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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended September 30, 2026
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the transition period from ________________ to ________________

Commission file number: 001-35972

BRAEMAR HOTELS & RESORTS INC.
(Exact name of registrant as specified in its charter)
Maryland46-2488594
(State or other jurisdiction of incorporation or organization)(IRS employer identification number)
14185 Dallas Parkway
Suite 1200
Dallas
Texas75254
(Address of principal executive offices)(Zip code)

(972) 490-9600
(Registrant’s telephone number, including area code)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☑
Non-accelerated filer☐Smaller reporting company☑
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No
    Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockBHRNew York Stock Exchange
Preferred Stock, Series BBHR-PBNew York Stock Exchange
Preferred Stock, Series DBHR-PDNew York Stock Exchange
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, $0.01 par value per share68,679,318
(Class)
Outstanding at November 3, 2026


BRAEMAR HOTELS & RESORTS INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2026

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS (unaudited)
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share amounts)
September 30, 2026December 31, 2025
ASSETS
Investments in hotel properties, gross$1,015,612 $1,902,328 
Accumulated depreciation(263,144)(344,061)
Investments in hotel properties, net752,468 1,558,267 
Cash and cash equivalents78,862 124,354 
Restricted cash39,571 42,479 
Accounts receivable, net of allowance of $117 and $113, respectively
24,120 32,843 
Inventories2,356 4,741 
Note receivable9,359 8,896 
Prepaid expenses4,130 6,987 
Deposit paid to Ashford Inc. — 17,000 
Deferred costs, net73 75 
Investment in unconsolidated entity— 89 
Derivative assets379 56 
Operating lease right-of-use assets310 30,743 
Other assets24,254 15,368 
Intangible assets, net— 2,746 
Due from third-party hotel managers16,508 17,088 
Assets held for sale275,310 — 
Total assets$1,227,700 $1,861,732 
LIABILITIES AND EQUITY
Liabilities:
Indebtedness, net$442,957 $1,103,450 
Accounts payable and accrued expenses107,949 142,123 
Redeemable preferred stock redemptions payable63,480 30,864 
Dividends and distributions payable3,780 7,672 
Due to Ashford Inc., net
179,333 5,148 
Due to related parties, net— 257 
Due to third-party hotel managers408 1,467 
Operating lease liabilities365 20,058 
Other liabilities12,278 25,572 
Liabilities associated with assets held for sale
210,483 — 
Total liabilities1,021,033 1,336,611 
Commitments and contingencies (note 15)
5.50% Series B cumulative convertible preferred stock, $0.01 par value, 3,078,017 shares issued and outstanding at September 30, 2026 and December 31, 2025
65,426 65,426 
Series E redeemable preferred stock, $0.01 par value, 8,150,132 and 10,818,280 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively
203,764 265,695 
Series M redeemable preferred stock, $0.01 par value, 1,269,981 and 1,368,091 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively
31,766 34,217 
Redeemable noncontrolling interests in operating partnership11,173 19,005 
Equity:
Preferred stock, $0.01 par value, 80,000,000 shares authorized:
8.25% Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at September 30, 2026 and December 31, 2025
16 16 
Common stock, $0.01 par value, 250,000,000 shares authorized, 68,679,318 and 68,219,432 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively
687 682 
Additional paid-in capital707,922 706,488 
Accumulated deficit(814,087)(568,503)
Total stockholders’ equity (deficit) of the Company(105,462)138,683 
Noncontrolling interest in consolidated entities— 2,095 
Total equity (deficit)(105,462)140,778 
Total liabilities and equity (deficit)$1,227,700 $1,861,732 
See Notes to Condensed Consolidated Financial Statements.
2

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
REVENUE
Rooms$63,147 $85,701 $294,131 $331,617 
Food and beverage25,983 36,637 123,647 133,996 
Other12,448 21,218 63,809 72,840 
Total hotel revenue101,578 143,556 481,587 538,453 
EXPENSES
Hotel operating expenses:
Rooms18,665 24,728 67,761 80,232 
Food and beverage24,268 30,685 98,075 106,662 
Other expenses38,356 51,766 151,158 168,587 
Management fees3,103 4,440 14,435 16,891 
Total hotel operating expenses84,392 111,619 331,429 372,372 
Property taxes, insurance and other4,677 8,211 16,836 26,568 
Depreciation and amortization16,611 23,164 60,623 69,919 
Advisory services fee7,498 7,915 22,182 21,717 
Corporate general and administrative12,139 3,811 21,419 4,407 
Termination fee480,000 — 480,000 — 
Total operating expenses605,317 154,720 932,489 494,983 
Gain (loss) on disposition of assets and hotel properties259,927 40,970 277,325 40,970 
OPERATING INCOME (LOSS)(243,812)29,806 (173,577)84,440 
Equity in earnings (loss) of unconsolidated entity— — (31)— 
Interest income841 1,494 2,425 4,901 
Other income (expense)— — — (1,250)
Interest expense and amortization of discounts and loan costs(16,203)(25,188)(57,911)(75,376)
Write-off of loan costs and exit fees(20)(366)(1,509)(1,833)
Gain (loss) on extinguishment of debt— (1,553)— (1,553)
Realized and unrealized gain (loss) on derivatives54 (118)337 (301)
INCOME (LOSS) BEFORE INCOME TAXES(259,140)4,075 (230,266)9,028 
Income tax (expense) benefit9,756 648 5,858 (474)
NET INCOME (LOSS)(249,384)4,723 (224,408)8,554 
(Income) loss attributable to noncontrolling interest in consolidated entities7 412 72 361 
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership16,104 607 15,805 2,358 
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY(233,273)5,742 (208,531)11,273 
Preferred dividends(7,594)(8,667)(23,375)(26,928)
Deemed dividends on preferred stock— (5,251)(4,771)(11,086)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS$(240,867)$(8,176)$(236,677)$(26,741)
INCOME (LOSS) PER SHARE - BASIC:
Net income (loss) attributable to common stockholders$(3.51)$(0.12)$(3.45)$(0.40)
Weighted average common shares outstanding – basic68,679 68,219 68,598 67,419 
INCOME (LOSS) PER SHARE - DILUTED:
Net income (loss) attributable to common stockholders$(3.51)$(0.12)$(3.45)$(0.40)
Weighted average common shares outstanding – diluted68,679 68,219 68,598 67,419 
See Notes to Condensed Consolidated Financial Statements.
3

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
NET INCOME (LOSS)$(249,384)$4,723 $(224,408)$8,554 
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized gain (loss) on investment in securities
— 143 — 742 
Total other comprehensive income (loss)— 143 — 742 
TOTAL COMPREHENSIVE INCOME (LOSS)(249,384)4,866 (224,408)9,296 
Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities7 412 72 361 
Comprehensive net (income) loss attributable to redeemable noncontrolling interests in operating partnership16,104 597 15,805 2,298 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY$(233,273)$5,875 $(208,531)$11,955 
See Notes to Condensed Consolidated Financial Statements.
4

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited, in thousands except per share amounts)
8.25% Series D Cumulative Preferred Stock
Common StockAdditional
Paid-in
Capital		Accumulated DeficitNoncontrolling Interest in Consolidated EntitiesTotal
5.50% Series B Cumulative Convertible
Preferred Stock
Series E Redeemable
Preferred Stock		Series M Redeemable
Preferred Stock		Redeemable Noncontrolling Interests in Operating Partnership
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance at June 30, 20261,600 $16 68,679 $687 $707,922 $(561,597)$2,030 $149,058 3,078 $65,426 8,637 $215,936 1,312 $32,820 $15,197 
Issuance of preferred stock— — — — — — — — — — 17 409 2 43 — 
Dividends declared – preferred stock - Series B ($0.34/share)
— — — — — (1,058)— (1,058)— — — — — — — 
Dividends declared – preferred stock - Series D ($0.52/share)
— — — — — (825)— (825)— — — — — — — 
Dividends declared – preferred stock - Series E ($0.47/share)
— — — — — (4,983)— (4,983)— — — — — — — 
Dividends declared – preferred stock - Series M ($0.53/share)
— — — — — (728)— (728)— — — — — — — 
Net income (loss)— — — — — (233,273)(7)(233,280)— — — — — — (16,104)
Disposition of joint venture— — — — — 457 (2,023)(1,566)— — — — — — — 
Reclassification of redeemable preferred stock from mezzanine equity to liability— — — — — — — — — — (504)(12,581)(44)(1,097)— 
Redemption value adjustment— — — — — (12,080)— (12,080)— — — — — — 12,080 
Balance at September 30, 2026
1,600 $16 68,679 $687 $707,922 $(814,087)$— $(105,462)3,078 $65,426 8,150 $203,764 1,270 $31,766 $11,173 
8.25% Series D Cumulative Preferred Stock
Common StockAdditional
Paid-in
Capital		Accumulated Deficit
Accumulated Other Comprehensive Income/(loss)
Noncontrolling Interest in Consolidated EntitiesTotal
5.50% Series B Cumulative Convertible
 Preferred Stock
 Series E Redeemable
 Preferred Stock		Series M Redeemable
 Preferred Stock		Redeemable Noncontrolling Interests in Operating Partnership
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance at June 30, 20251,600 $16 68,219 $682 $727,002 $(502,437)$(135)$(3,321)$221,807 3,078 $65,426 13,391 $320,585 1,420 $35,524 $17,994 
Purchase of common stock— — — — (26)— — — (26)— — — — — — — 
Equity-based compensation— — — — 51 — — — 51 — — — — — — 24 
Issuance of preferred stock— — — — — — — — — — — 27 686 3 41 — 
Dividends declared – common stock ($0.05/share)
— — — — — (3,430)— — (3,430)— — — — — — — 
Dividends declared – preferred stock - Series B ($0.34/share)
— — — — — (1,058)— — (1,058)— — — — — — — 
Dividends declared – preferred stock - Series D ($0.52/share)
— — — — — (825)— — (825)— — — — — — — 
Dividends declared – preferred stock - Series E ($0.47/share)
— — — — — (6,041)— — (6,041)— — — — — — — 
Dividends declared – preferred stock - Series M ($0.53/share)
— — — — — (743)— — (743)— — — — — — — 
Distributions to noncontrolling interests— — — — — — — (168)(168)— — — — — — (271)
Redemption/conversion of operating partnership units— — — — — — — — — — — — — — — (2)
Net income (loss)— — — — — 5,742 — (412)5,330 — — — — — — (607)
Unrealized gain (loss) on investment in securities— — — — — — 133 — 133 — — — — — — 10 
Redemption of preferred stock— — — — — — — — — — — (720)(17,975)(18)(438)— 
Redemption value adjustment – preferred stock— — — — — (5,251)— — (5,251)— — — 5,251 — — — 
Redemption value adjustment— — — — — (1,794)— — (1,794)— — — — — — 1,794 
Balance at September 30, 20251,600 $16 68,219 $682 $727,027 $(515,837)$(2)$(3,901)$207,985 3,078 $65,426 12,698 $308,547 1,405 $35,127 $18,942 
5

8.25% Series D Cumulative Preferred Stock
Common StockAdditional
Paid-in
Capital		Accumulated DeficitNoncontrolling Interest in Consolidated EntitiesTotal
5.50% Series B Cumulative Convertible
Preferred Stock
Series E Redeemable
Preferred Stock		Series M Redeemable
Preferred Stock		Redeemable Noncontrolling Interests in Operating Partnership
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 2025
1,600 $16 68,219 $682 $706,488 $(568,503)$2,095 $140,778 3,078 $65,426 10,818 $265,695 1,368 $34,217 $19,005 
Issuance of preferred stock— — — — — — — — — — 64 1,585 5 127 — 
Dividends declared – preferred stock - Series B ($1.02/share)
— — — — — (3,174)— (3,174)— — — — — — — 
Dividends declared – preferred stock - Series D ($1.56/share)
— — — — — (2,475)— (2,475)— — — — — — — 
Dividends declared – preferred stock - Series E ($1.41/share)
— — — — — (15,534)— (15,534)— — — — — — — 
Dividends declared – preferred stock - Series M ($1.59/share)
— — — — — (2,192)— (2,192)— — — — — — — 
Purchase true-up of remaining noncontrolling interest— — — — 48 — — 48 — — — — — — — 
Redemption/conversion of operating partnership units— — 460 5 1,386 — — 1,391 — — — — — — (1,391)
Net income (loss)— — — — — (208,531)(72)(208,603)— — — — — — (15,805)
Reclassification of redeemable preferred stock from mezzanine equity to liability— — — — — — — — — — (2,732)(68,287)(103)(2,578)— 
Disposition of joint venture— — — — — 457 (2,023)(1,566)— — — — — — — 
Redemption value adjustment – preferred stock— — — — — (4,771)— (4,771)— — — 4,771 — — — 
Redemption value adjustment— — — — — (9,364)— (9,364)— — — — — — 9,364 
Balance at September 30, 2026
1,600 $16 68,679 $687 $707,922 $(814,087)$— $(105,462)3,078 $65,426 8,150 $203,764 1,270 $31,766 $11,173 
8.25% Series D Cumulative Preferred Stock
Common StockAdditional
Paid-in
Capital		Accumulated Deficit
Accumulated Other Comprehensive Income/(loss)
Noncontrolling Interest in Consolidated EntitiesTotal
5.50% Series B Cumulative Convertible Preferred Stock
Series E Redeemable Preferred StockSeries M Redeemable Preferred StockRedeemable Noncontrolling Interests in Operating Partnership
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 2024
1,600 $16 66,608 $665 $718,536 $(477,804)$(684)$(3,367)$237,362 3,078 $65,426 14,911 $352,502 1,477 $36,916 $29,964 
Purchase of common stock— — (312)(2)(776)— — — (778)— — — — — — — 
Equity-based compensation— — — — (17)— — — (17)— — — — — — (3)
Issuance of preferred stock— — — — — — — — — — — 88 2,209 5 120 — 
Issuance of restricted shares/units— — 1 — 4 — — — 4 — — — — — — 498 
Dividends declared – common stock ($0.15/share)
— — — — — (10,232)— — (10,232)— — — — — — — 
Dividends declared – preferred stock - Series B ($1.02/share)
— — — — — (3,174)— — (3,174)— — — — — — — 
Dividends declared – preferred stock - Series D ($1.56/share)
— — — — — (2,475)— — (2,475)— — — — — — — 
Dividends declared – preferred stock - Series E ($1.41/share)
— — — — — (19,011)— — (19,011)— — — — — — — 
Dividends declared – preferred stock - Series M ($1.58/share)
— — — — — (2,268)— — (2,268)— — — — — — — 
Contributions from noncontrolling interests— — — — — — — 2,120 2,120 — — — — — — — 
Distributions to noncontrolling interests— — — — — — — (2,293)(2,293)— — — — — — (886)
Redemption/conversion of operating partnership units— — 1,922 19 9,280 — — — 9,299 — — — — — — (9,299)
Redemption of operating partnership units for cash— — — — — — — — — — — — — — — (94)
Net income (loss)— — — — — 11,273 — (361)10,912 — — — — — — (2,358)
Redemption of preferred stock— — — — — — — — — — — (2,301)(57,250)(77)(1,909)— 
Unrealized gain (loss) on investment in securities— — — — — — 682 — 682 — — — — — — 60 
Redemption value adjustment – preferred stock— — — — — (11,086)— — (11,086)— — — 11,086 — — — 
Redemption value adjustment— — — — — (1,060)— — (1,060)— — — — — — 1,060 
Balance at September 30, 2025
1,600 $16 68,219 $682 $727,027 $(515,837)$(2)$(3,901)$207,985 3,078 $65,426 12,698 $308,547 1,405 $35,127 $18,942 
See Notes to Condensed Consolidated Financial Statements.
6

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine Months Ended September 30,
20262025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)$(224,408)$8,554 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization60,623 69,919 
Recognition of deferred income(576)(510)
Equity-based compensation — (20)
Bad debt expense328 159 
(Gain) loss on extinguishment of debt— 1,553 
Amortization of loan costs and discounts6,812 8,033 
Write-off of loan costs and exit fees1,509 1,833 
Amortization of intangibles203 321 
Amortization of non-refundable membership initiation fees(1,619)(1,964)
Interest expense accretion on refundable membership club deposits273 421 
Realized (gain) loss on sale of securities
— 1,250 
(Gain) loss on disposition of assets and hotel properties(277,325)(40,970)
Realized and unrealized (gain) loss on derivatives(337)301 
Non-cash interest income
(463)(464)
Equity in (earnings) loss of unconsolidated entity31 — 
Deferred income tax expense (benefit)(6,490)(56)
Changes in operating assets and liabilities, exclusive of disposition of assets and hotel properties:
Accounts receivable and inventories(185)(5,996)
Prepaid expenses and other assets(10,594)(577)
Deposit paid to Ashford Inc. 17,000 (17,000)
Accounts payable and accrued expenses38,551 6,160 
Operating lease right-of-use assets76 172 
Due to/from related parties, net(257)(724)
Due to/from third-party hotel managers(262)(1,273)
Due to/from Ashford Inc.175,015 (1,757)
Operating lease liabilities15 23 
Other liabilities6,807 5,047 
Net cash provided by (used in) operating activities(215,273)32,435 
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from property insurance1,298 3,486 
Proceeds from sale of investment in securities
— 23,750 
Acquisition of land
— (5,509)
Net proceeds from sale of hotel properties760,618 139,326 
Proceeds from disposition of consolidated joint venture, net of cash disposed5,902 — 
Proceeds from sale of investment in unconsolidated entity58 — 
Improvements and additions to hotel properties(22,784)(54,552)
Net cash provided by (used in) investing activities745,092 106,501 
(Continued)
7

