Pebblebrook Hotel Trust 10-Q

Item 1. Financial Statements. Pebblebrook Hotel Trust Consolidated Balance Sheets (in thousands, except share and per-share data) June 30, 2026 December 31, 2025 (Unaudited) ASSETS Investment in hotel properties, net $ 4,891,792 $ 5,023,457 Cash and cash equivalents 261,010 184,185 Restricted cash 9,400 12,018 Hotel receivables (net of allowance for doubtful accounts of $ 246 and $ 241 , respectively) 44,286 34,184 Prepaid expenses and other assets 75,138 94,330 Total assets $ 5,281,626 $ 5,348,174 LIABILITIES AND EQUITY Debt, net $ 2,080,700 $ 2,124,092 Accounts payable, accrued expenses and other liabilities 221,655 199,631 Lease liabilities - operating leases 335,883 333,068 Deferred revenues 105,901 104,900 Accrued interest 12,978 12,106 Distribution payable 11,107 11,639 Total liabilities 2,768,224 2,785,436 Commitments and contingencies (Note 11) Shareholders' equity: Preferred shares of beneficial interest, $ .01 par value (liquidation preference $ 639,548 and $ 676,724 at June 30, 2026 and December 31, 2025, respectively), 100,000,000 shares authorized; 25,581,924 and 27,068,962 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 256 271 Common shares of beneficial interest, $ .01 par value, 500,000,000 shares authorized; 112,451,844 and 113,188,134 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 1,125 1,132 Additional paid-in capital 3,925,438 3,969,875 Accumulated other comprehensive income (loss) 6,098 605 Distributions and retained deficit ( 1,514,549 ) ( 1,503,262 ) Total shareholders' equity 2,418,368 2,468,621 Non-controlling interests 95,034 94,117 Total equity 2,513,402 2,562,738 Total liabilities and equity $ 5,281,626 $ 5,348,174 The accompanying notes are an integral part of these financial statements. 3 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Operations and Comprehensive Income (in thousands, except share and per-share data) (Unaudited) For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Revenues: Room $ 259,713 $ 257,600 $ 474,238 $ 454,610 Food and beverage 102,574 105,994 193,717 192,304 Other operating 44,855 43,943 84,843 80,889 Total revenues 407,142 407,537 752,798 727,803 Expenses: Hotel operating expenses: Room 64,836 67,732 124,351 126,255 Food and beverage 72,386 72,658 137,845 137,226 Other direct and indirect 115,315 113,396 222,429 217,519 Total hotel operating expenses 252,537 253,786 484,625 481,000 Depreciation and amortization 52,099 57,645 104,078 115,188 Real estate taxes, personal property taxes, property insurance and ground rent 32,248 33,978 65,039 67,251 General and administrative 11,898 12,504 23,939 25,730 Impairment 1,112 — 8,800 — Business interruption insurance income — ( 3,242 ) — ( 7,545 ) Other operating expenses 7 478 1,025 1,028 Total operating expenses 349,901 355,149 687,506 682,652 Operating income (loss) 57,241 52,388 65,292 45,151 Interest expense ( 26,056 ) ( 27,282 ) ( 52,370 ) ( 54,415 ) Other, net 1,444 1,991 1,254 1,019 Income (loss) before income taxes 32,629 27,097 14,176 ( 8,245 ) Income tax (expense) benefit ( 7,716 ) ( 7,812 ) ( 7,699 ) ( 4,650 ) Net income (loss) 24,913 19,285 6,477 ( 12,895 ) Net income (loss) attributable to non-controlling interests 1,334 1,229 2,172 1,996 Net income (loss) attributable to the Company 23,579 18,056 4,305 ( 14,891 ) Distributions to preferred shareholders ( 9,919 ) ( 10,632 ) ( 20,346 ) ( 21,263 ) Repurchase of preferred shares 6,999 — 6,999 — Net income (loss) attributable to common shareholders $ 20,659 $ 7,424 $ ( 9,042 ) $ ( 36,154 ) Net income (loss) per share available to common shareholders, basic $ 0.18 $ 0.06 $ ( 0.08 ) $ ( 0.30 ) Net income (loss) per share available to common shareholders, diluted $ 0.17 $ 0.06 $ ( 0.08 ) $ ( 0.30 ) Weighted-average number of common shares, basic 112,741,241 118,172,417 113,034,743 118,685,483 Weighted-average number of common shares, diluted 127,105,098 118,383,446 113,034,743 118,685,483 4 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Operations and Comprehensive Income - Continued (in thousands, except share and per-share data) (Unaudited) For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Comprehensive Income: Net income (loss) $ 24,913 $ 19,285 $ 6,477 $ ( 12,895 ) Other comprehensive income (loss): Change in fair value of derivative instruments 2,100 ( 122 ) 4,040 ( 1,962 ) Amounts reclassified from other comprehensive income 764 ( 3,939 ) 1,529 ( 7,739 ) Comprehensive income (loss) 27,777 15,224 12,046 ( 22,596 ) Comprehensive income (loss) attributable to non-controlling interests 1,368 1,190 2,248 2,011 Comprehensive income (loss) attributable to the Company $ 26,409 $ 14,034 $ 9,798 $ ( 24,607 ) The accompanying notes are an integral part of these financial statements. 5 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Equity (in thousands, except share data) (Unaudited) For the three months ended June 30, 2026 Preferred Shares Common Shares Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Distributions and retained deficit Total Shareholders' Equity Non-Controlling Interests Total Equity Shares Amount Shares Amount Balance at March 31, 2026 27,068,962 $ 271 112,985,227 $ 1,130 $ 3,966,623 $ 3,268 $ ( 1,534,069 ) $ 2,437,223 $ 94,304 $ 2,531,527 Repurchase of preferred shares ( 1,487,038 ) ( 15 ) — — ( 35,315 ) — 6,999 ( 28,331 ) — ( 28,331 ) Issuance of common shares for Board of Trustees compensation — — 5,248 — 77 — — 77 — 77 Repurchase of common shares — — ( 538,631 ) ( 5 ) ( 7,955 ) — — ( 7,960 ) — ( 7,960 ) Share-based compensation — — — — 2,008 — — 2,008 555 2,563 Distributions on common shares/units — — — — — — ( 1,139 ) ( 1,139 ) ( 29 ) ( 1,168 ) Distributions on preferred shares/units — — — — — — ( 9,919 ) ( 9,919 ) ( 1,164 ) ( 11,083 ) Other comprehensive income (loss): Change in fair value of derivative instruments — — — — — 2,066 — 2,066 34 2,100 Amounts reclassified from other comprehensive income — — — — — 764 — 764 — 764 Net income (loss) — — — — — — 23,579 23,579 1,334 24,913 Balance at June 30, 2026 25,581,924 $ 256 112,451,844 $ 1,125 $ 3,925,438 $ 6,098 $ ( 1,514,549 ) $ 2,418,368 $ 95,034 $ 2,513,402 6 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Equity - Continued (in thousands, except share data) (Unaudited) For the three months ended June 30, 2025 Preferred Shares Common Shares Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Distributions and retained deficit Total Shareholders' Equity Non-Controlling Interests Total Equity Shares Amount Shares Amount Balance at March 31, 2025 27,600,000 $ 276 118,278,405 $ 1,183 $ 4,060,426 $ 10,892 $ ( 1,437,622 ) $ 2,635,155 $ 91,261 $ 2,726,416 Issuance of shares, net of offering costs — — — — ( 41 ) — — ( 41 ) — ( 41 ) Repurchase of common shares — — ( 111,599 ) ( 1 ) ( 999 ) — — ( 1,000 ) — ( 1,000 ) Share-based compensation — — — — 2,284 — — 2,284 1,238 3,522 Distributions on common shares/units — — — — — — ( 1,196 ) ( 1,196 ) ( 28 ) ( 1,224 ) Distributions on preferred shares/units — — — — — — ( 10,632 ) ( 10,632 ) ( 1,164 ) ( 11,796 ) Other comprehensive income (loss): Change in fair value of derivative instruments — — — — — ( 83 ) — ( 83 ) ( 39 ) ( 122 ) Amounts reclassified from other comprehensive income — — — — — ( 3,939 ) — ( 3,939 ) — ( 3,939 ) Net income (loss) — — — — — — 18,056 18,056 1,229 19,285 Balance at June 30, 2025 27,600,000 $ 276 118,166,806 $ 1,182 $ 4,061,670 $ 6,870 $ ( 1,431,394 ) $ 2,638,604 $ 92,497 $ 2,731,101 7 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Equity - Continued (in thousands, except share data) (Unaudited) For the six months ended June 30, 2026 Preferred Shares Common Shares Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Distributions and retained deficit Total Shareholders' Equity Non-Controlling Interests Total Equity Shares Amount Shares Amount Balance at December 31, 2025 27,068,962 $ 271 113,188,134 $ 1,132 $ 3,969,875 $ 605 $ ( 1,503,262 ) $ 2,468,621 $ 94,117 $ 2,562,738 Repurchase of preferred shares ( 1,487,038 ) ( 15 ) — — ( 35,315 ) — 6,999 ( 28,331 ) — ( 28,331 ) Issuance of common shares for Board of Trustees compensation — — 77,206 1 901 — — 902 — 902 Repurchase of common shares — — ( 1,030,945 ) ( 10 ) ( 13,850 ) — — ( 13,860 ) — ( 13,860 ) Share-based compensation — — 217,449 2 3,827 — — 3,829 1,040 4,869 Distributions on common shares/units — — — — — — ( 2,245 ) ( 2,245 ) ( 43 ) ( 2,288 ) Distributions on preferred shares/units — — — — — — ( 20,346 ) ( 20,346 ) ( 2,328 ) ( 22,674 ) Other comprehensive income (loss): Change in fair value of derivative instruments — — — — — 3,964 — 3,964 76 4,040 Amounts reclassified from other comprehensive