Braemar Hotels & Resorts Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS (unaudited) BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in thousands, except share and per share amounts) March 31, 2026 December 31, 2025 ASSETS Investments in hotel properties, gross $ 1,906,327 $ 1,902,328 Accumulated depreciation ( 361,588 ) ( 344,061 ) Investments in hotel properties, net 1,544,739 1,558,267 Cash and cash equivalents 93,385 124,354 Restricted cash 55,357 42,479 Accounts receivable, net of allowance of $ 136 and $ 113 , respectively 37,045 32,843 Inventories 4,870 4,741 Note receivable 9,045 8,896 Prepaid expenses 8,286 6,987 Deposit paid to Ashford Inc. 17,000 17,000 Deferred costs, net 74 75 Investment in unconsolidated entity — 89 Derivative assets 341 56 Operating lease right-of-use assets 30,597 30,743 Other assets 17,685 15,368 Intangible assets, net 2,652 2,746 Due from related parties, net 367 — Due from third-party hotel managers 28,054 17,088 Total assets $ 1,849,497 $ 1,861,732 LIABILITIES AND EQUITY Liabilities: Indebtedness, net $ 1,106,029 $ 1,103,450 Accounts payable and accrued expenses 139,573 142,123 Redeemable preferred stock redemptions payable 46,719 30,864 Dividends and distributions payable 3,907 7,672 Due to Ashford Inc., net 1,924 5,148 Due to related parties, net — 257 Due to third-party hotel managers 3,392 1,467 Operating lease liabilities 20,058 20,058 Other liabilities 24,963 25,572 Total liabilities 1,346,565 1,336,611 Commitments and contingencies (note 15) 5.50 % Series B cumulative convertible preferred stock, $ 0.01 par value, 3,078,017 shares issued and outstanding at March 31, 2026 and December 31, 2025 65,426 65,426 Series E redeemable preferred stock, $ 0.01 par value, 9,561,665 and 10,818,280 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively 239,042 265,695 Series M redeemable preferred stock, $ 0.01 par value, 1,337,328 and 1,368,091 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively 33,450 34,217 Redeemable noncontrolling interests in operating partnership 15,925 19,005 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 March 31, 2026 and December 31, 2025 16 16 Common stock, $ 0.01 par value, 250,000,000 shares authorized, 68,679,318 and 68,219,432 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively 687 682 Additional paid-in capital 707,874 706,488 Accumulated deficit ( 561,566 ) ( 568,503 ) Total stockholders’ equity of the Company 147,011 138,683 Noncontrolling interest in consolidated entities 2,078 2,095 Total equity 149,089 140,778 Total liabilities and equity $ 1,849,497 $ 1,861,732 See Notes to Condensed Consolidated Financial Statements. 2 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share amounts) Three Months Ended March 31, 2026 2025 REVENUE Rooms $ 128,801 $ 136,092 Food and beverage 52,342 51,788 Other 27,840 27,940 Total hotel revenue 208,983 215,820 EXPENSES Hotel operating expenses: Rooms 24,878 28,219 Food and beverage 38,910 40,210 Other expenses 59,878 60,376 Management fees 6,194 6,910 Total hotel operating expenses 129,860 135,715 Property taxes, insurance and other 4,652 10,465 Depreciation and amortization 22,579 23,395 Advisory services fee 7,404 6,611 Corporate general and administrative 4,867 2,894 Total operating expenses 169,362 179,080 Gain (loss) on disposition of assets and hotel properties 3 — OPERATING INCOME (LOSS) 39,624 36,740 Equity in earnings (loss) of unconsolidated entity ( 31 ) — Interest income 810 1,888 Interest expense and amortization of discounts and loan costs ( 21,195 ) ( 24,827 ) Write-off of loan costs and exit fees ( 5 ) ( 1,464 ) Realized and unrealized gain (loss) on derivatives 248 ( 198 ) INCOME (LOSS) BEFORE INCOME TAXES 19,451 12,139 Income tax (expense) benefit ( 1,417 ) ( 1,467 ) NET INCOME (LOSS) 18,034 10,672 (Income) loss attributable to noncontrolling interest in consolidated entities 17 64 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership ( 347 ) 262 NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY 17,704 10,998 Preferred dividends ( 8,040 ) ( 9,269 ) Deemed dividends on preferred stock ( 4,763 ) ( 4,276 ) NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 4,901 $ ( 2,547 ) INCOME (LOSS) PER SHARE - BASIC: Net income (loss) attributable to common stockholders $ 0.07 $ ( 0.04 ) Weighted average common shares outstanding – basic 68,432 66,744 INCOME (LOSS) PER SHARE - DILUTED: Net income (loss) attributable to common stockholders $ 0.07 $ ( 0.04 ) Weighted average common shares outstanding – diluted 100,289 66,744 See Notes to Condensed Consolidated Financial Statements. 3 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited, in thousands) Three Months Ended March 31, 2026 2025 NET INCOME (LOSS) $ 18,034 $ 10,672 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Unrealized gain (loss) on investment in securities — 859 Total other comprehensive income (loss) — 859 TOTAL COMPREHENSIVE INCOME (LOSS) 18,034 11,531 Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities 17 64 Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership ( 347 ) 182 COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY $ 17,704 $ 11,777 See Notes to Condensed Consolidated Financial Statements. 4 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited, in thousands except per share amounts) 8.25 % Series D Cumulative Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Noncontrolling Interest in Consolidated Entities Total 5.50 % Series B Cumulative Convertible Preferred Stock Series E Redeemable Preferred Stock Series M Redeemable Preferred Stock Redeemable Noncontrolling Interests in Operating Partnership Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at December 31, 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 Issuance of preferred stock — — — — — — — — — — 26 634 1 43 — Dividends declared – preferred stock - Series B ($ 0.34 /share) — — — — — ( 1,058 ) — ( 1,058 ) — — — — — — — Dividends declared – preferred stock - Series D ($ 0.52 /share) — — — — — ( 825 ) — ( 825 ) — — — — — — — Dividends declared – preferred stock - Series E ($ 0.47 /share) — — — — — ( 5,422 ) — ( 5,422 ) — — — — — — — Dividends declared – preferred stock - Series M ($ 0.53 /share) — — — — — ( 735 ) — ( 735 ) — — — — — — — Redemption/conversion of operating partnership units — — 460 5 1,386 — — 1,391 — — — — — — ( 1,391 ) Net income (loss) — — — — — 17,704 ( 17 ) 17,687 — — — — — — 347 Reclassification of redeemable preferred stock from mezzanine equity to liability — — — — — — — — — — ( 1,282 ) ( 32,050 ) ( 32 ) ( 810 ) — Redemption value adjustment – preferred stock — — — — — ( 4,763 ) — ( 4,763 ) — — — 4,763 — — — Redemption value adjustment — — — — — 2,036 — 2,036 — — — — — — ( 2,036 ) Balance at March 31, 2026 1,600 $ 16 68,679 $ 687 $ 707,874 $ ( 561,566 ) $ 2,078 $ 149,089 3,078 $ 65,426 9,562 $ 239,042 1,337 $ 33,450 $ 15,925 8.25 % Series D Cumulative Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income/(loss) Noncontrolling Interest in Consolidated Entities Total 5.50 % Series B Cumulative Convertible Preferred Stock Series E Redeemable Preferred Stock Series M Redeemable Preferred Stock Redeemable Noncontrolling Interests in Operating Partnership Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at