What changed in this filing

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Item 1. Financial Statements

2024-05-01 compared with 2023-11-02 · 100 added, 160 removed, 302 unchanged (46% of the section changed)

3 unchanged sentences

(in millions, except share and per share data)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Property and equipment, net $ 7,441 $ 7,459

Contract asset 774 760

Intangibles, net 42 42

9 unchanged sentences

Debt $ 3,764 $ 3,765

Debt associated with hotels in receivership 725 725

Accrued interest associated with hotels in receivership 49 35

Accounts payable and accrued expenses 223 210

Dividends payable 57 362

Due to hotel managers 101 131

4 unchanged sentences

Stockholders' Equity

Common stock, par value $ 0.01 per share, 6,000,000,000 shares authorized, 210,672,182 shares issued and 209,983,781 shares outstanding as of September 30, 2023 and 224,573,858 shares issued and 224,061,745 shares outstanding as of December 31, 2022

Common stock, par value $ 0.01 per share, 6,000,000,000 shares authorized, 211,377,190 shares issued and 210,525,968 shares outstanding as of March 31, 2024 and 210,676,264 shares issued and 209,987,581 shares outstanding as of December 31, 2023

Additional paid-in capital 4,154 4,156

(Accumulated deficit) retained earnings ( 169 ) 16

Accumulated deficit ( 367 ) ( 344 )

Total stockholders' equity 3,789 3,814

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Rooms $ 374 $ 382

1 unchanged sentence

Ancillary hotel 62 65

Other 22 19 64 54

Total revenues 639 648

3 unchanged sentences

Other departmental and support 145 158

Other property-level 59 58 182 173

Other property 52 60

Management fees 30 30

Casualty and impairment loss — 3 204 4

Impairment and casualty loss 6 1

Depreciation and amortization 65 64

Corporate general and administrative 17 16

Other 19 18 61 52

Total expenses 561 583

Gain on sales of assets, net — 14 15 13

Gain on sale of assets, net — 15

Gain on derecognition of assets 14 —

Operating income 92 80

1 unchanged sentence

Interest expense ( 53 ) ( 52 )

Interest expense associated with hotels in receivership ( 14 ) ( 8 )

Equity in earnings from investments in affiliates — 4

Other gain, net — 1

Income (loss) before income taxes 31 37 ( 77 ) 136

Income tax benefit (expense) — 3 ( 5 ) 2

Net income (loss) 31 40 ( 82 ) 138

Income before income taxes 30 35

Income tax expense ( 1 ) ( 2 )

Net income 29 33

Net income attributable to noncontrolling interests ( 1 ) —

Net income (loss) attributable to stockholders $ 27 $ 35 $ ( 90 ) $ 128

Earnings (loss) per share:

Earnings (loss) per share – Basic $ 0.13 $ 0.15 $ ( 0.42 ) $ 0.55

Earnings (loss) per share – Diluted $ 0.13 $ 0.15 $ ( 0.42 ) $ 0.55

Net income attributable to stockholders $ 28 $ 33

Earnings per share:

Earnings per share – Basic $ 0.13 $ 0.15

Earnings per share – Diluted $ 0.13 $ 0.15

Weighted average shares outstanding – Basic 209 220

4 unchanged sentences

(unaudited, in millions)

Nine Months Ended

September 30,

Three Months Ended

Operating Activities:

Net (loss) income $ ( 82 ) $ 138

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Net income $ 29 $ 33

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 65 64

Gain on sales of assets, net — ( 15 )

Gain on derecognition of assets ( 14 ) —

Impairment and casualty loss 5 1

Equity in earnings from investments in affiliates — ( 4 )

Other gain, net — ( 92 )

Share-based compensation expense 4 4

7 unchanged sentences

Proceeds from asset dispositions, net — 116

Proceeds from the sale of investments in affiliates, net 3 101

Contributions to unconsolidated affiliates — ( 2 )

2 unchanged sentences

Repayments of credit facilities — ( 50 )

Proceeds from issuance of mortgage debt — 30

Repayments of mortgage debt ( 1 ) ( 2 )

5 unchanged sentences

Net cash used in financing activities ( 362 ) ( 217 )

Net (decrease) increase in cash and cash equivalents and restricted cash ( 153 ) 237

