Braemar Hotels & Resorts Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains registered trademarks that are the exclusive property of their respective owners, which are companies other than us, including Marriott International®, Hilton Worldwide®, Sofitel®, Hyatt® and Accor®. FORWARD-LOOKING STATEMENTS Throughout this Form 10-Q, we make forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature: • our business and investment strategy; • anticipated or expected purchases or sales of assets; • our projected operating results; • completion of any pending transactions; • our understanding of our competition; • projected capital expenditures; and • the impact of technology on our operations and business. Such forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. Additionally, the following factors could cause actual results to vary from our forward-looking statements: • the factors discussed in our Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2026 (the “2025 10-K”), including those set forth under the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Properties” and other filings under the Exchange Act; • changes in interest rates and inflation; • macroeconomic conditions, such as a prolonged period of weak economic growth, and volatility in capital markets; • uncertainty in the business sector and market volatility; • catastrophic events or geopolitical conditions, such as the conflict between Russia and Ukraine, Israel-Palestine-Iran conflict, ongoing instability in Venezuela and changes to tariffs or trade policies; • extreme weather conditions, which may cause property damage or interrupt business; • our ability to raise sufficient capital and/or take other actions to improve our liquidity position or otherwise meet our liquidity requirements; • general volatility of the capital markets and the market price of our common and preferred stock; • general business and economic conditions affecting the lodging and travel industry; • changes in our business or investment strategy; • availability, terms and deployment of capital; • risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board’s decision whether to pay further dividends at levels previously disclosed or to use available cash to pay dividends; • unanticipated increases in financing and other costs, including changes in interest rates; • changes in our industry and the markets in which we operate, interest rates, or local economic conditions; • the degree and nature of our competition; • actual and potential conflicts of interest with Ashford Trust, Ashford Inc. and its subsidiaries (including Ashford LLC, Remington Hospitality and Premier), and our executive officers and our non-independent directors; • changes in personnel of Ashford LLC or the lack of availability of qualified personnel; • changes in governmental regulations, accounting rules, tax rates and similar matters; 29 • legislative and regulatory changes, including changes to the Internal Revenue Code of 1986, as amended (the “Code”) and related rules, regulations and interpretations governing the taxation of REITs, including impacts from the One Big Beautiful Bill Act; • limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes; and • future sales and issuances of our common stock or other securities, which might result in dilution and could cause the price of our common stock to decline. When considering forward-looking statements, you should keep in mind the matters summarized under “Item 1A. Risk Factors” in Part I of our 2025 10-K and this Form 10-Q, and the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, could cause our actual results and performance to differ significantly from those contained in our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Form 10-Q. Furthermore, we do not intend to update any of our forward-looking statements after the date of this Form 10-Q to conform these statements to actual results and performance, except as may be required by applicable law. Overview We are a Maryland corporation formed in April 2013 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. Two times the U.S. national average was $200 for the year ended December 31, 2025. We have elected to be taxed as a REIT under the Code. We conduct our business and own substantially all of our assets through our operating partnership, Braemar OP. We operate in the direct hotel investment segment of the hotel lodging industry. As of March 31, 2026, we owned interests in 13 hotel properties in six states, the District of Columbia, Puerto Rico and St. Thomas, U.S. Virgin Islands with 3,028 total rooms. The hotel properties in our current portfolio are predominantly located in U.S. urban markets and resort locations with favorable growth characteristics resulting from multiple demand generators. We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC”) 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. As of March 31, 2026, Remington Hospitality, a subsidiary of Ashford Inc., managed five of our 13 hotel properties. Third-party management companies managed 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. Mr. Monty J. Bennett, chairman of our board of directors and chairman and chief executive officer of Ashford Inc. and his father, Mr. Archie Bennett, Jr. (together, the “Bennetts”), as of March 31, 2026, hold a controlling interest in Ashford Inc. The Bennetts owned approximately 809,937 shares of Ashford Inc. common stock, which represented an approximate 52.5% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc. Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,656,337 shares of Ashford Inc. common stock, which if converted as of March 31, 2026, would have increased the Bennetts’ ownership interest in Ashford Inc. to 88.2%. The 18,758,600 shares of Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts. Additionally, Mr. Monty J. Bennett acquired the right to direct votes, effective March 25, 2025, and as of March 31, 2026, those rights represented approximately 534,000 common shares. As of March 31, 2026, Mr. Monty J. Bennett and Mr. Archie Bennett, Jr., together owned approximately 2,472,808 shares of our common stock (including common units, LTIP and performance LTIP units), which represented an approximate 3.4% ownership in the Company. 