Braemar Hotels & Resorts Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm ( BDO USA, P.C. ; Dallas, Texas ; PCAOB ID # 243 ) 103 Consolidated Balance Sheets — December 31, 202 5 and 20 24 105 Consolidated Statements of Operations — Years Ended December 31, 2025, 2024 and 2023 106 Consolidated Statements of Comprehensive Income (Loss) — Years Ended December 31, 202 5 , 202 4 and 2023 107 Consolidated Statements of Equity — Years Ended December 31, 202 5 , 202 4 and 202 3 108 Consolidated Statements of Cash Flows — Years Ended December 31, 202 5 , 202 4 and 202 3 110 Notes to Consolidated Financial Statements 112 102 Report of Independent Registered Public Accounting Firm Stockholders and Board of Directors Braemar Hotels & Resorts Inc. Dallas, Texas Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Braemar Hotels & Resorts Inc. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 , in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 11, 2026 expressed an unqualified opinion thereon. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involve our especially challenging, subjective, or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition of Hotel Rooms Revenue As described in Note 3 to the consolidated financial statements, during the year ended December 31, 2025, the Company recognized approximately $429 million of hotel rooms revenue. Hotel rooms revenue is recognized as services are provided over the course of the hotel stay. We identified the auditing of the recognition of hotel rooms revenue as a critical audit matter. Auditing hotel rooms revenue was especially challenging due to the large volume of transactions and the nature and extent of audit effort required to address this matter. The primary procedures we performed to address this critical audit matter included the following: • Testing the operating effectiveness of internal controls over the Company’s revenue recognition. 103 • Testing the existence and accuracy of the revenue recognized by selecting a sample of individual rooms revenue transactions, and (i) obtaining detailed transaction data, (ii) testing the existence and accuracy of amounts recognized by agreeing each transaction to the corresponding customer folio, and (iii) corroborating the existence and accuracy of the amounts recognized by agreeing to the customer payment support. Measurement of Impairment of Investments in Hotel Properties As of December 31, 2025, the Company’s consolidated investments in hotel properties, net, totaled approximately $1.6 billion. As described in Notes 2 and 4 to the consolidated financial statements, the hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of a hotel property is measured by comparison of the carrying amount of the hotel to its estimated future undiscounted cash flows. If the Company’s analysis indicates that the carrying value of the hotel is not recoverable on an undiscounted cash flow basis, the Company recognizes an impairment charge for the amount by which the property’s net book value exceeds its estimated fair value. For the year ended December 31, 2025, the Company recorded impairment charges of approximately $54.5 million. We identified the estimated fair value of the hotel properties used to measure the impairment charge for certain hotel properties as a critical audit matter. For investments in hotel properties where the recoverability analysis indicated the carrying value of the hotels was not recoverable, an increased level of management judgment was required in the determination of certain assumptions used to estimate the fair value of such hotels, including forecasted rooms revenue, discount rates and terminal capitalization rates. Auditing these judgments was especially challenging due to the nature and extent of audit effort required, including the use of personnel with specialized skill or knowledge. The primary procedures we performed to address the critical audit matter utilized valuation professionals with specialized skill or knowledge, who assisted in: • Evaluating the rooms revenue assumptions utilized in developing the fair value estimate for certain hotel properties by comparing to independent market data. • Evaluating the discount rates and terminal capitalization rates utilized in developing the fair value estimate for certain hotel properties by comparing to independent market data. /s/ BDO USA, P.C. We have served as the Company’s auditor since 2015. Dallas, Texas March 11, 2026 104 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) December 31, 2025 December 31, 2024 ASSETS Investments in hotel properties, gross $ 1,902,328 $ 2,252,574 Accumulated depreciation ( 344,061 ) ( 473,888 ) Investments in hotel properties, net 1,558,267 1,778,686 Cash and cash equivalents 124,354 135,465 Restricted cash 42,479 49,592 Investment in securities (amortized cost of $ 0 and $ 42,279 , respectively) — 41,535 Accounts receivable, net of allowance of $ 113 and $ 459 , respectively 32,843 31,754 Inventories 4,741 4,664 Note receivable 8,896 8,283 Prepaid expenses 6,987 5,116 Deposit paid to Ashford Inc. 17,000 — Deferred costs, net 75 75 Investment in unconsolidated entity 89 145 Derivative assets 56 356 Operating lease right-of-use assets 30,743 34,852 Other assets 15,368 19,538 Intangible assets, net 2,746 3,125 Due from third-party hotel managers 17,088 22,873 Total assets $ 1,861,732 $ 2,136,059 LIABILITIES AND EQUITY Liabilities: Indebtedness, net $ 1,103,450 $ 1,210,018 Accounts payable and accrued expenses 142,123 143,566 Redeemable preferred stock redemptions payable 30,864 — Dividends and distributions payable 7,672 9,255 Due to Ashford Inc. 5,148 4,267 Due to related parties, net 257 1,055 Due to third-party hotel managers 1,467 1,476 Operating lease liabilities 20,058 19,984 Other liabilities 25,572 24,268 Total liabilities 1,336,611 1,413,889 Commitments and contingencies (note 18) 5.50 % Series B cumulative convertible preferred stock, $ 0.01 par value, 3,078,017 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 65,426 65,426 Series E redeemable preferred stock, $ 0.01 par value, 10,818,280 and 14,910,521 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 265,695 352,502 Series M redeemable preferred stock, $ 0.01 par value, 1,368,091 and 1,476,621 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 34,217 36,916 Redeemable noncontrolling interests in operating partnership 19,005 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 December 31, 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 December 31, 2025 and December 31, 2024, respectively 682 665 Additional paid-in capital 706,488 718,536 Accumulated other comprehensive income (loss) — ( 684 ) Accumulated deficit ( 568,503 ) ( 477,804 ) Total stockholders’ equity of the Company 138,683 240,729 Noncontrolling interest in consolidated entities 2,095 ( 3,367 ) Total equity 140,778 237,362 Total liabilities and equity $ 1,861,732 $ 2,136,059 See Notes to Consolidated Financial Statements. 105 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Year Ended December 31, 2025 2024 2023 REVENUE Rooms $ 428,990 $ 452,361 $ 464,899 Food and beverage 179,538 181,250 185,331 Other 95,487 94,793 89,113 Total hotel revenue 704,015 728,404 739,343 EXPENSES Hotel operating expenses: Rooms 104,367 106,465 105,439 Food and beverage 141,846 145,901 144,544 Other expenses 223,977 225,864 227,913 Management fees 21,995 23,500 23,261 Total hotel operating expenses 492,185 501,730 501,157 Property taxes, insurance and other 34,253 42,508 38,629 Depreciation and amortization 92,578 98,733 93,272 Impairment charges 54,492 — — Advisory services fee 29,186 30,487 31,089 Corporate general and administrative 11,754 14,361 13,523 Total operating expenses 714,448 687,819 677,670 Gain (loss) on disposition of assets and hotel properties 82,797 88,165 — OPERATING INCOME (LOSS) 72,364 128,750 61,673 Equity in earnings (loss) of unconsolidated entity ( 56 ) ( 1,608 ) ( 253 ) Interest income 6,246 7,135 6,401 Other income (expense) ( 1,572 ) — 293 Interest expense and amortization of discounts and loan costs ( 98,539 ) ( 108,124 ) ( 94,219 ) Write-off of loan costs and exit fees ( 1,833 ) ( 6,111 ) ( 3,489 ) Gain (loss) on extinguishment of debt ( 2,686 ) ( 22 ) 2,318 Realized and unrealized gain (loss) on derivatives ( 355 ) 585 ( 663 ) INCOME (LOSS) BEFORE INCOME TAXES ( 26,431 ) 20,605 ( 27,939 ) Income tax (expense) benefit ( 1,979 ) ( 842 ) ( 2,689 ) NET INCOME (LOSS) ( 28,410 ) 19,763 ( 30,628 ) (Income) loss attributable to noncontrolling interest in consolidated entities 325 ( 25,928 ) ( 1,619 ) Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 5,767 4,472 5,230 NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY ( 22,318 ) ( 1,693 ) ( 27,017 ) Preferred dividends ( 35,273 ) ( 40,295 ) ( 42,304 ) Deemed dividends on preferred stock ( 15,112 ) ( 8,958 ) ( 4,719 ) NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 72,703 ) $ ( 50,946 ) $ ( 74,040 ) INCOME (LOSS) PER SHARE - BASIC: Net income (loss) attributable to common stockholders $ ( 1.07 ) $ ( 0.77 ) $ ( 1.13 ) Weighted average common shares outstanding – basic 67,621 66,500 65,989 INCOME (LOSS) PER SHARE - DILUTED: Net income (loss) attributable to common stockholders $ ( 1.07 ) $ ( 0.77 ) $ ( 1.13 ) Weighted average common shares outstanding – diluted 67,621 66,500 65,989 See Notes to Consolidated Financial Statements. 106 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Year Ended December 31, 2025 2024 2023 NET INCOME (LOSS) $ ( 28,410 ) $ 19,763 $ ( 30,628 ) OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Unrealized gain (loss) on investment in securities 744 ( 744 ) — Total other comprehensive income (loss) 744 ( 744 ) — TOTAL COMPREHENSIVE INCOME (LOSS) ( 27,666 ) 19,019 ( 30,628 ) Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities 325 ( 25,928 ) ( 1,619 ) Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership 5,707 4,532 5,230 COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY $ ( 21,634 ) $ ( 2,377 ) $ ( 27,017 ) See Notes to Consolidated Financial Statements. 107 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (in thousands except per share amounts) 8.25% Series D Cumulative Preferred Stock Common Stock 5.50% Series B Cumulative Convertible Preferred Stock Series E Redeemable Preferred Stock Series M Redeemable Preferred Stock Shares Amount Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income/(loss) Noncontrolling Interests in Consolidated Entities Total Shares Amount Shares Amount Shares Amount Redeemable Noncontrolling Interest in Operating Partnership Balance at December 31, 2022 1,600 $ 16 69,919 $ 699 $ 734,134 $ ( 324,740 ) $ — $ ( 16,346 ) $ 393,763 3,078 $ 65,426 12,657 $ 291,076 1,428 $ 35,182 $ 40,555 Purchase of common stock — — ( 3,969 ) ( 40 ) ( 19,214 ) — — — ( 19,254 ) — — — — — — — Equity-based compensation — — — — 3,564 — — — 3,564 — — — — — — 5,680 Issuance of preferred stock — — — — — — — — — — — 3,931 88,448 542 13,051 — Issuance of restricted shares/units — — 689 7 14 — — — 21 — — — — — — — Forfeiture of restricted common shares — — ( 3 ) — — — — — — — — — — — — — Dividends declared - common stock - ($ 0.20 /share) — — — — — ( 13,423 ) — — ( 13,423 ) — — — — — — — Dividends declared – preferred stock - Series B ($ 1.38 /share) — — — — — ( 4,233 ) — — ( 4,233 ) — — — — — — — Dividends declared – preferred stock - Series D ($ 2.06 /share) — — — — — ( 3,300 ) — — ( 3,300 ) — — — — — — — Dividends declared – preferred stock - Series E ($ 1.91 /share) — — — — — ( 30,883 ) — — ( 30,883 ) — — — — — — — Dividends declared - preferred stock - Series M ($ 2.07 /share) — — — — — ( 3,888 ) — — ( 3,888 ) — — — — — — — Contributions from noncontrolling interests — — — — — — — 9,517 9,517 — — — — — — — Distributions to noncontrolling interests — — — — — — — ( 3,724 ) ( 3,724 ) — — — — — — ( 1,444 ) Redemption/conversion of operating partnership units — — — — — — — — — — — — — — — ( 7,162 ) Net income (loss) — — — — — ( 27,017 ) — 1,619 ( 25,398 ) — — — — — — ( 5,230 ) Redemptions of preferred stock — — — — — — — — — — — ( 272 ) ( 6,423 ) ( 137 ) ( 3,395 ) — Redemption value adjustment - preferred stock — — — — — ( 4,719 ) — — ( 4,719 ) — — — 3,934 — 785 — Redemption value adjustment — — — — — 4 — — 4 — — — — — — ( 4 ) 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 — — — — 403 — — — 403 — — — — — — 2,208 Issuance of preferred stock — — — — — — — — — — — 130 3,260 6 143 — Issuance of restricted shares/units — — 143 1 2 — — — 3 — — — — — — 32 Forfeiture of restricted common shares — — ( 1 ) — — — — — — — — — — — — — Dividends declared - common stock - ($ 0.20 /share) — — — — — ( 13,401 ) — — ( 13,401 ) — — — — — — — Dividends declared – preferred stock - Series B ($ 1.38 /share) — — — — — ( 4,233 ) — — ( 4,233 ) — — — — — — — Dividends declared – preferred stock - Series D ($ 2.06 /share) — — — — — ( 3,300 ) — — ( 3,300 ) — — — — — — — Dividends declared – preferred stock - Series E ($ 1.88 /share) — — — — — ( 29,328 ) — — ( 29,328 ) — — — — — — — Dividends declared - preferred stock - Series M ($ 2.10 /share) — — — — — ( 3,434 ) — — ( 3,434 ) — — — — — — — Contributions from noncontrolling interests — — — — — — — 2,961 2,961 — — — — — — — Distributions to noncontrolling interests — — — — — — — ( 23,322 ) ( 23,322 ) — — — — — — ( 1,397 ) Net income (loss) — — — — — ( 1,693 ) — 25,928 24,235 — — — — — — ( 4,472 ) Redemptions of preferred stock — — — — — — — — — — — ( 1,535 ) ( 36,554 ) ( 362 ) ( 9,047 ) — Unrealized gain (loss) on investment in securities — — — — — — ( 684 ) — ( 684 ) — — — — — — ( 60 ) Redemption value adjustment - preferred stock — — — — — ( 8,958 ) — — ( 8,958 ) — — — 8,761 — 197 — Redemption value adjustment — — — — — ( 1,258 ) — — ( 1,258 ) — — — — — — 1,258 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 $ 29,964 108 8.25% Series D Cumulative Preferred Stock Common Stock 5.50% Series B Cumulative Convertible Preferred Stock Series E Redeemable Preferred Stock Series M Redeemable Preferred Stock Shares Amount Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income/(loss) Noncontrolling Interests in Consolidated Entities Total Shares Amount Shares Amount Shares Amount Redeemable Noncontrolling Interest in Operating Partnership Purchase of common stock — — ( 312 ) ( 2 ) ( 776 ) — — — ( 778 ) — — — — — — — Equity-based compensation — — — — ( 309 ) — — — ( 309 ) — — — — — — ( 137 ) Issuance of preferred stock — — — — — — — — — — — 114 2,860 6 162 — Issuance of restricted shares/units — — 1 — 186 — — — 186 — — — — — — 686 Dividends declared - common stock - $ 0.20 /share) — — — — — ( 13,432 ) — — ( 13,432 ) — — — — — — — Dividends declared – preferred stock - Series B ($ 1.38 /share) — — — — — ( 4,233 ) — — ( 4,233 ) — — — — — — — Dividends declared – preferred stock - Series D ($ 2.06 /share) — — — — — ( 3,300 ) — — ( 3,300 ) — — — — — — — Dividends declared – preferred stock - Series E ($ 1.88 /share) — — — — — ( 24,733 ) — — ( 24,733 ) — — — — — — — Dividends declared - preferred stock - Series M ($ 2.11 /share) — — — — — ( 3,007 ) — — ( 3,007 ) — — — — — — — Contributions from noncontrolling interests — — — — — — — 2,120 2,120 — — — — — — — Distributions to noncontrolling interests — — — — — — — ( 2,293 ) ( 2,293 ) — — — — — — ( 945 ) Purchase of remaining noncontrolling interest — — — — ( 20,429 ) — — 5,960 ( 14,469 ) — — — — — — — Redemption/conversion of operating partnership units — — 1,922 19 9,280 — — — 9,299 — — — — — — ( 9,299 ) Redemption of operating partnership units for cash — — — — — — — — — — — — — — — ( 121 ) Net income (loss) — — — — — ( 22,318 ) — ( 325 ) ( 22,643 ) — — — — — — ( 5,767 ) Unrealized gain (loss) on investment in securities — — — — — — 684 — 684 — — — — — — 60 Redemptions of preferred stock — — — — — — — — — — — ( 2,998 ) ( 74,557 ) ( 89 ) ( 2,219 ) — Reclassification of redeemable preferred stock from mezzanine equity to liability — — — — — — — — — — — ( 1,209 ) ( 30,222 ) ( 26 ) ( 642 ) — Redemption value adjustment - preferred stock — — — — — ( 15,112 ) — — ( 15,112 ) — — — 15,112 — — — Redemption value adjustment — — — — — ( 4,564 ) — — ( 4,564 ) — — — — — — 4,564 Balance at December 31, 2025 1,600 $ 16 68,219 $ 682 $ 706,488 $ ( 568,503 ) $ — $ 2,095 $ 140,778 3,078 $ 65,426 10,818 $ 265,695 1,368 $ 34,217 $ 19,005 See Notes to Consolidated Financial Statements. 