Dividends on preferred stock - Series B 1,058 1,058 2,116 2,116 Interest expense on Convertible Senior Notes 1,133 1,124 2,264 2,247 Dividends on preferred stock - Series E (inclusive of deemed dividends) 7,913 7,596 18,805 16,997 Dividends on preferred stock - Series M (inclusive of deemed dividends) 755 876 1,525 1,997 Total $ 9,389 $ 8,756 $ 22,997 $ 21,776 Weighted average diluted shares are not adjusted for: Effect of unvested performance stock units 37 39 40 26 Effect of assumed conversion of operating partnership units 6,255 6,364 6,521 6,133 Effect of assumed conversion of preferred stock - Series B 4,116 4,116 4,116 4,116 Effect of assumed conversion of Convertible Senior Notes 16,586 15,464 16,427 14,537 Effect of assumed conversion of preferred stock - Series E 130,997 162,180 133,333 182,121 Effect of assumed conversion of preferred stock - Series M 13,858 17,098 13,909 19,719 Total 171,849 205,261 174,346 226,652 11. Redeemable Noncontrolling Interests in Operating Partnership Redeemable noncontrolling interests in the operating partnership represent the limited partners’ proportionate share of equity and their allocable share of equity in earnings/losses of Braemar OP, which is an allocation of net income/loss attributable to the common unitholders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership (the “common units”) and units issued under our Long-Term Incentive Plan (the “LTIP units”) that are vested. Each common unit may be redeemed, by the holder, for either cash or, at our sole discretion, up to one share of our REIT common stock, which is either: (i) issued pursuant to an effective registration 19 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) statement; (ii) included in an effective registration statement providing for the resale of such common stock; or (iii) issued subject to a registration rights agreement. LTIP units, which are issued to certain executives and employees of Ashford LLC as compensation, generally have vesting periods of three years . Additionally, certain independent members of the board of directors have elected to receive LTIP units as part of their compensation, which are fully vested upon grant. Upon reaching economic parity with common units, each vested LTIP unit can be converted by the holder into one common unit which can then be redeemed for cash or, at our election, settled in our common stock. An LTIP unit will achieve parity with the common units upon the sale or deemed sale of all or substantially all of the assets of our operating partnership at a time when our stock is trading at a level in excess of the price it was trading on the date of the LTIP issuance. More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of our operating partnership; or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for our operating partnership. The compensation committee of our board of directors may authorize the issuance of Performance LTIP units to certain executive officers and directors from time to time. The award agreements provide for the grant of a target number of Performance LTIP units that will be settled in common units of Braemar OP, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period, which is generally three years from the grant date. The performance awards will be eligible to vest, from 0 % to 200 % of target, based on achievement of certain performance targets over the three-year performance period. The performance criteria are based on performance conditions under the relevant literature. The corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the applicable measurement date fair value of the award. The grant date fair value of the award may vary from period to period, as the number of performance grants earned may vary since the estimated probable achievement of certain performance targets may vary from period to period. As of June 30, 2025, there are 353,000 unvested Performance LTIP units. As of June 30, 2025, there are approximately 429,000 issued and outstanding LTIP and Performance LTIP units. All LTIP and Performance LTIP units, other than approximately 353,000 Performance LTIP units issued in March 2023, had reached full economic parity with, and are convertible into, common units. The following table presents the redeemable noncontrolling interests in Braemar OP (in thousands) and the corresponding approximate ownership percentage of our operating partnership: June 30, 2025 December 31, 2024 Redeemable noncontrolling interests in Braemar OP (in thousands) $ 17,994 $ 29,964 Adjustments to redeemable noncontrolling interests (1) (in thousands) $ 536 $ 1,324 Ownership percentage of operating partnership 8.51 % 8.05 % ____________________________________ (1) Reflects the excess of the redemption value over the accumulated historical cost. We allocated net (income) loss to the redeemable noncontrolling interests as illustrated in the table below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership $ 1,489 $ 1,919 $ 1,751 $ 1,623 Distributions declared to holders of common units, LTIP units and Performance LTIP units $ 271 $ 368 615 734 In June 2025, the Company exchanged approximately 1.5 million LTIP and Performance LTIP units for fully vested shares of the Company's common stock which resulted in no adjustments to equity-based compensation expense because the estimated fair value of the units immediately before the exchange was equal to the estimated fair value of the common stock immediately after the exchange. The exchange was accounted for in the same manner as a redemption by the holder of common units that was settled by the Company in shares of the Company's common stock, in which the greater of the historical cost or fair value of the underlying LTIP or Performance LTIP units as of the exchange date was reclassified from mezzanine equity to permanent equity. 