income — — — — — 1,529 — 1,529 — 1,529 Net income (loss) — — — — — — 4,305 4,305 2,172 6,477 Balance at June 30, 2026 25,581,924 $ 256 112,451,844 $ 1,125 $ 3,925,438 $ 6,098 $ ( 1,514,549 ) $ 2,418,368 $ 95,034 $ 2,513,402 8 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Equity - Continued (in thousands, except share data) (Unaudited) For the six months ended June 30, 2025 Preferred Shares Common Shares Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Distributions and retained deficit Total Shareholders' Equity Non-Controlling Interests Total Equity Shares Amount Shares Amount Balance at December 31, 2024 27,600,000 $ 276 119,285,394 $ 1,193 $ 4,072,265 $ 16,550 $ ( 1,392,860 ) $ 2,697,424 $ 90,450 $ 2,787,874 Issuance of shares, net of offering costs — — — — ( 41 ) — — ( 41 ) — ( 41 ) Issuance of common shares for Board of Trustees compensation — — 54,451 1 744 — — 745 — 745 Repurchase of common shares — — ( 1,394,220 ) ( 14 ) ( 15,598 ) — — ( 15,612 ) — ( 15,612 ) Share-based compensation — — 221,181 2 4,336 — — 4,338 2,404 6,742 Distributions on common shares/units — — — — — — ( 2,380 ) ( 2,380 ) ( 40 ) ( 2,420 ) Distributions on preferred shares/units — — — — — — ( 21,263 ) ( 21,263 ) ( 2,328 ) ( 23,591 ) Other comprehensive income (loss): Change in fair value of derivative instruments — — — — ( 36 ) ( 1,941 ) — ( 1,977 ) 15 ( 1,962 ) Amounts reclassified from other comprehensive income — — — — — ( 7,739 ) — ( 7,739 ) — ( 7,739 ) Net income (loss) — — — — — — ( 14,891 ) ( 14,891 ) 1,996 ( 12,895 ) Balance at June 30, 2025 27,600,000 $ 276 118,166,806 $ 1,182 $ 4,061,670 $ 6,870 $ ( 1,431,394 ) $ 2,638,604 $ 92,497 $ 2,731,101 The accompanying notes are an integral part of these financial statements. 9 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Cash Flows (in thousands) (Unaudited) For the six months ended June 30, 2026 2025 Operating activities: Net income (loss) $ 6,477 $ ( 12,895 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 104,078 115,188 Provision (benefit) for deferred income taxes 5,224 3,334 Share-based compensation 4,869 6,742 Amortization of deferred financing costs, non-cash interest and other amortization 7,803 5,889 Impairment 8,800 — Non-cash ground rent 4,690 4,881 Other adjustments ( 1,373 ) ( 230 ) Changes in assets and liabilities: Hotel receivables ( 10,155 ) ( 10,438 ) Prepaid expenses and other assets 13,118 10,552 Accounts payable and accrued expenses 23,206 9,242 Deferred revenues 3,633 8,618 Net cash provided by (used in) operating activities 170,370 140,883 Investing activities: Improvements and additions to hotel properties ( 24,426 ) ( 49,508 ) Proceeds from sales of hotel properties 16,108 — Property insurance proceeds 3,175 2,386 Other investing activities ( 233 ) ( 382 ) Net cash provided by (used in) investing activities ( 5,376 ) ( 47,504 ) Financing activities: Payment of deferred financing costs ( 6,649 ) ( 78 ) Proceeds from debt 360,000 — Repayments of debt ( 401,339 ) ( 1,098 ) Repurchases of common shares ( 13,860 ) ( 15,612 ) Repurchases of preferred shares ( 2,466 ) — Distributions — common shares/units ( 2,295 ) ( 2,412 ) Distributions — preferred shares/units ( 23,183 ) ( 23,591 ) Other financing activities ( 995 ) ( 1,041 ) Net cash provided by (used in) financing activities ( 90,787 ) ( 43,832 ) Net change in cash and cash equivalents and restricted cash 74,207 49,547 Cash and cash equivalents and restricted cash, beginning of year 196,203 217,591 Cash and cash equivalents and restricted cash, end of period $ 270,410 $ 267,138 The accompanying notes are an integral part of these financial statements. 10 Table of Contents PEBBLEBROOK HOTEL TRUST NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Organization Pebblebrook Hotel Trust (the "Company") is an internally managed hotel investment company, formed as a Maryland real estate investment trust in October 2009 to opportunistically acquire and invest in hotel properties located primarily in major U.S. cities and resort properties located near our primary target urban markets and select destination resort markets, with an emphasis on major gateway coastal markets. As of June 30, 2026, the Company owned interests in 43 hotels with a total of 10,937 guest rooms. The hotel properties are located in: Boston, Massachusetts; Chicago, Illinois; Hollywood, Florida; Jekyll Island, Georgia; Key West, Florida; Los Angeles, California (Beverly Hills, Santa Monica and West Hollywood); Naples, Florida; Newport, Rhode Island; Portland, Oregon; San Diego, California; San Francisco, California; Santa Cruz, California; Stevenson, Washington; and Washington, D.C. Substantially all of the Company's assets are held by, and all of the Company's operations are conducted through, Pebblebrook Hotel, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership. As of June 30, 2026, the Company owned 98.8 % of the common limited partnership units issued by the Operating Partnership ("common units"). The remaining 1.2 % of the common units are owned by the other limited partners of the Operating Partnership. For the Company to maintain its qualification as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), it cannot operate the hotels it owns. Therefore, the Operating Partnership and its subsidiaries lease the hotel properties to subsidiaries of Pebblebrook Hotel Lessee, Inc. (collectively with its subsidiaries, "PHL"), a taxable REIT subsidiary ("TRS"), which in turn engage third-party eligible independent contractors to manage the hotels. PHL is consolidated into the Company's financial statements. Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and in conformity with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") applicable to interim financial information. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. These unaudited consolidated financial statements include all adjustments considered necessary for a fair presentation of the consolidated balance sheets, consolidated statements of operations and comprehensive income, consolidated statements of equity and consolidated statements of cash flows for the periods presented. Interim results are not necessarily indicative of full-year performance, as a result of the impact of seasonal and other short-term variations and the acquisitions and or dispositions of hotel properties. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. The Company and its subsidiaries are separate legal entities and maintain records and books of account separate and apart from each other. The consolidated financial statements include all of the accounts of the Company and its subsidiaries and are presented in accordance with U.S. GAAP. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities that the Company does not control, but over which the Company has the ability to exercise significant influence regarding operating and financial policies, are accounted for under the equity method. Certain reclassifications have been made to the prior period's financial statements to conform to the current year presentation. Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management's best judgment, after considering past, current and expected events and economic conditions. Actual results could differ from these estimates. 11 Table of Contents Risks and Uncertainties The state of the overall economy can significantly impact hotel operational performance and thus the Company's financial position. Global events, as well as national and local events, may adversely impact travel trends and the operations of the Company's hotels. In addition, inflation and changing interest rates may impact the overall economy and the availability of debt, which may impact the Company's financial position. A decline in travel or a significant increase in costs may also adversely impact the Company's cash flow and ability to service debt or meet other financial obligations. New Accounting Pronouncements Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). ASU 2024-03 requires public entities to disclose specified information about certain costs and expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments should be applied either retrospectively to all prior periods presented in the financial statements or prospectively after the adoption date. The Company is currently assessing the impact of adopting ASU 2024-03 on its consolidated financial statements and disclosures. Induced Conversions of Convertible Debt Instruments In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments ("ASU 2024-04"). ASU 2024-04 clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions rather than as debt extinguishments. ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods, with early adoption permitted. The amendments should be applied either prospectively or retrospectively. The Company adopted ASU 2024-04 on January 1, 2026 on a prospective basis to any future settlements of convertible debt instruments. Derivatives and Hedging In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements ("ASU 2025-09"). ASU 2025-09 amends existing hedge accounting guidance to improve the alignment of financial reporting with the economics of an entity's risk management activities. ASU 2025-09 is effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods. Early adoption is permitted. The amendments in this update apply to any entity that elects to apply hedge accounting in accordance with Topic 815 and generally are to be adopted on a prospective basis, with an election available to apply the guidance to existing hedging relationships as of the adoption date. The Company adopted ASU 2025-09 on January 1, 2026 on a prospective basis. The adoption did not have a material impact on the Company's consolidated financial statements. Note 3. Acquisition and Disposition of Hotel Properties Acquisitions The Company did not acquire any hotel properties during the six months ended June 30, 2026 or 2025. Dispositions The following table summarizes disposition transactions during 2026 and 2025 (in thousands): Hotel Property Name Location Sale Date Sales Price Chamberlain West Hollywood Hotel Los Angeles, CA May 27, 2026 $ 43,500 2026 Total $ 43,500 Montrose at Beverly Hills Los Angeles, CA November 19, 2025 $ 44,250 The Westin Michigan Avenue Chicago Chicago, IL December 3, 2025 72,000 2025 Total $ 116,250 The Company received $ 26.1 million of the sales price of the Chamberlain West Hollywood Hotel in the form of 1,347,614 preferred shares and received $ 4.0 million of the sales price of the Montrose at Beverly Hills in the form of 208,447 preferred shares. For the three and six months ended June 30, 2026, the accompanying consolidated statements of operations and comprehensive income included operating income of $ 0.4 million and $ 0.8 million, respectively, excluding impairment loss and gain on sale of hotel properties related to the hotel properties sold. 12 Table of Contents For the three and six months ended June 30, 2025, the accompanying consolidated statements of operations and comprehensive income included operating income (loss) of $ 3.4 million and $( 2.3 ) million, respectively, excluding impairment loss and gain on sale of hotel properties related to the hotel properties sold. The sales of the hotel properties described above did not represent a strategic shift that had a major effect on the Company's operations and financial results, and therefore, did not qualify as discontinued operations. Note 4. Investment in Hotel Properties Investment in hotel properties as of June 30, 2026 and December 31, 2025 consisted of the following (in thousands): June 30, 2026 December 31, 2025 Land $ 740,046 $ 754,384 Buildings and improvements 4,966,919 4,995,530 Furniture, fixtures and equipment 525,274 526,414 Finance lease asset 91,181 91,181 Construction in progress 3,644 1,203 $ 6,327,064 $ 6,368,712 Right-of-use asset, operating leases 351,976 353,873 Investment in hotel properties $ 6,679,040 $ 6,722,585 Less: Accumulated depreciation ( 1,787,248 ) ( 1,699,128 ) Investment in hotel properties, net $ 4,891,792 $ 5,023,457 Impairment The Company reviews its investment in hotel properties for impairment whenever events or circumstances indicate potential impairment. The Company periodically adjusts its estimate of future operating cash flows and estimated hold periods for certain properties. As a result of this review, the Company may identify an impairment trigger has occurred and assess its investment in hotel properties for recoverability. During the six months ended June 30, 2026, the Company recognized an impairment loss of $ 8.8 million for one hotel as a result of its fair value being lower than its carrying value. The impairment loss was determined using Level 2 inputs under authoritative guidance for fair value measurements using purchase and sale agreements and information from marketing efforts for this property. During the six months ended June 30, 2025, no impairment losses were incurred. Lease Assets and Lease Liabilities The Company recognized right-of-use assets and related liabilities related to its ground leases, all of which are operating leases. When the rate implicit in the lease could not be determined, the Company used incremental borrowing rates, which ranged from 4.7 % to 7.6 %. In addition, the term used includes any options to exercise extensions when it is reasonably certain the Company will exercise such option. See Note 11. Commitments and Contingencies for additional information about the ground leases. The operating lease right-of-use assets and liabilities are amortized to ground rent expense over the term of the underlying lease agreements. As of June 30, 2026, the Company's lease liabilities consisted of operating lease liabilities of $ 335.9 million and finance lease liabilities of $ 44.9 million. As of December 31, 2025, the Company's lease liabilities consisted of operating lease liabilities of $ 333.1 million and finance lease liabilities of $ 44.6 million. The finance lease liabilities are included in accounts payable, accrued expenses and other liabilities on the Company's accompanying consolidated balance sheets. 13 Table of Contents Note 5. Debt The Company's debt consisted of the following as of June 30, 2026 and December 31, 2025 (dollars in thousands): Balance Outstanding as of Interest Rate at June 30, 2026 Maturity Date June 30, 2026 December 31, 2025 Unsecured revolving credit facilities Senior unsecured credit facility — (1)(2) October 2028 $ — $ — PHL unsecured credit facility — (1) October 2028 — — Unsecured revolving credit facilities $ — $ — Unsecured term loans Term Loan 2027 — (3) October 2027 — 360,000 Term Loan 2028 5.15 % (1) January 2028 356,652 356,652 Term Loan 2029 4.91 % (1) January 2029 185,217 185,217 Term Loan 2031 5.23 % (1)(3) February 2031 360,000 — Unsecured term loans principal $ 901,869 $ 901,869 Convertible senior notes Convertible Notes 2026 1.75 % December 2026 350,000 350,000 Convertible Notes 2030 1.63 % January 2030 400,000 400,000 Convertible senior notes principal $ 750,000 $ 750,000 Unsecured senior notes principal 6.38 % October 2029 $ 400,000 $ 400,000 Mortgage loans Margaritaville Hollywood Beach Resort — (4) September 2026 — 40,000 Estancia La Jolla Hotel & Spa 5.07 % September 2028 52,056 53,395 Mortgage loans principal $ 52,056 $ 93,395 Total debt principal $ 2,103,925 $ 2,145,264 Unamortized debt premium and deferred financing costs, net ( 23,225 ) ( 21,172 ) Debt, net $ 2,080,700 $ 2,124,092 ______________________ (1) Borrowings bear interest at floating rates. Interest rate at June 30, 2026 gives effect to interest rate hedges. (2) The Company has the option to extend the maturity date for up to two six-month periods, subject to certain terms and conditions and payment of an extension fee. (3) In February 2026, the Company extended the maturity date of Term Loan 2027 to February 2031 (the extended loan is referred to as Term Loan 2031). (4) In February 2026, the Company paid down the remaining loan balance. 