Nine Months Ended September 30,
20262025
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on indebtedness— 403,000 
Repayments of indebtedness(483,252)(453,550)
Payments of loan costs and exit fees(1,595)(11,501)
Payments for derivatives(67)(658)
Proceeds from derivatives95 611 
Purchase of common stock— (778)
Payments for dividends and distributions(25,555)(35,917)
Contributions from noncontrolling interest in consolidated entities— 306 
Redemption of operating partnership units— (94)
Distributions to noncontrolling interest in consolidated entities— (2,293)
True-up for acquisition of noncontrolling interest in consolidated entities48 — 
Redemption of preferred stock(38,249)(59,159)
Net cash provided by (used in) financing activities(548,575)(160,033)
Net change in cash, cash equivalents and restricted cash (including cash, cash equivalents and restricted cash held for sale)(18,756)(21,097)
Cash, cash equivalents and restricted cash at beginning of period166,833 185,057 
Cash, cash equivalents and restricted cash at end of period (including cash, cash equivalents and restricted cash held for sale)$148,077 $163,960 
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid$52,775 $66,794 
Income taxes paid1,783 615 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Dividends and distributions declared but not paid$3,780 $8,553 
Assumption of debt in acquisition of land
— 5,360 
Capital expenditures accrued but not paid2,668 11,818 
Non-cash preferred stock dividends1,711 2,329 
Unsettled proceeds from derivatives— 51 
Non-cash common stock/unit dividends
— 502 
Non-cash redemption of common units
1,391 9,284 
Non-cash consideration for acquisition of land
— 1,814 
Derecognition of land upon deconsolidation of joint venture12,786 — 
Derecognition of term loan upon deconsolidation of joint venture5,359 — 
Derecognition of noncontrolling interest upon deconsolidation of joint venture2,023 — 
SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period$124,354 $135,465 
Restricted cash at beginning of period42,479 49,592 
Cash, cash equivalents and restricted cash at beginning of period$166,833 $185,057 
Cash and cash equivalents at end of period$78,862 $116,278 
Restricted cash at end of period39,571 47,682 
Cash, cash equivalents and restricted cash at end of period
$118,433 $163,960 
Cash and cash equivalents at end of period included in assets held for sale20,617 — 
Restricted cash at end of period included in assets held for sale
9,027 — 
Cash, cash equivalents and restricted cash at end of period (including cash, cash equivalents and restricted cash held for sale)
$148,077 $163,960 
See Notes to Condensed Consolidated Financial Statements.
8
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Organization and Description of Business
Braemar Hotels & Resorts Inc., together with its subsidiaries (“Braemar”), is a Maryland corporation focused on the high-growth luxury hotel and resort sector. Our industry-leading portfolio features luxury properties across the United States and the U.S. territories in the Caribbean. Braemar has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Braemar conducts its business and owns substantially all of its assets through its operating partnership, Braemar Hospitality Limited Partnership (“Braemar OP”). Terms such as the “Company,” “we,” “us” or “our” refer to Braemar Hotels & Resorts Inc. and, as the context may require, all entities included in its condensed consolidated financial statements.
We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC” or the “Advisor”) through an advisory agreement. Ashford LLC is a subsidiary of Ashford Inc. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.
We do not operate any of our hotel properties directly; instead, we contractually engage hotel management companies to operate them for us under management contracts. Remington Lodging & Hospitality, LLC (“Remington Hospitality”), a subsidiary of Ashford Inc., manages two of our eight hotel properties as of September 30, 2026. Third-party management companies manage the remaining hotel properties.
Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. These products and services include, but are not limited to, design and construction services, debt placement and related services, audio visual services, real estate advisory and brokerage services, insurance policies covering general liability, workers compensation and business automobile claims, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and cash management services.
The accompanying condensed consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of September 30, 2026, own eight hotel properties in four states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands (“USVI”). These hotel properties represent 2,268 total rooms. As a REIT, Braemar is required to comply with limitations imposed by the Code related to operating hotels. As of September 30, 2026, seven of our eight hotel properties were leased by wholly-owned subsidiaries that are treated as taxable REIT subsidiaries (“TRS”) for federal income tax purposes (collectively, the TRS entities are referred to as “Braemar TRS”). One hotel property, located in the USVI, is owned by our USVI TRS. Braemar TRS then engages third-party or affiliated hotel management companies to operate the hotel properties under management contracts. Hotel operating results related to the hotel properties are included in the condensed consolidated statements of operations.
Each leased hotel is leased under a percentage lease that provides for each lessee to pay in each calendar month the base rent plus, in each calendar quarter, percentage rent, if any, based on hotel revenues. Lease revenue from Braemar’s TRSs is eliminated in consolidation. The hotel properties are operated under management contracts with Marriott Hotel Services, LLC (“Marriott”), Hilton Management LLC (“Hilton”), Four Seasons Hotels Limited (“Four Seasons”), The Ritz-Carlton Hotel Company, L.L.C. and its affiliates, each of which is also an affiliate of Marriott (“Ritz-Carlton”), and Remington Hospitality, which are eligible independent contractors under the Code.
2. Significant Accounting Policies
Basis of Presentation and Principles of Consolidation—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These condensed consolidated financial statements include the accounts of Braemar Hotels & Resorts Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest. All intercompany accounts and transactions between consolidated entities have been eliminated in these condensed consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 12, 2026.
9
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Variable Interest Entity—Braemar OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance. A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has: (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance; and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. All major decisions related to Braemar OP that most significantly impact its economic performance, including but not limited to, operating procedures with respect to business affairs and any acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Braemar OP General Partner LLC, its general partner. As such, we consolidate Braemar OP.
Noncontrolling Interest in Consolidated Entities—Prior to August 2026, a noncontrolling interest partner held a 25% ownership interest in a joint venture that owns a parcel of land and was consolidated by the Company. In July 2026, the Company exercised its put option to require the noncontrolling interest holder to repurchase the Company’s interest in the joint venture. As a result, in August 2026, the noncontrolling interest holder repurchased the Company’s interest in the joint venture for $6.3 million and, in conjunction with the repurchase, the Company derecognized $12.8 million of land, the $5.4 million term loan balance secured by the land and the related working capital. The derecognition resulted in a loss of $11,000 for the three and nine months ended September 30, 2026.
Comparability—Historical seasonality patterns at some of our hotel properties cause fluctuations in our overall operating results. Consequently, operating results for the three and nine months ended September 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
The following transactions affect reporting comparability of our condensed consolidated financial statements:
PropertyLocationDisposition Date
Marriott Seattle WaterfrontSeattle, WashingtonAugust 7, 2025
The ClancySan Francisco, CaliforniaNovember 6, 2025
Park Hyatt Beaver Creek Resort & SpaAvon, ColoradoMay 26, 2026
The Ritz-Carlton SarasotaSarasota, FloridaJuly 14, 2026
Bardessono Hotel and SpaYountville, CaliforniaJuly 14, 2026
Hotel YountvilleYountville, CaliforniaJuly 14, 2026
Pier House Resort & SpaKey West, FloridaAugust 12, 2026
Use of Estimates—The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Recently Issued Accounting Standards—In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses that requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the statement of operations.
In January 2025, the FASB issued ASU 2025-01 which amends the effective date of the new disaggregation of income statement expenses standard to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is still permitted. The amendments may be applied either: (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU; or (2) retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact this ASU will have on our disclosures.
3. Revenue
The following tables present our revenue disaggregated by each of our comparable hotel properties and revenue from sold hotel properties (dollars in thousands):
10
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Three Months Ended September 30, 2026
PropertyLocationRoomsFood and BeverageOther HotelTotal
The Ritz-Carlton Lake TahoeCalifornia$7,584 $6,123 $2,251 $15,958 
Cameo Beverly HillsCalifornia3,327 381 267 3,975 
The Ritz-Carlton Reserve Dorado BeachPuerto Rico9,342 4,037 2,387 15,766 
The Four Seasons Resort ScottsdaleArizona4,273 3,613 1,455 9,341 
Sofitel Chicago Magnificent MileIllinois10,551 2,420 595 13,566 
The Notary HotelPennsylvania8,099 1,747 1,094 10,940 
Capital HiltonWashington, D.C.9,387 2,812 1,110 13,309 
The Ritz-Carlton St. ThomasUSVI5,959 3,504 1,801 11,264 
Sold hotel propertiesN/A4,625 1,346 1,488 7,459 
Total$63,147 $25,983 $12,448 $101,578 
Three Months Ended September 30, 2025
PropertyLocationRoomsFood and BeverageOther HotelTotal
The Ritz-Carlton Lake TahoeCalifornia$7,034 $6,622 $2,022 $15,678 
Cameo Beverly HillsCalifornia1,872 272 221 2,365 
The Ritz-Carlton Reserve Dorado BeachPuerto Rico8,184 3,887 2,154 14,225 
The Four Seasons Resort ScottsdaleArizona4,336 3,547 1,514 9,397 
Sofitel Chicago Magnificent MileIllinois8,940 1,896 750 11,586 
The Notary HotelPennsylvania6,050 1,309 750 8,109 
Capital HiltonWashington, D.C.8,631 4,456 974 14,061 
The Ritz-Carlton St. ThomasUSVI6,117 2,266 1,857 10,240 
Sold hotel properties
N/A34,537 12,382 10,976 57,895 
Total$85,701 $36,637 $21,218 $143,556 
Nine Months Ended September 30, 2026
PropertyLocationRoomsFood and BeverageOther HotelTotal
The Ritz-Carlton Lake TahoeCalifornia$22,248 $13,924 $6,192 $42,364 
Cameo Beverly HillsCalifornia8,914 1,355 654 10,923 
The Ritz-Carlton Reserve Dorado BeachPuerto Rico46,729 16,974 9,807 73,510 
The Four Seasons Resort ScottsdaleArizona29,954 18,451 7,281 55,686 
Sofitel Chicago Magnificent MileIllinois23,190 5,569 1,549 30,308 
The Notary HotelPennsylvania23,497 5,379 2,705 31,581 
Capital HiltonWashington, D.C.31,910 13,134 3,366 48,410 
The Ritz-Carlton St. ThomasUSVI36,916 15,605 7,429 59,950 
Sold hotel propertiesN/A70,773 33,256 24,826 128,855 
Total$294,131 $123,647 $63,809 $481,587 
Nine Months Ended September 30, 2025
PropertyLocationRoomsFood and BeverageOther HotelTotal
The Ritz-Carlton Lake TahoeCalifornia$22,276 $16,591 $5,777 $44,644 
Cameo Beverly HillsCalifornia6,661 1,054 1,081 8,796 
The Ritz-Carlton Reserve Dorado BeachPuerto Rico40,246 14,132 8,337 62,715 
The Four Seasons Resort ScottsdaleArizona28,382 19,615 6,566 54,563 
Sofitel Chicago Magnificent MileIllinois20,587 5,124 1,815 27,526 
The Notary HotelPennsylvania20,085 4,678 1,984 26,747 
Capital HiltonWashington, D.C.32,255 14,206 3,353 49,814 
The Ritz-Carlton St. ThomasUSVI32,632 12,077 7,395 52,104 
Sold hotel properties
N/A128,493 46,519 36,532 211,544 
Total$331,617 $133,996 $72,840 $538,453 
11
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
4. Investments in Hotel Properties, net
Investments in hotel properties, net consisted of the following (in thousands):
September 30, 2026December 31, 2025
Land$221,833 $576,362 
Buildings and improvements661,056 1,116,816 
Furniture, fixtures and equipment113,071 179,984 
Construction in progress6,906 16,420 
Residences12,746 12,746 
Total cost1,015,612 1,902,328 
Accumulated depreciation(263,144)(344,061)
Investments in hotel properties, net$752,468 $1,558,267 
5. Hotel Dispositions, Impairments and Held for Sale
On August 7, 2025, the Company sold the Marriott Seattle Waterfront for $145.0 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $88.4 million on the mortgage loan that was partially secured by the hotel property. The sale resulted in a gain of approximately $41.1 million for the year ended December 31, 2025.
On November 6, 2025, the Company sold The Clancy for $115.0 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $64.7 million on the mortgage loan that was partially secured by the hotel property. The sale resulted in a gain of approximately $41.7 million for the year ended December 31, 2025.
On May 26, 2026, the Company sold the Park Hyatt Beaver Creek Resort & Spa for $176.0 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid the $70.5 million mortgage loan that was secured by the hotel property. The sale resulted in a gain of approximately $16.9 million for the nine months ended September 30, 2026.
On July 14, 2026, the Company sold The Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville for a purchase price of $437.5 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $232.8 million on the mortgage loan that was partially secured by the hotel properties. The sale resulted in a gain of approximately $151.7 million for the three and nine months ended September 30, 2026.
On August 12, 2026, the Company sold the Pier House Resort & Spa for $190.0 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $93.7 million on the mortgage loan that was partially secured by the hotel property. The sale resulted in a gain of approximately $108.7 million for the three and nine months ended September 30, 2026.
12
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
We included the results of operations for these hotel properties through the dates of disposition in net income (loss) as shown in our condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025. The following table includes the condensed consolidated financial information from the disposed hotel properties (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Total hotel revenue$7,459 $57,895 $128,855 $211,544 
Total hotel operating expenses(6,266)(40,897)(78,678)(137,102)
Property taxes, insurance and other(646)(2,800)(6,572)(12,040)
Depreciation and amortization(624)(8,033)(11,889)(25,221)
Gain (loss) on disposition of assets and hotel properties259,927 40,970 277,325 40,970 
Operating income (loss)259,850 47,135 309,041 78,151 
Interest income1 125 86 386 
Interest expense and amortization of loan costs(1,950)(9,795)(15,914)(31,121)
Write-off of loan costs and exit fees(15)— (15)(263)
Gain (loss) on extinguishment of debt— (1,553)— (1,553)
Income (loss) before income taxes257,886 35,912 293,198 45,600 
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership(16,170)(2,481)(18,706)(3,762)
Income (loss) before income taxes attributable to the Company$241,716 $33,431 $274,492 $41,838 
Impairment Charges
During the three and nine months ended September 30, 2026 and 2025, no impairment charges were recorded.
Assets Held For Sale
On September 23, 2026, the Company entered into a definitive agreement to sell The Four Seasons Resort Scottsdale for a purchase price of $372 million in cash, subject to customary pro-rations and adjustments.
As of September 30, 2026, the hotel was classified as held for sale. Depreciation and amortization ceased as of the date the asset was deemed held for sale. Since the sale of the hotel did not represent a strategic shift that has (or will have) a major effect on our operations or financial results, the results of operations were not reported as discontinued operations in the consolidated financial statements. The sale of the hotel property closed on October 28, 2026. See note 17.
13
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The major classes of assets and liabilities related to assets held for sale included in the condensed consolidated balance sheet at September 30, 2026 were as follows:
September 30, 2026
Assets
Investments in hotel properties, gross$282,469 
Accumulated depreciation(40,548)
Investments in hotel properties, net241,921 
Cash and cash equivalents20,617 
Restricted cash9,027 
Accounts receivable, net2,609 
Inventories797 
Prepaid expenses263 
Other assets76 
Assets held for sale$275,310 
Liabilities
Indebtedness, net$178,608 
Accounts payable and accrued expenses31,658 
Due to third-party hotel managers, net217 
Liabilities associated with assets held for sale$210,483 
6. Indebtedness, net
Indebtedness, net consisted of the following (dollars in thousands):
IndebtednessCollateralCurrent Maturity
Final
Maturity (10)
Interest RateSeptember 30, 2026December 31, 2025
Convertible Senior Notes (2)
EquityJune 2026June 20264.50%$— $86,250 
Mortgage loan (3)
The Ritz-Carlton Lake TahoeOctober 2026January 2027
SOFR (1) + 3.25%
43,413 43,413 
Mortgage loan (4)
Capital HiltonDecember 2026December 2028
SOFR (1) + 3.75%
110,600 110,600 
Mortgage loan (5)
Park Hyatt Beaver Creek Resort & SpaFebruary 2027February 2027
SOFR (1) + 2.86%
— 70,500 
Term Loan (6)
LandMarch 2027March 2027
WSJ Prime Rate (1)
— 5,360 
Mortgage loan (7)
The Notary HotelMarch 2027March 2030
SOFR (1) + 2.83%
209,902 209,902 
Sofitel Chicago Magnificent Mile
The Ritz-Carlton Reserve Dorado Beach
Mortgage loan (8)
The Ritz-Carlton St. ThomasAugust 2027August 2029
SOFR (1) + 4.91%
80,499 407,000 
Mortgage loan (9)
The Four Seasons Resort ScottsdaleAugust 2028August 2030
SOFR (1) + 3.00%
180,000 180,000 
624,414 1,113,025 
Deferred loan costs, net(2,849)(9,291)
Premiums/(discounts), net— (284)
Indebtedness, net$621,565 $1,103,450 
Indebtedness, net related to assets held for sale (9)
The Four Seasons Resort ScottsdaleAugust 2028August 2030
SOFR (1) + 3.00%
178,608 — 
$442,957 $1,103,450 
__________________
(1)SOFR rates were 3.91% and 3.69% at September 30, 2026 and December 31, 2025, respectively. WSJ Prime Rate was 6.75% at December 31, 2025.
(2)On June 1, 2026, we repaid the Convertible Senior Notes.
(3)On June 25, 2026, we extended this mortgage loan secured by The Ritz-Carlton Lake Tahoe. Terms of the amendment included extending the maturity date from July 2026 to October 2026, and adding one three-month extension option, subject to satisfaction of certain conditions. In October 2026, we amended this mortgage loan extending the maturity date from October 2026 to November 2026. On October 30, 2026, we refinanced this mortgage loan into a new $60.0 million mortgage loan with an additional $15.0 million available to be drawn subject to certain conditions. The new mortgage loan is interest only during the initial term and bears interest at a rate of SOFR + 2.65% with a floor of 5.30%, has a three-year initial term and two one-year extension options, subject to satisfaction of certain conditions.
(4)This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 2.00%.
14
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
(5)On May 26, 2026, we repaid this mortgage loan in conjunction with sale of the Park Hyatt Beaver Creek Resort & Spa.
(6)On August 4, 2026, we derecognized this term loan in conjunction with the sale of our interest in a joint venture.
(7)This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions.
(8)This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. The first one-year extension option was exercised in August 2026. On July 14, 2026, this mortgage loan was paid down $232.8 million in conjunction with the sales of Bardessono Hotel & Spa, Hotel Yountville, and The Ritz-Carlton Sarasota. On August 12, 2026, the mortgage loan was paid down $93.7 million in conjunction with the sale of the Pier House Resort & Spa.
(9)This mortgage loan has two one-year extension options, subject to the satisfaction of certain conditions. This mortgage loan has a SOFR floor of 1.00%. As of September 30, 2026, this property is held for sale.
(10)The final maturity date assumes all available extension options will be exercised.
Convertible Senior Notes
For the three and nine months ended September 30, 2026, the Company recorded coupon interest expense of $0 and $1.6 million, respectively. For the three and nine months ended September 30, 2025, the Company recorded coupon interest expense of $970,000 and $2.9 million, respectively.
For the three and nine months ended September 30, 2026, the Company recorded discount amortization of $0 and $284,000, respectively, related to the initial purchase discount. For the three and nine months ended September 30, 2025, the Company recorded discount amortization of $165,000 and $489,000, respectively, related to the initial purchase discount, with the remaining discount balance amortized through June 2026. The convertible senior notes were repaid in full on June 1, 2026.
Covenants
If we violate covenants in any debt agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of the consolidated group. As of September 30, 2026, we were in compliance with all covenants.
Interest Rate Derivatives—We use interest rate caps to hedge our debt and our cash flows, which are recorded at fair value. Payments from counterparties on in-the-money interest rate caps are recognized as realized gains on our condensed consolidated statements of operations. See note 8.
As of September 30, 2026, we held the following interest rate caps, which limit our exposure to increases in SOFR on the related variable-rate mortgage loans (dollars in thousands):
Hedged mortgage loanNotional AmountStrike rate (SOFR)Maturity
Capital Hilton$110,600 4.0 %January 1, 2027
The Notary Hotel363,000 6.5 %March 15, 2027
Sofitel Chicago Magnificent Mile
The Ritz-Carlton Reserve Dorado Beach
The Ritz-Carlton St. Thomas174,170 8.0 %August 15, 2027
The Four Seasons Resort Scottsdale180,000 4.5 %August 15, 2027
$827,770 
SOFR was 3.91% at September 30, 2026. Accordingly, none of our interest rate caps were in-the-money as of that date.
15
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
7. Note Receivable
On July 2, 2024, Braemar, Ashford Hospitality Trust, Inc. (“Ashford Trust”) and Ashford Inc. (collectively with the Company, Ashford Trust and each of Ashford Inc.’s, the Company’s and Ashford Trust’s respective affiliates and any entity advised by Ashford Inc., the “Company Group”) entered into a Cooperation Agreement (the “Agreement”) with Blackwells Capital LLC, Blackwells Onshore I LLC, Blackwells Holding Co. LLC, Vandewater Capital Holdings, LLC, Blackwells Asset Management LLC, BW Coinvest Management I LLC and Jason Aintabi (collectively, the “Blackwells Parties”) regarding the withdrawal of the Blackwells Parties’ proxy campaign, dismissal of pending litigation involving the parties and certain other matters.
Concurrently and in connection with the Agreement, certain of the parties thereto have also entered into a Share Ownership Agreement (the “Share Ownership Agreement”) and a Loan Agreement (the “Loan Agreement”), pursuant to which agreements the Company will provide to BW Coinvest I, LLC (“Borrower”) an unsecured loan (the “Loan”). The proceeds from the Loan will be used to reimburse Borrower for 70% of the amount expended by Borrower to purchase on the open market a total of 3,500,000 shares of the Company’s common stock (the “Purchased Shares”) within six months of the date of Loan Agreement, at a price per Purchased Share not to exceed $10 and subject to the other limitations set forth therein. The Loan has a term of five years (the “Term”), is guaranteed by Jason Aintabi, Vandewater Capital Holdings, LLC, Blackwells Holding Co. LLC, and Blackwells Asset Management LLC and shall bear payment-in-kind interest during the Term at a rate equal to the sum of: (a) Term SOFR (as defined in the Loan Agreement) and (b) 3.00% (three hundred basis points) per annum. The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable due diligence expenses incurred on or prior to the date of the Share Ownership Agreement.
As of September 30, 2026, the Company has advanced approximately $8.1 million that has been used to purchase 3.5 million shares of Braemar common stock.
The note receivable is summarized in the table below (dollars in thousands):
Line Item
Interest Rate
September 30, 2026December 31, 2025
Note receivable
SOFR + 3.00%
$9,359 $8,896 
We recognized interest income as presented in the table below (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
Line Item2026202520262025
Interest income
$162 $157 $463 $464 
We review receivables for expected credit losses each reporting period. Under the model, the Company estimates credit losses over the entire contractual term of the instrument from the date of initial recognition of that instrument and is required to record an allowance for expected credit losses (or reversals) in each reporting period. Our assessment of expected credit losses is based on considerable management judgment and assumptions. No allowance for credit losses or related expenses were recorded for the three and nine months ended September 30, 2026 and 2025.
8. Fair Value Measurements
Fair Value Hierarchy—Our financial instruments measured at fair value either on a recurring or a non-recurring basis are classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs in the marketplace as discussed below:
•Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets.
•Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
•Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability.
16
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The fair value of interest rate caps is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rose above the strike rates of the caps. Variable interest rates used in the calculation of projected receipts and payments on the caps are based on an expectation of future interest rates derived from observable market interest rate curves (SOFR forward curves) and volatilities (Level 2 inputs). We also incorporate credit valuation adjustments (Level 3 inputs) to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk.
When a majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. However, when the valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties, which we consider significant (10% or more) to the overall valuation of our derivatives, the derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy. Transfers of inputs between levels are determined at the end of each reporting period. In determining the fair values of our derivatives at September 30, 2026, the SOFR interest rate forward curve (Level 2 inputs) was used to project variable interest rates over the remaining term of our derivatives. Credit spreads (Level 3 inputs) used in determining the fair values of derivatives assumed an uptrend in nonperformance risk for us and all of our counterparties through the maturity dates.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):
Quoted Market Prices (Level 1)Significant Other
Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total
September 30, 2026
Assets
Derivative assets:
Interest rate derivatives - caps$— $379 $— $379 
(1)
Total$— $379 $— $379 
Quoted Market Prices (Level 1)Significant Other
Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total
December 31, 2025
Assets
Derivative assets:
Interest rate derivatives - caps$— $56 $— $56 
(1)
Total$— $56 $— $56 
__________________
(1)Reported as “derivative assets” in our condensed consolidated balance sheets.
17
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Effect of Fair Value Measured Assets and Liabilities on Condensed Consolidated Statements of Operations
The following table summarizes the effect of fair value measured assets and liabilities on our condensed consolidated statements of operations (in thousands):
Gain (Loss) Recognized in Income
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Assets
Derivative assets:
Interest rate derivatives - caps$54 $(118)$337 $(301)
Total derivative assets$54 $(118)$337 $(301)
Non-derivative assets:
Investment in securities
$— $— $— $(1,250)
Total$54 $(118)$337 $(1,551)
Total combined
Interest rate derivatives - caps$54 $(299)$326 $(850)
Unrealized gain (loss) on derivatives$54 
(1)
$(299)
(1)
$326 
(1)
$(850)
(1)
Realized gain (loss) on interest rate caps— 
(1) (2)
181 
(1) (2)
11 
(1) (2)
549 
(1) (2)
Realized gain (loss) on investment in securities
— — — (1,250)(3)
Net$54 $(118)$337 $(1,551)
________
(1)Reported in “realized and unrealized gain (loss) on derivatives” in our condensed consolidated statements of operations.
(2)Represents settled and unsettled payments from counterparties on interest rate caps.
(3)Reported in “other income (expense)” in our condensed consolidated statements of operations.
9. Summary of Fair Value of Financial Instruments
Determining the estimated fair values of certain financial instruments such as indebtedness requires considerable judgment to interpret market data. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled.
The carrying amounts and estimated fair values of financial instruments were as follows (in thousands):
September 30, 2026December 31, 2025
Carrying
Value		Estimated
Fair Value		Carrying
Value		Estimated
Fair Value
Financial assets measured at fair value:
Derivative assets$379 $379 $56 $56 
Financial assets not measured at fair value (1):
Cash and cash equivalents$99,479 $99,479 $124,354 $124,354 
Restricted cash48,598 48,598 42,479 42,479 
Accounts receivable, net26,729 26,729 32,843 32,843 
Note receivable9,359 9,359 8,896 8,896 
Due from third-party hotel managers16,508 16,508 17,088 17,088 
Financial liabilities not measured at fair value (1):
Indebtedness$624,414 $624,414 $1,112,741 $1,113,025 
Accounts payable and accrued expenses139,607 139,607 142,123 142,123 
Redeemable preferred stock redemptions payable63,480 63,480 30,864 30,864 
Dividends and distributions payable3,780 3,780 7,672 7,672 
Due to Ashford Inc., net179,333 179,333 5,148 5,148 
Due to related parties, net— — 257 257 
Due to third-party hotel managers
625 625 1,467 1,467 
18
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
____________________________________
(1) Includes balances associated with assets held for sale and liabilities associated with assets held for sale as of September 30, 2026.
Cash, cash equivalents and restricted cash. These financial assets have maturities of less than 90 days and most bear interest at market rates. The carrying value approximates fair value due to their short-term nature. This is considered a Level 1 valuation technique.
Accounts receivable, net, due to/from related parties, net, accounts payable and accrued expenses, redeemable preferred stock redemptions payable, dividends and distributions payable, due to Ashford Inc. and due to/from third-party hotel managers. The carrying values of these financial instruments approximate their fair values due to the short-term nature of these financial instruments. This is considered a Level 1 valuation technique.
Note receivable. The carrying amount of note receivable approximates its fair value. This is considered a Level 2 valuation technique.
Derivative assets. See note 8 for a complete description of the methodology and assumptions utilized in determining fair values.
Indebtedness. Fair value of indebtedness is determined using the loan terms, collateral value and financial data such as loan-to-value ratios, debt service coverage ratios, and interest rates for comparable loans. We estimated the fair value of the total indebtedness to be approximately 100.0% of the carrying value of $624.4 million as of September 30, 2026, and approximately 100.0% of the carrying value of $1.1 billion as of December 31, 2025. These fair value estimates are considered a Level 2 valuation technique.
10. Income (Loss) Per Share
The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Net income (loss) attributable to common stockholders - basic and diluted:
Net income (loss) attributable to the Company$(233,273)$5,742 $(208,531)$11,273 
Less: dividends on preferred stock(7,594)(8,667)(23,375)(26,928)
Less: deemed dividends on preferred stock— (5,251)(4,771)(11,086)
Less: dividends on common stock— (3,410)— (10,174)
Less: dividends on unvested performance stock units— (20)— (58)
Undistributed net income (loss) allocated to common stockholders(240,867)(11,606)(236,677)(36,973)
Add back: dividends on common stock— 3,410 — 10,174 
Distributed and undistributed net income (loss) - basic and diluted$(240,867)$(8,196)$(236,677)$(26,799)
Weighted average common shares outstanding:
Weighted average common shares outstanding – basic and diluted68,679 68,219 68,598 67,419 
Income (loss) per share - basic and diluted:
Net income (loss) allocated to common stockholders per share$(3.51)$(0.12)$(3.45)$(0.40)
19
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Net income (loss) allocated to common stockholders is not adjusted for:
Income (loss) allocated to unvested performance stock units$— $20 $— $58 
Income (loss) attributable to redeemable noncontrolling interests in operating partnership(16,104)(607)(15,805)(2,358)
Dividends on preferred stock - Series B1,058 1,058 3,174 3,174 
Interest expense on Convertible Senior Notes— 1,135 1,940 3,399 
Dividends on preferred stock - Series E (inclusive of deemed dividends)4,983 11,292 20,305 30,097 
Dividends on preferred stock - Series M (inclusive of deemed dividends)728 743 2,192 2,268 
Total$(9,335)$13,641 $11,806 $36,638 
Weighted average diluted shares are not adjusted for:
Effect of unvested performance stock units— 63 — 77 
Effect of assumed conversion of operating partnership units4,592 5,092 4,675 6,057 
Effect of assumed conversion of preferred stock - Series B4,116 4,116 4,116 4,116 
Effect of assumed conversion of Convertible Senior Notes— 16,889 9,636 16,581 
Effect of assumed conversion of preferred stock - Series E159,684 116,179 141,397 126,870 
Effect of assumed conversion of preferred stock - Series M20,400 12,633 17,525 13,417 
Total188,792 154,972 177,349 167,118 
20
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
11. Redeemable Noncontrolling Interests in Operating Partnership
Redeemable noncontrolling interests in the operating partnership represent the limited partners’ proportionate share of equity and their allocable share of equity in earnings/losses of Braemar OP, which is an allocation of net income/loss attributable to the common unitholders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership (the “common units”) and units issued under our Long-Term Incentive Plan (the “LTIP units”) that are vested. Each common unit may be redeemed, by the holder, for either cash or, at our sole discretion, up to one share of our REIT common stock, which is either: (i) issued pursuant to an effective registration statement; (ii) included in an effective registration statement providing for the resale of such common stock; or (iii) issued subject to a registration rights agreement.
LTIP units, which are issued to certain executives and employees of Ashford LLC as compensation, generally have vesting periods of three years. Additionally, certain independent members of the board of directors have elected to receive LTIP units as part of their compensation, which are fully vested upon grant. Upon reaching economic parity with common units, each vested LTIP unit can be converted by the holder into one common unit which can then be redeemed for cash or, at our election, settled in our common stock. An LTIP unit will achieve parity with the common units upon the sale or deemed sale of all or substantially all of the assets of our operating partnership at a time when our stock is trading at a level in excess of the price it was trading on the date of the LTIP issuance. More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of our operating partnership; or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for our operating partnership.
As of September 30, 2026, there were approximately 77,000 issued and outstanding LTIP and Performance LTIP units. All LTIP and Performance LTIP units had reached full economic parity with, and are convertible into, common units.
The following table presents the redeemable noncontrolling interests in Braemar OP (in thousands) and the corresponding approximate ownership percentage of our operating partnership:
September 30, 2026December 31, 2025
Redeemable noncontrolling interests in Braemar OP (in thousands)$11,173 $19,005 
Adjustments to redeemable noncontrolling interests (1) (in thousands)
$14,526 $5,830 
Ownership percentage of operating partnership6.27 %6.91 %
____________________________________
(1)    Reflects the excess of the redemption value over the accumulated historical cost.
We allocated net (income) loss to the redeemable noncontrolling interests as illustrated in the table below (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership$16,104 $607 $15,805 $2,358 
Distributions declared to holders of common units, LTIP units and Performance LTIP units$— $271 $— $886 
The following table presents the common units redeemed/exchanged for common stock (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Units redeemed/exchanged
— — 460 1,922 
Fair value of common units redeemed (1)
$— $— $1,391 $4,897 
____________________________________
(1)    The redemption value is the greater of accumulated historical cost or fair value. The accumulated historical cost of the converted units for the nine months ended September 30, 2026 was $722,000. The accumulated historical cost of the converted units for the nine months ended September 30, 2025 was $9.3 million.
21
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents the common units redeemed for cash (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Units redeemed
— — — 36 
Fair value of common units redeemed
$— $— $— $94 
As of September 30, 2026, there were approximately 4,516,000 issued and outstanding common units.
12. Equity
Common Stock Dividends—The following table summarizes the common stock dividends declared during the period (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Common stock dividends declared$— $3,430 $— $10,232 
Stock Repurchases—On May 3, 2024, the board of directors approved a new share repurchase program pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share, having an aggregate value of up to $50 million. As of September 30, 2026, the Company has not repurchased any common stock pursuant to this program.
8.25% Series D Cumulative Preferred Stock—The dividend for all issued and outstanding shares of the Company’s Series D Cumulative Preferred Stock (the “Series D Preferred Stock”) is set at $2.0625 per annum per share.
The following table summarizes dividends declared (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Series D Cumulative Preferred Stock$825 $825 $2,475 $2,475 
13. Redeemable Preferred Stock
5.50% Series B Cumulative Convertible Preferred Stock
Each share of our 5.50% Series B Cumulative Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) is convertible at any time, at the option of the holder, into a number of whole shares of common stock at a conversion price of $18.70 (which represents a conversion rate of 1.3372 shares of our common stock, subject to certain adjustments). The Series B Convertible Preferred Stock is also subject to conversion upon certain events constituting a change of control. Holders of the Series B Convertible Preferred Stock have no voting rights, subject to certain exceptions. The Series B Convertible Preferred Stock dividend for all issued and outstanding shares is set at $1.375 per annum per share.
The Company may, at its option, cause the Series B Convertible Preferred Stock to be converted in whole or in part, on a pro-rata basis, into fully paid and nonassessable shares of the Company’s common stock at the conversion price, provided that the “Closing Bid Price” (as defined in the Articles Supplementary) of the Company’s common stock shall have equaled or exceeded 110% of the conversion price for the immediately preceding 45 consecutive trading days ending three days prior to the date of notice of conversion.
Additionally, the Series B Convertible Preferred Stock contains cash redemption features that consist of: 1) an optional redemption in which the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends; 2) a special optional redemption, in which on or prior to the occurrence of a Change of Control (as defined in the Articles Supplementary), the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share; and 3) a “REIT Termination Event” and “Listing Event Redemption,” in which at any time (i) a REIT Termination Event (as defined below) occurs or (ii) the Company’s common stock fails to be listed on the NYSE, NYSE American, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor thereto (each, a “National
22
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Exchange”), the holder of Series B Convertible Preferred Stock shall have the right to require the Company to redeem any or all shares of Series B Convertible Preferred Stock at 103% of the liquidation preference ($25.00 per share, plus any accumulated, accrued, and unpaid dividends) in cash.
A “REIT Termination Event,” shall mean the earliest of:
(i)    filing of a federal income tax return where the Company does not compute its income as a REIT;
(ii)    stockholders’ approval on ceasing to be qualified as a REIT;
(iii)    board of directors’ approval on ceasing to be qualified as a REIT;
(iv)    board’s determination based on the advice of counsel to cease to be qualified as a REIT; or
(v)    determination within the meaning of Section 1313(a) of the Code to cease to be qualified as a REIT.
Series B Convertible Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside our control. As such, the Series B Convertible Preferred Stock is classified outside of permanent equity.
The following table summarizes dividends declared (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Series B Convertible Preferred Stock$1,058 $1,058 $3,174 $3,174 
Series E Redeemable Preferred Stock
On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series E Redeemable Preferred Stock (the “Series E Preferred Stock”). Pursuant to such equity distribution agreements, the Company offered a maximum of 20,000,000 shares of Series E Preferred Stock in a primary offering at a price of $25.00 per share. On February 21, 2023, the Company announced the closing of its Series E Preferred Stock offering. The Company is also offering a maximum of 8,000,000 shares of the Series E Preferred Stock pursuant to a dividend reinvestment plan (the “DRIP”) at $25.00 per share (the “Stated Value”).
The Series E Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred Stock, the Series D Preferred Stock and the Series M Preferred Stock (as defined below)) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs.
Holders of the Series E Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of the Series E Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such monthly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series E Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series E Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.
Each share is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee, subject to the limitations as stated in the Articles Supplementary. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends (with no redemption fee). The Series E Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon such change of control events, holders have the option to convert their shares of Series E Preferred Stock into a maximum of 5.69476 shares of our common stock.
The redemption fee shall be an amount equal to:
•8.0% of the stated value of $25.00 per share (the “Stated Value”) beginning on the Original Issue Date (as defined in the Articles Supplementary) of the shares of the Series E Preferred Stock to be redeemed;
23
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
•5.0% of the Stated Value beginning on the second anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed; and
•0% of the Stated Value beginning on the third anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed.
The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption.
The Series E Preferred Stock cash dividends are as follows:
•8.00% per annum of the Stated Value beginning on the date of the first settlement of the Series E Preferred Stock (the “Date of Initial Closing”);
•7.75% per annum of the Stated Value beginning on the first anniversary from the Date of Initial Closing; and
•7.50% per annum of the Stated Value beginning on the second anniversary from the Date of Initial Closing.
Dividends are payable on a monthly basis in arrears on the 15th day of each month (or, if such payment date is not a business day, the next succeeding business day) to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year.
The Company has a DRIP that allows participating holders to have their Series E Preferred Stock dividend distributions automatically reinvested in additional shares of the Series E Preferred Stock at a price of $25.00 per share.
The Series E Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside of the Company’s control. As such, the Series E Preferred Stock is classified outside of permanent equity either in mezzanine equity or as a liability.
The Company evaluates the classification of redeemable preferred stock each reporting period based on the substance of holder redemption rights, redemption activity, contractual redemption limits, dividend payment conditions, liquidity, and other relevant factors. When redemption of any portion of a redeemable preferred stock series is considered mandatorily redeemable and not within the Company’s control, such portion is classified as a liability, while the remaining portion continues to be classified in mezzanine equity.
As of September 30, 2026, the Company determined that a portion of the outstanding Series E Preferred Stock met the criteria for mandatory redemption based on certain holders initiating redemption requests that exceeded the limitations set forth in the Articles Supplementary. As of September 30, 2026, the Company has received $61.2 million in investor-initiated Series E Preferred Stock redemption requests, representing approximately 2,448,062 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet. As of December 31, 2025, the Company had received $30.2 million in investor-initiated Series E Preferred Stock redemption requests, representing approximately 1,208,850 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet.
At the date of issuance, the carrying amount of the Series E Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable, the carrying value will be adjusted to the redemption amount each reporting period. The redemption value adjustment of Series E Preferred Stock classified as mezzanine equity is summarized below (in thousands):
September 30, 2026December 31, 2025
Series E Preferred Stock$203,764 $265,695 
Cumulative adjustments to Series E Preferred Stock (1)
$41,982 $37,210 
________
(1)    Reflects the excess of the redemption value over the accumulated carrying value.
24
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table summarizes dividends declared (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Series E Preferred Stock$4,983 $6,041 $15,534 $19,011 
The redemption activities of Series E Preferred Stock are summarized below (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Series E Preferred Stock shares redeemed193 720 1,492 2,301 
Redemption amount, net of redemption fees$4,832 $17,975 $37,304 $57,250 
Series M Redeemable Preferred Stock
On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series M Redeemable Preferred Stock (the “Series M Preferred Stock”). Pursuant to such equity distribution agreements, the Company offered a maximum of 20,000,000 shares of the Series M Preferred Stock (par value $0.01) in a primary offering at a price of $25.00 per share (or “Stated Value”). On February 21, 2023, the Company announced the closing of its Series M Preferred Stock offering. The Company is also offering a maximum of 8,000,000 shares of Series M Preferred Stock pursuant to the DRIP at $25.00 per share.
The Series M Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs.
Holders of the Series M Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of Series M Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such monthly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series M Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series M Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.
Each share is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee, subject to the limitations as stated in the Articles Supplementary. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends (with no redemption fee). The Series M Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon such change of control events, holders have the option to convert their shares of Series M Preferred Stock into a maximum of 5.69476 shares of our common stock.
The redemption fee shall be an amount equal to:
•1.5% of the Stated Value of $25.00 per share beginning on the Series M Original Issue Date (as defined in the Articles Supplementary) of the shares of Series M Preferred Stock to be redeemed; and
•0% of the Stated Value beginning on the first anniversary from the Series M Original Issue Date of the shares of Series M Preferred Stock to be redeemed.
The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption.
Holders of Series M Preferred Stock are entitled to receive cumulative cash dividends at the initial rate of 8.2% per annum of the Stated Value of $25.00 per share (equivalent to an annual dividend rate of $2.05 per share). Beginning one year from the
25
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
date of original issuance of each share of Series M Preferred Stock and on each one-year anniversary thereafter for such share of Series M Preferred Stock, the dividend rate shall increase by 0.10% per annum; provided, however, that the dividend rate for any share of Series M Preferred Stock shall not exceed 8.7% per annum of the Stated Value.
Dividends are payable on a monthly basis and in arrears on the 15th day of each month (or, if such payment date is not a business day, on the next succeeding business day) to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year.
The Company has a DRIP that allows participating holders to have their Series M Preferred Stock dividend distributions automatically reinvested in additional shares of the Series M Preferred Stock at a price of $25.00 per share.
The Series M Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside the Company’s control. As such, the Series M Preferred Stock is classified outside of permanent equity either in mezzanine equity or as a liability.
The Company evaluates the classification of redeemable preferred stock each reporting period based on the substance of holder redemption rights, redemption activity, contractual redemption limits, dividend payment conditions, liquidity, and other relevant factors. When redemption of any portion of a redeemable preferred stock series is considered mandatorily redeemable and not within the Company’s control, such portion is classified as a liability, while the remaining portion continues to be classified in mezzanine equity.
As of September 30, 2026, the Company determined that a portion of the outstanding Series M Preferred Stock met the criteria for mandatory redemption based on certain holders initiating redemption requests that exceeded the limitations set forth in the Articles Supplementary. As of September 30, 2026, the Company has received $2.3 million in investor-initiated Series M Preferred Stock redemption requests, representing approximately 91,129 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet. As of December 31, 2025, the Company had received $642,000 in investor-initiated Series M Preferred Stock redemption requests, representing approximately 25,689 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet.
At the date of issuance, the carrying amount of the Series M Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable, the carrying value will be adjusted to the redemption amount each reporting period. The redemption value adjustment of Series M Preferred Stock classified as mezzanine equity is summarized below (in thousands):
September 30, 2026December 31, 2025
Series M Preferred Stock$31,766 $34,217 
Cumulative adjustments to Series M Preferred Stock (1)
$1,794 $1,794 
__________________
(1)    Reflects the excess of the redemption value over the accumulated carrying value.
The following table summarizes dividends declared (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Series M Preferred Stock$728 $743 $2,192 $2,268 
The redemption activities of Series M Preferred Stock are summarized below (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Series M Preferred Stock shares redeemed6 18 38 77 
Redemption amount, net of redemption fees$136 $438 $942 $1,909 
26
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
14. Related Party Transactions
Ashford Inc.
Advisory Agreement
Ashford LLC, a subsidiary of Ashford Inc., acts as our advisor. Our chairman, Mr. Monty Bennett, also serves as chairman of the board of directors and is the chief executive officer of Ashford Inc. Under our advisory agreement, we pay advisory fees to Ashford LLC. We pay a monthly base fee equal to 1/12 of the sum of (i) 0.70% of the total market capitalization of our company for the prior month, plus (ii) the Net Asset Fee Adjustment (as defined in our advisory agreement), if any, on the last day of the prior month during which our advisory agreement was in effect; provided, however, in no event would the base fee for any month be less than the minimum base fee as provided by our advisory agreement. The base fee is payable on the fifth business day of each month.
The minimum base fee for Braemar for each month is equal to the greater of:
▪90% of the base fee paid for the same month in the prior year; and
▪1/12 of the G&A Ratio (as defined) multiplied by the total market capitalization of Braemar.
We are also required to pay Ashford LLC an incentive fee that is measured annually (or for a stub period if the advisory agreement is terminated at other than year-end). Each year that our annual total stockholder return exceeds the average annual total stockholder return for our peer group, we pay Ashford LLC an incentive fee over the following three years, subject to the Fixed Charge Coverage Ratio (“FCCR”) Condition, as defined in the advisory agreement, which relates to the ratio of adjusted EBITDA to fixed charges. We also reimburse Ashford LLC for certain reimbursable overhead and internal audit, risk management advisory and asset management services, as specified in the advisory agreement. We also record equity-based compensation expense for equity grants of common stock, PSUs and LTIP units awarded to officers and employees of Ashford LLC in connection with providing advisory services.
The following table summarizes the advisory services fees incurred (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Advisory services fee
Base advisory fee$4,030 $3,539 $11,587 $10,592 
Reimbursable expenses (1)
3,468 3,825 10,595 10,403 
Equity-based compensation (2)
— 75 — (24)
Incentive fee— 476 — 746 
Total$7,498 $7,915 $22,182 $21,717 
________
(1)Reimbursable expenses include overhead, internal audit, risk management advisory, asset management services and deferred cash awards.
(2)    Equity-based compensation is associated with equity grants of Braemar’s common stock, PSUs, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC.
On August 26, 2025, Braemar entered into a Letter Agreement with Ashford Inc. to explore a potential sale of Braemar. Pursuant to the Letter Agreement, Braemar and Ashford Inc. agreed that the termination fee payable to Ashford Inc. under the advisory agreement was $574.8 million (exclusive of accrued fees). However, Braemar and Ashford Inc. agreed to the payment of a discounted aggregate amount of $480.0 million plus accrued fees (the “Company Sale Fee”). Ashford Inc. received a $17.0 million payment upon execution of the agreement. The $17.0 million payment would be credited against other amounts due to Ashford Inc. from Braemar if the sale of the Company did not occur before July 1, 2028. The payment was presented in “deposit paid to Ashford Inc.” on the condensed consolidated balance sheets as of December 31, 2025.
On December 22, 2025, Braemar entered into an amendment to the Letter Agreement. The Amendment was entered into in order to eliminate unintended ambiguity regarding the circumstances under which the termination fees become due and payable to Ashford Inc. and the timing of payment in order to more fully reflect the parties’ original intent under the Letter Agreement and ensure consistency across potential transaction structures in how the proceeds from a Company Sale Transaction (as defined in the Letter Agreement) are applied. Specifically, the Amendment revised the definition of “Company Sale Transaction” to clarify that it is a Company Change of Control (as defined in the advisory agreement). Pursuant to the Amendment, Braemar and Ashford Inc. further agreed that the Company Sale Fee (as defined in the Letter Agreement) would
27
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
be paid directly to Ashford Inc. from Net Sale Proceeds (as defined in the Amendment) of a Company Sale Transaction (as defined in the Amendment), after payment of any Master Agreement Termination Fee (as defined in the Amendment), but before any other payments, dividends or distributions are made. In the event that Braemar’s assets are sold in more than one Company Sale Transaction and the Net Sale Proceeds from a particular Company Sale Transaction were insufficient to pay the Company Sale Fee and accrued fees in full, the Amendment provided that the Net Sale Proceeds from subsequent sales or dispositions of assets would be applied towards the payment of the Company Sale Fee until the Company Sale Fee was paid in full.
The Amendment further provided that upon the complete satisfaction and discharge of the Company Sale Fee, and the Master Agreement Termination Fee (if applicable), each of the Company and Ashford Inc. could terminate the advisory agreement upon providing 60 days’ prior written notice to the other. The Amendment further provided that in the case of a sale or disposition of assets representing 50% or more of the Gross Asset Value (as defined in the advisory agreement and calculated as of January 1, 2025) of all of Braemar’s assets, the buyer must pay directly to Ashford Inc. the cash proceeds from such sale or disposition transaction necessary to satisfy the Master Agreement Termination Fee, and the related master agreements would terminate upon closing of such transaction. If proceeds were insufficient to pay the Master Agreement Termination Fee, proceeds from subsequent sales would be applied until the fee was paid in full. Additionally, upon the approval of a plan of liquidation by Braemar’s stockholders, the master agreements would terminate, subject to payment of the Master Agreement Termination Fee.
On July 14, 2026, the Company completed the sale of The Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville. Upon closing, the Company Sale Fee was triggered under the Advisory Agreement with Ashford Inc., and as a result, the Company incurred a related liability of $480.0 million during the third quarter of 2026. The $17.0 million payment previously paid by the Company to Ashford Inc. was credited against the Company Sale Fee. The Company subsequently paid $173.0 million to Ashford Inc. from proceeds from the sale to pay down a portion of the Company Sale Fee. The Company additionally completed the sale of the Pier House Resort & Spa on August 12, 2026, and paid $92.0 million to Ashford Inc. from proceeds from the sale to pay down a portion of the Company Sale Fee. The Company recorded a liability of $198.0 million in “due to Ashford Inc., net” as of September 30, 2026 for the remaining unpaid portion of the Company Sale Fee.
Allocation Agreement
On October 6, 2026, the Company, Ashford Hospitality Trust, Inc. and Ashford Inc. entered into a Cooperation and Settlement Agreement (the “Settlement Agreement”) with Al Shams Investments Limited (“Al Shams”), the Company’s largest stockholder, resolving claims Al Shams had asserted or threatened to assert. Under the settlement, the Company agreed to pay Al Shams $25.0 million in settlement of the disputed claims plus $15.0 million in expense reimbursement, payable in installments (collectively the “Settlement Payment”). Also on October 6, 2026, the Company and Ashford Inc. entered into an Allocation Agreement (the “Allocation Agreement”), under which the Company and Ashford Inc. each bear 50% of the Settlement Payment, net of applicable insurance proceeds, which are currently estimated to be between $29.5 million and $32.0 million. The Company’s net cost of the Settlement Payment after application of any applicable insurance proceeds and contributions made by Ashford Inc. under the Allocation Agreement is currently estimated to be between $4.0 million and $5.3 million. The Settlement Payment is payable in three installments: $20.0 million, which was paid on October 6, 2026, $10.0 million due in February 2027 and $10.0 million due in June 2027.
The Company accounted for the Settlement Agreement as a recognized subsequent event. As of September 30, 2026, the Company recognized a liability of $40.0 million in “accounts payable and accrued expenses” for the Settlement Payment. The Company also recognized an insurance recovery receivable of $16.0 million in “other assets,” representing its 50% share of the estimated insurance proceeds under the Allocation Agreement, and a receivable from Ashford Inc. of $20.0 million in “due to Ashford Inc., net,” representing Ashford Inc.’s 50% share of the Settlement Payment. The Company recognized a net charge of $4.0 million in “corporate general and administrative” in its condensed consolidated statements of operations for the three and nine months ended September 30, 2026.
28
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Other Agreements under the Advisory Agreement
On March 10, 2025, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc. and Ashford LLC (the “March 2025 Limited Waiver”). Pursuant to the March 2025 Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waived the operation of any provision in our advisory agreement that would otherwise limit the ability of the Company in its discretion, at the Company’s cost and expense, to award during calendar year 2025, cash incentive compensation to employees and other representatives of the Advisor.
On March 13, 2026, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc. and Ashford LLC (the “March 2026 Limited Waiver”). Pursuant to the March 2026 Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waived the operation of any provision in our advisory agreement that would otherwise limit the ability of the Company in its discretion, at the Company’s cost and expense, to award during calendar year 2026, cash incentive compensation to employees and other representatives of the Advisor.
Pursuant to the Company’s hotel management agreements with each hotel management company, the Company bears the economic burden for casualty insurance coverage which includes workers’ compensation, general liability and auto liability coverages. The hotel management companies procure workers’ compensation insurance, the expenses of which are passed through to the Company. Under the advisory agreements and hotel management agreements, Ashford Inc. secures general liability and auto liability policies to cover Ashford Trust, Braemar, their hotel managers, as needed, and Ashford Inc. The total cost estimates covered by such policies are based on the collective pool of risk exposures from each party. Ashford Inc. delegates the management of the casualty insurance program to Warwick Insurance Company, LLC (“Warwick”), a subsidiary of Ashford Inc. which issues policies covering general liability, workers’ compensation and auto liability losses. Each year Ashford Inc. collects funds from Ashford Trust, Braemar and their respective hotel management companies, to fund the casualty insurance program as needed, on an allocated basis.
Lismore
We engage Lismore or its subsidiaries to provide debt placement services and assist with loan modifications or refinancings on our behalf and brokerage services.
For both the three and nine months ended September 30, 2026, we incurred no fees from Lismore or its subsidiaries. For the three and nine months ended September 30, 2025, we incurred fees from Lismore or its subsidiaries of $0 and $1.7 million, respectively.
Ashford Securities
The Company, Ashford Trust, and Ashford Inc. were party to the Fourth Amended and Restated Contribution Agreement with respect to funding certain expenses of Ashford Securities LLC, a subsidiary of Ashford Inc. (“Ashford Securities”). As of September 30, 2026, Braemar has funded approximately $13.7 million.
The table below summarizes the amount Braemar has expensed related to reimbursed operating expenses of Ashford Securities (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
Line Item2026202520262025
Corporate general and administrative
$— $— $435 $— 
Design and Construction Services
Premier Project Management LLC (“Premier”), a subsidiary of Ashford Inc., provides design and construction services to our hotels, including construction management, interior design, architectural services, and the purchasing, freight management and supervision of installation of FF&E and related services. Pursuant to the design and construction services agreement, we pay Premier: (a) design and construction fees of up to 4% of project costs; and (b) for the following services: (i) architectural (6.5% of total construction costs); (ii) construction management for projects without a general contractor (10% of total construction costs); (iii) interior design (6% of the purchase price of the FF&E designed or selected by Premier); and (iv) FF&E purchasing (8% of the purchase price of FF&E purchased by Premier; provided that if the purchase price exceeds $2.0 million for a single hotel in a calendar year, then the purchasing fee is reduced to 6% of the FF&E purchase price in excess of $2.0 million for such hotel in such calendar year). Such fees are payable monthly as the service is delivered based on percentage complete, as reasonably determined by Premier for each service, or payable as set forth in other agreements.
29
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Hotel Management Services
As of September 30, 2026, Remington Hospitality managed two of our eight hotel properties.
We pay monthly hotel management fees equal to the greater of approximately $18,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenues, as well as annual incentive management fees, if certain operational criteria were met, and other general and administrative expense reimbursements primarily related to accounting services. Our hotel management agreement also requires that we fund property-level operating costs, including the hotel manager’s payroll and related costs.
Investment in OpenKey
The Company previously held an investment in OpenKey, Inc. (“OpenKey”), a subsidiary of Ashford Inc., with a carrying value of $0 as of December 31, 2025. During the fourth quarter of 2025, Ashford Inc., Ashford Trust and Braemar entered into a purchase and sale agreement to sell OpenKey. The transaction closed in January 2026.
The Company also previously had a loan funding agreement with Ashford Inc. and OpenKey. During the fourth quarter of 2025, we determined that the full amount of the note receivable was not collectible and the note receivable was impaired. As of September 30, 2026 and December 31, 2025, the carrying amount of the note receivable was $0 and $89,000, respectively included in “investment in unconsolidated entity” on our condensed consolidated balance sheets. During the nine months ended September 30, 2026, the Company received proceeds of approximately $58,000 related to the note receivable with OpenKey and wrote off the remaining $31,000 balance.
Consulting Agreement with Blackwells
Effective July 6, 2026, the Company entered into a consulting agreement with Blackwells Capital LLC and Jason Aintabi (collectively, “Blackwells”), pursuant to which Blackwells agreed to provide advisory and consulting services to the Company and its affiliates on an as-requested basis.
In exchange for these services, the Company agreed to pay Blackwells a monthly fee of $100,000 for up to twelve months, with total compensation capped at $1.0 million. Blackwells is engaged as an independent contractor, with no entitlement to employee benefits, expense reimbursement, or tax withholding by the Company. The consulting agreement has a one-year term but may be terminated by the Company at any time upon written notice, with fees prorated for any partial month. The Company paid Blackwells $300,000 during the three and nine months ended September 30, 2026 under the consulting agreement.
15. Commitments and Contingencies
Restricted Cash—Under certain management and debt agreements for our hotel properties existing at September 30, 2026, escrow payments are required for insurance, real estate taxes and debt service. In addition, for certain properties based on the terms of the underlying debt and management agreements, we escrow 3% to 5% of gross revenues for capital improvements.
Franchise Fees—We currently have two hotel properties that operate under franchise agreements. The Cameo Beverly Hills franchise agreement has a 25-year term that expires on December 31, 2050. Under the terms of the agreement, we paid monthly franchise fees of 3% of gross rooms revenue through April 30, 2026. We will pay monthly franchise fees of 4% of gross rooms revenue from May 1, 2026 through December 31, 2026 and 5% of gross rooms revenue for the remainder of the term. We also paid monthly program fees of 2% of gross rooms revenue through April 30, 2026. We paid monthly program fees of 3% of gross rooms revenue from May 1, 2026 through August 3, 2026 and will pay 4% of gross rooms revenue for the remainder of the term.
Under the franchise agreement for the Sofitel Chicago Magnificent Mile, we pay franchisor royalty fees of 4.4% of gross rooms revenue. Additionally, we pay a marketing fee of 1.5% of gross rooms revenue. This franchise agreement expires in 2041, with extension options.
The table below summarizes the franchise fees incurred (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
Line Item2026202520262025
Other hotel expenses$600 $416 $1,312 $939 
30
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Management Fees—Under hotel management agreements for our hotel properties existing at September 30, 2026, we pay a monthly hotel management fee equal to the greater of approximately $18,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenues, or in some cases, approximately 3.5% to 4.0% of gross revenues, as well as annual incentive management fees, if applicable. These management agreements expire from August 2031 through December 2065, with renewal options. If we terminate a management agreement prior to its expiration, we may be liable for estimated management fees through the remaining term, liquidated damages or, in certain circumstances, we may substitute a new management agreement. Our hotel management agreements also require that we fund property-level operating costs, including the hotel manager’s payroll and related costs.
Income Taxes—We and our subsidiaries file income tax returns in the federal jurisdiction and various states. Tax years 2021 through 2025 remain subject to potential examination by certain federal and state taxing authorities.
Litigation—On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects two hotels owned by subsidiaries of the Company. The court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment. Notices to potential class members were sent out on February 2, 2021. Potential class members had until April 4, 2021 to opt out of the class; however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery. The opt-out period has been extended until such time that discovery has concluded. In May 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class de-certified. After submission of the briefs, the court requested that the parties submit stipulations for the court to rule upon. On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks. A tentative settlement in the amount of $850,000 was reached on February 14, 2025. Final court approval was obtained on September 12, 2025. Braemar’s portion of the settlement was 11.7%. The case is now in the settlement administration phase. Settlement distributions began on July 22, 2026, and the Court has set a compliance hearing for November 18, 2026. As of September 30, 2026, the settlement liability amount was paid in full.
On June 8, 2022, a lawsuit was filed against various Hilton entities on behalf of a class of all hourly employees at all Hilton-branded managed properties in California, including Hilton La Jolla Torrey Pines. The complaint includes claims for unpaid wages, meal and rest break violations, and unreimbursed business expenses, along with various derivative claims including wage statement, final pay, and Private Attorneys General Act (“PAGA”) claims. On November 30, 2023, Hilton mediated this litigation, but it did not result in a settlement. At the end of the mediation, the mediator submitted a mediator’s proposal for approximately $3.5 million, which the parties have since agreed to. The allocation to Hilton La Jolla Torrey Pines was approximately $401,000. The Court granted a motion for preliminary approval of the settlement on October 27, 2025. A hearing on the motion for final approval occurred on April 20, 2026, and the Court entered a final judgment. As of September 30, 2026, the settlement liability amount was paid in full.
On August 4, 2020, a lawsuit, Benjamin Zermeno v. Beverly Hills Marriott, was filed in Alameda County Superior Court as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties. The plaintiff’s individual claims were compelled to arbitration. On August 18, 2022, another lawsuit, Cristina Catalano v. Beverly Hills Marriott and Mr. C, was filed as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties. The co-defendant separately settled and the individual arbitration has also settled. A private mediation was held on December 27, 2024 to globally resolve the three outstanding matters. The Court approved the settlement of all matters on January 16, 2026. The aggregate settlement was $2.5 million. Braemar’s portion of the settlement was approximately $679,000. As of September 30, 2026, the settlement liability was paid in full.
On February 6, 2024, we received a Request for Information Under Section 114 of the Clean Air Act dated January 11, 2024, from the Environmental Protection Agency (EPA), Region 2, relating to The Ritz-Carlton St. Thomas. We complied with the Request for Information and provided the requested information on March 12, 2024. Then, on April 16, 2025, we received a subsequent communication from the EPA alleging certain failures to comply with various record keeping and reporting requirements. The EPA also indicated that they had concerns regarding the operation of the hotel’s generators and the lack of certain certifications that should be held by hotel employees. We met with the EPA in May 2025 to discuss and respond to the allegations in the EPA’s April 16, 2025 communication. Since this meeting, we have been working with the hotel management team to ensure full compliance with all applicable regulatory requirements at the hotel, including ensuring all appropriate hotel employees have all applicable certifications, engaging third-party environmental consultants, working with outside counsel,
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BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
preparing standard operating procedures for the hotel, and reviewing options relating to the operation of the hotel’s generators. This matter was resolved for approximately $350,000 with no admission with respect to the factual allegations or alleged violations. As of September 30, 2026, the settlement liability was paid in full.
On June 12, 2026, the Company announced its intention to terminate the Advisory Agreement with Ashford Inc. and transition to a self-managed REIT. In connection with the asset sale transactions and the planned termination of the Advisory Agreement, certain stockholders publicly expressed opposition to aspects of the asset sale transactions and the termination of the Advisory Agreement and indicated an intention to pursue legal remedies.
On August 25, 2026, Babak “Bob” Ghassemieh filed counterclaims against the Company, the Advisor, and certain of their directors and officers, asserting claims under federal and Maryland law with respect to the planned termination payment under the Advisory Agreement as well as relating to the Standstill Agreement between himself and the Company and his resignation as a director. On October 27, 2026, the Company and counterclaim-defendants filed a motion to dismiss the counterclaims. This case is in its early stages. There can be no assurance that additional litigation will not be commenced or, if commenced, that it will be resolved quickly or in the Company’s favor.
On October 6, 2026, the Company, Ashford Hospitality Trust, Inc. and Ashford Inc. entered into a Settlement Agreement with Al Shams, the Company’s largest stockholder, resolving claims Al Shams had asserted or threatened to assert. See note 14 for a discussion of the terms of the settlement.
We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disabilities Act and similar state laws). The likelihood of loss from these legal proceedings is based on the definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations or cash flow.
Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty. If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.
16. Segment Reporting
We operate in one reportable business segment within the hotel lodging industry: direct hotel investments. Direct hotel investments refers to owning hotel properties through either acquisition or new development. We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments: (i) offer similar products and services to their customers in the form of hotel rooms, food and beverage, and ancillary services; (ii) utilize third-party hotel management companies to deliver its products and services to its customers; (iii) are designed and operated to appeal to similar individuals, groups, leisure, and business customers; and (iv) have third-party hotel managers that utilize the same methods (direct hotel sales and various online booking portals) to distribute the Company’s products and services. As of September 30, 2026 and 2025, all of our hotel properties were in the U.S. and its territories. The Company’s chief operating decision maker (“CODM”) is its President and Chief Executive Officer.
Each hotel property derives revenue primarily from guestroom sales, food and beverage sales, and revenues from other lodging services and amenities. The accounting policies of each operating segment are the same as those described in the summary of significant accounting policies in note 2 of the consolidated financial statements included in our 2025 Annual Report on Form 10-K.
The CODM reviews and makes decisions on all aspects of the Company’s business using all available financial and non-financial data for each hotel individually. Capital allocation decisions to acquire, sell, enhance, redevelop, or perform renewal and replacement expenditures are determined on a hotel-by-hotel basis. Specifically, the CODM reviews the results of each hotel to assess the hotel’s profitability. The key measure the CODM uses to allocate resources and assess performance is individual hotel net income (loss) before interest expense, income taxes, depreciation, and amortization, adjusted to exclude certain items determined by management to not be reflective of its ongoing operating performance or incurred in the normal course of business (Hotel Adjusted EBITDA). The adjustments include gains and losses on hotel dispositions, impairment charges, pre-opening costs associated with extensive renovation projects, property-level legal settlements, restructuring,
32
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
severance, and management transition costs, and other expenses identified by management to be non-recurring. The CODM does not regularly review asset information by segment.
33
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following tables include revenues, significant hotel operating expenses, and Hotel Adjusted EBITDA for the Company’s hotels, reconciled to the consolidated amounts included in the Company’s condensed consolidated statements of operations (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
REVENUE
Rooms$63,147 $85,701 $294,131 $331,617 
Food and beverage25,983 36,637 123,647 133,996 
Other hotel revenue12,448 21,218 63,809 72,840 
Total hotel revenue$101,578 $143,556 $481,587 $538,453 
EXPENSES
Hotel expenses:
Rooms$18,665 $24,728 $67,761 $80,232 
Food and beverage24,268 30,685 98,075 106,662 
Direct expenses4,840 7,236 22,837 24,903 
Indirect expenses:
Property, general and administration10,334 14,364 38,920 45,228 
Sales and marketing8,535 11,138 32,163 36,868 
Information and telecommunications systems1,487 1,969 5,323 5,928 
Repairs and maintenance5,776 7,802 19,810 23,627 
Energy5,127 6,148 17,229 17,899 
Lease expense125 634 1,242 1,756 
Ownership expenses89 995 1,565 3,149 
Incentive management fee(44)(187)7,727 5,263 
Management fees3,015 4,337 14,120 16,498 
Property taxes2,694 4,405 8,083 14,358 
Other taxes53 331 232 1,098 
Insurance1,918 3,409 8,389 10,888 
Total expenses86,882 117,994 343,476 394,357 
Hotel adjusted EBITDA$14,696 $25,562 $138,111 $144,096 
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Hotel adjusted EBITDA$14,696 $25,562 $138,111 $144,096 
Ownership expenses included in other hotel expenses(2,087)(1,667)(4,342)(3,966)
Ownership expenses included in property taxes, insurance and other(12)(66)(132)(224)
Management fees(88)(103)(315)(393)
Depreciation and amortization(16,611)(23,164)(60,623)(69,919)
Advisory services fee(7,498)(7,915)(22,182)(21,717)
Corporate general and administrative
(12,139)(3,811)(21,419)(4,407)
Termination fee(480,000)— (480,000)— 
Gain (loss) on disposition of assets and hotel properties259,927 40,970 277,325 40,970 
Equity in earnings (loss) of unconsolidated entities— — (31)— 
Interest income841 1,494 2,425 4,901 
Other income (expense)— — — (1,250)
Interest expense and amortization of discounts and loan costs(16,203)(25,188)(57,911)(75,376)
Write-off of loan costs and exit fees(20)(366)(1,509)(1,833)
Gain (loss) on extinguishment of debt— (1,553)— (1,553)
Realized and unrealized gain (loss) on derivatives54 (118)337 (301)
Income tax (expense) benefit9,756 648 5,858 (474)
Net income (loss)$(249,384)$4,723 $(224,408)$8,554 
34
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
17. Subsequent Events
Sale of The Four Seasons Resort Scottsdale
On October 28, 2026, the Company completed the sale of The Four Seasons Resort Scottsdale for a purchase price of $372.0 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $180.0 million on the mortgage loan that was secured by the hotel property. The Company subsequently paid $193.6 million to Ashford Inc. which included $168.6 million to pay down a portion of the Company Sale Fee and $25.0 million in cumulative termination fees (the “Master Agreement Termination Fee”) related to the Amended & Restated Braemar Hotel Master Management Agreement with Remington Hospitality and the Braemar Master Project Management Agreement with Premier (collectively, the “Master Agreements”) which were triggered upon the sale of The Four Seasons Resort Scottsdale. As of the filing of this Form 10-Q, approximately $29.4 million of the Company Sale Fee remains payable to our Advisor.
Cooperation and Settlement Agreement
On June 12, 2026, the Company announced its intention to terminate the Advisory Agreement with Ashford Inc. and transition to a self-managed REIT. In connection with the asset sale transactions and the planned termination of the Advisory Agreement, certain stockholders publicly expressed opposition to aspects of the asset sale transactions and the termination of the Advisory Agreement and indicated an intention to pursue legal remedies.
On October 6, 2026, the Company, Ashford Hospitality Trust, Inc. and Ashford Inc. entered into a Settlement Agreement with Al Shams, the Company’s largest stockholder, resolving claims Al Shams had asserted or threatened to assert. Under the settlement, the Company agreed to pay Al Shams $25.0 million in settlement of the disputed claims plus $15.0 million in expense reimbursement, payable in installments (collectively the “Settlement Payment”). Also on October 6, 2026, the Company and Ashford Inc. entered into an Allocation Agreement (the “Allocation Agreement”), under which the Company and Ashford Inc. each bear 50% of the Settlement Payment, net of applicable insurance proceeds, which are currently estimated to be between $29.5 million and $32.0 million. The Company’s net cost of the Settlement Payment after application of any applicable insurance proceeds and contributions made by Ashford Inc. under the Allocation Agreement is currently estimated to be between $4.0 million and $5.3 million. The Settlement Payment is payable in three installments: $20.0 million, which was paid on October 6, 2026, $10.0 million due in February 2027 and $10.0 million due in June 2027.
The Ritz-Carlton Lake Tahoe Mortgage Loan Refinancing
In October 2026, we amended our mortgage loan secured by The Ritz-Carlton Lake Tahoe extending the maturity date from October 2026 to November 2026. On October 30, 2026, we refinanced this mortgage loan into a new $60.0 million mortgage loan with an additional $15.0 million available to be drawn subject to certain conditions. The new mortgage loan is interest only during the initial term and bears interest at a rate of SOFR + 2.65% with a floor of 5.30%, has a three-year initial term and two one-year extension options, subject to satisfaction of certain conditions.
35

