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What changed in DiamondRock Hospitality Co's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of DiamondRock Hospitality Co's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+394 added−453 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)

Top changes in DiamondRock Hospitality Co's 2025 10-K

394 paragraphs added · 453 removed · 291 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn addition to competing with traditional hotels and lodging facilities, we compete with alternative lodging, including third-party providers of short-term rental properties and serviced apartments. We compete based on a number of factors, including room rates, quality of accommodations, service levels, convenience of location, reputation, reservation systems, brand recognition and supply and availability of alternative lodging.
Biggest changeWe compete based on a number of factors, including room rates, quality of accommodations, service levels, convenience of location, reputation, reservation systems, brand recognition and supply and availability of alternative lodging. -10- Table of Contents We face competition for the acquisition of hotels from institutional pension funds, private equity funds, REITs, hotel companies and others who are engaged in hotel acquisitions and investments.
We will continue to evaluate our portfolio for opportunities to upgrade our portfolio by considering strategic acquisitions and opportunistic non-core hotel dispositions. Our acquisition strategy focuses primarily on hotels that we believe can be acquired at a discount to replacement cost present unique value-add opportunities.
We will continue to evaluate opportunities to upgrade our portfolio by considering strategic acquisitions and opportunistic non-core hotel dispositions. Our acquisition strategy focuses primarily on hotels that we believe can be acquired at a discount to replacement cost and present unique value-add opportunities.
Insurance We carry comprehensive property insurance and general liability insurance, including fire, extended coverage, windstorm, business interruption and rental loss insurance covering all of the properties in our portfolio. In addition, we carry earthquake and terrorism insurance on our properties in an amount and with deductibles which we believe are commercially reasonable.
Insurance We carry comprehensive property insurance and general liability insurance, including fire, extended coverage, windstorm, business interruption and rental loss insurance covering all of the properties in our portfolio. In addition, we carry earthquake, pollution and terrorism insurance on our properties in an amount and with deductibles which we believe are commercially reasonable.
In turn, our TRS lessees must engage a third-party management company to manage the hotels. As of December 31, 2024, we leased all of our hotels to TRS lessees, except for one hotel that is directly owned by a TRS.
In turn, our TRS lessees must engage a third-party management company to manage the hotels. As of December 31, 2025, we leased all of our hotels to TRS lessees, except for one hotel that is directly owned by a TRS.
High-Quality Urban and Destination Resort Hotels As of December 31, 2024, we owned 37 premium hotels and resorts throughout the United States. Our hotels and resorts are primarily categorized as luxury and upper upscale as defined by STR, Inc. and are generally located in high barrier-to-entry markets with multiple demand generators.
High-Quality Urban and Destination Resort Hotels As of December 31, 2025, we owned 35 premium hotels and resorts throughout the United States. Our hotels and resorts are primarily categorized as luxury and upper upscale as defined by STR, Inc. and are generally located in high barrier-to-entry markets with multiple demand generators.
Over 97% of revenues for the year ended December 31, 2024 was derived from core urban and resort destination hotels. Our capital recycling program has also achieved several other important strategic portfolio goals that include improving our portfolio’s geographic, climate, operator and brand diversity.
Over 97% of revenues for the year ended December 31, 2025 were derived from core urban and resort destination hotels. Our capital recycling program has also achieved several other important strategic portfolio goals that include improving our portfolio’s geographic, climate, operator and brand diversity.
The water and energy data we use is first gathered from utility statements and then reviewed, aggregated, and analyzed by third-parties. -8- Table of Contents Beginning in 2021, we engaged an independent third party to verify our energy and water consumption data.
The water and energy data we use is first gathered from utility statements and then reviewed, aggregated, and analyzed by third-parties. Beginning in 2021, we engaged an independent third party to verify our energy and water consumption data.
The annual Corporate Responsibility Report is prepared in accordance with relevant international standards and best practices, including standards developed for the real estate sector by the International Financial Reporting Standards (“IFRS”) Foundation, which was formerly known as the Sustainable Accounting Standards Board.
In January 2026, we published our most recent annual Corporate Responsibility Report. The annual Corporate Responsibility Report is prepared in accordance with relevant international standards and best practices, including standards developed for the real estate sector by the International Financial Reporting Standards (“IFRS”) Foundation, which was formerly known as the Sustainable Accounting Standards Board.
Copies of our charter, our bylaws, our Code of Business Conduct and Ethics and our SEC reports are also available in print to stockholders upon request addressed to Investor Relations, DiamondRock Hospitality Company, 2 Bethesda Metro Center, Suite 1400, Bethesda, Maryland 20814 or through the “Information Request” section on the Investor Relations page of our website.
Copies of our charter, our bylaws, our Code of Business Conduct and Ethics and our SEC reports are also available in print to stockholders upon request addressed to Investor Relations, DiamondRock Hospitality Company, 7373 Wisconsin Avenue, Suite 1900, Bethesda, Maryland 20814 or through the “Information Request” section on the Investor Relations page of our website.
We structure our hotel investments to be straightforward and to fit within our conservative capital structure; however, we will consider a more complex transaction (e.g. the issuance of operating partnership units to limited partners or entry into a joint venture) if we believe that the projected returns to our stockholders will significantly exceed the returns that would otherwise be available.
We prefer a relatively efficient capital structure and generally structure our hotel investments to be straightforward; however, we will consider a more complex transaction (e.g. the issuance of operating partnership units to limited partners or -6- Table of Contents entry into a joint venture) if we believe that the projected returns to our stockholders will significantly exceed the returns that would otherwise be available.
As of December 31, 2024, limited partners held 994,653 common OP units. We may issue additional common OP units from time to time in connection with acquiring hotel properties, financing, compensation, or other reasons.
As of December 31, 2025, limited partners held 1,041,362 common OP units. We may issue additional common OP units from time to time in connection with acquiring hotel properties, financing, compensation, or other reasons.
In addition, either we or the hotel manager are responsible for obtaining general liability insurance, workers' compensation and employer's liability insurance. We may adjust our insurance coverage based on market conditions or changes in a property's risks or exposures.
We comply with -11- Table of Contents all such requirements. In addition, either we or the hotel manager are responsible for obtaining general liability insurance, workers' compensation and employer's liability insurance. We may adjust our insurance coverage based on market conditions or changes in a property's risks or exposures.
Increased competition may have a material adverse effect on occupancy, Average Daily Rate (or ADR) and Revenue per Available Room (or RevPAR), or may require us to make capital improvements that we otherwise would not undertake, which may result in decreases in the profitability of our hotels.
Increased competition may have a material adverse effect on occupancy, Average Daily Rate (or ADR) and Revenue per Available Room (or RevPAR), or may require us to make capital improvements that we otherwise would not undertake, which may result in a decrease in the profitability of our hotels, reduce cash flow available for distribution, increase capital requirements, and adversely affect the value and returns of our hotels.
Most of our hotel management agreements and mortgage agreements require that we obtain and maintain property insurance, business interruption insurance, flood insurance, earthquake insurance (if the hotel is located in an “earthquake prone zone” as determined by the U.S. Geological Survey) and other customary types of insurance related to hotels. We comply with all such requirements.
Most of our hotel management agreeme nts and our credit agreement requ ire that we obtain and maintain property insurance, business interruption insurance, flood insurance, earthquake insurance (if the hotel is located in an “earthquake prone zone” as determined by the U.S. Geological Survey) and other customary types of insurance related to hotels.
In addition to working directly with the personnel at our hotels, our senior management team also has long-standing professional relationships with our hotel managers' senior executives, and we work directly with these senior executives to improve the performance of our hotels. Conservative Capital Structure We believe that a conservative capital structure maximizes investment capacity while reducing enterprise risk.
In addition to working directly with the personnel at our hotels, our senior management team also has long-standing professional relationships with our hotel managers' senior executives, and we work directly with these senior executives to improve the performance of our hotels.
Our asset management team also focuses on identifying new and potential value creation opportunities across our portfolio, including implementing resort or amenity fees where appropriate, creating incremental guest rooms, leasing out restaurants to more profitable third-party operators, converting underutilized space to revenue-generating meeting space, marketing underutilized midweek bookings and implementing programs to reduce energy consumption and increase labor efficiency. -7- Table of Contents Our senior management team has established a broad network of hotel industry contacts and relationships, including relationships with hotel owners, financiers, operators, project managers and contractors and other key industry participants.
Our asset management team also focuses on identifying new and potential value creation opportunities across our portfolio, including implementing resort or amenity fees where appropriate, creating incremental guest rooms, leasing out restaurants to more profitable third-party operators, converting underutilized space to revenue-generating meeting space, marketing underutilized midweek bookings and implementing programs to reduce energy consumption and increase labor efficiency.
As an owner, rather than an operator, of lodging properties, we receive all of the operating profits or losses generated by our hotels after the payment of fees due to hotel managers and hotel brands, which are calculated based on the revenues and profitability of each hotel.
As an owner, we receive all operating profits or losses generated by our hotels after we pay fees to the hotel managers, which are based on the revenues and profitability of the hotels, and the hotel brands, in certain cases, which are based on the revenues of the hotels.
We also display disclosures in accordance with the framework established by the Task Force on Climate-Related Financial Disclosures. Annually, we submit a response to the GRESB survey (the “GRESB Report”), which benchmarks our approach and performance on environmental, social and governance indicators against other real estate companies. The GRESB Report is accessible on our website.
Annually, we submit a response to the GRESB survey (the “GRESB Report”) which benchmarks our approach and performance on environmental, social and governance indicators against other real estate companies. The GRESB Report is accessible on our website.
The following charts display our Total Energy Consumption and Total Water Consumption for 2021, 2022 and 2023, the last fiscal year for which data is available. These metrics relate to our hotels owned for the entire year presented.
The following charts display our Total Energy Consumption and Total Water Consumption for 2022 2023, and 2024, the last fiscal year for which data is available.
Innovative Asset Management We believe that we can create significant value in our portfolio through innovative asset management strategies such as rebranding, renovating and repositioning our hotels. We completed rebrandings at six of our hotels since 2021 and are currently completing a rebranding and repositioning at one additional hotel.
Innovative Asset Management We believe that we can create significant value in our portfolio through innovative asset management strategies such as rebranding, renovating and repositioning our hotels. We completed rebrandings at seven of our hotels since 2021. We regularly evaluate our portfolio to determine if there are additional opportunities to employ these value-add strategies.
Employees and Human Capital The Company is headquartered in Bethesda, Maryland. As of December 31, 2024, we employed 34 full-time employees and did not have any part-time employees . None of our employees are members of any union.
Employees and Human Capital The Company is headquartered in Bethesda, Maryland. As of December 31, 2025, we employed 35 full-time employees and did not have any part-time employees . None of our employees are members of any union. All employees involved in the day-to-day operation of our hotels are employed by third-party management companies engaged pursuant to hotel management agreements.
Subsequent to December 31, 2024, we sold the Westin Washington D.C. City Center hotel located in Washington, D.C. The markets that we target are those that we believe align with our strategic objectives, including destination markets with constrained supply trends, those that provide geographic diversity relative to our existing portfolio, and those that are considered to have high growth potential.
The markets that we target for ownership are those that we believe align with our strategic objectives, which include those in destination markets with constrained supply trends, those that provide geographic diversity relative to our existing portfolio, and those we consider to have high demand growth potential.
Volatility in our financial performance from the seasonality of the lodging industry could adversely affect our financial condition and results of operations. Governmental Regulations Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material.
Governmental Regulations Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material.
We currently employ a conservative debt profile with prudent leverage. We maintain balance sheet flexibility with our existing corporate cash, capacity under our senior unsecured credit facility and 34 of our 37 hotels unencumbered by mortgage debt as of December 31, 2024.
We maintain balance sheet flexibility with our existing corporate cash, capacity under our senior unsecured credit facility and all of our hotels unencumbered by mortgage debt as of December 31, 2025. We prefer that a significant portion of our portfolio remain unencumbered by debt in order to provide maximum balance sheet flexibility.
We regularly evaluate our portfolio to determine if there are additional opportunities to employ these value-add strategies. Our asset management team is focused on improving hotel profits through revenue management strategies and cost control programs.
Our asset management team is focused on improving hotel profits through revenue management strategies and cost control programs.
We expect that our strategy will enable us to maintain a balance sheet with an appropriate amount of debt throughout all phases of the lodging cycle. Corporate Responsibility Our Corporate Responsibility program incorporates governance, environmental, and social initiatives in our overall business strategy, investment decisions and asset management strategies. Our Corporate Responsibility program is guided by executive and board-level oversight.
Corporate Responsibility Our Corporate Responsibility program incorporates governance, environmental, and social initiatives in our overall business strategy, investment decisions and asset management strategies. Our Corporate Responsibility program is guided by executive and board-level oversight. The Nominating and Corporate Governance Committee is assigned to oversee the policies, strategy, and implementation of the program.
Item 1. Business Overview DiamondRock Hospitality Company is a lodging-focused Maryland corporation operating as a REIT for U.S. federal income tax purposes. As of December 31, 2024, we owned a portfolio of 37 premium hotels and resorts that contain 10,004 guest rooms located in 26 different markets in the United States.
Item 1. Business Overview DiamondRock Hospitality Company is a self-managed and self-administered lodging-focused real estate investment trust ("REIT") that owns a portfolio of premium hotels and resorts. As of December 31, 2025, we owned 35 hotels with 9,595 rooms located in 26 markets in the United States.
If we believe our cost of capital is elevated, we expect to create value over the long term to stockholders by deploying investment capacity into share repurchases. We prefer a relatively efficient capital structure.
If our cost of capital is attractive, we expect to: • invest in value-enhancing capital projects across our portfolio; • pursue strategic acquisitions in line with our target asset type; • consider opportunistically raising equity; and If we believe our cost of capital is elevated, we expect to create value over the long term to our stockholders by deploying investment capacity into share repurchases.
The remaining 0.5% of the common OP units are held by third parties and current and former executive officers of the Company. A portion of our common OP units were issued in connection with our acquisition of Cavallo Point, The Lodge at the Golden Gate (“Cavallo Point”) in December 2018.
The remaining 0.5% of the common OP units are held by third parties and current and former executive officers of the Company.
This competition may reduce the number of suitable investment opportunities offered to us and increase the cost of acquiring our targeted hotel investments. -10- Table of Contents Seasonality The periods during which our hotels experience higher revenues vary from property to property, depending principally upon location and the customer base served. Accordingly, we expect some seasonality in our business.
Seasonality The periods during which our hotels experience higher revenues vary from property to property, depending principally upon location and the customer base served. Accordingly, we expect some seasonality in our business. Volatility in our financial performance from the seasonality of the lodging industry could adversely affect our financial condition and results of operations.
We use our broad network of hotel industry contacts and relationships to maximize the value of our hotels.
Our senior management team has established a broad network of hotel industry contacts and relationships, including relationships with hotel owners, financiers, operators, project managers and contractors and other key industry participants. We use our broad network of hotel industry contacts and relationships to maximize the value of our hotels.
We face competition for the acquisition of hotels from institutional pension funds, private equity funds, REITs, hotel companies and others who are engaged in hotel acquisitions and investments. Some of these competitors have substantially greater financial and operational resources than we have and may have greater knowledge of the markets in which we seek to invest.
Some of these competitors have substantially greater financial and operational resources than we have and may have greater knowledge of the markets in which we seek to invest. This competition may reduce the number of suitable investment opportunities offered to us and increase the cost of acquiring our targeted hotel investments.
Our Company We commenced operations in July 2004 and became a public reporting company in May 2005. Our common stock and Series A Preferred Stock are listed and traded on the New York Stock Exchange (the “NYSE”) under the symbols “DRH” and “DRH Pr A”, respectively.
All of our hotels are managed by a third party, either an independent operator or a brand operator, such as Marriott. Our Company We commenced operations in July 2004 and became a public reporting company in May 2005. Our common stock is listed and traded on The Nasdaq Stock Market LLC (the "Nasdaq") under the symbol “DRH”.
We may incur losses, including material losses, due to uninsured risks, deductibles, or losses that exceed our coverage limits. -11- Table of Contents Available Information We maintain a website at the following address: www.drhc.com.
Available Information We maintain a website at the following address: www.drhc.com.
Our strategy is to apply aggressive asset management, prudent financial strategy, and disciplined capital allocation to high quality lodging properties in North American urban and resort markets with superior growth prospects and high barriers-to-entry. Our goal is to deliver long-term stockholder returns that exceed those generated by our peers through a combination of dividends and enduring capital appreciation.
Our goal is to deliver long-term stockholder returns that exceed those generated by our peers through a combination of dividends and enduring capital appreciation. We are committed to following sound corporate governance practices and to maintaining transparent communications with our stockholders. Our primary business is to acquire, own, renovate and asset manage premium hotel properties in the United States.
In 2021, total consumption of both energy and water was significantly reduced due to the historically low occupancy levels at our hotels as a result of the COVID-19 pandemic. We display key metrics, documents, programs and policies through the Global Reporting Initiative (“GRI”) Index, and in accordance with the GRI framework.
These metrics relate to our hotels owned for the entire year presented. -8- Table of Contents We display key metrics, documents, programs and policies through the Global Reporting Initiative (“GRI”) Index, and in accordance with the GRI framework. We also display disclosures in accordance with the framework established by the Task Force on Climate-Related Financial Disclosures.
The Nominating and Corporate Governance Committee is assigned to oversee the policies, strategy, and implementation of the program. In 2024, as a result of our commitment to sustainability, we were ranked first in sustainability performance as the Global Listed Sector Leader/Hotel by the GRESB Real Estate Assessment for the Standing Investments Benchmark.
In 2025, as a result of our commitment to sustainability, we were ranked first in our Hotel / United States comparison group for the GRESB Public Disclosure Report and third within the Hotel / Americas peer set for the GRESB Real Estate Benchmark Report. We are committed to transparent reporting of our corporate responsibility initiatives.
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Our primary business is to acquire, own, renovate and asset manage premium hotel properties in the United States. Our portfolio is concentrated in major urban markets and destination resort locations. All of our hotels are managed by a third party—either an independent operator or a brand operator, such as Marriott.
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Each hotel is positioned to maximize its cash flow and value; accordingly, we choose to operate nearly 40% of our portfolio as an independent hotel and the remainder are operated under a brand owned by one of the leading global lodging brand companies (Marriott International, Hilton Worldwide, or IHG Hotels & Resorts).
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We critically evaluate each of our hotels to ensure that we own a portfolio of hotels that conforms to our vision, supports our mission and corresponds with our strategy. On a regular basis, we analyze our portfolio to identify opportunities to invest capital in certain projects or market non-core assets for sale in order to increase our portfolio quality.
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We are an owner, as opposed to an operator, of the hotels in our portfolio.
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We are committed to a conservative capital structure with prudent leverage. We regularly assess the availability and affordability of capital in order to maximize stockholder value and minimize enterprise risk. In addition, we are committed to following sound corporate governance practices and to being open and transparent in our communications with our stockholders.
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Our Business Strategy Our strategy is to drive long-term value through active asset management, disciplined capital allocation and a conservative balance sheet. We regularly assess the availability and cost of capital to maximize stockholder value and minimize enterprise risk. We plan to strategically allocate capital based on our cost of capital and market conditions.
Removed
Our Business Strategy Our strategy is to apply aggressive asset management, prudent financial strategy, and disciplined capital allocation to high quality lodging properties in North American urban and resort markets with superior growth prospects and high barriers-to-entry. We plan to strategically allocate capital in order to create value depending on our cost of capital.
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Separately, we regularly evaluate opportunities to dispose of non-core hotels.
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If our cost of capital is attractive, we expect to: -6- Table of Contents • pursue strategic acquisitions in line with our target asset type; • consider opportunistically raising equity; and • evaluate opportunities to dispose of non-core hotels.
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Conservative Capital Structure -7- Table of Contents We believe that a conservative capital structure maximizes investment capacity while reducing enterprise risk. We currently employ a conservative debt profile with prudent leverage.
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As of December 31, 2024, our outstanding debt consists of a combination of unsecured term loans and fixed-rate property-specific mortgage debt. We prefer that a significant portion of our portfolio remain unencumbered by debt in order to provide maximum balance sheet flexibility.
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As of December 31, 2025, our outstanding debt consists of unsecured term loans, and we had no outstanding borrowings under our senior unsecured credit facility. We expect that our strategy will enable us to maintain a balance sheet with an appropriate amount of debt throughout all phases of the lodging cycle.
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In addition, in 2024, we were the recipient of the National Association of Real Estate Investment Trusts’ (“Nareit”) 2024 Leader in the Light Award for the lodging and resorts sector. The award recognizes member companies that demonstrate leadership in implementing sustainable and socially responsible investment and operating practices, good governance, and transparency.