14 Table of Contents Unsecured Credit Agreement On October 13, 2022, the Company entered into the Fifth Amended and Restated Credit Agreement with Bank of America, N.A., as administrative agent and certain other agents and lenders ("Credit Agreement"). The Credit Agreement provides for a $ 650.0 million senior unsecured revolving credit facility and three unsecured term loan facilities. The Company may request additional lender commitments to increase the aggregate borrowing capacity under the Credit Agreement up to an additional $ 970.0 million. On February 11, 2026, the Company amended its Credit Agreement to extend the $ 360.0 million Term Loan 2027 to mature in February 2031 and to provide for a delayed draw option for the Company to borrow an additional $ 90.0 million by December 15, 2026 (the extended loan is referred to as Term Loan 2031). The Credit Facility was also amended to remove the SOFR adjustment from its senior unsecured revolving credit facility and all unsecured term loan facilities. Concurrently, the maturity date of the $ 48.0 million unextended portion of the senior unsecured revolving credit facility was extended to October 13, 2028. Unsecured Revolving Credit Facilities The $ 650.0 million senior unsecured revolving credit facility provided for in the Credit Agreement matures in October 2028 and provides the Company the option to extend the maturity date for up to two six-month periods, subject to certain terms and conditions and payment of an extension fee. All borrowings under this senior unsecured revolving credit facility bear interest at a rate per annum equal to, at the option of the Company, (i) the Secured Overnight Financing Rate ("SOFR") plus a margin that is based upon the Company's leverage ratio or (ii) the Base Rate (as defined by the Credit Agreement) plus a margin that is based on the Company's leverage ratio. The margins for revolving credit facility loans range in amount from 1.45 % to 2.50 % for SOFR-based loans and 0.45 % to 1.50 % for Base Rate-based loans, depending on the Company's leverage ratio. As of June 30, 2026, the Company had no outstanding borrowings, $ 8.8 million of outstanding letters of credit and a borrowing capacity of $ 641.2 million remaining on the senior unsecured revolving credit facility. The Company is required to pay an unused commitment fee at an annual rate of 0.20 % or 0.30 % of the unused portion of the senior unsecured revolving credit facility, depending on the amount of borrowings outstanding. The credit agreement contains certain financial covenants, including a maximum leverage ratio, a minimum fixed charge coverage ratio and a maximum percentage of secured debt to total asset value. Under the terms of the Credit Agreement, one or more standby letters of credit, up to a maximum aggregate outstanding balance of $ 30.0 million, may be issued on behalf of the Company by the lenders under the senior unsecured revolving facility. The Company pays a fee for outstanding standby letters of credit at a rate per annum equal to the applicable margin based upon the Company's leverage ratio. Any outstanding standby letters of credit reduce the available borrowings on the senior unsecured revolving credit facility by a corresponding amount. Standby letters of credit of $ 8.8 million and $ 7.9 million were outstanding as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026, the Company also has a $ 20.0 million unsecured revolving credit facility (the "PHL Credit Facility") to be used for PHL's working capital and general corporate purposes. On November 27, 2024, PHL amended the agreement governing the PHL Credit Facility to extend the maturity to October 2028. The PHL Credit Facility has substantially similar terms as the Company's senior unsecured revolving credit facility. Borrowings on the PHL Credit Facility bear interest at a rate per annum equal to, at the option of the Company, (i) SOFR plus a margin that is based upon the Company's leverage ratio or (ii) the Base Rate (as defined by the Credit Agreement) plus a margin that is based on the Company's leverage ratio. The PHL Credit Facility is subject to debt covenants substantially similar to the covenants under the Credit Agreement, which governs the Company's senior unsecured revolving credit facility. As of June 30, 2026, the Company had no borrowings under the PHL Credit Facility and had $ 20.0 million borrowing capacity remaining available under the PHL Credit Facility. As of June 30, 2026, the Company was in compliance with all debt covenants of the credit agreements that govern the unsecured revolving credit facilities. Unsecured Term Loan Facilities The term loan facilities provided for in the Credit Agreement bear interest at a rate per annum equal to, at the option of the Company, (i) SOFR plus a margin that is based upon the Company's leverage ratio or (ii) the Base Rate (as defined by the Credit Agreement) plus a margin that is based on the Company's leverage ratio. The margins for term loans range in amount from 1.40 % to 2.45 % for SOFR-based loans and 0.40 % to 1.45 % for Base Rate-based loans, depending on the Company's leverage ratio. The term loans are subject to the debt covenants in the Credit Agreement. As of June 30, 2026, the Company was in compliance with all debt covenants of its term loans. The Company entered into interest rate swap agreements to fix the SOFR rate on a portion of these unsecured term loan facilities. See Derivative and Hedging Activities for further discussion on the interest rate swaps. 15 Table of Contents Convertible Senior Notes due 2026 The Company has $ 350.0 million aggregate principal amount of 1.75 % Convertible Senior Notes due December 2026 (the "Convertible Notes 2026") outstanding. The Convertible Notes 2026 are governed by an indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, and bear interest at a rate of 1.75 % per annum, payable semi-annually in arrears on June 15th and December 15th of each year. As of June 30, 2026 and December 31, 2025, the Convertible Notes 2026 had $ 0.2 million and $ 0.4 million, respectively, of unamortized issuance costs outstanding. Holders may convert any of their Convertible Notes 2026 into the Company's common shares of beneficial interest ("common shares") at the applicable conversion rate at any time at their election until two days prior to the maturity date. The initial conversion rate is 39.2549 common shares per $1,000 principal amount of Convertible Notes 2026, which represents an initial conversion price of approximately $ 25.47 per share. The conversion rate is subject to adjustment in certain circumstances. Upon conversion of the Convertible Notes 2026, the Company may choose to pay or deliver cash, common shares or a combination of cash and shares. The Company may redeem for cash all or a portion of the Convertible Notes 2026, at its option, upon certain circumstances. The redemption price will be equal to 100 % of the principal amount of the convertible notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If certain make-whole fundamental changes occur, the conversion rate for the Convertible Notes 2026 may be increased. Convertible Senior Notes due 2030 The Company has $ 400.0 million aggregate principal amount of 1.625 % Convertible Senior Notes 2030 due January 2030 (the "Convertible Notes 2030") outstanding. The Convertible Notes 2030 are governed by an indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, and bear interest at a rate of 1.625 % per annum, payable semi-annually in arrears on January 15th and July 15th of each year. As of June 30, 2026 and December 31, 2025, the Convertible Notes 2030 had $ 8.6 million and $ 9.8 million, respectively, of unamortized issuance costs outstanding. Prior to July 15, 2029, the Convertible Notes 2030 are convertible upon certain circumstances. On and after July 15, 2029, holders may convert any of their Convertible Notes 2030 into the Company's common shares at the applicable conversion rate at any time at their election until two days prior to the maturity date. The initial conversion rate is 62.9129 common shares per $1,000 principal amount of Convertible Notes 2030, which represents an initial conversion price of approximately $ 15.89 per share. The conversion rate is subject to adjustment in certain circumstances. Upon conversion of the Convertible Notes 2030, the Company will settle the conversion by paying cash up to the aggregate principal amount of the Convertible Notes 2030 to be converted and cash, common shares or a combination of cash and common shares, at the Company's election, with respect to the remainder, if any, of the conversion obligation in excess of the aggregate principal amount. As of June 30, 2026, the Convertible Notes 2030 were not convertible. Prior to July 20, 2028, the Company may not redeem the Convertible Notes 2030. On or after July 20, 2028, the Company may redeem for cash all or a portion of the Convertible Notes 2030, at its option, upon certain circumstances. The redemption price will be equal to 100 % of the principal amount of the convertible notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If certain make-whole fundamental changes occur, the conversion rate for the Convertible Notes 2030 may be increased. Capped Call Transactions in Connection with the Convertible Senior Notes In connection with the issuances of the Convertible Notes 2026 and the Convertible Notes 2030, the Company entered into privately negotiated capped call transactions. The capped call transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the convertible notes, the number of common shares underlying the applicable convertible note instrument. The capped call transactions are expected generally to reduce the potential dilution to holders of common shares upon conversion of the applicable convertible notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount of any converted applicable convertible notes upon conversion thereof, with such reduction and/or offset subject to a cap. The upper strike price of the capped call transactions is $ 33.0225 per share for the Convertible Notes 2026 and $ 20.23 per share for the Convertible Notes 2030. Premiums paid for the capped call transactions were included as a net reduction to additional paid-in capital in the Company's accompanying consolidated balance sheets. The Company is exposed to credit risk in the event of non-performance by the counterparties to the capped call agreements. The Company believes it minimizes the credit risk by transacting with major creditworthy financial institutions. Unsecured Senior Notes On October 3, 2024, the Company issued $ 400.0 million aggregate principal amount of its 6.375 % senior notes due October 15, 2029 (the "Senior Notes 2029"). The indenture governing the Senior Notes 2029 contains covenants that are customary for similar securities and require the Company to maintain total unencumbered assets as of the end of each fiscal quarter of not less than 150 % of total unsecured indebtedness calculated on a consolidated basis. As of June 30, 2026, the Company was in compliance with all such covenants. 