Net decrease in cash and cash equivalents and restricted cash ( 340 ) ( 64 )

Cash and cash equivalents and restricted cash, beginning of period 750 939

8 unchanged sentences

Common Stock Additional

Capital Retained

Deficit) Non-

Capital Accumulated

Interests Total

6 unchanged sentences

Distributions to noncontrolling interests — — — — ( 2 ) ( 2 )

Repurchase of common stock ( 9 ) — ( 105 ) — — ( 105 )

Balance as of March 31, 2024 211 $ 2 $ 4,154 $ ( 367 ) $ ( 47 ) $ 3,742

Share-based compensation, net — — 5 — — 5

Net (loss) income — — — ( 150 ) 4 ( 146 )

Dividends and dividend equivalents (1)

— — — ( 34 ) — ( 34 )

Balance as of June 30, 2023 216 2 4,221 ( 165 ) ( 45 ) 4,013

Share-based compensation, net — — 5 — — 5

Net income — — — 27 4 31

Dividends and dividend equivalents (1)

— — — ( 31 ) — ( 31 )

Distributions to noncontrolling interests — — — — ( 3 ) ( 3 )

Repurchase of common stock ( 6 ) — ( 75 ) — — ( 75 )

Balance as of September 30, 2023 210 $ 2 $ 4,151 $ ( 169 ) $ ( 44 ) $ 3,940

Common Stock Additional

Capital (Accumulated

Capital Retained

Earnings Non-

3 unchanged sentences

Share-based compensation, net 1 — — 2 — 2

Net (loss) income — — — ( 57 ) 1 ( 56 )

Dividends and dividend equivalents (2)

— — — ( 2 ) — ( 2 )

Repurchase of common stock ( 3 ) — ( 61 ) — — ( 61 )

Balance as of March 31, 2022 233 2 4,473 ( 142 ) ( 48 ) 4,285

Share-based compensation, net — — 5 — — 5

Net income — — — 33 — 33

3 unchanged sentences

Repurchase of common stock ( 9 ) — ( 105 ) — — ( 105 )

Balance as of June 30, 2022 225 2 4,321 6 ( 48 ) 4,281

Share-based compensation, net — — 4 — — 4

Net income — — — 35 5 40

Dividends and dividend equivalents (2)

— — — ( 3 ) — ( 3 )

Distributions to noncontrolling interests — — — — ( 3 ) ( 3 )

Balance as of September 30, 2022 225 $ 2 $ 4,325 $ 38 $ ( 46 ) $ 4,319

Balance as of March 31, 2023 216 $ 2 $ 4,216 $ 19 $ ( 49 ) $ 4,188

___________________________________

(1) Dividends declared per common share were $ 0.15 for each of the three months ended March 31, 2023, June 30, 2023 and September 30, 2023.

(2) Dividends declared per common share were $ 0.01 for each of the three months ended March 31, 2022, June 30, 2022 and September 30, 2022.

(1) Dividends declared per common share were $ 0.25 and $ 0.15 for the three months ended March 31, 2024 and 2023, respectively.

Refer to the notes to the unaudited condensed consolidated financial statements.

32 unchanged sentences

Reclassifications

Certain line items on the audited condensed consolidated balance sheet as of December 31, 2022 have been reclassified to conform to the current period presentation.

Certain line items on the condensed consolidated statements of operations for the three months ended March 31, 2023 have been reclassified to conform to the current period presentation.

Summary of Significant Accounting Policies

5 unchanged sentences

In February 2023, we sold the Hilton Miami Airport hotel for gross proceeds of $ 118.25 million.

We recognized a net gain of approximately $ 15 million, which is included in gain on sales of assets, net in our condensed consolidated statements of operations.

Additionally, in June 2023, the ground lessor terminated the ground lease for the Embassy Suites Phoenix Airport hotel and, pursuant to an agreement, we received an early termination fee of approximately $ 4 million, which is included in other gain, net in our condensed consolidated statements of operations.

During the nine months ended September 30, 2022, we sold the five consolidated hotels listed in the table below and received total gross proceeds of approximately $ 149 million.

We recognized a net gain of approximately $ 15 million, which is included in gain on sales of assets, net in our condensed consolidated statements of operations.