December 31, 2024 1,600 $ 16 66,608 $ 665 $ 718,536 $ ( 477,804 ) $ ( 684 ) $ ( 3,367 ) $ 237,362 3,078 $ 65,426 14,911 $ 352,502 1,477 $ 36,916 $ 29,964 Purchase of common stock — — ( 19 ) — ( 51 ) — — — ( 51 ) — — — — — — — Equity-based compensation — — — — ( 33 ) — — — ( 33 ) — — — — — — ( 15 ) Issuance of preferred stock — — — — — — — — — — — 32 798 1 39 — Issuance of restricted shares/units — — 1 — 4 — — — 4 — — — — — — 498 Dividends declared – common stock - ($ 0.05 /share) — — — — ( 3,372 ) — — ( 3,372 ) — — — — — — — Dividends declared – preferred stock - Series B ($ 0.34 /share) — — — — — ( 1,058 ) — — ( 1,058 ) — — — — — — — Dividends declared – preferred stock-Series D ($ 0.52 /share) — — — — — ( 825 ) — — ( 825 ) — — — — — — — Dividends declared – preferred stock - Series E ($ 0.47 /share) — — — — — ( 6,616 ) — — ( 6,616 ) — — — — — — — Dividends declared – preferred stock - Series M ($ 0.53 /share) — — — — — ( 770 ) — — ( 770 ) — — — — — — — Distributions to noncontrolling interests — — — — — — — — — — — — — — — ( 344 ) Redemption/conversion of operating partnership units — — 457 4 2,247 — — — 2,251 — — — — — — ( 2,251 ) Redemption of operating partnership units for cash — — — — — — — — — — — — — — — ( 92 ) Net income (loss) — — — — — 10,998 — ( 64 ) 10,934 — — — — — — ( 262 ) Redemption of preferred stock — — — — — — — — — — — ( 1,033 ) ( 25,701 ) ( 19 ) ( 466 ) — Unrealized gain (loss) on investment in securities — — — — — — 779 — 779 — — — — 80 Redemption value adjustment – preferred stock — — — — — ( 4,276 ) — — ( 4,276 ) — — — 4,276 — — — Redemption value adjustment — — — — — 1,148 — — 1,148 — — — — — — ( 1,148 ) Balance at March 31, 2025 1,600 $ 16 67,047 $ 669 $ 720,703 $ ( 482,575 ) $ 95 $ ( 3,431 ) $ 235,477 3,078 $ 65,426 13,910 $ 331,875 1,459 $ 36,489 $ 26,430 See Notes to Condensed Consolidated Financial Statements. 5 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Three Months Ended March 31, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 18,034 $ 10,672 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 22,579 23,395 Recognition of deferred income ( 174 ) ( 174 ) Equity-based compensation — ( 48 ) Bad debt expense 64 ( 15 ) Amortization of loan costs, discounts and capitalized default interest 2,579 2,293 Write-off of loan costs and exit fees 5 1,464 Amortization of intangibles 95 107 Amortization of non-refundable membership initiation fees ( 879 ) ( 623 ) Interest expense accretion on refundable membership club deposits 135 151 Realized and unrealized (gain) loss on derivatives ( 248 ) 198 Non-cash interest income ( 149 ) ( 151 ) Equity in (earnings) loss of unconsolidated entity 31 — Deferred income tax expense (benefit) 376 ( 13 ) Changes in operating assets and liabilities, exclusive of disposition of assets and hotel properties: Accounts receivable and inventories ( 4,542 ) ( 9,285 ) Prepaid expenses and other assets ( 3,616 ) ( 8,003 ) Accounts payable and accrued expenses ( 157 ) ( 6,518 ) Operating lease right-of-use assets 51 57 Due to/from related parties, net ( 624 ) 645 Due to/from third-party hotel managers ( 9,041 ) ( 1,676 ) Due to/from Ashford Inc. ( 2,880 ) ( 1,006 ) Operating lease liabilities — 8 Other liabilities 309 3,668 Net cash provided by (used in) operating activities 21,948 15,146 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from property insurance 135 1,101 Proceeds from sale of investment in unconsolidated entity 58 — Improvements and additions to hotel properties ( 12,069 ) ( 15,305 ) Net cash provided by (used in) investing activities ( 11,876 ) ( 14,204 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on indebtedness — 363,000 Repayments of indebtedness — ( 365,180 ) Payments of loan costs and exit fees ( 5 ) ( 8,852 ) Payments for derivatives ( 45 ) ( 508 ) Proceeds from derivatives 20 244 Payments for dividends and distributions ( 11,128 ) ( 12,209 ) Redemption of operating partnership units — ( 92 ) Redemption of preferred stock ( 17,005 ) ( 26,167 ) Net cash provided by (used in) financing activities ( 28,163 ) ( 49,764 ) Net change in cash, cash equivalents and restricted cash ( 18,091 ) ( 48,822 ) Cash, cash equivalents and restricted cash at beginning of period 166,833 185,057 Cash, cash equivalents and restricted cash at end of period $ 148,742 $ 136,235 6 Three Months Ended March 31, 2026 2025 SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ 17,712 $ 21,960 Income taxes paid (refunded) ( 178 ) ( 120 ) SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Dividends and distributions declared but not paid $ 3,907 $ 8,692 Common stock purchases accrued but not paid — 51 Capital expenditures accrued but not paid 4,516 8,825 Non-cash preferred stock dividends 677 837 Unsettled proceeds from derivatives 2 57 Non-cash common stock/unit dividends — 502 Non-cash redemption of common units 1,391 2,251 Reclassification of redeemable preferred stock from mezzanine equity to liability 46,719 — SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH Cash and cash equivalents at beginning of period $ 124,354 $ 135,465 Restricted cash at beginning of period 42,479 49,592 Cash, cash equivalents and restricted cash at beginning of period $ 166,833 $ 185,057 Cash and cash equivalents at end of period $ 93,385 $ 81,689 Restricted cash at end of period 55,357 54,546 Cash, cash equivalents and restricted cash at end of period $ 148,742 $ 136,235 See Notes to Condensed Consolidated Financial Statements. 7 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Organization and Description of Business Braemar Hotels & Resorts Inc., together with its subsidiaries (“Braemar”), is a Maryland corporation that invests primarily in high revenue per available room (“RevPAR”) luxury hotels and resorts. High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S. national average RevPAR for all hotels as determined by STR, LLC. Braemar has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Braemar conducts its business and owns substantially all of its assets through its operating partnership, Braemar Hospitality Limited Partnership (“Braemar OP”). Terms such as the “Company,” “we,” “us” or “our” refer to Braemar Hotels & Resorts Inc. and, as the context may require, all entities included in its condensed consolidated financial statements. We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC” or the “Advisor”) through an advisory agreement. Ashford LLC is a subsidiary of Ashford Inc. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC. We do not operate any of our hotel properties directly; instead, we contractually engage hotel management companies to operate them for us under management contracts. Remington Lodging & Hospitality, LLC (“Remington Hospitality”), a subsidiary of Ashford Inc., manages five of our 13 hotel properties as of March 31, 2026. 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 condensed consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of March 31, 2026, 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 March 31, 2026, 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 condensed 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 unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These condensed consolidated financial statements include the accounts of Braemar Hotels & Resorts Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest. All intercompany accounts and transactions between consolidated entities have been eliminated in these condensed consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 12, 2026. 