20 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The following table presents the common units redeemed/exchanged for common stock (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Units redeemed/exchanged 1,465 — 1,922 $ — Fair value of common units redeemed (1) $ 3,516 $ — $ 4,897 — ____________________________________ (1) The redemption value is the greater of historical cost or fair value. The historical cost of the converted units for the three and six months ended June 30, 2025 was $ 7.0 million and $ 9.3 million, respectively. The following table presents the common units redeemed for cash (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Units redeemed — — 35 — Fair value of common units redeemed $ — $ — $ 92 $ — 12. Equity and Stock-Based Compensation Common Stock Dividends —The following table summarizes the common stock dividends declared during the period (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Common stock dividends declared $ 3,430 $ 3,347 $ 6,802 $ 6,692 Stock Repurchases —On May 3, 2024, the 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. As of June 30, 2025, the Company has not repurchased any common stock pursuant to this program. Restricted Stock —We incur stock-based compensation expense in connection with restricted stock awarded to certain employees of Ashford LLC and its affiliates. We also issue common stock to certain of our independent directors, which vests immediately upon issuance. Performance Stock Units —The compensation committee of the board of directors of the Company may authorize the issuance of grants of performance stock units (“PSUs”) to certain executive officers and directors from time to time. The award agreements provide for the grant of a target number of PSUs that will be settled in shares of common stock of the Company, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period, which is generally three years from the grant date. The compensation committee utilizes a performance metric, pursuant to which, the performance awards will be eligible to vest, from 0 % to 200 % of target, based on achievement of certain performance targets over the three-year performance period. The performance criteria are based on performance conditions under the relevant literature and were issued to non-employees. The corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the corresponding measurement date fair value of the award, which may vary from period to period, as the number of performance grants earned may vary since the estimated probable achievement of certain performance targets may vary from period to period. 8.25 % Series D Cumulative Preferred Stock —The dividend for all issued and outstanding shares of the Company’s Series D Cumulative Preferred Stock (the “Series D Preferred Stock”) is set at $ 2.0625 per annum per share. The following table summarizes dividends declared (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Series D Cumulative Preferred Stock $ 825 $ 825 $ 1,650 $ 1,650 21 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 13. Redeemable Preferred Stock 5.50 % Series B Cumulative Convertible Preferred Stock Each share of our 5.50 % Series B Cumulative Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) is convertible at any time, at the option of the holder, into a number of whole shares of common stock at a conversion price of $ 18.70 (which represents a conversion rate of 1.3372 shares of our common stock, subject to certain adjustments). The Series B Convertible Preferred Stock is also subject to conversion upon certain events constituting a change of control. Holders of the Series B Convertible Preferred Stock have no voting rights, subject to certain exceptions. The Series B Convertible Preferred Stock dividend for all issued and outstanding shares is set at $ 1.375 per annum per share. The Company may, at its option, cause the Series B Convertible Preferred Stock to be converted in whole or in part, on a pro-rata basis, into fully paid and nonassessable shares of the Company’s common stock at the conversion price, provided that the “Closing Bid Price” (as defined in the Articles Supplementary) of the Company’s common stock shall have equaled or exceeded 110 % of the conversion price for the immediately preceding 45 consecutive trading days ending three days prior to the date of notice of conversion. Additionally, the Series B Convertible Preferred Stock contains cash redemption features that consist of: 1) an optional redemption in which the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $ 25.00 per share, plus any accumulated, accrued and unpaid