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains registered trademarks that are the exclusive property of their respective owners, which are companies other than us, including Marriott International®, Hilton Worldwide®, Sofitel®, Hyatt® and Accor®.
FORWARD-LOOKING STATEMENTS
Throughout this Form 10-Q, we make forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature:
•our business and investment strategy;
•anticipated or expected purchases or sales of assets;
•our projected operating results;
•completion of any pending transactions;
•our understanding of our competition;
•projected capital expenditures; and
•the impact of technology on our operations and business.
Such forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. Additionally, the following factors could cause actual results to vary from our forward-looking statements:
•the factors discussed in our Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2026 (the “2025 10-K”), including those set forth under the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Properties” and other filings under the Exchange Act;
•changes in interest rates and inflation;
•macroeconomic conditions, such as a prolonged period of weak economic growth, and volatility in capital markets;
•uncertainty in the business sector and market volatility;
•catastrophic events or geopolitical conditions, such as the conflict between Russia and Ukraine, Israel-Palestine-Iran conflict, ongoing instability in Venezuela and changes to tariffs or trade policies;
•extreme weather conditions, which may cause property damage or interrupt business;
•our ability to raise sufficient capital and/or take other actions to improve our liquidity position or otherwise meet our liquidity requirements;
•general volatility of the capital markets and the market price of our common and preferred stock;
•general business and economic conditions affecting the lodging and travel industry;
•changes in our business or investment strategy;
•availability, terms and deployment of capital;
•risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board’s decision whether to pay further dividends at levels previously disclosed or to use available cash to pay dividends;
•unanticipated increases in financing and other costs, including changes in interest rates;
•changes in our industry and the markets in which we operate, interest rates, or local economic conditions;
•the degree and nature of our competition;
•actual and potential conflicts of interest with Ashford Trust, Ashford Inc. and its subsidiaries (including Ashford LLC, Remington Hospitality and Premier), and our executive officers and our non-independent directors;
•the ability to fully realize the expected benefits of our transition to a self-managed company or such benefits taking longer than anticipated;
36