8 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) Braemar OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance. A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has: (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance; and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. All major decisions related to Braemar OP that most significantly impact its economic performance, including but not limited to, operating procedures with respect to business affairs and any acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Braemar OP General Partner LLC, its general partner. As such, we consolidate Braemar OP. The following items affect reporting comparability of our historical condensed consolidated financial statements: • Historical seasonality patterns at some of our hotel properties cause fluctuations in our overall operating results. Consequently, operating results for the three months ended March 31, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. • 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 condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Recently Issued Accounting Standards —In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 , Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses that requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the statement of operations. In January 2025, the FASB issued ASU 2025-01 which amends the effective date of the new disaggregation of income statement expenses standard to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is still permitted. The amendments may be applied either: (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU; or (2) retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact this ASU will have on our disclosures. 9 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 3. Revenue The following tables present our revenue disaggregated by geographical areas (dollars in thousands): Three Months Ended March 31, 2026 Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total California 4 $ 17,307 $ 6,522 $ 3,424 $ 27,253 Puerto Rico 1 18,697 6,026 2,973 27,696 Arizona 1 16,267 8,351 3,160 27,778 Colorado 1 13,049 5,349 3,377 21,775 Florida 2 22,716 12,238 8,766 43,720 Illinois 1 3,224 833 396 4,453 Pennsylvania 1 5,757 1,455 754 7,966 Washington, D.C. 1 9,362 5,403 1,110 15,875 USVI 1 22,422 6,165 3,880 32,467 Total 13 $ 128,801 $ 52,342 $ 27,840 $ 208,983 Three Months Ended March 31, 2025 Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total California 4 $ 17,118 $ 6,510 $ 3,432 $ 27,060 Puerto Rico 1 20,367 5,629 3,380 29,376 Arizona 1 14,288 8,798 2,800 25,886 Colorado 1 13,824 5,219 3,360 22,403 Florida 2 20,411 11,060 8,339 39,810 Illinois 1 3,135 706 477 4,318 Pennsylvania 1 5,470 1,679 533 7,682 Washington, D.C. 1 10,805 5,278 1,224 17,307 USVI 1 16,348 5,056 2,972 24,376 Sold hotel properties 2 14,326 1,853 1,423 17,602 Total 15 $ 136,092 $ 51,788 $ 27,940 $ 215,820 4. Investments in Hotel Properties, net Investments in hotel properties, net consisted of the following (in thousands): March 31, 2026 December 31, 2025 Land $ 576,362 $ 576,362 Buildings and improvements 1,117,429 1,116,816 Furniture, fixtures and equipment 187,613 179,984 Construction in progress 12,177 16,420 Residences 12,746 12,746 Total cost 1,906,327 1,902,328 Accumulated depreciation ( 361,588 ) ( 344,061 ) Investments in hotel properties, net $ 1,544,739 $ 1,558,267 Impairment Charges During the three months ended March 31, 2026 and 2025, no impairment charges were recorded. 5. Hotel Dispositions 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. 10 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 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. We included the results of operations for these hotel properties through the dates of disposition in net income (loss) as shown in our condensed consolidated statements of operations for the three months ended March 31, 2025. The following table includes the condensed consolidated financial information from the disposed hotel properties (in thousands): Three Months Ended March 31, 2025 Total hotel revenue $ 17,602 Total hotel operating expenses ( 11,664 ) Property taxes, insurance and other ( 1,554 ) Depreciation and amortization ( 3,378 ) Operating income (loss) 1,006 Interest income 91 Interest expense and amortization of loan costs ( 2,932 ) Write-off of loan costs and exit fees ( 263 ) Income (loss) before income taxes ( 2,098 ) (Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership 196 Income (loss) before income taxes attributable to the Company $ ( 1,902 ) 6. Indebtedness, net Indebtedness, net consisted of the following (dollars in thousands): Indebtedness Collateral Current Maturity Final Maturity (7) Interest Rate March 31, 2026 December 31, 2025 Term Loan (2) Land March 2026 March 2026 WSJ Prime Rate (1) $ 5,360 $ 5,360 Convertible Senior Notes Equity June 2026 June 2026 4.50 % 86,250 86,250 Mortgage loan The Ritz-Carlton Lake Tahoe July 2026 July 2026 SOFR (1) + 3.25 % 43,413 43,413 Mortgage loan (3) Bardessono Hotel & Spa August 2026 August 2029 SOFR (1) + 3.24 % 407,000 407,000 Hotel Yountville The Ritz-Carlton Sarasota Pier House Resort & Spa The Ritz-Carlton St. Thomas Mortgage loan (4) Capital Hilton December 2026 December 2028 SOFR (1) + 3.75 % 110,600 110,600 Mortgage loan (5) Park Hyatt Beaver Creek Resort & Spa February 2027 February 2027 SOFR (1) + 2.86 % 70,500 70,500 Mortgage loan (3) The Notary Hotel March 2027 March 2030 SOFR (1) + 2.83 % 209,902 209,902 Sofitel Chicago Magnificent Mile The Ritz-Carlton Reserve Dorado Beach Mortgage loan (6) Four Seasons Resort Scottsdale August 2028 August 2030 SOFR (1) + 3.00 % 180,000 180,000 1,113,025 1,113,025 Deferred loan costs, net ( 6,882 ) ( 9,291 ) Premiums/(discounts), net ( 114 ) ( 284 ) Indebtedness, net $ 1,106,029 $ 1,103,450 __________________ (1) SOFR rates were 3.66 % and 3.69 % at March 31, 2026 and December 31, 2025, respectively. WSJ Prime Rate was 6.75 % at March 31, 2026 and December 31, 2025. (2) This term loan bears interest at WSJ Prime Rate, has a floor of 4.99 % and had an original maturity date in March 2026. The Company executed an amendment on April 21, 2026, that extended the maturity date to March 31, 2027, and modified the terms from interest-only to principal and interest amortizing beginning in October 2026. The term loan was not in default upon maturity in March 2026. (3) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. (4) 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 %. (5) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the third was exercised in February 2026. (6) This mortgage loan has two one-year extension options, subject to the satisfaction of certain conditions. (7) The final maturity date assumes all available extension options will be exercised. 