dividends; 2) a special optional redemption, in which on or prior to the occurrence of a Change of Control (as defined in the Articles Supplementary), the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $ 25.00 per share; and 3) a “REIT Termination Event” and “Listing Event Redemption,” in which at any time (i) a REIT Termination Event (as defined below) occurs or (ii) the Company’s common stock fails to be listed on the NYSE, NYSE American, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor thereto (each, a “National Exchange”), the holder of Series B Convertible Preferred Stock shall have the right to require the Company to redeem any or all shares of Series B Convertible Preferred Stock at 103 % of the liquidation preference ($ 25.00 per share, plus any accumulated, accrued, and unpaid dividends) in cash. A “REIT Termination Event,” shall mean the earliest of: (i) filing of a federal income tax return where the Company does not compute its income as a REIT; (ii) stockholders’ approval on ceasing to be qualified as a REIT; (iii) board of directors’ approval on ceasing to be qualified as a REIT; (iv) board’s determination based on the advice of counsel to cease to be qualified as a REIT; or (v) determination within the meaning of Section 1313(a) of the Code to cease to be qualified as a REIT. Series B Convertible Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside our control. As such, the Series B Convertible Preferred Stock is classified outside of permanent equity. The following table summarizes dividends declared (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Series B Convertible Preferred Stock $ 1,058 $ 1,058 $ 2,116 $ 2,116 Series E Redeemable Preferred Stock On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series E Redeemable Preferred Stock (the “Series E Preferred Stock”). Pursuant to such equity distribution agreements, the Company offered a maximum of 20,000,000 shares of Series E Preferred Stock in a primary offering at a price of $ 25.00 per share. On February 21, 2023, the Company announced the closing of its Series E Preferred Stock offering. The Company is also offering a maximum of 8,000,000 shares of the Series E Preferred Stock pursuant to a dividend reinvestment plan (the “DRIP”) at $ 25.00 per share (the “Stated Value”). The Series E Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred stock, 22 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) the Series D Preferred Stock and the Series M Preferred Stock (as defined below)) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs. Holders of the Series E Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of the Series E Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series E Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series E Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms. Each share is redeemable at any time, at the option of the holder, at a redemption price of $ 25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $ 25.00 per share, plus any accumulated, accrued and unpaid dividends (with no redemption fee). The Series E Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon such change of control events, holders have the option to convert their shares of Series E Preferred Stock into a maximum of 5.69476 shares of our common stock. The redemption fee shall be an amount equal to: • 8.0 % of the stated value of $ 25.00 per share (the “Stated Value”) beginning on the Original Issue Date (as defined in the Articles Supplementary) of the shares of the Series E Preferred Stock to be redeemed; • 5.0 % of the Stated Value beginning on the second anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed; and • 0 % of the Stated Value beginning on the third anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed. The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption. The Series E Preferred Stock cash dividends are as follows: • 8.00 % per annum of the Stated Value beginning on the date of the first settlement of the Series E Preferred Stock (the “Date of Initial Closing”); • 7.75 % per annum of the Stated Value beginning on the first anniversary from the Date of Initial Closing; and • 7.50 % per annum of the Stated Value beginning on the second anniversary from the Date of Initial Closing. Dividends are payable on a monthly basis in arrears on the 15th day of each month (or, if such payment date is not a business day, the next succeeding business day) to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year. The Company has a DRIP that allows participating holders to have their Series E Preferred Stock dividend distributions automatically reinvested in additional shares of the Series E Preferred Stock at a price of $ 25.00 per share. The Series E Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside of the Company’s control. As such, the Series E Preferred Stock is classified outside of permanent equity. At the date of issuance, the carrying amount of the Series E Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable, the carrying value will be adjusted to the redemption amount each reporting period. 