Hotel Location Month Sold

Hampton Inn & Suites Memphis – Shady Grove Memphis, Tennessee April 2022

Hilton Chicago/Oak Brook Suites Chicago, Illinois May 2022

Homewood Suites by Hilton Seattle Convention Center Pike Street Seattle, Washington June 2022

Hilton Garden Inn Chicago/Oakbrook Terrace Chicago, Illinois July 2022

Hilton Garden Inn LAX/El Segundo El Segundo, California September 2022

Additionally, in June 2022, we sold our ownership interests in the joint ventures that own and operate the Hilton San Diego Bayfront for gross proceeds of $ 157 million.

Our gross proceeds were reduced by $ 55 million for our share of the mortgage debt in the joint venture.

We recognized a gain of approximately $ 92 million, net of selling costs, which is included in other gain, net in our condensed consolidated statements of operations.

We recognized a net gain of approximately $ 15 million, which is included in gain on sale of assets, net in our condensed consolidated statements of operations.

Property and Equipment

Property and equipment were:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in millions)

6 unchanged sentences

$ 7,441 $ 7,459

Depreciation of property and equipment was $ 65 million and $ 67 million during the three months ended September 30, 2023 and 2022, respectively, and $ 193 million and $ 203 million during the nine months ended September 30, 2023 and 2022, respectively.

For the nine months ended September 30, 2023, we recognized an impairment loss of approximately $ 202 million related to one of the hotels securing our $ 725 million non-recourse CMBS loan as a result of a decision to cease making debt service payments that we expect will result in us no longer owning the property and benefiting from the cash flow.

Depreciation of property and equipment was $ 65 million and $ 64 million during the three months ended March 31, 2024 and 2023, respectively.

During the three months ended March 31, 2024, we recognized an impairment loss of approximately $ 5 million related to one of our hotels subject to a ground lease and our inability to recover the carrying value of the asset over the remaining lease term.

Refer to Note 7:

"Debt" and Note 7:

"Fair Value Measurements" for additional information.

4 unchanged sentences

Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them.

The assets of our VIEs are only available to settle the obligations of these entities.

The assets of our VIEs

are only available to settle the obligations of these entities.

Our condensed consolidated balance sheets include the following assets and liabilities of these entities:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in millions)

8 unchanged sentences

Unconsolidated Entities

Four of our hotels are owned by unconsolidated joint ventures in which we hold an interest, are accounted for using the equity method and had total debt of approximately $ 721 million as of both September 30, 2023 and December 31, 2022.

Four of our hotels are owned by unconsolidated joint ventures in which we hold an interest.

These hotels are accounted for using the equity method and had total debt of approximately $ 702 million as of both March 31, 2024 and December 31, 2023.

Substantially all the debt is secured solely by the affiliates’ assets or is guaranteed by other partners without recourse to us.

Debt balances and associated interest rates as of September 30, 2023 were:

Debt balances and associated interest rates as of March 31, 2024 were:

Principal balance as of

Interest Rate

at September 30, 2023 Maturity Date September 30, 2023 December 31, 2022

at March 31, 2024 Maturity Date March 31, 2024 December 31, 2023

(in millions)

SF Mortgage Loan (1)

November 2023 $ 725 $ 725

HHV Mortgage Loan (1)

11 unchanged sentences

4.88 % May 2029 750 750

Finance lease obligations

7.66 % 2024 to 2028 1 1

unamortized premium 1 1

2 unchanged sentences

_____________________________________

(1) In October 2016, we entered into a $ 725 million CMBS loan ("SF Mortgage Loan") secured by the Hilton San Francisco Union Square and the Parc 55 San Francisco – a Hilton Hotel (collectively, the "Hilton San Francisco Hotels") and a $ 1.275 billion CMBS loan secured by the Hilton Hawaiian Village Waikiki Beach Resort (“HHV Mortgage Loan”).

(2) In June 2023, we ceased making debt service payments toward the SF Mortgage Loan, and we have received notice of default from the servicer.

The stated rate on the loan is 4.11 %, however, beginning June 1, 2023, the default interest rate on the loan is 7.11 %.

Additionally, beginning June 1, 2023, the loan accrues a monthly late payment administrative fee of 3 % of the monthly amount due.