11 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) Convertible Senior Notes For the three months ended March 31, 2026 and 2025, the Company recorded coupon interest expense of $ 970,000 and $ 970,000 , respectively. For the three months ended March 31, 2026 and 2025, the Company recorded discount amortization of $ 170,000 and $ 161,000 , respectively, related to the initial purchase discount, with the remaining discount balance to be amortized through June 2026. The convertible senior notes are convertible at any time prior to the close of business on the business day immediately preceding the maturity date for cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the election of the Company. As of March 31, 2026, the conversion rate is 199.2360 shares per $1,000 principal amount of notes. If we violate covenants in any debt agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of the consolidated group. As of March 31, 2026, we were in compliance with all covenants. Interest Rate Derivatives —We use interest rate caps to hedge our debt and our cash flows, which are recorded at fair value. Payments from counterparties on in-the-money interest rate caps are recognized as realized gains on our condensed consolidated statements of operations. See note 8 . 7. Note Receivable On July 2, 2024, Braemar, Ashford Hospitality Trust, Inc. (“Ashford Trust”) and Ashford Inc. (collectively with the Company, Ashford Trust and each of Ashford Inc.’s, the Company’s and Ashford Trust’s respective affiliates and any entity advised by Ashford Inc., the “Company Group”) entered into a Cooperation Agreement (the “Agreement”) with Blackwells Capital LLC, Blackwells Onshore I LLC, Blackwells Holding Co. LLC, Vandewater Capital Holdings, LLC, Blackwells Asset Management LLC, BW Coinvest Management I LLC and Jason Aintabi (collectively, the “Blackwells Parties”) regarding the withdrawal of the Blackwells Parties’ proxy campaign, dismissal of pending litigation involving the parties and certain other matters. Concurrently and in connection with the Agreement, certain of the parties thereto have also entered into a Share Ownership Agreement (the “Share Ownership Agreement”) and a Loan Agreement (the “Loan Agreement”), pursuant to which agreements the Company will provide to BW Coinvest I, LLC (“Borrower”) an unsecured loan (the “Loan”). The proceeds from the Loan will be used to reimburse Borrower for 70 % of the amount expended by Borrower to purchase on the open market a total of 3,500,000 shares of the Company’s common stock (the “Purchased Shares”) within six months of the date of Loan Agreement, at a price per Purchased Share not to exceed $ 10 and subject to the other limitations set forth therein. The Loan has a term of five years (the “Term”), is guaranteed by Jason Aintabi, Vandewater Capital Holdings, LLC, Blackwells Holding Co. LLC, and Blackwells Asset Management LLC and shall bear payment-in-kind interest during the Term at a rate equal to the sum of: (a) Term SOFR (as defined in the Loan Agreement) and (b) 3.00 % (three hundred basis points) per annum. The Company has 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 March 31, 2026, 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 March 31, 2026 December 31, 2025 Note receivable SOFR + 3.00 % $ 9,045 $ 8,896 We recognized interest income as presented in the table below (in thousands): Three Months Ended March 31, Line Item 2026 2025 Interest income $ 149 $ 152 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 12 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 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 three months ended March 31, 2026 and 2025. 8. Fair Value Measurements Fair Value Hierarchy —Our financial instruments measured at fair value either on a recurring or a non-recurring basis are classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs in the marketplace as discussed below: • Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. • Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. • Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. The fair value of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rose above the strike rates of the caps. Variable interest rates used in the calculation of projected receipts and payments on the caps are based on an expectation of future interest rates derived from observable market interest rate curves (SOFR forward curves) and volatilities (Level 2 inputs). We also incorporate credit valuation adjustments (Level 3 inputs) to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk. When a majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. However, when the valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties, which we consider significant ( 10 % or more) to the overall valuation of our derivatives, the derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy. Transfers of inputs between levels are determined at the end of each reporting period. In determining the fair values of our derivatives at March 31, 2026, the SOFR interest rate forward curve (Level 2 inputs) assumed a downtrend from 3.660 % to 3.493 % 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. 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 March 31, 2026 Assets Derivative assets: Interest rate derivatives - caps $ — $ 341 $ — $ 341 (1) Total $ — $ 341 $ — $ 341 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 (1) Total $ — $ 56 $ — $ 56 __________________ 13 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) (1) Reported as “derivative assets” in our condensed consolidated balance sheets. ​ Effect of Fair Value Measured Assets and Liabilities on Condensed Consolidated Statements of Operations The following table summarizes the effect of fair value measured assets and liabilities on our condensed consolidated statements of operations (in thousands): Gain (Loss) Recognized in Income Three Months Ended March 31, 2026 2025 Assets Derivative assets: Interest rate derivatives - caps $ 248 $ ( 198 ) Total $ 248 $ ( 198 ) Total combined Interest rate derivatives - caps $ 240 $ ( 386 ) Unrealized gain (loss) on derivatives $ 240 (1) $ ( 386 ) (1) Realized gain (loss) on interest rate caps 8 (1) (2) 188 (1) (2) Net $ 248 $ ( 198 ) ________ (1) Reported in “realized and unrealized gain (loss) on derivatives” in our condensed consolidated statements of operations. (2) Represents settled and unsettled payments from counterparties on interest rate caps. 9. Summary of Fair Value of Financial Instruments Determining the estimated fair values of certain financial instruments such as indebtedness requires considerable judgment to interpret market data. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled. The carrying amounts and estimated fair values of financial instruments were as follows (in thousands): March 31, 2026 December 31, 2025 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Financial assets measured at fair value: Derivative assets $ 341 $ 341 $ 56 $ 56 Financial assets not measured at fair value: Cash and cash equivalents $ 93,385 $ 93,385 $ 124,354 $ 124,354 Restricted cash 55,357 55,357 42,479 42,479 Accounts receivable, net 37,045 37,045 32,843 32,843 Note receivable 9,045 9,045 8,896 8,896 Due from related parties, net 367 367 — — Due from third-party hotel managers 28,054 28,054 17,088 17,088 Financial liabilities not measured at fair value: Indebtedness $ 1,112,911 $ 1,113,025 $ 1,112,741 $ 1,113,025 Accounts payable and accrued expenses 139,573 139,573 142,123 142,123 Redeemable preferred stock redemptions payable 46,719 46,719 30,864 30,864 Dividends and distributions payable 3,907 3,907 7,672 7,672 Due to Ashford Inc., net 1,924 1,924 5,148 5,148 Due to related parties, net — — 257 257 Due to third-party hotel managers 3,392 3,392 1,467 1,467 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. 14 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 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. Note receivable. The carrying amount of note receivable approximates its fair value. This is considered a Level 2 valuation technique. Derivative assets . See note 8 for a complete description of the methodology and assumptions utilized in determining fair values. Indebtedness. 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 March 31, 2026, and approximately 100.0 % of the carrying value of $ 1.1 billion as of December 31, 2025. These fair value estimates are considered a Level 2 valuation technique. 10. Income (Loss) Per Share The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts): Three Months Ended March 31, 2026 2025 Net income (loss) attributable to common stockholders - basic and diluted: Net income (loss) attributable to the Company $ 17,704 $ 10,998 Less: dividends on preferred stock ( 8,040 ) ( 9,269 ) Less: deemed dividends on preferred stock ( 4,763 ) ( 4,276 ) Less: dividends on common stock — ( 3,353 ) Less: dividends on unvested performance stock units — ( 19 ) Undistributed net income (loss) allocated to common stockholders 4,901 ( 5,919 ) Add back: dividends on common stock — 3,353 Distributed and undistributed net income (loss) - basic $ 4,901 $ ( 2,566 ) Interest expense on Convertible Senior Notes 1,140 — Dividends on preferred stock - Series M (inclusive of deemed dividends) 735 — Distributed and undistributed net income (loss) - diluted $ 6,776 $ ( 2,566 ) Weighted average common shares outstanding: Weighted average common shares outstanding – basic 68,432 66,744 Effect of assumed conversion of Convertible Senior Notes 17,184 — Effect of assumed conversion of preferred stock - Series M 14,673 — Weighted average common shares outstanding – diluted 100,289 66,744 Income (loss) per share - basic: Net income (loss) allocated to common stockholders per share $ 0.07 $ ( 0.04 ) Income (loss) per share - diluted: Net income (loss) allocated to common stockholders per share $ 0.07 $ ( 0.04 ) 15 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands): Three Months Ended March 31, 2026 2025 Net income (loss) allocated to common stockholders is not adjusted for: Income (loss) allocated to unvested performance stock units $ — $ 19 Income (loss) attributable to redeemable noncontrolling interests in operating partnership 347 ( 262 ) Dividends on preferred stock - Series B 1,058 1,058 Interest expense on Convertible Senior Notes — 1,131 Dividends on preferred stock - Series E (inclusive of deemed dividends) 10,185 10,892 Dividends on preferred stock - Series M (inclusive of deemed dividends) — 770 Total $ 11,590 $ 13,608 Weighted average diluted shares are not adjusted for: Effect of unvested performance stock units — 43 Effect of assumed conversion of operating partnership units 4,840 6,786 Effect of assumed conversion of preferred stock - Series B 4,116 4,116 Effect of assumed conversion of Convertible Senior Notes — 16,267 Effect of assumed conversion of preferred stock - Series E 123,303 135,669 Effect of assumed conversion of preferred stock - Series M — 13,959 Total 132,259 176,840 16 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 11. Redeemable Noncontrolling Interests in Operating Partnership Redeemable noncontrolling interests in the operating partnership represent the limited partners’ proportionate share of equity and their allocable share of equity in earnings/losses of Braemar OP, which is an allocation of net income/loss attributable to the common unitholders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership (the “common units”) and units issued under our Long-Term Incentive Plan (the “LTIP units”) that are vested. Each common unit may be redeemed, by the holder, for either cash or, at our sole discretion, up to one share of our REIT common stock, which is either: (i) issued pursuant to an effective registration 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. As of March 31, 2026, there were 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: March 31, 2026 December 31, 2025 Redeemable noncontrolling interests in Braemar OP (in thousands) $ 15,925 $ 19,005 Adjustments to redeemable noncontrolling interests (1) (in thousands) $ 3,125 $ 5,830 Ownership percentage of operating partnership 6.61 % 6.91 % ____________________________________ (1) Reflects the excess of the redemption value over the accumulated historical cost. We allocated net (income) loss to the redeemable noncontrolling interests as illustrated in the table below (in thousands): Three Months Ended March 31, 2026 2025 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership $ ( 347 ) $ 262 Distributions declared to holders of common units, LTIP units and Performance LTIP units — 344 The following table presents the common units redeemed/exchanged for common stock (in thousands): Three Months Ended March 31, 2026 2025 Units redeemed/exchanged 460 457 Fair value of common units redeemed (1) $ 1,391 $ 1,381 ____________________________________ (1) The redemption value is the greater of accumulated historical cost or fair value. The accumulated historical cost of the converted units for the three months ended March 31, 2026 and 2025 was $ 722,000 and $ 2.3 million, respectively. 17 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The following table presents the common units redeemed for cash (in thousands): Three Months Ended March 31, 2026 2025 Units redeemed — 35 Fair value of common units redeemed $ — $ 92 12. Equity Common Stock Dividends —The following table summarizes the common stock dividends declared during the period (in thousands): Three Months Ended March 31, 2026 2025 Common stock dividends declared $ — $ 3,372 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 March 31, 2026, the Company has not repurchased any common stock pursuant to this program. 