30 Recent Developments On February 20, 2026, our board of directors, in consultation with counsel, in compliance with Article II, Section 12 of the Company’s bylaws, voted unanimously (with Mr. Ghassemieh recused) to determine that Mr. Ghassemieh was in breach of the cooperation agreement entered into on August 25, 2025 between the Company, Ashford Trust, Ashford Inc. and Mr. Ghassemieh (the “Ghassemieh Agreement”). Accordingly, pursuant to Section 4(a)(ii) of the Ghassemieh Agreement, Mr. Ghassemieh’s irrevocable resignation letter executed by Mr. Ghassemieh in connection with the Ghassemieh Agreement became effective on February 20, 2026. On March 5, 2026, Ashford Inc. and Ashford LLC agreed with Deric Eubanks, the Chief Financial Officer of Ashford Inc., and Ashford LLC that, effective March 31, 2026 (the “Termination Date”), Mr. Eubanks would terminate employment with and service to Ashford Inc., Ashford LLC and their affiliates. Mr. Eubanks was also the Chief Financial Officer of the Company and Ashford Trust and accordingly his service as Chief Financial Officer of each of the Company and Ashford Trust ended effective as of the Termination Date. Effective on the Termination Date, Justin Coe, the Company’s current Chief Accounting Officer and principal accounting officer, assumed the role of principal financial officer of the Company. On March 31, 2026, the Advisor delivered written notice to the Company of the Advisor’s election to extend the term of our advisory agreement (the “Extension Notice”). Pursuant to Section 12.2 of our advisory agreement, the Advisor exercised its right to extend the agreement for an additional ten-year term, commencing on January 24, 2027 and expiring on January 24, 2037. All terms, conditions, rights and obligations under our advisory agreement will remain in full force and effect during the extended term, subject to Section 6.6 of our advisory agreement that provides the parties to our advisory agreement the right to renegotiate the amount of the Base Fee or Incentive Fee (as such terms are defined in our advisory agreement) payable by the Company. On April 23, 2026, the Company announced that its board of directors declared and set aside the April 2026 portion of the second quarter 2026 dividends for its Series B Convertible Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series M Preferred Stock. On April 27, 2026, the Company entered into an Agreement of Purchase and Sale (the “Agreement”) for the sale of Park Hyatt Beaver Creek Resort & Spa located in Avon, Colorado for $176 million in cash, subject to customary pro-rations and adjustments. The agreement included a $6.5 million nonrefundable deposit. The sale is scheduled to close in the second quarter of 2026, subject to customary closing conditions. Key Indicators of Operating Performance We use a variety of operating and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP, as well as other financial measures that are non-GAAP measures. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel’s contribution to cash flow and its potential to provide attractive long-term total returns. These key indicators include: • Occupancy . Occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available. Occupancy measures the utilization of our hotels’ available capacity. We use occupancy to measure demand at a specific hotel or group of hotels in a given period. • ADR . ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. We use ADR to assess the pricing levels that we are able to generate. • RevPAR. RevPAR means revenue per available room and is calculated by multiplying ADR by the average daily occupancy. RevPAR is one of the commonly used measures within the hotel industry to evaluate hotel operations. RevPAR does not include revenues from food and beverage sales or parking, telephone or other non-rooms revenues generated by the property. Although RevPAR does not include these ancillary revenues, it is generally considered the leading indicator of core revenues for many hotels. We also use RevPAR to compare the results of our hotels between periods and to analyze results of our comparable hotels (comparable hotels represent hotels we have owned for the entire period). RevPAR improvements attributable to increases in occupancy are generally accompanied by increases in most categories of variable operating costs. RevPAR improvements attributable to increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees. 31 RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (including housekeeping services, utilities and room supplies) and could also result in increased other operating department revenue and expenses. Changes in ADR typically have a greater impact on operating margins and profitability as they do not have a substantial effect on variable operating costs. Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring operating performance at the individual hotel level and across our entire business. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only rooms revenue. Rooms revenue is dictated by demand (as measured by occupancy), pricing (as measured by ADR) and our available supply of hotel rooms. We also use funds from operations (“FFO”), Adjusted FFO, earnings before interest, taxes, depreciation and amortization for real estate (“EBITDAre”) and Adjusted EBITDAre as measures of the operating performance of our business. See “Non-GAAP Financial Measures.” 