In October 2023, the trustee for the SF Mortgage Loan filed a lawsuit against the borrowers under the SF Mortgage Loan.

In connection with the lawsuit, the court appointed a receiver to take control of the Hilton San Francisco Hotels, which serve as security for the SF Mortgage Loan, and their operations, and thus, we have no further economic interest in the operations of the hotels.

Refer to Note 13:

"Subsequent Events" for additional information.

(3) In June 2023, we fully repaid the $ 75 million mortgage loan secured by the W Chicago – City Center.

(1) In October 2016, we entered into a $ 1.275 billion CMBS loan secured by the Hilton Hawaiian Village Waikiki Beach Resort (“HHV Mortgage Loan”).

(2) Assumes the exercise of all extensions that are exercisable solely at our option.

The mortgage loan for Hilton Denver City Center matures in 2042 but is callable by the lender with six months of notice.

As of September 30, 2023, Park had not received notice from the lender.

(5) In February 2023, we fully repaid the $ 50 million outstanding balance under our revolving credit facility ("Revolver").

The Revolver permits one or more standby letters of credit, up to a maximum aggregate outstanding balance of $ 50 million, to be issued on behalf of us.

As of September 30, 2023, we had approximately $ 4 million outstanding on a standby letter of credit and $ 946 million of available capacity under our Revolver.

The mortgage loan for Hilton Denver City Center matures in 2042 but became callable by the lender in August 2022 with six months of notice.

As of March 31, 2024, Park had not received notice from the lender.

(3) Our revolving credit facility ("Revolver") permits one or more standby letters of credit, up to a maximum aggregate outstanding balance of $ 50 million, to be issued on behalf of us.

As of March 31, 2024, we had approximately $ 4 million outstanding on a standby letter of credit and $ 946 million of available capacity under our Revolver.

(4) SOFR includes a credit spread adjustment of 0.1 %.

(5) In May and September 2020, our Operating Company, PK Domestic and PK Finance Co-Issuer Inc.

1 unchanged sentence

Additionally, in May 2021, our Operating Company, PK Domestic and PK Finance issued an aggregate of $ 750 million of senior notes due 2029 (“2029 Senior Notes”).

We are required to deposit with lenders certain cash reserves for restricted uses.

As of September 30, 2023 and December 31, 2022, our condensed consolidated balance sheets included $ 27 million and $ 6 million of restricted cash, respectively, related to our mortgage loans.

As of September 30, 2023, restricted cash included $ 26 million of cash related to the default on our SF Mortgage Loan and the use of such funds is limited pursuant to the terms of the loan and associated agreements.

Debt Maturities

The contractual maturities of our debt, assuming the exercise of all extensions that are exercisable solely at our option, as of September 30, 2023 were:

The contractual maturities of our debt, assuming the exercise of all extensions that are exercisable solely at our option, as of March 31, 2024 were:

Year (in millions)

1 unchanged sentence

_____________________________________

(1) Excludes the $ 725 million non-recourse CMBS loan ("SF Mortgage Loan") secured by two of our San Francisco hotels – the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco – a Hilton Hotel (collectively, the "Hilton San Francisco Hotels").

(2) Assumes the exercise of all extensions that are exercisable solely at our option.

Debt Associated with Hotels in Receivership

In June 2023, we ceased making debt service payments towards the SF Mortgage Loan secured by the Hilton San Francisco Hotels, which was due November 2023, and we received a notice of default from the servicer.

The stated rate on the loan is 4.11 %;

however, beginning June 1, 2023, the default interest rate on the loan is 7.11 %.

Additionally, beginning June 1, 2023, the loan accrues a monthly late payment administrative fee of 3 % of the monthly amount due.

In October 2023, the trustee for the SF Mortgage Loan filed a lawsuit against the borrowers under the SF Mortgage Loan.

The receiver will operate and has authority over the hotels and, until no later than November 1, 2024, has the ability to sell the hotels.

The court order contemplates that the receivership will end with a non-judicial foreclosure by December 2, 2024, if the hotels are not sold within the predetermined sale period.

We derecognized the Hilton San Francisco Hotels from our consolidated balance sheet in October 2023 when the receiver took control of the hotels.