Added
In addition to competing with traditional hotels and lodging facilities, we compete with alternative lodging, including third-party internet travel intermediaries, peer-to-peer inventory sources that allow travelers to stay at homes and apartments booked directly from owners, and other third-party providers of short-term rental properties and serviced apartments.
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We are committed to transparent reporting of our corporate responsibility initiati ves. In January 2025, we published our most recent annual Corporate Responsibility Report.
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We may incur losses, including material losses, due to uninsured risks, deductibles, or losses that exceed our coverage limits. New Tax Legislation In July 2025, certain changes to U.S. tax law were enacted that impact us and our stockholders.
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During 2024, all employees involved in the day-to-day operation of our hotels were employed by third-party management companies engaged pursuant to hotel management agreements.
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Among other changes, this legislation (i) permanently extends the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code, (ii) increases the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries from 20% to 25% for taxable years beginning after December 31, 2025, and (iii) increases the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization, and depletion from the definition of “adjusted taxable income” (i.e., based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurthermore, labor agreements may limit the ability of our hotel managers to reduce the size of hotel workforces during an economic downturn because collective bargaining agreements are negotiated between the hotel managers and labor unions. We do not have the ability to control the outcome of these negotiations. Labor shortages could slow our growth or harm our business.
Biggest changeThe resolution of labor disputes or the negotiation of new or renewed labor contracts may result in higher wages, increased benefits, or work rule changes that raise operating costs. Additionally, collective bargaining agreements may limit our hotel managers’ ability to reduce workforce size during economic downturns, and we do not control the outcome of these negotiations.
While, in general, operators of hotels possess the ability to adjust room rates daily to reflect the effects of inflation, competitive pressures, customer resistance to higher booking costs or other factors may limit the ability of our management companies to raise room rates.
While, in general, operators of hotels possess the ability to adjust room rates daily to reflect the effects of inflation or higher costs, competitive pressures, customer resistance to higher booking costs or other factors may limit the ability of our management companies to raise room rates.
Even if we successfully complete hotel acquisitions, there can be no assurance that we will be able to successfully integrate the hotels we acquire into our existing operations or otherwise realize the expected benefits of these acquisitions.
Even if we successfully complete hotel acquisitions, there can be no assurance that we will be able to successfully integrate the hotels we acquire into our existing operations or otherwise realize the expected benefits of these acquisitions.
Additionally, our share repurchase program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible any future strategic opportunities or acquisitions.
Additionally, our share repurchase program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue any possible future strategic opportunities or acquisitions.
These capital improvements may give rise to the following risks: • construction cost overruns and delays, including those caused by supply chain disruptions or inflationary price increases; • a possible shortage of available cash to fund capital improvements and the related possibility that financing for these capital improvements may not be available to us on affordable terms; • the renovation investment failing to produce the returns on investment that we expect; • disruptions in the operations of the hotel as well as in demand for the hotel while capital improvements are underway; and • disputes with franchisors/hotel managers regarding compliance with relevant franchise/management agreements.
These capital improvements may give rise to the following risks: • construction cost overruns and delays, including those caused by supply chain disruptions or inflationary price increases; • a possible shortage of available cash to fund capital improvements and the related possibility that financing for these capital improvements may not be available to us on affordable terms; • the renovation investment failing to produce the returns on investment that we expect; • disruptions in operations or in demand for the hotel while capital improvements are underway; and • disputes with franchisors/hotel managers regarding compliance with relevant franchise/management agreements.
Our ability to make these intended distributions may be adversely affected by the factors, risks and uncertainties described in this Annual Report on Form 10-K and other reports that we file from time to time with the SEC.
Our ability to make these distributions may be adversely affected by the factors, risks and uncertainties described in this Annual Report on Form 10-K and other reports that we file from time to time with the SEC.
Our existing debt, and any additional debt borrowed in the future could subject us to many risks, including the risks that: • our cash flow from operations will be insufficient to make required payments of principal and interest or to make cash distributions necessary to maintain our tax status as a REIT; • we may be vulnerable to adverse economic and industry conditions; • we may be required to dedicate a substantial portion of our cash flow from operations to the repayment of our debt, thereby reducing the cash available for distribution to our stockholders, operations and capital expenditures, future investment opportunities or other purposes; • the terms of any refinancing might not be as favorable as the terms of the debt being refinanced; and • the use of leverage could adversely affect our stock price and our ability to make distributions to our stockholders.
Our existing debt, and any additional debt borrowed in the future could subject us to many risks, including the risks that: • our cash flow from operations will be insufficient to make required payments of principal and interest or to make cash distributions necessary to maintain our tax status as a REIT; • we may be vulnerable to adverse economic and industry conditions; -21- Table of Contents • we may be required to dedicate a substantial portion of our cash flow from operations to the repayment of our debt, thereby reducing the cash available for distribution to our stockholders, operations and capital expenditures, future investment opportunities or other purposes; • the terms of any refinancing might not be as favorable as the terms of the debt being refinanced; and • the use of leverage could adversely affect our stock price and our ability to make distributions to our stockholders.
As a result, no assurance can be given that we will be able to make distributions to our stockholders at expected levels, or at all, or that distributions will increase or even be maintained over time, any of which could materially and adversely affect the market price of our common stock and Series A Preferred Stock.
As a result, no assurance can be given that we will be able to make distributions to our stockholders at expected levels, or at all, or that distributions will increase or even be maintained over time, any of which could materially and adversely affect the market price of our common stock.
Given that our hotels are concentrated in major urban markets and destination resort locations in the U.S., our business may be particularly sensitive to changes in foreign exchange rates or a negative international perception of the U.S. arising from its political or other positions.
Given that our hotels are concentrated in major urban markets and destination resort locations in the U.S., our business may be particularly sensitive to changes in foreign exchange rates, elevated interest rates or a negative international perception of the U.S. arising from its political or other positions.
Additional changes to applicable tax laws are likely to continue to occur in the future, and we cannot assure our stockholders that any such changes will not adversely affect the taxation of a stockholder. Any such changes could have an adverse effect on an investment in our common stock and Series A Preferred Stock.
Additional changes to applicable tax laws are likely to continue to occur in the future, and we cannot assure our stockholders that any such changes will not adversely affect the taxation of a stockholder. Any such changes could have an adverse effect on an investment in our common stock.
These facts and any others that would impede our ability to respond to adverse changes in the performance of our hotel properties could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to our stockholders.
These factors and any others that would impede our ability to respond to adverse changes in the performance of our hotel properties could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to our stockholders.
Among the market conditions that may affect the value of our common stock and Series A Preferred Stock are the following: • the extent of investor interest in our securities; • the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • the underlying asset value of our hotels; • investor confidence in the stock and bond markets, generally; • national and local economic conditions; • changes in tax laws; • our financial performance; and • general stock and bond market conditions.
Among the market conditions that may affect the value of our common stock are the following: • the extent of investor interest in our securities; • the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • the underlying asset value of our hotels; • investor confidence in the stock and bond markets, generally; • national and local economic conditions; • changes in tax laws; • our financial performance; and • general stock and bond market conditions.
Future issuances or sales of a substantial number of shares of our common stock in the public market, or the issuance of our common stock or Series A Preferred Stock in connection with future property, portfolio or business acquisitions, or the perception that such issuances or sales might occur, may cause the market price of our shares to decline.
Future issuances or sales of a substantial number of shares of our common stock in the public market, or the issuance of our common stock in connection with future property, portfolio or business acquisitions, or the perception that such issuances or sales might occur, may cause the market price of our shares to decline.
Our board of directors has the sole discretion to determine the timing, form and amount of any distribution to our stockholders and will make determinations regarding distributions based -30- Table of Contents upon many facts, including our financial performance, our debt service obligations, our debt covenants, our capital expenditure requirements, the requirements for qualification as a REIT and other factors that our board of directors may deem relevant from time to time.
Our board of directors has the sole discretion to determine the timing, form and amount of any distribution to our stockholders and will make determinations regarding distributions based upon many facts, including our financial performance, our debt service obligations, our debt covenants, our capital expenditure requirements, the requirements for qualification as a REIT and other factors that our board of directors may deem relevant from time to time.
The taxable income of our TRS lessees currently consists and generally will continue to consist of revenues from the hotels leased by our TRS lessees plus, in certain cases, key money payments (amounts paid to us by a hotel management company in exchange for the right to manage a hotel we acquire) and yield support payments, net of the operating expenses for such properties and rent payments to us.
The taxable income of our TRS lessees currently consists and generally will continue to consist of revenues from the hotels leased by our TRS lessees plus, in certain cases, key money payments (amounts paid to us by a hotel -24- Table of Contents management company in exchange for the right to manage a hotel we acquire) and yield support payments, net of the operating expenses for such properties and rent payments to us.
In addition to fluctuations related to our business model, our hotels are, and will continue to be, subject to various long-term operating risks common to the hotel industry, many of which are beyond our control, including: -12- Table of Contents • dependence on business and commercial travelers and tourism, both of which vary with consumer and business confidence in the strength of the economy; • decreases in the frequency of business travel that may result from alternatives to in-person meetings and a sustained increase in hybrid or remote work arrangements; • competition from other hotels and alternative lodging channels located in the markets in which we own properties; • competition from third-party internet travel intermediaries; • an over-supply or over-building of hotels in the markets in which we own properties, which could adversely affect occupancy rates, revenues and profits at our hotels; • increases in energy and transportation costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists; • increases in operating costs due to inflation and other factors that may not be offset by increased room rates; and • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance.
In addition to fluctuations related to our business model, our hotels are, and will continue to be, subject to various long-term operating risks common to the hotel industry, many of which are beyond our control, including: • dependence on business travelers and tourism, both of which vary with consumer and business confidence in the strength of the economy; • decreases in the frequency of business travel that may result from alternatives to in-person meetings and a sustained increase in hybrid or remote work arrangements; • decreases in tourism due to geopolitical pressures; • competition from other hotels and alternative lodging channels located in the markets in which we own properties; • competition from third-party internet travel intermediaries; • an over-supply or over-building of hotels in the markets in which we own properties, which could adversely affect occupancy rates, revenues and profits at our hotels; • increases in energy and transportation costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business travelers and tourists; • increases in operating costs due to inflation and other factors that may not be offset by increased room rates; and • changes in laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance.
Our hotels are also subject to various federal, state, and local environmental, health and safety laws and regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from emergency generators, storm water and wastewater discharges, asbestos, lead-based paint, mold and mildew and waste management.
Our hotels are also subject to various federal, state, and local environmental, health and safety laws and regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from emergency generators, storm -22- Table of Contents water and wastewater discharges, asbestos, lead-based paint, mold and mildew and waste management.
Investments in hotels are illiquid and we may not be able to respond in a timely fashion to adverse changes in the performance of our properties. Because real estate investments are relatively illiquid, our ability to promptly sell one or more hotel properties or investments in our portfolio in response to changing economic, financial and investment conditions may be limited.
Investments in hotels are illiquid and we may not be able to respond in a timely fashion to adverse changes in the performance of our properties. -14- Table of Contents Because real estate investments are relatively illiquid, our ability to promptly sell one or more hotel properties or investments in our portfolio in response to changing economic, financial and investment conditions may be limited.
Our ground lease agreements with respect to the Embassy Suites by Hilton Bethesda, the Salt Lake City Marriott Downtown at City Creek, the Westin Boston Seaport District, the Hotel Palomar Phoenix, the Courtyard New York Manhattan/Fifth Avenue and Cavallo Point, as well as the ground lease underlying our annex sublease at the Orchards Inn Sedona, require the consent of the lessor for assignment or transfer.
Our ground lease agreements with respect to the Embassy Suites by Hilton Bethesda, the Salt Lake City Marriott Downtown at City Creek, the Westin Boston Seaport District, the Hotel Palomar Phoenix, the Courtyard New York Manhattan/Fifth Avenue and Cavallo Point, as well as the ground lease underlying our annex sublease at the L'Auberge de Sedona, require the consent of the lessor for assignment or transfer.
If this transfer to a trust would not be effective to prevent a violation of the ownership restrictions in our charter, then the initial intended transfer or ownership will be null and void from the outset. The intended transferee or owner of those shares will be deemed never to have owned the shares.
If this transfer to a trust would not be effective to prevent a violation of the ownership restrictions in our charter, then the initial intended transfer or ownership will be null and void from the outset. The intended transferee or owner of those shares will be -25- Table of Contents deemed never to have owned the shares.
Our charter provides that no person may beneficially own more than 9.8% of the aggregate outstanding shares of our common stock, more than 9.8% of the aggregate outstanding shares of our Series A Preferred Stock, or more than 9.8% of the value of the aggregate outstanding shares of our capital stock, except certain “look-through entities,” such as mutual funds, which may beneficially own up to 15% of the aggregate outstanding shares of our common stock, up to 15% of the aggregate outstanding shares of our Series A Preferred Stock, or up to 15% of the value of the aggregate outstanding shares of our capital stock.
Our charter provides that no person may beneficially own more than 9.8% of the aggregate outstanding shares of our common stock, more than 9.8% of the value of the aggregate outstanding shares of our capital stock, except certain “look-through entities,” such as mutual funds, which may beneficially own up to 15% of the aggregate outstanding shares of our common stock, or up to 15% of the value of the aggregate outstanding shares of our capital stock.
Our December 2018 acquisition of Cavallo Point was partially funded by the issuance by our operating partnership of common OP units, which became redeemable by the sellers after the one-year anniversary of such issuance for cash or, at our election, on a one-for-one basis for shares of our common stock.
Our December 2018 acquisition of Cavallo Point, The Lodge at the Golden Gate was partially funded by the issuance by our operating partnership of common OP units, which became redeemable by the sellers after the one-year anniversary of such issuance for cash or, at our election, on a one-for-one basis for shares of our common stock.
Future issuances of our common stock, Series A Preferred Stock or our operating partnership’s common OP units, may depress the market price of our common stock and have a dilutive effect on our existing stockholders.
Future issuances of our common stock or our operating partnership’s common OP units, may depress the market price of our common stock and have a dilutive effect on our existing stockholders.
Any one of these options could have a material adverse effect on our business, results of operations, financial condition and ability to pay distributions to our stockholders.
Any one of these options could have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.
In -21- Table of Contents addition, the acquisition and subsequent integration of the additional hotels into our existing portfolio may require significant time and focus from our management team and may divert attention from the day-to-day operations of our business, which could delay the achievement of our strategic objectives.
In addition, the acquisition and subsequent integration of the additional hotels into our existing portfolio may require significant time and focus from our management team and may divert attention from the day-to-day operations of our business, which could delay the achievement of our strategic objectives.
In addition, the REIT rules generally prohibit a manager of one of our hotels from owning, directly or indirectly, more than 35% of our stock and a person who holds 35% or more of our stock -27- Table of Contents from also holding, directly or indirectly, more than 35% of any such hotel management company.
In addition, the REIT rules generally prohibit a manager of one of our hotels from owning, directly or indirectly, more than 35% of our stock and a person who holds 35% or more of our stock from also holding, directly or indirectly, more than 35% of any such hotel management company.
The more favorable rates applicable to regular corporate dividends could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay qualified dividend income, which could adversely affect the value of the stock of REITs, including our common stock and Series A Preferred Stock.
The more favorable rates applicable to regular corporate dividends could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay qualified dividend income, which could adversely affect the value of the stock of REITs, including our common stock.
If anyone transfers or owns shares in a way that would violate the aggregate share ownership limit, the common share ownership limit, or the preferred share ownership limit (unless such ownership limits have been waived by our board of directors), or would prevent us from continuing to qualify as a REIT under the U.S. federal income tax laws, those shares instead will be transferred to a trust for the benefit of a charitable beneficiary and will be either redeemed by us or sold to a person whose ownership of the shares will not violate the aggregate share ownership limit, the common share ownership limit, or the preferred share ownership limit (as applicable).
If anyone transfers or owns shares in a way that would violate a share ownership limit (unless such ownership limit has been waived by our board of directors), or would prevent us from continuing to qualify as a REIT under the U.S. federal income tax laws, those shares instead will be transferred to a trust for the benefit of a charitable beneficiary and will be either redeemed by us or sold to a person whose ownership of the shares will not violate the applicable share ownership limit.
If such over-building occurs in one or more of our major markets, our business, financial condition, results of operations and our ability to make distributions to our stockholders may be materially adversely affected. Our hotels are subject to seasonal volatility, which is expected to contribute to fluctuations in our financial condition and results of operations.
If such over-building occurs in one or more of the markets where our hotels are located, our business, financial condition, results of operations and our ability to make distributions to our stockholders may be materially adversely affected. Our hotels are subject to seasonal volatility, which is expected to contribute to fluctuations in our financial condition and results of operations.
In order to qualify as a REIT, we cannot operate our hotel properties or control the daily operations of our hotel properties. Our TRS lessees may not operate these hotel properties and, therefore, they must enter into third-party hotel management agreements with one or more eligible independent contractors.
In order to qualify as a REIT, we cannot operate our hotel properties or control the daily operations of our hotel properties and therefore our TRS lessees must enter into third-party hotel management agreements with one or more eligible independent contractors.
We may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders at expected levels, and we cannot assure you of our ability to make distributions in the future. We intend to pay quarterly dividends that represent at least 90% of our REIT taxable income.
We may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders at expected levels, and we cannot assure you of our ability to make distributions in the future. We are required to pay dividends that represent at least 90% of our REIT taxable income.
Certain of these benefits and the related tax indemnity in the case of certain executive officers could prevent or deter a change of control of our company that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders.
Certain of these benefits and the related tax indemnity in the case of certain executive officers could prevent or deter a change of control of our company that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders or decrease the value that stockholders receive in such a change of control.
Our board of directors determines our major policies, including policies related to our investment objectives, leverage, financing, growth and distributions to our stockholders. Our board of directors may amend or revise these policies without a vote of our stockholders.
Our board of directors determines our major policies, including policies related to our investment objectives, leverage, financing, growth and distributions to our stockholders. Our board of directors may amend or revise these policies without a vote of our stockholders, including our historical dividend policy.
Any compromise of the function, security and availability of our network and systems or the network and systems of our hotel managers or our third-party vendors could result in disruptions to operations, misappropriated or compromised confidential hotel or guest information, systems disruptions, the shutdown of our hotels, exploited security vulnerability of our respective networks, delayed sales or bookings, lost guest reservations and damage to our reputation or the reputations of our hotel managers and third-party vendors.
Any compromise of the function, security and availability of our network and systems or the network and systems of our hotel managers or our third-party vendors could result in disruptions to operations, misappropriated or compromised confidential hotel or guest information, systems disruptions, the shutdown of our hotels, exploited security vulnerability of our respective networks, delayed sales or bookings, lost guest reservations and damage to our reputation or the reputations of our hotel managers and third-party vendors, or significant litigation or other legal expense.
Many of our costs, such as operating expenses, interest expense and acquisition and renovation costs, could be adversely impacted by periods of heightened inflation. During 2024, inflation began to moderate, but remained elevated relative to the years preceding 2021.
Many of our costs, such as operating expenses, interest expense and acquisition and renovation costs, remain elevated and could be adversely impacted by periods of heightened inflation. During 2025, inflation began to moderate, but our expenses remained significantly elevated relative to the years preceding 2021.
Unless we were -26- Table of Contents entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.
Unless we were entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.
Anyone who acquires or owns shares in violation of the aggregate share ownership limit, the common share ownership limit, the preferred share ownership limit (unless such ownership limits have been waived by our board of directors) or the other restrictions on transfer or ownership in our charter bears the risk of a financial loss when the shares are redeemed or sold if the market price of our stock falls between the date of purchase and the date of redemption or sale.
Anyone who acquires or owns shares in violation of the a share ownership limit (unless such ownership limit has been waived by our board of directors) or the other restrictions on transfer or ownership in our charter bears the risk of a financial loss when the shares are redeemed or sold if the market price of our stock falls between the date of purchase and the date of redemption or sale.
Several of our hotels are operated under franchise agreements and we are subject to the risks associated with the franchise brand and the costs associated with maintaining the franchise license. As of the date of this report, 19 of our 36 hotels operate under Marriott, Hilton, or IHG franchise agreements.
Several of our hotels are operated under franchise agreements and we are subject to the risks associated with the franchise brand and the costs associated with maintaining the franchise license. As of the date of this report, 18 of our 35 hotels operate under Marriott, Hilton, or IHG franchise agreements.
