What changed in this filing

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Item 1. Financial Statements

2025-05-05 compared with 2024-10-30 · 128 added, 205 removed, 297 unchanged (53% of the section changed)

3 unchanged sentences

(in millions, except share and per share data)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Property and equipment, net $ 7,317 $ 7,398

21 unchanged sentences

Stockholders’ Equity

Common stock, par value $ 0.01 per share, 6,000,000,000 shares authorized, 207,257,541 shares issued and 206,403,675 shares outstanding as of September 30, 2024 and 210,676,264 shares issued and 209,987,581 shares outstanding as of December 31, 2023

Common stock, par value $ 0.01 per share, 6,000,000,000 shares authorized, 200,815,720 shares issued and 199,782,608 shares outstanding as of March 31, 2025 and 203,407,320 shares issued and 202,553,194 shares outstanding as of December 31, 2024

Additional paid-in capital 4,017 4,063

5 unchanged sentences

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

Table of Content s

PARK HOTELS & RESORTS INC.

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Rooms $ 363 $ 374

1 unchanged sentence

Ancillary hotel 63 62

Other 21 22 64 64

Total revenues 630 639

8 unchanged sentences

Corporate general and administrative 18 17

Other 21 19 62 61

Total expenses 639 561

Gain on sale of assets, net — — — 15

Gain on derecognition of assets 16 14

3 unchanged sentences

Interest expense associated with hotels in receivership ( 16 ) ( 14 )

Equity in earnings from investments in affiliates 28 2 29 9

Other (loss) gain, net ( 1 ) — ( 4 ) 4

Income (loss) before income taxes 59 31 144 ( 77 )

Income tax (expense) benefit ( 2 ) — 9 ( 5 )

Net income (loss) 57 31 153 ( 82 )

Other gain, net 2 —

(Loss) income before income taxes ( 56 ) 30

Income tax expense ( 1 ) ( 1 )

Net (loss) income ( 57 ) 29

Net income attributable to noncontrolling interests — ( 1 )

Net income (loss) attributable to stockholders $ 54 $ 27 $ 146 $ ( 90 )

Earnings (loss) per share:

Earnings (loss) per share – Basic $ 0.26 $ 0.13 $ 0.70 $ ( 0.42 )

Earnings (loss) per share – Diluted $ 0.26 $ 0.13 $ 0.69 $ ( 0.42 )

Net (loss) income attributable to stockholders $ ( 57 ) $ 28

(Loss) earnings per share:

(Loss) earnings per share – Basic $ ( 0.29 ) $ 0.13

(Loss) earnings per share – Diluted $ ( 0.29 ) $ 0.13

Weighted average shares outstanding – Basic 200 209

1 unchanged sentence

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

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PARK HOTELS & RESORTS INC.

1 unchanged sentence

(unaudited, in millions)

Nine Months Ended

September 30,

Three Months Ended

Operating Activities:

Net income (loss) $ 153 $ ( 82 )

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

Net (loss) income $ ( 57 ) $ 29

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

Depreciation and amortization 69 65

Gain on sales of assets, net — ( 15 )

Gain on derecognition of assets ( 16 ) ( 14 )

Impairment and casualty loss 12 204

Equity in earnings from investments in affiliates ( 29 ) ( 9 )

Other loss, net 3 —

Impairment loss 70 5

Share-based compensation expense 4 4

Amortization of deferred financing costs 3 —

Distributions from unconsolidated affiliates 4 9

Deferred income taxes ( 13 ) —

Changes in operating assets and liabilities 13 3

2 unchanged sentences

Capital expenditures for property and equipment ( 77 ) ( 70 )

Acquisitions, net — ( 11 )

Proceeds from asset dispositions, net — 116

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

Distributions from unconsolidated affiliates 33 —

Contributions to unconsolidated affiliates ( 3 ) ( 4 )

Net cash used in investing activities ( 77 ) ( 70 )

Financing Activities:

Proceeds from issuance of Senior Notes 550 —

Repurchase or redemption of Senior Notes ( 650 ) —

Borrowings from credit facilities 200 —

Repayments of credit facilities — ( 50 )

Repayments of mortgage debt ( 2 ) ( 1 )

Debt issuance costs ( 11 ) ( 1 )

Dividends paid ( 131 ) ( 355 )

7 unchanged sentences

Supplemental Disclosures

Non-cash financing activities:

Non-cash investing and financing activities:

Dividends declared but unpaid $ 50 $ 52

Accrued capital expenditures 18 19

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

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PARK HOTELS & RESORTS INC.

7 unchanged sentences

Share-based compensation, net 1 — ( 1 ) 1 — —

Net income — — — 28 1 29

Dividends and dividend equivalents (1)

— — — ( 53 ) — ( 53 )

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

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

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

Net income — — — 64 3 67

Dividends and dividend equivalents (1)

— — — ( 52 ) — ( 52 )

Repurchase of common stock ( 2 ) — ( 25 ) — — ( 25 )

Balance as of June 30, 2024 209 2 4,133 ( 355 ) ( 44 ) 3,736

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

Net income — — — 54 3 57

Net loss — — — ( 57 ) — ( 57 )

Dividends and dividend equivalents (1)

2 unchanged sentences

Repurchase of common stock ( 4 ) — ( 45 ) — — ( 45 )

Balance as of September 30, 2024 206 $ 2 $ 4,103 $ ( 353 ) $ ( 45 ) $ 3,707

Balance as of March 31, 2025 200 $ 2 $ 4,017 $ ( 525 ) $ ( 58 ) $ 3,436

Common Stock Additional

Capital Retained

Earnings (Accumulated Deficit) Non-

Capital Accumulated Deficit Non-

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)

___________________________________

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

___________________________________

(1) Dividends declared per common share were $ 0.25 for each of the three months ended March 31, 2024, June 30, 2024 and September 30, 2024.

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.

(1) Dividends declared per common share were $ 0.25 for both the three months ended March 31, 2025 and 2024.

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

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PARK HOTELS & RESORTS INC.

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as an independent, publicly traded company.

On May 5, 2019, the Company, PK Domestic Property LLC, an indirect subsidiary of the Company (“PK Domestic”), and PK Domestic Sub LLC, a wholly-owned subsidiary of PK Domestic (“Merger Sub”) entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with Chesapeake Lodging Trust (“Chesapeake”).

On September 18, 2019, pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Chesapeake merged with and into Merger Sub (the “Merger”) and each of Chesapeake’s common shares of beneficial interest, $ 0.01 par value per share, was converted into $ 11.00 in cash and 0.628 of a share of our common stock.

No fractional shares of our common stock were issued in the Merger.

The value of any fractional interests to which a Chesapeake shareholder would otherwise have been entitled was paid in cash.

On September 18, 2019, we acquired Chesapeake Lodging Trust.

We are a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes.

2 unchanged sentences

From the date of our spin-off from Hilton, Park Intermediate Holdings LLC (our “Operating Company”), directly or indirectly, has held all our assets and has conducted all of our operations.

Park Parent owned 100 % of the interests of our Operating Company until December 31, 2021 when the business undertook an internal reorganization transitioning our structure to a traditional umbrella partnership REIT ("UPREIT") structure.

Effective January 1, 2022, Park Parent became the managing member of our Operating Company and PK Domestic REIT Inc., a direct subsidiary of Park Parent, became a member of our Operating Company.

We are structured as a traditional umbrella partnership REIT (“UPREIT”).

Park Parent is the managing member of our Operating Company and PK Domestic REIT Inc., a direct subsidiary of Park Parent, is a member of our Operating Company.

We may, in the future, issue interests in (or from) our Operating Company in connection with acquiring hotels, financings, issuance of equity compensation or other purposes.

13 unchanged sentences

Interim results are not necessarily indicative of full year performance.

Reclassifications

Certain line items on the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 have been reclassified to conform to the current period presentation.

Summary of Significant Accounting Policies

1 unchanged sentence

There have been no significant changes to our significant accounting policies since December 31, 2024.

Acquisitions and Dispositions

During the nine months ended September 30, 2023, we acquired two parcels of land, adjacent to the Hilton Hawaiian Village Waikiki Beach Resort, for a purchase price of approximately $ 18 million, including transaction costs.

We accounted for the purchase as an acquisition of an asset, and the entire purchase price was allocated to land.

In July 2024, the unconsolidated joint venture that owns and operates the Hilton La Jolla Torrey Pines sold the hotel for gross proceeds of approximately $ 165 million, and our pro-rata share of the gross proceeds was approximately $ 41 million, which was reduced by our portion of debt of approximately $ 17 million.

We recognized a gain of approximately $ 19 million, which is included in equity in earnings from investments in affiliates in our condensed consolidated statements of operations.

Additionally, in August 2024, we permanently closed the Hilton Oakland Airport and subsequently terminated its ground lease, returning the property to the ground lessor.

During the nine months ended September 30, 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 sale 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 (loss) gain, net in our condensed consolidated statements of operations.

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Recently Issued Accounting Pronouncements

Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-09 (“ASU 2023-09”), Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which enhances income tax disclosures, including disclosures about the existing rate reconciliation and income taxes paid information.

We expect to adopt ASU 2023-09 when the requirements become effective for the year-ended December 31, 2025.

ASU 2023-09 is required to be adopted on a prospective basis, but retrospective adoption is permitted.

We are currently evaluating the effect that ASU 2023-09 will have on our consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03 (“ASU 2024-03”), Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) , which adds guidance on providing qualitative and quantitative disclosures about certain costs and expenses.

Although early adoption is permitted, we expect to adopt ASU 2024-03 on a prospective basis when the requirements become effective for the year ended December 31, 2027.

We are currently evaluating the effect that ASU 2024-03 will have on our consolidated financial statements.

Property and Equipment

Property and equipment were:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in millions)

6 unchanged sentences

$ 7,317 $ 7,398

Depreciation of property and equipment was $ 63 million and $ 65 million during the three months ended September 30, 2024 and 2023, respectively, and $ 191 million and $ 193 million for the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, we recognized impairment losses of approximately $ 12 million related to two of our hotels subject to ground leases and our inability to recover the carrying value of the assets over the remaining lease term.

Refer to Note 7:

"Fair Value Measurements" for additional information.

For the nine months ended September 30, 2023, we recognized approximately $ 202 million of impairment loss related to one of the hotels securing our $ 725 million non-recourse CMBS loan ("SF Mortgage Loan") as a result of a decision to cease making debt service payments.

In October 2023, the two 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") that secure the SF Mortgage Loan were placed into receivership.

Depreciation of property and equipment was $ 69 million and $ 65 million during the three months ended March 31, 2025 and 2024.

During the three months ended March 31, 2025, we recognized an impairment loss of approximately $ 70 million related to one of our hotels and our inability to recover the carrying value of the asset.

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 6:

"Debt" and Note 7:

“Fair Value Measurements” for additional information.

1 unchanged sentence

Consolidated VIEs

We consolidate VIEs that own three hotels in the U.S.

We consolidate VIEs that own two hotels.

We are the primary beneficiary of these VIEs as we have the power to direct the activities that most significantly affect their economic performance.

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

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available to settle the obligations of these entities.

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in millions)

9 unchanged sentences

Three 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 $ 685 million and $ 702 million as of September 30, 2024 and December 31, 2023, respectively.

These hotels are accounted for using the equity method and had total debt of approximately $ 684 million and $ 685 million as of March 31, 2025 and December 31, 2024, respectively.

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, 2024 were:

Debt balances and associated interest rates as of March 31, 2025 were:

Principal balance as of

Interest Rate

at September 30, 2024 Maturity Date September 30, 2024 December 31, 2023

at March 31, 2025 Maturity Date March 31, 2025 December 31, 2024

(in millions)

10 unchanged sentences

2028 Senior Notes (6)

7.50 % June 2025 — 650

2028 Senior Notes (5)

5.88 % October 2028 725 725

5 unchanged sentences

7.04 % 2025 to 2028 1 1

unamortized premium — 1

unamortized deferred financing costs and discount ( 22 ) ( 24 )

4 unchanged sentences

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 September 30, 2024, Park had not received notice from the lender.

As of March 31, 2025, we did not receive 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 September 30, 2024, we had approximately $ 4 million outstanding on a standby letter of credit and $ 946 million of available capacity under our Revolver.

As of March 31, 2025, we had $ 950 million of available capacity under our Revolver and no outstanding letters of credit.

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(4) The secured overnight financing rate (“SOFR”) includes a credit spread adjustment of 0.1 %.

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

("PK Finance") issued an aggregate of $ 650 million senior notes due 2025 ("2025 Senior Notes"), all of which were repurchased or redeemed during the second quarter of 2024.

Our Operating Company, PK Domestic, and PK Finance also issued an aggregate of $ 725 million of senior notes due 2028 (“2028 Senior Notes”) in September 2020, an aggregate of $ 750 million of senior notes due 2029 (“2029 Senior Notes”) in May 2021 and an aggregate of $ 550 million of senior notes due 2030 ("2030 Senior Notes") in May 2024.

Credit Facilities

2024 Term Loan

In May 2024, the Company, our Operating Company and PK Domestic amended our existing credit agreement to include a new $ 200 million senior unsecured term loan facility ("2024 Term Loan") with a scheduled maturity date of May 14, 2027.

Borrowings under the 2024 Term Loan bear interest based upon SOFR plus a credit spread adjustment of 0.1 %, plus an applicable margin based on our leverage ratio.

We capitalized $ 2 million of financing fees incurred during the nine months ended September 30, 2024.

The amendment did not amend or modify existing financial maintenance covenants or other terms and provisions under our existing credit agreement, except to provide that income, value and debt of the Hilton San Francisco Hotels be excluded from the calculations of our leverage ratio, the fixed charge coverage ratio and the secured leverage ratio under the existing credit agreement.

2030 Senior Notes

In May 2024, our Operating Company, PK Domestic and PK Finance issued an aggregate of $ 550 million of 2030 Senior Notes.

Net proceeds from the 2030 Senior Notes and the 2024 Term Loan were used to repurchase or redeem all of the 2025 Senior Notes, and the remainder was used for general corporate purposes.

The 2030 Senior Notes bear interest at a rate of 7.000 % per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning February 1, 2025.

The 2030 Senior Notes will mature on February 1, 2030.

We capitalized approximately $ 9 million of issuance costs during the nine months ended September 30, 2024.

We may redeem the 2030 Senior Notes at any time prior to August 1, 2026, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus a make-whole premium.

On or after August 1, 2026, we may redeem the 2030 Senior Notes at (i) 103.500 % of the principal amount on or prior to August 1, 2027, (ii) 101.750 % of the principal amount prior to August 1, 2028 and (iii) 100.000 % of the principal amount on or after August 1, 2028, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, at any time prior to August 1, 2026, we may redeem up to 40 % of the 2030 Senior Notes with net cash proceeds from certain equity offerings at a redemption price of 107.000 % of the principal amount redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

The 2030 Senior Notes are guaranteed by Park Parent, PK Domestic REIT Inc., and by the subsidiaries of our Operating Company that also guarantee indebtedness under our credit facility, the 2028 Senior Notes and 2029 Senior Notes.

The guarantees are full and unconditional and joint and several.

The indenture governing the 2030 Senior Notes contains customary covenants that limit the issuers' ability and, in certain instances, the ability of the issuers' subsidiaries, to borrow money, create liens on assets, make distributions and pay dividends on or redeem or repurchase stock, make certain types of investments, sell stock in certain subsidiaries, enter into agreements that restrict dividends or other payments from subsidiaries, enter into transactions with affiliates, issue guarantees of indebtedness, and sell assets or merge with other companies.

These limitations are subject to a number of exceptions and qualifications, including exceptions and qualifications related to the declaration and payment of dividends and the making of distributions in order to maintain our status as a REIT.

In addition, the indenture requires our Operating Company to maintain total unencumbered assets as of each fiscal quarter of at least 150 % of total unsecured indebtedness, in each case calculated on a consolidated basis.

As of March 31, 2025, our all-in interest rate for borrowing under the 2024 Term Loan was 6.37 %.

(5) In May 2024, the Company, our Operating Company, and PK Domestic Property LLC, an indirect subsidiary of the Company (“PK Domestic”), amended our existing credit agreement to include a new $ 200 million senior unsecured term loan (“2024 Term Loan”).

(6) Our Operating Company, PK Domestic and PK Finance Co-Issuer Inc.

(“PK Finance”) issued an aggregate of $ 725 million of senior notes due 2028 (“2028 Senior Notes”) in September 2020, an aggregate of $ 750 million of senior notes due 2029 (“2029 Senior Notes”) in May 2021 and an aggregate of $ 550 million of senior notes due 2030 (“2030 Senior Notes”) in May 2024.

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, 2024 were:

The contractual maturities of our debt, excluding 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”) and assuming the exercise of all extensions that are exercisable solely at our option, as of March 31, 2025 were:

Year (in millions)

Thereafter 550

_____________________________________

(1) Excludes the SF Mortgage Loan secured by the Hilton San Francisco Hotels.

Debt Associated with Hotels in Receivership

3 unchanged sentences

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

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

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.

The receiver will operate and has authority over the hotels and, until no later than March 31, 2025, has the ability to sell the hotels.

The court order contemplates that the receivership will end with a non-judicial foreclosure by July 15, 2025, if the hotels are not sold within the predetermined sale period.

The receiver operates and has authority over the hotels.

The receiver also had the ability to sell the hotels until March 31, 2025;

however, prior to the deadline, the receiver requested an extension to May 30, 2025 in order to sell the hotels to a specified buyer.

The court granted the extension with an additional one-time extension option not to exceed 60 days.

If the hotels are not sold to the specified buyer by the amended predetermined period, the court order contemplates that the receivership will end with a non-judicial foreclosure as soon as permissible under California law.

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 and nine months ended September 30, 2024, we recognized a gain of $ 15 million and $ 44 million, respectively, which is included in gain on derecognition of assets in our condensed consolidated statements of operations.

For the three months ended March 31, 2025 and 2024, we recognized a gain of $ 16 million and $ 14 million, respectively, 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 September 30, 2024 and December 31, 2023, the contract asset on our condensed consolidated balance sheets was $ 804 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.

As of March 31, 2025 and December 31, 2024, the contract asset on our condensed consolidated balance sheets was $ 836 million and $ 820 million, respectively.

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

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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, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Level Carrying

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2030 Senior Notes 1 550 556 550 559

2030 Senior Notes 1 550 572 — —

The fair value of the SF Mortgage Loan, which has a carrying value of $ 725 million as of both September 30, 2024 and December 31, 2023 and categorized as Level 3 of the fair value hierarchy, was $ 718 million as of both September 30, 2024 and December 31, 2023.

Refer to Note 6:

"Debt" for additional information.

During the nine months ended September 30, 2024, we recognized impairment losses related to two of our hotels due to our inability to recover the carrying value of the assets.

During the nine months ended September 30, 2023, we recognized an impairment loss related to one of our hotels and in October 2023, that hotel, along with the other hotel securing our SF Mortgage Loan, were placed into receivership.

The fair value of the SF Mortgage Loan, which has a carrying value of $ 725 million as of both March 31, 2025 and December 31, 2024 and is categorized as Level 3 of the fair value hierarchy, was $ 718 million as of both March 31, 2025 and December 31, 2024.

Refer to Note 5:

“Debt” for additional information.

estimated fair value of the assets that were measured on a nonrecurring basis were:

September 30, 2024 September 30, 2023

During the three months ended March 31, 2025, we recognized an impairment loss related to one of our hotels due to our inability to recover the carrying value of the asset.

During the three months ended March 31, 2024, we recognized an impairment loss 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.

The estimated fair value of the assets that were measured on a nonrecurring basis were:

March 31, 2025 March 31, 2024

Fair Value Impairment Loss Fair Value Impairment Loss

4 unchanged sentences

____________________________________________________________________________________

(1) We estimated fair value of the assets during the nine months ended September 30, 2024, using a discounted cash flow analysis, with an estimated stabilized growth rate range of 2 % to 3 %, a discounted cash flow term of 10 years and a discount rate ranging from 17.0 % to 20.0 %.

We estimated fair value of the asset during the nine months ended September 30, 2023, 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 assets reflected the risk profile of the markets where the properties are located.

Fair value as of both September 30, 2024 and 2023 were measured using significant unobservable inputs (Level 3).

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, 2024 and 2023 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 three months ended September 30, 2024, we recognized income tax expense of $ 2 million, which was primarily related to taxable income from our TRSs.

During the nine months ended September 30, 2024, we recognized an income tax benefit of $ 9 million, which was primarily associated with the effective exit from the Hilton San Francisco Hotels and the reversal of $ 14 million of tax expense that is no longer expected to be incurred.

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

(1) We estimated the fair value of the asset as of March 31, 2025 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 7.3 % and a discount rate of 10.0 % (Level 3).

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

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.

The 2017 Employee Plan provides that a maximum of 14,070,000 shares of our common stock may be issued, and as of September 30, 2024, 6,430,660 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, 2024, 154,166 shares of common stock remain available for future issuance.

For both the three months ended September 30, 2024 and 2023, we recognized $ 5 million of share-based compensation expense and $ 14 million for both the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, unrecognized compensation expense was $ 24 million, which is expected to be recognized over a weighted-average period of 1.5 years.

The total fair value of shares vested (calculated as the number of shares multiplied by the vesting date share price) for the nine months ended September 30, 2024 and 2023 was $ 14 million and $ 7 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, 2024:

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, 2025, 5,251,266 shares of common stock remain available for future issuance.

An amendment and restatement of the 2017 Director Plan was approved by our stockholders in April 2025 to, among other changes, increase the number of shares available to be issued by 875,000 , from 950,000 to 1,825,000 .

As of March 31, 2025, 130,143 shares of common stock remain available for future issuance, which excludes the 875,000 additional shares that were approved in April 2025.

For both the three months ended March 31, 2025 and 2024, we recognized $ 4 million of share-based compensation expense.

As of March 31, 2025, unrecognized compensation expense was $ 32 million, which is expected to be recognized over a weighted-average period of 2.0 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, 2025 and 2024 was $ 11 million and $ 12 million, respectively.

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Stock awards generally vest in annual installments between one and three years from each grant date.

The following table provides a summary of stock awards for the three months ended March 31, 2025:

Number of Shares Weighted-Average

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Forfeited ( 11,764 ) 14.28

Unvested at September 30, 2024 1,009,165 $ 15.66

Unvested at March 31, 2025 1,247,483 $ 14.01

Performance Stock Units

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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, 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 nine months ended September 30, 2024:

The following table provides a summary of PSUs for the three months ended March 31, 2025:

Number of Shares Weighted-Average

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Forfeited ( 7,196 ) 17.99

Unvested at September 30, 2024 1,759,245 $ 17.72

Unvested at March 31, 2025 1,884,359 $ 15.62

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:

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_____________________________________

(1) Estimated using a blended approach of historical and implied volatility.

Historical volatility is based on the historical movement of the Company’s stock price for a period that corresponds to the expected terms of the PSUs.

(2) Dividends are assumed to be reinvested in shares of our common stock and dividends will not be paid unless shares vest.

(3) Based on the yields of U.S.

Department of Treasury instruments with similar expected terms of the PSUs at the grant date of each award.

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Earnings Per Share

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions, except per share amounts)

Net income (loss) attributable to stockholders $ 54 $ 27 $ 146 $ ( 90 )

Net (loss) income attributable to stockholders $ ( 57 ) $ 28

Earnings attributable to participating securities ( 1 ) —

Net income (loss) attributable to stockholders, net of earnings allocated to participating securities 53 27 145 ( 91 )

Net (loss) income attributable to stockholders, net of earnings allocated to participating securities ( 58 ) 28

Weighted average shares outstanding – basic 200 209

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Weighted average shares outstanding – diluted 200 211

Earnings (loss) per share – Basic (1)

(Loss) earnings per share – Basic (1)

$ ( 0.29 ) $ 0.13

Earnings (loss) per share – Diluted (1)

(Loss) earnings per share – Diluted (1)

$ ( 0.29 ) $ 0.13

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(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, 2024 and 2023 because their effect would have been anti-dilutive.

Certain of our outstanding equity awards were excluded from the above calculation of EPS for the three months ended March 31, 2025 and 2024 because their effect would have been anti-dilutive.

Business Segment Information

As of September 30, 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.

We evaluate our consolidated hotels primarily based on hotel adjusted earnings before interest expense, taxes and depreciation and amortization (“EBITDA”).

Hotel Adjusted EBITDA, presented herein, is calculated as EBITDA from hotel operations, adjusted to exclude the following items that are not reflective of our ongoing operating performance or incurred in the normal course of business, and thus excluded from management's analysis in making day to day operating decisions and evaluations of our operating performance against other companies within our industry:

As of March 31, 2025, 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 operating segment is our only reportable segment.

Our Chief Operating Decision Maker (the “CODM”), who is our chief executive officer, evaluates our consolidated hotels primarily based on hotel adjusted earnings (loss) before interest income and expense, taxes and depreciation and amortization (“EBITDA”) when deciding how to allocate resources, in making other day-to-day operating decisions and evaluating our operating performance against other companies within our industry.

• Gains or losses on sales of assets for both consolidated and unconsolidated investments;

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• Other items that we believe are not representative of our current or future operating performance.

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,

2024 2023 2024 2023

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The following table presents our reportable segment revenues reconciled to our consolidated amounts, reportable segment expenses and Hotel Adjusted EBITDA reconciled to net (loss) income:

Three Months Ended March 31,

(in millions)

Total consolidated hotel revenues $ 628 $ 657 $ 1,910 $ 1,977

Other revenues 21 22 64 64

Total revenues $ 630 $ 639

Net income (loss) $ 57 $ 31 $ 153 $ ( 82 )

Other revenues ( 22 ) ( 21 )

Total segment revenues 608 618

Rooms expense 100 102

Food and beverage expense 123 123

Other departmental and support expense 151 145

Management fees 30 30

Other property segment expenses (1)

Total segment expenses 457 449

Hotel Adjusted EBITDA 151 169

Other revenues 22 21

Depreciation and amortization expense ( 69 ) ( 65 )

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Other operating expenses ( 21 ) ( 21 )

Gain on sales of assets, net — — — ( 15 )

Gain on derecognition of assets 16 14

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Interest expense associated with hotels in receivership ( 16 ) ( 14 )

Equity in earnings from investments in affiliates ( 28 ) ( 2 ) ( 29 ) ( 9 )

Income tax expense (benefit) 2 — ( 9 ) 5

Other loss (gain), net 1 — 4 ( 4 )

Income tax expense ( 1 ) ( 1 )

Other gain, net 2 —

Other items ( 4 ) ( 3 )

Hotel Adjusted EBITDA $ 168 $ 173 $ 536 $ 517

Net (loss) income $ ( 57 ) $ 29

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(1) Other property segment expenses primarily include real and personal property taxes, other local taxes, ground rent, equipment rent and property insurance incurred in the normal course of business.

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in millions)

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Commitments and Contingencies

As of September 30, 2024, we had outstanding commitments under third-party contracts of approximately $ 113 million for capital expenditures at our properties, of which $ 34 million relates to guestroom renovations at the Hilton Hawaiian Village Waikiki Beach Resort, $ 19 million relates to guestroom renovations at the Hilton Waikoloa Village and $ 6 million relates to guestroom renovations at the Hilton New Orleans Riverside.

As of March 31, 2025, we had outstanding commitments under third-party contracts of approximately $ 121 million for capital expenditures at our properties, of which $ 40 million relates to guestroom renovations at the Hilton

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Hawaiian Village Waikiki Beach Resort, $ 30 million relates the transformative renovation at the Royal Palm South Beach Miami, a Tribute Portfolio Hotel, and $ 13 million relates to guestroom renovations at the Hilton Waikoloa Village.

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

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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, 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.

In connection with our obligation to indemnify Hilton under the spin-off agreements, we have reserved approximately $ 8 million as of March 31, 2025 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.

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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