For the three months ended March 31, 2024, we recognized a gain of $ 14 million, which is included in gain on derecognition of assets in our condensed consolidated statements of operations.

The gain represents the accrued interest expense associated with the default of the SF Mortgage Loan, which results in a corresponding increase of the contract asset on our condensed consolidated balance sheets as we expect to be released from this obligation upon final resolution with the lender on the SF Mortgage Loan, in exchange for the transfer of ownership of the Hilton San Francisco Hotels.

As of March 31, 2024 and December 31, 2023, the contract asset on our condensed consolidated balance sheets was $ 774 million and $ 760 million, respectively.

The SF Mortgage Loan will remain a liability until final resolution with the lender is concluded and is included in debt associated with hotels in receivership on our condensed consolidated balance sheets.

Fair Value Measurements

2 unchanged sentences

The fair value of our debt and the hierarchy level we used to estimate fair values are shown below:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Level Carrying

2 unchanged sentences

(in millions)

SF Mortgage Loan 3 $ 725 $ 722 $ 725 $ 692

HHV Mortgage Loan 3 $ 1,275 $ 1,192 $ 1,275 $ 1,195

Other mortgage loans 3 384 361 385 365

Revolver 3 — — 50 50

2025 Senior Notes 1 650 652 650 652

1 unchanged sentence

2029 Senior Notes 1 750 699 750 702

During the nine months ended September 30, 2023, we recognized an impairment loss related to one of our hotels.

The estimated value of the asset that was measured on a nonrecurring basis was:

September 30, 2023

The fair value of the SF Mortgage Loan, which has a carrying value of $ 725 million as of both March 31, 2024 and December 31, 2023 and categorized as Level 3 of the fair value hierarchy, was $ 718 million as of both March 31, 2024 and December 31, 2023.

Refer to Note 6:

"Debt" for additional information.

During the three months ended March 31, 2024, we recognized an impairment loss related to one of our hotels due to our inability to recover the carrying value of the asset.

The estimated fair value of the asset that was measured on a nonrecurring basis was:

March 31, 2024

Fair Value Impairment Loss

3 unchanged sentences

____________________________________________________________________________________

(1) Fair value as of September 30, 2023 was measured using significant unobservable inputs (Level 3).

We estimated fair value of the asset using a discounted cash flow analysis, with an estimated stabilized growth rate of 3 %, a discounted cash flow term of 10 years, terminal capitalization rate of 6.3 %, and discount rate of 9.5 %.

The discount and terminal capitalization rates used for the fair values of the asset reflected the risk profile of the market where the property is located.

We are a REIT for U.S.

federal income tax purposes.

We have been organized and operated, and we expect to continue to be organized and operate in a manner to qualify as a REIT.

To qualify as a REIT, we must satisfy requirements related to, among other things, the real estate qualification of sources of our income, the real estate composition and values of our assets, the amounts we distribute to our stockholders annually and the diversity of ownership of our stock.

To the extent we continue to remain qualified as a REIT, we generally will not be subject to U.S.

federal (and state) income tax on taxable income generated by our REIT activities that we distribute annually to our stockholders.

Accordingly, no provision for U.S.

federal income taxes has been included in our accompanying condensed consolidated financial statements for the three or nine months ended September 30, 2023 and 2022 related to our REIT activities.

Our taxable REIT subsidiaries (“TRSs”) are generally subject to U.S.

federal, state and local, and foreign income taxes (as applicable).

During the nine months ended September 30, 2023, we recognized income tax expense of $ 5 million primarily related to taxable income from our TRSs.

(1) Fair value as of March 31, 2024 was determined to be zero as the hotel is subject to a ground lease and is not expected to produce positive cash flows over the remaining lease term.

Share-Based Compensation

We issue equity-based awards to our employees pursuant to the 2017 Omnibus Incentive Plan (the “2017 Employee Plan”) and our non-employee directors pursuant to the 2017 Stock Plan for Non-Employee Directors (the “2017 Director Plan”), both of which are amended and restated from time to time.

An amendment and restatement of the 2017 Employee Plan was approved by our Board of Directors in February 2023 and approved by our stockholders in April 2023 to, among other changes, increase the number of shares available to be issued by 6,070,000 , from 8,000,000 to 14,070,000 shares.