16 Table of Contents Mortgage Loans On December 1, 2021, the Company assumed a $ 61.7 million loan secured by a first-lien mortgage on the leasehold interest of Estancia La Jolla Hotel & Spa ("Estancia"). The loan requires both principal and interest monthly payments based on a fixed interest rate of 5.07 %. The loan matures on September 1, 2028. On September 7, 2023, the Company entered into a $ 140.0 million loan secured by a first-lien mortgage on the leasehold interest of Margaritaville Hollywood Beach Resort. In February 2026, the Company paid down the remaining $ 40.0 million of the loan. The Company's mortgage loan associated with Estancia is non-recourse to the Company except for customary carve-outs to the general non-recourse liability. The loan contains customary provisions regarding events of default, as well as customary cash management, cash trap and lockbox provisions. Cash trap provisions are triggered if the hotel's performance is below a certain threshold. Once triggered, all of the cash flow generated by the hotel is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of the lender. The property is not in a cash trap, and no event of default has occurred under the loan documents. Interest Expense The components of the Company's interest expense consisted of the following for the three and six months ended June 30, 2026 and 2025 (in thousands): For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Unsecured revolving credit facilities $ 558 $ 502 $ 1,085 $ 999 Unsecured term loans 11,701 10,956 22,664 21,927 Convertible senior notes 3,157 3,282 6,313 6,563 Unsecured senior notes 6,375 6,405 12,750 12,597 Mortgage loans 672 3,191 1,664 6,354 Amortization of debt (premium), deferred financing fees and loss on debt extinguishment 2,590 1,911 5,761 3,821 Other 1,003 1,035 2,133 2,154 Total interest expense $ 26,056 $ 27,282 $ 52,370 $ 54,415 Fair Value The Company estimates the fair value of its fixed rate mortgage loan and unsecured senior notes by discounting the future cash flows of each instrument at estimated market rates, taking into consideration general market conditions and maturity of the debt with similar credit terms, and is classified within Level 2 of the fair value hierarchy. The Company estimates the fair value of its fixed rate convertible senior notes using public market prices and is classified within Level 1 of the fair value hierarchy. The estimated fair value of the Company's fixed rate debt (unsecured senior notes, convertible senior notes and the Estancia mortgage loan) as of June 30, 2026 and December 31, 2025 was $ 1.4 billion and $ 1.2 billion, respectively. The fair value of the Company's variable rate debt approximates its carrying value. Future Minimum Principal Payments As of June 30, 2026, the future minimum principal payments for the Company's debt are as follows (in thousands): 2026 $ 351,163 2027 2,439 2028 405,106 2029 585,217 2030 400,000 Thereafter 360,000 Total debt principal payments $ 2,103,925 Unamortized debt premium and deferred financing costs, net ( 23,225 ) Debt, net $ 2,080,700 17 Table of Contents Derivative and Hedging Activities The Company enters into interest rate swap agreements to hedge against interest rate fluctuations. All of the Company's interest rate swaps are designated as cash flow hedges. All unrealized gains and losses on these hedging instruments are reported in accumulated other comprehensive income (loss) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company's interest rate swaps at June 30, 2026 and December 31, 2025 consisted of the following, by maturity date (dollars in thousands): Aggregate Notional Value as of Hedge Type Interest Rate Range (SOFR) Maturity June 30, 2026 December 31, 2025 Swap-cash flow 3.02 % - 3.03 % October 2026 $ 200,000 $ 200,000 Swap-cash flow 3.29 % October 2027 165,000 165,000 Swap-cash flow 3.34 % November 2027 200,000 200,000 Swap-cash flow 3.28 % - 3.29 % March 2028 200,000 — Swap-cash flow 3.54 % - 3.55 % May 2028 100,000 100,000 Total $ 865,000 $ 665,000 The Company records all derivative instruments at fair value in the accompanying consolidated balance sheets. Fair values of interest rate swaps are determined using the standard market methodology of netting the discounted future fixed cash receipts/payments and the discounted expected variable cash payments/receipts. Variable interest rates used in the calculation of projected receipts and payments on the swaps are based on an expectation of future interest rates derived from observable market interest rate curves (Overnight Index Swap curves) and volatilities (Level 2 inputs). Derivatives expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company incorporates these counterparty credit risks in its fair value measurements. The Company believes it minimizes the credit risk by transacting with major creditworthy financial institutions. As of June 30, 2026 and December 31, 2025, the Company's interest rate swap assets had an aggregate fair value of $ 6.2 million and $ 0.7 million, respectively. As of June 30, 2026 and December 31, 2025, the Company's interest rate swap liabilities had an aggregate fair value of zero and $ 0.9 million, respectively. Interest rate swap assets are included in prepaid expenses and other assets and interest rate swap liabilities are included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets. The Company expects to reclassify approximately $ 4.2 million from accumulated other comprehensive income (loss) to interest expense within the next 12 months. Note 6. Revenue The Company presents revenue on a disaggregated basis in the accompanying consolidated statements of operations and comprehensive income. The following table presents revenues by geographic location for the three and six months ended June 30, 2026 and 2025 (in thousands): For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 San Diego, CA $ 91,311 $ 86,700 $ 174,633 $ 161,911 Southern Florida/Georgia 76,232 70,951 165,777 156,406 Boston, MA 81,882 80,956 127,218 127,729 San Francisco, CA 40,976 37,309 88,457 71,050 Los Angeles, CA 44,483 44,630 86,785 78,927 Portland, OR 21,673 21,581 35,222 34,378 Washington, D.C. 18,688 20,425 31,034 35,425 Other (1) 31,897 44,985 43,672 61,977 Total Revenues $ 407,142 $ 407,537 $ 752,798 $ 727,803 ______________________ (1) Other includes Chicago, IL, Newport, RI and Santa Cruz, CA . Payments from customers are primarily made when services are provided. Due to the short-term nature of the Company's contracts (other than membership contracts) and the almost simultaneous receipt of payment, almost all of the contract liability balance at the beginning of the period is expected to be recognized as revenue over the following 12 months. Membership deposits, which are received pursuant to membership contracts, are recognized as revenue over the expected life of the membership. 