•changes in personnel of Ashford LLC or the lack of availability of qualified personnel;
•changes in governmental regulations, accounting rules, tax rates and similar matters;
•legislative and regulatory changes, including changes to the Internal Revenue Code of 1986, as amended (the “Code”) and related rules, regulations and interpretations governing the taxation of REITs, including impacts from the One Big Beautiful Bill Act;
•limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes; and
•future sales and issuances of our common stock or other securities, which might result in dilution and could cause the price of our common stock to decline.
When considering forward-looking statements, you should keep in mind the matters summarized under “Item 1A. Risk Factors” in Part I of our 2025 10-K and this Form 10-Q, and the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, could cause our actual results and performance to differ significantly from those contained in our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Form 10-Q. Furthermore, we do not intend to update any of our forward-looking statements after the date of this Form 10-Q to conform these statements to actual results and performance, except as may be required by applicable law.
Overview
Braemar is a REIT focused on the high-growth luxury hotel and resort sector. Our industry-leading portfolio features luxury properties across the United States and the U.S. territories in the Caribbean. We conduct our business and own substantially all of our assets through our operating partnership, Braemar OP.
We operate in the direct hotel investment segment of the hotel lodging industry. As of September 30, 2026, we owned interests in eight hotel properties in four states, the District of Columbia, Puerto Rico and St. Thomas, U.S. Virgin Islands with 2,268 total rooms. The hotel properties in our current portfolio are predominantly located in U.S. urban markets and resort locations with favorable growth characteristics resulting from multiple demand generators.
We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC”) through an advisory agreement. Ashford LLC is a subsidiary of Ashford Inc. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC. See “Recent Developments” below.
We do not operate any of our hotel properties directly; instead, we contractually engage hotel management companies to operate them for us under management contracts. As of September 30, 2026, Remington Hospitality, a subsidiary of Ashford Inc., managed two of our eight hotel properties. Third-party management companies managed the remaining hotel properties.
Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. These products and services include, but are not limited to, design and construction services, debt placement and related services, audio visual services, real estate advisory and brokerage services, insurance policies covering general liability, workers compensation and business automobile claims, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and cash management services.
Mr. Monty J. Bennett, chairman of our board of directors and chairman and chief executive officer of Ashford Inc. and his father, Mr. Archie Bennett, Jr. (together, the “Bennetts”), as of September 30, 2026, hold a controlling interest in Ashford Inc. The Bennetts owned approximately 810,123 shares of Ashford Inc. common stock, which represented an approximate 55.0% ownership interest in Ashford Inc., and owned 18,777,914 shares of Ashford Inc. Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,832,240 shares of Ashford Inc. common stock, which if converted as of September 30, 2026, would have increased the Bennetts’ ownership interest in Ashford Inc. to 89.5%. The 18,777,914 shares of Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts. Additionally, Mr. Monty J. Bennett acquired the right to direct votes, effective March 25, 2025, and as of September 30, 2026, those rights represented approximately 465,000 common shares.
As of September 30, 2026, Mr. Monty J. Bennett and Mr. Archie Bennett, Jr., together owned approximately 2,472,806 shares of our common stock (including common units, LTIP and performance LTIP units), which represented an approximate 3.4% ownership in the Company.
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Recent Developments
Our Planned Termination of the Advisory Agreement and Transition to Self-Management
On June 12, 2026, following the conclusion of a lengthy strategic review process and upon the recommendation of a Special Committee of the Company’s Board of Directors (the “Board”) comprised solely of independent directors (the “Special Committee”), the Board approved a plan for the Company to become a self-managed REIT. The plan includes terminating the Fifth Amended and Restated Advisory Agreement (the “Advisory Agreement”) with Ashford Inc. and its affiliates (“Ashford”), directly hiring the Company’s management team (including Mr. Richard J. Stockton) and reconstituting the Board with seven new independent directors, including an independent Chairman. Mr. Stockton will continue to serve on the Board. The Special Committee and the Board considered a potential sale of the Company, as contemplated by the Letter Agreement with Ashford dated August 26, 2025, as amended December 22, 2025 (the “Letter Agreement”), but ultimately concluded that terminating the Advisory Agreement and transitioning to self-management, while remaining publicly listed, offered superior value to stockholders.
Benefits for Stockholders
•A focused business generating significant revenue: On a go-forward basis, the Company intends to maintain a portfolio of seven luxury properties across the U.S. and the Caribbean, which had a gross asset value of $1 billion and generated total annual revenue of $381.4 million as of the trailing twelve months ending June 30, 2026.
•Long-term cost savings: The Company intends to directly hire employees and has relocated to new office space, headquartered in Dallas. By directly employing its own management team, Braemar expects to reduce G&A costs by more than $25 million per year. Based on prevailing industry EBITDA multiples, ranging from 11-13x, these savings imply significant potential equity value accretion.
•Board and management fully aligned with stockholders’ best interests: The in-house management structure and a new Board are designed to improve stockholder alignment. The Company retained Ferguson Partners, an independent executive search firm, to identify seven new independent Board members.
•No disruption to management team: Certain members of the management team currently employed by Ashford will become employees of Braemar, and will work exclusively for the Company and have no ongoing relationship with Ashford or its affiliates.
The Special Committee and the entire Board have worked tirelessly to exhaust all available options to maximize stockholder value. While initially a sale of the Company was explored, the Special Committee ultimately concluded that superior value creation was available by terminating the Advisory Agreement, directly hiring management, and remaining publicly listed.
Transition to Self-Managed REIT
As part of the transition, Braemar will terminate the Advisory Agreement and all other material legacy contractual arrangements with Ashford and its affiliates. Following the termination, management, including Mr. Stockton, will be employed directly by Braemar. This new structure is expected to reduce Braemar’s general and administrative costs by more than $25 million annually. Furthermore, by canceling the Ashford Master Agreements, the Company will be free to utilize any third-party company to provide property management, project management or other services at the Company’s hotels.
The new self-management structure was recommended by the Special Committee and approved by the independent members of the Board.
Board Refreshment and Corporate Governance Enhancements
The Company currently expects all existing directors other than Mr. Stockton to tender a resignation letter which will become effective simultaneously with the upcoming filing of the Company’s definitive proxy statement. Immediately thereafter, the Company currently expects that the seven new independent director nominees listed in the Company’s upcoming definitive proxy statement will be appointed to the Board.
The Company has retained Ferguson Partners to assist in the search for new directors, with a focus on ensuring that they collectively possess the right mix of skills and experience to oversee the Company and shape its future strategy. No individuals will be appointed who have existing or prior relationships with Ashford, its Chairman and Chief Executive Officer, Monty J. Bennett, or Archie Bennett Jr.
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Governance Reforms
The Company is also taking steps to implement best-practice corporate governance reforms to better align the Company with the best interests of all stockholders, including a thorough review and revision of the Company’s Bylaws, Corporate Governance Guidelines, Code of Ethics and Board Committee Charters.
Additionally, Braemar will terminate its contractual relationships with Premier Project Management LLC and Remington Lodging & Hospitality, LLC, both of which are subsidiaries of Ashford Inc. Certain immaterial, short-term contracts will be retained with Inspire, Pure and RED Hospitality to avoid disrupting existing hotel operations.
Company Sale Fee under the Advisory Agreement
On July 14, 2026, the Company completed the sale of the Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville for a purchase price of $437.5 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $232.8 million on the mortgage loan that was partially secured by the hotel properties. Upon closing, the Company Sale Fee was triggered under the Advisory Agreement with Ashford Inc., and as a result, the Company incurred a related liability of $480.0 million during the third quarter of 2026.
On August 12, 2026, the Company sold the Pier House Resort & Spa for $190 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $93.7 million on the mortgage loan that was partially secured by the hotel property. During the three months ended September 30, 2026, we paid $265.0 million to our Advisor to pay down a portion of the Company Sale Fee using proceeds from the sales of these four properties.
On October 28, 2026, the Company completed the sale of The Four Seasons Resort Scottsdale for a purchase price of $372.0 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $180.0 million on the mortgage loan that was secured by the hotel property. The Company subsequently paid $193.6 million to Ashford Inc. which included $168.6 million to pay down a portion of the Company Sale Fee and $25.0 million to pay the Master Agreement Termination Fee related to the Master Agreements which was triggered upon the sale of The Four Seasons Resort Scottsdale. As of the filing of this Form 10-Q, approximately $29.4 million of the Company Sale Fee remains payable to our Advisor, which we expect to pay during November of 2026. Following the termination of the advisory agreement, we will no longer pay advisory fees to our Advisor and instead directly incur the costs of employing our management team.
Cooperation and Settlement Agreement
On June 12, 2026, the Company announced its intention to terminate the Advisory Agreement with Ashford Inc. and transition to a self-managed REIT. In connection with the asset sale transactions and the planned termination of the Advisory Agreement, certain stockholders publicly expressed opposition to aspects of the asset sale transactions and the termination of the Advisory Agreement and indicated an intention to pursue legal remedies. On October 6, 2026, the Company, Ashford Hospitality Trust, Inc. and Ashford Inc. entered into a Cooperation and Settlement Agreement with Al Shams resolving these and other claims. See note 14 for a discussion of the Cooperation and Settlement Agreement and related Allocation Agreement.
Other Recent Developments
In July 2026, the Company exercised its put option to require the noncontrolling interest holder to repurchase the Company’s interest in a joint venture consolidated by the Company. As a result, in August 2026, the noncontrolling interest holder repurchased the Company’s interest in the joint venture for $6.3 million and, in conjunction with the repurchase, the Company derecognized $12.8 million of land, the $5.4 million term loan balance secured by the land and the related working capital. The derecognition resulted in a loss of $11,000 for the three and nine months ended September 30, 2026.
In October 2026, we amended our mortgage loan secured by The Ritz-Carlton Lake Tahoe extending the maturity date from October 2026 to November 2026. On October 30, 2026, we refinanced this mortgage loan into a new $60.0 million mortgage loan with an additional $15.0 million available to be drawn subject to certain conditions. The new mortgage loan is interest only during the initial term and bears interest at a rate of SOFR + 2.65% with a floor of 5.30%, has a three-year initial term and two one-year extension options, subject to satisfaction of certain conditions.
Key Indicators of Operating Performance
We use a variety of operating and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP, as well as other financial measures that are non-GAAP measures. 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 operating performance of our individual hotels, groups of hotels
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and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel’s contribution to cash flow and its potential to provide attractive long-term total returns. These key indicators include:
•Occupancy. Occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available. Occupancy measures the utilization of our hotels’ available capacity. We use occupancy to measure demand at a specific hotel or group of hotels in a given period.
•ADR. ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. We use ADR to assess the pricing levels that we are able to generate.
•RevPAR. RevPAR means revenue per available room and is calculated by multiplying ADR by the average daily occupancy. RevPAR is one of the commonly used measures within the hotel industry to evaluate hotel operations. RevPAR does not include revenues from food and beverage sales or parking, telephone or other non-rooms revenues generated by the property. Although RevPAR does not include these ancillary revenues, it is generally considered the leading indicator of core revenues for many hotels. We also use RevPAR to compare the results of our hotels between periods and to analyze results of our comparable hotels (comparable hotels represent hotels we have owned for the entire period). RevPAR improvements attributable to increases in occupancy are generally accompanied by increases in most categories of variable operating costs. RevPAR improvements attributable to increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees.
RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (including housekeeping services, utilities and room supplies) and could also result in increased other operating department revenue and expenses. Changes in ADR typically have a greater impact on operating margins and profitability as they do not have a substantial effect on variable operating costs.
Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring operating performance at the individual hotel level and across our entire business. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only rooms revenue. Rooms revenue is dictated by demand (as measured by occupancy), pricing (as measured by ADR) and our available supply of hotel rooms.
We also use funds from operations (“FFO”), Adjusted FFO, earnings before interest, taxes, depreciation and amortization for real estate (“EBITDAre”) and Adjusted EBITDAre as measures of the operating performance of our business. See “Non-GAAP Financial Measures.”
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RESULTS OF OPERATIONS
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
The following table summarizes changes in key line items from our condensed consolidated statements of operations for the three months ended September 30, 2026 and 2025 (in thousands except percentages):
Three Months Ended September 30,Favorable (Unfavorable)
20262025$ Change% Change
Revenue
Rooms$63,147 $85,701 $(22,554)(26.3)%
Food and beverage25,983 36,637 (10,654)(29.1)
Other12,448 21,218 (8,770)(41.3)
Total revenue101,578 143,556 (41,978)(29.2)
Expenses
Hotel operating expenses:
Rooms18,665 24,728 6,063 24.5 
Food and beverage24,268 30,685 6,417 20.9 
Other expenses38,356 51,766 13,410 25.9 
Management fees3,103 4,440 1,337 30.1 
Total hotel operating expenses84,392 111,619 27,227 24.4 
Property taxes, insurance and other4,677 8,211 3,534 43.0 
Depreciation and amortization16,611 23,164 6,553 28.3 
Advisory services fee7,498 7,915 417 5.3 
Corporate general and administrative12,139 3,811 (8,328)(218.5)
Termination fee480,000 — (480,000)
Total expenses605,317 154,720 (450,597)(291.2)
Gain (loss) on disposition of assets and hotel properties259,927 40,970 218,957 534.4 
Operating income (loss)(243,812)29,806 (273,618)(918.0)
Interest income841 1,494 (653)(43.7)
Interest expense and amortization of discounts and loan costs(16,203)(25,188)8,985 35.7 
Write-off of loan costs and exit fees(20)(366)346 94.5 
Gain (loss) on extinguishment of debt
— (1,553)1,553 100.0 
Realized and unrealized gain (loss) on derivatives54 (118)172 145.8 
Income (loss) before income taxes(259,140)4,075 (263,215)(6,459.3)
Income tax (expense) benefit9,756 648 9,108 1,405.6 
Net income (loss)(249,384)4,723 (254,107)(5,380.2)
(Income) loss attributable to noncontrolling interest in consolidated entities7 412 (405)(98.3)
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership16,104 607 15,497 2,553.0 
Net income (loss) attributable to the Company$(233,273)$5,742 $(239,015)(4,162.6)%
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All hotel properties owned for the three months ended September 30, 2026 and 2025 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the three months ended September 30, 2026 and 2025. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties. The following dispositions affect reporting comparability related to our condensed consolidated financial statements:
Hotel PropertyLocationDisposition Date
Marriott Seattle Waterfront
Seattle, WashingtonAugust 7, 2025
The Clancy
San Francisco, CaliforniaNovember 6, 2025
Park Hyatt Beaver Creek Resort & Spa
Avon, ColoradoMay 26, 2026
The Ritz-Carlton SarasotaSarasota, FloridaJuly 14, 2026
Bardessono Hotel and SpaYountville, CaliforniaJuly 14, 2026
Hotel YountvilleYountville, CaliforniaJuly 14, 2026
Pier House Resort & SpaKey West, FloridaAugust 12, 2026
The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the three months ended September 30, 2026 and 2025:
Three Months Ended September 30,
20262025
Occupancy68.49 %65.24 %
ADR (average daily rate)$415.49 $395.60 
RevPAR (revenue per available room)$284.57 $258.10 
Rooms revenue (in thousands)$63,147 $85,701 
Total hotel revenue (in thousands)$101,578 $143,556 
________
The above information does not include the operations of voluntary rental programs with respect to condominium units and residential units not owned by the Company.
The following table illustrates the key performance indicators of the eight hotel properties that were owned for the full three months ended September 30, 2026 and 2025:
Three Months Ended September 30,
20262025
Occupancy67.89 %64.45 %
ADR (average daily rate)$408.97 $376.00 
RevPAR (revenue per available room)$277.65 $242.33 
Rooms revenue (in thousands)$58,522 $51,164 
Total hotel revenue (in thousands)$94,119 $85,661 
________
The above information does not include the operations of voluntary rental programs with respect to condominium units and residential units not owned by the Company.
Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company changed $239.0 million, from net income of $5.7 million for the three months ended September 30, 2025 (the “2025 quarter”) to a net loss of $233.3 million for the three months ended September 30, 2026 (the “2026 quarter”), as a result of the factors discussed below.
Rooms Revenue. Rooms revenue decreased $22.6 million, or 26.3%, to $63.1 million during the 2026 quarter compared to the 2025 quarter primarily due to the sales of the seven hotel properties stated above. During the 2026 quarter, our eight comparable hotel properties experienced a 344 basis point increase in occupancy and an 8.8% increase in room rates.
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Fluctuations in rooms revenue between the 2026 quarter and the 2025 quarter are a result of the changes in occupancy and ADR between the 2026 quarter and the 2025 quarter as reflected in the table below (dollars in thousands):
Hotel PropertyFavorable (Unfavorable)
Rooms RevenueOccupancy
(change in bps)		ADR (change in %)
Comparable
Capital Hilton$756 (39)9.3 %
The Notary Hotel2,049 983 15.4 %
Sofitel Chicago Magnificent Mile1,611 190 15.3 %
The Ritz-Carlton St. Thomas(158)115 (4.9)%
The Ritz-Carlton Lake Tahoe550 (368)14.0 %
Cameo Beverly Hills1,455 2,283 27.7 %
The Ritz-Carlton Reserve Dorado Beach1,158 4 14.1 %
The Four Seasons Resort Scottsdale(63)(163)2.5 %
Total$7,358 344 8.8 %
Noncomparable
Pier House Resort & Spa$(1,489)1,924 4.0 %
The Ritz-Carlton Sarasota(4,670)1,796 24.4 %
Bardessono Hotel and Spa(4,125)488 (1.1)%
Hotel Yountville(2,850)(1,282)(8.7)%
Park Hyatt Beaver Creek Resort & Spa(2,915)n/an/a
The Clancy(8,881)n/an/a
Marriott Seattle Waterfront(4,982)n/an/a
Food and Beverage Revenue. Food and beverage revenue decreased $10.7 million, or 29.1%, to $26.0 million during the 2026 quarter compared to the 2025 quarter. This decrease is attributable to an aggregate decrease of $2.1 million at The Ritz-Carlton Lake Tahoe and Capital Hilton and a decrease of $11.0 million due to the sales of the seven hotel properties. These decreases were partially offset by an aggregate increase of $2.5 million at six comparable hotel properties.
Other Hotel Revenue. Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, decreased $8.8 million, or 41.3%, to $12.4 million during the 2026 quarter compared to the 2025 quarter. This decrease is attributable to a decrease of $9.5 million due to the sales of the seven hotel properties and an aggregate decrease of $271,000 at Sofitel Chicago Magnificent Mile, The Ritz-Carlton St. Thomas and The Four Seasons Resort Scottsdale, partially offset by an aggregate increase of $1.0 million at five comparable hotel properties.
Rooms Expense. Rooms expense decreased $6.1 million, or 24.5%, to $18.7 million in the 2026 quarter compared to the 2025 quarter. This decrease is primarily attributable to an aggregate decrease of $7.7 million due to the sale of the seven hotel properties and a decrease of $206,000 at The Ritz-Carlton Reserve Dorado Beach. These decreases were partially offset by an aggregate increase of $1.9 million at seven comparable hotel properties.
Food and Beverage Expense. Food and beverage expense decreased $6.4 million, or 20.9%, to $24.3 million during the 2026 quarter compared to the 2025 quarter. This decrease is attributable to a decrease of $9.2 million due to the sales of the seven hotel properties and an aggregate decrease of $723,000 at The Ritz-Carlton Lake Tahoe and Capital Hilton, partially offset by an aggregate increase of $3.5 million at six comparable hotel properties.
Other Operating Expenses. Other operating expenses decreased $13.4 million, or 25.9%, to $38.4 million in the 2026 quarter compared to the 2025 quarter. Other operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees.
We experienced a decrease of $11.0 million in indirect expenses and incentive management fees and a decrease of $2.4 million in direct expenses in the 2026 quarter as compared to the 2025 quarter. Direct expenses were 4.8% of total hotel revenue in the 2026 quarter and 5.0% in the 2025 quarter.
The decrease in direct expenses is associated with lower direct expenses of $2.8 million due to the sales of seven hotel properties partially offset by higher direct expenses of $438,000 at our eight comparable hotel properties.
The decrease in indirect expenses comprises decreases in: (i) general and administrative costs of $4.9 million comprising an aggregate decrease of $5.7 million from the seven sold hotel properties, partially offset by an aggregate increase of $792,000 at our eight comparable hotel properties; (ii) marketing costs of $2.6 million comprising a decrease of $3.3 million from the
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seven sold hotel properties partially offset by an aggregate increase of $700,000 at our eight comparable hotel properties; (iii) repairs and maintenance of $2.1 million comprising a decrease of $2.1 million from the seven sold hotel properties partially offset by an aggregate increase of $77,000 at our eight comparable hotel properties; (iv) energy costs of $1.0 million comprising a decrease of $1.4 million from the seven sold hotel properties partially offset by an aggregate increase of $358,000 at our eight comparable hotel properties; and (v) lease expense of $580,000 comprising a decrease of $593,000 from the seven sold hotel properties partially offset by an aggregate increase of $13,000 at our eight comparable hotel properties. These decreases were partially offset by an increase in incentive management fees of $144,000 comprising an aggregate increase of $375,000 at our eight comparable hotel properties partially offset by a decrease of $231,000 from the seven sold hotel properties.
Management Fees. Base management fees decreased $1.3 million, or 30.1%, to $3.1 million in the 2026 quarter compared to the 2025 quarter. Base management fees decreased $46,000 at Capital Hilton, The Ritz-Carlton Lake Tahoe and The Four Seasons Resort Scottsdale and $1.6 million from the seven sold hotel properties. These decreases were partially offset by an aggregate increase of $295,000 at five comparable hotel properties.
Property Taxes, Insurance and Other. Property taxes, insurance and other decreased $3.5 million, or 43.0%, to $4.7 million in the 2026 quarter compared to the 2025 quarter. The decrease is primarily attributable to a decrease of $2.2 million from the seven sold hotel properties and an aggregate decrease of $1.3 million at our eight comparable hotel properties, primarily at Sofitel Chicago Magnificent Mile.
Depreciation and Amortization. Depreciation and amortization decreased $6.6 million, or 28.3%, to $16.6 million in the 2026 quarter compared to the 2025 quarter. There was an aggregate decrease of $261,000 at Capital Hilton and The Notary Hotel and a decrease of $7.4 million from the seven sold hotel properties, partially offset by an aggregate increase of $1.1 million at six comparable hotel properties.
Advisory Services Fee. Advisory services fee decreased $417,000, or 5.3%, to $7.5 million in the 2026 quarter compared to the 2025 quarter due to decreases of $476,000 in the incentive fee, $357,000 in reimbursable expenses and $75,000 in equity-based compensation, partially offset by an increase of $491,000 in the base advisory fee.
In the 2026 quarter, we recorded an advisory services fee of $7.5 million, which included a base advisory fee of $4.0 million and reimbursable expenses of $3.5 million.
In the 2025 quarter, we recorded an advisory services fee of $7.9 million, which included a base advisory fee of $3.5 million, reimbursable expenses of $3.8 million, an incentive fee of $476,000 and equity-based compensation of $75,000 associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.
Corporate General and Administrative. Corporate general and administrative expense was $12.1 million in the 2026 quarter and consisted of $6.8 million in professional fees, $4.0 million in net settlement charges related to the Settlement Agreement with the Al Shams Parties, $1.2 million of public company costs and $141,000 of miscellaneous expenses.
Corporate general and administrative expense was $3.8 million in the 2025 quarter and consisted of $3.5 million in professional fees, $632,000 of public company costs and $93,000 of miscellaneous expenses. These expenses were partially offset by an expense reduction of $400,000 from an insurance recovery for prior legal expenses.
Termination Fee. Termination fee expense was $480.0 million in the 2026 quarter. On July 14, 2026, the Company completed the sale of The Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville. Upon closing, the Company Sale Fee of $480.0 million was triggered under the Advisory Agreement with Ashford Inc. See discussion in “Recent Developments” above.
Gain (Loss) on Disposition of Assets and Hotel Properties. In the 2026 quarter, we recorded a gain of approximately $259.9 million primarily related to the sales of four hotel properties. On July 14, 2026, the Company sold the Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville, resulting in a gain of approximately $151.7 million. On August 12, 2026, the Company sold Pier House Resort & Spa, resulting in a gain of approximately $108.7 million. These gains were partially offset by a loss in the 2026 quarter of approximately $500,000 related to the settlement of pro-rations and adjustments from the sale of Park Hyatt Beaver Creek Resort & Spa in the second quarter of 2026. In the 2025 quarter, we recorded a gain of approximately $41.0 million related to the sale of Marriott Seattle Waterfront.
Interest Income. Interest income was $841,000 and $1.5 million in the 2026 quarter and 2025 quarter, respectively. The decrease in interest income in the 2026 quarter was primarily attributable to lower excess cash balances in the 2026 quarter compared to the 2025 quarter.
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Interest Expense and Amortization of Loan Costs. Interest expense and amortization of loan costs decreased $9.0 million, or 35.7%, to $16.2 million in the 2026 quarter compared to the 2025 quarter. This decrease is primarily due to lower interest expense of $8.0 million and lower amortization costs of $1.0 million in the 2026 quarter as the Company paid down mortgage loans with proceeds from the sale of the seven hotel properties.
Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $20,000 in the 2026 quarter and $366,000 in the 2025 quarter.
Gain (loss) on Extinguishment of Debt. In the 2025 quarter, we recognized a loss of $1.6 million from the write-off of deferred loan costs resulting from the paydown on the mortgage loan partially secured by the Marriott Seattle Waterfront in conjunction with the sale of the property.
Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain on derivatives of $54,000 for the 2026 quarter consisted primarily of an unrealized gain on interest rate caps.
Realized and unrealized loss on derivatives of $118,000 for the 2025 quarter consisted of an unrealized loss on interest rate caps of approximately $299,000, partially offset by a realized gain of $181,000 associated with payments received from counterparties on in-the-money interest rate caps.
Income Tax (Expense) Benefit. Income tax benefit increased $9.1 million, from $648,000 in the 2025 quarter to $9.8 million in the 2026 quarter. The increase in income tax benefit in the 2026 quarter is due to a decrease in the taxable income of certain of our TRS, including the TRS impact of the Company Sale Fee.
(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities. Our noncontrolling interest partners in consolidated entities were allocated losses of $7,000 and $412,000 in the 2026 quarter and the 2025 quarter, respectively. At September 30, 2025, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity and a 25% ownership interest in a joint venture which was derecognized in August 2026 after the Company exercised its put option to require the noncontrolling interest holder to repurchase the Company’s interest in the joint venture.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net losses of $16.1 million and $607,000 in the 2026 quarter and the 2025 quarter, respectively. Redeemable noncontrolling interests in Braemar OP represented ownership interests of 6.27% and 6.91% as of September 30, 2026 and 2025, respectively.
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Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
The following table summarizes changes in key line items from our condensed consolidated statements of operations for the nine months ended September 30, 2026 and 2025 (in thousands except percentages):
Nine Months Ended September 30,Favorable (Unfavorable)
20262025$ Change% Change
Revenue
Rooms$294,131 $331,617 $(37,486)(11.3)%
Food and beverage123,647 133,996 (10,349)(7.7)
Other63,809 72,840 (9,031)(12.4)
Total hotel revenue481,587 538,453 (56,866)(10.6)
Expenses
Hotel operating expenses:
Rooms67,761 80,232 12,471 15.5 
Food and beverage98,075 106,662 8,587 8.1 
Other expenses151,158 168,587 17,429 10.3 
Management fees14,435 16,891 2,456 14.5 
Total hotel operating expenses331,429 372,372 40,943 11.0 
Property taxes, insurance and other16,836 26,568 9,732 36.6 
Depreciation and amortization60,623 69,919 9,296 13.3 
Advisory services fee22,182 21,717 (465)(2.1)
Corporate general and administrative21,419 4,407 (17,012)(386.0)
Termination fee480,000 — (480,000)
Total expenses932,489 494,983 (437,506)(88.4)
Gain (loss) on disposition of assets and hotel properties277,325 40,970 236,355 576.9 
Operating income (loss)(173,577)84,440 (258,017)(305.6)
Equity in earnings (loss) of unconsolidated entity(31)— (31)
Interest income2,425 4,901 (2,476)(50.5)
Other income (expense)— (1,250)1,250 100.0 
Interest expense and amortization of discounts and loan costs(57,911)(75,376)17,465 23.2 
Write-off of loan costs and exit fees(1,509)(1,833)324 17.7 
Gain (loss) on extinguishment of debt— (1,553)1,553 100.0 
Realized and unrealized gain (loss) on derivatives337 (301)638 212.0 
Income (loss) before income taxes(230,266)9,028 (239,294)(2,650.6)
Income tax (expense) benefit5,858 (474)6,332 1,335.9 
Net income (loss)(224,408)8,554 (232,962)(2,723.4)
(Income) loss attributable to noncontrolling interest in consolidated entities72 361 (289)(80.1)
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership15,805 2,358 13,447 570.3 
Net income (loss) attributable to the Company$(208,531)$11,273 $(219,804)(1,949.8)%
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All hotel properties owned for the nine months ended September 30, 2026 and 2025 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the nine months ended September 30, 2026 and 2025. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties. The following dispositions affect reporting comparability related to our condensed consolidated financial statements:
Hotel PropertyLocationDisposition Date
Marriott Seattle Waterfront
Seattle, WashingtonAugust 7, 2025
The Clancy
San Francisco, CaliforniaNovember 6, 2025
Park Hyatt Beaver Creek Resort & SpaAvon, ColoradoMay 26, 2026
The Ritz-Carlton SarasotaSarasota, FloridaJuly 14, 2026
Bardessono Hotel and SpaYountville, CaliforniaJuly 14, 2026
Hotel YountvilleYountville, CaliforniaJuly 14, 2026
Pier House Resort & SpaKey West, FloridaAugust 12, 2026
The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the nine months ended September 30, 2026 and 2025:
Nine Months Ended September 30,
20262025
Occupancy67.89 %67.26 %
ADR (average daily rate)$564.90 $480.86 
RevPAR (revenue per available room)$383.51 $323.44 
Rooms revenue (in thousands)$294,131 $331,617 
Total hotel revenue (in thousands)$481,587 $538,453 
________
The above information does not include the operations of voluntary rental programs with respect to condominium units and residential units not owned by the Company.
The following table illustrates the key performance indicators of the eight comparable hotel properties that were owned for the full nine months ended September 30, 2026 and 2025:
Nine Months Ended September 30,
20262025
Occupancy67.19 %66.83 %
ADR (average daily rate)$531.14 $485.13 
RevPAR (revenue per available room)$356.85 $324.20 
Rooms revenue (in thousands)$223,358 $203,124 
Total hotel revenue (in thousands)$352,732 $326,909 
________
The above information does not include the operations of voluntary rental programs with respect to condominium units and residential units not owned by the Company.
Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company changed $219.8 million from net income of $11.3 million for the nine months ended September 30, 2025 (the “2025 period”) to a net loss of $208.5 million for the nine months ended September 30, 2026 (the “2026 period”), as a result of the factors discussed below.
Rooms Revenue. Rooms revenue decreased $37.5 million, or 11.3%, to $294.1 million during the 2026 period compared to the 2025 period primarily due to the sales of the seven hotel properties stated above. During the 2026 period, our eight comparable hotel properties experienced a 9.5% increase in room rates and a 36 basis point increase in occupancy compared to the 2025 period.
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Fluctuations in rooms revenue between the 2026 period and the 2025 period are a result of the changes in occupancy and ADR between the 2026 period and the 2025 period as reflected in the table below (dollars in thousands):
Hotel PropertyFavorable (Unfavorable)
Rooms RevenueOccupancy
(change in bps)		ADR
(change in %)
Comparable
Capital Hilton
$(345)(52)(0.4)%
The Notary Hotel3,412 310 11.7 %
Sofitel Chicago Magnificent Mile2,603 72 11.5 %
The Ritz-Carlton St. Thomas
4,284 336 7.3 %
The Ritz-Carlton Lake Tahoe
(28)(571)10.9 %
Cameo Beverly Hills
2,253 146 32.9 %
The Ritz-Carlton Reserve Dorado Beach6,483 305 10.8 %
The Four Seasons Resort Scottsdale1,572 (396)13.3 %
Total$20,234 36 9.5 %
Noncomparable
Pier House Resort & Spa$(56)1,121 5.9 %
The Ritz-Carlton Sarasota(1,441)1,140 14.8 %
Bardessono Hotel and Spa(3,455)(679)9.2 %
Hotel Yountville(2,381)(452)5.2 %
Park Hyatt Beaver Creek Resort & Spa(4,409)696 25.5 %
The Clancy(27,535)n/an/a
Marriott Seattle Waterfront(18,443)n/an/a
Food and Beverage Revenue. Food and beverage revenue decreased $10.3 million, or 7.7%, to $123.6 million during the 2026 period compared to the 2025 period. This decrease is attributable to an aggregate decrease of $4.9 million at Capital Hilton, The Ritz-Carlton Lake Tahoe and The Four Seasons Resort Scottsdale and a decrease of $13.3 million due to the sales of the seven hotel properties. These decreases were partially offset by an aggregate increase of approximately $7.8 million at five comparable hotel properties.
Other Hotel Revenue. Other hotel revenue, which consists mainly of condominium management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, decreased $9.0 million, or 12.4%, to $63.8 million during the 2026 period compared to the 2025 period. This decrease is attributable to an aggregate decrease of approximately $692,000 at Sofitel Chicago Magnificent Mile and Cameo Beverly Hills as well as a decrease of $11.7 million due to the sales of the seven hotel properties. These decreases were partially offset by higher other hotel revenue of $3.4 million at six comparable hotel properties.
Rooms Expense. Rooms expense decreased $12.5 million, or 15.5%, to $67.8 million in the 2026 period compared to the 2025 period. This decrease is attributable to a decrease in rooms expense of $175,000 at The Ritz-Carlton Lake Tahoe and a decrease of $16.5 million due to the sales of the seven hotel properties. These decreases were partially offset by an aggregate increase of $4.2 million at seven comparable hotel properties.
Food and Beverage Expense. Food and beverage expense decreased $8.6 million, or 8.1%, to $98.1 million during the 2026 period compared to the 2025 period. This decrease is attributable to lower aggregate food and beverage expense of approximately $1.5 million at Capital Hilton and The Ritz-Carlton Lake Tahoe and a decrease of $13.0 million due to the sales of seven hotel properties. These decreases were partially offset by an aggregate increase of approximately $6.0 million at six comparable hotel properties.
Other Operating Expenses. Other operating expenses decreased $17.4 million, or 10.3%, to $151.2 million in the 2026 period compared to the 2025 period. Other operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees.
We experienced a decrease of $2.1 million in direct expenses and a decrease of $15.4 million in indirect expenses and incentive management fees in the 2026 period compared to the 2025 period. Direct expenses were 4.7% of total hotel revenue in the 2026 period and 4.6% in the 2025 period.
The decrease in direct expenses is associated with lower direct expenses of $3.0 million due to the sales of seven hotel properties partially offset by higher direct expenses of $936,000 at our eight comparable hotel properties.
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The decrease in indirect expenses is comprised of decreases in: (i) general and administrative costs of $7.9 million comprising a decrease of $10.4 million from the seven sold hotel properties partially offset by an aggregate increase of $2.5 million at our eight comparable hotel properties; (ii) marketing costs of $4.7 million comprising a decrease of $6.1 million from the seven sold hotel properties partially offset by an aggregate increase of $1.4 million at our eight comparable hotel properties; (iii) repairs and maintenance of $4.0 million comprising a decrease of $4.2 million from the seven sold hotel properties partially offset by an aggregate increase of $162,000 at our eight comparable hotel properties; (iv) energy costs of $670,000 comprising a decrease of $2.1 million from the seven sold hotel properties partially offset by an aggregate increase of $1.5 million at our eight comparable hotel properties; and (v) lease expense of $585,000 comprising decreases of $576,000 from the seven sold hotel properties and $9,000 at our eight comparable hotel properties. These decreases were partially offset by an increase in incentive management fees of $2.5 million comprising an aggregate increase of $1.8 million at our eight comparable hotel properties and an increase of $627,000 from the seven sold hotel properties.
Management Fees. Base management fees decreased $2.5 million, or 14.5%, to $14.4 million in the 2026 period compared to the 2025 period. Management fees decreased $3.2 million due to the sales of the seven hotel properties as well as decreases of $220,000 at Capital Hilton and The Ritz-Carlton Lake Tahoe. These decreases were partially offset by an aggregate increase of $934,000 at six comparable hotel properties.
Property Taxes, Insurance and Other. Property taxes, insurance and other decreased $9.7 million, or 36.6%, to $16.8 million in the 2026 period compared to the 2025 period. This decrease is primarily attributable to a decrease of $5.5 million from the sale of the seven hotel properties and an aggregate decrease of $4.2 million at our eight comparable hotel properties, primarily attributable to a favorable property tax assessment at the Sofitel Chicago Magnificent Mile.
Depreciation and Amortization. Depreciation and amortization decreased $9.3 million, or 13.3%, to $60.6 million for the 2026 period compared to the 2025 period. This decrease is due to lower depreciation of $13.3 million from the sales of the seven hotel properties and an aggregate decrease of $538,000 at Capital Hilton and The Notary Hotel. These decreases were partially offset by an aggregate increase of $4.6 million at six comparable hotel properties.
Advisory Services Fee. Advisory services fee increased $465,000, or 2.1%, to $22.2 million in the 2026 period compared to the 2025 period due to a higher base advisory fee of $995,000, higher reimbursable expenses of $192,000 and higher equity-based compensation of $24,000, partially offset by a lower incentive fee of $746,000.
In the 2026 period, we recorded an advisory services fee of $22.2 million, which included a base advisory fee of $11.6 million and reimbursable expenses of $10.6 million.
In the 2025 period, we recorded an advisory services fee of $21.7 million, which included a base advisory fee of $10.6 million, reimbursable expenses of $10.4 million, an incentive fee of $746,000 and a credit to expense of $24,000 associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.
Corporate General and Administrative. Corporate general and administrative expense was $21.4 million in the 2026 period and consisted of $12.9 million in professional fees, $4.0 million in net settlement charges related to the Settlement Agreement with the Al Shams Parties, $3.3 million of public company costs, $435,000 related to Ashford Securities and $824,000 in miscellaneous expenses.
Corporate general and administrative expense was $4.4 million in the 2025 period and consisted of $6.6 million in professional fees, $2.2 million of public company costs and $931,000 in miscellaneous expenses. These expenses were partially offset by an expense reduction of $5.4 million from an insurance recovery for prior legal expenses.
Termination Fee. Termination fee expense was $480.0 million in the 2026 period. On July 14, 2026, the Company completed the sale of The Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville. Upon closing, the Company Sale Fee of $480.0 million was triggered under the Advisory Agreement with Ashford Inc. See discussion in “Recent Developments” above.
Gain (loss) on Disposition of Assets and Hotel Properties. In the 2026 period, we recorded a gain of approximately $277.3 million primarily related to the sales of five hotel properties. On July 14, 2026, the Company sold The Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville, resulting in a gain of approximately $151.7 million. On August 12, 2026, the Company sold the Pier House Resort & Spa, resulting in a gain of approximately $108.7 million. On May 26, 2026, the Company sold the Park Hyatt Beaver Creek Resort & Spa resulting in a gain of approximately $16.9 million. In the 2025 period, we recorded a gain of approximately $41.0 million primarily related to the sale of Marriott Seattle Waterfront.
Equity in Earnings (Loss) of Unconsolidated Entity. There was a $31,000 loss in equity in earnings (loss) of unconsolidated entity in the 2026 period as a result of writing off the remaining OpenKey note receivable balance.
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Other Income (Expense). Other expense was $1.3 million in the 2025 period due to a realized loss on the sale of a portion of CMBS.
Interest Income. Interest income was $2.4 million and $4.9 million in the 2026 period and the 2025 period, respectively. The decrease in interest income in the 2026 period was primarily attributable to lower excess cash balances compared to the 2025 period.
Interest Expense and Amortization of Discounts and Loan Costs. Interest expense and amortization of discounts and loan costs decreased $17.5 million, or 23.2%, to $57.9 million for the 2026 period compared to the 2025 period. The decrease is primarily due to lower interest expense of $16.4 million and lower amortization costs of $1.0 million in the 2026 period as the Company paid down mortgage loans with proceeds from the sale of the seven hotel properties.
Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $1.5 million in the 2026 period and $1.8 million in the 2025 period. Write-off of loan costs and exit fees relate to various loan refinances and modifications.
Gain (loss) on Extinguishment of Debt. In the 2025 period, we recognized a loss of $1.6 million from the write-off of deferred loan costs resulting from the paydown on the mortgage loan partially secured by the Marriott Seattle Waterfront in conjunction with the sale of the property.
Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain on derivatives of $337,000 for the 2026 period consisted of an unrealized gain on interest rate caps of $326,000 and a realized gain of $11,000 associated with payments received from counterparties on in-the-money interest rate caps.
Realized and unrealized loss on derivatives of $301,000 for the 2025 period consisted of an unrealized loss on interest rate caps of $850,000, partially offset by a realized gain of $549,000 associated with payments received from counterparties on in-the-money interest rate caps.
Income Tax (Expense) Benefit. Income tax (expense) benefit changed $6.3 million, from expense of $474,000 in the 2025 period to a benefit of $5.9 million in the 2026 period. The change in income tax (expense) benefit in the 2026 period is due to a decrease in the taxable income of certain of our TRS, including the TRS impact of the Company Sale Fee.
(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities. Our noncontrolling interest partners in consolidated entities were allocated losses of $72,000 and $361,000 in the 2026 period and the 2025 period, respectively. As of September 30, 2025, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity and a 25% ownership interest in a joint venture which was derecognized in August 2026 after the Company exercised its put option to require the noncontrolling interest holder to repurchase the Company’s interest in the joint venture.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net losses of $15.8 million and $2.4 million in the 2026 period and the 2025 period, respectively. Redeemable noncontrolling interests represented ownership interests in Braemar OP of approximately 6.27% and 6.91% as of September 30, 2026 and 2025, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our hotel properties, including:
•advisory fees payable to Ashford LLC prior to and in connection with the termination of the advisory agreement and Master Agreements and, following our transition to self-management, the costs of employing our management team directly;
•recurring maintenance necessary to maintain our hotel properties in accordance with brand standards;
•interest expense and scheduled principal payments on outstanding indebtedness;
•dividends on our common stock;
•dividends on our preferred stock;
•redemptions of our non-traded preferred stock; and
•capital expenditures to improve our hotel properties.
We expect to meet our short-term liquidity requirements generally through net cash provided by operations, capital market activities, asset sales and existing cash balances.
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We are required to pay our Advisor on a monthly basis a base advisory fee, subject to a minimum base advisory fee, pursuant to the advisory agreement between us and our Advisor. Additionally, under the terms of the Letter Agreement with our Advisor, as amended in December 2025, we are required to remit property sale net proceeds, after taking into account our anticipated working capital requirements, to our Advisor to satisfy the Company Sale Fee and Master Agreement Termination Fee. During the three months ended September 30, 2026, we paid $265.0 million to our Advisor to pay down a portion of the Company Sale Fee.
On October 28, 2026, the Company completed the sale of The Four Seasons Resort Scottsdale for a purchase price of $372.0 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $180.0 million on the mortgage loan that was secured by the hotel property. The Company subsequently paid $193.6 million to Ashford Inc. which included $168.6 million to pay down a portion of the Company Sale Fee and $25.0 million to pay the Master Agreement Termination Fee related to the Master Agreements which was triggered upon the sale of The Four Seasons Resort Scottsdale. As of the filing of this Form 10-Q, approximately $29.4 million of the Company Sale Fee remains payable to our Advisor, which we expect to pay during November of 2026. Following the termination of the advisory agreement, we will no longer pay advisory fees to our Advisor and instead directly incur the costs of employing our management team.
On October 6, 2026, the Company, Ashford Hospitality Trust, Inc. and Ashford Inc. entered into a Settlement Agreement with Al Shams resolving these and other claims. Under the Settlement Agreement, the Company agreed to pay Al Shams $25.0 million in settlement of the disputed claims plus $15.0 million in expense reimbursement, payable in installments (collectively the “Settlement Payment”). Also on October 6, 2026, the Company and Ashford Inc. entered into an Allocation Agreement (the “Allocation Agreement”), under which the Company and Ashford Inc. each bear 50% of the Settlement Payment, net of applicable insurance proceeds, which are currently estimated to be between $29.5 million and $32.0 million. The Company’s net cost of the Settlement Payment after application of any applicable insurance proceeds and contributions made by Ashford Inc. under the Allocation Agreement is currently estimated to be between $4.0 million and $5.3 million. The Settlement Payment is payable in three installments: $20.0 million, which was paid on October 6, 2026, $10.0 million due in February 2027 and $10.0 million due in June 2027.
Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotel properties and redevelopments, renovations, expansions and other capital expenditures that need to be made periodically with respect to our hotel properties and scheduled debt payments. We expect to meet our long-term liquidity requirements through various sources of capital, including future common and preferred equity issuances, existing working capital, net cash provided by operations, hotel mortgage indebtedness and other secured and unsecured borrowings. However, there are a number of factors that may have a material adverse effect on our ability to access these capital sources, the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity and market perceptions about us. The success of our business strategy will depend, in part, on our ability to access these various capital sources. While management cannot provide any assurances, management believes that our cash flow from operations and our existing cash balances will be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity principal payments and paydowns for extension tests), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S. federal income tax purposes.
Our hotel properties will require periodic capital expenditures and renovations to remain competitive. In addition, acquisitions, redevelopments or expansions of hotel properties may require significant capital outlays. We may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures, acquisitions or hotel redevelopment through retained earnings is very limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations and prospects could be materially and adversely affected.
Certain of our loan agreements contain cash trap provisions that may be triggered if the performance of our hotel properties declines. When these provisions are triggered, substantially all of the profit generated by the hotel properties securing such loan is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our various lenders. This could affect our liquidity and our ability to make distributions to our stockholders until such time that a cash trap is no longer in effect for such loan. These cash trap provisions have been triggered on two mortgage loans, as discussed below. Our loans that are in cash traps may remain subject to the cash trap provisions for a substantial period of time which could limit our flexibility and adversely affect our financial condition or our qualification as a REIT. As of September 30, 2026, the
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mortgage loan secured by The Ritz-Carlton Lake Tahoe and the loan secured by the Capital Hilton were in cash traps. The amount of cash in the cash traps as of September 30, 2026 was $874,000.
As of September 30, 2026, the Company held cash and cash equivalents of $99.5 million (inclusive of amounts held for sale) and restricted cash of $48.6 million (inclusive of amounts held for sale), the vast majority of which is comprised of lender and manager-held reserves. As of September 30, 2026, $16.5 million (inclusive of amounts held for sale) was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs. As of September 30, 2026, our net debt to gross assets was 33.3%.
The Company’s cash and cash equivalents are primarily comprised of corporate cash invested in short-term U.S. Treasury securities with maturity dates of less than 90 days and corporate cash held at commercial banks in Insured Cash Sweep (“ICS”) accounts, which are fully insured by the FDIC. The Company’s cash and cash equivalents also includes property-level operating cash deposited with commercial banks that have been designated as a Global Systemically Important Bank (“G-SIB”) by the Financial Stability Board (“FSB”) and a small amount deposited with other commercial banks.
Each share of our Series E Preferred Stock and Series M Preferred Stock is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee, subject to the limitations as stated in the Articles Supplementary.
As of September 30, 2026, the Company determined that a portion of the outstanding Series E Preferred Stock and Series M Preferred Stock met the criteria for mandatory redemption based on certain holders initiating redemption requests that exceeded the limitations set forth in the Articles Supplementary. As of September 30, 2026, the Company has received $61.2 million in investor-initiated Series E Preferred Stock redemption requests and $2.3 million in investor-initiated Series M Preferred Stock redemption requests that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet.
Equity Transactions
On November 13, 2019, we filed an initial registration statement with the SEC, as amended on January 24, 2020, for shares of our non-traded Series E Redeemable Preferred Stock (the “Series E Preferred Stock”) and our non-traded Series M Redeemable Preferred Stock (the “Series M Preferred Stock”). The registration statement became effective on February 21, 2020, and contemplates the issuance and sale of up to 20,000,000 shares of Series E Preferred Stock or Series M Preferred Stock in a primary offering and up to 8,000,000 shares of Series E Preferred Stock or Series M Preferred Stock pursuant to a dividend reinvestment plan. On February 25, 2020, we filed our prospectus with the SEC. Ashford Securities, a subsidiary of Ashford Inc., serves as the dealer manager and wholesaler of the Series E Preferred Stock and Series M Preferred Stock. On April 2, 2021, the Company filed with the State Department of Assessments and Taxation of the State of Maryland (the “SDAT”) articles supplementary to the Company’s Articles of Amendment and Restatement that provided for: (i) reclassifying the existing 28,000,000 shares of Series E Preferred Stock and 28,000,000 shares of Series M Preferred Stock as unissued shares of preferred stock; (ii) reclassifying and designating 28,000,000 shares of the Company’s authorized capital stock as shares of the Series E Preferred Stock (the “Series E Articles Supplementary”); and (iii) reclassifying and designating 28,000,000 shares of the Company’s authorized capital stock as shares of the Series M Preferred Stock (the “Series M Articles Supplementary”). The Series E Articles Supplementary and Series M Articles Supplementary were filed to revise the preferred stock terms related to the dividend rate, our optional redemption right and certain other voting rights. The Company also caused its operating partnership to execute Amendment No. 5 to the Third Amended and Restated Agreement of Limited Partnership to amend the terms of its operating partnership agreement to conform to the terms of the Series E Articles Supplementary and Series M Articles Supplementary. In total, the Company issued approximately 16.4 million shares of Series E Preferred Stock and received net proceeds of approximately $369.5 million and issued approximately 2.0 million shares of Series M Preferred Stock and received net proceeds of approximately $47.6 million. On February 21, 2023, the Company announced the closing of its offering of the Series E Preferred Stock and Series M Preferred Stock.
On May 3, 2024, our board of directors approved a new share repurchase program, pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share, having an aggregate value of up to $50 million. The Company may repurchase shares through open market transactions, privately negotiated transactions or other means. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions, and the program may be suspended or terminated at any time by the Company at its discretion without prior notice. The board of directors’ authorization replaced any previous repurchase authorizations. As of November 3, 2026, the Company has not repurchased any common stock pursuant to the plan.
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Debt Transactions
On May 26, 2026, the Company sold the Park Hyatt Beaver Creek Resort & Spa for $176 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid the $70.5 million mortgage loan that was secured by the hotel property.
On June 1, 2026, the Company repaid its $86.3 million Convertible Senior Notes in full.
On June 25, 2026, the Company extended its $43.4 million mortgage loan secured by The Ritz-Carlton Lake Tahoe. Terms of the amendment included extending the maturity date from July 2026 to October 2026, and adding one three-month extension option, subject to satisfaction of certain conditions. In October 2026, we amended this mortgage loan extending the maturity date from October 2026 to November 2026. On October 30, 2026, we refinanced this mortgage loan into a new $60.0 million mortgage loan with an additional $15.0 million available to be drawn subject to certain conditions. The new mortgage loan is interest only during the initial term and bears interest at a rate of SOFR + 2.65% with a floor of 5.30%, has a three-year initial term and two one-year extension options, subject to satisfaction of certain conditions.
On July 14, 2026, the Company completed the sale of the Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville for a purchase price of $437.5 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $232.8 million on the mortgage loan that was partially secured by the hotel properties.
On August 12, 2026, the Company sold the Pier House Resort & Spa for $190.0 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $93.7 million on the mortgage loan that was partially secured by the hotel property.
On October 28, 2026, the Company completed the sale of The Four Seasons Resort Scottsdale for a purchase price of $372 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $180.0 million on the mortgage loan that was secured by the hotel property.
Sources and Uses of Cash
We had approximately $99.5 million (inclusive of amounts held for sale) and $124.4 million of cash and cash equivalents at September 30, 2026 and December 31, 2025, respectively.
Net Cash Flows Provided by (Used in) Operating Activities. Net cash flows used in operating activities were $215.3 million for the nine months ended September 30, 2026 and net cash flows provided by operating activities were $32.4 million for the nine months ended September 30, 2025. Operating cash flows in the nine months ended September 30, 2026 and 2025 include $265.0 million and $17.0 million, respectively, of payments to Ashford Inc. which were used to partially pay down the Company Sale Fee. Cash flows from operations were also impacted by changes in hotel operations and the disposition of hotel properties and by the timing of working capital cash flows, such as collecting receivables from hotel guests, paying vendors, settling with related parties and settling with hotel managers.
Net Cash Flows Provided by (Used in) Investing Activities. For the nine months ended September 30, 2026, net cash flows provided by investing activities were $745.1 million. Cash inflows consisted of net proceeds from the sale of five hotel properties of $760.6 million, $5.9 million in net proceeds from the sale of the Company’s interest in a joint venture consolidated by the Company, $1.3 million from property insurance proceeds and $58,000 from the sale of OpenKey. These cash inflows were partially offset by cash outflows of $22.8 million from capital improvements made to various hotel properties. Our capital improvements consisted of approximately $15.4 million of return on investment capital projects and approximately $7.4 million of renewal and replacement capital projects.
For the nine months ended September 30, 2025, net cash flows provided by investing activities were $106.5 million. The cash inflows were attributable to $139.3 million from the sale of Marriott Seattle Waterfront, $23.8 million of proceeds from the sale of investment in securities and $3.5 million from property insurance proceeds. These cash inflows were partially offset by cash outflows of $54.6 million of capital improvements made to various hotel properties and the acquisition of land of $5.5 million. Our capital improvements consisted of approximately $38.5 million of return on investment capital projects and approximately $16.1 million of renewal and replacement capital projects.
Return on investment capital projects are designed to improve the positioning of our hotel properties within their markets and competitive sets. Renewal and replacement capital projects are designed to maintain the quality and competitiveness of our hotels.
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Net Cash Flows Provided by (Used in) Financing Activities. For the nine months ended September 30, 2026, net cash flows used in financing activities were $548.6 million. Cash outflows primarily consisted of $483.3 million of repayments of indebtedness, $1.6 million of payments of loan costs and exit fees, $38.2 million for cash redemptions of Series E and Series M Preferred Stock and $25.6 million of dividend and distribution payments.
For the nine months ended September 30, 2025, net cash flows used in financing activities were $160.0 million. Cash outflows primarily consisted of $453.6 million of repayments of indebtedness, $59.2 million for cash redemptions of Series E and Series M preferred stock, $35.9 million of dividend and distribution payments, $11.5 million of payments of loan costs and exit fees, $2.3 million of distributions to noncontrolling interests in consolidated entities, $778,000 for repurchase of common stock, $658,000 to purchase interest rate caps and $94,000 from the redemption of operating partnership units. These cash outflows were partially offset by cash inflows of $403.0 million from borrowings on indebtedness, $611,000 of proceeds from in-the-money interest rate caps and a contribution of $306,000 from a noncontrolling interest holder in a consolidated entity.
Dividend Policy
Our board of directors has not declared a dividend policy for 2026. The board of directors will continue to review the Company’s dividend policy. For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof.
Seasonality
Our properties’ operations historically have been seasonal as certain properties maintain higher occupancy rates during the summer months and some during the winter months. This seasonality pattern can cause fluctuations in our quarterly lease revenue under our percentage leases. Quarterly revenue also may be adversely affected by renovations and repositionings, our managers’ effectiveness in generating business and by events beyond our control, such as pandemics, extreme weather conditions, natural disasters, terrorist attacks or alerts, civil unrest, government shutdowns, airline strikes or reduced airline capacity, economic factors and other considerations affecting travel. To the extent that cash flows from operations and cash on hand are insufficient during any quarter due to temporary or seasonal fluctuations in lease revenue, we expect to utilize borrowings to fund distributions required to maintain our REIT status. However, we cannot make any assurances that we will make distributions in the future.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Our accounting policies that are critical or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Form 10-K. There have been no material changes in these critical accounting policies.
Non-GAAP Financial Measures
The following non-GAAP presentations of EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO are presented to help our investors evaluate our operating performance.
EBITDA is defined as net income (loss) before interest expense and amortization of loan costs, depreciation and amortization, income taxes, equity in (earnings) loss of unconsolidated entity and after the Company’s portion of EBITDA of OpenKey. In addition, we exclude impairment on real estate, (gain) loss on disposition of assets and hotel properties and the Company’s portion of EBITDAre of OpenKey from EBITDA to calculate EBITDA for real estate, or EBITDAre, as defined by NAREIT.
We then further adjust EBITDAre to exclude certain additional items such as amortization of favorable (unfavorable) contract assets (liabilities), transaction and conversion costs, other income/expense, write-off of loan costs and exit fees, gain/loss on insurance settlements, legal, advisory and settlement costs, advisory services incentive fee, gain/loss on extinguishment of debt, stock/unit-based compensation and the Company’s portion of adjustments to EBITDAre of OpenKey, non-cash items such as unrealized gain/ loss on derivatives and the termination fee from our planned termination of the advisory agreement.
We present EBITDA, EBITDAre and Adjusted EBITDAre because we believe they are useful to an investor in evaluating our operating performance because they provide investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We
54