Changes in market conditions could adversely affect the market price of our common stock and Series A Preferred Stock. As with other publicly traded equity securities, the value of our common stock and Series A Preferred Stock depends on various market conditions that may change from time to time.
Changes in market conditions could adversely affect the market price of our common stock. As with other publicly traded equity securities, the value of our common stock depends on various market conditions that may change from time to time.
If a jurisdiction in which the Company owns a hotel adopts such legislation, then the cost to operate the hotel may increase significantly and could have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.
Some of this legislation applies to hotels only. If a jurisdiction in which the Company owns a hotel adopts such legislation, then the cost to operate the hotel may increase significantly and could have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.
We cannot predict whether future issuances of our common stock or Series A Preferred Stock or the availability of shares for resale in the open market may depress the market price of our common stock or Series A Preferred Stock.
We cannot predict whether future issuances of our common stock or the availability of shares for resale in the open market may depress the market price of our common stock.
Hedging against interest rate exposure may adversely affect us. We manage certain exposure to interest rate volatility by using interest rate hedging, such as swap agreements, to hedge against the possible negative effects of interest rate fluctuations. We may continue to do so in the future.
We manage certain exposure to interest rate volatility by using interest rate hedging, such as swap agreements, to hedge against the possible negative effects of interest rate fluctuations, and we may continue to do so in the future.
Due to restrictions in our hotel management agreements, franchise agreements, mortgage agreements and ground leases, we may not be able to sell our hotels at the highest possible price, or at all. Certain of our current hotel management and franchise agreements are long-term. All but three of our hotel management agreements are terminable at our option.
Due to restrictions in our hotel management agreements, franchise agreements, mortgage agreements, if any, and ground leases, we may not be able to sell our hotels at the highest possible price, or at all. Certain of our current hotel management and franchise agreements are long-term. The majority of our hotel management agreements are terminable at our option.
As a result, our ability to fund capital expenditures or investments through retained earnings is very limited. Consequently, we rely upon the availability of debt or equity capital to fund our investments and capital improvements. These sources of funds may not be available on reasonable terms or conditions.
As a result, our ability to fund capital expenditures or investments through retained earnings is very limited and we rely upon the availability of debt or equity capital to fund our investments and capital improvements, which may not be available on reasonable terms or conditions.
We currently rely, and will continue to rely, on these hotel management companies to adequately -18- Table of Contents operate our hotel properties under the terms of the hotel management agreements.
We currently rely, and will continue to rely, on these hotel management companies to adequately operate our hotel properties under the terms of the hotel management agreements.
The maintenance of the franchise licenses for branded hotel properties is subject to the franchisors’ operating standards and other terms and conditions set forth in the applicable franchise agreement. Franchisors periodically inspect hotel properties to ensure that we, our TRS lessees and management companies follow their brand standards.
The maintenance of the franchise licenses for branded hotel properties is subject to the franchisors’ operating standards and other terms and conditions set forth in the applicable franchise agreement. Franchisors periodically inspect hotel properties to ensure that companies follow their brand standards.
Furthermore, other macroeconomic factors, such as consumer confidence and conditions which negatively shape public perception of travel, including travel-related disruptions or incidents and their impact on travel, may have a negative effect on the lodging industry and may adversely impact our revenues and profitability. Our hotels are subject to significant competition.
Other macroeconomic factors, such as consumer confidence and conditions which negatively shape public perception of travel, including travel-related disruptions or incidents and their impact on travel, may have a negative effect on the lodging industry and may adversely impact our revenues and profitability. Our hotels are subject to significant competition. -13- Table of Contents The lodging industry is highly competitive.
Any future pandemic, epidemic or outbreak of any other highly infectious disease may materially and adversely affect, our business, financial condition and results of operations, and our ability to pay dividends, and may also have the effect of heightening many of the risks described below and within this “Risk Factors” section, including: • a complete or partial closure or re-closure of, or other operational issues at, one or more of our hotels resulting from government, third-party hotel manager or franchisor action, which could materially adversely affect our operations; • the postponement or cancellation of conferences, conventions, festivals, sporting events, public events and other group business that would have otherwise brought individuals to the cities in which our hotels are located, which could cause a decrease in occupancy rates over a prolonged period of time and exacerbate the seasonal volatility at our hotels; • a general decline in in-person business meetings and an increase in the use of teleconferencing and video-conference technology, which could cause a sustained shift away from business-related travel and have a material adverse effect on the overall demand for hotel rooms; and • a decrease in individuals’ willingness to travel as a result of the public health risks and social impacts of such outbreak or a decrease in consumer spending, which could affect the ability of our hotels to generate sufficient revenues to meet operating and other expenses in the short- and long-term.
Any future pandemic, epidemic or outbreak of any highly infectious disease, could cause widespread disruptions to the U.S. and global economy and volatility and negative pressure in financial markets and may materially and adversely affect, our business, financial condition and results of operations, and our ability to pay dividends, and may also have the effect of heightening many of the risks described below and within this “Risk Factors” section, including: • a complete or partial closure or re-closure of, or other operational issues at, one or more of our hotels resulting from government, third-party hotel manager or franchisor action, which could materially adversely affect our operations; • the postponement or cancellation of conferences, conventions, festivals, sporting events, public events and other group business that would have otherwise brought individuals to the cities in which our hotels are located, which could cause a decrease in occupancy rates; • a general decline in in-person business meetings and an increase in the use of teleconferencing and video-conference technology, which could cause a sustained shift away from business-related travel and have a material adverse effect on the overall demand for hotel rooms; and • a decrease in individuals’ willingness to travel as a result of the public health risks and social impacts of such outbreak or a decrease in consumer spending, which could affect the ability of our hotels to generate sufficient revenues.
The increased use of Zoom video conferencing, Microsoft Teams and other teleconferencing and video-conference technology by businesses has resulted in decreased business travel as companies have leveraged the use of technologies that allow multiple parties from different locations to participate in virtual meetings without traveling to a centralized meeting location, such as our hotels.
The increased use of video conferencing technology by businesses has resulted in decreased business travel as companies have leveraged the use of technologies that allow multiple parties from different locations to participate in virtual meetings without traveling to a centralized meeting location, such as our hotels.
Certain advance notice provisions of our bylaws may limit the ability of a third party to acquire control of our company. -29- Table of Contents Our bylaws provide that (a) with respect to an annual meeting of stockholders, nominations of individuals for election to our board of directors and the proposal of other business to be considered by stockholders may be made only (i) pursuant to our notice of the meeting, (ii) by the board of directors or (iii) by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in the bylaws and (b) with respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting of stockholders and nominations of individuals for election to the board of directors may be made only (A) by the board of directors or (B) provided that the board of directors has determined that directors shall be elected at such meeting by a stockholder who is entitled to vote at the meeting and has complied with the advance notice provisions set forth in the bylaws.
Our bylaws provide that (a) with respect to an annual meeting of stockholders, nominations of individuals for election to our board of directors and the proposal of other business to be considered by stockholders may be made only (i) pursuant to our notice of the meeting, (ii) by the board of directors or (iii) by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in the bylaws and (b) with respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting of stockholders and nominations of individuals for election to the board of directors may be made only (A) by the board of directors or (B) provided that the board of directors has determined that directors shall be elected at such meeting by a stockholder who is entitled to vote at the meeting and has complied with the advance notice provisions set forth in the bylaws.
In addition, future issuances or sales of our common stock or Series A Preferred Stock may be dilutive to existing stockholders.
In addition, future issuances or sales of our common stock may be dilutive to existing stockholders.
The drive to limit carbon emissions and other climate change related regulations and consumer preferences may require us to make significant investments in our hotels and could result in increased energy costs at our properties which could have a material adverse effect on our results of operations and our ability to make distributions to our stockholders.
The drive to limit carbon emissions and other climate change related regulations and any increase in investor requirements for climate related disclosures may require us to make significant investments in our hotels and could result in increased energy costs at our properties which could have a material adverse effect on our results of operations and our ability to make distributions to our stockholders.
Future lenders may require such insurance, and our failure to obtain such insurance could -17- Table of Contents constitute a default under the loan agreements.
Future lenders may require such insurance, and our failure to obtain such insurance could constitute a default under the loan agreements.
To the extent that we receive lower sale proceeds, our business, financial condition, results of operations and our ability to make distributions to stockholders could be materially adversely affected. Our mortgage agreements contain certain provisions that may limit our ability to sell our hotels.
To the extent that we receive lower sale proceeds, or are unable to sell the hotels, our business, financial condition, results of operations and our ability to make distributions to stockholders could be materially adversely affected. Our ground leases contain certain provisions that may limit our ability to sell our hotels.
We believe this could provide the major brand companies with leverage when negotiating for property improvement plans where the franchisor or hotel brand requires renovations to bring the physical condition of a hotel into compliance with the specifications and standards each franchisor or hotel brand has developed.
We believe this could provide the major brand companies with leverage when negotiating for property improvement plans where the hotel brand requires renovations to bring the physical condition of a hotel into compliance with the specifications and standards required by the brand.
Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our portfolio and result in the decline of the quoted trading price of our securities and market capitalization, as well as lower sales proceeds from future dispositions.
Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our portfolio and result in the decline of the quoted trading price of our securities and market capitalization, as well as lower sales proceeds from future dispositions. Hedging against interest rate exposure may adversely affect us.
There is refinancing risk associated with our debt. -23- Table of Contents Our typical debt contains limited principal amortization; therefore, the vast majority of the principal must be repaid at the maturity of the loan in a so-called “balloon payment.” In the event that we do not have sufficient funds to repay the debt at the maturity of these loans, we will need to refinance this debt.
Our typical debt contains limited principal amortization; therefore, the vast majority of the principal must be repaid at the maturity of the loan in a so-called “balloon payment.” In the event that we do not have sufficient funds to repay the debt at the maturity of these loans, we will need to refinance this debt.
Finally, as the lessee under our ground leases, we are exposed to the possibility of losing the hotel, or a portion of the hotel, upon termination, or an earlier breach by us, of the ground lease, which could result in a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.
Finally, as the lessee under our ground leases, we are exposed to the possibility of losing the hotel, or a portion of the hotel, upon maturity or termination, or an earlier breach by us, of the ground lease, which would mean we would no longer receive operating income from the hotel and could therefore result in a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.
These advance notice provisions may have the effect of delaying, deferring or preventing a transaction or a change in control of our company that might involve a premium to the market price of our common stock or otherwise be in our stockholders’ best interests.
These advance notice provisions may have the effect of delaying, deferring or preventing a transaction or a change in control of our company that might involve a premium to the market price of our common stock or otherwise be in our stockholders’ best interests. Stockholders have limited control over any changes that we make to our policies.
We believe that we are qualified to be taxed as a REIT for U.S. federal income tax purposes for our taxable year ended December 31, 2024, and we expect to continue to qualify as a REIT for future taxable years, but we cannot assure you that we have qualified, or will remain qualified, as a REIT.
Risks Related to Our Status as a REIT We cannot assure you that we will remain qualified as a REIT. -23- Table of Contents We believe that we are qualified to be taxed as a REIT for U.S. federal income tax purposes for our taxable year ended December 31, 2025, and we expect to continue to qualify as a REIT for future taxable years, but we cannot assure you that we have qualified, or will remain qualified, as a REIT.
Thus, higher market interest rates could cause the returns on investment in our common stock and Series A Preferred Stock to be relatively less attractive to our investors and the market price of our common stock and Series A Preferred Stock to decline.
Thus, higher market interest -28- Table of Contents rates could cause the returns on investment in our common stock to be relatively less attractive to our investors and the market price of our common stock to decline.
Furthermore, because each hotel brand company relies on its own network of reservation systems, hotel management systems and customer databases, the integration of two or more networks may result in a disruption to operations of these systems, such as disruptions in processing guest reservations, delayed bookings or sales, or lost guest reservations, which could adversely affect our financial condition and results of operations.
Furthermore, because each hotel brand company relies on its own network of reservation systems, hotel management systems and customer databases, the integration of two or more networks may result in a disruption to operations of these systems, which could adversely affect our financial condition and results of operations.
Moreover, the risk of a cybersecurity incident has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world has increased.
The risk of a cybersecurity incident continues to increase as the number, intensity and sophistication of attempted attacks and intrusions from around the world has increased.
Dividends payable by REITs, however, are generally not eligible for the reduced rates on qualified dividend income and are taxed at normal ordinary income tax rates (provided that for taxable years beginning after December 31, 2017 and before January 1, 2026, non-corporate taxpayers generally may deduct 20% of their ordinary REIT dividends that are not “capital gain dividends” or “qualified dividend income”).
Dividends payable by REITs, however, are generally not eligible for the reduced rates on qualified dividend income and are taxed at normal ordinary income tax rates (provided that non-corporate taxpayers generally may deduct 20% of their ordinary REIT dividends that are not “capital gain dividends” or “qualified dividend income”).
If we pay higher prices for hotels, our returns on investment and profitability may be reduced. Also, future acquisitions of hotels, hotel companies or hotel investments may not yield the returns we expect, especially if we cannot obtain financing without paying higher borrowing costs, and may result in stockholder dilution.
Also, future acquisitions of hotels, hotel companies or hotel investments may not yield the returns we expect, especially if we cannot obtain financing without paying higher borrowing costs, and may result in stockholder dilution.
Future debt service obligations may adversely affect our operating results, require us to liquidate our properties, jeopardize our ability to make cash distributions necessary to maintain our tax status as a REIT and limit our ability to make distributions to our stockholders. In the future, we and our subsidiaries may incur substantial additional debt, including secured debt.
Future debt service obligations may adversely affect our operating results, require us to liquidate our properties, jeopardize our ability to make cash distributions necessary to maintain our tax status as a REIT and limit our ability to make distributions to our stockholders.
In addition, we may not be able to fund capital improvements or acquisitions solely from cash provided from our operating activities because we generally must distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains, each year to maintain our REIT tax status.
In addition, we may not be able to fund capital improvements or acquisitions solely from cash provided from our operating activities because we generally must distribute at least 90% of our REIT taxable income each year to maintain our REIT tax status.
We may acquire additional hotels in the future subject to ground leases. In the past, from time to time, secured lenders have been unwilling to lend, or otherwise charged higher interest rates, for loans secured by a leasehold mortgage compared to loans secured by a fee simple mortgage.
In the past, from time to time, secured lenders have been unwilling to lend, or otherwise charged higher interest rates, for loans secured by a leasehold mortgage compared to loans secured by a fee simple mortgage.
Acquired properties may be located in markets where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area and unfamiliarity with local governmental and permitting procedures. Further, the acquired properties may present other unique risks due to the nature of the assets acquired.
Acquired properties may be located in markets where we may face -19- Table of Contents risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area and unfamiliarity with local governmental and permitting procedures.
Furthermore, unless we purchase a fee simple interest in the land and improvements subject to our ground leases, we will not have any economic interest in the land or improvements at the expiration of our ground leases and therefore we generally will not share in any increase in value of the land or improvements beyond the term of a ground lease, notwithstanding our capital outlay to purchase our interest in the hotel or fund improvements thereon, and will lose our right to use the hotel. -20- Table of Contents The failure of tenants to make rent payments under our retail and restaurant leases may adversely affect our results of operation.
Furthermore, unless we purchase a fee simple interest in the land and improvements subject to our ground leases, we will not have any economic interest in the land or improvements at the expiration of our ground leases and therefore we generally will not share in any increase in value of the land or improvements beyond the term of a ground lease, notwithstanding our capital outlay to purchase our interest in the hotel or fund improvements thereon, and will lose our right to use the hotel.
An increase in hotel reservations made through these companies, such as Google, Apple, Amazon or Facebook, may reduce the value of our franchise brands, which may negatively affect our average rates and revenues.
An increase in hotel reservations made through these companies, including those that deploy artificial intelligence or automated recommendation tools, such as Google, Apple, Amazon or Meta, may reduce the value of our franchise brands, which may negatively affect our average rates and revenues.
The increase in the use of third-party internet travel intermediaries and the increase in alternative lodging channels, such as Airbnb, could adversely affect our profitability. -13- Table of Contents Many of our managers and franchisors contract with third-party internet travel intermediaries, including, but not limited to Expedia.com and Priceline.com and their subsidiaries.
The increase in the use of third-party internet travel intermediaries and the increase in alternative lodging channels, such as Airbnb, could adversely affect our profitability. Many of our managers and franchisors contract with third-party internet travel intermediaries, including, but not limited to, Expedia.com and Priceline.com, to sell rooms to leisure travelers, as well as for corporate and group travel.
Currently, the markets where our hotels are located are very competitive. However, a material increase in the supply of new hotel rooms to a market can quickly destabilize that market and existing hotels can experience rapidly decreasing RevPAR and profitability.
A material increase in the supply of new hotel rooms to a market can quickly destabilize that market and existing hotels can experience rapidly decreasing RevPAR and profitability.
The TRS lessee receives all of the operating profit or losses at the hotel. Moreover, virtually all hotel guests stay at the hotel for only a few nights, so the rate and occupancy at each of our hotels changes every day. As a result, our earnings may be highly volatile.
Most hotel guests stay at the hotel for only a few nights, so the rate and occupancy at each of our hotels changes every day. As a result, our earnings may be highly volatile.
This section contains forward-looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements beginning on page 4. Risks Related to Our Business and Operations Our business model, especially our concentration in premium full-service hotels, can be highly volatile. We solely own hotels, a very different asset class from many other REITs.
This section contains forward-looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements beginning on page 4. -12- Table of Contents Risks Related to Our Business and Operations Our business model, especially our concentration in premium full-service hotels, can be highly volatile.
Generally, any shares of our stock owned by affiliated owners will be added together for purposes of the aggregate share ownership limit, and any shares of common stock or preferred stock, as applicable, owned by affiliated owners will be added together for purposes of the common share ownership limit and the preferred share ownership limit.
Generally, any shares of our stock owned by affiliated owners will be added together for purposes of the aggregate share ownership limit, and any shares of a specific class of stock, owned by affiliated owners will be added together for purposes of the share ownership limit for such class of stock.
Under the terms of the hotel management agreements that we have entered into, or that we will enter into in the future, our ability to participate in operating decisions regarding our hotel properties is limited to certain matters, including approval of the annual operating budget.
Thus, third-party hotel management companies that enter into management contracts with our TRS lessees control the daily operations of our hotel properties. -17- Table of Contents Under the terms of the hotel management agreements that we have entered into, or that we will enter into in the future, our ability to participate in operating decisions regarding our hotel properties is limited to certain matters, including approval of the annual operating budget.
If the property taxes we pay increase, our financial condition, results of operations, cash flow, per share trading price of our common stock and Series A Preferred Stock and our ability to satisfy our principal and interest obligations and to make distributions to our stockholders may be negatively impacted.
If the property taxes we pay increase, our financial condition, results of operations, cash flow, per share trading price of our common stock and our ability to satisfy our principal and interest obligations and to make distributions to our stockholders may be negatively impacted. Dividends payable by REITs generally do not qualify for reduced tax rates.
The existence or use of our share repurchase program may cause our stock price to be higher than it would otherwise be, and could potentially reduce the market liquidity for our stock.
In addition, repurchases of our common stock pursuant to our share repurchase program could affect our stock price and increase its volatility. The existence or use of our share repurchase program may cause our stock price to be higher than it -29- Table of Contents would otherwise be, and could potentially reduce the market liquidity for our stock.
Because our decision to issue securities in any future offering will -32- Table of Contents depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.
Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock and diluting their interest.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+12 added−4 removed0 unchanged
Biggest changeOur Audit Committee discusses DiamondRock’s cybersecurity program at least annually, and receives quarterly updates from internal audit or management on cybersecurity incidents or other developments. Our Audit Committee reports on these matters to our Board of Directors as needed. Our Board of Directors plays an important role in the risk oversight of the Company.
Biggest changeThe Audit Committee administers its risk oversight function by receiving regular reports from members of the Senior Risk Management Team, on areas of material risk to the Company. Our Audit Committee discusses DiamondRock’s cybersecurity program at least annually, and receives quarterly updates from internal audit or management on cybersecurity incidents or other developments.
Item 1C. Cybersecurity Cyber Risk Management and Strategy We and our property managers rely on information technology in our operations, and any material failures, inadequacies, interruptions, security failures, social engineering attacks or cyber-attacks could harm our business.
Item 1C. Cybersecurity Cyber Risk Management and Strategy We and our hotel managers rely on information technology in our operations, and any material failures, inadequacies, interruptions, security failures, social engineering attacks or cyber-attacks could harm our business.
To help manage these risks, we engage and rely on external experts, internal auditors, and third-party assessors, including an information technology managed services provider.