18 Table of Contents Note 7. Equity Common Shares The Company is authorized to issue up to 500,000,000 common shares. Each outstanding common share entitles the holder to one vote on each matter submitted to a vote of shareholders. Holders of common shares are entitled to receive dividends when authorized by the Board of Trustees. Common Share Repurchase Program On October 21, 2025, the Company's Board of Trustees authorized a share repurchase program of up to $ 150.0 million of common shares. Under this program, the Company may repurchase common shares from time to time in transactions on the open market or by private agreement. The Company may suspend or discontinue this program at any time. Common shares repurchased by the Company cease to be outstanding and become authorized but unissued common shares. During the six months ended June 30, 2026, the Company repurchased 944,452 common shares for an aggregate purchase price of $ 12.9 million, or an average of approximately $ 13.63 per share. As of June 30, 2026, $ 137.1 million of common shares remained available for repurchase under this program. Common Dividends The Company declared the following dividends on common shares/units for the six months ended June 30, 2026: Dividend per Share/Unit For the Quarter Ended Record Date Payable Date $ 0.01 March 31, 2026 March 31, 2026 April 15, 2026 $ 0.01 June 30, 2026 June 30, 2026 July 15, 2026 Preferred Shares The Company is authorized to issue up to 100,000,000 preferred shares of beneficial interest, $ 0.01 par value per share ("preferred shares"). The following preferred shares were outstanding as of June 30, 2026 and December 31, 2025: Security Type June 30, 2026 December 31, 2025 6.375 % Series E 4,032,809 4,265,374 6.30 % Series F 5,707,904 5,890,475 6.375 % Series G 8,452,564 9,085,949 5.70 % Series H 7,388,647 7,827,164 25,581,924 27,068,962 The Series E, Series F, Series G and Series H Cumulative Redeemable Preferred Shares (collectively, the "Preferred Shares") rank senior to the common shares and on parity with each other with respect to payment of distributions. The Preferred Shares do not have any maturity date and are not subject to mandatory redemption. The Company may redeem the Preferred Shares at any time. The Company may, at its option, redeem the Preferred Shares, in each case in whole or from time to time in part, by payment of $ 25.00 per share, plus any accumulated, accrued and unpaid distributions through the date of redemption. Upon the occurrence of a change of control, as defined in the Company's declaration of trust, the result of which the common shares and the common securities of the acquiring or surviving entity are not listed on the New York Stock Exchange, the NYSE American or Nasdaq, or any successor exchanges, the Company may, at its option, redeem the Preferred Shares in whole or in part within 120 days following the change of control by paying $ 25.00 per share, plus any accrued and unpaid distributions through the date of redemption. If the Company does not exercise its right to redeem the Preferred Shares upon a change of control, the holders of the Preferred Shares have the right to convert some or all of their shares into a number of common shares based on defined formulas subject to share caps. The share cap on each Series E Preferred Share is 1.9372 common shares, on each Series F Preferred Share is 2.0649 common shares, on each Series G Preferred Share is 2.1231 common shares, and on each Series H Preferred Share is 2.2311 common shares. Preferred Share Repurchase Programs On February 17, 2023, the Company's Board of Trustees authorized a share repurchase program of up to $ 100.0 million of the Preferred Shares (the "2023 Preferred Share Repurchase Program"). Under the terms of the program, the Company may repurchase up to an aggregate of $ 100.0 million of its 6.375 % Series E Cumulative Redeemable Preferred Shares, 6.30 % Series F Cumulative Redeemable Preferred Shares, 6.375 % Series G Cumulative Redeemable Preferred Shares and 5.70 % Series H Cumulative Redeemable Preferred Shares from time to time in transactions on the open market or by private agreement. 19 Table of Contents During the six months ended June 30, 2026, the Company repurchased and retired 1,487,038 Preferred Shares for an aggregate purchase price of $ 28.6 million, or an average of approximately $ 19.22 per share. This includes 1,347,614 Preferred Shares received as partial consideration for the sale of Chamberlain West Hollywood Hotel and 139,424 Preferred Shares repurchased in the market. As of June 30, 2026, $ 45.6 million remained available for repurchase of Preferred Shares under this program. On July 24, 2026, the Company's Board of Trustees authorized a new share repurchase program of up to $ 50.0 million of Preferred Shares (the "2026 Preferred Share Repurchase Program"), which will commence upon the completion of the 2023 Preferred Share Repurchase Program. Under the 2026 Preferred Share Repurchase Program, the Company may repurchase up to an aggregate of $ 50.0 million of its 6.375 % Series E Cumulative Redeemable Preferred Shares, 6.30 % Series F Cumulative Redeemable Preferred Shares, 6.375 % Series G Cumulative Redeemable Preferred Shares and 5.70 % Series H Cumulative Redeemable Preferred Shares from time to time in transactions on the open market or by private agreement. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerations, and market conditions. The programs do not require the Company to repurchase any specific number of Preferred Shares. The programs do not have an expiration date and may be suspended, modified or discontinued at any time. Preferred Dividends The Company declared the following dividends on preferred shares for the six months ended June 30, 2026: Security Type Dividend per Share/Unit For the Quarter Ended Record Date Payable Date 6.375 % Series E $ 0.40 March 31, 2026 March 31, 2026 April 15, 2026 6.375 % Series E $ 0.40 June 30, 2026 June 30, 2026 July 15, 2026 6.30 % Series F $ 0.39 March 31, 2026 March 31, 2026 April 15, 2026 6.30 % Series F $ 0.39 June 30, 2026 June 30, 2026 July 15, 2026 6.375 % Series G $ 0.40 March 31, 2026 March 31, 2026 April 15, 2026 6.375 % Series G $ 0.40 June 30, 2026 June 30, 2026 July 15, 2026 5.70 % Series H $ 0.36 March 31, 2026 March 31, 2026 April 15, 2026 5.70 % Series H $ 0.36 June 30, 2026 June 30, 2026 July 15, 2026 Non-controlling Interest of Common Units in Operating Partnership Holders of Operating Partnership common units ("OP units") have certain redemption rights that enable OP unit holders to cause the Operating Partnership to redeem their units in exchange for, at the Company's option, cash per unit equal to the market price of common shares at the time of redemption or common shares on a one -for-one basis. The number of shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of share splits, mergers, consolidations or similar pro-rata share transactions, which otherwise would have the effect of diluting the ownership interests of the Operating Partnership's limited partners or the Company's shareholders. On May 11, 2022, in connection with the acquisition of Inn on Fifth in Naples, Florida, the Company issued 16,291 OP units. As of June 30, 2026 and December 31, 2025, the Operating Partnership had 16,291 OP units held by third parties, excluding LTIP units. As of June 30, 2026, the Operating Partnership had two classes of long-term incentive partnership units ("LTIP units"), LTIP Class A units and LTIP Class B units. All of the outstanding LTIP units are held by officers of the Company. On February 7, 2025, the Board of Trustees granted time-vesting restricted awards of 159,594 LTIP Class B units to executive officers. On February 5, 2026, the Board of Trustees granted time-vesting restricted awards of 183,587 LTIP Class B units to executive officers. As of June 30, 2026, the Operating Partnership had 1,338,018 LTIP units outstanding, of which 1,002,586 LTIP units have vested. As of December 31, 2025, the Operating Partnership had 1,154,431 LTIP units outstanding, of which 710,156 LTIP units have vested. Only vested LTIP units may be converted to OP units, which in turn can be tendered for redemption as described above. 