also believe they help investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results. Our management team also uses EBITDA as one measure in determining the value of acquisitions and dispositions. EBITDA, EBITDAre and Adjusted EBITDAre as calculated by us may not be comparable to EBITDA, EBITDAre and Adjusted EBITDAre reported by other companies that do not define EBITDA, EBITDAre and Adjusted EBITDAre exactly as we define the terms. EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as determined by GAAP as an indicator of liquidity.
The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands) (unaudited):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Net income (loss)$(249,384)$4,723 $(224,408)$8,554 
Interest expense and amortization of loan costs 16,203 25,188 57,911 75,376 
Depreciation and amortization 16,611 23,164 60,623 69,919 
Income tax expense (benefit) (9,756)(648)(5,858)474 
Equity in (earnings) loss of unconsolidated entity— — 31 — 
EBITDA
(226,326)52,427 (111,701)154,323 
(Gain) loss on disposition of assets and hotel properties(259,927)(40,970)(277,325)(40,970)
EBITDAre(486,253)11,457 (389,026)113,353 
Amortization of favorable (unfavorable) contract assets (liabilities)36 107 250 321 
Transaction and conversion costs
3,900 1,608 7,719 2,774 
Write-off of premiums, loan costs and exit fees20 366 1,509 1,833 
Realized and unrealized (gain) loss on derivatives(54)118 (337)301 
Stock/unit-based compensation— 75 — (20)
Legal, advisory and settlement costs
5,866 618 7,178 (3,864)
Advisory services incentive fee— 476 — 746 
(Gain) loss on extinguishment of debt— 1,553 — 1,553 
Other (income) expense
— — — 1,250 
Severance
365 — 913 — 
Termination fee480,000 — 480,000 — 
Adjusted EBITDAre$3,880 $16,378 $108,206 $118,247 
55

FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses on disposition of assets, plus impairment charges on real estate, depreciation and amortization of real estate assets, and after redeemable noncontrolling interests in the operating partnership and adjustments for unconsolidated entities. NAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the basis determined by GAAP. Our calculation of Adjusted FFO excludes transaction and conversion costs, other income/expense, write-off of premiums, loan costs and exit fees, legal, advisory and settlement costs, stock/unit-based compensation, severance, gain/loss on insurance settlements, gain/loss on extinguishment of debt, and non-cash items such as deemed dividends on redeemable preferred stock, interest expense accretion on refundable membership club deposits, amortization of loan costs, unrealized gain/loss on derivatives, the termination fee from our planned termination of the advisory agreement, net of related tax benefit, and the Company’s portion of adjustments to FFO of OpenKey. FFO and Adjusted FFO exclude amounts attributable to the portion of a partnership owned by the third party. We present FFO and Adjusted FFO because we consider FFO and Adjusted FFO important supplemental measures of our operational performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and Adjusted FFO when reporting their results. FFO and Adjusted FFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and Adjusted FFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and Adjusted FFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. We consider FFO and Adjusted FFO to be appropriate measures of our ongoing normalized operating performance as a REIT. We compute FFO in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that either do not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition differently than us. FFO and Adjusted FFO do not represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to GAAP net income or loss as an indication of our financial performance or GAAP cash flows from operating activities as a measure of our liquidity. FFO and Adjusted FFO are also not indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO and Adjusted FFO should be considered along with our net income or loss and cash flows reported in our condensed consolidated financial statements.
56