23 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The redemption value adjustment of Series E Preferred Stock is summarized below (in thousands): June 30, 2025 December 31, 2024 Series E Preferred Stock $ 320,585 $ 352,502 Cumulative adjustments to Series E Preferred Stock (1) $ 27,933 $ 22,098 ________ (1) Reflects the excess of the redemption value over the accumulated carrying value. The following table summarizes dividends declared (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Series E Preferred Stock $ 6,354 $ 7,570 $ 12,970 $ 15,170 The redemption activities of Series E Preferred Stock is summarized below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Series E Preferred Stock shares redeemed 548 53 1,581 239 Redemption amount, net of redemption fees $ 13,574 $ 1,249 $ 39,275 $ 5,652 Series M Redeemable Preferred Stock On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series M Redeemable Preferred Stock (the “Series M Preferred Stock”). Pursuant to such equity distribution agreements, the Company offered a maximum of 20,000,000 shares of the Series M Preferred Stock (par value $ 0.01 ) in a primary offering at a price of $ 25.00 per share (or “Stated Value”). On February 21, 2023, the Company announced the closing of its Series M Preferred Stock offering. The Company is also offering a maximum of 8,000,000 shares of Series M Preferred Stock pursuant to the DRIP at $ 25.00 per share. The Series M Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs. Holders of the Series M Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of Series M Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series M Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series M Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms. Each share is redeemable at any time, at the option of the holder, at a redemption price of $ 25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $ 25.00 per share, plus any accumulated, accrued and unpaid dividends (with no redemption fee). The Series M Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon such change of control events, holders have the option to convert their shares of Series M Preferred Stock into a maximum of 5.69476 shares of our common stock. 24 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The redemption fee shall be an amount equal to: • 1.5 % of the Stated Value of $ 25.00 per share beginning on the Series M Original Issue Date (as defined in the Articles Supplementary) of the shares of Series M Preferred Stock to be redeemed; and • 0 % of the Stated Value beginning on the first anniversary from the Series M Original Issue Date of the shares of Series M Preferred Stock to be redeemed. The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption. Holders of Series M Preferred Stock are entitled to receive cumulative cash dividends at the initial rate of 8.2 % per annum of the Stated Value of $ 25.00 per share (equivalent to an annual dividend rate of $ 2.05 per share). Beginning one year from the date of original issuance of each share of Series M Preferred Stock and on each one-year anniversary thereafter for such share of Series M Preferred Stock, the dividend rate shall increase by 0.10 % per annum; provided, however, that the dividend rate for any share of Series M Preferred Stock shall not exceed 8.7 % per annum of the Stated Value. Dividends are payable on a monthly basis and in arrears on the 15th day of each month (or, if such payment date is not a business day, on the next succeeding business day) to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year. The Company has a DRIP that allows participating holders to have their Series M Preferred Stock dividend distributions automatically reinvested in additional shares of the Series M Preferred Stock at a price of $ 25.00 per share. The Series M Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside the Company’s control. As such, the Series M Preferred Stock is classified outside of permanent equity. At the date of issuance, the carrying amount of the Series M Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable, the carrying value will be adjusted to the redemption amount each reporting period. The redemption value adjustment of Series M Preferred stock is summarized below (in thousands): June 30, 2025 December 31, 2024 Series M Preferred Stock $ 35,524 $ 36,916 Cumulative adjustments to Series M Preferred Stock (1) $ 1,794 $ 1,794 __________________ (1) Reflects the excess of the redemption value over the accumulated carrying value. The following table summarizes dividends declared (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Series M Preferred Stock $ 755 $ 876 $ 1,525 $ 1,800 The redemption activities of Series M Preferred Stock is summarized below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Series M Preferred Stock shares redeemed 40 126 59 213 Redemption amount, net of redemption fees $ 1,005 $ 3,159 $ 1,471 $ 5,322 25 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 14. Related Party Transactions Ashford Inc. Advisory Agreement Ashford LLC, a subsidiary of Ashford Inc., acts as our advisor. Our chairman, Mr. Monty Bennett, also serves as chairman of the board of directors and chief executive officer of Ashford Inc. Under our advisory agreement, we pay advisory fees to Ashford LLC. We pay a monthly base fee