109 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2025 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ ( 28,410 ) $ 19,763 $ ( 30,628 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 92,578 98,733 93,272 Recognition of deferred income ( 684 ) — — Equity-based compensation ( 446 ) 2,611 9,244 Bad debt expense 352 318 915 (Gain) loss on extinguishment of debt 2,686 22 ( 2,318 ) Amortization of loan costs, discounts and capitalized default interest 10,833 6,890 2,195 Write-off of loan costs and exit fees 1,833 6,111 3,489 Amortization of intangibles 428 453 474 Amortization of non-refundable membership initiation fees ( 2,695 ) ( 2,200 ) ( 1,776 ) Interest expense accretion on refundable membership club deposits 557 616 671 Realized (gain) loss on sale of securities 1,572 — — (Gain) loss on disposition of assets and hotel properties ( 82,797 ) ( 88,165 ) — Impairment charges 54,492 — — Realized and unrealized (gain) loss on derivatives 355 ( 585 ) 663 Non-cash interest income ( 613 ) ( 207 ) — Equity in (earnings) loss of unconsolidated entity 56 1,608 253 Deferred income tax expense (benefit) 1,059 ( 96 ) 1,329 Changes in operating assets and liabilities, exclusive of disposition of assets and hotel properties: Accounts receivable and inventories ( 7,366 ) 6,260 11,264 Prepaid expenses and other assets 2,151 3,058 ( 5,758 ) Deposit paid to Ashford Inc. ( 17,000 ) — — Accounts payable and accrued expenses 5,528 8,454 47 Operating lease right-of-use assets 233 416 592 Due to/from related parties, net ( 798 ) 452 1,541 Due to/from third-party hotel managers ( 601 ) ( 5,266 ) 8,398 Due to/from Ashford Inc. 1,214 4,632 ( 10,361 ) Operating lease liabilities 24 ( 157 ) ( 313 ) Other liabilities 6,237 3,096 1,518 Net cash provided by (used in) operating activities 40,778 66,817 84,711 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from property insurance 4,765 958 361 Issuance of note receivable — ( 8,076 ) — Payments for initial franchise fee — — ( 75 ) Proceeds from sale of investment in securities 40,707 — — Acquisition of land ( 5,509 ) — — Net proceeds from sale of hotel properties 247,570 155,583 — Purchase of securities — ( 42,279 ) ( 238 ) Investment in unconsolidated entity — ( 79 ) — Improvements and additions to hotel properties ( 77,904 ) ( 70,598 ) ( 77,114 ) Net cash provided by (used in) investing activities 209,629 35,509 ( 77,066 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on indebtedness 403,000 234,000 370,600 Repayments of indebtedness ( 518,277 ) ( 184,100 ) ( 534,307 ) Payments of loan costs and exit fees ( 11,928 ) ( 15,372 ) ( 11,636 ) Payments for derivatives ( 670 ) ( 1,592 ) ( 5,051 ) Proceeds from derivatives 714 4,904 7,720 Purchase of common stock ( 778 ) ( 369 ) ( 19,307 ) 110 Year Ended December 31, 2025 2024 2023 Payments for dividends and distributions ( 47,339 ) ( 51,558 ) ( 52,563 ) Net proceeds from issuance of preferred stock — — 97,862 Contributions from noncontrolling interest in consolidated entities 306 2,961 9,517 Redemption of operating partnership units ( 121 ) — ( 7,162 ) Distributions to noncontrolling interest in consolidated entities ( 2,293 ) ( 27,045 ) ( 2,693 ) Acquisition of noncontrolling interest in consolidated entities ( 14,469 ) — — Redemption of preferred stock ( 76,776 ) ( 45,601 ) ( 9,818 ) Net cash provided by (used in) financing activities ( 268,631 ) ( 83,772 ) ( 156,838 ) Net change in cash, cash equivalents and restricted cash ( 18,224 ) 18,554 ( 149,193 ) Cash, cash equivalents and restricted cash at beginning of period 185,057 166,503 315,696 Cash, cash equivalents and restricted cash at end of period $ 166,833 $ 185,057 $ 166,503 SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ 88,129 $ 102,541 $ 91,576 Income taxes paid (refunded) 616 ( 728 ) 3,424 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Dividends and distributions declared but not paid $ 7,672 $ 9,255 $ 9,158 Assumption of debt in acquisition of land 5,360 — — Capital expenditures accrued but not paid 7,629 8,825 21,702 Non-cash preferred stock dividends 3,022 3,403 3,614 Unsettled proceeds from derivatives 14 113 361 Non-cash common stock/unit dividends 872 35 20 Non-cash redemption of common units 9,466 — — Non-cash consideration for acquisition of land 1,814 — — Reclassification of redeemable preferred stock from mezzanine equity to liability 30,864 — — SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH Cash and cash equivalents at beginning of period $ 135,465 $ 85,599 $ 261,541 Restricted cash at beginning of period 49,592 80,904 54,155 Cash, cash equivalents and restricted cash at beginning of period $ 185,057 $ 166,503 $ 315,696 Cash and cash equivalents at end of period $ 124,354 $ 135,465 $ 85,599 Restricted cash at end of period 42,479 49,592 80,904 Cash, cash equivalents and restricted cash at end of period $ 166,833 $ 185,057 $ 166,503 See Notes to Consolidated Financial Statements. 111 Table of Contents BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2025, 2024 and 2023 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 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 13 hotel properties as of December 31, 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, 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 consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of December 31, 2025, own 13 hotel properties in six states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands (“USVI”). These hotel properties represent 3,028 total rooms. As a REIT, Braemar is required to comply with limitations imposed by the Code related to operating hotels. As of December 31, 2025, 12 of our 13 hotel properties were leased by wholly-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 consolidated statements of operations. 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’s TRSs is eliminated in consolidation. 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 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 significant intercompany accounts and transactions between consolidated entities have been eliminated in these consolidated financial statements. 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 (formerly Ashford Prime OP General Partner LLC), its general partner. As such, we consolidate Braemar OP. 112 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The following items affect reporting comparability of our historical consolidated financial statements: • 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. • On August 7, 2025, we sold the Marriott Seattle Waterfront. The operating results of the hotel property were excluded from our results of operations as of the disposition date. • On November 6, 2025, we sold The Clancy. 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 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. Cash and Cash Equivalents —Cash and cash equivalents include cash on hand or held in banks and short-term investments with an initial maturity of three months or less at the date of purchase. Restricted Cash —Restricted cash includes reserves for debt service, real estate taxes, and insurance, as well as excess cash flow deposits and reserves for furniture, fixtures, and equipment (“FF&E”) replacements of approximately 3 % to 5 % of property revenue for certain hotels, as required by certain management or mortgage debt agreement restrictions and provisions. Accounts Receivable —Accounts receivable consists primarily of meeting and banquet room rental and hotel guest receivables. We generally do not require collateral. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of guests to make required payments for services. The allowance is maintained at a level believed adequate to absorb estimated receivable losses. The estimate is based on past receivable loss experience, known and inherent credit risks, current economic conditions, and other relevant factors, including specific reserves for certain accounts. Inventories —Inventories, which primarily consist of food, beverages, and gift store merchandise, are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. Investments in Hotel Properties, net —Hotel properties are generally stated at cost. All improvements and additions which extend the useful life of the hotel properties are capitalized. For property and equipment acquired in a business combination, we record the assets acquired based on their fair value as of the acquisition date. Replacements and improvements and finance leases are capitalized, while repairs and maintenance are expense as incurred. Property and equipment acquired in an asset acquisition are recorded at cost. The acquisition cost is allocated to land, buildings, improvements, furniture, fixtures and equipment, as well as identifiable intangible and lease assets and liabilities. Acquisition cost is allocated using relative fair values. We evaluate several factors, including weighted market data for similar assets, expected future cash flows discounted at risk adjusted rates, and replacement costs for assets to determine an appropriate exit cost when evaluating the fair values. Impairment of Investments in Hotel Properties —Hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the hotel is measured by comparison of the carrying amount of the hotel to the estimated future undiscounted cash flows, which take into account current market conditions and our intent with respect to holding or disposing of the hotel. If our analysis indicates that the carrying value of the hotel is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the property’s net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating the impairment of hotel properties, we make many assumptions and estimates, including projected cash flows, expected holding period and expected useful life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions and third-party appraisals, where considered necessary. Asset write-downs resulting from property damage are recorded up to the amount of the allocable property insurance deductible in the period that the property damage occurs. See note 4. Assets Held for Sale and Discontinued Operations —We classify assets as held for sale when we have obtained a firm commitment from a buyer, and consummation of the sale is considered probable and expected within one year. The related operations of assets held for sale are reported as discontinued if the disposal is a component of an entity or group of components that represents a strategic shift that has (or will have) a major effect on our operations and cash flows. Depreciation and amortization will cease as of the date assets have met the criteria to be deemed held for sale. 113 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Investment in Unconsolidated Entity —As of December 31, 2025, we held a 7.9 % ownership interest in OpenKey, which is accounted for under the equity method of accounting by recording the initial investment and our percentage of interest in the entities’ net income/loss. We review our investment in unconsolidated entity for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. Any impairment is recorded in equity in earnings (loss) of unconsolidated entity. See note 6 . Our investment in unconsolidated entity is considered to be a variable interest in the underlying entity. VIEs, as defined by authoritative accounting guidance, 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. Because we do not have the power and financial responsibility to direct the unconsolidated entity’s activities and operations, we are not considered to be the primary beneficiary of this entity on an ongoing basis and therefore such entity should not be consolidated. Leases —We determine if an arrangement is a lease at the commencement date. Operating leases, as lessee, are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on our consolidated balance sheets. We currently do not have any finance leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. The lease terms used to calculate our right-of-use asset may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Subsequent to the initial recognition, lease liabilities are measured using the effective interest method. The ROU asset is generally reduced utilizing a straight-line method adjusted for the lease liability accretion during the period. We have lease agreements with lease and non-lease components, which under the elected practical expedients under ASC 842, we are not accounting for separately. For certain equipment leases, such as office equipment, copiers and vehicles, we account for the lease and non-lease components as a single lease component. Intangible Assets, net —Intangible assets, net represents the customer relationships associated with The Ritz-Carlton Sarasota acquisition, which are amortized using the straight-line method over its expected useful life, which approximates amortization based on economic consumption. See note 21. Derivative Instruments —We use interest rate derivatives to hedge our risks and to capitalize on the historical correlation between changes in SOFR (Secured Overnight Financing Rate) and RevPAR. Interest rate derivatives could include swaps, caps, floors and flooridors. All derivatives are recorded at fair value in accordance with the applicable authoritative accounting guidance. None of our derivative instruments are designated as cash flow hedges. Interest rate derivatives are reported as “derivative assets” in our consolidated balance sheets. For interest rate derivatives and credit default swaps, changes in fair value and realized gains and losses are recognized in earnings as “realized and unrealized gain (loss) on derivatives” in our consolidated statements of operations. Accrued interest on interest rate derivatives is included in “accounts receivable, net” in the consolidated balance sheets. Due to/from Related Parties, net —Due to/from related parties, net, represent current receivables and payables resulting from transactions related to hotel management with a related party. Due to/from related parties is generally settled within a period not exceeding one year . See note 17. Due to/from Ashford Inc. —Due to/from Ashford Inc. represents payables related to the advisory services fee, including reimbursable expenses as well as other hotel products and services. These payables are generally settled within a period not exceeding one year . See note 17. Due to/from Third-Party Hotel Managers —Due to/from third-party hotel managers primarily consists of amounts due from Marriott related to our cash reserves held at the Marriott corporate level related to our operations, real estate taxes, and other items, as well as current receivables and payables resulting from transactions with other third-party managers related to hotel management. These receivables and payables are generally settled within a period not exceeding one year . 