8.25 % Series D Cumulative Preferred Stock —The dividend for all issued and outstanding shares of the Company’s Series D Cumulative Preferred Stock (the “Series D Preferred Stock”) is set at $ 2.0625 per annum per share. The following table summarizes dividends declared (in thousands): Three Months Ended March 31, 2026 2025 Series D Cumulative Preferred Stock $ 825 $ 825 13. Redeemable Preferred Stock 5.50 % Series B Cumulative Convertible Preferred Stock Each share of our 5.50 % Series B Cumulative Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) is convertible at any time, at the option of the holder, into a number of whole shares of common stock at a conversion price of $ 18.70 (which represents a conversion rate of 1.3372 shares of our common stock, subject to certain adjustments). The Series B Convertible Preferred Stock is also subject to conversion upon certain events constituting a change of control. Holders of the Series B Convertible Preferred Stock have no voting rights, subject to certain exceptions. The Series B Convertible Preferred Stock dividend for all issued and outstanding shares is set at $ 1.375 per annum per share. The Company may, at its option, cause the Series B Convertible Preferred Stock to be converted in whole or in part, on a pro-rata basis, into fully paid and nonassessable shares of the Company’s common stock at the conversion price, provided that the “Closing Bid Price” (as defined in the Articles Supplementary) of the Company’s common stock shall have equaled or exceeded 110 % of the conversion price for the immediately preceding 45 consecutive trading days ending three days prior to the date of notice of conversion. Additionally, the Series B Convertible Preferred Stock contains cash redemption features that consist of: 1) an optional redemption in which the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $ 25.00 per share, plus any accumulated, accrued and unpaid dividends; 2) a special optional redemption, in which on or prior to the occurrence of a Change of Control (as defined in the Articles Supplementary), the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $ 25.00 per share; and 3) a “REIT Termination Event” and “Listing Event Redemption,” in which at any time (i) a REIT Termination Event (as defined below) occurs or (ii) the Company’s common stock fails to be listed on the NYSE, NYSE American, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor thereto (each, a “National Exchange”), the holder of Series B Convertible Preferred Stock shall have the right to require the Company to redeem any or all shares of Series B Convertible Preferred Stock at 103 % of the liquidation preference ($ 25.00 per share, plus any accumulated, accrued, and unpaid dividends) in cash. 18 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) A “REIT Termination Event,” shall mean the earliest of: (i) filing of a federal income tax return where the Company does not compute its income as a REIT; (ii) stockholders’ approval on ceasing to be qualified as a REIT; (iii) board of directors’ approval on ceasing to be qualified as a REIT; (iv) board’s determination based on the advice of counsel to cease to be qualified as a REIT; or (v) determination within the meaning of Section 1313(a) of the Code to cease to be qualified as a REIT. Series B Convertible Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside our control. As such, the Series B Convertible Preferred Stock is classified outside of permanent equity. The following table summarizes dividends declared (in thousands): Three Months Ended March 31, 2026 2025 Series B Convertible Preferred Stock $ 1,058 $ 1,058 Series E Redeemable Preferred Stock On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series E Redeemable Preferred Stock (the “Series E Preferred Stock”). Pursuant to such equity distribution agreements, the Company offered a maximum of 20,000,000 shares of Series E Preferred Stock in a primary offering at a price of $ 25.00 per share. On February 21, 2023, the Company announced the closing of its Series E Preferred Stock offering. The Company is also offering a maximum of 8,000,000 shares of the Series E Preferred Stock pursuant to a dividend reinvestment plan (the “DRIP”) at $ 25.00 per share (the “Stated Value”). The Series E Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred stock, 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. 19 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption. The Series E Preferred Stock cash dividends are as follows: • 8.00 % per annum of the Stated Value beginning on the date of the first settlement of the Series E Preferred Stock (the “Date of Initial Closing”); • 7.75 % per annum of the Stated Value beginning on the first anniversary from the Date of Initial Closing; and • 7.50 % per annum of the Stated Value beginning on the second anniversary from the Date of Initial Closing. Dividends are payable on a monthly basis in arrears on the 15th day of each month (or, if such payment date is not a business day, the next succeeding business day) to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year. The Company has a DRIP that allows participating holders to have their Series E Preferred Stock dividend distributions automatically reinvested in additional shares of the Series E Preferred Stock at a price of $ 25.00 per share. The Series E Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside of the Company’s control. As such, the Series E Preferred Stock is classified outside of permanent equity 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 March 31, 2026, 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 March 31, 2026, the Company has received $ 45.7 million in investor-initiated Series E Preferred Stock redemption requests, representing approximately 1,826,794 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet. As of December 31, 2025, the Company had 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 condensed 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): March 31, 2026 December 31, 2025 Series E Preferred Stock $ 239,042 $ 265,695 Cumulative adjustments to Series E Preferred Stock (1) $ 41,973 $ 37,210 ________ (1) Reflects the excess of the redemption value over the accumulated carrying value. The following table summarizes dividends declared (in thousands): Three Months Ended March 31, 2026 2025 Series E Preferred Stock $ 5,422 $ 6,616 20 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The redemption activities of Series E Preferred Stock is summarized below (in thousands): Three Months Ended March 31, 2026 2025 Series E Preferred Stock shares redeemed 664 1,033 Redemption amount, net of redemption fees $ 16,601 $ 25,701 Series M Redeemable Preferred Stock On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series M Redeemable Preferred Stock (the “Series M Preferred Stock”). Pursuant to such equity distribution agreements, the Company offered a maximum of 20,000,000 shares of the Series M Preferred Stock (par value $ 0.01 ) in a primary offering at a price of $ 25.00 per share (or “Stated Value”). On February 21, 2023, the Company announced the closing of its Series M Preferred Stock offering. The Company is also offering a maximum of 8,000,000 shares of Series M Preferred Stock pursuant to the DRIP at $ 25.00 per share. The Series M Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs. Holders of the Series M Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of Series M Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series M Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series M Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms. Each share is redeemable at any time, at the option of the holder, at a redemption price of $ 25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee, 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. 