equal to 1/12 of the sum of (i) 0.70 % of the total market capitalization of our company for the prior month, plus (ii) the Net Asset Fee Adjustment (as defined in our advisory agreement), if any, on the last day of the prior month during which our advisory agreement was in effect; provided, however, in no event shall the base fee for any month be less than the minimum base fee as provided by our advisory agreement. The base fee is payable on the fifth business day of each month. The minimum base fee for Braemar for each month will be equal to the greater of: ▪ 90 % of the base fee paid for the same month in the prior year; and ▪ 1/12 of the G&A Ratio (as defined) multiplied by the total market capitalization of Braemar. We are also required to pay Ashford LLC an incentive fee that is measured annually (or for a stub period if the advisory agreement is terminated at other than year-end). Each year that our annual total stockholder return exceeds the average annual total stockholder return for our peer group, we pay Ashford LLC an incentive fee over the following three years , subject to the Fixed Charge Coverage Ratio (“FCCR”) Condition, as defined in the advisory agreement, which relates to the ratio of adjusted EBITDA to fixed charges. We also reimburse Ashford LLC for certain reimbursable overhead and internal audit, risk management advisory and asset management services, as specified in the advisory agreement. We also recorded equity-based compensation expense for equity grants of common stock, PSUs and LTIP units awarded to officers and employees of Ashford LLC in connection with providing advisory services. The following table summarizes the advisory services fees incurred (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Advisory services fee Base advisory fee $ 3,477 $ 3,336 $ 7,053 $ 6,663 Reimbursable expenses (1) 3,577 2,961 6,578 5,226 Equity-based compensation (2) ( 51 ) 883 ( 99 ) 1,991 Incentive fee 188 648 270 648 Total $ 7,191 $ 7,828 $ 13,802 $ 14,528 ________ (1) Reimbursable expenses include overhead, internal audit, risk management advisory, asset management services and deferred cash awards. (2) Equity-based compensation is associated with equity grants of Braemar’s common stock, PSUs, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC. On each of March 11, 2024 and March 10, 2025, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc. and Ashford LLC (collectively, the “Advisory Agreement Limited Waivers”). Pursuant to the Advisory Agreement Limited Waivers, the Company, the Operating Partnership, TRS and the Advisor waive the operation of any provision in our advisory agreement that would otherwise limit the ability of the Company in its discretion, at the Company’s cost and expense, to award during calendar years 2024 and 2025, respectively, cash incentive compensation to employees and other representatives of the Advisor. Pursuant to the Company’s hotel management agreements with each hotel management company, the Company bears the economic burden for casualty insurance coverage which includes workers’ compensation, general liability and auto liability coverages. The hotel management companies procure workers’ compensation insurance, the expenses of which are passed through to the Company. Under the advisory agreement and hotel management agreements, Ashford Inc. secures general liability and auto liability policies to cover Ashford Trust, Braemar, Stirling OP, their hotel managers, as needed, and Ashford Inc. The total cost estimates covered by such policies are based on the collective pool of risk exposures from each party. Ashford Inc. delegates the management of the casualty insurance program to Warwick Insurance Company, LLC (“Warwick”), a subsidiary of Ashford Inc. which issues policies covering general liability, workers’ compensation and auto liability 26 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) losses. Each year Ashford Inc. collects funds from Ashford Trust, Braemar, Stirling OP and their respective hotel management companies, to fund the casualty insurance program as needed, on an allocated basis. Lismore We engage Lismore or its subsidiaries to provide debt placement services and assist with loan modifications or refinancings on our behalf and brokerage services. For the three and six months ended June 30, 2025, we incurred fees from Lismore or its subsidiaries of $ 0 and $ 1.7 million, respectively. For the three and six months ended June 30, 2024, we incurred fees from Lismore or its subsidiaries of $ 50,000 and $ 1.1 million, respectively. Ashford Securities The Company, Ashford Trust, and Ashford Inc. are party to the Fourth Amended and Restated Contribution Agreement with respect to funding certain expenses of Ashford Securities LLC, a subsidiary of Ashford Inc. (“Ashford Securities”). As of June 30, 2025 and December 31, 2024 , Braemar has funded approximately $ 12.9 million and has a pre-funded balance of $ 797,000 that is included in “other assets” on the condensed consolidated balance sheet. During the first quarter of 2024, there was a true-up of the funding requirement based on the aggregate capital raised that resulted to a credit to expense of $ 5.6 million for the six months ended June 