32 RESULTS OF OPERATIONS Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025 The following table summarizes changes in key line items from our condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025 (in thousands except percentages): Three Months Ended March 31, Favorable (Unfavorable) 2026 2025 $ Change % Change Revenue Rooms $ 128,801 $ 136,092 $ (7,291) (5.4) % Food and beverage 52,342 51,788 554 1.1 Other 27,840 27,940 (100) (0.4) Total hotel revenue 208,983 215,820 (6,837) (3.2) Expenses Hotel operating expenses: Rooms 24,878 28,219 3,341 11.8 Food and beverage 38,910 40,210 1,300 3.2 Other expenses 59,878 60,376 498 0.8 Management fees 6,194 6,910 716 10.4 Total hotel operating expenses 129,860 135,715 5,855 4.3 Property taxes, insurance and other 4,652 10,465 5,813 55.5 Depreciation and amortization 22,579 23,395 816 3.5 Advisory services fee 7,404 6,611 (793) (12.0) Corporate general and administrative 4,867 2,894 (1,973) (68.2) Total expenses 169,362 179,080 9,718 5.4 Gain (loss) on disposition of assets and hotel properties 3 — 3 Operating income (loss) 39,624 36,740 2,884 7.8 Equity in earnings (loss) of unconsolidated entity (31) — (31) Interest income 810 1,888 (1,078) (57.1) Interest expense and amortization of discounts and loan costs (21,195) (24,827) 3,632 14.6 Write-off of loan costs and exit fees (5) (1,464) 1,459 99.7 Realized and unrealized gain (loss) on derivatives 248 (198) 446 225.3 Income (loss) before income taxes 19,451 12,139 7,312 60.2 Income tax (expense) benefit (1,417) (1,467) 50 3.4 Net income (loss) 18,034 10,672 7,362 69.0 (Income) loss attributable to noncontrolling interest in consolidated entities 17 64 (47) (73.4) Net (income) loss attributable to redeemable noncontrolling interests in operating partnership (347) 262 (609) (232.4) Net income (loss) attributable to the Company $ 17,704 $ 10,998 $ 6,706 61.0 % All hotel properties owned for the three months ended March 31, 2026 and 2025 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the three months ended March 31, 2026 and 2025. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties. The following dispositions affect reporting comparability related to our condensed consolidated financial statements: Hotel Property Location Type Date Marriott Seattle Waterfront Seattle, Washington Disposition August 7, 2025 The Clancy San Francisco, California Disposition November 6, 2025 33 The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 2025 Occupancy 64.50 % 64.58 % ADR (average daily rate) $ 727.20 $ 611.38 RevPAR (revenue per available room) $ 469.07 $ 394.81 Rooms revenue (in thousands) $ 128,801 $ 136,092 Total hotel revenue (in thousands) $ 208,983 $ 215,820 The following table illustrates the key performance indicators of the 13 comparable hotel properties that were owned for the full three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 2025 Occupancy 64.50 % 64.50 % ADR (average daily rate) $ 727.20 $ 687.46 RevPAR (revenue per available room) $ 469.07 $ 443.45 Rooms revenue (in thousands) $ 128,801 $ 121,766 Total hotel revenue (in thousands) $ 208,983 $ 198,218 Net Income (Loss) Attributable to the Company. Net income attributable to the Company increased $6.7 million from $11.0 million for the three months ended March 31, 2025 (the “2025 quarter”) to $17.7 million for the three months ended March 31, 2026 (the “2026 quarter”), as a result of the factors discussed below. Rooms Revenue . Rooms revenue decreased $7.3 million to $128.8 million during the 2026 quarter compared to the 2025 quarter primarily due to the sales of Marriott Seattle Waterfront in August 2025 and The Clancy in November 2025. During the 2026 quarter, our 13 comparable hotel properties experienced a 5.8% increase in room rates while occupancy was flat compared to the 2025 quarter. Fluctuations in rooms revenue between the 2026 quarter and the 2025 quarter are a result of the changes in occupancy and ADR between the 2026 quarter and the 2025 quarter as reflected in the table below (dollars in thousands): Hotel Property Favorable (Unfavorable) Rooms Revenue Occupancy (change in bps) ADR (change in %) Comparable Capital Hilton $ (1,443) (97) (12.2) % The Notary Hotel 287 143 2.7 % Sofitel Chicago Magnificent Mile 89 (60) 4.2 % Pier House Resort & Spa 804 808 0.1 % The Ritz-Carlton St. Thomas 2,349 426 8.3 % Park Hyatt Beaver Creek Resort & Spa (775) (385) (0.8) % Hotel Yountville (1) (53) 29 (4.4) % The Ritz-Carlton Sarasota 1,501 239 8.6 % Bardessono Hotel and Spa 457 65 18.4 % The Ritz-Carlton Lake Tahoe (79) 48 (1.5) % Cameo Beverly Hills (137) (1,475) 24.2 % The Ritz-Carlton Reserve Dorado Beach 2,055 7 10.0 % Four Seasons Resort Scottsdale 1,980 89 12.4 % Total $ 7,035 — 5.8 % Non-comparable Marriott Seattle Waterfront $ (4,581) n/a n/a The Clancy $ (9,745) n/a n/a ________ (1) This hotel was under renovation during the 2025 quarter. Food and Beverage Revenue . Food and beverage revenue increased $554,000, or 1.1%, to $52.3 million during the 2026 quarter compared to the 2025 quarter. We experienced an aggregate increase in food and beverage revenue of approximately 34 $3.3 million at ten comparable hotel properties. This increase was partially offset by an aggregate decrease of $885,000 at The Notary Hotel, The Ritz-Carlton Lake Tahoe and Four Seasons Resort Scottsdale and a decrease of $1.9 million due to the sales of The Clancy and Marriott Seattle Waterfront. Other Hotel Revenue . Other hotel revenue, which consists mainly of condominium management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, decreased $100,000, or 0.4%, to $27.8 million during the 2026 quarter compared to the 2025 quarter. This decrease is attributable to an aggregate decrease of approximately $587,000 at the Capital Hilton, Sofitel Chicago Magnificent Mile and Cameo Beverly Hills as well as a decrease of $1.4 million due to the sales of The Clancy and Marriott Seattle Waterfront. These decreases were partially offset by higher other hotel revenue of $1.9 million at ten comparable hotel properties. Rooms Expense . Rooms expense decreased $3.3 million, or 11.8%, to $24.9 million in the 2026 quarter compared to the 2025 quarter. This decrease is attributable to an aggregate decrease in rooms expense of $462,000 at Capital Hilton, Pier House Resort & Spa, Park Hyatt Beaver Creek Resort & Spa and The Ritz-Carlton Lake Tahoe and a decrease of $4.0 million due to the sales of The Clancy and Marriott Seattle Waterfront. These decreases were partially offset by an aggregate increase of $1.1 million at nine comparable hotel properties. Food and Beverage Expense . Food and beverage expense decreased $1.3 million, or 3.2%, to $38.9 million during the 2026 quarter compared