As of September 30, 2023, 7,498,093 shares of common stock remain available for future issuance.

The 2017 Director Plan provides that a maximum of 950,000 shares of our common stock may be issued, and as of September 30, 2023, 263,524 shares of common stock remain available for future issuance.

For the three months ended September 30, 2023 and 2022, we recognized $ 5 million and $ 4 million, respectively, of share-based compensation expense and $ 14 million and $ 13 million, respectively, for the nine months ended September 30, 2023 and 2022.

As of September 30, 2023, unrecognized compensation expense was $ 24 million, which is expected to be recognized over a weighted-average period of 1.6 years.

The total fair value of shares vested (calculated as the number of shares multiplied by the vesting date share price) for both the nine months ended September 30, 2023 and 2022 was $ 7 million.

The 2017 Employee Plan provides that a maximum of 14,070,000 shares of our common stock may be issued, and as of March 31, 2024, 6,423,353 shares of common stock remain available for future issuance.

The 2017 Director Plan provides that a maximum of 950,000 shares of our common stock may be issued, and as of March 31, 2024, 244,343 shares of common stock remain available for future issuance.

For both the three months ended March 31, 2024 and 2023, we recognized $ 4 million of share-based compensation expense.

As of March 31, 2024, unrecognized compensation expense was $ 33 million, which is expected to be recognized over a weighted-average period of 1.9 years.

The total fair value of shares vested (calculated as the number of shares multiplied by the vesting date share price) for the three months ended March 31, 2024 and 2023 was $ 12 million and $ 6 million, respectively.

Restricted Stock Awards

Restricted Stock Awards (“RSAs”) generally vest in annual installments between one and three years from each grant date.

The following table provides a summary of RSAs for the nine months ended September 30, 2023:

The following table provides a summary of RSAs for the three months ended March 31, 2024:

Number of Shares Weighted-Average

3 unchanged sentences

Forfeited ( 20,375 ) 15.63

Unvested at September 30, 2023 987,499 $ 15.40

Unvested at March 31, 2024 1,058,933 $ 15.28

Performance Stock Units

1 unchanged sentence

The number of PSUs that may become vested ranges from zero to 200 % of the number of PSUs granted to an employee, based on the level of achievement of the foregoing performance measure.

Additionally, in November 2020, we granted special awards with vesting of these awards subject to the achievement of eight increasing levels of our average closing sales price per share, from $ 11.00 to $ 25.00 , over a

consecutive 20 trading day period (“Share Price Target”).

One-eighth of PSUs will vest at each date a Share Price Target is achieved and any PSUs remaining after a four-year performance period will be forfeited.

As of September 30, 2023, six of the eight Share Price Targets were achieved and thus 75 % of the awards granted were vested.

The following table provides a summary of PSUs for the nine months ended September 30, 2023:

As of March 31, 2024, six of the eight Share Price Targets were achieved and thus 75 % of the awards granted were vested.

The following table provides a summary of PSUs for the three months ended March 31, 2024:

Number of Shares Weighted-Average

1 unchanged sentence

Granted 590,483 17.75

Vested ( 337,283 ) 26.99

Forfeited ( 5,531 ) 19.63

Unvested at September 30, 2023 1,527,196 $ 19.72

Unvested at March 31, 2024 1,775,245 $ 17.69

The grant date fair values of the awards that are subject to the achievement of market conditions based on total shareholder return were determined using a Monte Carlo simulation valuation model with the following assumptions:

7 unchanged sentences

The following table presents the calculation of basic and diluted earnings per share (“EPS”):

Three Months Ended September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

(in millions, except per share amounts)

Net income (loss) attributable to stockholders $ 27 $ 35 $ ( 90 ) $ 128

Earnings attributable to participating securities — — ( 1 ) —

Net income (loss) attributable to stockholders , net of earnings allocated to participating securities 27 35 ( 91 ) 128

Net income attributable to stockholders, net of earnings allocated to participating securities $ 28 $ 33

Weighted average shares outstanding – basic 209 220

1 unchanged sentence

Weighted average shares outstanding – diluted 211 221

Earnings (loss) per share – Basic (1)

Earnings per share – Basic (1)

$ 0.13 $ 0.15

Earnings (loss) per share – Diluted (1)

Earnings per share – Diluted (1)

$ 0.13 $ 0.15

_____________________________________

(1) Per share amounts are calculated based on unrounded numbers and are calculated independently for each period presented.