114 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Noncontrolling Interests —The redeemable noncontrolling interests in the operating partnership represent the limited partners’ proportionate share of equity in earnings/losses of the operating partnership, 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 unit holdings throughout the period. The redeemable noncontrolling interests in our operating partnership is classified in the mezzanine section of our consolidated balance sheets as these redeemable operating partnership units do not meet the requirements for permanent equity classification prescribed by the authoritative accounting guidance because these redeemable operating partnership units may be redeemed by the holder for cash or registered shares in certain cases outside of the Company’s control. The carrying value of the noncontrolling interests in the operating partnership is based on the greater of the accumulated historical cost or the redemption value. The noncontrolling interest in consolidated entities represents an ownership interest of 25 % in a JV at December 31, 2025, and is reported in equity in our consolidated balance sheets. The noncontrolling interest in consolidated entities represents an ownership interest of 25 % in one hotel property at December 31, 2024, and is reported in equity in our consolidated balance sheets. Net income/loss attributable to redeemable noncontrolling interests in operating partnership and income/loss from consolidated entities attributable to noncontrolling interests in our consolidated entities are reported as deductions/additions from/to net income/loss. Comprehensive income/loss attributable to these noncontrolling interests is reported as reductions/additions from/to comprehensive income/loss. Revenue Recognition —Rooms revenue represents revenues from the occupancy of our hotel rooms, which is driven by the occupancy and average daily rate. Rooms revenue includes revenue for guest no-shows, day use, and early/late departure fees. The contracts for room stays with customers are generally short in duration and revenues are recognized as services are provided over the course of the hotel stay. Advance deposits are recorded as liabilities when a customer or group of customers provides a deposit for a future stay or banquet event at our hotels. Advance deposits are converted to revenue when the services are provided to the customer or when the customer with a noncancellable reservation fails to arrive for part or all of the reservation. Conversely, advance deposits are generally refundable upon guest cancellation of the related reservation within an established period of time prior to the reservation. Our advance deposit balance as of December 31, 2025 and 2024 was $ 59.4 million and $ 58.7 million, respectively, and are generally recognized as revenue within a one-year period. These are included in “accounts payable and accrued expenses” on the consolidated balance sheets. Food & Beverage (“F&B”) revenue consists of revenue from the restaurants and lounges at our hotel properties, in-room dining and mini-bars revenue, and banquet/catering revenue from group and social functions. Other F&B revenue may include revenue from audiovisual equipment/services, rental of function rooms, and other F&B related revenues. Revenue is recognized as the services or products are provided. Our hotel properties may employ third parties to provide certain services at the property, for example, audio visual services. We evaluate each of these contracts to determine if the hotel is the principal or the agent in the transaction, and record the revenues as appropriate (i.e. gross vs. net). Other revenue consists of ancillary revenue at the property, including attrition and cancellation fees, condo management fees, resort and destination fees, health center fees, spas, golf, telecommunications, parking, entertainment and other guest services, as well as rental revenue primarily from leased retail outlets at our hotel properties, and membership initiation fees and dues, primarily from club memberships. Cancellation fees are recognized from non-cancellable deposits when the customer provides notification of cancellation in accordance with established management policy time frames. Non-refundable membership initiation fees are recognized over the expected life of an active membership. Taxes specifically collected from customers and submitted to taxing authorities are not recorded in revenue. Other Hotel Expenses —Other hotel expenses include Internet, telephone charges, guest laundry, valet parking, hotel-level general and administrative, sales and marketing expenses, repairs and maintenance, franchise fees and utility costs. They are expensed as incurred. Advertising Costs —Advertising costs are charged to expense as incurred. For the years ended December 31, 2025, 2024 and 2023, we incurred advertising costs of $ 5.9 million, $ 6.5 million and $ 6.4 million, respectively. Advertising costs are included in “other” hotel expenses in our consolidated statements of operations. Equity-Based Compensation —Stock/unit-based compensation for non-employees is measured at the grant date and expensed ratably over the vesting period based on the original measurement as of the grant date. This results in the recording of expense, included in “advisory services fee,” “management fees” and “corporate general and administrative” expense, equal to 115 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) the ratable amount of the grant date fair value based on the requisite service period satisfied during the period. The Company recognizes forfeitures as they occur. 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. The corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date fair value of the award. The compensation expense 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. Depreciation and Amortization —Hotel properties are depreciated over the estimated useful life of the assets and leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the related assets. Presently, hotel properties are depreciated using the straight-line method over lives ranging from 7.5 to 39 years for buildings and improvements and 1.5 to 5 years for FF&E. While we believe our estimates are reasonable, a change in estimated useful lives could affect depreciation expense and net income (loss) as well as resulting gains or losses on potential hotel sales. Income Taxes —As a REIT, we generally are not subject to federal corporate income tax on the portion of our net income (loss) that does not relate to TRSs. However, Braemar TRS and our USVI TRS are treated as TRSs for U.S. federal income tax purposes. In accordance with authoritative accounting guidance, we account for income taxes related to our TRSs using the asset and liability method under which deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, the analysis utilized by us in determining our deferred tax asset valuation allowance involves considerable management judgment and assumptions. See note 20. The entities that own 12 of our 13 hotel properties are considered partnerships for U.S. federal income tax purposes. Partnerships are not subject to U.S. federal income tax on their income. Instead, each of its partners is required to include in income its allocable share of the partnership’s income. The states and cities where the partnerships operate follow the U.S. federal income tax treatment, with the exception of the District of Columbia, Puerto Rico and the city of Philadelphia. Accordingly, we provide for income taxes in these jurisdictions for the partnerships. The consolidated entities that operate the 13 hotel properties are considered taxable corporations for U.S. federal, foreign, state, and city income tax purposes and have elected to be TRSs of Braemar. The “Income Taxes” topic of the FASB’s ASC addresses the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance requires us to determine whether tax positions we have taken or expect to take in a tax return are more likely than not to be sustained upon examination by the appropriate taxing authority based on the technical merits of the positions. Tax positions that do not meet the more likely than not threshold would be recorded as additional tax expense in the current period. We analyze all open tax years, as defined by the statute of limitations for each jurisdiction, which includes the federal jurisdiction and various states. We classify interest and penalties related to underpayment of income taxes as income tax expense. We and our subsidiaries file income tax returns in the U.S. federal jurisdiction, USVI, Puerto Rico and various states and cities. Tax years 2021 through 2025 remain subject to potential examination by certain federal, foreign and state taxing authorities. Income (Loss) Per Share —Basic income (loss) per common share is calculated by dividing net income (loss) attributable to common stockholders by the weighted average common shares outstanding during the period using the two-class method prescribed by applicable authoritative accounting guidance. Diluted income (loss) per common share is calculated using the two-class method, or the treasury stock method, if more dilutive. Diluted income (loss) per common share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares, whereby such exercise or conversion would result in lower income per share. Recently Issued Accounting Standards —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 116 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 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. Recently Adopted Accounting Standards —In December 2023, the Financial Accounting Standards Board’s (“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. 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 December 31, 2025, the Company has prospectively adopted this ASU. The adoption of this ASU only impacted disclosures with respect to the Company’s consolidated financial statements. See note 20. 3. Revenu e The following tables present our revenue disaggregated by geographical areas (in thousands): Year Ended December 31, 2025 Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total California 4 $ 60,834 $ 25,960 $ 12,912 $ 99,706 Puerto Rico 1 56,129 19,349 11,433 86,911 Arizona 1 40,029 30,053 9,190 79,272 Colorado 1 22,903 13,699 8,891 45,493 Florida 2 60,103 35,583 29,077 124,763 Illinois 1 27,684 7,330 2,506 37,520 Pennsylvania 1 27,295 6,403 2,821 36,519 Washington, D.C. 1 41,529 18,793 4,257 64,579 USVI 1 42,209 16,146 9,573 67,928 Sold hotel properties 2 50,275 6,222 4,827 61,324 Total 15 $ 428,990 $ 179,538 $ 95,487 $ 704,015 Year Ended December 31, 2024 Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total California 4 $ 62,310 $ 21,967 $ 12,478 $ 96,755 Puerto Rico 1 49,994 17,609 10,785 78,388 Arizona 1 36,704 26,062 9,347 72,113 Colorado 1 24,067 14,084 9,756 47,907 Florida 2 59,651 31,635 25,357 116,643 Illinois 1 27,949 7,283 2,336 37,568 Pennsylvania 1 28,642 6,358 1,455 36,455 Washington, D.C. 1 42,164 19,251 3,719 65,134 USVI 1 45,042 19,476 9,857 74,375 Sold hotel properties 3 75,838 17,525 9,703 103,066 Total 16 $ 452,361 $ 181,250 $ 94,793 $ 728,404 117 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Year Ended December 31, 2023 Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total California 4 $ 65,645 $ 23,990 $ 12,060 $ 101,695 Puerto Rico 1 50,436 18,214 11,595 80,245 Arizona 1 35,789 23,803 8,074 67,666 Colorado 1 25,351 14,888 9,096 49,335 Florida 2 61,446 32,418 22,297 116,161 Illinois 1 25,512 6,337 2,068 33,917 Pennsylvania 1 26,222 5,564 1,331 33,117 Washington, D.C. 1 36,615 19,234 1,867 57,716 USVI 1 47,971 17,460 9,963 75,394 Sold hotel properties 3 89,912 23,423 10,762 124,097 Total 16 $ 464,899 $ 185,331 $ 89,113 $ 739,343 4. Investments in Hotel Properties, net Investments in hotel properties, net consisted of the following (in thousands): December 31, 2025 December 31, 2024 Land $ 576,362 $ 630,842 Buildings and improvements 1,116,816 1,430,096 Furniture, fixtures and equipment 179,984 158,470 Construction in progress 16,420 20,420 Residences 12,746 12,746 Total cost 1,902,328 2,252,574 Accumulated depreciation ( 344,061 ) ( 473,888 ) Investments in hotel properties, net $ 1,558,267 $ 1,778,686 For the years ended December 31, 2025, 2024 and 2023, depreciation expense was $ 92.1 million, $ 98.2 million and $ 92.6 million, respectively. Impairment Charges For the year ended December 31, 2025, we recorded impairment charges of $ 54.5 million related to the reductions to the expected holding periods of the hotel properties. We recorded impairment charges of $ 30.3 million at the Sofitel Chicago Magnificent Mile, $ 15.6 million at Hotel Yountville and $ 8.7 million at Bardessono Hotel & Spa as the hotel properties’ net book values exceeded their estimated fair values. The impairment charges were based on methodologies which include the development of the discounted cash flow method of the income approach with support based on the market approach, which are considered Level 3 valuation techniques. During the years ended December 31, 2024 and 2023, no impairment charges were recorded. The following table presents our hotel property measured at fair value as a result of the aforementioned impairment charges aggregated by the level in the fair value hierarchy within which measurements fall on a non-recurring basis at December 31, 2025, and the related impairment charge recorded (in thousands): Fair Value as of December 31, 2025 Year Ended December 31, 2025 Level 1 Level 2 Level 3 Total Impairment Charges Sofitel Chicago Magnificent Mile $ — $ — $ 79,100 $ 79,100 $ 30,256 (1) Hotel Yountville — — 70,300 70,300 15,564 (1) Bardessono Hotel & Spa (2) — — 74,000 74,000 8,672 (1) _____________________________ (1) The impairment charges were based on the estimated fair value of each applicable hotel property and were recorded during the year ended December 31, 2025. (2) Inclusive of “right-of-use asset.” 