To help manage these risks, we engage and rely on external experts, internal auditors, and third-party assessors, including an information technology managed services provider (the “MSP”) and a managed security services provider (the “MSSP”).
Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced threats to and security incidents related to our data and systems.
We, like other companies in our industry, face a number of cybersecurity risks in connection with our business. Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced threats to and security incidents related to our data and systems.
As part of its charter, the Audit Committee oversees our policies with respect to risk assessment and risk management, including with respect to cybersecurity risks.
Additionally, we provide cybersecurity training for all Board members and our employees. As part of its charter, the Audit Committee oversees our policies with respect to risk assessment and risk management, including with respect to cybersecurity risks.
For more information about the cybersecurity risks we face, see Item 1A "Risk Factors." -33- Table of Contents Governance Related to Cybersecurity Risks DiamondRock engages a managed services provider, which includes vCISO and vCIO services, to assist DiamondRock with the identification, monitoring, and management of cybersecurity risks.
For more information about the cybersecurity risks we face, see Item 1A "Risk Factors." Governance Related to Cybersecurity Risks DiamondRock engages a MSP and MSSP to assist us with the identification, monitoring, and management of cybersecurity risks.
Our Board is involved in risk oversight through its direct decision-making authority with respect to significant matters and the oversight of management by the Board’s committees. Our Board also relies on management to bring significant matters impacting DiamondRock to its attention. -34- Table of Contents
Our Audit Committee reports on these matters to our Board of Directors as needed. Our Board of Directors plays an important role in the risk oversight of the Company. Our Board is involved in risk oversight through its direct decision-making authority with respect to significant matters and the oversight of management by the Board’s committees.
Our managed services provider reports periodically to our management team, including our Chief Accounting Officer, Chief Financial Officer & Treasurer and General Counsel & Chief Risk Officer. These senior executives then brief the Board on information regarding security matters at least quarterly. Additionally, we provide cybersecurity training for all Board members and senior executives.
Management, including our Chief Accounting Officer, Chief Financial Officer & Treasurer and General Counsel & Chief Risk Officer (collectively, the "Senior Risk Management Team"), oversees cybersecurity risk management activities and receives updates from internal technology leadership and our MSP and MSSP. The Senior Risk Management Team then briefs the Board on information regarding security matters at least quarterly.
Our senior management reviews assessments performed by third-party assessors and our managed services provider to determine the appropriate treatment of identified risks. We have also developed and implemented a cyber risk management program for our third-party property managers.
Our MSP and MSSP also conduct periodic assessments of certain applications to determine, in part, any necessary security improvements. Our senior management reviews information provided by third-party assessors and our MSP and MSSP to determine the appropriate treatment of identified risks.
Removed
Our managed services provider currently provides us with both a virtual chief information security officer (vCISO) and a virtual chief information officer (vCIO), who offer us advice on technology, infrastructure, management, and productivity in relation to our information technology capabilities.
Added
Due to our REIT structure, the cybersecurity program, processes and strategy described in this section are primarily limited to the corporate systems, information and service providers belonging to or supporting the REIT. In 2025, we strengthened our technology and cybersecurity governance by adding a senior technology and security professional to our IT leadership team.
Removed
Our current view of cybersecurity risk is informed by a risk assessment conducted by a leading third-party assessor based on a recognized industry framework, which evaluated our cyber risk management controls. Our managed services provider also conducts periodic assessments of certain applications on our systems to determine, in part, any necessary security improvements.
Added
This role is responsible for strengthening internal ownership of our technology and cybersecurity governance and providing oversight over both our MSP and MSSP.
Removed
This program aims to assess the cybersecurity maturity of various commercial properties that we own through an evaluation of our property managers’ cybersecurity risk profile. We, like other companies in our industry, face a number of cybersecurity risks in connection with our business.
Added
This individual brings extensive experience in cybersecurity and information security services, including security operations, threat detection and response, vulnerability management, incident response, and compliance oversight aligned with recognized frameworks such as the National Institute of Standards and Technology Cybersecurity Framework.
Removed
The Audit Committee administers its risk oversight function by receiving regular reports from members of senior management, including the Chief Accounting Officer, Chief Financial Officer & Treasurer and General Counsel & Chief Risk Officer, on areas of material risk to the Company.
Added
Our current view of cybersecurity risk is informed by third-party risk assessments and ongoing monitoring and testing activities designed to identify and evaluate cybersecurity vulnerabilities and emerging threats, including periodic vulnerability scans, penetration testing and reviews of key service provider assurance reports and security documentation, where appropriate.
Added
Cybersecurity risks are assessed within our broader enterprise risk management processes and are reported through established governance and escalation channels. We maintain information technology policies and procedures, including incident response and disaster recovery plans, and we periodically evaluate these procedures, including through tabletop exercises.
Added
Because our hotels are operated by third parties, our cybersecurity program is primarily designed around the Company’s corporate technology environment and the vendors and service providers that support our corporate functions.
Added
We do not manage hotel operations, and the day-to-day operation of our properties, including many of the technology systems used at the hotels, is performed by independent hotel managers and, where applicable, franchisors. Those operators and brands utilize their own systems and service providers to support hotel activity.
Added
Given this structure, our control over those hotel-operator and franchisor systems is limited. We rely on the cybersecurity programs and controls implemented by those third parties to address cyber-related risks in hotel operations.
Added
While we maintain governance and oversight of our corporate systems through our MSP and MSSP relationships, we look to our hotel managers and franchisors to manage cybersecurity within their environments.
Added
To better understand and assess our exposure, we periodically gather information from our hotel managers regarding their cybersecurity programs and practices and follow up, as appropriate, on identified areas of risk. In addition, our hotel managers -30- Table of Contents and franchisors often maintain their own cyber insurance coverage, and we also maintain cyber insurance intended to provide supplemental protection.
Added
As of and for the three years ended December 31, 2025, we have not had any known instances of material cybersecurity incidents, including third-party incidents, and have not experienced a cyber-related incident that has materially affected our business, results of operations or financial condition.
Added
Our Board also relies on management to bring significant matters impacting DiamondRock to its attention. -31- Table of Contents

Item 2. Properties

Properties — owned and leased real estate

16 edited+11 added−5 removed1 unchanged
Biggest changeCity Center (2) Washington District of Columbia Upper Upscale Full Service 410 Sage Hospitality The Dagny Boston Boston Massachusetts Upper Upscale Full Service 403 Aimbridge Hospitality The Hythe Vail Vail Colorado Luxury Full Service 344 Vail Resorts Courtyard New York Manhattan/Midtown East New York New York Upscale Select Service 321 HEI Hotels & Resorts Atlanta Marriott Alpharetta Atlanta Georgia Upper Upscale Full Service 318 Aimbridge Hospitality The Gwen Chicago Illinois Luxury Full Service 311 HEI Hotels & Resorts Hilton Garden Inn New York/Times Square Central New York New York Upscale Select Service 282 Highgate Hotels Embassy Suites by Hilton Bethesda Bethesda Maryland Upper Upscale Full Service 272 Sage Hospitality Hotel Champlain Burlington Burlington Vermont Upper Upscale Full Service 258 Aimbridge Hospitality Henderson Beach Resort Destin Florida Luxury Full Service 269 Aimbridge Hospitality AC Hotel Minneapolis Downtown (3) Minneapolis Minnesota Upscale Select Service 245 Sage Hospitality Kimpton Hotel Palomar Phoenix Phoenix Arizona Upper Upscale Full Service 242 Kimpton Hotels & Restaurants Bourbon Orleans Hotel New Orleans Louisiana Luxury Full Service 220 Evolution Hospitality Hotel Clio Denver Colorado Luxury Full Service 199 Sage Hospitality Courtyard New York Manhattan/Fifth Avenue New York New York Upscale Select Service 189 Highgate Hotels Margaritaville Beach House Key West Key West Florida Upper Upscale Full Service 186 Ocean Properties The Lodge at Sonoma Resort Sonoma California Upper Upscale Full Service 182 Sage Hospitality Courtyard Denver Downtown Denver Colorado Upscale Select Service 177 Sage Hospitality The Lindy Renaissance Charleston Hotel Charleston South Carolina Upper Upscale Full Service 167 Aimbridge Hospitality Kimpton Shorebreak Huntington Beach Resort Huntington Beach California Upper Upscale Full Service 157 Kimpton Hotels & Restaurants Cavallo Point, The Lodge at the Golden Gate Sausalito California Luxury Full Service 142 Passport Resorts Chico Hot Springs Resort & Day Spa Pray Montana Economy Full Service 117 EOS Hospitality Havana Cabana Key West Key West Florida Upscale Full Service 106 EOS Hospitality Tranquility Bay Beachfront Resort Marathon Florida Luxury Full Service 103 EOS Hospitality Hotel Emblem San Francisco San Francisco California Upper Upscale Full Service 96 Pacifica Hotels Kimpton Shorebreak Fort Lauderdale Beach Resort Fort Lauderdale Florida Upper Upscale Full Service 96 HEI Hotels & Resorts L'Auberge de Sedona Sedona Arizona Luxury Full Service 88 Evolution Hospitality The Landing Lake Tahoe Resort & Spa South Lake Tahoe California Luxury Full Service 82 Evolution Hospitality Orchards Inn Sedona Sedona Arizona Upscale Full Service 70 Evolution Hospitality Lake Austin Spa Resort Austin Texas Luxury Full Service 40 EOS Hospitality Henderson Park Inn Destin Florida Luxury Full Service 37 Aimbridge Hospitality Total 10,004 _____________ (1) As defined by STR, Inc. -36- Table of Contents (2) On February 19, 2025, we sold the Westin Washington D.C.
Biggest changeHotel City State Class (1) Service Category Rooms Manager Chicago Marriott Downtown Magnificent Mile Chicago Illinois Upper Upscale Full Service 1,200 Marriott Westin Boston Seaport District Boston Massachusetts Upper Upscale Full Service 793 Aimbridge Hospitality Salt Lake City Marriott Downtown at City Creek Salt Lake City Utah Upper Upscale Full Service 510 HEI Hotels & Resorts Worthington Renaissance Fort Worth Hotel Fort Worth Texas Upper Upscale Full Service 504 Marriott Westin San Diego Bayview San Diego California Upper Upscale Full Service 436 Aimbridge Hospitality Westin Fort Lauderdale Beach Resort Fort Lauderdale Florida Upper Upscale Full Service 432 HEI Hotels & Resorts The Dagny Boston Boston Massachusetts Luxury Full Service 403 Aimbridge Hospitality The Hythe Vail Vail Colorado Luxury Full Service 344 Vail Resorts Courtyard New York Manhattan/Midtown East New York New York Upscale Select Service 321 HEI Hotels & Resorts (2) Atlanta Marriott Alpharetta Atlanta Georgia Upper Upscale Full Service 318 Aimbridge Hospitality The Gwen Hotel Chicago Illinois Luxury Full Service 311 HEI Hotels & Resorts Hilton Garden Inn New York/Times Square Central New York New York Upscale Select Service 282 Highgate Hotels Embassy Suites by Hilton Bethesda Bethesda Maryland Upper Upscale Full Service 272 Sage Hospitality Hotel Champlain Burlington Burlington Vermont Upper Upscale Full Service 258 Aimbridge Hospitality Henderson Beach Resort Destin Florida Luxury Full Service 270 Aimbridge Hospitality AC Hotel Minneapolis Downtown Minneapolis Minnesota Upscale Select Service 245 Sage Hospitality Kimpton Hotel Palomar Phoenix Phoenix Arizona Upper Upscale Full Service 242 IHG Hotels & Resorts Bourbon Orleans Hotel New Orleans Louisiana Luxury Full Service 220 Aimbridge Hospitality Hotel Clio Denver Colorado Luxury Full Service 199 Sage Hospitality Courtyard New York Manhattan/Fifth Avenue New York New York Upscale Select Service 189 Highgate Hotels Margaritaville Beach House Key West Key West Florida Upper Upscale Full Service 186 Ocean Properties The Lodge at Sonoma Resort Sonoma California Upper Upscale Full Service 182 Sage Hospitality Courtyard Denver Downtown Denver Colorado Upscale Select Service 177 Sage Hospitality The Lindy Renaissance Charleston Hotel Charleston South Carolina Upper Upscale Full Service 167 Aimbridge Hospitality L'Auberge de Sedona Sedona Arizona Luxury Full Service 158 Aimbridge Hospitality Kimpton Shorebreak Huntington Beach Resort Huntington Beach California Upper Upscale Full Service 157 IHG Hotels & Resorts Cavallo Point, The Lodge at the Golden Gate Sausalito California Luxury Full Service 142 Passport Resorts Chico Hot Springs Resort & Day Spa Pray Montana Upper Upscale Full Service 117 EOS Hospitality Havana Cabana Key West Key West Florida Upper Upscale Full Service 106 EOS Hospitality Tranquility Bay Beachfront Resort Marathon Florida Luxury Full Service 103 EOS Hospitality Hotel Emblem San Francisco San Francisco California Upper Upscale Full Service 96 Pacifica Hotels Kimpton Shorebreak Fort Lauderdale Beach Resort Fort Lauderdale Florida Upper Upscale Full Service 96 HEI Hotels & Resorts The Landing Lake Tahoe Resort & Spa South Lake Tahoe California Luxury Full Service 82 Aimbridge Hospitality Lake Austin Spa Resort Austin Texas Luxury Full Service 40 EOS Hospitality Henderson Park Inn Destin Florida Luxury Full Service 37 Aimbridge Hospitality Total 9,595 _____________ -32- Table of Contents (1) As defined by STR, Inc.
(5) In January 2026, the franchise fees will increase to 7% of gross room sales and 3% of gross food and beverage sales through the remainder of the term. Additional information regarding fees incurred under franchise agreements can be found in Note 13 to our accompanying consolidated financial statements.
(6) In January 2026, the franchise fees will increase to 7% of gross room sales and 3% of gross food and beverage sales through the remainder of the term. Additional information regarding fees incurred under franchise agreements can be found in Note 13 to our accompanying consolidated financial statements.
The following table sets forth the expiration date of the current term, the terms of termination of the manager by the Company, and the number of remaining renewal terms at the manager's option under the respective hotel management agreements for each of our hotels as of December 31, 2024.
The following table sets forth the expiration date of the current term, the terms of termination of the manager by the Company, and the number of remaining renewal terms at the manager's option under the respective hotel management agreements for each of our hotels as of December 31, 2025.
We refer to this excess of operating profits over the owner's priority as “available cash flow.” The following table sets forth the base management fee and incentive management fee generally due and payable each fiscal year, for each of our hotels as of December 31, 2024: Property Base Management Fee (1) Incentive Management Fee (2) AC Hotel Minneapolis Downtown 2.25% (3) 10% (3) Atlanta Marriott Alpharetta 2% 15% (4) (5) Bourbon Orleans Hotel 1% 15% (4) (5) Cavallo Point, The Lodge at the Golden Gate 2.5% 20% Chicago Marriott Downtown Magnificent Mile 3% 15% (7) Chico Hot Springs Resort & Day Spa 2.5% 15% (4) (8) Courtyard Denver Downtown 1.5% (6) 10% Courtyard New York Manhattan/Fifth Avenue 2.25% 15% (4) Courtyard New York Manhattan/Midtown East 1.75% 15% (4) Embassy Suites by Hilton Bethesda 1.5% (6) 10% The Gwen 2.25% (9) 15% Havana Cabana Key West 2.5% 15% (4) (8) Henderson Beach Resort 2.25% 15% (4) (5) Henderson Park Inn 2.5% 15% (4) (5) The Dagny Boston 1.25% 15% (4) (5) Hotel Champlain Burlington 1.5% (10) 10% (5) Hilton Garden Inn New York/Times Square Central 2.25% 20% (4) Hotel Clio 2% 15% (4) Hotel Emblem San Francisco 3% 10% (4) The Hythe Vail 2% 15% (4) Kimpton Hotel Palomar Phoenix 3.5% 20% Kimpton Shorebreak Fort Lauderdale Beach Resort 2% 15% (4) Kimpton Shorebreak Huntington Beach Resort 2.5% 15% Lake Austin Spa Resort 2.5% 15% (4) (8) The Landing Lake Tahoe Resort & Spa 1.25% 15% (5) L'Auberge de Sedona 2% (12) 15% (5) The Lodge at Sonoma Resort 2% 15% (4) Margaritaville Beach House Key West 3% 10% Orchards Inn Sedona 2% (12) 15% (5) The Lindy Renaissance Charleston Hotel 2% 15% (4) (5) Salt Lake City Marriott Downtown at City Creek 2% 15% (4) Tranquility Bay Beachfront Resort 2.5% 15% (4) (8) Westin Boston Seaport District 1% (11) 15% (4) (5) Westin Fort Lauderdale Beach Resort 2% 15% (4) Westin San Diego Bayview 1.5% (10) 10% (5) Westin Washington D.C.
We refer to this excess of operating profits over the owner's priority as “available cash flow.” The following table sets forth the base management fee and incentive management fee generally due and payable each fiscal year, for each of our hotels as of December 31, 2025: Property Base Management Fee (1) Incentive Management Fee (2) AC Hotel Minneapolis Downtown 2.25% (3) 10% (3) Atlanta Marriott Alpharetta 2% 15% (4) (5) Bourbon Orleans Hotel 1% 15% (4) (5) Cavallo Point, The Lodge at the Golden Gate 2.5% 20% Chicago Marriott Downtown Magnificent Mile 3% 15% (7) Chico Hot Springs Resort & Day Spa 2.5% (8) 15% (4) (9) Courtyard Denver Downtown 1.5% (6) 10% Courtyard New York Manhattan/Fifth Avenue 2.25% (10) 15% (4) (7) (10) Courtyard New York Manhattan/Midtown East (11) 1.75% 15% (4) Embassy Suites by Hilton Bethesda 1.5% (6) 10% The Gwen 2.25% (12) 15% Havana Cabana Key West 2.5% (8) 15% (4) (9) Henderson Beach Resort 2.25% 15% (4) (5) Henderson Park Inn 2.5% 15% (4) (5) The Dagny Boston 1.25% (13) 15% (4) (5) Hotel Champlain Burlington 1.5% (14) 10% (5) Hilton Garden Inn New York/Times Square Central 2.25% (10) (15) 20% (10) Hotel Clio 2% 15% (4) Hotel Emblem San Francisco 3% 10% (4) The Hythe Vail 2.2% 15% (4) Kimpton Hotel Palomar Phoenix 3.5% 20% Kimpton Shorebreak Fort Lauderdale Beach Resort 2% 15% (4) Kimpton Shorebreak Huntington Beach Resort 2.5% 15% Lake Austin Spa Resort 1.5% 15% (4) (9) The Landing Lake Tahoe Resort & Spa 1.25% 15% (5) L'Auberge de Sedona 2% (16) 15% (5) The Lodge at Sonoma Resort 2% 15% (4) Margaritaville Beach House Key West 3% 10% The Lindy Renaissance Charleston Hotel 2% 15% (4) (5) Salt Lake City Marriott Downtown at City Creek 2% 15% (4) Tranquility Bay Beachfront Resort 2.5% 15% (4) (9) Westin Boston Seaport District 1% (17) 15% (4) (5) Westin Fort Lauderdale Beach Resort 2% 15% (4) Westin San Diego Bayview 1.5% (14) 10% (5) Worthington Renaissance Fort Worth Hotel 3% 25% ______________ (1) As a percentage of gross revenues.
Franchise Agreements The following table sets forth the terms of the hotel franchise agreements for our 20 franchised hotels as of December 31, 2024: Franchised Hotels Expiration Date of Agreement Franchise Fee AC Hotel Minneapolis Downtown 10/2041 6% of gross room sales Atlanta Marriott Alpharetta 9/2040 (1) 6% of gross room sales and 3% of gross food and beverage sales Embassy Suites by Hilton Bethesda 2/2037 3.5% of gross room sales; program fee of 4% of gross room sales (2) Courtyard Denver Downtown 10/2027 5.5% of gross room sales Courtyard New York Manhattan/Fifth Avenue 12/2035 6% of gross room sales Courtyard New York Manhattan/Midtown East 8/2042 6% of gross room sales The Gwen 9/2035 5% of gross room sales Hotel Champlain Burlington 6/2034 4% of gross room sales; program fee of 4% of gross room sales (3) Hilton Garden Inn New York/Times Square Central 6/2033 5% of gross room sales; program fee of 4.3% of gross room sales Hotel Clio 10/2036 6% of gross room sales and 3% of gross food and beverage sales (4) The Hythe Vail 12/2041 5% of gross room sales and 2% of gross food and beverage sales Kimpton Shorebreak Fort Lauderdale Beach Resort 4/2041 6% of gross room sales and 2% of gross food and beverage sales The Lodge at Sonoma Resort 12/2035 5% of gross room sales Margaritaville Beach House Key West 4/2041 5% of gross revenues The Lindy Renaissance Charleston Hotel 12/2031 5% of gross room sales Salt Lake City Marriott Downtown at City Creek 9/2040 (1) 6% of gross room sales and 3% of gross food and beverage sales Westin Boston Seaport District 12/2026 6% of gross room sales and 2% of gross food and beverage sales (5) Westin Fort Lauderdale Beach Resort 12/2034 6% of gross room sales and 2% of gross food and beverage sales Westin San Diego Bayview 12/2040 7% of gross room sales and 3% of gross food and beverage sales Westin Washington D.C.