30, 2024. The table below summarizes the amount Braemar has expensed related to reimbursed operating expenses of Ashford Securities (in thousands): Three Months Ended June 30, Six Months Ended June 30, Line Item 2025 2024 2025 2024 Corporate, general and administrative $ — $ — $ — $ ( 5,624 ) Design and Construction Services Premier Project Management LLC (“Premier”), a subsidiary of Ashford Inc., provides design and construction services to our hotels, including construction management, interior design, architectural services, and the purchasing, freight management and supervision of installation of FF&E and related services. Pursuant to the design and construction services agreement, we pay Premier: (a) design and construction fees of up to 4 % of project costs; and (b) for the following services: (i) architectural ( 6.5 % of total construction costs); (ii) construction management for projects without a general contractor ( 10 % of total construction costs); (iii) interior design ( 6 % of the purchase price of the FF&E designed or selected by Premier); and (iv) FF&E purchasing ( 8 % of the purchase price of FF&E purchased by Premier; provided that if the purchase price exceeds $ 2.0 million for a single hotel in a calendar year, then the purchasing fee is reduced to 6 % of the FF&E purchase price in excess of $ 2.0 million for such hotel in such calendar year). Such fees are payable monthly as the service is delivered based on percentage complete, as reasonably determined by Premier for each service, or payable as set forth in other agreements. Hotel Management Services As of June 30, 2025, Remington Hospitality managed five of our 15 hotel properties. We pay monthly hotel management fees equal to the greater of approximately $ 17,000 per hotel (increased annually based on consumer price index adjustments) or 3 % of gross revenues, as well as annual incentive management fees, if certain operational criteria were met, and other general and administrative expense reimbursements primarily related to accounting services. Our hotel management agreement also requires that we fund property-level operating costs, including the hotel manager's payroll and related costs. Investment in OpenKey OpenKey, Inc. (“OpenKey”) is a hospitality-focused mobile key platform that provides a universal smart phone app and related hardware and software for keyless entry into hotel guest rooms. As of June 30, 2025 and December 31, 2024, the Company had made equity investments in OpenKey totaling $ 2.9 million resulting in an ownership interest of 7.9 % accounted for under the equity method of accounting. During the fourth quarter of 27 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 2024, we determined that the estimated fair value of the investment in OpenKey was less than our carrying amount and fully impaired our investment as of December 31, 2024. The Company also entered into a loan funding agreement with Ashford Inc. and OpenKey. The loan bears interest at an annual rate of 15 %. During the fourth quarter of 2024, we determined that the full amount of the note receivable was not collectible, the note receivable was impaired and the recognition of interest income ceased. As of June 30, 2025 and December 31, 2024, the carrying amount of the loan was $ 145,000 included in “investment of unconsolidated entity” on our condensed consolidated balance sheets. 15. Commitments and Contingencies Restricted Cash —Under certain management and debt agreements for our hotel properties existing at June 30, 2025, escrow payments are required for insurance, real estate taxes and debt service. In addition, for certain properties based on the terms of the underlying debt and management agreements, we escrow 3 % to 5 % of gross revenues for capital improvements. Franchise Fees —We currently have two hotel properties that operate under franchise agreements. The Cameo Beverly Hills franchise agreement has a 25-year term. The term begins upon the completion of conversion of the Cameo Beverly Hills. Under the terms of the agreement, we will pay: (i) 3 % of gross rooms revenue for the preceding calendar month during the first three years of the agreement; (ii) 4 % of gross rooms revenue for the preceding calendar month during year four; and (iii) 5 % of the gross rooms revenue for the preceding calendar month for the remainder of the term. As of June 30, 2025, we are currently paying 3 % of gross revenues for the Cameo Beverly Hills. Under the franchise agreement for the Sofitel Chicago Magnificent Mile, we will pay franchisor royalty fees of 4.4 % of gross rooms revenue. Additionally, we will pay a marketing fee of 1.5 % of gross rooms revenue. This franchise agreement expires in 2041, with extension options. The table below summarizes the franchise fees incurred (in thousands): Three Months Ended June 30, Six Months Ended June 30, Line Item 2025 2024 2025 2024 Other hotel expenses $ 453 $ 94 $ 523 $ 174 Management Fees —Under hotel management agreements for our hotel properties existing at June 30, 2025, we pay a monthly hotel management fee equal to the greater of approximately $ 17,000 per hotel (increased annually based on consumer price index adjustments) or 3 % of gross revenues, or in some