The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands) (unaudited):
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Net income (loss)$(249,384)$4,723 $(224,408)$8,554 
(Income) loss attributable to noncontrolling interest in consolidated entities7 412 72 361 
Net (Income) loss attributable to redeemable noncontrolling interests in operating partnership16,104 607 15,805 2,358 
Preferred dividends(7,594)(8,667)(23,375)(26,928)
Deemed dividends on preferred stock
— (5,251)(4,771)(11,086)
Net income (loss) attributable to common stockholders(240,867)(8,176)(236,677)(26,741)
Depreciation and amortization on real estate (2)
16,611 22,498 60,623 67,864 
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership(16,104)(607)(15,805)(2,358)
Equity in (earnings) loss of unconsolidated entity— — 31 — 
(Gain) loss on disposition of assets and hotel properties (2)
(259,927)(40,988)(277,325)(40,988)
FFO available to common stockholders and OP unitholders(500,287)(27,273)(469,153)(2,223)
Deemed dividends on preferred stock
— 5,251 4,771 11,086 
Transaction and conversion costs
3,900 1,608 7,719 2,774 
Write-off of premiums, loan costs and exit fees20 366 1,509 1,833 
Unrealized (gain) loss on derivatives(53)299 (326)850 
Stock/unit-based compensation— 75 — (20)
Legal, advisory and settlement costs (1)
5,866 618 7,178 (3,864)
Interest expense accretion on refundable membership club deposits17 135 272 421 
Amortization of loan costs (2)
1,678 2,690 6,528 7,438 
Advisory services incentive fee— 476 — 746 
(Gain) loss on extinguishment of debt— 1,553 — 1,553 
Other (income) expense
— — — 1,250 
Severance
365 — 913 — 
Termination fee, net of related income tax benefit469,825 — 469,825 — 
Adjusted FFO available to common stockholders and OP unitholders$(18,669)$(14,202)$29,236 $21,844 
____________________
(1)Includes amounts related to expense reductions from an insurance recovery for prior legal expenses of $400,000 and $5.0 million, respectively, for the three and nine months ended September 30, 2025.
(2)Net of adjustment for noncontrolling interest in consolidated entities. The following table presents the amounts of the adjustments for noncontrolling interests for each line item:
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Depreciation and amortization on real estate$— $(666)$— $(2,055)
Amortization of loan costs— (36)— (107)
Gain (loss) on disposition of assets and hotel properties
— (18)— (18)