Franchise Agreements The following table sets forth the terms of the hotel franchise agreements for our 19 franchised hotels as of December 31, 2025: Franchised Hotels Expiration Date of Agreement Franchise Fee AC Hotel Minneapolis Downtown 10/2041 6% of gross room sales Atlanta Marriott Alpharetta 9/2050 (1) 6% of gross room sales and 3% of gross food and beverage sales Embassy Suites by Hilton Bethesda 2/2037 3.5% of gross room sales (2) Courtyard Denver Downtown 10/2027 5.5% of gross room sales Courtyard New York Manhattan/Fifth Avenue 12/2035 6% of gross room sales Courtyard New York Manhattan/Midtown East 8/2042 6% of gross room sales The Gwen 9/2035 5% of gross room sales Hotel Champlain Burlington 6/2034 4% of gross room sales (3) Hilton Garden Inn New York/Times Square Central 6/2033 5% of gross room sales Hotel Clio 10/2036 6% of gross room sales and 3% of gross food and beverage sales (4) The Hythe Vail 12/2041 5% of gross room sales and 2% of gross food and beverage sales Kimpton Shorebreak Fort Lauderdale Beach Resort 4/2041 6% of gross room sales and 2% of gross food and beverage sales The Lodge at Sonoma Resort 12/2035 5% of gross room sales Margaritaville Beach House Key West 4/2041 1.5% of gross revenues (5) The Lindy Renaissance Charleston Hotel 12/2031 5% of gross room sales Salt Lake City Marriott Downtown at City Creek 9/2050 (1) 6% of gross room sales and 3% of gross food and beverage sales Westin Boston Seaport District 12/2026 6% of gross room sales and 2% of gross food and beverage sales (6) Westin Fort Lauderdale Beach Resort 12/2034 6% of gross room sales and 2% of gross food and beverage sales Westin San Diego Bayview 12/2040 7% of gross room sales and 3% of gross food and beverage sales ______________ (1) The franchise agreement may be terminated at Marriott's option after September 2040.
Property Manager Terminable Expiration Date of Current Term Number of Remaining Renewal Terms at Manager's Exclusive Option (1) AC Hotel Minneapolis Downtown Sage Hospitality At will with no fee 11/2029 Five one-year periods Atlanta Marriott Alpharetta Aimbridge Hospitality At will with no fee 9/2025 None Bourbon Orleans Hotel Evolution Hospitality At will with no fee 7/2026 Month-to-month Cavallo Point, The Lodge at the Golden Gate Passport Resorts At will with fee 6/2028 None Chicago Marriott Downtown Magnificent Mile Marriott No 12/2038 Two ten-year periods Chico Hot Springs Resort & Day Spa EOS Hospitality At will with no fee 8/2033 Month-to-month Courtyard Denver Downtown Sage Hospitality At will with fee 7/2026 One five-year period Courtyard New York Manhattan/Fifth Avenue Highgate Hotels At will with no fee 10/2025 None Courtyard New York Manhattan/Midtown East HEI Hotels & Resorts At will with no fee 8/2027 None Embassy Suites by Hilton Bethesda Sage Hospitality At will with no fee 2/2027 One five-year period The Gwen HEI Hotels & Resorts At will with fee 6/2026 None Havana Cabana Key West EOS Hospitality At will with no fee 5/2032 Month-to-month Henderson Beach Resort Aimbridge Hospitality At will with no fee 2/2032 Month-to-month Henderson Park Inn Aimbridge Hospitality At will with no fee 7/2026 Month-to-month The Dagny Boston Aimbridge Hospitality At will with no fee 7/2025 None Hotel Champlain Burlington Aimbridge Hospitality At will with no fee 9/2029 Month-to-month Hilton Garden Inn New York/Times Square Central Highgate Hotels At will with no fee 10/2025 One five-year period (2) Hotel Clio Sage Hospitality At will with fee 5/2026 One five-year period Hotel Emblem San Francisco Pacifica Hotels At will fee until 3/2025; at will with no fee thereafter 3/2028 T Two five-year periods The Hythe Vail Vail Resorts At will with fee 3/2025 None Kimpton Hotel Palomar Phoenix Kimpton Hotel & Restaurant Group At will with no fee 12/2028 One five-year period (3) Kimpton Shorebreak Fort Lauderdale Beach Resort HEI Hotels & Resorts At will with no fee 3/2028 None Kimpton Shorebreak Huntington Beach Resort Kimpton Hotel & Restaurant Group At will with fee 2/2025 (4) None Lake Austin Spa Resort EOS Hospitality At will with no fee 11/2032 Month-to-month The Landing Lake Tahoe Resort & Spa Evolution Hospitality At will with fee 10/2029 None L'Auberge de Sedona Evolution Hospitality At will with fee 10/2029 None The Lodge at Sonoma Resort Sage Hospitality At will with fee 9/2025 None Margaritaville Beach House Key West Ocean Properties No 7/2027 None Orchards Inn Sedona Evolution Hospitality At will with fee 10/2029 None The Lindy Renaissance Charleston Hotel Aimbridge Hospitality At will with no fee 9/2025 None Salt Lake City Marriott Downtown at City Creek HEI Hotels & Resorts At will with no fee 9/2025 None Tranquility Bay Beachfront Resort EOS Hospitality At will with no fee 4/2032 Month-to-month Westin Boston Seaport District Aimbridge Hospitality At will with no fee 12/2026 None Westin Fort Lauderdale Beach Resort HEI Hotels & Resorts At will with no fee 12/2027 None Westin San Diego Bayview Aimbridge Hospitality At will with no fee N/A Month-to-month Westin Washington D.C.
Property Manager Terminable Expiration Date of Current Term Number of Remaining Renewal Terms at Manager's Exclusive Option (1) AC Hotel Minneapolis Downtown Sage Hospitality At will with no fee 11/2029 Five one-year periods Atlanta Marriott Alpharetta Aimbridge Hospitality At will with no fee 9/2030 Month-to-month Bourbon Orleans Hotel Aimbridge Hospitality At will with no fee 7/2026 Month-to-month Cavallo Point, The Lodge at the Golden Gate Passport Resorts At will with fee 6/2028 None Chicago Marriott Downtown Magnificent Mile Marriott No 12/2038 Two ten-year periods Chico Hot Springs Resort & Day Spa EOS Hospitality At will with no fee 8/2033 Month-to-month Courtyard Denver Downtown Sage Hospitality At will with no fee 7/2026 One five-year period Courtyard New York Manhattan/Fifth Avenue Highgate Hotels At will with no fee 9/2030 (2) Month-to-month (2) Courtyard New York Manhattan/Midtown East HEI Hotels & Resorts (3) At will with no fee 8/2027 None Embassy Suites by Hilton Bethesda Sage Hospitality At will with no fee 2/2027 One five-year period The Gwen Hotel HEI Hotels & Resorts At will with no fee 6/2026 None Havana Cabana Key West EOS Hospitality At will with no fee 5/2032 Month-to-month Henderson Beach Resort Aimbridge Hospitality At will with no fee 2/2032 Month-to-month Henderson Park Inn Aimbridge Hospitality At will with no fee 7/2026 Month-to-month The Dagny Boston Aimbridge Hospitality At will with no fee 9/2030 Month-to-month Hotel Champlain Burlington Aimbridge Hospitality At will with no fee 9/2029 Month-to-month Hilton Garden Inn New York/Times Square Central Highgate Hotels At will with no fee 9/2030 (2) One five-year period (2) (4) Hotel Clio Sage Hospitality At will with no fee 5/2026 One five-year period Hotel Emblem San Francisco Pacifica Hotels At will with no fee 3/2028 Two five-year periods The Hythe Vail Vail Resorts At will with fee 6/2027 None Kimpton Hotel Palomar Phoenix IHG Hotels & Resorts No 12/2028 One five-year period (5) Kimpton Shorebreak Fort Lauderdale Beach Resort HEI Hotels & Resorts At will with no fee 3/2027 None Kimpton Shorebreak Huntington Beach Resort IHG Hotels & Resorts At will with no fee 1/2031 None Lake Austin Spa Resort EOS Hospitality At will with no fee 11/2032 Month-to-month The Landing Lake Tahoe Resort & Spa Aimbridge Hospitality At will with no fee 10/2029 None L'Auberge de Sedona Aimbridge Hospitality At will with no fee 10/2029 None The Lodge at Sonoma Resort Sage Hospitality At will with no fee N/A Month-to-month Margaritaville Beach House Key West Ocean Properties No 7/2027 None The Lindy Renaissance Charleston Hotel Aimbridge Hospitality At will with no fee 9/2030 Month-to-month Salt Lake City Marriott Downtown at City Creek HEI Hotels & Resorts At will with no fee N/A Month-to-month Tranquility Bay Beachfront Resort EOS Hospitality At will with no fee 5/2032 Month-to-month Westin Boston Seaport District Aimbridge Hospitality At will with no fee 12/2026 Month-to-month Westin Fort Lauderdale Beach Resort HEI Hotels & Resorts At will with no fee 12/2027 None Westin San Diego Bayview Aimbridge Hospitality At will with no fee N/A Month-to-month Worthington Renaissance Fort Worth Hotel Marriott No 12/2030 Two ten-year periods (6) ____________________ (1) Certain agreements allow for other extension rights that may be only at our option.
The base management fee is generally payable as a percentage of gross hotel revenues for each fiscal year. The incentive management fee is generally based on hotel operating profits, but the fee only applies to that portion of hotel operating profits above a negotiated return on our invested capital, which we refer to as the owner's priority.
The incentive management fee is generally based on hotel operating profits, but the fee only applies to that portion of hotel operating profits above a negotiated return on our invested capital, which we refer to as the owner's priority.
(4) Total incentive management fees are capped at 1% of gross revenues. -38- Table of Contents (5) The property will not individually earn their incentive fee unless a collective owner's priority threshold is met. (6) The base management fee is the sum of 1.5% of gross revenues and 1.5% gross operating profit.
(5) The property will not individually earn their incentive fee unless a collective owner's priority threshold is met. (6) The base management fee is the sum of 1.5% of gross revenues and 1.5% of gross operating profit. Total management fees are capped at 3% of gross revenues. (7) Calculated as 15% of net operating income.
Base management fees for the year ended December 31, 2024 were 0.5% of gross revenues. (12) The base management fee decreased from 2.25% of gross revenues to 2% of gross revenues beginning September 1, 2024. Additional information regarding fees incurred under hotel management agreements can be found in Note 13 to our accompanying consolidated financial statements.
Base management fees for the year ended December 31, 2025 were 0.5% of gross revenues. Additional information regarding fees incurred under hotel management agreements can be found in Note 13 to our accompanying consolidated financial statements.
Additional information regarding our hotels that are subject to ground leases can be found in Note 8 to our accompanying consolidated financial statements. -40- Table of Contents
Ground Leases Eight of our hotels and one parking area are subject to ground lease agreements. Additional information regarding our hotels that are subject to ground leases can be found in Note 8 to our accompanying consolidated financial statements. -36- Table of Contents
City Center 1.5% (6) 10% Worthington Renaissance Fort Worth Hotel 3% 25% ______________ (1) As a percentage of gross revenues. (2) As a percentage of hotel operating profits above a specified return on our invested capital or specified operating profit thresholds. (3) Aggregate management fees (base plus incentive) are capped at 3.5% of total operating revenue.
(2) As a percentage of hotel operating profits above a specified return on our invested capital or specified operating profit thresholds. (3) Aggregate management fees (base plus incentive) are capped at 3.5% of total operating revenue. -34- Table of Contents (4) Total incentive management fees are capped at 1% of gross revenues.
(10) Total management fees are capped at 2.5% of gross revenues. (11) The base management fee decreases to 0.5% of gross revenues if the annual gross operating profit is less than $36 million. Effective January 1, 2025, the GOP threshold increases annually by the percentage increase in CPI.
(16) The base management fee decreased from 2.25% of gross revenues to 2% of gross revenues beginning September 1, 2024. (17) The base management fee decreases to 0.5% of gross revenues if the annual gross operating profit is less than $36 million. Effective January 1, 2025, the GOP threshold increases annually by the percentage increase in CPI.
(3) In July 2028, the franchise fees will increase to 5% through the remainder of the term. (4) In January 2030, the franchise fees will decrease to 5% of gross room sales and 2% of gross food and beverage sales.
(2) In February 2026, the franchise fee will increase to 5.5% of gross room sales through the remainder of the term. (3) In July 2028, the franchise fees will increase to 5% through the remainder of the term.
(2) Hotel manager is entitled to one five-year extension option upon achievement of a certain level of net operating income, which is significantly above current net operating income at the hotel. -37- Table of Contents (3) Hotel manager is entitled to one five-year extension option if the manager earns an incentive management fee in both 2027 and 2028.
The management agreement is terminable at will with no fee. -33- Table of Contents (4) Hotel manager is entitled to one five-year extension option upon achievement of a certain level of net operating income, which is significantly above current net operating income at the hotel.
Total management fees are capped at 3% of gross revenues. (7) Calculated as 15% of net operating income. (8) The incentive management fee increases to 1.5% of gross revenues if the gross operating profit exceeds a specified amount plus any owner's priority. (9) The incentive management fee is capped at 0.75% of gross revenues.
(9) The incentive management fee increases to 1.5% of gross revenues if the gross operating profit exceeds a specified amount plus any owner's priority. (10) Effective February 3, 2026, we entered into a new management agreement with Highgate Hotels.
The manager did not earn an incentive management fee in 2024. (4) On January 30, 2025, the term of the hotel operating agreement was extended to April 30, 2025. Under our hotel management agreements, the hotel manager receives a base management fee and, if certain financial thresholds are met or exceeded, an incentive management fee.
Under our hotel management agreements, the hotel manager receives a base management fee and, if certain financial thresholds are met or exceeded, an incentive management fee. The base management fee is generally payable as a percentage of gross hotel revenues for each fiscal year.
Removed
Properties The following table sets forth certain information for each of our hotels owned as of December 31, 2024. -35- Table of Contents Hotel City State Chain Scale Segment (1) Service Category Rooms Manager Chicago Marriott Downtown Magnificent Mile Chicago Illinois Upper Upscale Full Service 1,200 Marriott Westin Boston Seaport District Boston Massachusetts Upper Upscale Full Service 793 Aimbridge Hospitality Salt Lake City Marriott Downtown at City Creek Salt Lake City Utah Upper Upscale Full Service 510 HEI Hotels & Resorts Worthington Renaissance Fort Worth Hotel Fort Worth Texas Upper Upscale Full Service 504 Marriott Westin San Diego Bayview San Diego California Upper Upscale Full Service 436 Aimbridge Hospitality Westin Fort Lauderdale Beach Resort Fort Lauderdale Florida Upper Upscale Full Service 432 HEI Hotels & Resorts Westin Washington D.C.
Added
Item 2. Properties The following table sets forth certain information for each of our hotels owned as of December 31, 2025.
Removed
City Center. (3) On November 12, 2024, we acquired the AC Hotel Minneapolis Downtown. Hotel Management Agreements We are party to hotel management agreements for each hotel we own.
Added
(2) Effective February 3, 2026, we terminated the management agreement with HEI Hotels & Resorts and entered into a management agreement with Highgate Hotels. Hotel Management Agreements We are party to hotel management agreements for each hotel we own.
Removed
City Center Sage Hospitality At will with fee 11/2026 One five-year period Worthington Renaissance Fort Worth Hotel Marriott No 12/2031 Two ten-year periods ____________________ (1) Certain agreements allow for other extension rights that may be only at our option.
Added
(2) Effective February 3, 2026, we entered into a new management agreement with Highgate Hotels, which expires February 2036 with one five-year renewal option. The management agreement is terminable at will with no fee.
Removed
City Center 12/2040 7% of gross room sales and 3% of gross food and beverage sales ______________ (1) The franchise agreement may be extended at Marriott's option for one 10-year term. (2) In February 2026, the franchise fee will increase to 5.5% of gross room sales through the remainder of the term.
Added
(3) Effective February 3, 2026, we terminated the management agreement with HEI Hotels & Resorts and entered into a management agreement with Highgate Hotels, which expires February 2036 with one five-year renewal option.
Removed
Mortgage Debt -39- Table of Contents As of December 31, 2024, three of our hotels are encumbered by mortgage debt. Additional information regarding such hotels can be found in Note 5 to our accompanying consolidated financial statements. Ground Leases Eight of our hotels and one parking area are subject to ground lease agreements.
Added
(5) Hotel manager is entitled to one five-year extension option if the manager earns an incentive management fee in both 2027 and 2028. The manager did not earn an incentive management fee in 2025.
Added
(6) Hotel manager is entitled to one ten-year extension option if the manager achieves a certain level of operating profit for the three-year period ending December 31, 2029. Hotel manager is entitled to a second ten-year extension option if the manager achieves a certain level of operating profit for the three-year period ending December 31, 2039.
Added
(8) For the year ended December 31, 2025, the base management fee decreases to 1.5% of total revenues if actual EBITDA is less than the budgeted EBITDA for the year. Base management fees for the year ended December 31, 2025 were 1.5% of gross revenues.
Added
Under the new management agreement, base management fees are 2% of gross revenues and incentive management fees are 15% of aggregate operating profit exceeding aggregate owner's priority, capped at 1% of gross revenues. (11) Effective February 3, 2026, we terminated the management agreement with HEI Hotels & Resorts and entered into a management agreement with Highgate Hotels.
Added
Under the new management agreement, base management fees are 2% of gross revenues and incentive management fees are 15% of aggregate operating profit exceeding aggregate owner's priority, capped at 1% of gross revenues. (12) The incentive management fee is capped at 0.75% of gross revenues.
Added
(13) The base management fee is the greater of 1.25% of total revenues or the sum of 1% of total revenues plus $75,000. (14) Total management fees are capped at 2.5% of gross revenues. (15) Total management fees are capped at 4% of gross revenues.
Added
(4) In January 2030, the franchise fees will decrease to 5% of gross room sales and 2% of gross food and beverage sales. -35- Table of Contents (5) An additional franchise fee applies equal to (i) 12.5% of gross revenues in excess of $24.0 million but not exceeding $28.0 million, and (ii) 15.0% of gross revenues in excess of $28.0 million.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeThe outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties. Item 4. Mine Safety Disclosures Not applicable. -41- Table of Contents Part II
Biggest changeThe outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties. Item 4. Mine Safety Disclosures Not applicable. -37- Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

13 edited+0 added−1 removed2 unchanged
Biggest changeDividend Information -42- Table of Contents In order to maintain our qualification as a REIT, we must make distributions to our stockholders each year in an amount equal to at least: • 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains, plus • 90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code, minus • any excess non-cash income.
Biggest changeDividend Information In order to maintain our qualification as a REIT, we are required to distribute to our stockholders each year at least: -38- Table of Contents • 90% of our REIT taxable income, determined before the deduction for dividends paid and excluding any net capital gain (which does not necessarily equal net income as calculated in accordance with U.S. generally accepted accounting principles ("U.S.
The share repurchase program expires on May 1, 2026. The share repurchase program does not obligate the Company to acquire any particular amount of shares, and the share repurchase program may be suspended or discontinued at any time at the Company's discretion. Fourth Quarter 2024 Sales of Unregistered Securities None. Item 6. Reserved Not applicable.
The share repurchase program expires on May 1, 2026. The share repurchase program does not obligate the Company to acquire any particular amount of shares, and the share repurchase program may be suspended or discontinued at any time at the Company's discretion. Fourth Quarter 2025 Sales of Unregistered Securities None. Item 6. Reserved Not applicable.
Equity Compensation Plan Information The following table provides information as of December 31, 2024 regarding shares of common stock that may be issued under the Company’s equity compensation plans.
Equity Compensation Plan Information The following table provides information as of December 31, 2025 regarding shares of common stock that may be issued under the Company’s equity compensation plans.
The graph assumes an initial investment on December 31, 2019 of $100 in our common stock in each of the indices and also assumes the reinvestment of dividends.
The graph assumes an initial investment on December 31, 2020 of $100 in our common stock in each of the indices and also assumes the reinvestment of dividends.
Stockholder Information As of February 25, 2025, there were 13 record holders of our common stock and we believe we have more than one thousand beneficial holders. As of February 25, 2025, there were 14 holders of common OP units (in addition to the Company and executive officers of the Company).
Stockholder Information As of February 25, 2026, there were 17 record holders of our common stock and we believe we have more than one thousand beneficial holders. As of February 25, 2026, there were 14 holders of common OP units (in addition to the Company and executive officers of the Company).
(2) Performance stock units and deferred stock units do not have any exercise price. -43- Table of Contents Fourth Quarter 2024 Repurchases of Equity Securities Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (1) October 1 - October 31, 2024 — $ — — $ 174,038 November 1 - November 30, 2024 — $ — — $ 174,038 December 1 - December 31, 2024 — $ — — $ 174,038 ______________ (1) On May 1, 2024, our board of directors approved a $200.0 million share repurchase program.
(2) Performance stock units and deferred stock units do not have any exercise price. -39- Table of Contents Fourth Quarter 2025 Repurchases of Equity Securities Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (1) October 1 - October 31, 2025 200,700 $ 7.93 200,700 $ 136,975 November 1 - November 30, 2025 — $ — — $ 136,975 December 1 - December 31, 2025 — $ — — $ 136,975 ______________ (1) On May 1, 2024, our board of directors approved a $200.0 million share repurchase program.
We believe the Dow Jones U.S. Hotels & Lodging REITs Index's total return provides a relevant industry sector comparison to our common stock's total stockholder return given the index is based on REITs that primarily invest in lodging real estate.
We believe the Nareit Lodging Index's total return provides a relevant industry sector comparison to our common stock's total stockholder return given the index is based on REITs that primarily invest in lodging real estate.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the NYSE under the symbol “DRH”. The closing price of our common stock on the NYSE on December 31, 2024 was $9.03 per share.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq under the symbol “DRH”. The closing price of our common stock on December 31, 2025 was $8.96 per share.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (a) (b) (c) Equity compensation plans approved by security holders 2,443,560 (1) — (2) 6,823,085 Equity compensation plans not approved by security holders — — — Total 2,443,560 — 6,823,085 ______________ (1) Includes 1,334,986 shares of common stock issuable pursuant to our deferred compensation plan and 1,108,574 shares of common stock issuable upon the achievement of certain performance conditions.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (a) (b) (c) Equity compensation plans approved by security holders 2,003,836 (1) — (2) 5,386,647 Equity compensation plans not approved by security holders — — — Total 2,003,836 — 5,386,647 ______________ (1) Includes 536,425 shares of common stock issuable pursuant to our deferred compensation plan and 1,467,411 shares of common stock issuable upon the achievement of certain performance conditions.
Stock Performance Graph The following graph compares the five-year cumulative total stockholder return on our common stock against the cumulative total returns of the Standard & Poor's 500 Index (the “ S&P 500 Total Return ”) and the Dow Jones U.S. Hotels & Lodging REITs Index (the “ Dow Jones U.S. Hotels Total Return ”).
Stock Performance Graph The following graph compares the five-year cumulative total stockholder return on our common stock against the cumulative total returns of the Standard & Poor's 500 Index (the “ S&P 500 ”) and the FTSE Nareit Equity Lodging/Resorts Index (the “ Nareit Lodging Index ”).
Does not include 621,595 shares of unvested restricted stock.
Does not include 841,105 shares of unvested restricted stock.
Hotel Hotels Total Return $100.00 $66.77 $79.36 $74.18 $91.12 $81.99 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing by us under the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing.
The total return values do not include dividends declared, but not paid, during the period. 2020 2021 2022 2023 2024 2025 DiamondRock Hospitality Company $100.00 $116.48 $100.41 $116.79 $116.34 $120.65 S&P 500 $100.00 $128.71 $105.40 $133.10 $166.40 $196.16 Nareit Lodging Index $100.00 $118.22 $100.12 $124.07 $121.59 $115.34 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing by us under the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing.
We generally pay quarterly cash dividends to common stockholders at the discretion of our board of directors.
GAAP")); plus • 90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code; less • any excess non-cash income (as determined under the Code). We generally pay quarterly cash dividends to common stockholders at the discretion of our board of directors.
Removed
The total return values do not include dividends declared, but not paid, during the period. 2019 2020 2021 2022 2023 2024 DiamondRock Hospitality Company Total Return $100.00 $74.46 $86.73 $74.76 $86.96 $86.63 S&P 500 Total Return $100.00 $118.40 $152.39 $124.79 $157.59 $197.02 Dow Jones U.S.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

76 edited+33 added−40 removed40 unchanged
Biggest changeWe have declared the following dividends to holders of our common stock and distributions to holders of common OP units and LTIP units for the years ended December 31, 2024 and 2023, and through the date of this report: Payment Date Record Date Dividend per Share/Unit April 12, 2023 March 31, 2023 $ 0.03 July 12, 2023 June 30, 2023 $ 0.03 October 12, 2023 September 29, 2023 $ 0.03 January 11, 2024 December 29, 2023 $ 0.03 April 12, 2024 March 29, 2024 $ 0.03 July 12, 2024 June 28, 2024 $ 0.03 October 11, 2024 September 30, 2024 $ 0.03 January 14, 2025 December 31, 2024 $ 0.23 We have declared the following dividends to holders of our Series A Preferred Stock for the years ended December 31, 2024 and 2023, and through the date of this report: Payment Date Record Date Dividend per Share March 31, 2023 March 17, 2023 $ 0.515625 June 30, 2023 June 20, 2023 $ 0.515625 September 29, 2023 September 18, 2023 $ 0.515625 December 29, 2023 December 18, 2023 $ 0.515625 March 29, 2024 March 18, 2024 $ 0.515625 June 28, 2024 June 18, 2024 $ 0.515625 September 30, 2024 September 20, 2024 $ 0.515625 December 31, 2024 December 20, 2024 $ 0.515625 Capital Expenditures The management and franchise agreements for each of our hotels provide for the establishment of separate property improvement reserves to cover, among other things, the cost of replacing and repairing furniture, fixtures and equipment at our hotels and other routine capital expenditures.
Biggest changeCapital Expenditures The management and franchise agreements for each of our hotels provide for the establishment of separate property improvement reserves to cover, among other things, the cost of replacing and repairing furniture, fixtures and equipment at our hotels and other routine capital expenditures. Contributions to the property improvement fund are calculated as a percentage of hotel revenues.
Our ADR, occupancy percentage and RevPAR performance may be impacted by macroeconomic factors such as U.S. economic conditions generally, inflation, interest rates, regional and local employment growth, personal income and corporate earnings, office vacancy rates and business relocation decisions, airport and other business and leisure travel, increased use of lodging alternatives, new hotel construction and the pricing strategies of our competitors.
Our ADR, occupancy percentage, RevPAR, and Total RevPAR performance may be impacted by macroeconomic factors such as U.S. economic conditions generally, inflation, interest rates, tariffs, regional and local employment growth, personal income and corporate earnings, office vacancy rates and business relocation decisions, airport and other business and leisure travel, increased use of lodging alternatives, new hotel construction and the pricing strategies of our competitors.
ATM Program In August 2024, our board of directors approved an “at-the-market” equity offering program (the “Current ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million.
ATM Program In August 2024, our board of directors approved an “at-the-market” equity offering program (the “ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million.
The Company is the sole general partner of our operating partnership and owns 99.5% of the limited partnership units (“common OP units”) of our operating partnership as of December 31, 2024. The remaining 0.5% of the common OP units are held by third parties and current and former executive officers of the Company.
The Company is the sole general partner of our operating partnership and owns 99.5% of the limited partnership units (“common OP units”) of our operating partnership as of December 31, 2025. The remaining 0.5% of the common OP units are held by third parties and current and former executive officers of the Company.
In making estimates of fair values for purposes of allocating purchase price we evaluate several factors, including but not limited to -56- Table of Contents comparable sales, expected future cash flows discounted at risk adjusted rates as well as industry and Company data. Direct acquisition-related costs are capitalized as a component of the acquired assets.
In making estimates of fair values for purposes of allocating purchase price we evaluate several factors, including but not limited to comparable sales, expected future cash flows discounted at risk adjusted rates as well as industry and Company data. Direct acquisition-related costs are capitalized as a component of the acquired assets.
Dividend Policy -51- Table of Contents We intend to distribute to our stockholders dividends at least equal to our REIT taxable income to avoid paying corporate income tax and excise tax on our earnings (other than the earnings of our taxable REIT subsidiaries, which are all subject to tax at regular corporate rates) and to qualify for the tax benefits afforded to REITs under the Code.
Dividend Policy We intend to distribute to our stockholders dividends at least equal to our REIT taxable income to avoid paying corporate income tax and excise tax on our earnings (other than the earnings of our taxable REIT subsidiaries, which are all subject to tax at regular corporate rates) and to qualify for the tax benefits afforded to REITs under the Code.
In addition, covenants included in our debt agreements use EBITDA as a measure of financial compliance. We also use EBITDA and EBITDA re as measures in determining the value of hotel acquisitions and dispositions. FFO The Company computes FFO in accordance with standards established by Nareit, which defines FFO as net income (calculated in accordance with U.S.
In addition, covenants included in our debt agreements use EBITDA as a measure of financial compliance. We also use EBITDA and EBITDA re as measures in determining the value of hotel acquisitions and dispositions. FFO We compute FFO in accordance with standards established by Nareit, which defines FFO as net income (calculated in accordance with U.S.
These key indicators include: • Occupancy percentage; • Average Daily Rate (“ADR”); • Rooms Revenue per Available Room (“RevPAR”); • Earnings Before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”), Earnings Before Interest, Income Taxes, Depreciation and Amortization for real estate (“EBITDA re ” ) , Adjusted EBITDA, and Hotel Adjusted EBITDA; and • Funds From Operations (“FFO”) and Adjusted FFO.
These key indicators include: • Occupancy percentage; • Average Daily Rate (“ADR”); • Rooms Revenue per Available Room (“RevPAR”); • • Total Revenue per Available Room (“Total RevPAR”); • Earnings Before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”), Earnings Before Interest, Income Taxes, Depreciation and Amortization for real estate (“EBITDA re ” ) , Adjusted EBITDA, and Hotel Adjusted EBITDA; and • Funds From Operations (“FFO”) and Adjusted FFO.
We adjust EBITDA re and FFO for the following items: • Non-Cash Lease Expense and Other Amortization : We exclude the non-cash expense incurred from the straight line recognition of expense from our ground leases and other contractual obligations and the non-cash amortization of our favorable and unfavorable contracts, originally recorded in conjunction with certain hotel acquisitions.
We adjust EBITDA re and FFO for the following items: -49- Table of Contents • Non-Cash Lease Expense and Other Amortization : We exclude the non-cash expense incurred from the straight line recognition of expense from our ground leases and other contractual obligations and the non-cash amortization of our favorable and unfavorable contracts, originally recorded in conjunction with certain hotel acquisitions.
City Center was a result of our evaluation of the recoverability of the carrying amount of the hotel due to our determination in the fourth quarter of 2024 that it is more likely than not that the hotel will be sold before the end of its previously estimated useful life.
City Center was a result of our evaluation of the recoverability of the carrying amount of the hotel due to our determination in the fourth quarter of 2024 that it was more likely than not that the hotel would be sold before the end of its previously estimated useful life.
Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Discussion of the comparison of the results of operations for the year ended December 31, 2023 to the year ended December 31, 2022 was included in our Annual Report on Form 10-K for the year ended December 31, 2023 on page 49 under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 28, 2024.
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 Discussion of the comparison of the results of operations for the year ended December 31, 2024 to the year ended December 31, 2023 was included in our Annual Report on Form 10-K for the year ended December 31, 2024 on page 47 under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 28, 2025.
The timing and actual number of shares repurchased will depend on a variety of factors, including price and general business and market conditions. The new share repurchase program does not obligate us to acquire any particular amount of shares, and may be suspended or discontinued at any time at our discretion.
The timing and actual number of shares repurchased will depend on a variety of factors, including price and general business and market conditions. The share repurchase program does not obligate us to acquire any particular amount of shares, and may be suspended or discontinued at any time at our discretion. The share repurchase program will expire on May 1, 2026.
We believe that it is prudent to reduce the inherent risk of highly cyclical lodging fundamentals through a low leverage capital structure. We prefer a relatively simple yet efficient capital structure.
We believe that it is prudent to reduce the inherent risk of highly cyclical lodging fundamentals through a low leverage capital structure. -45- Table of Contents We prefer a relatively simple yet efficient capital structure.
See Note 9 for additional disclosures related to common OP units. Key Indicators of Financial Condition and Operating Performance We use a variety of operating and other information to evaluate the financial condition and operating performance of our business. These key indicators include financial information that is prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S.
See Note 9 for additional disclosures related to common OP units. Key Indicators of Financial Condition and Operating Performance We use a variety of operating and other information to evaluate the financial condition and operating performance of our business. These key indicators include financial information that is prepared in accordance with U.S.
Room revenue comprised approximately 66% of our total revenues for the year ended December 31, 2024 and is dictated by demand, as measured by occupancy percentage, pricing, as measured by ADR, and our available supply of hotel rooms.
Room revenue comprised approximately 65% of our total revenues for the year ended December 31, 2025 and is dictated by demand, as measured by occupancy percentage, pricing, as measured by ADR, and our available supply of hotel rooms.
The Company computes EBITDA re in accordance with the National Association of Real Estate Investment Trusts ("Nareit") guidelines, as defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate." EBITDA re represents net income (calculated in accordance with U.S.
The Company computes EBITDA re in accordance with the National Association of Real Estate Investment Trusts (“Nareit”) guidelines, as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate.” EBITDA re represents net income (calculated in accordance with U.S.
Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotels, renovations and other capital expenditures that need to be made periodically to our hotels, scheduled debt payments, debt maturities, certain redemptions of limited operating partnership units (“common OP units”), ground lease payments, share -49- Table of Contents repurchases, and making distributions to our common and preferred stockholders.
Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotels, renovations and other capital expenditures that need to be made periodically to our hotels, scheduled debt payments, debt maturities, certain redemptions of common OP units, ground lease payments, share repurchases, and making distributions to our common stockholders.
Liquidity and Capital Resources Our short-term liquidity requirements consist primarily of funds necessary to pay our scheduled debt service, near term debt maturities, operating expenses, ground lease payments, capital expenditures directly associated with our hotels, any share repurchases, distributions to our common and preferred stockholders, and the cost of acquiring additional hotels.
Liquidity and Capital Resources Our short-term liquidity requirements consist primarily of funds necessary to pay our scheduled debt service, operating expenses, ground lease payments, capital expenditures directly associated with our hotels, any share repurchases, and distributions to our common stockholders.
The markets that we target are those that we believe align with our strategic objectives, which include investing in assets in destination markets with constrained supply trends, those that provide geographic diversity relative to our existing portfolio, and those markets that are considered to have high growth potential.
The markets that we target for ownership are those that we believe align with our strategic objectives, which include those in destination markets with constrained supply trends, those that provide geographic diversity relative to our existing portfolio, and those we consider to have high demand growth potential.
As of -52- Table of Contents December 31, 2024, we have set aside $44.7 million for capital projects in property improvement funds, which are included in restricted cash on our consolidated balance sheets. We invested approximately $81.6 million in capital improvements at our hotels during the year ended December 31, 2024.
As of December 31, 2025, we have set aside $35.1 million for capital projects in property improvement funds, which are included in restricted cash on our consolidated balance sheets. We invested approximately $81.6 million in capital improvements at our hotels during the year ended December 31, 2025.
We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and regional basis. ADR and RevPAR include only room revenue.
We evaluate individual hotel RevPAR and Total RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and regional basis.
Contributions to the property improvement fund are calculated as a percentage of hotel revenues. In addition, we may be required to pay for the cost of certain additional improvements that are not permitted to be funded from the property improvement reserves under the applicable management or franchise agreement.
In addition, we may be required to pay for the cost of certain additional improvements that are not permitted to be funded from the property improvement reserves under the applicable management or franchise agreement.
We expect our estimated uses of cash for the year ending December 31, 2025 will be scheduled debt service and maturity payments, potential acquisitions of hotel properties, capital expenditures, operating costs, ground lease payments, corporate expenses, distributions to preferred and common stockholders, and potential share repurchases.
We expect our estimated uses of cash for the year ending December 31, 2026 will be debt service payments, potential acquisitions of hotel properties, capital expenditures, distributions to common stockholders, share repurchases, and corporate expenses.
We conduct our business through a traditional umbrella partnership REIT, or UPREIT, in which our hotel properties are owned by our operating partnership, DiamondRock Hospitality Limited Partnership, or subsidiaries of our operating partnership.
We are a REIT for U.S. federal income tax purposes. We conduct our business through a traditional umbrella partnership REIT, or UPREIT, in which our hotel properties are owned by our operating partnership, DiamondRock Hospitality Limited Partnership, or subsidiaries of our operating partnership.
We exclude the effect of these adjustments, which include the accounting impact from prior periods, because they do not reflect the Company’s actual underlying performance for the current period. • Gains or Losses from Early Extinguishment of Debt : We exclude the effect of gains or losses recorded on the early extinguishment of debt because these gains or losses result from transaction activity related to the Company’s capital structure that we believe are not indicative of the ongoing operating performance of the Company or our hotels. • Hotel Acquisition Costs : We exclude hotel acquisition costs expensed during the period because we believe these transaction costs are not reflective of the ongoing performance of the Company or our hotels. • Severance Costs : We exclude corporate severance costs, or reversals thereof, incurred with the termination of corporate-level employees and severance costs incurred at our hotels related to lease terminations or structured -54- Table of Contents severance programs because we believe these costs do not reflect the ongoing performance of the Company or our hotels. • Hotel Manager Transition and Hotel Pre-Opening Costs : We exclude the transition costs associated with a change in hotel manager and the pre-opening costs associated with the redevelopment or rebranding of a hotel because we believe these items do not reflect the ongoing performance of the Company or our hotels. • Other Items : From time to time we incur costs or realize gains that we consider outside the ordinary course of business and that we do not believe reflect the ongoing performance of the Company or our hotels.
We exclude the effect of these adjustments, which include the accounting impact from prior periods, because they do not reflect the Company’s actual underlying performance for the current period. • Gains or Losses from Debt Extinguishment : We exclude the effect of gains or losses recorded on the debt extinguishment because these gains or losses result from transaction activity related to the Company’s capital structure that we believe are not indicative of the ongoing operating performance of the Company or our hotels. • Hotel Acquisition Costs : We exclude hotel acquisition costs expensed during the period because we believe these transaction costs are not reflective of the ongoing performance of the Company or our hotels. • Severance Costs : We exclude corporate severance costs, or reversals thereof, incurred with the termination of corporate-level employees and severance costs incurred at our hotels related to lease terminations or structured severance programs because we believe these costs do not reflect the ongoing performance of the Company or our hotels. • Hotel Manager Transition and Hotel Pre-Opening Costs : We exclude the transition costs associated with a change in hotel manager and the pre-opening costs associated with the redevelopment or rebranding of a hotel because we believe these items do not reflect the ongoing performance of the Company or our hotels. • Share-Based Compensation Expense: We exclude share-based compensation expense as it is a non-cash item.
Senior Unsecured Credit Facility and Unsecured Term Loans We are party to a Sixth Amended and Restated Credit Agreement that provides us with a $400 million senior unsecured revolving credit facility and two term loan facilities in the aggregate amount of $800 million.
Senior Unsecured Credit Facility and Unsecured Term Loans Prior to July 22, 2025, we were party to a Sixth Amended and Restated Credit Agreement that provided us with a $400.0 million senior unsecured revolving credit facility and two term loan facilities in the aggregate amount of $800.0 million.
The Company believes that the presentation of FFO provides useful information to investors regarding its operating performance because it is a measure of the Company's operations without regard to specified non-cash items, such as real estate related depreciation and amortization and gains or losses on the sale of assets.
We believe that the presentation of FFO provides useful information to investors regarding its operating performance because it is a measure of our operations without regard to specified non-cash items, such as real estate related depreciation and amortization and gains or losses on the sale of assets. We also use FFO as one measure in assessing our operating results.
In addition, our ADR, occupancy percentage and RevPAR performance is dependent on the continued success of our hotels' global brands. We also use EBITDA, EBITDA re , Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO as measures of the financial performance of our business. See “Non-GAAP Financial Measures” for further discussion on these financial measures.