Certain of our outstanding equity awards were excluded from the above calculation of EPS for the three and nine months ended September 30, 2023 and 2022 because their effect would have been anti-dilutive.

(1) Per share amounts are calculated based on unrounded numbers.

Certain of our outstanding equity awards were excluded from the above calculation of EPS for the three months ended March 31, 2024 and 2023 because their effect would have been anti-dilutive.

Business Segment Information

As of September 30, 2023, we have two operating segments, our consolidated hotels and unconsolidated hotels.

As of March 31, 2024, we have two operating segments, our consolidated hotels and unconsolidated hotels.

Our unconsolidated hotels operating segment does not meet the definition of a reportable segment, thus our consolidated hotels is our only reportable segment.

8 unchanged sentences

The following table presents revenues for our consolidated hotels reconciled to our consolidated amounts and net income to Hotel Adjusted EBITDA:

Three Months Ended September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

(in millions)

2 unchanged sentences

Total revenues $ 639 $ 648

Net income (loss) $ 31 $ 40 $ ( 82 ) $ 138

Net income $ 29 $ 33

Other revenues ( 21 ) ( 20 )

1 unchanged sentence

Corporate general and administrative expense 17 16

Casualty and impairment loss — 3 204 4

Impairment and casualty loss 6 1

Other operating expenses 21 20

Gain on sales of assets, net — ( 15 )

Gain on derecognition of assets ( 14 ) —

Interest income ( 5 ) ( 10 )

Interest expense 53 52

Interest expense associated with hotels in receivership 14 8

Equity in earnings from investments in affiliates — ( 4 )

Income tax (benefit) expense — ( 3 ) 5 ( 2 )

Income tax expense 1 2

Other gain, net — ( 1 )

2 unchanged sentences

The following table presents total assets for our consolidated hotels, reconciled to total assets:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in millions)

3 unchanged sentences

Commitments and Contingencies

As of September 30, 2023, we had outstanding commitments under third-party contracts of approximately $ 135 million for capital expenditures at our properties, of which $ 30 million relates to projects at the Bonnet Creek complex, including the meeting space expansion project and renovation of guestrooms, existing meeting space, lobbies, golf course and other recreational amenities, $ 28 million relates to the complete renovation of all guestrooms, public spaces, and certain hotel infrastructure at the Casa Marina Key West, Curio Collection, and $ 25 million relates to the Tapa Tower guestroom renovations at the Hilton Hawaiian Village Waikiki Beach Resort.

As of March 31, 2024, we had outstanding commitments under third-party contracts of approximately $ 91 million for capital expenditures at our properties.

Our contracts contain clauses that allow us to cancel all or some portion of the work.

4 unchanged sentences

In addition, losses related to certain contingent liabilities could be apportioned to us under the spin-off agreements.

In connection with our obligation to indemnify Hilton under the spin-off agreements, we have reserved approximately $ 8 million as of September 30, 2023 related to litigation with respect to an audit by the Australian Tax Office (“ATO”) of Hilton related to the sale of the Hilton Sydney in June 2015.

In connection with our obligation to indemnify Hilton under the spin-off agreements, we have reserved approximately $ 8 million as of March 31, 2024 related to litigation with respect to an audit by the Australian Tax Office (“ATO”) of Hilton related to the sale of the Hilton Sydney in June 2015.

This amount could change as the litigation of the ATO’s claim progresses.

Subsequent Events

In October 2023, the trustee for the SF Mortgage Loan filed a lawsuit against the borrowers under the SF Mortgage Loan.

The receiver will operate and has authority over the hotels and, until no later than November 1, 2024, has the ability to sell the hotels.

The lawsuit contemplates the receivership will end with a non-judicial foreclosure by December 2, 2024, if the hotels are not sold within the predetermined sale period.

The effective exit from the Hilton San Francisco Hotels results in a required distribution.

Thus, our Board of Directors declared a special cash dividend of $ 0.77 per share on October 27, 2023, which will be paid on January 16, 2024 to stockholders of record as of December 29, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements