What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-01 compared with 2025-11-03 · 96 added, 159 removed, 209 unchanged (55% of the section changed)

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This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

Forward-looking statements include, but are not limited to, statements related to the effects of our decision to cease payments on 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 our expectation that the hotels will be sold by the court-appointed receiver by November 21, 2025, with the buyer assuming the SF Mortgage Loan at that time, as well as our current expectations regarding the performance of our business, our financial results, our liquidity and capital resources, including the use of proceeds from our new $800 million senior unsecured delayed draw term loan facility (“2025 Delayed Draw Term Loan”) and the anticipated repayment of certain of our indebtedness, the completion of capital allocation priorities, the expected repurchase of our stock, the impact from macroeconomic factors (including elevated inflation and interest rates, potential economic slowdown or a recession and geopolitical conflicts or trends, including trade policy, travel barriers or changes in travel preferences for U.S.

destinations, including as a result of the government shutdown), the effects of competition, the effects of future legislation, executive action or regulations, tariffs, the expected completion of anticipated dispositions, the declaration, payment and any change in amounts of future dividends and other non-historical statements.

Forward-looking statements include, but are not limited to our current expectations regarding the performance of our business, our financial results, our liquidity and capital resources, including the use of proceeds from our $800 million senior unsecured delayed draw term loan facility (“2025 Delayed Draw Term Loan”) and our $700 million delayed draw mortgage loan (“Bonnet Creek Mortgage Loan”), which will be secured by the 1,009-room Signia by Hilton Orlando Bonnet Creek and the 502-room Waldorf Astoria Orlando and associated golf course (collectively, the “Bonnet Creek complex”) when drawn upon, and the anticipated repayment of certain of our indebtedness, the completion of capital allocation priorities, the expected repurchase of our stock, the impact from macroeconomic factors (including elevated inflation and interest rates, potential economic slowdown or a recession and geopolitical conflicts or trends, including trade policy, travel barriers or changes in travel preferences for U.S.

destinations, including as a result of government and agency shutdowns), the effects of competition, the effects of future legislation, executive action or regulations, tariffs, the expected completion of anticipated dispositions, including of our Non-Core hotels (as defined below), the declaration, payment and any change in amounts of future dividends and other non-historical statements.

Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”, “hopes” or the negative version of these words or other comparable words.

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We have a diverse portfolio of iconic and market-leading hotels and resorts with significant underlying real estate value.

We currently have interests in 38 hotels, consisting of premium-branded hotels and resorts with over 24,000 rooms, of which over 87% are luxury and upper upscale (as defined by Smith Travel Research) and are located in prime U.S.

We currently have interests in 33 hotels, consisting of premium-branded hotels and resorts with over 22,000 rooms, located in prime U.S.

markets and its territories.

Our high-quality portfolio currently includes hotels mostly in major urban and convention areas, such as New York City, Washington, D.C., Chicago, Boston, New Orleans and Denver;

Our strategic focus is on our “Core” portfolio, which consists primarily of hotels and resorts that cater to group and leisure demand and includes 20 of our consolidated hotels that contribute over 90% of our Hotel Adjusted EBITDA as well as one unconsolidated joint venture.

Over 96% of rooms in our Core portfolio are luxury and upper upscale, and our Core hotels are located in major urban and convention areas, such as New York City, Washington, D.C., Chicago, Boston, New Orleans and Denver;

and premier resorts in key leisure destinations, including Hawaii, Orlando, Key West and Miami Beach;

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Our objective is to be the preeminent lodging real estate investment trust (“REIT”), focused on consistently delivering superior, risk-adjusted returns to stockholders through active asset management and a thoughtful external growth strategy while maintaining a strong and flexible balance sheet.

As a pure-play real estate company with direct access to capital and independent financial resources, we believe our enhanced ability to implement compelling return on investment initiatives within our portfolio represents a significant embedded growth opportunity.

Finally, given our scale and investment expertise, we believe we will be able to successfully execute single-asset and portfolio acquisitions and

As a pure-play real estate company with direct access to capital and independent financial resources, we believe our enhanced ability to implement compelling return on investment initiatives represents a significant embedded growth opportunity, particularly for our Core portfolio.

Finally, given our scale and investment expertise, we believe we will be able to successfully execute single-asset and portfolio acquisitions

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dispositions to further enhance the value and diversification of our assets throughout the lodging cycle, including potentially taking advantage of the economies of scale that could come from consolidation in the lodging REIT industry.

We operate our business through two operating segments, our consolidated hotels and unconsolidated hotels.

Our consolidated hotels operating segment is our only reportable segment.

and dispose of all 12 remaining “Non-Core” hotels, which includes 11 consolidated hotels and one unconsolidated joint venture, to further enhance the value and diversification of our assets throughout the lodging cycle.

We operate our business through three operating segments, our consolidated Core hotels, consolidated Non-Core hotels and unconsolidated hotels, following the shift in our business strategy to dispose of all Non-Core hotels.

Only our consolidated Core hotels and consolidated Non-Core hotels are reportable segments.

Refer to Note 10:

“Business Segment Information” in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information regarding our operating segments.

Economic disruptions, including as a result of elevated interest and inflation rates, may adversely affect our business by affecting consumer sentiment and demand for travel.

Heightened uncertainty due to ongoing changes to trade policy, tax policy and disruptions to government spending has resulted in inflationary concerns and changes in demand and travel preferences, which may affect the lodging industry.

During the third quarter of 2025, we have relied on the performance of our hotels and active asset management to mitigate the effects of current macroeconomic uncertainty.

While there can be no assurances that we will not experience further fluctuations in hotel revenues or earnings at our hotels due to inflation and other macroeconomic factors, local economic factors and demand, a potential economic slowdown or a recession, geopolitical conflicts or further continuation of the government shutdown, we are cautiously optimistic for the remainder of 2025 based on expected improvements in group demand and continued benefits from transformative renovations at certain of our hotels.

Core and Non-Core hotel financial data presented is based on our consolidated hotels only.

Geopolitical conflicts and trends, coupled with economic disruptions, including as a result of elevated interest and inflation rates, may adversely affect our business by affecting consumer sentiment and demand for both domestic and international travel.

Additionally, heightened uncertainty due to ongoing changes to trade policy, tax policy and disruptions to government spending has resulted in inflationary concerns and changes in demand and travel preferences, which may affect the lodging industry.

During the first quarter of 2026, we relied on the performance of our hotels and active asset management to mitigate the effects of current macroeconomic uncertainty.

foreign or domestic policy, or another government or agency shutdown, we are cautiously optimistic for 2026 based on upcoming major events, including the World Cup and the 250th anniversary of the U.S., continued benefits from transformative renovations at certain of our hotels, including the expected reopening of the Royal Palm South Beach Miami, a Tribute Portfolio Resort (“Royal Palm”) in June 2026, and the benefits of divesting of our Non-Core hotels.

Key Business Metrics Used by Management

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We use occupancy to gauge demand at a specific hotel or group of hotels in a given period.

Occupancy levels also help us determine achievable ADR levels as demand for rooms increases or decreases.

Occupancy levels also help us determine achievable Average Daily Rate (“ADR”) levels as demand for rooms increases or decreases.

Average Daily Rate

Average daily rate (“ADR”) represents rooms revenue divided by total number of room nights sold in a given period.

ADR represents rooms revenue divided by total number of room nights sold in a given period.

ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels.

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RevPAR is also a useful indicator in measuring performance over comparable periods.

Comparable Hotels Data

We present certain data for our hotels on a comparable hotel basis as supplemental information for investors.

We present comparable hotel results to help us and our investors evaluate the ongoing performance of our comparable hotels.

Our comparable hotels data includes results from hotels that were active and operating in our portfolio since January 1st of the previous year and excludes results from property dispositions that have occurred through September 30, 2025 and the Hilton San Francisco Hotels, which were placed into receivership at the end of October 2023.

Non-GAAP Financial Measures

We also evaluate the performance of our business through certain other financial measures that are not recognized under U.S.

Each of these non-GAAP financial measures should be considered by investors as supplemental measures to GAAP performance measures such as total revenues, operating profit and net (loss) income.

Each of these non-GAAP financial measures should be considered by investors as supplemental measures to GAAP performance measures such as total revenues, operating profit and net income (loss).

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EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA

EBITDA, presented herein, reflects net (loss) income excluding depreciation and amortization, interest income, interest expense, income taxes and also interest income and expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates.

EBITDA, presented herein, reflects net income (loss) excluding depreciation and amortization, interest income, interest expense, income taxes and also interest income and expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates.

Adjusted EBITDA, presented herein, is calculated as EBITDA, further 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:

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EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA are not recognized terms under U.S.

GAAP and should not be considered as alternatives to net (loss) income or other measures of financial performance or liquidity derived in accordance with U.S.

GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S.

In addition, our definitions of EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

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and (ii) EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.

EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net (loss) income or other methods of analyzing our operating performance and results as reported under U.S.

EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss) or other methods of analyzing our operating performance and results as reported under U.S.

Some of these limitations are:

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• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA do not reflect any cash requirements for such replacements.

The following table provides a reconciliation of Net (loss) income to Hotel Adjusted EBITDA:

The following table provides a reconciliation of Net income (loss) to Hotel Adjusted EBITDA:

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

(in millions)

Net (loss) income $ (14) $ 57 $ (73) $ 153

Net income (loss) $ 12 $ (57)

Depreciation and amortization expense 64 69

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Interest expense associated with hotels in receivership (1)

Income tax expense (benefit) 6 2 8 (9)

Income tax expense 1 1

Interest income and expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates — 2

EBITDA 127 80

Gain on sales of assets, net (2)

— (19) (1) (19)

Loss on sale of assets, net 1 —

Gain on derecognition of assets (1)

(16) (15) (48) (44)

Share-based compensation expense 4 4

Impairment and casualty loss — — 70 13

Impairment 5 70

Other items 6 6

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Hotel Adjusted EBITDA 151 151

Adjusted EBITDA from Non-Core hotels (10) (7)

Core Hotel Adjusted EBITDA $ 141 $ 144

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(1) For the three and nine months ended September 30, 2025 and 2024, represents accrued interest expense associated with the default of the SF Mortgage Loan, which is offset by a gain on derecognition for the 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.

(2) For the three and nine months ended September 30, 2024, includes a gain of $19 million on the sale of the Hilton La Jolla Torrey Pines included in equity in earnings from investments in affiliates.

(1) For the three months ended March 31, 2025, represents accrued interest expense associated with the default of the $725 million non-recourse CMBS loan (“SF Mortgage Loan”), which was offset by a gain on derecognition for the corresponding increase of the contract asset on our condensed consolidated balance sheets.

The SF Mortgage Loan was assumed by the buyer of 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”), which were sold by the court-appointed receiver on November 21, 2025.

(2) Includes other revenues and other expenses , non-income taxes on leases with our taxable REIT subsidiaries included in other property expenses and corporate general and administrative expenses.

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Nareit FFO attributable to stockholders and Adjusted FFO attributable to stockholders

We present Nareit FFO attributable to stockholders and Nareit FFO per diluted share (defined as set forth below) as non-GAAP measures of our performance.

We calculate funds from (used in) operations (“FFO”) attributable to stockholders for a given operating period in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), as net (loss) income attributable to stockholders (calculated in accordance with U.S.

We calculate funds from (used in) operations (“FFO”) attributable to

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stockholders for a given operating period in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), as net income (loss) attributable to stockholders (calculated in accordance with U.S.

GAAP), excluding depreciation and amortization, gains or losses on sales of assets, impairment, and the cumulative effect of changes in accounting principles, plus adjustments for unconsolidated joint ventures.

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

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The following table provides a reconciliation of Net (loss) income attributable to stockholders to Nareit FFO attributable to stockholders and Adjusted FFO attributable to stockholders:

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

2025 2024 2025 2024

The following table provides a reconciliation of Net income (loss) attributable to stockholders to Nareit FFO attributable to stockholders and Adjusted FFO attributable to stockholders:

Three Months Ended March 31,

(in millions, except per share amounts)

Net (loss) income attributable to stockholders $ (16) $ 54 $ (78) $ 146

Net income (loss) attributable to stockholders $ 11 $ (57)

Depreciation and amortization expense 64 69

Depreciation and amortization expense attributable to noncontrolling interests (1) (1)

Gain on sales of assets, net — — (1) —

Loss on sale of assets, net 1 —

Gain on derecognition of assets (1)

(16) (15) (48) (44)

Impairment loss — — 70 12

Impairment 5 70

Equity investment adjustments:

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Nareit FFO attributable to stockholders 79 66

Casualty loss — — — 1

Share-based compensation expense 4 4

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$ 0.45 $ 0.46

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(1) For the three months ended March 31, 2025, represents accrued interest expense associated with the default of the SF Mortgage Loan, which was offset by a gain on derecognition for the corresponding increase of the contract asset on our condensed consolidated balance sheets.

The SF Mortgage Loan was assumed by the buyer of the Hilton San Francisco Hotels, which were sold by the court-appointed receiver on November 21, 2025.

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

Results of Operations

Our non-comparable hotels in the table of Hotel Revenues and Operating Expenses below consist of two hotels sold and two hotels returned to the lessor upon termination of the ground lease since January 1, 2024.

The results of operations of these hotels are included in our consolidated results only during our period of ownership.

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Since January 1, 2025, we disposed of five consolidated Non-Core hotels.

The results of operations of these Non-Core hotels are included in our consolidated results only during our period of ownership.

Hotel Revenues and Operating Expenses

Three Months Ended September 30,

2025 2024 Change Change from Comparable Hotels (1)

Change from Non-Comparable Hotels

(in millions)

Rooms revenue $ 370 $ 403 $ (33) $ (23) $ (10)

Food and beverage revenue 150 157 (7) (5) (2)

Ancillary hotel revenue 67 68 (1) 1 (2)

Rooms expense 106 107 (1) 2 (3)

Food and beverage expense 112 112 — 2 (2)

Other departmental and support expense 148 154 (6) (1) (5)

Other property expense 56 65 (9) (4) (5)

Management fees expense 27 30 (3) (2) (1)

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(1) Change from our comparable hotels primarily relates to the market-specific conditions discussed below.

Nine Months Ended September 30,

2025 2024 Change Change from Comparable Hotels (1)

Change from Non-Comparable Hotels

Three Months Ended March 31, Non-Core Hotels

2026 2025 Change Change from Core Hotels Change from Remaining Non-Core Hotels

Change from Disposed Hotels

(in millions)

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Management fees expense 30 30 — 1 — (1)

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(1) Change from our comparable hotels primarily relates to the market-specific conditions discussed below.

Group, transient, contract and other rooms revenue for the three and nine months ended September 30, 2025, as well as the change for each type of rooms revenue compared to the same periods in 2024 were as follows:

Three Months Ended September 30,

2025 2024 Change Change from Comparable Hotels (1)

Change from Non-Comparable Hotels

(in millions)

Group rooms revenue $ 88 $ 107 $ (19) $ (18) $ (1)

Transient rooms revenue 253 264 (11) (4) (7)

Contract rooms revenue 21 24 (3) (1) (2)

Other rooms revenue 8 8 — — —

Rooms revenue $ 370 $ 403 $ (33) $ (23) $ (10)

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(1) Change from our comparable hotels primarily relates to the market-specific conditions discussed below.

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Nine Months Ended September 30,

2025 2024 Change Change from Comparable Hotels (1)

Change from Non-Comparable Hotels

Group, transient, contract and other rooms revenue for the three months ended March 31, 2026, as well as the change for each type of rooms revenue compared to the same period in 2025 were as follows:

Three Months Ended March 31, Non-Core Hotels

2026 2025 Change Change from Core Hotels Change from Remaining Non-Core Hotels

Change from Disposed Hotels

(in millions)

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Rooms revenue $ 356 $ 363 $ (7) $ 5 $ 3 $ (15)

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(1) Change from other factors primarily relates to the market-specific conditions discussed below.

Market-Specific Conditions

The changes in hotel revenues and operating expenses for our comparable hotels during the three and nine months ended September 30, 2025 compared to the same periods in 2024 were primarily attributable to decreases at our hotels in our Hawaii and Miami markets, partially offset by increases at our hotels in the Orlando, New York, Puerto Rico and Key West markets.

At our two Hawaii hotels, group and transient demand decreased, partially related to disruption from renovations at both hotels and ongoing recovery from the labor strike at the Hilton Hawaiian Village Waikiki Beach Resort last year.

Combined occupancy and ADR decreased 5.6 percentage points and 5.6%, respectively, for the three months ended September 30, 2025 and 8.6 percentage points and 3.4%, respectively, for the nine months ended September 30, 2025, compared to the same periods in 2024.

Additionally, the Royal Palm South Beach Miami, a Tribute Portfolio Resort, suspended operations beginning in May 2025 for a full-scale renovation.

These decreases were offset by increases in hotel revenues and operating expenses at several of our key markets.

Our Orlando hotels experienced an increase in food and beverage revenue of 5.5% and 6.9% for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024 as a result of the benefit derived from the comprehensive renovation and expansion projects at the Bonnet Creek complex completed in early 2024.

The Waldorf Astoria Orlando benefited from an increase in both group and transient demand, resulting in an increase in ADR of 4.8% while maintaining occupancy for the three months ended September 30, 2025, and increases in ADR and occupancy of 5.8% and 9.1 percentage points, respectively, for the nine months ended September 30, 2025, compared to the same periods in 2024.

The Signia by Hilton Orlando Bonnet Creek benefited primarily from an increase in transient demand, resulting in an increase in ADR of 3.3% and 3.1%, respectively, for the three and nine months ended September 30, 2025 compared to the same periods in 2024.

The New York Hilton Midtown experienced an increase in food and beverage revenue of 27.7% and 3.4% for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024, primarily due to an increase in banquet and catering revenue.

It also benefited from an increase in transient demand, resulting in an increase in ADR of 5.2% and 6.0%, respectively, for the three and nine months ended September 30, 2025, compared to the same periods in 2024.

The Caribe Hilton in Puerto Rico continues to benefit from an increase in transient demand resulting in increases in occupancy of 15.5 percentage points and 13.9 percentage points for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024.

The increase in the Key West market was a result of the Casa Marina Key West, Curio Collection, which continues to benefit from the hotel’s comprehensive renovation completed in 2023 and an increase in transient demand, resulting in increases in occupancy of 4.5 percentage points and 6.8 percentage points, respectively, for the three and nine months ended September 30, 2025, compared to the same periods in 2024.

The changes in hotel revenues and operating expenses for our Core hotels during the three months ended March 31, 2026 compared to the same period in 2025 were primarily attributable to increases at the Bonnet Creek complex, our Hawaii hotels and the Hilton Caribe, partially offset by decreases at our hotels in New Orleans and Miami.

The Waldorf Astoria Orlando and Signia by Hilton Orlando Bonnet Creek benefited from increases in both group and transient demand, resulting in an increase in occupancy of 10.4 percentage points and 6.3 percentage points, respectively, for the three months ended March 31, 2026 compared to the same period in 2025, while ADR increased 3.7% and 5.1%, respectively.

Additionally, the Waldorf Astoria Orlando and the Signia by Hilton Orlando Bonnet Creek experienced a combined increase in food and beverage revenue of 14.8%, or approximately $6 million, for the three

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months ended March 31, 2026 compared to the same period in 2025 as a result of continued benefits derived from the comprehensive renovation and expansion projects at the Bonnet Creek complex completed in early 2024.

Our two hotels in Hawaii experienced an increase in transient demand following the completion of the first phase of guestroom renovations at both hotels.

Occupancy at the Hilton Hawaiian Village Waikiki Beach Resort and the Hilton Waikoloa Village increased 4.7 percentage points and 3.6 percentage points, respectively, for the three months ended March 31, 2026 compared to the same period in 2025.

The Caribe Hilton in Puerto Rico continues to benefit from an increase in group demand resulting in increases in ADR and occupancy of 9.9% and 1.8 percentage points, respectively, for the three months ended March 31, 2026 compared to the same period in 2025.

These increases were offset by decreases in hotel revenues at our hotels in New Orleans and Miami.

The Hilton New Orleans Riverside experienced decreases in both group and transient demand primarily due to the Super Bowl held in New Orleans in 2025, resulting in a decrease in ADR of 13.6% for the three months ended March 31, 2026 compared to the same period in 2025.

Additionally, the Royal Palm in Miami suspended operations beginning in May 2025 for a full-scale renovation.

Corporate general and administrative

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 Percent Change 2025 2024 Percent Change

(in millions) (in millions)

2026 2025 Percent Change

(in millions)

General and administrative expenses $ 13 $ 13 — %

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Total corporate general and administrative $ 18 $ 18 — %

Impairment and casualty loss

During the nine months ended September 30, 2025, we recognized an impairment loss of approximately $70 million related to the Hyatt Centric Fisherman’s Wharf, which was sold in May 2025, due to a change in our intent to hold the hotel and our inability to recover the carrying value of the asset.

During the nine months ended September 30, 2024, we recognized an impairment loss 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.

During the three months ended March 31, 2026, we recognized an impairment loss of approximately $5 million related to the Hilton Seattle Airport & Conference Center, which was subsequently sold in April 2026, as the gross proceeds of $18 million were less than the net book value of the hotel.

During the three months ended March 31, 2025, we recognized an impairment loss of approximately $70 million related the Hyatt Centric Fisherman’s Wharf, which was sold in May 2025, as the gross proceeds were less than the net book value of the hotel.

Refer to Note 7:

“Fair Value Measurements” in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.

Depreciation and amortization

The increase in depreciation expense for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was primarily due to accelerated depreciation recognized in connection with renovations at certain of our hotels, including approximately $56 million related to the full-scale renovation at the Royal Palm South Beach Miami, a Tribute Portfolio Resort, which began in May 2025.

Gain on derecognition of assets

During the three and nine months ended September 30, 2025, we recognized a gain of $16 million and $48 million, respectively, and during the three and nine months ended September 30, 2024, we recognized a gain of $15 million and $44 million, respectively, from the accrued interest expense associated with the default of the SF Mortgage Loan, which resulted in a corresponding increase of the contract asset in our condensed consolidated balance sheets, as we expect to be released from this obligation upon final resolution with the lender.

During the three months ended March 31, 2025, we recognized a gain of $16 million from the accrued interest expense associated with the default of the SF Mortgage Loan, which resulted in a corresponding increase of the contract asset in our condensed consolidated balance sheets.

We ceased accruing interest expense when the SF Mortgage Loan was assumed by the buyer of the Hilton San Francisco Hotels, which were sold by the court-appointed receiver on November 21, 2025.

Non-operating Income and Expenses

Interest income

Interest income decreased $3 million and $8 million during the three and nine months ended September 30, 2025 compared to the same periods in 2024 primarily as a result of a decrease in average cash balances.

Interest income decreased $2 million during the three months ended March 31, 2026 compared to the same period in 2025 primarily as a result of a decrease in average cash balances as we have reinvested cash into our Core portfolio, including the full-scale renovation of the Royal Palm.

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Interest expense

Interest expense associated with our debt for the three and nine months ended September 30, 2025 and 2024 were as follows:

Interest expense associated with our debt for the three months ended March 31, 2026 and 2025 were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 Percent Change 2025 2024 Percent Change

(in millions) (in millions)

2026 2025 Percent Change

(in millions)

HHV Mortgage Loan (1)

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Other mortgage loans 4 3 33.3

Revolver — 1 (100.0) 2 2 —

2024 Term Loan (3)

4 4 — 10 6 66.7

2028 Senior Notes (4)

— — — — 19 (100.0)

2029 Senior Notes (4)

11 11 — 32 32 —

2030 Senior Notes (4)

9 9 — 27 27 —

2030 Senior Notes (3)

10 10 — 29 15 93.3

Other — 2 (100.0)

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(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) As of March 31, 2026, we had $1 billion of available capacity under our senior unsecured revolving credit facility (“Revolver”).

In April 2026, we drew $50 million under the Revolver.

(3) The $200 million senior unsecured term loan (“2024 Term Loan”) was incurred in May 2024.

(3) In May 2020, Park Intermediate Holdings LLC (our “Operating Company”), PK Domestic Property LLC, an indirect subsidiary of the Company (“PK Domestic”), and PK Finance Co Issuer Inc.

(“PK Finance”) issued an aggregate of $650 million of 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.

(4) Park Intermediate Holdings LLC, PK Domestic Property LLC, an indirect subsidiary of the Company, and PK Finance Co Issuer Inc.

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.

Interest expense associated with hotels in receivership

For the three and nine months ended September 30, 2025, interest expense of $16 million and $48 million, respectively, and for the three and nine months ended September 30, 2024, interest expense of $15 million and $44 million, respectively, represents accrued interest associated with the default of the SF Mortgage Loan.

Refer to Note 6:

“Debt” in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.

Other (loss) gain, net

During the nine months ended September 30, 2024, we recognized a loss of approximately $4 million, primarily related to the write-off of the remaining unamortized deferred financing costs associated with the repurchase and redemption of all the 2025 Senior Notes.

Equity in earnings from investments in affiliates

Equity in earnings from investments in affiliates decreased $28 million and $27 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024 primarily due to a $19 million gain from the sale of the Hilton La Jolla Torrey Pines in July 2024.

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Income tax benefit (expense)

During the three and nine months ended September 30, 2025, we recognized income tax expense of $6 million and $8 million respectively, which was primarily related to taxable income from our TRSs.

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.

For the three months ended March 31, 2025, interest expense of $16 million represents accrued interest associated with the default of the SF Mortgage Loan.

We ceased accruing interest expense when the SF Mortgage Loan was assumed by the buyer of the Hilton San Francisco Hotels, which were sold by the court-appointed receiver on November 21, 2025.

Liquidity and Capital Resources

We seek to maintain sufficient amounts of liquidity with an appropriate balance of cash, debt and equity to provide financial flexibility.

As of September 30, 2025, we had total cash and cash equivalents of $278 million and $31 million of restricted cash.

As of March 31, 2026, we had total cash and cash equivalents of $156 million and $34 million of restricted cash.

Restricted cash primarily consists of cash restricted as to use by our debt agreements and reserves for capital expenditures in accordance with certain of our management agreements.

With the recent amendment and restatement of our existing credit agreement in September 2025, which increased the available capacity under our senior unsecured revolving credit facility (“Revolver”) to $1 billion and added the new 2025 Delayed Draw Term Loan of up to $800 million, in addition to the $278 million in existing cash and cash equivalents, we have sufficient liquidity to pay our debt maturities and to fund other liquidity obligations over the next 12 months and beyond.

Excluding the SF Mortgage Loan for which we ceased to make debt service payments in June 2023 and is in default, we have no significant maturities until the fourth quarter of 2026, and we intend to draw upon the 2025 Delayed Draw Term Loan in 2026 to assist in repaying two mortgage loans totaling approximately $1.4 billion maturing in 2026.

With nearly $1 billion available under our Revolver, our $800 million undrawn 2025 Delayed Draw Term Loan and our new undrawn $700 million Bonnet Creek Mortgage Loan, in addition to the $156 million in existing cash and cash equivalents, we have sufficient liquidity to pay our debt maturities and to fund other liquidity obligations over the next 12 months and beyond.

We intend to draw upon the 2025 Delayed Draw Term Loan and the Bonnet Creek Mortgage Loan to fund the repayment of two mortgage loans totaling approximately $1.4 billion and maturing in the second half of 2026 and further pay down our debt with proceeds from the sales of our Non-Core hotels.

Following the repayment of these mortgage loans, we have no significant maturities until the fourth quarter of 2028.

Refer to Note 6:

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However, there can be no assurance as to the timing of any such issuance, which may be in the near term, or that any such additional financing will be completed on favorable terms, or at all.

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including reimbursements to our hotel manager for payroll and related benefits, costs associated with the operation of our hotels, interest and contractually due principal payments on our outstanding indebtedness, capital expenditures for in-progress renovations and maintenance at our hotels, corporate general and administrative expenses and dividends to our stockholders.

In July 2025, we declared a third quarter dividend of $0.25 per share that was paid on October 15, 2025 to stockholders of record as of September 30, 2025.

In addition, we declared a fourth quarter dividend of $0.25 per share in October 2025 to be paid on January 15, 2026 to stockholders of record as of December 31, 2025.

Many of the other expenses associated with our hotels are relatively fixed, including portions of rent expense, property taxes and insurance.

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Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including reimbursements to our hotel managers for payroll and related benefits, costs associated with the operation of our hotels, interest and contractually due principal payments on our outstanding indebtedness, capital expenditures for in-progress renovations and maintenance at our hotels, corporate general and administrative expenses and dividends to our stockholders.

In February 2026, we declared a first quarter dividend of $0.25 per share that was paid on April 15, 2026 to stockholders of record as of March 31, 2026.

In addition, we declared a second quarter dividend of $0.25 per share in April 2026 to be paid on July 15, 2026 to stockholders of record as of June 30, 2026.

Many of the other expenses associated with our operations are relatively fixed, including portions of rent expense, property taxes, insurance and interest expense on our debt.

Since we generally are unable to decrease these costs significantly or rapidly when demand for our hotels decreases, the resulting decline in our revenues can have a greater adverse effect on our net cash flow, margins and profits.

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Further, we have an investment policy that is focused on the preservation of capital and maximizing the return on new and existing investments.

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Stock Repurchase Program

In February 2025, our Board of Directors terminated a previous $300 million stock repurchase program that was approved in February 2023 (the “February 2023 Stock Repurchase Program”) and authorized and approved a new stock repurchase program allowing us to repurchase up to $300 million of our common stock over a two-year period ending in February 2027 (the “February 2025 Stock Repurchase Program”), subject to any applicable limitations or restrictions set forth in our credit facility and indentures related to our senior notes.

In February 2025, our Board of Directors authorized and approved a stock repurchase program allowing us to repurchase up to $300 million of our common stock over a two-year period ending in February 2027, subject to any applicable limitations or restrictions set forth in our credit facility and indentures related to our senior notes.

Stock repurchases may be made through open market purchases, including through Rule 10b5-1 trading programs, in privately negotiated transactions, or in such other manner that would comply with applicable securities laws.

The timing of any future stock repurchases and the number of shares to be repurchased will depend upon prevailing market conditions and other factors, and we may suspend the repurchase program at any time.

During the nine months ended September 30, 2025, we repurchased 3.5 million shares of our common stock, including 1.4 million shares under the February 2023 Stock Repurchase Program and 2.1 million shares under the February 2025 Stock Repurchase Program, for a total purchase price of $45 million.

As of September 30, 2025, $275 million remained available for stock repurchases under the February 2025 Stock Repurchase Program.

As of March 31, 2026, $275 million remained available for stock repurchases.

Sources and Uses of Our Cash and Cash Equivalents

The following tables summarize our net cash flows and key metrics related to our liquidity:

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 Percent Change

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Cash flow from operating activities are primarily generated from the operating income generated at our hotels.

The $56 million decrease in net cash provided by operating activities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to decreases in occupancy at certain of our hotels, including the Royal Palm South Beach Miami, a Tribute Portfolio Resort, which suspended operations in May 2025 for a full-scale renovation.

The $27 million decrease in net cash provided by operating activities for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to decreases in occupancy at certain of our hotels, including the Royal Palm, which suspended operations in May 2025 for a full-scale renovation, and timing of receipts from our customers.

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Investing Activities

The $113 million in net cash used in investing activities for the nine months ended September 30, 2025 was attributable to $188 million of capital expenditures, partially offset by $75 million of net proceeds from the sale of the Hyatt Centric Fisherman’s Wharf.

The $134 million in net cash used in investing activities for the nine months ended September 30, 2024 was attributable to $164 million of capital expenditures, partially offset by $33 million of distributions from unconsolidated affiliates primarily related to the sale of the Hilton La Jolla Torrey Pines.

The $72 million in net cash used in investing activities for the three months ended March 31, 2026 was attributable to $83 million of capital expenditures, partially offset by $11 million of net proceeds from the sale of the Hilton Checkers Los Angeles.

The $77 million in net cash used in investing activities for the three months ended March 31, 2025 was attributable to capital expenditures.

Financing Activities

The $311 million in net cash used in financing activities for the nine months ended September 30, 2025 was primarily attributable to $230 million of dividends paid, the repurchase of approximately 3.5 million shares of our common stock for $45 million and $16 million in financing fees related to the recent amendment to our credit agreement in September 2025.

The $447 million in net cash used in financing activities for the nine months ended September 30, 2024 was primarily attributable to the issuance of $550 million of 2030 Senior Notes and the $200 million 2024 Term Loan, offset by $656 million of debt repayments, $459 million of dividends paid and the repurchase of approximately 4.2 million shares of our common stock for $60 million.

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The $61 million in net cash used in financing activities for the three months ended March 31, 2026 was primarily attributable to $50 million of dividends paid.

The $189 million in net cash used in financing activities for the three months ended March 31, 2025 was primarily attributable to $131 million of dividends paid and the repurchase of approximately 3.5 million shares of our common stock for $45 million.

As a REIT, we are required to distribute at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to our stockholders on an annual basis.

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June 30, 2026 July 15, 2026 $ 0.25

September 30, 2025 October 15, 2025 $ 0.25

December 31, 2025 January 15, 2026 $ 0.25

As of September 30, 2025, our total indebtedness was approximately $3.8 billion, including over $2 billion of our Senior Notes, and excluding the $725 million SF Mortgage Loan (that we ceased making debt service payments in June 2023) and our share of debt from investments in affiliates.

As of March 31, 2026, our total indebtedness was approximately $3.8 billion, including over $2 billion of our Senior Notes, and excluding our share of debt from investments in affiliates.

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

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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 2. Management’s Discussion and Analysis