118 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 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 Dispositions 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, and is included in “gain (loss) on disposition of assets and hotel properties” in our consolidated statements of operations. On August 7, 2025, the Company sold the Marriott Seattle Waterfront 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 sale resulted in a gain of approximately $ 41.1 million for the year ended December 31, 2025, and is included in “gain (loss) on disposition of assets and hotel properties” in our consolidated statements of operations. On November 6, 2025, the Company sold The Clancy for $ 115 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $ 64.7 million on the mortgage loan that was partially secured by the hotel property. The sale resulted in a gain of approximately $ 41.7 million for the year ended December 31, 2025, and is included in “gain (loss) on disposition of assets and hotel properties” in our consolidated statements of operations. We included the results of operations for these hotel properties through the dates of disposition in net income (loss) as shown in our consolidated statements of operations for the year ended December 31, 2025, 2024 and 2023, respectively. The following table includes the consolidated financial information from the disposed hotel properties (in thousands): Year Ended December 31, 2025 2024 2023 Total hotel revenue $ 61,324 $ 103,066 $ 124,097 Total hotel operating expenses ( 38,868 ) ( 66,953 ) ( 77,536 ) Property taxes, insurance and other ( 4,419 ) ( 7,861 ) ( 7,807 ) Depreciation and amortization ( 9,193 ) ( 18,292 ) ( 21,213 ) Gain (loss) on disposition of assets and hotel properties 82,870 88,115 — Operating income (loss) 91,714 98,075 17,541 Interest income 302 636 556 Interest expense and amortization of loan costs ( 8,015 ) ( 17,391 ) ( 21,517 ) Write-off of loan costs and exit fees ( 263 ) ( 107 ) ( 18 ) Gain (loss) on extinguishment of debt ( 2,687 ) — — Income (loss) before income taxes 81,051 81,213 ( 3,438 ) Income from consolidated entities attributable to noncontrolling interests — ( 27,995 ) ( 3,335 ) (Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership ( 5,571 ) ( 4,244 ) 464 Income (loss) before income taxes attributable to the Company $ 75,480 $ 48,974 $ ( 6,309 ) 6. Investment in Unconsolidated Entity 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. 119 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) As of December 31, 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 %. Our investment is accounted for under the equity method of accounting as we have significant influence over the entity under the applicable accounting guidance. During the fourth quarter of 2024, we determined that the estimated fair value of the investment in OpenKey was less than our carrying amount and fully impaired our investment to $ 0 as of December 31, 2024. The following table summarizes our equity in earnings (loss) in OpenKey (in thousands): Year Ended December 31, Line Item 2025 2024 2023 Equity in earnings (loss) of unconsolidated entity $ — $ ( 297 ) $ ( 273 ) On February 2, 2023, the Company entered into a loan funding agreement with Ashford Inc. and OpenKey. Per the agreement, Ashford Inc. and the Company would provide OpenKey with a maximum loan amount of $ 5.0 million to be allocated on a pro-rata basis based on current ownership interests and funded quarterly. On February 27, 2024, the Company approved additional funding, together with Ashford Inc., up to $ 1.0 million in aggregate to OpenKey, allocated pro rata among them. The loan bears interest at an annual rate of 15 %. Additionally, repayment of the loan principal and all accrued interest is due upon certain events. 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. The following table summarizes our note receivable from OpenKey (in thousands): Line Item December 31, 2025 December 31, 2024 Investment in unconsolidated entity $ 89 $ 145 The following table summarizes the interest income associated with the loan to OpenKey (in thousands): Year Ended December 31, Line Item 2025 2024 2023 Equity in earnings (loss) of unconsolidated entity $ — $ 40 $ 20 We review our investment in OpenKey, which includes our note receivable, for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of the investment. Any impairment is recorded in equity in earnings (loss) of unconsolidated entity. There were no impairment charges recorded for the year ended December 31, 2023. As of December 31, 2024, we determined that the estimated fair value of the note receivable in OpenKey was less than our carrying amount. During the year ended December 31, 2024, we recorded an impairment charge of $ 232,000 associated with the note receivable from OpenKey. The impairment charges were included in “equity in earnings (loss) of unconsolidated entity” in our consolidated statements of operations. During the fourth quarter of 2025, Ashford Inc., Ashford Trust and Braemar entered into a purchase and sale agreement to sell OpenKey. The transaction closed in January 2026. As of December 31, 2025, we determined that the estimated proceeds from the sale was less than the carrying amount. During the year ended December 31, 2025, we recorded an impairment charge of $ 56,000 associated with the note receivable from OpenKey. The impairment charge is included in “equity in earnings (loss) of unconsolidated entity” in our consolidated statements of operations. Subsequent to December 31, 2025, the Company received proceeds of approximately $ 58,000 related to the note receivable with OpenKey. 120 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 7. Indebtedness, net Indebtedness, net consisted of the following (dollars in thousands): Indebtedness Collateral Current Maturity Final Maturity (11) Interest Rate December 31, 2025 December 31, 2024 Debt Balance Book Value of Collateral Debt Balance Book Value of Collateral Mortgage loan (2) (3) The Notary Hotel June 2025 June 2025 SOFR (1) + 2.66 % $ — $ — $ 293,180 $ 354,893 The Clancy Sofitel Chicago Magnificent Mile Marriott Seattle Waterfront Mortgage loan (4) Park Hyatt Beaver Creek Resort & Spa February 2026 February 2027 SOFR (1) + 2.86 % 70,500 155,792 70,500 144,707 Mortgage loan (3) The Ritz-Carlton Reserve Dorado Beach March 2026 March 2026 SOFR (1) + 4.75 % — — 62,000 186,539 Term Loan (5) Land March 2026 March 2026 WSJ Prime Rate (1) 5,360 12,786 — — Convertible Senior Notes Equity June 2026 June 2026 4.50 % 86,250 — 86,250 — Mortgage loan (6) The Ritz-Carlton Lake Tahoe July 2026 July 2026 SOFR (1) + 3.25 % 43,413 132,595 53,413 135,287 Mortgage loan (7) Bardessono Hotel & Spa August 2026 August 2029 SOFR (1) + 3.24 % 407,000 468,923 407,000 496,223 Hotel Yountville The Ritz-Carlton Sarasota Pier House Resort & Spa The Ritz-Carlton St. Thomas Mortgage loan (8) Capital Hilton December 2026 December 2028 SOFR (1) + 3.75 % 110,600 123,347 110,600 134,013 Mortgage loan (3) (9) The Notary Hotel March 2027 March 2030 SOFR (1) + 2.83 % 209,902 327,759 — — Sofitel Chicago Magnificent Mile The Ritz-Carlton Reserve Dorado Beach Mortgage loan (10) Four Seasons Resort Scottsdale August 2028 August 2030 SOFR (1) + 3.00 % 180,000 248,923 140,000 255,631 1,113,025 $ 1,470,125 1,222,943 $ 1,707,293 Deferred loan costs, net ( 9,291 ) ( 11,985 ) Premiums/(discounts), net ( 284 ) ( 940 ) Indebtedness, net $ 1,103,450 $ 1,210,018 __________________ (1) SOFR rates were 3.69% and 4.33% at December 31, 2025 and December 31, 2024, respectively. WSJ Prime Rate was 6.75% at December 31, 2025. (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 + 2.57 %, has a two-year initial term, and has three one-year extension options, subject to the satisfaction of certain conditions. (4) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the third was exercised in February 2026. (5) 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. (6) 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 extended the maturity date to July 2026. (7) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. Braemar held a tranche of Commercial Mortgage-Backed Securities (“CMBS”), which was secured by the five hotel properties that serve as collateral for the mortgage loan and had a par value of $ 42.2 million and a rate of SOFR + 5.20 % at December 31, 2024, and was reported as “investment in securities” on the consolidated balance sheet. The CMBS was sold in 2025. (8) 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 %. (9) On August 7, 2025, this mortgage loan was paid down $ 88.4 million in conjunction with the sale of the Marriott Seattle Waterfront. On November 6, 2025, this mortgage loan was paid down $ 64.7 million in conjunction with the sale of The Clancy. See note 5. (10) On August 15, 2025, we amended this mortgage loan. Terms of the amendment included increasing the principal balance to $ 180.0 million, reducing the interest rate to SOFR + 3.00 %, extending the maturity to August 2028, and adding two , one-year extension options, subject to the satisfaction of certain conditions. (11) The final maturity date assumes all available extension options will be exercised. Convertible Senior Notes In May 2021, the Company issued $ 86.25 million aggregate principal amount of 4.50 % Convertible Senior Notes due June 2026 (the “Convertible Senior Notes”). The net proceeds from this offering of the Convertible Senior Notes were approximately $ 82.8 million after deducting the underwriting fees and other expenses paid by the Company. The Convertible Senior Notes are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Convertible Senior Notes bear interest at a rate of 4.50 % per annum, payable semi-annually in arrears on June 1 121 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) and December 1 of each year, beginning on December 1, 2021. The Convertible Senior Notes will mature on June 1, 2026. For the years ended December 31, 2025, 2024 and 2023, the Company recorded coupon interest expense of $ 3.9 million, $ 3.9 million and $ 3.9 million, respectively. For the years ended December 31, 2025, 2024 and 2023, the Company recorded discount amortization of $ 656,000 , $ 621,000 and $ 589,000 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, based on an initial conversion rate of 157.7909 shares of the Company’s common stock per $1,000 principal amount of notes (equivalent to a conversion price of approximately $ 6.34 per share of common stock), subject to adjustment of the conversion rate under certain circumstances. As of December 31, 2025, the conversion rate is 199.2360 shares (equivalent to a conversion price of approximately $ 5.02 per share of common stock). In addition, following the occurrence of certain corporate events, if the Company provides notice of redemption or if it exercises its option to convert the Convertible Senior Notes, the Company will, in certain circumstances, increase the conversion rate for a holder that converts its Convertible Senior Notes in connection with such corporate event, such notice of redemption, or such issuer conversion option, as the case may be. The Company may redeem the Convertible Senior Notes at the Company’s option, in whole or in part, on any business day on or after the date of issuance if the last reported sale price per share of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a notice of redemption at a redemption price equal to 100 % of the principal amount of the Convertible Senior Notes to be redeemed subject to certain adjustments, plus accrued and unpaid interest to, but excluding, the redemption date. Maturities and scheduled amortization of indebtedness as of December 31, 2025, assuming no extension of existing extension options for each of the following five years and thereafter are as follows (in thousands): 2026 $ 723,122 2027 209,903 2028 180,000 2029 — 2030 — Thereafter — Total $ 1,113,025 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 December 31, 2025, we were in compliance with all covenants. 8. 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 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 122 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) five years (the “Term”), is guaranteed by Jason Aintabi, Vandewater Capital Holdings, LLC, Blackwells Holding Co. LLC, and Blackwells Asset Management LLC and shall bear payment-in-kind interest during the Term at a rate equal to the sum of: (a) Term SOFR (as defined in the Loan Agreement) and (b) 3.00 % (three hundred basis points) per annum. The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable due diligence expenses incurred on or prior to the date of the Share Ownership Agreement. As of December 31, 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 December 31, 2025 December 31, 2024 Note receivable SOFR + 3.00 % $ 8,896 $ 8,283 We recognized interest income as presented in the table below (in thousands): Year Ended December 31, Line Item 2025 2024 2023 Interest income $ 613 $ 207 $ — We review receivables for expected credit losses 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 an allowance for expected credit losses (or reversals) in each reporting period. Our assessment of expected credit losses is based on considerable management judgment and assumptions. No allowance for credit losses or related expenses were recorded for the year ended December 31, 2025 and 2024. 9. Derivative Instruments Interest Rate Derivatives —We are exposed to risks arising from our business operations, economic conditions and financial markets. To manage these risks, we primarily use interest rate derivatives to hedge our debt and our cash flows, which include interest rate caps. All derivatives are recorded at fair value. Payments from counterparties on in-the-money interest rate caps are recognized as realized gains on our consolidated statements of operations. The following table summarizes the interest rate derivatives we entered into over the applicable periods: Year Ended December 31, Interest rate caps: (1) 2025 2024 2023 Notional amount (in thousands) $ 656,913 $ 935,280 $ 537,780 Strike rate low end of range 3.64 % 3.50 % 3.50 % Strike rate high end of range 6.50 % 8.00 % 5.25 % Effective date range January 2025 - December 2025 January 2024 - December 2024 January 2023 - December 2023 Termination date range February 2026 - August 2027 January 2025 - August 2026 January 2024 - January 2026 Total cost of interest rate caps (in thousands) $ 670 $ 1,592 $ 5,051 _______________ (1) No instruments were designated as cash flow hedges. Interest rate derivatives consisted of the following: Interest rate caps: (1) December 31, 2025 December 31, 2024 Notional amount (in thousands) $ 1,314,513 $ 1,185,880 Strike rate low end of range 3.64 % 3.50 % Strike rate high end of range 8.00 % 8.00 % Termination date range January 2026 - August 2027 January 2025 - August 2026 Aggregate principal balance on corresponding mortgage loans (in thousands) $ 1,021,415 $ 1,074,693 _______________ (1) No instruments were designated as cash flow hedges. 123 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 10. 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 December 31, 2025, the SOFR interest rate forward curve (Level 2 inputs) assumed a downtrend from 3.688 % to 3.104 % 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 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 December 31, 2025 Assets Derivative assets: Interest rate derivatives - caps $ — $ 56 $ — $ 56 (2) Total $ — $ 56 $ — $ 56 124 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 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 consolidated balance sheet. (2) Reported as “derivative assets” in our consolidated balance sheets. Effect of Fair Value Measured Assets and Liabilities on Consolidated Statements of Operations The following table summarizes the effect of fair value measured assets and liabilities on our consolidated statements of operations (in thousands): Gain (Loss) Recognized in Income Year Ended December 31, 2025 2024 2023 Assets Derivative assets: Interest rate derivatives - caps $ ( 355 ) $ 573 $ ( 935 ) Total derivative assets $ ( 355 ) $ 573 $ ( 935 ) Non-derivative assets: Investment in securities $ ( 1,572 ) $ — $ — Total $ ( 1,927 ) $ 573 $ ( 935 ) Liabilities Derivative liabilities: Warrants $ — $ 12 $ 272 Net $ ( 1,927 ) $ 585 $ ( 663 ) Total combined Interest rate derivatives - caps $ ( 971 ) $ ( 4,083 ) $ ( 8,685 ) Warrants — 12 272 Unrealized gain (loss) on derivatives $ ( 971 ) (1) $ ( 4,071 ) (1) $ ( 8,413 ) (1) Realized gain (loss) on interest rate caps 616 (1) (2) 4,656 (1) (2) 7,750 (1) (2) Realized gain (loss) on investment in securities ( 1,572 ) (3) — — Net $ ( 1,927 ) $ 585 $ ( 663 ) ________ (1) Reported in “realized and unrealized gain (loss) on derivatives” in our consolidated statements of operations. (2) Represents settled and unsettled payments from counterparties on interest rate caps. (3) Reported in “other income (expense)” in our consolidated statements of operations. During the year ended December 31, 2025, the Company sold the investment in CMBS. The amortized cost of the CMBS at December 31, 2025 and December 31, 2024, was $ 0 and $ 42.3 million, respectively. The unrealized gain (loss) recognized as a change in other comprehensive income (loss) for the years ended December 31, 2025 and December 31, 2024 was $ 744,000 and $( 744,000 ), respectively. The CMBS had a par value of $ 42.2 million resulting in a realized loss of approximately $ 1.6 million included in “other income (expense)” on the consolidated statements of operations. As a result of the sales, $ 70,000 of unrealized gain was reclassified to realized loss during the year ended December 31, 2025. 125 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 11. 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. The carrying amounts and estimated fair values of financial instruments were as follows (in thousands): December 31, 2025 December 31, 2024 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Financial assets measured at fair value: Investment in securities $ — $ — $ 41,535 $ 41,535 Derivative assets 56 56 356 356 Financial assets not measured at fair value: Cash and cash equivalents $ 124,354 $ 124,354 $ 135,465 $ 135,465 Restricted cash 42,479 42,479 49,592 49,592 Accounts receivable, net 32,843 32,843 31,754 31,754 Note receivable 8,896 8,896 8,283 8,283 Due from third-party hotel managers 17,088 17,088 22,873 22,873 Financial liabilities not measured at fair value: Indebtedness $ 1,112,741 $ 1,113,025 $ 1,222,003 $ 1,207,420 Accounts payable and accrued expenses 142,123 142,123 143,566 143,566 Redeemable preferred stock redemptions payable 30,864 30,864 — — Dividends and distributions payable 7,672 7,672 9,255 9,255 Due to Ashford Inc., net 5,148 5,148 4,267 4,267 Due to related parties, net 257 257 1,055 1,055 Due to third-party hotel managers 1,467 1,467 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, redeemable preferred stock redemptions payable, 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 10 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 10 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 100.0 % of the carrying value of $ 1.1 billion as of December 31, 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. 126 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 12. 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): Year Ended December 31, 2025 2024 2023 Net income (loss) attributable to common stockholders - basic and diluted: Net income (loss) attributable to the Company $ ( 22,318 ) $ ( 1,693 ) $ ( 27,017 ) Less: dividends on preferred stock ( 35,273 ) ( 40,295 ) ( 42,304 ) Less: deemed dividends on preferred stock ( 15,112 ) ( 8,958 ) ( 4,719 ) Less: dividends on common stock ( 13,585 ) ( 13,302 ) ( 13,164 ) Less: dividends on unvested performance stock units 153 ( 99 ) ( 226 ) Less: dividends on unvested restricted shares — — ( 33 ) Undistributed net income (loss) allocated to common stockholders ( 86,135 ) ( 64,347 ) ( 87,463 ) Add back: dividends on common stock 13,585 13,302 13,164 Distributed and undistributed net income (loss) - basic and diluted $ ( 72,550 ) $ ( 51,045 ) $ ( 74,299 ) Weighted average common shares outstanding: Weighted average common shares outstanding – basic and diluted 67,621 66,500 65,989 Income (loss) per share - basic and diluted: Net income (loss) allocated to common stockholders per share $ ( 1.07 ) $ ( 0.77 ) $ ( 1.13 ) 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): Year Ended December 31, 2025 2024 2023 Net income (loss) allocated to common stockholders is not adjusted for: Income (loss) allocated to unvested restricted shares $ — $ — $ 33 Income (loss) allocated to unvested performance stock units $ — $ 99 226 Income (loss) attributable to redeemable noncontrolling interests in operating partnership ( 5,767 ) ( 4,472 ) ( 5,230 ) Dividends on preferred stock - Series B 4,233 4,233 4,233 Interest expense on Convertible Senior Notes 4,537 4,503 4,470 Dividends on preferred stock - Series E (inclusive of deemed dividends) 39,845 38,089 34,817 Dividends on preferred stock - Series M (inclusive of deemed dividends) 3,007 3,631 4,673 Total $ 45,855 $ 46,083 $ 43,222 Weighted average diluted shares are not adjusted for: Effect of unvested restricted shares — — 3 Effect of unvested performance stock units — 25 273 Effect of assumed conversion of operating partnership units 5,808 6,421 5,487 Effect of assumed conversion of preferred stock - Series B 4,116 4,116 4,116 Effect of assumed conversion of Convertible Senior Notes 16,732 15,184 13,609 Effect of assumed conversion of preferred stock - Series E 121,516 150,154 126,832 Effect of assumed conversion of preferred stock - Series M 13,065 15,961 14,740 Total 161,237 191,861 165,060 127 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 13. 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 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. During the year ended December 31, 2025, approximately 353,000 Performance LTIPs were cancelled as a result of the performance conditions not being met over the performance period. As a result there was a claw back of the previously declared distributions. As of December 31, 2025, there are approximately 77,000 issued and outstanding LTIP and Performance LTIP units. All LTIP and Performance LTIP units 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: December 31, 2025 December 31, 2024 Redeemable noncontrolling interests in Braemar OP (in thousands) $ 19,005 $ 29,964 Adjustments to redeemable noncontrolling interests (1) (in thousands) $ 5,830 $ 1,324 Ownership percentage of operating partnership 6.91 % 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): Year Ended December 31, 2025 2024 2023 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership $ 5,767 $ 4,472 $ 5,230 Distributions declared to holders of common units, LTIP units and Performance LTIP units 945 1,397 1,444 128 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The following table presents compensation expense for Performance LTIP units and LTIP units (in thousands): Year Ended December 31, Type Line Item 2025 2024 2023 Performance LTIP units Advisory services fee $ ( 142 ) $ 1,842 $ 4,445 LTIP units Advisory services fee — 209 1,039 LTIP units Corporate, general and administrative — 3 14 LTIP units - independent directors Corporate, general and administrative 5 154 182 Total $ ( 137 ) $ 2,208 $ 5,680 A summary of the activity of the units in our operating partnership is as follows (in thousands): Year Ended December 31, 2025 2024 2023 Units outstanding at beginning of year 7,220 7,224 8,283 LTIP units issued 153 151 44 Performance LTIP units issued — — 353 Units redeemed for shares of common stock ( 1,922 ) — — Units redeemed for cash ( 46 ) — ( 1,456 ) Performance LTIP units cancelled ( 353 ) ( 155 ) — Units outstanding at end of year 5,052 7,220 7,224 Units convertible/redeemable at end of year 5,052 6,244 4,292 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. The following table presents the common units redeemed/exchanged for common stock (in thousands): Year Ended December 31, 2025 2024 2023 Units redeemed/exchanged 1,922 — — Fair value of common units redeemed (1) $ 4,897 $ — $ — ____________________________________ (1) The redemption value is the greater of historical cost or fair value. The historical cost of the converted units for the year ended December 31, 2025 was $ 9.3 million. The following table presents the common units redeemed for cash (in thousands): Year Ended December 31, 2025 2024 2023 Units redeemed 46 — 1,456 Fair value of common units redeemed $ 121 $ — $ 7,162 (1) ____________________________________ (1) Includes Mr. Monty J. Bennett’s 1.4 million common units redeemed for cash of approximately $ 7.0 million during February 2023. 129 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 14. Equity Common Stock Dividends —The following table summarizes the common stock dividends declared during the period (in thousands): Year Ended December 31, 2025 2024 2023 Common stock dividends declared $ 13,432 $ 13,401 $ 13,423 8.25 % Series D Cumulative Preferred Stock —At December 31, 2025 and 2024, there were 1.6 million shares of 8.25 % Series D cumulative preferred stock outstanding. The Series D cumulative 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 cumulative convertible 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. Series D cumulative preferred stock has no maturity date, and we are not required to redeem the shares at any time. Series D cumulative preferred stock is redeemable at our option for cash (on or after November 20, 2023), in whole or from time to time in part, at a redemption price of $ 25.00 per share plus accrued and unpaid dividends, if any, at the redemption date. Series D cumulative preferred stock may be converted into shares of our common stock, at the option of the holder, in certain limited circumstances such as a change of control. Each share of Series D cumulative preferred stock is convertible into a maximum 5.12295 shares of our common stock. The actual number is based on a formula as defined in the Series D cumulative preferred stock agreement (unless the Company exercises its right to redeem the Series D cumulative preferred shares for cash, for a limited period upon a change in control). The necessary conditions to convert the Series D cumulative preferred stock to common stock have not been met as of period end. Therefore, Series D cumulative preferred stock will not impact our earnings per share. Series D cumulative preferred stock quarterly dividends are set at the rate of 8.25 % of the $ 25.00 liquidation preference (equivalent to an annual dividend rate of $ 2.0625 per share). In general, Series D cumulative preferred stockholders have no voting rights. The Series D Preferred Stock dividend for all issued and outstanding shares is set at $ 2.0625 per annum per share. The following table summarizes dividends declared (in thousands): Year Ended December 31, 2025 2024 2023 Series D Cumulative Preferred Stock $ 3,300 $ 3,300 $ 3,300 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 December 31, 2025, the Company has not repurchased any common stock pursuant to this program. We repurchased approximately 312,000 , 170,000 and 83,000 shares of our common stock in 2025, 2024 and 2023, respectively, to satisfy employees’ statutory minimum U.S. federal income tax obligations in connection with vesting of equity grants issued under our stock-based compensation plan. Noncontrolling Interest in Consolidated Entities — One noncontrolling interest partner held a 25 % ownership interest in an entity that owns one hotel property until November 25, 2025, when the Company purchased the remaining 25 % ownership interest in the entity. Additionally, another noncontrolling interest entity partner held an ownership interest of 25 % in a JV. The table below summarizes the total carrying value (in thousands), which is reported in equity in the consolidated balance sheet: December 31, 2025 2024 Carrying value of noncontrolling interests $ 2,095 $ ( 3,367 ) 130 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The following table summarizes the (income) loss allocated to the noncontrolling interest in consolidated entities (in thousands): Year Ended December 31, 2025 2024 2023 (Income) loss from consolidated entities attributable to noncontrolling interests $ 325 $ ( 25,928 ) $ ( 1,619 ) 15. 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): Year Ended December 31, 2025 2024 2023 Series B Convertible Preferred Stock $ 4,233 $ 4,233 $ 4,233 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 131 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 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, 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, subject to the limitations as stated in the Articles Supplementary. 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. 132 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The issuance activity of the Series E Preferred Stock is summarized below (in thousands): Year Ended December 31, 2025 2024 2023 Series E Preferred Stock shares issued (1) — — 3,798 Net proceeds (1) $ — $ — $ 85,444 __________________ (1) Exclusive of shares issued under the DRIP. 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 either in mezzanine equity or as a liability. The Company evaluates the classification of redeemable preferred stock each reporting period based on the substance of holder redemption rights, redemption activity, contractual redemption limits, dividend payment conditions, liquidity, and other relevant factors. When redemption of any portion of a redeemable preferred stock series is considered mandatorily redeemable and not within the Company’s control, such portion is classified as a liability, while the remaining portion continues to be classified in mezzanine equity. As of December 31, 2025, the Company determined that a portion of the outstanding Series E Preferred Stock met the criteria for mandatory redemption based on certain holders initiating redemption requests that exceeded the limitations set forth in the Articles Supplementary. As of December 31, 2025, the Company has received $ 30.2 million in investor-initiated Series E Preferred Stock redemption requests representing approximately 1,208,850 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our consolidated balance sheet. 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. The redemption value adjustment of Series E Preferred Stock classified as mezzanine equity is summarized below (in thousands): December 31, 2025 December 31, 2024 Series E Preferred Stock $ 265,695 $ 352,502 Cumulative adjustments to Series E Preferred Stock (1) $ 37,210 $ 22,098 ________ (1) Reflects the excess of the redemption value over the accumulated carrying value. The following table summarizes dividends declared (in thousands): Year Ended December 31, 2025 2024 2023 Series E Preferred Stock $ 24,733 $ 29,328 $ 30,883 The redemption activities of Series E Preferred Stock is summarized below (in thousands): Year Ended December 31, 2025 2024 2023 Series E Preferred Stock shares redeemed 2,998 1,535 272 Redemption amount, net of redemption fees $ 74,557 $ 36,554 $ 6,423 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. 133 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 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, subject to the limitations as stated in the Articles Supplementary. 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. 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 issuance activity of Series M Preferred Stock is summarized below (in thousands): Year Ended December 31, 2025 2024 2023 Series M Preferred Stock shares issued (1) — — 531 Net proceeds (1) $ — $ — $ 12,869 __________________ (1) Exclusive of shares issued under the DRIP. 134 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 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 either in mezzanine equity or as a liability. The Company evaluates the classification of redeemable preferred stock each reporting period based on the substance of holder redemption rights, redemption activity, contractual redemption limits, dividend payment conditions, liquidity, and other relevant factors. When redemption of any portion of a redeemable preferred stock series is considered mandatorily redeemable and not within the Company’s control, such portion is classified as a liability, while the remaining portion continues to be classified in mezzanine equity. As of December 31, 2025, the Company determined that a portion of the outstanding Series M Preferred Stock met the criteria for mandatory redemption based on certain holders initiating redemption requests that exceeded the limitations set forth in the Articles Supplementary. As of December 31, 2025, the Company has received $ 642,000 in investor-initiated Series M Preferred Stock redemption requests representing approximately 25,689 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our consolidated balance sheet. 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 classified as mezzanine equity is summarized below (in thousands): December 31, 2025 December 31, 2024 Series M Preferred Stock $ 34,217 $ 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): Year Ended December 31, 2025 2024 2023 Series M Preferred Stock $ 3,007 $ 3,434 $ 3,888 The redemption activities of Series M Preferred Stock is summarized below (in thousands): Year Ended December 31, 2025 2024 2023 Series M Preferred Stock shares redeemed 89 362 137 Redemption amount, net of redemption fees $ 2,219 $ 9,047 $ 3,395 16. Stock-Based Compensation At December 31, 2025, the Company does not have an equity incentive plan. 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. The following table summarizes the stock-based compensation expense for restricted stock (in thousands): Year Ended December 31, Line Item 2025 2024 2023 Advisory services fee $ — $ 216 $ 1,162 Management fees — 2 11 Corporate general and administrative — 14 101 Corporate general and administrative - independent directors — 144 182 $ — $ 376 $ 1,456 135 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) A summary of our restricted stock activity is as follows (shares in thousands): Year Ended December 31, 2025 2024 2023 Number of Units Weighted Average Price at Grant Number of Units Weighted Average Price at Grant Number of Units Weighted Average Price at Grant Outstanding at beginning of year — $ — 167 $ 7.02 437 $ 6.46 Restricted shares granted — — 50 2.82 45 4.07 Restricted shares vested — — ( 216 ) 6.04 ( 312 ) 5.82 Restricted shares forfeited — — ( 1 ) 7.02 ( 3 ) 6.90 Outstanding at end of year — $ — — $ — 167 $ 7.02 The fair value of restricted stock vested during the years ended December 31, 2025, 2024 and 2023 was approximately $ 0 , $ 452,000 and $ 1.3 million, respectively. 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. During the year ended December 31, 2025, approximately 383,000 PSUs granted in 2023, were cancelled as a result of the performance conditions not being met over the performance period. As a result there was a claw back of the previously declared dividends. During the year ended December 31, 2024, PSUs granted in 2022, vested at 174 % of target based on the performance conditions met over the performance period. During the year ended December 31, 2023, PSUs granted in 2021, vested at 200 % of target based on the performance conditions met over the performance period. The following table summarizes the compensation expense for PSUs (in thousands): Year Ended December 31, Line Item 2025 2024 2023 Advisory services fee $ ( 309 ) $ 27 2,108 136 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) A summary of our PSU activity is as follows (shares in thousands): Year Ended December 31, 2025 2024 2023 Number of Units Weighted Average Price at Grant Number of Units Weighted Average Price at Grant Number of Units Weighted Average Price at Grant Outstanding at beginning of year 383 $ 4.07 424 $ 4.22 335 $ 5.84 PSUs granted (at target) — — — — 383 4.07 PSUs vested (at target) — 4.07 ( 41 ) 5.63 ( 294 ) 7.01 PSUs canceled ( 383 ) 4.07 — — — — Outstanding at end of year (at target) — $ — 383 $ 4.07 424 $ 4.22 17. 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): Year Ended December 31, 2025 2024 2023 Advisory services fee Base advisory fee $ 14,290 $ 13,838 $ 13,982 Reimbursable expenses (1) 13,939 11,620 8,353 Equity-based compensation (2) ( 451 ) 2,294 8,754 Incentive fee 1,408 2,735 — Total $ 29,186 $ 30,487 $ 31,089 ________ (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. 137 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) On September 27, 2022, an agreement was entered into by Ashford Inc., Ashford Trust and Braemar pursuant to which the Advisor is to implement the REITs’ cash management strategies. This includes actively managing the REITs excess cash by primarily investing in short-term U.S. Treasury securities. The annual fee is equal to the lesser of (i) 20 bps of the average daily balance of the funds managed by the Advisor and (ii) the actual rate of return realized by the cash management strategies; provided that in no event will the cash management fee be less than zero. The fee is payable monthly in arrears. On March 2, 2023, the Company entered into a Limited Waiver Under Advisory Agreement (the “2023 Limited Waiver”) with Braemar OP, Braemar TRS and its Advisor. Pursuant to the 2023 Limited Waiver, the Company, Braemar OP, Braemar TRS and the Company’s Advisor waived the operation of any provision in the advisory agreement that would otherwise limit our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2023, cash incentive compensation to employees and other representatives of the Advisor. On March 11, 2024, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc. and Ashford LLC (the “Advisory Agreement Limited Waiver”). Pursuant to the Advisory Agreement Limited Waiver, 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 year 2024, cash incentive compensation to employees and other representatives of the Advisor. On 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 year 2025, 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, 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 losses. Each year Ashford Inc. collects funds from Ashford Trust, Braemar and their respective hotel management companies, to fund the casualty insurance program as needed, on an allocated basis. On August 26, 2025, Braemar entered into a Letter Agreement with Ashford Inc. to explore a potential sale of Braemar. Pursuant to the Letter Agreement, Braemar and Ashford Inc. agreed that the termination fee payable to Ashford Inc. under the advisory agreement is $ 574.8 million (exclusive of accrued fees). However, Braemar and Ashford Inc. have agreed to the payment of a discounted aggregate amount of $ 480.0 million plus accrued fees (the “Company Sale Fee”). Ashford Inc. received a $ 17.0 million payment upon execution of the agreement. The $ 17.0 million payment will be credited against other amounts due to Ashford Inc. from Braemar if the sale of the Company does not occur before July 1, 2028. The $ 17.0 million payment is presented in “deposit paid to Ashford Inc.” on the consolidated balance sheet. On December 22, 2025, Braemar entered into an amendment to the Letter Agreement. The Amendment was entered into in order to eliminate unintended ambiguity regarding the circumstances under which the termination fees become due and payable to Ashford Inc. and the timing of payment in order to more fully reflect the parties’ original intent under the Letter Agreement and ensure consistency across potential transaction structures in how the proceeds from a Company Sale Transaction (as defined in the Letter Agreement) are applied. Specifically, the Amendment revises the definition of “Company Sale Transaction” to clarify that it is a Company Change of Control (as defined in the advisory agreement). Pursuant to the Amendment, Braemar and Ashford Inc. further agreed that the Company Sale Fee (as defined in the Letter Agreement) will be paid directly to Ashford Inc. from Net Sale Proceeds (as defined in the Amendment) of a Company Sale Transaction (as defined in the Amendment), after payment of any Master Agreement Termination Fee (as defined in the Amendment), but before any other payments, dividends or distributions are made. In the event that Braemar’s assets are sold in more than one Company Sale Transaction and the Net Sale Proceeds from a particular Company Sale Transaction is insufficient to pay the Company Sale Fee and accrued fees in full, the Amendment provides that the Net Sale Proceeds from subsequent sales or dispositions of assets will be applied towards the payment of the Company Sale Fee until the Company Sale Fee is paid in full. 138 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The Amendment further provides that upon the complete satisfaction and discharge of the Company Sale Fee, and the Master Agreement Termination Fee (if applicable), each of the Company and Ashford Inc. may terminate the advisory agreement upon providing 60 days’ prior written notice to the other. The Amendment further provides that in the case of a sale or disposition of assets representing 50 % or more of the Gross Asset Value (as defined in the advisory agreement and calculated as of January 1, 2025) of all of Braemar’s assets, the buyer must pay directly to Ashford Inc. the cash proceeds from such sale or disposition transaction necessary to satisfy the Master Agreement Termination Fee, and the related master agreements will terminate upon closing of such transaction. If proceeds are insufficient to pay the Master Agreement Termination Fee, proceeds from subsequent sales will be applied until the fee is paid in full. Additionally, upon the approval of a plan of liquidation by Braemar’s stockholders, the master agreements will terminate, subject to payment of the Master Agreement Termination Fee. 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 years ended December 31, 2025, 2024 and 2023, we incurred fees from Lismore or its subsidiaries of $ 1.7 million, $ 2.8 million and $ 2.4 million respectively. Ashford Securities On December 31, 2020, an Amended and Restated Contribution Agreement (the “Amended and Restated Contribution Agreement”) was entered into by Ashford Inc., Ashford Trust and Braemar (collectively, the “Parties” and each individually, a “Party”) with respect to funding certain expenses of Ashford Securities LLC, a subsidiary of Ashford Inc. (“Ashford Securities”). Beginning on the effective date of the Amended and Restated Contribution Agreement, costs were allocated based upon an allocation percentage of 50 % to Ashford Inc., 50 % to Braemar and 0 % to Ashford Trust. Upon reaching the earlier of $ 400 million in aggregate capital raised, or June 10, 2023, there was to be a true-up (the “Amended and Restated True-Up Date”) among Ashford Inc., Ashford Trust and Braemar whereby the actual amount contributed by each company was based on the actual amount of capital raised by Ashford Inc., Ashford Trust and Braemar, respectively, through Ashford Securities (the resulting ratio of contributions among the Parties, the “Initial True-up Ratio”). On January 27, 2022, Ashford Trust, Braemar and Ashford Inc. entered into a Second Amended and Restated Contribution Agreement which provided for an additional $ 18 million in expenses to be reimbursed, with all expenses allocated 45 % to Ashford Trust, 45 % to Braemar and 10 % to Ashford Inc. On February 1, 2023, Braemar entered into a Third Amended and Restated Contribution Agreement, which provided that after the Amended and Restated True-Up Date, capital contributions for the remainder of fiscal year 2023 would be divided between each Party based on the Initial True-Up Ratio, there would be a true up reflecting amounts raised by Ashford Securities since June 10, 2019, and thereafter, the capital contributions would be divided among each Party in accordance with the cumulative ratio of capital raised by the Parties. During the first quarter of 2024, there was a true-up of the capital contributions in accordance with the Third Amended and Restated Contribution Agreement made through December 31, 2023, which resulted in a payment of $ 3.5 million from Ashford Inc. Effective January 1, 2024, Braemar entered into a Fourth Amended and Restated Contribution Agreement with Ashford Inc. and Ashford Trust, which states that, notwithstanding anything in the prior contribution agreements: (1) the Parties equally split responsibility for all aggregate contributions made by them to Ashford Securities through September 30, 2021; and (2) thereafter, their contributions for each quarter will be based on the ratio of the amounts raised by each Party through Ashford Securities in the prior quarter compared to the total aggregate amount raised by the Parties through Ashford Securities for the prior quarter. To the extent contributions made by any of the Parties through December 31, 2023 differed from the amounts owed pursuant to the foregoing, the Parties shall make true up payments to each other to settle the difference. During the first quarter of 2024, the funding requirement was revised based on the aggregate capital raised through Ashford Securities. This resulted in Braemar receiving a payment of approximately $ 5.9 million from Ashford Inc., which resulted in a net credit to expense of approximately $ 4.5 million that is included in “corporate general and administrative” on the consolidated statements of operations for the year ended December 31, 2024. Effective December 9, 2025, the Parties entered into the Wind‑Down and Investor Servicing Cost Sharing Agreement providing for the orderly wind‑down of Ashford Securities as a FINRA member and SEC‑registered broker‑dealer and allocating all related wind‑down and investor servicing costs among the Parties based on each Party’s proportion of outstanding shares in applicable investment products as of each quarterly measurement date. The agreement supersedes prior cost‑allocation terms solely with respect to these wind‑down and servicing obligations and remains in effect until completion of the wind‑down and the end of all related servicing requirements. 139 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) As of December 31, 2025, Braemar has funded approximately $ 12.9 million and has a payable of approximately $ 652,000 that is included in “due to Ashford Inc.” on the consolidated balance sheet . As of December 31, 2024, Braemar had funded approximately $ 12.9 million and had a pre-funded balance of $ 797,000 that is included in “other assets” on the consolidated balance sheet. The table below summarizes amounts expensed related to operating expenses of Ashford Securities reimbursed by Braemar (in thousands): Year Ended December 31, Line Item 2025 2024 2023 Corporate, general and administrative $ 1,193 $ ( 4,547 ) $ 4,330 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 December 31, 2025, Remington Hospitality managed five of our 13 hotel properties. We pay monthly hotel management fees equal to the greater of approximately $ 18,000 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. 140 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Summary of Transactions In accordance with our advisory agreement, our Advisor, or entities in which our Advisor has an interest, has a right to provide products or services to our hotel properties, provided such transactions are evaluated and approved by our independent directors. The following tables summarize the entities in which our Advisor has an interest with which we or our hotel properties contracted for products and services, the amounts recorded by us for those services and the applicable classification on our consolidated financial statements (in thousands): Year Ended December 31, 2025 Company Product or Service Total Investments in Hotel Properties, net (1) Indebtedness, net (2) Other Hotel Revenue Other Hotel Expenses Management fees Property Taxes, Insurance and Other Advisory Services Fee Interest Income Corporate General and Administrative Write-off of Premiums, Loan Costs and Exit Fees Ashford LLC Insurance claims services $ 18 $ — $ — $ — $ — $ — $ 18 $ — $ — $ — $ — Ashford Securities Broker/Dealer 1,193 — — — — — — — — 1,193 — INSPIRE Audio visual services 3,878 — — 3,723 — — — — — 155 — Lismore Capital Debt placement and related services 1,693 — 1,584 — — — — — — — 109 OpenKey Mobile key app 44 — — — 44 — — — — — — Premier Design and construction services 12,417 10,524 — — 382 — — 1,511 — — — Pure Wellness Hypoallergenic premium rooms 182 — — — 182 — — — — — — RED Leisure Watersports activities and travel/transportation services 1,232 — — 453 674 — — — — 105 — Warwick Insurance 1,418 — — — — — 1,418 — — — — Ashford LLC Cash management services 10 — — — — — — — ( 10 ) — — Remington Hospitality Hotel management services (5) 5,117 — — — 1,650 3,467 — — — — — Year Ended December 31, 2024 Company Product or Service Total Investments in Hotel Properties, net (1) Indebtedness, net (2) Other Assets (3) Other Hotel Revenue Other Hotel Expenses Management fees Property Taxes, Insurance and Other Advisory Services Fee Interest Income Corporate General and Administrative Write-off of Premiums, Loan Costs and Exit Fees Ashford LLC Insurance claims services $ 2 $ — $ — $ — $ — $ — $ — $ 2 $ — $ — $ — $ — Ashford Securities Broker/Dealer ( 4,473 ) — — — — — — — — — ( 4,473 ) — INSPIRE Audio visual services 4,525 — — — 4,415 — — — — — 110 — Lismore Capital Debt placement and related services 2,799 — 1,112 75 — — — — — — — 1,612 OpenKey Mobile key app 36 — — — — 36 — — — — — — Premier Design and construction services 15,886 14,133 — — — 363 — — 1,390 — — — Pure Wellness Hypoallergenic premium rooms 146 — — — — 146 — — — — — — RED Leisure Watersports activities and travel/transportation services 1,119 — — — 336 713 — — — — 70 — Warwick Insurance 1,291 — — — — 50 — 1,241 — — — — Ashford LLC Cash management services 91 — — — — — — — — ( 91 ) — — Remington Hospitality Hotel management services (5) 4,089 — — — — 1,612 2,477 — — — — — Year Ended December 31, 2023 Company Product or Service Total Investments in Hotel Properties, net (1) Indebtedness, net (2) Other Assets (3) Preferred Stock (4) Other Hotel Revenue Other Hotel Expenses Management fees Property Taxes, Insurance and Other Advisory Services Fee Corporate General and Administrative Write-off of Premiums, Loan Costs and Exit Fees Ashford LLC Insurance claims services 3 $ — $ — $ — $ — $ — $ — $ — $ 3 $ — $ — $ — Ashford Securities Broker/Dealer 6,385 — — — 1,972 — — — — — 4,413 — INSPIRE Audio visual services 4,371 — — — — 4,268 — — — — 103 — Lismore Capital Debt placement and related services 2,426 — 987 150 — — — — — — — 1,289 OpenKey Mobile key app 41 — — — — — 41 — — — — — Premier Design and construction services 12,652 11,618 — — — — — — — 1,034 — — Pure Wellness Hypoallergenic premium rooms 149 — — — — — 149 — — — — — RED Leisure Watersports activities and travel/transportation services 1,043 — — — — 308 692 — — — 43 — Remington Hospitality Hotel management services (5) 3,913 — — — — — 1,394 2,519 — — — — ________ (1) Recorded in FF&E and depreciated over the estimated useful life. (2) Recorded as deferred loan costs, which are included in “indebtedness, net” on our consolidated balance sheets and amortized over the initial term of the applicable loan agreement. 141 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (3) Represents nonrefundable work fees. (4) Recorded as a reduction of Series E and Series M Redeemable Preferred Stock proceeds. (5) Other hotel expenses include incentive hotel management fees and other hotel management costs. The following table summarizes the components of due to Ashford Inc. (in thousands): Due to (from) Ashford Inc. Company Product or Service December 31, 2025 December 31, 2024 Ashford LLC Advisory services $ 1,918 $ 1,536 Ashford LLC Casualty insurance 1,357 1,044 INSPIRE Audio visual services 1,012 501 Ashford Securities Broker/Dealer 58 10 Premier Design and construction services 660 968 RED Leisure Watersports activities and travel/transportation services 143 208 $ 5,148 $ 4,267 As of December 31, 2025, due to related parties, net included a net payable to Remington Hospitality of $ 257,000 . As of December 31, 2024, due from related parties, net included a net payable to Remington Hospitality of $ 1.1 million. These amounts are primarily related to advances made by Braemar, accrued base and incentive management fees and casualty insurance premiums. 18. Commitments and Contingencies Restricted Cash —Under certain management and debt agreements for our hotel properties existing at December 31, 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 December 31, 2025, we are currently paying 2 % of gross revenues for the Cameo Beverly Hills. Under the franchise agreement for the Sofitel Chicago Magnificent Mile, we pay franchisor royalty fees of 4.4 % of gross rooms revenue. Additionally, we 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): Year Ended December 31, Line Item 2025 2024 2023 Other hotel expenses $ 1,101 $ 340 $ — Management Fees —Under hotel management agreements for our hotel properties existing at December 31, 2025, we pay a monthly hotel management fee equal to the greater of approximately $ 18,000 per hotel (increased annually based on consumer price index adjustments) or 3 % of gross revenues, or in some cases, 2.3 % to 4.0 % 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 2021 through 2025 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 142 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 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 in the amount of $ 850,000 was reached on February 14, 2025. Final court approval was obtained on September 12, 2025. Braemar’s portion of the settlement is 11.7 %. The case is now in the settlement administration phase. As of December 31, 2025, the settlement liability amount has been accrued. 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 December 31, 2025. The Court granted a motion for preliminary approval of the settlement on October 27, 2025, and a hearing on the motion for final approval is set for April 20, 2026. 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. The Court approved the settlement of all matters on January 16, 2026. The aggregate settlement is $ 2.5 million. Braemar’s portion of the settlement is approximately $ 679,000 . As of December 31, 2025, the 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. 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. Leases —We lease land under one non-cancelable operating ground lease, which expires in 2065, related to our hotel property in Yountville, California. The lease in Yountville, California contains two 25 -year extension options. The lease is subject to base rent plus contingent rent based on the hotel property’s financial results and escalation clauses. Capital Commitments —At December 31, 2025, we had capital commitments of $ 18.3 million, including commitments that will be satisfied with insurance proceeds, relating to general capital improvements that are expected to be paid in the next twelve months . 19. Leases We have operating ground leases and operating equipment leases, such as copier and vehicle leases, at our hotel properties. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years. The exercise of lease renewal options is at our sole discretion. Some leases have variable payments, however, if variable payments are contingent, they are not included in the ROU assets and liabilities. We have no finance leases as of December 31, 2025. 