to the 2025 quarter. This decrease is attributable to lower aggregate food and beverage expense of approximately $533,000 at the Pier House Resort & Spa, Bardessono Hotel and Spa and The Ritz-Carlton Lake Tahoe and a decrease of $2.2 million due to the sales of The Clancy and Marriott Seattle Waterfront. These decreases were partially offset by an aggregate increase of approximately $1.5 million at ten comparable hotel properties. Other Operating Expenses . Other operating expenses decreased $498,000, or 0.8%, to $59.9 million in the 2026 quarter compared to the 2025 quarter. Other operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees. We experienced an increase of $552,000 in direct expenses and a decrease of $1.1 million in indirect expenses and incentive management fees in the 2026 quarter compared to the 2025 quarter. Direct expenses were 4.8% of total hotel revenue in the 2026 quarter and 4.4% in the 2025 quarter. The increase in direct expenses is associated with higher direct expenses of $684,000 at our 13 comparable hotel properties partially offset by a decrease of $132,000 due to the sales of The Clancy and Marriott Seattle Waterfront. The decrease in indirect expenses is comprised of decreases in: (i) general and administrative costs of $786,000 comprising a decrease of $2.0 million from the two disposed hotel properties partially offset by an aggregate increase of $1.2 million at our 13 comparable hotel properties; (ii) marketing costs of $748,000 comprising an aggregate decrease of $1.2 million from the two disposed hotel properties partially offset by an increase of $497,000 at our 13 comparable hotel properties; and (iii) repairs and maintenance of $986,000 comprising an aggregate decrease of $117,000 at our 13 comparable hotel properties and a decrease of $869,000 from the two disposed hotel properties. These decreases were partially offset by increases in: (i) incentive management fees of $913,000 at our 13 comparable hotel properties; and (ii) energy costs of $570,000 comprising an aggregate increase of $984,000 at our 13 comparable hotel properties partially offset by a decrease of $414,000 from the two disposed hotel properties. Management Fees . Base management fees decreased $716,000, or 10.4%, to $6.2 million in the 2026 quarter compared to the 2025 quarter. Management fees decreased $754,000 due to the sales of The Clancy and Marriott Seattle Waterfront, and decreases of $233,000 at The Ritz-Carlton Sarasota, Cameo Beverly Hills, Capital Hilton and Park Hyatt Beaver Creek Resort & Spa. These decreases were partially offset by an aggregate increase of $271,000 at nine comparable hotel properties. Property Taxes, Insurance and Other . Property taxes, insurance and other decreased $5.8 million, or 55.5%, to $4.7 million in the 2026 quarter compared to the 2025 quarter. This decrease is primarily attributable to a decrease of $1.6 million due to the sales of The Clancy and Marriott Seattle Waterfront and an aggregate decrease of $4.2 million at our 13 comparable hotel properties, primarily attributable to a favorable property tax assessment at the Sofitel Chicago Magnificent Mile. Depreciation and Amortization . Depreciation and amortization decreased $816,000, or 3.5%, to $22.6 million for the 2026 quarter compared to the 2025 quarter. This decrease is due to lower depreciation of $3.4 million from the sales of The Clancy and Marriott Seattle Waterfront and an aggregate decrease of $324,000 at Capital Hilton, Sofitel Chicago Magnificent Mile and Pier House Resort & Spa. These decreases were partially offset by an aggregate increase of $2.9 million at ten comparable hotel properties. 35 Advisory Services Fee. Advisory services fee increased $793,000, or 12.0%, to $7.4 million in the 2026 quarter compared to the 2025 quarter due to higher reimbursable expenses of $635,000, higher base advisory fee of $192,000 and higher equity-based compensation of $48,000, partially offset by a lower incentive fee of $82,000. In the 2026 quarter, we recorded an advisory services fee of $7.4 million, which included a base advisory fee of $3.8 million and reimbursable expenses of $3.6 million. In the 2025 quarter, we recorded an advisory services fee of $6.6 million, which included a base advisory fee of $3.6 million, reimbursable expenses of $3.0 million, an incentive fee of $82,000 and a credit to expense of $48,000 associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. Corporate General and Administrative . Corporate general and administrative expense was $4.9 million in the 2026 quarter and consisted of $3.5 million in professional fees, $709,000 of public company costs, $437,000 related to Ashford Securities and $270,000 in miscellaneous expenses. Corporate general and administrative expense was $2.9 million in the 2025 quarter and consisted of $1.5 million in professional fees, $673,000 of public company costs and $717,000 in miscellaneous expenses. Equity in Earnings (Loss) of Unconsolidated Entity . There was a $31,000 loss in equity in earnings (loss) of unconsolidated entity in the 2026 quarter as a result of writing off the remaining OpenKey note receivable balance. Interest Income . Interest income was $810,000 and $1.9 million in the 2026 quarter and the 2025 quarter, respectively. The decrease in interest income in the 2026 quarter was primarily attributable to lower interest rates and lower excess cash balances compared to the 2025 quarter. Interest Expense and Amortization of Discounts and Loan Costs . Interest expense and amortization of discounts and loan costs decreased $3.6 million, or 14.6%, to $21.2 million for the 2026 quarter compared to the 2025 quarter. The decrease is primarily due to lower interest expense of $3.9 million from lower average interest rates and lower average debt balances in the 2026 quarter partially offset by higher amortization of loan costs of approximately $277,000 in the 2026 quarter compared to the 2025 quarter. Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $5,000 in the 2026 quarter. Write-off of loan costs and exit fees was $1.5 million in the 2025 quarter related to various loan refinances and modifications. Realized and Unrealized Gain (Loss) on Derivatives . Realized and unrealized gain on derivatives of $248,000 for the 2026 quarter consisted of an unrealized gain on interest rate caps of $240,000 and a realized gain of $8,000 associated with payments received from counterparties on in-the-money interest rate caps. Realized and unrealized loss on derivatives of $198,000 for the 2025 quarter consisted of an unrealized loss on interest rate caps of $386,000, partially offset by a realized gain of $188,000 associated with payments received from counterparties on in-the-money interest rate caps. Income Tax (Expense) Benefit . Income tax expense decreased $50,000, from $1.5 million in the 2025 quarter to $1.4 million in the 2026 quarter. (Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities . Our noncontrolling interest partners in consolidated entities were allocated a loss of $17,000 and a loss of $64,000 in the 2026 quarter and the 2025 quarter, respectively. For the 2026 quarter noncontrolling interest in consolidated entities represented a 25% ownership interest in a JV. As of March 31, 2025, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity. Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net income of $347,000 in the 2026 quarter and a net loss of $262,000 in the 2025 quarter. Redeemable noncontrolling interests represented ownership interests in Braemar OP of approximately 6.61% and 9.33% as of March 31, 2026 and 2025, respectively. 36 LIQUIDITY AND CAPITAL RESOURCES Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our hotel properties, including: • advisory fees payable to Ashford LLC; • recurring maintenance necessary to maintain our hotel properties in accordance with brand standards; • interest expense and scheduled principal payments on outstanding indebtedness; • dividends on our common stock; • dividends on our preferred stock; • redemptions of our non-traded preferred stock; and • capital expenditures to improve our hotel properties. We expect to meet our short-term liquidity requirements generally through net cash provided by operations, capital market activities, asset sales and existing cash balances. Pursuant to the advisory agreement between us and our Advisor, we must pay our Advisor on a monthly basis a base advisory fee, subject to a minimum base advisory fee. The minimum base advisory fee is equal to the greater of: (i) 90% of the base fee paid for the same month in the prior fiscal year; and (ii) 1/12 th of the “G&A Ratio” for the most recently completed fiscal quarter multiplied by our total market capitalization on the last balance sheet date included in the most recent quarterly report on Form 10-Q or annual report on Form 10-K that we file with the SEC. Thus, even if our total market capitalization and performance decline, we will still be required to make payments to our Advisor equal to the minimum base advisory fee, which could adversely impact our liquidity and financial condition. Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotel properties and redevelopments, renovations, expansions and other capital expenditures that need to be made periodically with respect to our hotel properties and scheduled debt payments. We expect to meet our long-term liquidity requirements through various sources of capital, including future common and preferred equity issuances, existing working capital, net cash provided by operations, hotel mortgage indebtedness and other secured and unsecured borrowings. However, there are a number of factors that may have a material adverse effect on our ability to access these capital sources, the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity and market perceptions about us. The success of our business strategy will depend, in part, on our ability to access these various capital sources. While management cannot provide any assurances, management believes that our cash flow from operations and our existing cash balances will be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity principal payments and paydowns for extension tests), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S. federal income tax purposes. Our hotel properties will require periodic capital expenditures and renovations to remain competitive. In addition, acquisitions, redevelopments or expansions of hotel properties may require significant capital outlays. We may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures, acquisitions or hotel redevelopment through retained earnings is very limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations and prospects could be materially and adversely affected. Certain of our loan agreements contain cash trap provisions that may be triggered if the performance of our hotel properties declines. When these provisions are triggered, substantially all of the profit generated by the hotel properties securing such loan is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our various lenders. This could affect our liquidity and our ability to make distributions to our stockholders until such time that a cash trap is no longer in effect for such loan. These cash trap provisions have been triggered on two mortgage loans, as discussed below. Our loans that are in cash traps may remain subject to the cash trap provisions for a substantial period of time which could limit our flexibility and adversely affect our financial condition or our qualification as a REIT. As of March 31, 2026, the mortgage loan secured by The Ritz-Carlton Lake Tahoe and the loan secured by the Capital Hilton were in cash traps. The amount of cash in the cash traps as of March 31, 2026 was $0. 