cases, 2.3 % to 5.0 % of gross revenues, as well as annual incentive management fees, if applicable. These management agreements expire from November 2029 through December 2065, with renewal options. If we terminate a management agreement prior to its expiration, we may be liable for estimated management fees through the remaining term, liquidated damages or, in certain circumstances, we may substitute a new management agreement. Our hotel management agreements also require that we fund property-level operating costs, including the hotel manager's payroll and related costs. Income Taxes —We and our subsidiaries file income tax returns in the federal jurisdiction and various states. Tax years 2020 through 2024 remain subject to potential examination by certain federal and state taxing authorities. Litigation —On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects two hotels owned by subsidiaries of the Company. The court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment. Notices to potential class members were sent out on February 2, 2021. Potential class members had until April 4, 2021 to opt-out of the class; however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery. The opt-out period has been extended until such time that discovery has concluded. In May 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class de-certified. After submission of the briefs, the court requested that the parties submit stipulations for the court to rule upon. On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks. A tentative settlement has been reached subject to the respective parties obtaining various approvals. As of June 30, 2025, the estimated settlement liability amount has been accrued. 28 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) On June 8, 2022, a lawsuit was filed against various Hilton entities on behalf of a class of all hourly employees at all Hilton-branded managed properties in California, including Hilton La Jolla Torrey Pines. The complaint includes claims for unpaid wages, meal and rest break violations, and unreimbursed business expenses, along with various derivative claims including wage statement, final pay, and Private Attorneys General Act (“PAGA”) claims. On November 30, 2023, Hilton mediated this litigation, but it did not result in a settlement. At the end of the mediation, the mediator submitted a mediator’s proposal for approximately $ 3.5 million, to which the parties have since agreed to. The allocation to Hilton La Jolla Torrey Pines is approximately $ 401,000 , which was accrued as of June 30, 2025. A hearing on a motion for preliminary approval of the settlement has been set for August 29, 2025. On August 4, 2020, a lawsuit, Benjamin Zermeno v. Beverly Hills Marriott , was filed in Alameda County Superior Court as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties. The plaintiff’s individual claims were compelled to arbitration. On August 18, 2022, another lawsuit, Cristina Catalano v. Beverly Hills Marriott and Mr. C , was filed as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties. The co-defendant separately settled and the individual arbitration has also settled. A private mediation was held on December 27, 2024 to globally resolve the three outstanding matters. A tentative settlement was reached subject to the parties finalizing the agreement and court approval. As of June 30, 2025, the estimated settlement liability amount has been accrued. We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disabilities Act and similar state laws). The likelihood of loss from these legal proceedings is based on the definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations or cash flow. During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain personal information. We have completed an investigation and have identified certain information that may have been exposed and notified potentially impacted individuals pursuant to applicable state guidelines. All systems have been restored. In February of 2024, two class action lawsuits were filed, one in the U.S. District Court for the Northern District of Texas and a second in the 68th District Court for Dallas County related to the cyber incident. The lawsuit filed in the 68th District Court was subsequently dismissed and refiled in the U.S. District Court for the Northern District of Texas. On March 12, 2024, the court ordered the two cases be consolidated. The consolidated case is currently pending in the U.S. District Court for the Northern District of Texas. The parties have reached an agreement, subject to final Court approval, to resolve the class action suit. The amount of the class settlement is approximately $ 485,000 . The hearing for final Court approval of the settlement is scheduled for August 27, 2025. Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty. If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods. 29 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 16. Segment Reporting We operate in one reportable business segment within the hotel lodging industry: direct hotel investments. Direct hotel investments refers to owning hotel properties through either acquisition or new development. We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments; (i) offer similar products and services to their customers in the form of hotel rooms, food and beverage, and ancillary services: (ii) utilize third-party hotel management companies to deliver its products and services to its customers; (iii) are designed and operated to appeal to similar individuals, groups, leisure, and business customers; and (iv) have third-party hotel managers that utilize the same methods (direct hotel sales and various online booking portals) to distribute the Company’s products and services. As of June 30, 2025 and December 31, 2024, all of our hotel properties were in the U.S. and its territories. The Company’s chief operating decision maker (“CODM”) is its President and Chief Executive Officer. Each hotel property derives revenue primarily from guestroom sales, food and beverage sales, and revenues from other lodging services and amenities. The accounting policies of each operating segment are the same as those described in the summary of significant accounting policies in note 2 of the consolidated financial statements included in our 2024 Annual Report on Form 10-K. The CODM reviews and makes decisions on all aspects of the Company’s business using all available financial and non-financial data for each hotel individually. Capital allocation decisions to acquire, sell, enhance, redevelop, or perform renewal and replacement expenditures are determined on a hotel-by-hotel basis. Specifically, the CODM reviews the results of each hotel to assess the hotel’s profitability. The key measure the CODM uses to allocate resources and assess performance is individual hotel net income (loss) before interest expense, income taxes, depreciation, and amortization, adjusted to exclude certain items determined by management to not be reflective of its ongoing operating performance or incurred in the normal course of business (Hotel Adjusted EBITDA). The adjustments include gains and losses on hotel dispositions, impairment charges, pre-opening costs associated with extensive renovation projects, property-level legal settlements, restructuring, severance, and management transition costs, and other expenses identified by management to be non-recurring. The CODM does not regularly review asset information by segment. 30 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The following tables include revenues, significant hotel operating expenses, and Hotel Adjusted EBITDA for the Company’s hotels, reconciled to the consolidated amounts included in the Company’s condensed consolidated statements of operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 REVENUE Rooms $ 109,824 $ 116,227 $ 245,916 $ 254,779 Food and beverage 45,571 47,563 97,359 101,110 Other hotel revenue 23,682 23,797 51,622 50,777 Total hotel revenue $ 179,077 $ 187,587 $ 394,897 $ 406,666 EXPENSES Hotel expenses: Rooms $ 27,285 $ 27,476 $ 55,504 $ 55,740 Food and beverage 35,767 36,664 75,977 77,381 Direct expenses 8,208 7,970 17,667 17,739 Indirect expenses: Property, general and administration 15,466 15,644 30,864 32,247 Sales and marketing 12,557 12,624 25,730 26,005 Information and telecommunications systems 1,884 2,072 3,959 4,120 Repairs and maintenance 8,053 7,906 15,825 15,568 Energy 5,892 5,781 11,751 11,745 Lease expense 568 1,483 1,122 2,656 Ownership expenses 1,172 761 2,154 1,937 Incentive management fee 1,221 2,361 5,450 6,211 Management fees 5,424 5,871 12,161 12,737 Property taxes 4,002 5,203 9,953 10,913 Other taxes 299 332 767 845 Insurance 3,486 4,362 7,479 8,765 Total expenses 131,284 136,510 276,363 284,609 Hotel adjusted EBITDA $ 47,793 $ 51,077 $ 118,534 $ 122,057 Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Hotel adjusted EBITDA $ 47,793 $ 51,077 $ 118,534 $ 122,057 Ownership expenses included in other hotel expenses ( 1,424 ) ( 1,553 ) ( 2,299 ) ( 3 ) Ownership expenses included in property taxes, insurance and other ( 105 ) ( 161 ) ( 158 ) ( 232 ) Management fees ( 117 ) ( 197 ) ( 290 ) ( 307 ) Depreciation and amortization ( 23,360 ) ( 24,694 ) ( 46,755 ) ( 50,114 ) Advisory services fee ( 7,191 ) ( 7,828 ) ( 13,802 ) ( 14,528 ) Corporate, general and administrative 2,298 ( 4,469 ) ( 596 ) ( 2,231 ) Equity in earnings (loss) of unconsolidated entities — ( 85 ) — ( 134 ) Interest income 1,519 1,072 3,407 1,868 Other income (expense) ( 1,250 ) — ( 1,250 ) — Interest expense and amortization of discounts and loan costs ( 25,361 ) ( 27,285 ) ( 50,188 ) ( 53,776 ) Write-off of loan costs and exit fees ( 3 ) ( 82 ) ( 1,467 ) ( 803 ) Gain (loss) on extinguishment of debt — ( 22 ) — ( 22 ) Realized and unrealized gain (loss) on derivatives 15 326 ( 183 ) 1,258 Income tax (expense) benefit 345 114 ( 1,122 ) ( 1,338 ) Net income (loss) $ ( 6,841 ) $ ( 13,787 ) $ 3,831 $ 1,695 17. Subsequent Events On August 7, 2025, we sold the Marriott Seattle Waterfront hotel pursuant to an Agreement of Purchase and Sale, entered into effective July 3, 2025, for $ 145 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $ 88.4 million on the mortgage loan that was partially secured by the hotel property. The net carrying value of the building and furniture, fixtures and equipment was approximately $ 100.9 million as of June 30, 2025. 31