143 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The discount rate used to calculate the lease liability and ROU asset related to our ground leases is based on our incremental borrowing rate (“IBR”), as the rate implicit in each lease is not readily determinable. The IBR is determined at commencement of the lease, or upon modification of the lease, as the interest rate a lessee would have to pay to borrow on a fully collateralized basis over a similar term and at an amount equal to the lease payments in a similar economic environment. As of December 31, 2025 and 2024, our leased assets and liabilities consisted of the following (in thousands): December 31, 2025 December 31, 2024 Assets Operating lease right-of-use assets $ 30,743 $ 34,852 Liabilities Operating lease liabilities $ 20,058 $ 19,984 We incurred the following lease costs related to our operating leases (in thousands): Year Ended December 31, Classification 2025 2024 2023 Operating lease cost (1) Hotel operating expenses - other $ 2,308 $ 4,505 $ 6,757 Operating lease asset impairment Impairment charges 3,498 — — _______________________________________ (1) For the years ended December 31, 2025, 2024 and 2023, operating lease cost includes approximately $ 416,000 , $ 934,000 and $ 2.3 million, respectively, of variable lease cost associated with the ground leases. Additionally, we recorded $( 21,000 ), $ 451,000 and $ 474,000 , respectively, of amortization costs related to the intangible assets that were reclassified to “operating lease right-of-use assets” upon adoption of ASC 842. Short-term lease costs in aggregate are immaterial. Other information related to leases is as follows: Year Ended December 31, 2025 2024 2023 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used for operating leases (in thousands) $ 1,030 $ 3,288 $ 3,310 Weighted Average Remaining Lease Term Operating leases (1) 40 years 41 years 43 years Weighted Average Discount Rate Operating leases (1) 5.30 % 5.25 % 4.98 % _______________________________________ (1) Calculated using the lease term, excluding extension options, and discount rates of the ground leases. Future minimum lease payments due under non-cancellable leases as of December 31, 2025 were as follows (in thousands): Operating Leases 2026 $ 1,259 2027 1,162 2028 1,164 2029 1,144 2030 1,159 Thereafter 51,571 Total future minimum lease payments (1) 57,459 Less: interest ( 37,401 ) Present value of operating lease liabilities $ 20,058 _______________________________________ (1) Based on payment amounts as of December 31, 2025 . 144 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 20. Income Taxes For U.S. federal income tax purposes, we elected to be taxed as a REIT under the Code. To qualify as a REIT, we must meet certain organizational and operational stipulations, including a requirement that we distribute at least 90% of our REIT taxable income, excluding net capital gains, to our stockholders. We currently intend to adhere to these requirements and maintain our REIT status. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes as well as to federal income and excise taxes on our undistributed taxable income. At December 31, 2025, 12 of our hotel properties were leased to TRS lessees and The Ritz-Carlton St. Thomas was owned by our USVI TRS. The TRS entities recognized net book income (loss) before income taxes of $ 2.8 million, $ 9.6 million and $ 17.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. We have prospectively adopted the disclosure requirements as required after the adoption of ASU 2023-09. The following table reconciles the income tax expense of the Company at applicable statutory rates to the actual income tax expense recorded (in thousands): Year Ended December 31, 2025 $ % Income tax (expense) benefit at federal statutory rate of 21% $ 5,551 21.00 % State and local income tax, net of federal (national) income tax effect (1) ( 287 ) ( 1.09 ) % Foreign tax effects: Benefit of USVI Economic Development Commission credit 398 1.51 % USVI - Nontaxable or nondeductible items 111 0.42 % Benefit of Puerto Rico tax incentives 818 3.09 % Puerto Rico - nontaxable or nondeductible items ( 167 ) ( 0.63 ) % Changes in valuation allowance ( 742 ) ( 2.81 ) % Nontaxable or nondeductible items ( 275 ) ( 1.04 ) % Redeemable noncontrolling interests in operating partnership ( 616 ) ( 2.33 ) % Tax impact of REIT election ( 6,793 ) ( 25.70 ) % Other 23 0.09 % Effective tax rate $ ( 1,979 ) ( 7.49 ) % __________________ (1) State taxes in Texas, Philadelphia and California make up the majority (greater than 50% percent) of the tax effect in this category. As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the following table reconciles the income tax expense of the TRS entities at applicable statutory rates to the actual income tax expense recorded (in thousands): Year Ended December 31, 2024 2023 Income tax (expense) benefit of the TRS entities at federal statutory income tax rate of 21% $ ( 2,040 ) $ ( 5,180 ) State income tax (expense) benefit, net of U.S. federal income tax benefit ( 81 ) ( 258 ) State and local income tax (expense) benefit on pass-through entity subsidiaries ( 27 ) ( 20 ) Gross receipts and margin taxes ( 88 ) ( 52 ) Benefit of USVI Economic Development Commission credit 1,559 1,511 Benefits of Puerto Rico tax incentives 950 2,064 Effect of permanent differences ( 412 ) ( 229 ) Other 39 ( 46 ) Valuation allowance ( 742 ) ( 479 ) Total income tax (expense) benefit $ ( 842 ) $ ( 2,689 ) 145 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The components of income tax expense are as follows (in thousands): Year Ended December 31, 2025 2024 2023 Current: Federal $ ( 137 ) $ ( 387 ) $ ( 467 ) State ( 305 ) 68 ( 69 ) Foreign ( 478 ) ( 619 ) ( 824 ) Total current income tax (expense) benefit ( 920 ) ( 938 ) ( 1,360 ) Deferred: Federal 10 1 ( 14 ) State 3 — — Foreign ( 1,072 ) 95 ( 1,315 ) Total deferred income tax (expense) benefit ( 1,059 ) 96 ( 1,329 ) Total income tax (expense) benefit $ ( 1,979 ) $ ( 842 ) $ ( 2,689 ) We have prospectively adopted the disclosure requirements as required after the adoption of ASU 2023-09. The following table presents the disaggregated cash paid for income taxes, net of refunds (in thousands): Year Ended December 31, 2025 Federal $ 230 State ( 176 ) Foreign 562 Total cash paid (refunded) during the period for income taxes (1) $ 616 ___________________ (1) Individual jurisdictions equaling 5% or more of the total income taxes paid (net of refunds) for the year ended December 31, 2025 include Puerto Rico at $ 463,000 , federal at $ 230,000 , USVI at $ 119,000 , Philadelphia at $ 76,000 , Florida at $( 247,000 ) and Arizona at $( 61,000 ). The following table presents the U.S. and foreign earnings (losses) from continuing operations (in thousands): Year Ended December 31, 2025 2024 2023 U.S. $ ( 39,318 ) $ 6,549 $ ( 51,878 ) Foreign 12,887 14,056 23,939 Total $ ( 26,431 ) $ 20,605 $ ( 27,939 ) For the years ended December 31, 2025, 2024 and 2023, income tax expense included interest and penalties paid to/(received from) taxing authorities of $ 17,000 , $ 4,000 and $( 11,000 ), respectively. At December 31, 2025 and 2024, we determined that there were no amounts to accrue for interest and penalties due to taxing authorities. 146 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) At December 31, 2025 and 2024, our deferred tax asset (liability) and related valuation allowance consisted of the following (in thousands): December 31, 2025 2024 Deferred tax assets: Tax intangibles basis greater than book basis $ 743 $ 722 Allowance for doubtful accounts 18 99 Unearned income 4,159 3,068 Federal and state net operating losses 17,978 16,435 Capital loss carryforward — 331 Accrued expenses 886 775 Other 9 12 Total deferred tax asset 23,793 21,442 Valuation allowance ( 18,351 ) ( 16,496 ) Net deferred tax asset $ 5,442 $ 4,946 Deferred tax liabilities: Deferred income $ ( 11 ) $ ( 11 ) Tax property basis greater/(less) than book basis ( 7,710 ) ( 6,160 ) Prepaid expenses ( 5 ) — Total deferred tax liability ( 7,726 ) ( 6,171 ) Net deferred tax asset (liability) $ ( 2,284 ) $ ( 1,225 ) At December 31, 2025 and 2024, we have reserved certain deferred tax assets of our TRS entities and recorded a valuation allowanc e of $ 18.4 million and $ 16.5 million, respectively . Primarily as a result of the limitation imposed by the Code on the utilization of net operating losses of acquired subsidiaries, we believe it is more likely than not that a portion of our deferred tax assets will not be realized, and therefore, have provided a valuation allowance to reserve against the balances. At December 31, 2025, we had TRS net operating loss carryforwards for U.S. federal income tax purposes of $ 64.9 million, of which $ 43.4 million is subject to expiration and will begin to expire in 2026. The remainder was generated after December 2017 and is not subject to expiration under the Tax Cuts and Jobs Act. $ 43.4 million of net operating loss carryforwards are attributable to acquired subsidiaries and are subject to substantial limitation on their use. At December 31, 2025, we had state net operating loss carryforwards of $ 137.3 million, which begin to expire in 2033. The Company also has indefinite-lived state net operating losses (“NOLs”). At December 31, 2025, Braemar Hotels & Resorts Inc., our REIT, had net operating loss carryforwards for U.S. federal income tax purposes of $ 109.7 million based on the latest filed tax return. Of this amount, $ 2.2 million is subject to expiration in 2033. The remainder is not subject to expiration under the Tax Cuts and Jobs Act. We do not recognize deferred tax assets and a valuation allowance for the REIT since the REIT distributes its taxable income as dividends to stockholders, and in turn, the stockholders incur income taxes on those dividends. The following table summarizes the changes in the valuation allowance (in thousands): Year Ended December 31, 2025 2024 2023 Balance at beginning of year $ 16,496 $ 16,169 $ 18,627 Additions 1,855 327 — Deductions — — ( 2,458 ) Balance at end of year $ 18,351 $ 16,496 $ 16,169 The USVI TRS operates under a tax holiday in the U.S. Virgin Islands, which is effective through December 31, 2028, and may be extended if certain additional requirements are satisfied. The tax holiday is conditional upon our meeting certain employment and investment thresholds. The impact of this tax holiday decreased current foreign taxes by $ 2.0 million and $ 2.7 million for the years ended December 31, 2024 and 2023, respectively. There was no current foreign tax for the U.S. Virgin Islands for the year ended December 31, 2025. The benefit of the tax holiday on net income (loss) per share was approximately, $ 0.00 , $ 0.03 and $ 0.04 for the years ended December 31, 2025, 2024 and 2023, respectively. 147 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In 2022, we acquired The Ritz-Carlton Reserve Dorado Beach in Dorado, Puerto Rico. Our taxable entities in Puerto Rico operate under a tax holiday which is effective through April 2, 2028. The tax holiday is conditional upon meeting certain employment and investment thresholds. The impact of this tax holiday decreased current foreign taxes by $ 4.4 million, $ 1.7 million and $ 4.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. The benefit of this tax holiday on net income (loss) per share was approximately $ 0.07 , $ 0.02 and $ 0.06 for the years ended December 31, 2025, 2024 and 2023, respectively. 21. Intangible Assets, net Intangible assets, net consisted of the following (in thousands): December 31, 2025 2024 Cost $ 5,682 $ 5,682 Accumulated amortization ( 2,936 ) ( 2,557 ) $ 2,746 $ 3,125 Intangible assets include the customer relationships associated with The Ritz-Carlton Sarasota acquisition on April 4, 2018. The customer relationships are being amortized over the 15 year expected life. For the years ended December 31, 2025, 2024 and 2023, amortization expense related to intangible assets was $ 379,000 , $ 379,000 and $ 379,000 , respectively. Estimated future amortization expense for intangible assets, net for each of the next five years and thereafter is as follows (in thousands): Intangible Assets, net 2026 $ 379 2027 379 2028 379 2029 379 2030 379 Thereafter 851 Total $ 2,746 22. Concentration of Risk Our investments are all concentrated within the hotel industry. All of our hotel properties are located within the U.S. and its territories. For the year ended December 31, 2025, The Ritz-Carlton Sarasota, The Ritz-Carlton Reserve Dorado Beach and Four Seasons Resort Scottsdale generated revenues of 13.3 %, 12.4 %, and 11.3 %, respectively, of total hotel revenue amounting to approximately 37.0 % of total hotel revenue. Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We are exposed to credit risk with respect to cash held at various financial institutions that are in excess of the FDIC insurance limits of $250,000 and amounts due or payable under our derivative contracts. Our counterparties to our derivative contracts are investment grade financial institutions. 23. 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 December 31, 2025, 2024 and 2023, 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. 148 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 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. 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. 149 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 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 consolidated statements of operations (in thousands): Year Ended December 31, 2025 2024 2023 REVENUE Rooms $ 428,990 $ 452,361 $ 464,899 Food and beverage 179,538 181,250 185,331 Other hotel revenue 95,487 94,793 89,112 Total hotel revenue $ 704,015 $ 728,404 $ 739,342 EXPENSES Hotel expenses: Rooms $ 104,367 $ 106,465 $ 105,439 Food and beverage 141,846 145,901 144,544 Direct expenses 33,257 32,824 31,887 Indirect expenses: Property, general and administration 60,126 62,214 59,714 Sales and marketing 47,909 49,331 48,998 Information and telecommunications systems 7,869 8,331 8,159 Repairs and maintenance 30,892 30,732 29,587 Energy 23,792 23,696 24,603 Lease expense 2,329 4,052 6,283 Ownership expenses 4,199 3,765 3,912 Incentive management fee 7,757 8,037 9,935 Management fees 21,452 22,837 22,839 Property taxes 19,231 23,745 21,343 Other taxes 1,185 1,571 1,171 Insurance 14,068 16,766 14,489 Total expenses 520,279 540,267 532,903 Hotel adjusted EBITDA $ 183,736 $ 188,137 $ 206,439 Year Ended December 31, 2025 2024 2023 Hotel adjusted EBITDA $ 183,736 $ 188,137 $ 206,439 Ownership expenses included in other hotel expenses ( 5,847 ) ( 2,882 ) ( 4,834 ) Ownership expenses included in property taxes, insurance and other 231 ( 426 ) ( 1,626 ) Management fees ( 543 ) ( 663 ) ( 422 ) Depreciation and amortization ( 92,578 ) ( 98,733 ) ( 93,272 ) Impairment charges ( 54,492 ) — — Advisory services fee ( 29,186 ) ( 30,487 ) ( 31,089 ) Corporate, general and administrative ( 11,754 ) ( 14,361 ) ( 13,523 ) Gain (loss) on disposition of assets and hotel properties 82,797 88,165 — Equity in earnings (loss) of unconsolidated entities ( 56 ) ( 1,608 ) ( 253 ) Interest income 6,246 7,135 6,401 Other income (expense) ( 1,572 ) — 293 Interest expense and amortization of discounts and loan costs ( 98,539 ) ( 108,124 ) ( 94,219 ) Write-off of loan costs and exit fees ( 1,833 ) ( 6,111 ) ( 3,489 ) Gain (loss) on extinguishment of debt ( 2,686 ) ( 22 ) 2,318 Realized and unrealized gain (loss) on derivatives ( 355 ) 585 ( 663 ) Income tax (expense) benefit ( 1,979 ) ( 842 ) ( 2,689 ) Net income (loss) $ ( 28,410 ) $ 19,763 $ ( 30,628 ) 150 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.