In addition, our ADR, occupancy percentage, RevPAR, and Total RevPAR performance is dependent on the continued success of our hotels' global brands and our hotel operators. We also use EBITDA, EBITDA re , Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO as measures of the financial performance of our business.
We believe that we maintain a reasonable amount of debt. As of December 31, 2024, we had $1.1 billion of debt outstanding with a weighted average interest rate of 5.21% and a weighted average maturity date of approximately 1.7 years, assuming all extension options available in our debt agreements are exercised.
We believe that we maintain a reasonable amount of debt. As of December 31, 2025, we had $1.1 billion of debt outstanding with a weighted average interest rate of 4.98%, which includes the effect of interest rate swaps, and a weighted average maturity date of approximately 3.6 years, assuming all extension options available in our debt agreements are exercised.
Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from the Company’s accounts and any resulting gain or loss is included in the statements of operations and comprehensive income. Inflation Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation.
Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from the Company’s accounts and any resulting gain or loss is included in the statements of operations and comprehensive income.
Use and Limitations of Non-GAAP Financial Measures Our management and Board of Directors use EBITDA, EBITDA re , Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies.
EBITDA, EBITDA re , Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO, as calculated by us, may not be comparable to other companies that do not define such terms exactly as the Company. -48- Table of Contents Use and Limitations of Non-GAAP Financial Measures Our management and Board of Directors use EBITDA, EBITDA re , Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies.
Occupancy, ADR and RevPAR are commonly used measures within the hotel industry to evaluate operating performance. RevPAR, which is calculated as the product of ADR and occupancy percentage, is an important statistic for monitoring operating performance at the individual hotel level and across our business as a whole.
Occupancy, ADR, RevPAR, and Total RevPAR are commonly used measures within the hotel industry to evaluate operating performance. RevPAR, which is calculated as the product of ADR and occupancy percentage, and Total RevPAR, which is calculated as total revenues divided by room nights available, are important statistics for monitoring operating performance at the individual hotel level and across our portfolio.
Such items may include, but are not limited to, the following: lease preparation costs incurred to prepare vacant space for marketing; management or franchise contract termination fees; gains or losses from legal settlements; costs incurred related to natural disasters; and gains on property insurance claim settlements, other than income related to business interruption insurance.
Such items may include, but are not limited to, the following: non-cash realized gains or losses on our deferred compensation plan assets; management or franchise contract termination fees; terminated transaction costs; gains or losses from legal settlements; costs incurred related to natural disasters; and gains on property insurance claim settlements, other than income related to business interruption insurance.
Our Financing Strategy Since our formation in 2004, we have been committed to a conservative capital structure with prudent leverage. Our outstanding debt consists of fixed interest rate mortgage debt, unsecured term loans and periodic borrowings on our senior unsecured credit facility.
Our Financing Strategy Since our formation in 2004, we have been committed to a conservative capital structure with prudent leverage. Our outstanding debt consists of unsecured term loans and periodic borrowings on our senior unsecured credit facility. We have a preference to maintain a significant portion of our portfolio as unencumbered in order to provide balance sheet flexibility.
Our net cash used in financing activities was $150.7 million for the year ended December 31, 2024, which consisted of $25.6 million of distributions paid to holders of common stock and common units, $9.8 million of distributions paid to holders of preferred stock, $9.1 million of scheduled mortgage debt principal payments, $73.3 million of repayments of mortgage debt, $6.9 million paid to repurchase shares upon the vesting of restricted stock for the payment of tax withholdings obligations, and $26.0 million paid to repurchase shares under our share repurchase program.
Our net cash used in financing activities was $276.7 million for the year ended December 31, 2025, which consisted of $295.8 million of mortgage debt principal payments, $119.0 million paid for the redemption of our preferred stock, $98.3 million of distributions paid to holders of common stock and common units, $37.1 million of common shares repurchased under our share repurchase program, $11.6 million of financing costs, $9.8 million of distributions paid to holders of preferred stock, $5.1 million paid to repurchase shares upon the vesting of restricted stock for the payment of tax withholdings obligations, partially offset by $300.0 million of term loan proceeds.
As an owner, we receive all of the operating profits or losses generated by our hotels after we pay fees to the hotel managers and hotel brands, which are based on the revenues and profitability of the hotels. We are a real estate investment trust (“REIT”) for U.S. federal income tax purposes.
As an owner, we receive all operating profits or losses generated by our hotels after we pay fees to the hotel managers, which are based on the revenues and profitability of the hotels, and the hotel brands, in certain cases, which are based on the revenues of the hotels.
We have a preference to maintain a significant portion of our portfolio as unencumbered in order to provide balance sheet flexibility. We expect that our strategy will enable us to maintain a balance sheet with an appropriate amount of debt throughout all phases of the lodging cycle.
As of December 31, 2025, our portfolio is fully unencumbered by secured debt. We expect that our strategy will enable us to maintain a balance sheet with an appropriate amount of debt throughout all phases of the lodging cycle.
Results of Operations At December 31, 2024 and 2023, we owned 37 and 36 hotels, respectively. All properties owned during these periods have been included in our results of operations during the respective periods since their date of acquisition.
Results of Operations Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024 All properties owned during these periods have been included in our results of operations during the respective periods since their date of acquisition.
Overview DiamondRock Hospitality Company (the “Company” or “we”) is a lodging-focused real estate company that owns a portfolio of premium hotels and resorts. As of December 31, 2024, we owned 37 hotels with 10,004 rooms located in 26 different markets in the U.S.
Overview DiamondRock Hospitality Company (the “Company”, “we”, or "our") is a self-managed and self-administered lodging-focused real estate investment trust ("REIT") that owns a portfolio of premium hotels and resorts. As of December 31, 2025, we owned 35 hotels with 9,595 rooms located in 26 markets in the United States.
We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure. -53- Table of Contents EBITDA and EBITDA re EBITDA represents net income (calculated in accordance with U.S.
We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure. EBITDA and EBITDA re EBITDA represents net income (calculated in accordance with U.S. GAAP) excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; and (3) depreciation and amortization.
City Center (2) Washington, D.C. 410 69.5 % 244.68 170.10 6.3 % The Dagny Boston Boston, Massachusetts 403 85.5 % 277.32 236.99 9.3 % The Hythe Vail Vail, Colorado 344 59.8 % 425.03 254.21 3.3 % Courtyard New York Manhattan/Midtown East New York, New York 321 92.3 % 357.72 330.11 6.1 % Atlanta Marriott Alpharetta Atlanta, Georgia 318 64.4 % 157.97 101.66 (0.5) % The Gwen Chicago, Illinois 311 75.2 % 296.64 222.93 0.7 % Hilton Garden Inn New York/Times Square Central New York, New York 282 92.0 % 280.33 257.81 2.3 % Embassy Suites by Hilton Bethesda Bethesda, Maryland 272 69.7 % 175.06 122.07 4.8 % Hotel Champlain Burlington Burlington, Vermont 258 74.6 % 235.51 175.69 (6.7) % Henderson Beach Resort Destin, Florida 269 53.1 % 406.38 215.61 (10.0) % AC Hotel Minneapolis Downtown (3) Minneapolis, Minnesota 245 39.4 % 136.45 53.73 13.4 % Kimpton Hotel Palomar Phoenix Phoenix, Arizona 242 75.1 % 222.82 167.41 (0.8) % Bourbon Orleans Hotel New Orleans, Louisiana 220 68.5 % 249.85 171.10 (6.1) % Hotel Clio Denver, Colorado 199 77.9 % 304.46 237.26 5.2 % Courtyard New York Manhattan/Fifth Avenue New York, New York 189 91.5 % 306.10 280.11 1.4 % Margaritaville Beach House Key West Key West, Florida 186 82.3 % 396.94 326.63 (0.8) % The Lodge at Sonoma Resort Sonoma, California 182 67.3 % 405.07 272.43 0.1 % Courtyard Denver Downtown Denver, Colorado 177 77.2 % 202.95 156.69 (3.9) % The Lindy Renaissance Charleston Hotel Charleston, South Carolina 167 87.8 % 344.88 302.80 (1.7) % Kimpton Shorebreak Huntington Beach Resort Huntington Beach, California 157 82.1 % 312.59 256.56 (2.9) % Cavallo Point, The Lodge at the Golden Gate Sausalito, California 142 60.3 % 574.60 346.53 5.8 % Chico Hot Springs Resort & Day Spa Pray, Montana 117 70.4 % 205.35 144.62 15.2 % Havana Cabana Key West Key West, Florida 106 77.7 % 293.52 227.99 (8.8) % Tranquility Bay Beachfront Resort Marathon, Florida 103 73.7 % 601.79 443.56 (8.4) % Hotel Emblem San Francisco San Francisco, California 96 59.9 % 195.52 117.20 (24.0) % Kimpton Shorebreak Fort Lauderdale Beach Resort Fort Lauderdale, Florida 96 73.7 % 203.39 149.98 4.9 % L'Auberge de Sedona Sedona, Arizona 88 67.3 % 886.86 597.16 2.6 % The Landing Lake Tahoe Resort & Spa South Lake Tahoe, California 82 60.7 % 415.66 252.27 9.5 % Orchards Inn Sedona Sedona, Arizona 70 50.0 % 293.23 146.71 (16.7) % Lake Austin Spa Resort Austin, Texas 40 57.8 % 1,012.08 585.19 (6.1) % Henderson Park Inn Destin, Florida 37 65.6 % 575.56 377.33 (8.0) % TOTAL/WEIGHTED AVERAGE 10,004 72.8 % $ 284.63 $ 207.30 2.5 % ________________ (1) The percentage change from 2023 RevPAR reflects the comparable period in 2023 to our 2024 ownership period.
City Center (1) Washington, D.C. 410 45.4 % 254.66 115.57 153.18 4.9 % The Dagny Boston Boston, Massachusetts 403 85.4 % 295.92 252.62 281.05 6.6 % The Hythe Vail Vail, Colorado 344 57.1 % 434.91 248.32 389.33 (1.3) % Courtyard New York Manhattan/Midtown East New York, New York 321 90.9 % 356.47 323.96 333.80 (2.3) % Atlanta Marriott Alpharetta Atlanta, Georgia 318 65.5 % 164.41 107.65 157.03 6.0 % The Gwen Chicago, Illinois 311 74.1 % 318.29 235.78 351.57 5.7 % Hilton Garden Inn New York/Times Square Central New York, New York 282 90.7 % 295.95 268.52 298.73 3.5 % Embassy Suites by Hilton Bethesda Bethesda, Maryland 272 65.6 % 166.35 109.18 128.26 (8.4) % Hotel Champlain Burlington Burlington, Vermont 258 69.6 % 225.25 156.74 229.32 (5.1) % Henderson Beach Resort Destin, Florida 270 56.2 % 379.44 213.40 432.04 7.3 % AC Hotel Minneapolis Downtown (2) Minneapolis, Minnesota 245 59.7 % 157.50 94.04 109.19 (2.7) % Kimpton Hotel Palomar Phoenix Phoenix, Arizona 242 67.7 % 240.60 162.92 274.61 (1.8) % Bourbon Orleans Hotel New Orleans, Louisiana 220 68.0 % 239.49 162.87 213.33 (1.9) % Hotel Clio Denver, Colorado 199 77.8 % 315.61 245.52 419.90 4.5 % Courtyard New York Manhattan/Fifth Avenue New York, New York 189 97.7 % 326.23 318.72 324.42 13.1 % L'Auberge de Sedona (3) Sedona, Arizona 158 49.6 % 733.64 363.88 674.38 (3.5) % Margaritaville Beach House Key West Key West, Florida 186 82.7 % 376.79 311.50 425.03 (4.1) % The Lodge at Sonoma Resort Sonoma, California 182 70.9 % 420.81 298.30 474.93 7.2 % Courtyard Denver Downtown Denver, Colorado 177 78.8 % 212.38 167.44 188.38 7.6 % The Lindy Renaissance Charleston Hotel Charleston, South Carolina 167 88.0 % 346.00 304.47 394.72 5.0 % Kimpton Shorebreak Huntington Beach Resort Huntington Beach, California 157 79.7 % 301.02 239.87 362.58 (2.7) % Cavallo Point, The Lodge at the Golden Gate Sausalito, California 142 59.7 % 591.24 352.90 927.11 1.9 % Chico Hot Springs Resort & Day Spa Pray, Montana 117 67.1 % 225.43 151.32 355.89 (1.4) % Havana Cabana Key West Key West, Florida 106 62.9 % 269.13 169.29 247.74 (20.3) % Tranquility Bay Beachfront Resort Marathon, Florida 103 70.2 % 598.88 420.39 539.69 (5.5) % Hotel Emblem San Francisco San Francisco, California 96 61.3 % 205.47 126.04 154.10 3.8 % Kimpton Shorebreak Fort Lauderdale Beach Resort Fort Lauderdale, Florida 96 71.6 % 202.63 145.12 287.08 5.5 % The Landing Lake Tahoe Resort & Spa South Lake Tahoe, California 82 60.9 % 421.17 256.68 468.60 2.9 % Lake Austin Spa Resort Austin, Texas 40 52.0 % 1,041.28 541.54 1,330.79 (3.1) % Henderson Park Inn Destin, Florida 37 68.8 % 574.13 394.77 658.31 9.3 % TOTAL/WEIGHTED AVERAGE 10,005 71.9 % $ 287.51 $ 206.86 $ 318.12 1.2 % ________________ (1) The percentage change from 2024 RevPAR reflects the comparable period in 2024 to our 2025 ownership period from January 1, 2025 until the hotel was sold on February 19, 2025.
GAAP”), as well as other financial information that is not prepared in accordance with U.S. -44- Table of Contents GAAP. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the performance of individual hotels, groups of hotels and/or our business as a whole.
Generally Accepted -40- Table of Contents Accounting Principles (“U.S. GAAP”), as well as other financial information that is not prepared in accordance with U.S. GAAP. In addition, we use other information that may not be financial in nature, including statistical information and comparative data.
Our interest expense increased $0.4 million from $65.1 million for the year ended December 31, 2023 to $65.5 million for the year ended December 31, 2024, and was comprised of the following (in thousands): Year Ended December 31, Change 2024 2023 $ % Mortgage debt interest $ 14,753 $ 16,436 $ (1,683) (10.2) % Term loan interest 47,232 43,294 3,938 9.1 Credit facility interest and unused fees 1,253 1,256 (3) (0.2) Amortization of debt issuance costs 1,967 2,053 (86) (4.2) Interest rate swap mark-to-market — 2,033 (2,033) (100.0) Finance lease expense (1) 311 — 311 100.0 $ 65,516 $ 65,072 $ 444 0.7 % (1) In October 2024, we extended the term on one of our ground leases, and, as a result, the lease classification changed from an operating lease to a finance lease.
Our interest expense was comprised of the following (in thousands): -44- Table of Contents Year Ended December 31, Change 2025 2024 $ % Unsecured term loan interest $ 50,394 $ 47,232 $ 3,162 6.7 % Mortgage debt interest 7,211 14,753 (7,542) (51.1) Credit facility interest and unused fees 1,337 1,253 84 6.7 Amortization of debt issuance costs 1,972 1,967 5 0.3 Finance lease expense (1) 1,884 311 1,573 505.8 $ 62,798 $ 65,516 $ (2,718) (4.1) % (1) In October 2024, we extended the term on one of our ground leases, and, as a result, the lease classification changed from an operating lease to a finance lease.
We currently anticipate our significant sources of cash for the year ending December 31, 2025 will be the net cash flow from hotel operations, proceeds from the sale of the Westin Washington D.C. City Center, and proceeds from debt financings or sales of debt securities.
We currently anticipate our significant sources of cash for the year ending December 31, 2026 will be net cash flow from hotel operations and potential dispositions.
As of December 31, 2024, we had $400 million of borrowing capacity under our senior unsecured revolving credit facility. Additional information about the credit and term loan facilities, including a summary of significant covenants, can be found in Note 5 to the accompanying consolidated financial statements.
Additional information about the Amended Credit Facility, including a summary of significant covenants, can be found in Note 5 to the accompanying consolidated financial statements. Sources and Uses of Cash As of December 31, 2025, we had $68.1 million of unrestricted corporate cash and $35.1 million of restricted cash, and no outstanding borrowings on our Revolving Credit Facility.
Critical Accounting Estimates and Policies Our consolidated financial statements include the accounts of DiamondRock Hospitality Company and all consolidated subsidiaries. The preparation of financial statements in conformity with U.S.
(3) During the year ended December 31, 2024, we incurred severance costs related to the executive team changes that occurred in April 2024. Critical Accounting Estimates and Policies Our consolidated financial statements include the accounts of DiamondRock Hospitality Company and all consolidated subsidiaries. The preparation of financial statements in conformity with U.S.
Generally, our management companies may adjust room rates daily, excluding previous contractually committed reservations. However, competitive pressures or other factors may limit the ability of our management companies to raise room rates.
Inflation -52- Table of Contents Operators of hotels generally possess the ability to adjust room rates on a daily basis to reflect the effects of inflation. Our management companies may adjust room rates daily, excluding previously contractually committed reservations. However, competitive pressures, demand elasticity, or other market factors may limit the ability of our management companies to increase room rates.
Our Hotels The following table sets forth certain operating information for the year ended December 31, 2024 for each of the hotels we owned during 2024. -45- Table of Contents Property Location Number of Rooms Occupancy (%) ADR ($) RevPAR($) % Change from 2023 RevPAR (1) Chicago Marriott Downtown Magnificent Mile Chicago, Illinois 1,200 63.4 % $ 257.60 $ 163.27 11.3 % Westin Boston Seaport District Boston, Massachusetts 793 83.6 % 265.23 221.75 9.7 % Salt Lake City Marriott Downtown at City Creek Salt Lake City, Utah 510 66.5 % 192.28 127.86 9.3 % Worthington Renaissance Fort Worth Hotel Fort Worth, Texas 504 70.7 % 206.33 145.86 0.7 % Westin San Diego Bayview San Diego, California 436 72.0 % 229.57 165.35 0.1 % Westin Fort Lauderdale Beach Resort Fort Lauderdale, Florida 432 78.1 % 254.95 199.04 1.3 % Westin Washington D.C.
Our Hotels The following table sets forth certain operating information for the year ended December 31, 2025 for each of the hotels we owned during 2025. -41- Table of Contents Property Location Number of Rooms Occupancy (%) ADR ($) RevPAR($) Total RevPAR ($) % Change from 2024 Total RevPAR Chicago Marriott Downtown Magnificent Mile Chicago, Illinois 1,200 63.2 % $ 262.61 $ 166.04 $ 276.52 2.0 % Westin Boston Seaport District Boston, Massachusetts 793 82.1 % 274.08 224.97 347.67 (0.2) % Salt Lake City Marriott Downtown at City Creek Salt Lake City, Utah 510 68.5 % 203.47 139.47 193.65 6.8 % Worthington Renaissance Fort Worth Hotel Fort Worth, Texas 504 71.8 % 202.16 145.12 271.37 0.7 % Westin San Diego Bayview San Diego, California 436 77.7 % 224.08 174.05 241.98 8.8 % Westin Fort Lauderdale Beach Resort Fort Lauderdale, Florida 432 74.9 % 253.60 190.03 410.86 (3.8) % Westin Washington D.C.
Inflation may also affect our expenses and cost of capital improvements, including, without limitation, by increasing the costs of labor, employee-related benefits, food, commodities and other materials, taxes, property and casualty insurance and utilities. During 2024, inflation levels began to decrease, but remained elevated relative to the years preceding 2021.
Inflation may also affect our operating expenses and the cost of capital improvements, including, without limitation, increases in costs of labor, employee-related benefits, food, commodities and other materials, taxes, property and casualty insurance and utilities. Refer to “Outlook for 2026” above for more information regarding inflation.
Our cash from operations generally consists of the net cash flow from hotel operations, offset by cash paid for corporate expenses, interest payments, and other working capital changes. The decrease in cash provided by operations was primarily driven by timing differences related to collections from our hotel managers and severance payments related to our previously announced leadership changes.
Our net cash provided by operations was $243.7 million for the year ended December 31, 2025. Our cash from operations generally consists of the net cash flow from hotel operations, offset by cash paid for corporate expenses, interest payments, and other working capital changes.
GAAP net income to FFO and Adjusted FFO (in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 48,250 $ 86,635 $ 109,705 Real estate related depreciation and amortization 113,588 111,302 108,849 Impairment losses 34,169 941 2,843 Loss on sale of hotel properties (1) — — 1,659 FFO 196,007 198,878 223,056 Distributions to preferred stockholders (9,817) (9,817) (9,817) FFO available to common stock and unit holders 186,190 189,061 213,239 Non-cash lease expense and other amortization 6,092 6,156 6,226 Loss on early extinguishment of debt — — 9,766 Hotel pre-opening costs 1,006 1,246 — Hotel manager transition items — — 1,164 Severance costs (2) 20,362 — (532) Fair value adjustments to interest rate swaps — 2,033 (13,914) Adjusted FFO available to common stock and unit holders $ 213,650 $ 198,496 $ 215,949 _______________ (1) During the year ended December 31, 2022, we recognized an incremental loss of $1.7 million due to post-closing adjustments related to hotels sold in 2021.
GAAP net income to FFO and Adjusted FFO (in thousands): Year Ended December 31, 2025 2024 (As Adjusted) (1) 2023 (As Adjusted) (1) Net income $ 101,942 $ 48,250 $ 86,635 Real estate related depreciation and amortization 113,107 113,588 111,302 Impairment losses 1,076 34,169 941 FFO 216,125 196,007 198,878 Distributions to preferred stockholders (9,817) (9,817) (9,817) FFO available to common stock and unit holders 206,308 186,190 189,061 Non-cash lease expense and other amortization 5,891 6,092 6,156 Share-based compensation expense 7,350 7,458 9,463 Terminated transaction costs 1,058 — — Loss on debt extinguishment 5,850 — — Severance costs (3) — 20,362 — Hotel pre-opening costs 501 1,006 1,246 Fair value adjustments to interest rate swaps — — 2,033 Adjusted FFO available to common stock and unit holders $ 226,958 $ 221,108 $ 207,959 _______________ -51- Table of Contents (1) Effective January 1, 2025, we exclude share-based compensation from our calculation of Adjusted FFO.
Other revenues, which primarily represent spa, parking, resort fees and attrition and cancellation fees, increased $7.9 million from the year ended December 31, 2023 to the year ended December 31, 2024, $1.5 million of which was due to non-comparable properties. The remaining increase of $6.4 million was primarily due to increases in resort fees and parking revenues. Hotel operating expenses.
Other revenues, which primarily represent spa, parking, resort fees and attrition and cancellation fees, increased $4.5 million from the year ended December 31, 2024 to the year ended December 31, 2025, primarily due to an increase in spa revenue, parking revenue, and resort fees, including the implementation of a resort fee at the Bourbon Orleans Hotel and The Lindy Renaissance Charleston Hotel.
Based on when a property was acquired, operating results for certain properties are not comparable for the year ended December 31, 2024 and 2023.
Based on when a property was acquired, operating results for certain properties are not comparable for the year ended December 31, 2025 and 2024. The AC Hotel Minneapolis Downtown was acquired on November 12, 2024 and will hereinafter be referred to as our “2024 Acquisition.” The Westin Washington D.C.
The impairment adjusts the hotel's carrying amount to its estimated fair value less costs to sell. During the year ended December 31, 2023, we recorded an impairment loss of $0.9 million related to the write-off of construction in progress that was determined not to be recoverable. Corporate expenses.
During the year ended December 31, 2025, we recorded an impairment loss of $1.1 million related to the write-off of construction in progress that was determined not to be recoverable. During the year ended December 31, 2024, we recorded impairment losses of $32.6 million related to the Westin Washington D.C.
Our corporate expenses increased $20.9 million, from $32.0 million for the year ended December 31, 2023 to $52.9 million for the year ended December 31, 2024, primarily due to $20.4 million of severance expense recognized due to the leadership changes announced in April 2024. -48- Table of Contents Business interruption insurance income.
Our corporate expenses decreased $18.5 million, from $52.9 million for the year ended December 31, 2024 to $34.4 million for the year ended December 31, 2025, primarily due to severance expense recognized during the year ended December 31, 2024, in connection with executive leadership changes made in April 2024. Interest expense.
Additionally, elevated interest rates continue to impact real estate financing and transaction activity, influencing capital allocation decisions within the industry. Our portfolio, which consists primarily of luxury and upper upscale hotels and resorts in major urban centers and desirable leisure destinations, is well positioned for continued resilient performance.
Our portfolio, which consists primarily of luxury and upper upscale hotels and resorts in major urban centers and desirable leisure destinations, is well positioned for continued resilient performance. Our portfolio is relatively insulated from competitive new supply and the majority of our hotels are marketed to higher-income consumers.
Our hotels are concentrated in major urban markets and in destination resort locations and more than 60% of our hotels are operated under a brand owned by one of the leading global lodging brand companies (Marriott International, Inc., Hilton Worldwide, or IHG Hotels & Resorts). We are an owner, as opposed to an operator, of the hotels in our portfolio.
Each hotel is positioned to maximize its cash flow and value; accordingly, we choose to operate nearly 40% of our portfolio as an independent hotel and the remainder are operated under a brand owned by one of the leading global lodging brand companies (Marriott International, Hilton Worldwide, or IHG Hotels & Resorts).
We periodically compare historical information to our internal budgets as well as industry-wide information.
We use this information to measure the performance of individual hotels, groups of hotels and/or our business as a whole. We periodically compare historical information to our internal budgets as well as industry-wide information.
Corporate expenses principally consist of employee-related costs, including base payroll, bonus, restricted stock and severance. Corporate expenses also include corporate operating costs, professional fees and directors’ fees.
The impairment adjusted the hotel's carrying amount to its estimated fair value less costs to sell. Corporate expenses. Corporate expenses principally consist of employee-related costs, including payroll, bonus, share-based compensation and benefits. Corporate expenses also include corporate operating costs, professional fees and directors' fees.
The operating expenses consisted of the following (in thousands): Year Ended December 31, Change 2024 2023 $ % Rooms $ 186,131 $ 176,765 $ 9,366 5.3 % Food and beverage 193,331 180,546 12,785 7.1 Other departmental and support expenses 268,563 261,536 7,027 2.7 Management fees 27,149 24,998 2,151 8.6 Franchise fees 39,724 35,738 3,986 11.2 Other property-level expenses 103,347 102,177 1,170 1.1 Total hotel operating expenses $ 818,245 $ 781,760 $ 36,485 4.7 % Our hotel operating expenses increased $36.5 million from $781.8 million for the year ended December 31, 2023 to $818.2 million for the year ended December 31, 2024, $8.3 million of which was due to the acquisition of non-comparable properties.
The operating expenses consisted of the following (in thousands): Year Ended December 31, Change 2025 2024 $ % Rooms $ 182,694 $ 186,131 $ (3,437) (1.8) % Food and beverage 191,172 193,331 (2,159) (1.1) Other departmental and support expenses 270,698 268,563 2,135 0.8 Management fees 25,838 27,149 (1,311) (4.8) Franchise fees 38,360 39,724 (1,364) (3.4) Other property-level expenses 100,542 103,347 (2,805) (2.7) Total hotel operating expenses $ 809,304 $ 818,245 $ (8,941) (1.1) % Our hotel operating expenses decreased $8.9 million from $818.2 million for the year ended December 31, 2024 to $809.3 million for the year ended December 31, 2025, with $20.6 million of such decrease attributable to our 2025 Disposition, partially offset by an increase of $7.3 million due to our 2024 Acquisition.
Our depreciation and amortization expense increased $2.3 million from $111.3 million for the year ended December 31, 2023 to $113.6 million for the year ended December 31, 2024, primarily due to the acquisition of the non-comparable properties. Impairment losses. During the year ended December 31, 2024, we recorded impairment losses of $32.6 million related to the Westin Washington D.C.
Our depreciation and amortization expense decreased $0.5 million from $113.6 million for the year ended December 31, 2024 to $113.1 million for the year ended December 31, 2025, primarily due to our 2025 Disposition. Impairment losses.
Revenue consists of the following (in thousands): Year Ended December 31, Change 2024 2023 $ % Rooms $ 742,626 $ 717,447 $ 25,179 3.5 % Food and beverage 281,682 259,757 21,925 8.4 Other 105,575 97,663 7,912 8.1 Total revenues $ 1,129,883 $ 1,074,867 $ 55,016 5.1 % Our total revenues increased $55.0 million from $1,074.9 million for the year ended December 31, 2023 to $1,129.9 million for the year ended December 31, 2024.
Revenue consists of the following (in thousands): Year Ended December 31, Change 2025 2024 $ % Rooms $ 728,606 $ 742,626 $ (14,020) (1.9) % Food and beverage 281,793 281,682 111 — Other 110,092 105,575 4,517 4.3 Total revenues $ 1,120,491 $ 1,129,883 $ (9,392) (0.8) % The following are key hotel operating statistics for the years ended December 31, 2025 and 2024.
As of December 31, 2024, 34 of our 37 hotels are unencumbered by mortgage debt. We remain committed to our core strategy of prudent leverage.
We remain committed to our core strategy of prudent leverage.
The repositioning will integrate the hotel with the adjacent L'Auberge de Sedona and include construction of a new pool connecting the two properties, renovation of the guestrooms and creation of a new arrival experience and new outdoor event space.
Completed projects in 2025 included the following: • Hilton Garden Inn New York/Times Square Central: We completed a renovation of the hotel's guestrooms during the first quarter of 2025. • Sedona Repositioning: We completed the repositioning of Orchards Inn as the Cliffs at L'Auberge during the third quarter of 2025, which integrated the hotel with the adjacent L'Auberge de Sedona and included construction of a new hillside pool and path connecting the two properties, renovation of the guestrooms and creation of a new arrival experience and new outdoor event space.
GAAP net income to EBITDA, EBITDA re, Adjusted EBITDA and Hotel Adjusted EBITDA (in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 48,250 $ 86,635 $ 109,705 Interest expense 65,516 65,072 38,283 Income tax expense 1,541 317 2,607 Real estate related depreciation and amortization 113,588 111,302 108,849 EBITDA 228,895 263,326 259,444 Impairment losses 34,169 941 2,843 Loss on sale of hotel properties (1) — — 1,659 EBITDA re 263,064 264,267 263,946 Non-cash lease expense and other amortization 5,970 6,156 6,226 Loss on early extinguishment of debt — — 9,766 Hotel pre-opening costs 1,006 1,246 — Hotel manager transition items — — 1,164 Severance costs (2) 20,362 — (532) Adjusted EBITDA $ 290,402 $ 271,669 $ 280,570 Corporate expenses 32,549 32,048 31,790 Interest (income) and other (income) expense, net (4,337) (2,561) (255) Hotel Adjusted EBITDA $ 318,614 $ 301,156 $ 312,105 _______________ -55- Table of Contents (1) During the year ended December 31, 2022, we recognized an incremental loss of $1.7 million due to post-closing adjustments related to hotels sold in 2021.
GAAP net income to EBITDA, EBITDA re, Adjusted EBITDA and Hotel Adjusted EBITDA (in thousands): -50- Table of Contents Year Ended December 31, 2025 2024 (As Adjusted) (1) 2023 (As Adjusted) (1) Net income $ 101,942 $ 48,250 $ 86,635 Interest expense 62,798 65,516 65,072 Income tax (benefit) expense (1,231) 1,541 317 Real estate related depreciation and amortization 113,107 113,588 111,302 EBITDA 276,616 228,895 263,326 Impairment losses 1,076 34,169 941 EBITDA re 277,692 263,064 264,267 Non-cash lease expense and other amortization 5,140 5,970 6,156 Share-based compensation expense (2) 7,350 7,458 9,463 Hotel pre-opening costs 501 1,006 1,246 Terminated transaction costs 1,058 — — Loss on debt extinguishment 5,850 — — Severance costs (3) — 20,362 — Adjusted EBITDA $ 297,591 $ 297,860 $ 281,132 Corporate expenses 25,279 25,001 22,577 Interest (income) and other (income) expense, net (6,042) (4,247) (2,553) Hotel Adjusted EBITDA $ 316,828 $ 318,614 $ 301,156 _______________ (1) Effective January 1, 2025, we exclude share-based compensation from our calculation of Adjusted EBITDA.
(2) During the year ended December 31, 2024, we incurred severance costs related to the executive team changes that occurred in April 2024. During the year ended December 31, 2022, we incurred severance costs associated with the elimination of positions at our hotels. These costs are classified within other hotel expenses on the consolidated statement of operations.
(3) During the year ended December 31, 2024, we incurred severance costs related to the executive team changes that occurred in April 2024. The following table is a reconciliation of our U.S.
The following table outlines the timing and extent of our debt principal maturities and estimated interest payments for our mortgage debt and unsecured term loans as of December 31, 2024 (in thousands), assuming all extension options available in our debt agreements are exercised.
The following table outlines the timing and extent of our debt principal maturities and estimated interest payments for our mortgage debt and unsecured term loans as of December 31, 2025, assuming all extension options available in our debt agreements are exercised (in thousands): Principal Interest (1) Total Principal and Interest 2026 $ — $ 54,799 $ 54,799 2027 — 54,630 54,630 2028 — 55,148 55,148 2029 500,000 30,684 530,684 2030 600,000 1,837 601,837 $ 1,100,000 $ 197,098 $ 1,297,098 ______________ (1) The interest expense for our variable rate unsecured term loans is calculated based on the weighted average rate as of December 31, 2025 of 4.98%, which includes the effect of interest rate swaps.
Share Repurchase Program In May 2024, our board of directors authorized the repurchase of up to $200.0 million of our common stock under a new share repurchase program, which replaced our prior share repurchase program that was authorized in September 2022.
We did not sell any shares under the ATM Program during the years ended December 31, 2025 and 2024. Share Repurchase Program On May 1, 2024, our board of directors authorized the repurchase of up to $200.0 million of our common stock under a share repurchase program.
In order to qualify as a REIT under the Code, we generally must make distributions to our stockholders each year in an amount equal to at least: • 90% of our REIT taxable income determined without regard to the dividends paid deduction and excluding net capital gains, plus • 90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code, minus • any excess non-cash income.
GAAP); plus • 90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code; less • any excess non-cash income (as determined under the Code).
Our net cash used in investing activities was $112.1 million for the year ended December 31, 2024, which consisted of $81.6 million of capital expenditures and $30.5 million paid for the acquisition of the AC Hotel Minneapolis Downtown.
Our net cash provided by investing activities was $7.5 million for the year ended December 31, 2025, which consisted of $89.0 million of proceeds from the sale of Westin Washington D.C. City Center offset by $81.6 million of capital expenditures.
The new share repurchase program will expire on May 1, 2026. During the year ended December 31, 2024, we repurchased 3,114,876 shares of common stock at an average price of $8.33 per share for an aggregate purchase price of $26.0 million. Information about our share repurchase program is in Note 9 to the accompanying consolidated financial statements.
During the year ended December 31, 2025, we repurchased 4,798,642 shares of common stock at an average price of $7.72 per share for an aggregate purchase price of $37.1 million. As of February 27, 2026, we have $137.0 million of authorized capacity remaining under the share repurchase program.
The revolving credit facility matures on September 27, 2026, which we may extend for an additional year upon the payment of applicable fees and satisfaction of certain standard conditions. The term loan facilities consist of a $500 million term loan that matures on January 3, 2028 and a $300 million term loan that matures on January 3, 2026.
The revolving credit facility was scheduled to mature on September 27, 2026, subject to customary extension options. The term loan facilities consisted of a $500.0 million term loan maturing on January 3, 2028 and a $300.0 million term loan maturing on January 3, 2026.
In September 2024, we exercised our option to extend the maturity of our $300 million term loan from January 3, 2025 to January 3, 2026. We have the right to increase the aggregate amount of the facilities to $1.4 billion upon the satisfaction of certain standard conditions.
We had the right to increase the aggregate amount of the facilities to $1.4 billion upon the satisfaction of certain standard conditions. On July 2, 2025, we drew $60.0 million on our senior unsecured revolving credit facility, which was subsequently repaid.
Rooms revenues increased by $25.2 million from the year ended December 31, 2023 to the year ended December 31, 2024, $4.1 million of which was due to the acquisition of the non-comparable properties. The remaining increase of $21.1 million was the result of improved occupancy at our resort hotels and increased ADR at our urban hotels.
The remaining increase in rooms revenues of $0.2 million was due to a modest decline in lodging demand offset by ADR growth in group and business transient segments. -43- Table of Contents Food and beverage revenues increased $0.1 million from the year ended December 31, 2024 to the year ended December 31, 2025.
We expect the continued expansion of corporate travel demand will enable the industry to improve profits in 2025 and we enter the year with several favorable factors, including: (1) ownership of a high-quality portfolio, (2) expected internal growth from six recent and one additional in-process hotel rebranding or repositionings, (3) expected internal growth from the continuation of our asset management initiatives and return on investment projects, (4) conservative debt capital structure, and (5) liquidity of $584.3 million as of December 31, 2024.
In 2026, we expect to benefit from: (1) the ownership of a high-quality portfolio, (2) return on investments from recently completed renovations, rebrandings, and repositionings, and limited earnings disruption from ongoing renovations, (3) incremental travel demand from a favorable holiday calendar and one-time events, such as the FIFA World Cup, (4) asset management initiatives, and (5) a conservative debt capital structure.
Short-Term Borrowings Other than borrowings under our senior unsecured credit facility, discussed below, we do not utilize short-term borrowings to meet liquidity requirements.
On December 31, 2025, the Company redeemed all 4,760,000 outstanding shares at $25.00 per share for a total redemption amount of $119.0 million, plus accrued and unpaid dividends. -46- Table of Contents Short-Term Borrowings Other than borrowings under our senior unsecured credit facility, discussed below, we do not utilize short-term borrowings to meet liquidity requirements.
Removed
(2) On February 19, 2025, we sold the Westin Washington D.C. City Center hotel to an unaffiliated third party for $92 million. (3) On November 12, 2024, we acquired the 245-room AC Hotel Minneapolis Downtown located in Minneapolis, Minnesota for $30.5 million, including prorations and transaction costs. The acquisition was funded with corporate cash.
Added
We are an owner, as opposed to an operator, of the hotels in our portfolio.
Removed
Outlook for 2025 U.S. economic growth is broadly projected to remain moderate in 2025, with persistent effects of monetary policy, elevated interest rates, and evolving consumer spending patterns influencing both businesses and households.
Added
See “Non-GAAP Financial Measures” for further discussion on these financial measures.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−0 removed2 unchanged
Biggest changeAs of December 31, 2024, we held interest rate swaps related to $225 million of our variable-rate indebtedness. In addition, effective January 2, 2025, we have an additional $100 million of interest rate swaps related to our variable-rate indebtedness. We receive one-month SOFR and pay a fixed rate for all of our interest rate swaps.
Biggest changeIn October 2025, we entered into an additional interest rate swap for a notional amount of $50 million, effective January 4, 2027, partially replacing a maturing swap. We receive one-month SOFR and pay a fixed rate for all of our interest rate swaps.
Our primary sensitivity in 2024 was to changes in one-month Secured Overnight Financing Rate (“SOFR”), as the interest rates on our variable-rate indebtedness were based on this benchmark rate. We use interest rate swaps in order to maintain what we believe to be an appropriate level of exposure to interest rate variability.
Our primary sensitivity in 2025 was to changes in one-month Secured Overnight Financing Rate (“SOFR”), as the interest rates on our variable-rate indebtedness were based on this benchmark rate. We use interest rate swaps in order to maintain what we believe to be an appropriate level of exposure to interest rate variability.
If market rates of interest on our unhedged variable rate debt fluctuate by 100 basis points, interest expense would increase or decrease, depending on rate movement, future earnings and cash flows, by $4.8 million annually. Item 8. Financial Statements and Supplementary Data See Index to the Financial Statements on page F-1. Item 9.
If market interest rates on our unhedged variable rate debt fluctuate by 100 basis points, interest expense would increase or decrease, depending on rate movement, future earnings and cash flows, by $7.8 million annually. Item 8. Financial Statements and Supplementary Data See Index to the Financial Statements on page F-1. Item 9.
In pursuing our business strategies, the primary -57- Table of Contents market risk to which we are currently exposed, and, to which we expect to be exposed in the future, is interest rate risk. The face amount of our outstanding debt as of December 31, 2024 was $1.1 billion, of which $0.8 billion had a variable interest rate.
In pursuing our business strategies, the primary market risk to which we are currently exposed and to which we expect to be exposed in the future is interest rate risk. The face amount of our outstanding debt as of December 31, 2025 was $1.1 billion, all of which had a variable interest rate.
Added
As of December 31, 2025, the interest rate on $325 million of our variable-rate indebtedness had been effectively fixed through the use of interest rate swaps. In August 2025, we executed an interest rate swap for a notional amount of $75 million, effective January 2, 2026, to replace a maturing swap.

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