37 As of March 31, 2026, the Company held cash and cash equivalents of $93.4 million and restricted cash of $55.4 million, the vast majority of which is comprised of lender and manager-held reserves. As of March 31, 2026, $28.1 million was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs. As of March 31, 2026, our net debt to gross assets was 46.8%. The Company’s cash and cash equivalents are primarily comprised of corporate cash invested in short-term U.S. Treasury securities with maturity dates of less than 90 days and corporate cash held at commercial banks in Insured Cash Sweep (“ICS”) accounts, which are fully insured by the FDIC. The Company’s cash and cash equivalents also includes property-level operating cash deposited with commercial banks that have been designated as a Global Systemically Important Bank (“G-SIB”) by the Financial Stability Board (“FSB”) and a small amount deposited with other commercial banks. Each share of our Series E Preferred Stock and Series M Preferred Stock 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. As of March 31, 2026, the Company determined that a portion of the outstanding Series E Preferred Stock and 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 $45.7 million in investor-initiated Series E Preferred Stock redemption requests and $1.0 million in investor-initiated Series M Preferred Stock redemption requests that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet. Based on the various limitations in place as of March 31, 2026, and not considering any future redemption requests received, we expect that all of these redemption requests will be fulfilled over the subsequent twelve months from March 31, 2026. As of April 30, 2026, the redeemable preferred stock redemptions payable was approximately $49.7 million. Potential Strategic Transaction As previously disclosed, our board of directors is exploring potential strategic alternatives, including a potential sale of the Company or one or more potential transactions involving the sale of individual assets. However, there can be no assurance that the strategic process will result in a transaction of any kind. The outcome of the process will depend on many factors beyond our control, including the availability of interested buyers for the Company as a whole or for individual assets, the state of the capital markets, macroeconomic and industry conditions, and the ability to negotiate mutually acceptable terms. The failure to complete a transaction, or uncertainty about whether or when a transaction may be completed, could negatively affect investor sentiment, cause volatility in our stock price, and adversely affect our business, operating results, liquidity, and financial condition. We can give no assurance that the strategic process will result in a definitive agreement or a completed transaction, whether involving the entire Company or individual assets, on terms favorable to stockholders, or at all. Equity Transactions On November 13, 2019, we filed an initial registration statement with the SEC, as amended on January 24, 2020, for shares of our non-traded Series E Redeemable Preferred Stock (the “Series E Preferred Stock”) and our non-traded Series M Redeemable Preferred Stock (the “Series M Preferred Stock”). The registration statement became effective on February 21, 2020, and contemplates the issuance and sale of up to 20,000,000 shares of Series E Preferred Stock or Series M Preferred Stock in a primary offering and up to 8,000,000 shares of Series E Preferred Stock or Series M Preferred Stock pursuant to a dividend reinvestment plan. On February 25, 2020, we filed our prospectus with the SEC. Ashford Securities, a subsidiary of Ashford Inc., serves as the dealer manager and wholesaler of the Series E Preferred Stock and Series M Preferred Stock. On April 2, 2021, the Company filed with the State Department of Assessments and Taxation of the State of Maryland (the “SDAT”) articles supplementary to the Company’s Articles of Amendment and Restatement that provided for: (i) reclassifying the existing 28,000,000 shares of Series E Preferred Stock and 28,000,000 shares of Series M Preferred Stock as unissued shares of preferred stock; (ii) reclassifying and designating 28,000,000 shares of the Company’s authorized capital stock as shares of the Series E Preferred Stock (the “Series E Articles Supplementary”); and (iii) reclassifying and designating 28,000,000 shares of the Company’s authorized capital stock as shares of the Series M Preferred Stock (the “Series M Articles Supplementary”). The Series E Articles Supplementary and Series M Articles Supplementary were filed to revise the preferred stock terms related to the dividend rate, our optional redemption right and certain other voting rights. The Company also caused its operating partnership to execute Amendment No. 5 to the Third Amended and Restated Agreement of Limited Partnership to amend the terms of its operating partnership agreement to conform to the terms of the Series E Articles Supplementary and Series M Articles Supplementary. In total, the Company issued approximately 16.4 million shares of Series E Preferred Stock and received net proceeds of approximately $369.5 million and issued approximately 2.0 million shares of Series M Preferred 38 Stock and received net proceeds of approximately $47.6 million. On February 21, 2023, the Company announced the closing of its offering of the Series E Preferred Stock and Series M Preferred Stock. On May 3, 2024, our board of directors approved a new share repurchase program, pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share, having an aggregate value of up to $50 million. The Company may repurchase shares through open market transactions, privately negotiated transactions or other means. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions, and the program may be suspended or terminated at any time by the Company at its discretion without prior notice. The board of directors’ authorization replaced any previous repurchase authorizations. As of May 5, 2026, the Company has not repurchased any common stock pursuant to the plan. Sources and Uses of Cash We had approximately $93.4 million and $124.4 million of cash and cash equivalents at March 31, 2026 and December 31, 2025, respectively. We anticipate that our principal sources of funds to meet our cash requirements will include cash on hand, positive cash flow from operations and capital market activities. Net Cash Flows Provided by (Used in) Operating Activities. Net cash flows provided by operating activities were $21.9 million and $15.1 million for the three months ended March 31, 2026 and 2025, respectively. Cash flows from operations were impacted by changes in hotel operations and the disposition of hotel properties. Cash flows from operations are also impacted by the timing of working capital cash flows, such as collecting receivables from hotel guests, paying vendors, settling with related parties and settling with hotel managers. Net Cash Flows Provided by (Used in) Investing Activities . For the three months ended March 31, 2026, net cash flows used in investing activities were $11.9 million. The cash outflows of $12.1 million consisted of capital improvements made to various hotel properties. These cash outflows were partially offset by cash inflows of $135,000 from property insurance proceeds and $58,000 from the sale of OpenKey. Our capital improvements consisted of approximately $9.1 million of return on investment capital projects and approximately $3.0 million of renewal and replacement capital projects. For the three months ended March 31, 2025, net cash flows used in investing activities were $14.2 million. The cash outflows were primarily attributable to $15.3 million of capital improvements made to various hotel properties, partially offset by cash inflows of $1.1 million from property insurance proceeds. Our capital improvements consisted of approximately $10.5 million of return on investment capital projects and approximately $4.8 million of renewal and replacement capital projects. Return on investment capital projects are designed to improve the positioning of our hotel properties within their markets and competitive sets. Renewal and replacement capital projects are designed to maintain the quality and competitiveness of our hotels. Net Cash Flows Provided by (Used in) Financing Activities. For the three months ended March 31, 2026, net cash flows used in financing activities were $28.2 million. Cash outflows primarily consisted of $17.0 million for cash redemptions of Series E and Series M Preferred Stock and $11.1 million of dividend and distribution payments. For the three months ended March 31, 2025, net cash flows used in financing activities were $49.8 million. Cash outflows primarily consisted of $365.2 million of repayments of indebtedness, $26.2 million for cash redemptions of Series E and Series M Preferred Stock, $12.2 million of dividend and distribution payments, $8.9 million of payments of loan costs and exit fees, $508,000 to purchase interest rate caps, and $92,000 from the redemption of operating partnership units. These cash outflows were partially offset by cash inflows of $363.0 million from borrowings on indebtedness, and $244,000 of proceeds from in-the-money interest rate caps. Dividend Policy Our board of directors has not declared a dividend policy for 2026 in light of the fact that there is an ongoing Company strategic review process. The board of directors will continue to review the Company’s dividend policy. For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof. Seasonality Our properties’ operations historically have been seasonal as certain properties maintain higher occupancy rates during the summer months and some during the winter months. This seasonality pattern can cause fluctuations in our quarterly lease revenue under our percentage leases. Quarterly revenue also may be adversely affected by renovations and repositionings, our managers’ effectiveness in generating business and by events beyond our control, such as pandemics, extreme weather 39 conditions, natural disasters, terrorist attacks or alerts, civil unrest, government shutdowns, airline strikes or reduced airline capacity, economic factors and other considerations affecting travel. To the extent that cash flows from operations and cash on hand are insufficient during any quarter due to temporary or seasonal fluctuations in lease revenue, we expect to utilize borrowings to fund distributions required to maintain our REIT status. However, we cannot make any assurances that we will make distributions in the future. Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us 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. Our accounting policies that are critical or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Form 10-K. There have been no material changes in these critical accounting policies. Non-GAAP Financial Measures The following non-GAAP presentations of EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO are presented to help our investors evaluate our operating performance. EBITDA is defined as net income (loss) before interest expense and amortization of loan costs, depreciation and amortization, income taxes, equity in (earnings) loss of unconsolidated entity and after the Company’s portion of EBITDA of OpenKey. In addition, we exclude impairment on real estate, (gain) loss on disposition of assets and hotel properties and the Company’s portion of EBITDAre of OpenKey from EBITDA to calculate EBITDA for real estate, or EBITDAre, as defined by NAREIT. We then further adjust EBITDAre to exclude certain additional items such as amortization of favorable (unfavorable) contract assets (liabilities), transaction and conversion costs, other income/expense, write-off of loan costs and exit fees, gain/loss on insurance settlements, legal, advisory and settlement costs, advisory services incentive fee, gain/loss on extinguishment of debt, stock/unit-based compensation and the Company’s portion of adjustments to EBITDAre of OpenKey and non-cash items such as unrealized gain/ loss on derivatives. We present EBITDA, EBITDAre and Adjusted EBITDAre because we believe they are useful to an investor in evaluating our operating performance because they provide investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe they help investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results. Our management team also uses EBITDA as one measure in determining the value of acquisitions and dispositions. EBITDA, EBITDAre and Adjusted EBITDAre as calculated by us may not be comparable to EBITDA, EBITDAre and Adjusted EBITDAre reported by other companies that do not define EBITDA, EBITDAre and Adjusted EBITDAre exactly as we define the terms. EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as determined by GAAP as an indicator of liquidity. 