20 Table of Contents Non-controlling Interest of Preferred Units in Operating Partnership On May 11, 2022, the Company issued 3,104,400 preferred units in the Operating Partnership, designated as 6.0 % Series Z Cumulative Perpetual Preferred Units ("Series Z Preferred Units"). The Series Z Preferred Units rank senior to the OP units and on parity with the Operating Partnership's Series E, Series F, Series G and Series H Preferred Units. Holders of Series Z Preferred Units are entitled to receive quarterly distributions at an annual rate of 6.0 % of the liquidation preference value of $ 25.00 per share. Holders of Series Z Preferred Units may elect to redeem some or all of their units for, at the Company's election, cash, common shares having an equivalent value or a like number of Preferred Shares of a series selected by the redeeming holder. As of June 30, 2026 and December 31, 2025, the Operating Partnership had 3,104,400 Series Z Preferred Units outstanding. Note 8. Share-Based Compensation Plan Available Shares The Company maintains the 2009 Equity Incentive Plan (as amended and restated effective May 23, 2025, the "Plan") to attract and retain independent trustees, executive officers and other key employees and service providers. The Plan provides for the grant of options to purchase common shares, share awards, share appreciation rights, performance units and other equity-based awards. Share awards under the Plan vest over a period determined by the Board of Trustees, generally over three to five years . The Company pays or accrues for dividends on share-based awards. All outstanding share awards are subject to full or partial accelerated vesting upon a change in control and upon death or disability or certain other employment termination events as set forth in the award agreements. As of June 30, 2026, there were 3,463,261 common shares available for issuance under the Plan. Service Condition Share Awards From time to time, the Company awards restricted common shares under the Plan to officers, employees and new members of the Board of Trustees. These shares generally vest over three to five years based on continued service or employment. The following table provides a summary of service condition restricted share activity for the six months ended June 30, 2026: Shares Weighted-Average Grant Date Fair Value Unvested at December 31, 2025 399,625 $ 15.28 Granted 206,644 $ 11.92 Vested ( 215,397 ) $ 16.47 Unvested at June 30, 2026 390,872 $ 12.85 For the three and six months ended June 30, 2026, the Company recognized approximately $ 0.5 million and $ 1.1 million, respectively, of share-based compensation expense related to these awards as presented in the accompanying consolidated statements of operations and comprehensive income. For the three and six months ended June 30, 2025, the Company recognized approximately $ 0.8 million and $ 1.5 million , respectively, of share-based compensation expense related to these awards as presented in the accompanying consolidated statements of operations and comprehensive income. Performance-Based Equity Awards On February 5, 2026, the Board of Trustees approved a target award of 393,872 performance-based equity awards to officers and employees of the Company. These awards will vest, if at all, in 2029. The actual number of common shares that ultimately vest will be from 0 % to 200 % of the target award and will be determined in 2029 based on the performance criteria set forth in the award agreements for the period of performance from January 1, 2026 through December 31, 2028. For the three and six months ended June 30, 2026, the Company recognized approximately $ 1.4 million and $ 2.7 million, respectively, of share-based compensation expense related to these performance-based equity awards as presented in the accompanying consolidated statements of operations and comprehensive income. For the three and six months ended June 30, 2025, the Company recognized approximately $ 1.5 million and $ 2.8 million, respectively, of share-based compensation expense related to these performance-based equity awards as presented in the accompanying consolidated statements of operations and comprehensive income. Long-Term Incentive Partnership Units As of June 30, 2026, the Operating Partnership had two classes of LTIP units, LTIP Class A units and LTIP Class B units. All of the outstanding LTIP units are held by officers of the Company. 21 Table of Contents On February 5, 2026, the Board of Trustees granted 183,587 LTIP Class B units to executive officers. These LTIP units will vest ratably on January 1, 2027, 2028 and 2029, contingent upon continued employment with the Company. The fair value of each award was determined based on the closing price of the Company's common shares on the grant date of $ 11.89 per unit with an aggregate grant date fair value of $ 2.2 million. As of June 30, 2026, the Operating Partnership had 1,338,018 LTIP units outstanding, of which 1,002,586 LTIP units have vested. As of December 31, 2025, the Operating Partnership had 1,154,431 LTIP units outstanding, of which 710,156 LTIP units have vested. Only vested LTIP units may be converted to OP units, which in turn can be tendered for redemption as described in Note 7. Equity . For the three and six months ended June 30, 2026, the Company recognized approximately $ 0.5 million and $ 1.0 million, respectively, in expense related to these LTIP units. The aggregate expense related to the LTIP unit grants is presented as non-controlling interest in the Company's accompanying consolidated balance sheets. For the three and six months ended June 30, 2025, the Company recognized approximately $ 1.2 million and $ 2.4 million, respectively, in expense related to these LTIP units. The aggregate expense related to the LTIP unit grants is presented as non-controlling interest in the Company's accompanying consolidated balance sheets. Note 9. Income Taxes As a REIT, the Company generally is not subject to federal corporate income tax on that portion of its taxable income that is currently distributed to shareholders. However, as a REIT, the Company is still subject to certain state and local taxes on its revenues, income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, taxable income of TRSs, including our TRS lessees, is subject to federal, state and local income taxes. A valuation allowance on deferred tax assets is recorded when the Company has determined it more likely than not that future results will not generate sufficient taxable income to realize the deferred tax assets for each jurisdiction. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and local jurisdictions, where applicable. Due to the net operating loss carryforward, tax years 2020 through 2025 remain open to examination by the major taxing jurisdictions to which the Company is subject. Note 10. Earnings (Loss) Per Share The following is a reconciliation of basic and diluted earnings (loss) per common share (in thousands, except share and per-share data): For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Numerator: Net income (loss) attributable to common shareholders $ 20,659 $ 7,424 $ ( 9,042 ) $ ( 36,154 ) Less: Dividends paid on unvested share-based compensation ( 8 ) ( 8 ) ( 15 ) ( 17 ) Less: Undistributed earnings attributable to share-based compensation ( 125 ) ( 45 ) — — Net income (loss) available to common shareholders — basic $ 20,526 $ 7,371 $ ( 9,057 ) $ ( 36,171 ) Plus: Interest expense on convertible notes 1,531 — — — Net income (loss) available to common shareholders — diluted $ 22,057 $ 7,371 $ ( 9,057 ) $ ( 36,171 ) Denominator: Weighted-average number of common shares — basic 112,741,241 118,172,417 113,034,743 118,685,483 Effect of dilutive share-based compensation 624,642 211,029 — — Effect of dilutive convertible notes 13,739,215 — — — Weighted-average number of common shares — diluted 127,105,098 118,383,446 113,034,743 118,685,483 Net income (loss) per share available to common shareholders — basic $ 0.18 $ 0.06 $ ( 0.08 ) $ ( 0.30 ) Net income (loss) per share available to common shareholders — diluted $ 0.17 $ 0.06 $ ( 0.08 ) $ ( 0.30 ) For the three and six months ended June 30, 2026, zero and 1,453,904 , respectively, of unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average number of common shares, as their effect would have been anti-dilutive. For the three and six months ended June 30, 2025, 998,501 and 1,390,978 , respectively, of unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average number of common shares, as their effect would have been anti-dilutive. For the three and six months ended June 30, 2026, zero and 13,739,215 , respectively, of common shares underlying the Convertible Notes 2026 have been excluded from diluted shares as their effect would have been anti-dilutive. For the three and six months ended June 30, 2025, 29,441,175 of common shares underlying the Convertible Notes 2026 have been excluded from diluted shares as their effect would have been anti-dilutive. 