21 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The Company has a DRIP that allows participating holders to have their Series M Preferred Stock dividend distributions automatically reinvested in additional shares of the Series M Preferred Stock at a price of $ 25.00 per share. The Series M Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside the Company’s control. As such, the Series M Preferred Stock is classified outside of permanent equity 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 March 31, 2026, 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 March 31, 2026, the Company has received $ 1.0 million in investor-initiated Series M Preferred Stock redemption requests, representing approximately 41,961 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet. As of December 31, 2025, the Company had 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 condensed 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): March 31, 2026 December 31, 2025 Series M Preferred Stock $ 33,450 $ 34,217 Cumulative adjustments to Series M Preferred Stock (1) $ 1,794 $ 1,794 __________________ (1) Reflects the excess of the redemption value over the accumulated carrying value. The following table summarizes dividends declared (in thousands): Three Months Ended March 31, 2026 2025 Series M Preferred Stock $ 735 $ 770 The redemption activities of Series M Preferred Stock is summarized below (in thousands): Three Months Ended March 31, 2026 2025 Series M Preferred Stock shares redeemed 16 19 Redemption amount, net of redemption fees $ 404 $ 466 22 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 14. Related Party Transactions Ashford Inc. Advisory Agreement Ashford LLC, a subsidiary of Ashford Inc., acts as our advisor. Our chairman, Mr. Monty Bennett, also serves as chairman of the board of directors and chief executive officer of Ashford Inc. Under our advisory agreement, we pay advisory fees to Ashford LLC. We pay a monthly base fee equal to 1/12 of the sum of (i) 0.70 % of the total market capitalization of our company for the prior month, plus (ii) the Net Asset Fee Adjustment (as defined in our advisory agreement), if any, on the last day of the prior month during which our advisory agreement was in effect; provided, however, in no event shall the base fee for any month be less than the minimum base fee as provided by our advisory agreement. The base fee is payable on the fifth business day of each month. The minimum base fee for Braemar for each month will be equal to the greater of: ▪ 90 % of the base fee paid for the same month in the prior year; and ▪ 1/12 of the G&A Ratio (as defined) multiplied by the total market capitalization of Braemar. We are also required to pay Ashford LLC an incentive fee that is measured annually (or for a stub period if the advisory agreement is terminated at other than year-end). Each year that our annual total stockholder return exceeds the average annual total stockholder return for our peer group, we pay Ashford LLC an incentive fee over the following three years , subject to the Fixed Charge Coverage Ratio (“FCCR”) Condition, as defined in the advisory agreement, which relates to the ratio of adjusted EBITDA to fixed charges. We also reimburse Ashford LLC for certain reimbursable overhead and internal audit, risk management advisory and asset management services, as specified in the advisory agreement. We also recorded equity-based compensation expense for equity grants of common stock, PSUs and LTIP units awarded to officers and employees of Ashford LLC in connection with providing advisory services. The following table summarizes the advisory services fees incurred (in thousands): Three Months Ended March 31, 2026 2025 Advisory services fee Base advisory fee $ 3,768 $ 3,576 Reimbursable expenses (1) 3,636 3,001 Equity-based compensation (2) — ( 48 ) Incentive fee — 82 Total $ 7,404 $ 6,611 ________ (1) Reimbursable expenses include overhead, internal audit, risk management advisory, asset management services and deferred cash awards. (2) Equity-based compensation is associated with equity grants of Braemar’s common stock, PSUs, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC. On March 10, 2025, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc. and Ashford LLC (the “March 2025 Limited Waiver”). Pursuant to the March 2025 Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waived 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. On March 13, 2026, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc. and Ashford LLC (the “March 2026 Limited Waiver”). Pursuant to the March 2026 Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waived 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 2026, 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 23 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 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 condensed consolidated balance sheets. 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. 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 three months ended March 31, 2026 and 2025, we incurred fees from Lismore or its subsidiaries of $ 0 and $ 1.7 million, respectively. Ashford Securities The Company, Ashford Trust, and Ashford Inc. are party to the Fourth Amended and Restated Contribution Agreement with respect to funding certain expenses of Ashford Securities LLC, a subsidiary of Ashford Inc. (“Ashford Securities”). As of March 31, 2026, Braemar has funded approximately $ 13.7 million . The table below summarizes the amount Braemar has expensed related to reimbursed operating expenses of Ashford Securities (in thousands): Three Months Ended March 31, Line Item 2026 2025 Corporate general and administrative $ 437 $ — 24 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 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 March 31, 2026, 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. Investment in OpenKey The Company previously held an investment in OpenKey, Inc. (“OpenKey”), a subsidiary of Ashford Inc., with a carrying value of $ 0 as of December 31, 2025. 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. The Company also previously had a loan funding agreement with Ashford Inc. and OpenKey. During the fourth quarter of 2025, we determined that the full amount of the note receivable was not collectible and the note receivable was impaired. As of March 31, 2026 and December 31, 2025, the carrying amount of the note receivable was $ 0 and $ 89,000 , respectively included in “investment in unconsolidated entity” on our condensed consolidated balance sheets. During the three months ended March 31, 2026, the Company received proceeds of approximately $ 58,000 related to the note receivable with OpenKey and wrote off the remaining $ 31,000 balance. 15. Commitments and Contingencies Restricted Cash —Under certain management and debt agreements for our hotel properties existing at March 31, 2026, 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 that expires on December 31, 2050. Under the terms of the agreement, we will pay monthly franchise fees of: (i) 3 % of gross rooms revenue through April 30, 2026; (ii) 4 % of gross rooms revenue from May 1, 2026 through December 31, 2026; and (iii) 5 % of the gross rooms revenue for the remainder of the term. We will also pay monthly program fees of: (i) 2 % of gross rooms revenue through April 30, 2026; (ii) 3 % of gross rooms revenue from May 1, 2026 through August 3, 2026; and (iii) 4 % of gross rooms revenue for the remainder of the term. 