40 The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands) (unaudited): Three Months Ended March 31, 2026 2025 Net income (loss) $ 18,034 $ 10,672 Interest expense and amortization of loan costs 21,195 24,827 Depreciation and amortization 22,579 23,395 Income tax expense (benefit) 1,417 1,467 Equity in (earnings) loss of unconsolidated entity 31 — EBITDA 63,256 60,361 (Gain) loss on disposition of assets and hotel properties (3) — EBITDAre 63,253 60,361 Amortization of favorable (unfavorable) contract assets (liabilities) 107 107 Transaction and conversion costs 2,675 695 Write-off of premiums, loan costs and exit fees 5 1,464 Realized and unrealized (gain) loss on derivatives (248) 198 Stock/unit-based compensation — (48) Legal, advisory and settlement costs 504 144 Advisory services incentive fee — 82 Severance 237 — Adjusted EBITDAre $ 66,533 $ 63,003 41 FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses on disposition of assets, plus impairment charges on real estate, depreciation and amortization of real estate assets, and after redeemable noncontrolling interests in the operating partnership and adjustments for unconsolidated entities. NAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the basis determined by GAAP. Our calculation of Adjusted FFO excludes transaction and conversion costs, other income/expense, write-off of premiums, loan costs and exit fees, legal, advisory and settlement costs, stock/unit-based compensation, severance, gain/loss on insurance settlements, gain/loss on extinguishment of debt, and non-cash items such as deemed dividends on redeemable preferred stock, interest expense accretion on refundable membership club deposits, amortization of loan costs, unrealized gain/loss on derivatives and the Company’s portion of adjustments to FFO of OpenKey. FFO and Adjusted FFO exclude amounts attributable to the portion of a partnership owned by the third party. We present FFO and Adjusted FFO because we consider FFO and Adjusted FFO important supplemental measures of our operational performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and Adjusted FFO when reporting their results. FFO and Adjusted FFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and Adjusted FFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and Adjusted FFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. We consider FFO and Adjusted FFO to be appropriate measures of our ongoing normalized operating performance as a REIT. We compute FFO in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that either do not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition differently than us. FFO and Adjusted FFO do not represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to GAAP net income or loss as an indication of our financial performance or GAAP cash flows from operating activities as a measure of our liquidity. FFO and Adjusted FFO are also not indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO and Adjusted FFO should be considered along with our net income or loss and cash flows reported in our condensed consolidated financial statements. 42 The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands) (unaudited): Three Months Ended March 31, 2026 2025 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 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) Depreciation and amortization on real estate (1) 22,579 22,676 Net income (loss) attributable to redeemable noncontrolling interests in operating partnership 347 (262) Equity in (earnings) loss of unconsolidated entity 31 — (Gain) loss on disposition of assets and hotel properties (3) — FFO available to common stockholders and OP unitholders 27,855 19,867 Deemed dividends on preferred stock 4,763 4,276 Transaction and conversion costs 2,675 695 Write-off of premiums, loan costs and exit fees 5 1,464 Unrealized (gain) loss on derivatives (240) 386 Stock/unit-based compensation — (48) Legal, advisory and settlement costs 504 144 Interest expense accretion on refundable membership club deposits 135 151 Amortization of loan costs (1) 2,409 2,097 Advisory services incentive fee — 82 Severance 237 — Adjusted FFO available to common stockholders and OP unitholders $ 38,343 $ 29,114 ____________________ (1) Net of adjustment for noncontrolling interest in consolidated entities. The following table presents the amounts of the adjustments for noncontrolling interests for each line item: Three Months Ended March 31, 2026 2025 Depreciation and amortization on real estate $ — $ (719) Amortization of loan costs — (35) The following table presents certain information related to our hotel properties as of March 31, 2026: Hotel Property Location Total Rooms Fee Simple Properties Capital Hilton Washington, D.C. 559 The Notary Hotel Philadelphia, PA 499 Sofitel Chicago Magnificent Mile Chicago, IL 415 Pier House Resort & Spa Key West, FL 142 The Ritz-Carlton St. Thomas St. Thomas, USVI 180 Park Hyatt Beaver Creek Resort & Spa Beaver Creek, CO 193 Hotel Yountville Yountville, CA 80 The Ritz-Carlton Sarasota Sarasota, FL 276 The Ritz-Carlton Lake Tahoe (1) Truckee, CA 170 Cameo Beverly Hills (2) Los Angeles, CA 143 The Ritz-Carlton Reserve Dorado Beach (3) Dorado, Puerto Rico 96 Four Seasons Resort Scottsdale Scottsdale, AZ 210 Ground Lease Property (4) Bardessono Hotel and Spa (5) Yountville, CA 65 Total 3,028 ________ (1) The above information does not include the operations of the voluntary rental program with respect to condominium units not owned by the Company. (2) Includes 138 hotel rooms and five residences adjacent to the hotel. (3) The above information does not include the operations of the voluntary rental program with respect to residential units not owned by the Company. (4) Some of our hotel properties are on land subject to ground leases, one of which covers the entire property. (5) The initial ground lease expires in 2065. The ground lease contains two 25-year extension options, at our election. 43