22 Table of Contents The LTIP and OP units held by the non-controlling interest holders have been excluded from the denominator of the diluted earnings per share as there would be no effect on the amounts since the limited partners' share of income (loss) would also be added or subtracted to derive net income (loss) available to common shareholders. The 3,104,400 Series Z Preferred Units have been excluded from diluted shares as their effect would have been anti-dilutive for all periods presented. Note 11. Commitments and Contingencies Hotel Management Agreements The Company's hotel properties are operated pursuant to management agreements with various management companies. The remaining terms of these management agreements are up to eight years , not including renewals, and up to 26 years, including renewals. The majority of the Company's management agreements are terminable at will by the Company upon paying a termination fee and some are terminable by the Company upon sale of the property, with, in some cases, the payment of termination fees. Most of the agreements also provide the Company the ability to terminate based on failure to achieve defined operating performance thresholds. Termination fees range from zero to up to two times the annual base management and incentive management fees, depending on the agreement and the reason for termination. Certain of the Company's management agreements are non-terminable except upon the manager's breach of a material representation or the manager's failure to meet performance thresholds as defined in the management agreement. The management agreements require the payment of a base management fee generally between 1 % and 4 % of hotel revenues. Under certain management agreements, the management companies are also eligible to receive an incentive management fee if hotel operating income, cash flows or other performance measures, as defined in the agreements, exceed certain performance thresholds. The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel. For the three and six months ended June 30, 2026, combined base and incentive management fees were $ 11.1 million and $ 19.5 million, respectively. For the three and six months ended June 30, 2025, combined base and incentive management fees were $ 11.2 million and $ 18.8 million, respectively. Base and incentive management fees are included in other direct and indirect expenses in the Company's accompanying consolidated statements of operations and comprehensive income. Reserve Funds Certain of the Company's agreements with its hotel managers, franchisors, ground lessors and lenders have provisions for the Company to provide funds, typically 4.0 % of hotel revenues, sufficient to cover the cost of (a) certain non-routine repairs and maintenance to the hotels and (b) replacements and renewals to the hotels' furniture, fixtures and equipment. Restricted Cash At June 30, 2026 and December 31, 2025, the Company had $ 9.4 million and $ 12.0 million, respectively, in restricted cash, which consisted of funds held in cash management accounts held by a lender, reserves for replacement of furniture and fixtures, and reserves to pay for real estate taxes, ground rent or property insurance under certain hotel management agreements or loan agreements. 23 Table of Contents Long-Term Property Operating and Finance Leases At June 30, 2026, the following hotels were subject to leases as follows: Lease Properties Lease Type Lease Expiration Date Restaurant at Southernmost Beach Resort Operating lease April 2029 Paradise Point Resort & Spa Operating lease May 2050 Harbor Court Hotel San Francisco Finance lease August 2052 Hotel Monaco Washington DC Operating lease November 2059 Argonaut Hotel Operating lease December 2059 Hotel Zephyr Fisherman's Wharf and Retail Operating lease February 2062 Viceroy Santa Monica Hotel Operating lease September 2065 Estancia La Jolla Hotel & Spa Operating lease January 2066 San Diego Mission Bay Resort Operating lease July 2068 1 Hotel San Francisco Operating lease March 2070 (1) Hyatt Regency Boston Harbor Operating lease April 2077 The Westin Copley Place, Boston Operating lease December 2077 (2) The Liberty, a Luxury Collection Hotel, Boston Operating lease May 2080 Jekyll Island Club Resort and Restaurant Operating lease January 2089 Hotel Zeppelin San Francisco Operating and finance lease June 2089 (4) Hotel Zelos San Francisco Operating lease June 2097 Hotel Palomar Los Angeles Beverly Hills Operating lease January 2107 (3) Margaritaville Hollywood Beach Resort Operating lease July 2112 ______________________ (1) The expiration date assumes the exercise of a 14 -year extension option. (2) No payments are required through maturity. (3) The expiration date assumes the exercise of all 19 five-year extension options. (4) This property consists of a 116 -guest room building, which is owned in fee simple, and an adjoining building with 80 guest rooms, which is subject to a lease agreement. The expiration date assumes the exercise of a 30-year extension option. The Company's leases may require minimum fixed rent payments, percentage rent payments based on a percentage of revenues in excess of certain thresholds or rent payments equal to the greater of a minimum fixed rent or percentage rent. Minimum fixed rent may be adjusted annually by increases in the consumer price index and may be subject to minimum and maximum increases. Some leases also contain certain restrictions on modifications that can be made to the hotel structures due to their status as national historic landmarks. The Company records expense on a straight-line basis for leases that provide for minimum rental payments that increase in pre-established amounts over the remaining terms of the leases. Ground rent expense is included in real estate taxes, personal property taxes, property insurance and ground rent in the Company's accompanying consolidated statements of operations and comprehensive income. The components of ground rent expense for the three and six months ended June 30, 2026 and 2025 are as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Fixed ground rent $ 5,200 $ 4,825 $ 10,356 $ 9,635 Variable ground rent 5,740 5,128 10,543 9,314 Total ground rent $ 10,940 $ 9,953 $ 20,899 $ 18,949 Litigation The nature of the operations of hotels exposes the Company's hotels, the Company and the Operating Partnership to the risk of claims and litigation in the normal course of their business. The Company has insurance to cover certain potential material losses. The Company is not presently subject to any material litigation nor, to the Company's knowledge, is any material litigation threatened against the Company. 24 Table of Contents Note 12. Supplemental Information to Statements of Cash Flows (in thousands) For the six months ended June 30, 2026 2025 Interest paid, net of capitalized interest $ 45,228 $ 51,068 Income taxes paid (refunded) $ 2,441 $ 779 Non-Cash Investing and Financing Activities: Distributions payable on common shares/units $ 1,203 $ 1,255 Distributions payable on preferred shares/units $ 9,904 $ 10,601 Issuance of common shares for Board of Trustees compensation $ 902 $ 745 Accrued additions and improvements to hotel properties $ 847 $ 455 Write-off of fully amortized deferred financing costs $ 2,313 $ — Write-down of investment $ 1,639 $ 2,662 Preferred shares received in connection with hotel sale $ 25,865 $ — Note 13. Operating Segment Information The following table presents the Company's segment hotel revenues, Hotel EBITDA, including significant hotel expenses and its reconciliation to net income (loss) for the three and six months ended June 30, 2026 and 2025 (in thousands): For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Revenues: Total revenues $ 407,142 $ 407,537 $ 752,798 $ 727,803 Less: Corporate and other revenues 220 209 480 587 Hotel revenues 406,922 407,328 752,318 727,216 Significant hotel expenses: Room expenses 64,836 67,732 124,351 126,255 Food and beverage expenses 72,386 72,658 137,845 137,226 Hotel general and administrative 31,123 31,579 60,235 60,690 Hotel sales and marketing 25,219 25,083 48,030 48,038 Hotel operations and maintenance 31,304 30,963 62,381 61,895 Hotel management fee 11,060 11,636 19,478 19,585 Hotel real estate taxes, personal property taxes, property insurance and ground rent 32,712 34,063 65,990 67,110 Other segment items (1) 14,460 12,635 27,987 24,611 Hotel EBITDA 123,822 120,979 206,021 181,806 Depreciation and amortization ( 52,099 ) ( 57,645 ) ( 104,078 ) ( 115,188 ) Interest expense ( 26,056 ) ( 27,282 ) ( 52,370 ) ( 54,415 ) Impairment ( 1,112 ) — ( 8,800 ) — Business interruption insurance income — 3,242 — 7,545 Income tax (expense) benefit ( 7,716 ) ( 7,812 ) ( 7,699 ) ( 4,650 ) Corporate and other (2) ( 11,926 ) ( 12,197 ) ( 26,597 ) ( 27,993 ) Net income (loss) $ 24,913 $ 19,285 $ 6,477 $ ( 12,895 ) ______________________ (1) Other segment items include expenses incurred for parking, spa, franchise fees and other hotel operating expenses. (2) Corporate and other includes corporate general and administrative and other operating income and expenses. 25 Table of Contents