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): Three Months Ended March 31, Line Item 2026 2025 Other hotel expenses $ 185 $ 70 25 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) Management Fees —Under hotel management agreements for our hotel properties existing at March 31, 2026, 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, approximately 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 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 March 31, 2026, 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, which the parties have since agreed to. The allocation to Hilton La Jolla Torrey Pines is approximately $ 401,000 , which was accrued as of March 31, 2026. The Court granted a motion for preliminary approval of the settlement on October 27, 2025, and a hearing on the motion for final approval was set for April 20, 2026, and the ruling is pending. 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 March 31, 2026, the settlement liability amount has been accrued. On February 6, 2024, we received a Request for Information Under Section 114 of the Clean Air Act dated January 11, 2024, from the Environmental Protection Agency (EPA), Region 2, relating to The Ritz-Carlton St. Thomas. We complied with the Request for Information and provided the requested information on March 12, 2024. Then, on April 16, 2025, we received a subsequent communication from the EPA alleging certain failures to comply with various record keeping and reporting requirements. The EPA also indicated that they had concerns regarding the operation of the hotel’s generators and the lack of certain certifications that should be held by hotel employees. We met with the EPA in May 2025 to discuss and respond to the allegations in the EPA’s April 16, 2025 communication. Since this meeting, we have been working with the hotel management team to ensure full compliance with all applicable regulatory requirements at the hotel, including ensuring all appropriate hotel employees have all applicable certifications, engaging third-party environmental consultants, working with outside counsel, 26 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) preparing standard operating procedures for the hotel, and reviewing options relating to the operation of the hotel’s generators. As of the date of this Quarterly Report on Form 10-Q, conversations with the EPA are ongoing. 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. 16. Segment Reporting We operate in one reportable business segment within the hotel lodging industry: direct hotel investments. Direct hotel investments refers to owning hotel properties through either acquisition or new development. We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments: (i) offer similar products and services to their customers in the form of hotel rooms, food and beverage, and ancillary services; (ii) utilize third-party hotel management companies to deliver its products and services to its customers; (iii) are designed and operated to appeal to similar individuals, groups, leisure, and business customers; and (iv) have third-party hotel managers that utilize the same methods (direct hotel sales and various online booking portals) to distribute the Company’s products and services. As of March 31, 2026 and 2025, all of our hotel properties were in the U.S. and its territories. The Company’s chief operating decision maker (“CODM”) is its President and Chief Executive Officer. Each hotel property derives revenue primarily from guestroom sales, food and beverage sales, and revenues from other lodging services and amenities. The accounting policies of each operating segment are the same as those described in the summary of significant accounting policies in note 2 of the consolidated financial statements included in our 2025 Annual Report on Form 10-K. The CODM reviews and makes decisions on all aspects of the Company’s business using all available financial and non-financial data for each hotel individually. Capital allocation decisions to acquire, sell, enhance, redevelop, or perform renewal and replacement expenditures are determined on a hotel-by-hotel basis. Specifically, the CODM reviews the results of each hotel to assess the hotel’s profitability. The key measure the CODM uses to allocate resources and assess performance is individual hotel net income (loss) before interest expense, income taxes, depreciation, and amortization, adjusted to exclude certain items determined by management to not be reflective of its ongoing operating performance or incurred in the normal course of business (Hotel Adjusted EBITDA). The adjustments include gains and losses on hotel dispositions, impairment charges, pre-opening costs associated with extensive renovation projects, property-level legal settlements, restructuring, severance, and management transition costs, and other expenses identified by management to be non-recurring. The CODM does not regularly review asset information by segment. 27 BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The following tables include revenues, significant hotel operating expenses, and Hotel Adjusted EBITDA for the Company’s hotels, reconciled to the consolidated amounts included in the Company’s condensed consolidated statements of operations (in thousands): Three Months Ended March 31, 2026 2025 REVENUE Rooms $ 128,801 $ 136,092 Food and beverage 52,342 51,788 Other hotel revenue 27,840 27,940 Total hotel revenue $ 208,983 $ 215,820 EXPENSES Hotel expenses: Rooms $ 24,878 $ 28,219 Food and beverage 38,910 40,210 Direct expenses 10,010 9,459 Indirect expenses: Property, general and administration 14,535 15,398 Sales and marketing 12,426 13,173 Information and telecommunications systems 2,007 2,075 Repairs and maintenance 6,867 7,772 Energy 6,429 5,859 Lease expense 543 554 Ownership expenses 1,076 982 Incentive management fee 5,142 4,229 Management fees 6,074 6,737 Property taxes 1,175 5,951 Other taxes 79 468 Insurance 3,369 3,993 Total expenses 133,520 145,079 Hotel adjusted EBITDA $ 75,463 $ 70,741 Three Months Ended March 31, 2026 2025 Hotel adjusted EBITDA $ 75,463 $ 70,741 Ownership expenses included in other hotel expenses ( 843 ) ( 875 ) Ownership expenses included in property taxes, insurance and other ( 29 ) ( 53 ) Management fees ( 120 ) ( 173 ) Depreciation and amortization ( 22,579 ) ( 23,395 ) Advisory services fee ( 7,404 ) ( 6,611 ) Corporate general and administrative ( 4,867 ) ( 2,894 ) Gain (loss) on disposition of assets and hotel properties 3 — Equity in earnings (loss) of unconsolidated entities ( 31 ) — Interest income 810 1,888 Interest expense and amortization of discounts and loan costs ( 21,195 ) ( 24,827 ) Write-off of loan costs and exit fees ( 5 ) ( 1,464 ) Realized and unrealized gain (loss) on derivatives 248 ( 198 ) Income tax (expense) benefit ( 1,417 ) ( 1,467 ) Net income (loss) $ 18,034 $ 10,672 17. Subsequent Event On April 27, 2026, the Company entered into a definitive agreement to sell the Park Hyatt Beaver Creek Resort & Spa located in Avon, Colorado for a purchase price of $ 176 million. The agreement included a nonrefundable deposit of $ 6.5 million which was paid on April 28, 2026. 28