57

The following table presents certain information related to our hotel properties as of September 30, 2026:
Hotel PropertyLocationTotal Rooms
Fee Simple Properties
Capital Hilton
Washington, D.C.559 
The Notary HotelPhiladelphia, PA499 
Sofitel Chicago Magnificent MileChicago, IL415 
The Ritz-Carlton St. Thomas St. Thomas, USVI180 
The Ritz-Carlton Lake Tahoe (1)
Truckee, CA170 
Cameo Beverly Hills (2)
Los Angeles, CA139 
The Ritz-Carlton Reserve Dorado Beach (3)
Dorado, Puerto Rico96 
The Four Seasons Resort Scottsdale (4)
Scottsdale, AZ210 
Total2,268 
________
(1)     The above information does not include the operations of the voluntary rental program with respect to condominium units not owned by the Company.
(2)    Includes 138 hotel rooms and one residence adjacent to the hotel.
(3)    The above information does not include the operations of the voluntary rental program with respect to residential units not owned by the Company.
(4)    The hotel property was held for sale as of September 30, 2026, and subsequently sold on October 28, 2026.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary market risk exposure consists of changes in interest rates on borrowings under our debt instruments that bear interest at variable rates that fluctuate with market interest rates. To the extent that we acquire assets or conduct operations in an international jurisdiction, we will also have currency exchange risk. We may enter into certain hedging arrangements in order to manage interest rate and currency fluctuations. The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates.
As of September 30, 2026, our total indebtedness of approximately $624.4 million included all variable-rate debt. The impact on the results of operations of a 25-basis point change in the interest rate on the outstanding balance of variable-rate debt as of September 30, 2026, would be approximately $1.6 million per year.
The above amounts were determined based on the impact of hypothetical interest rates on our borrowings and assume no changes in our capital structure. The information presented above includes those exposures that existed as of September 30, 2026, but it does not consider exposures or positions that could arise after that date. Accordingly, the information presented herein has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on exposures that arise during the period, the hedging strategies at the time, and the related interest rates.
ITEM 4.CONTROLS AND PROCEDURES
Under the supervision and with the participation of our Chief Executive Officer and Chief Accounting Officer and Principal Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2026. Based upon that evaluation, our Chief Executive Officer and Chief Accounting Officer and Principal Financial Officer concluded that, as of September 30, 2026, our disclosure controls and procedures are effective to ensure that: (i) information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Accounting Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.
There have been no changes in our internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects two hotels owned by subsidiaries of the Company. The court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment. Notices to potential class members were sent out on February 2, 2021. Potential class members had until April 4, 2021 to opt out of the class; however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery. The opt-out period has been extended until such time that discovery has concluded. In May 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class de-certified. After submission of the briefs, the court requested that the parties submit stipulations for the court to rule upon. On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks. A tentative settlement in the amount of $850,000 was reached on February 14, 2025. Final court approval was obtained on September 12, 2025. Braemar’s portion of the settlement was 11.7%. The case is now in the settlement administration phase. Settlement distributions began on July 22, 2026, and the Court has set a compliance hearing for November 18, 2026. As of September 30, 2026, the settlement liability amount was paid in full.
On June 8, 2022, a lawsuit was filed against various Hilton entities on behalf of a class of all hourly employees at all Hilton-branded managed properties in California, including Hilton La Jolla Torrey Pines. The complaint includes claims for unpaid wages, meal and rest break violations, and unreimbursed business expenses, along with various derivative claims including wage statement, final pay, and Private Attorneys General Act (“PAGA”) claims. On November 30, 2023, Hilton mediated this litigation, but it did not result in a settlement. At the end of the mediation, the mediator submitted a mediator’s proposal for approximately $3.5 million, which the parties have since agreed to. The allocation to Hilton La Jolla Torrey Pines was approximately $401,000. The Court granted a motion for preliminary approval of the settlement on October 27, 2025. A hearing on the motion for final approval occurred on April 20, 2026, and the Court entered a final judgment. As of September 30, 2026, the settlement liability amount was paid in full.
On August 4, 2020, a lawsuit, Benjamin Zermeno v. Beverly Hills Marriott, was filed in Alameda County Superior Court as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties. The plaintiff’s individual claims were compelled to arbitration. On August 18, 2022, another lawsuit, Cristina Catalano v. Beverly Hills Marriott and Mr. C, was filed as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties. The co-defendant separately settled and the individual arbitration has also settled. A private mediation was held on December 27, 2024 to globally resolve the three outstanding matters. The Court approved the settlement of all matters on January 16, 2026. The aggregate settlement was $2.5 million. Braemar’s portion of the settlement was approximately $679,000. As of September 30, 2026, the settlement liability was paid in full.
On February 6, 2024, we received a Request for Information Under Section 114 of the Clean Air Act dated January 11, 2024, from the Environmental Protection Agency (EPA), Region 2, relating to The Ritz-Carlton St. Thomas. We complied with the Request for Information and provided the requested information on March 12, 2024. Then, on April 16, 2025, we received a subsequent communication from the EPA alleging certain failures to comply with various record keeping and reporting requirements. The EPA also indicated that they had concerns regarding the operation of the hotel’s generators and the lack of certain certifications that should be held by hotel employees. We met with the EPA in May 2025 to discuss and respond to the allegations in the EPA’s April 16, 2025 communication. Since this meeting, we have been working with the hotel management team to ensure full compliance with all applicable regulatory requirements at the hotel, including ensuring all appropriate hotel employees have all applicable certifications, engaging third-party environmental consultants, working with outside counsel, preparing standard operating procedures for the hotel, and reviewing options relating to the operation of the hotel’s generators. This matter was resolved for approximately $350,000 with no admission with respect to the factual allegations or alleged violations. As of September 30, 2026, the settlement liability was paid in full.
On June 12, 2026, the Company announced its intention to terminate the Advisory Agreement with Ashford Inc. and transition to a self-managed REIT. In connection with the asset sale transactions and the planned termination of the Advisory Agreement, certain stockholders publicly expressed opposition to aspects of the asset sale transactions and the termination of the Advisory Agreement and indicated an intention to pursue legal remedies.
59

On August 25, 2026, Babak “Bob” Ghassemieh filed counterclaims against the Company, the Advisor, and certain of their directors and officers, asserting claims under federal and Maryland law with respect to the planned termination payment under the Advisory Agreement as well as relating to the Standstill Agreement between himself and the Company and his resignation as a director. On October 27, 2026, the Company and counterclaim-defendants filed a motion to dismiss the counterclaims. This case is in its early stages. There can be no assurance that additional litigation will not be commenced or, if commenced, that it will be resolved quickly or in the Company’s favor.
On October 6, 2026, the Company, Ashford Hospitality Trust, Inc. and Ashford Inc. entered into a Cooperation and Settlement Agreement with Al Shams, the Company’s largest stockholder, resolving claims Al Shams had asserted or threatened to assert. See note 14 to the condensed consolidated financial statements included in this Form 10-Q for a discussion of the terms of the settlement.
We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disabilities Act and similar state laws). The likelihood of loss from these legal proceedings is based on the definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations, or cash flow.
Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty. If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.
ITEM 1A.RISK FACTORS
The discussion of our business and operations should be read together with the risk factors contained in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner. In addition to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025, the following risk factor should be carefully considered in evaluating us and our business.
We may not be able to fully realize the expected benefits of our transition to a self-managed company or the ability to realize such benefits may take longer than anticipated.
On June 12, 2026, we announced that we intended to terminate the Advisory Agreement with Ashford Inc. Following the termination of the Advisory Agreement, we will be a self-managed REIT. In addition, and as discussed, we intend to nominate eight directors, including seven new director candidates and Richard J. Stockton, for election at our upcoming annual meeting. We believe the transition to a self-management structure, with a new Board, will result in material benefits to our stockholders. However, while this development offers us meaningful room for change, it could introduce potential volatilities in our operations. Accordingly, should we fail to sustain our business under this new arrangement of self-management, or should our new Board fail to adequately adapt or respond to its obligations, our business operations or financial condition could be materially and adversely affected.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of Equity Securities by the Issuer
On May 3, 2024, our board of directors approved a new share repurchase program, pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share, having an aggregate value of up to $50 million. The Company may repurchase shares through open market transactions, privately negotiated transactions or other means. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions, and the program may be suspended or terminated at any time by the Company at its discretion without prior notice. The board of directors’ authorization replaced any previous repurchase authorizations.
60

The following table provides the information with respect to purchases and forfeitures of our common stock during each of the months in the third quarter of 2026:
PeriodTotal Number of Shares Purchased Average Price Paid Per ShareTotal Number of Shares Purchased as Part of a Publicly Announced PlanMaximum Dollar Value of Shares That May Yet Be Purchased Under the Plan
Common stock:
July 1 - July 31— $— — $50,000,000 
August 1 - August 31— $— — $50,000,000 
September 1 - September 30— $— — $50,000,000 
Total— $— — 
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the three months ended September 30, 2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
61

ITEM 6.EXHIBITS
ExhibitDescription
3.1
3.2
3.3
3.4
3.5
3.6
3.7
10.1
10.2†
10.3†
10.4
10.5
10.6
10.7*+
10.8*+
10.9
31.1*
31.2*
32.1**
32.2**
62

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 are formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Income; (iv) Condensed Consolidated Statements of Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to the Condensed Consolidated Financial Statements. In accordance with Rule 402 of Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema DocumentSubmitted electronically with this report.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentSubmitted electronically with this report.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentSubmitted electronically with this report.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.Submitted electronically with this report.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.Submitted electronically with this report.
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
___________________________________
* Filed herewith.
** Furnished herewith.
+ Schedules and exhibits to the Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. Certain identified information in the Agreement has also been excluded because it is both (i) not material and (ii) the type of information that the Company treats as private or confidential, in accordance with Item 601(b)(10) of Regulation S-K.
† Management contract or compensatory plan or arrangement.
63

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BRAEMAR HOTELS & RESORTS INC.
Date:November 5, 2026By:
/s/ RICHARD J. STOCKTON
Richard J. Stockton
President and Chief Executive Officer
Date:November 5, 2026By:
/s/ JUSTIN R. COE
Justin R. Coe
Chief Accounting Officer and Principal Financial Officer
64
EXHIBIT 10.7
AGREEMENT OF PURCHASE AND SALE

by and among

LAST MANGO OWNER, LLC
a Delaware limited liability company

(“Purchaser”)

and

ASHFORD PIER HOUSE LP,
a Delaware limited partnership

and

ASHFORD TRS PIER HOUSE LLC,
a Delaware limited liability company
(collectively “Seller”)


Pier House Resort & Spa,
1 Duval Street
Key West, Florida





TABLE OF CONTENTS

Page
1.1.    Definitions    1
Article II. PURCHASE AND SALE; DEPOSIT; PAYMENT OF PURCHASE PRICE; STUDY PERIOD    8
2.1.    Purchase and Sale    8
2.2.    Payment of Purchase Price    8
2.3.    Deposit    9
2.4.    Study Period    9
Article III. SELLER’S REPRESENTATIONS AND WARRANTIES    12
3.1.    Organization and Power    12
3.2.    Authorization and Execution    12
3.3.    Non-contravention    13
3.4.    Compliance with Existing Laws    13
3.5.    Operating Agreements    13
3.6.    Condemnation Proceedings; Roadways    13
3.7.    Actions or Proceedings    13
3.8.    Occupancy Agreements    14
3.9.    Permits    14
3.10.    Capital Improvements    14
3.11.    ERISA    14
3.12.    Seller Is Not a “Foreign Person”    14
3.13.    Bankruptcy    14
3.14.    Employees    15
3.15.    Labor and Employment    15
3.16.    Financial Statements    15
3.17.    Right of First Refusal    15
3.18.    Taxes    15
3.19.    Terrorism    15
3.20.    Trademarks    16
3.21.    Submerged Lands Lease    16
3.22.    LIMITATION ON SELLER’S REPRESENTATIONS AND WARRANTIES    16
Article IV. PURCHASER’S REPRESENTATIONS AND WARRANTIES    19
4.1.    Organization and Power    20
4.2.    Authorization and Execution    20
4.3.    Non-contravention    20
4.4.    Litigation    20
4.5.    Patriot Act    20
4.6.    Terrorism    20
Article V. CONDITIONS PRECEDENT    21
5.1.    As to Purchaser’s Obligations    21
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5.2.    As to Seller’s Obligations    22
Article VI. COVENANTS OF SELLER AND PURCHASER    22
6.1.    Operating Agreements/Occupancy Agreements/Leased Property Agreements    22
6.2.    Warranties and Guaranties    23
6.3.    No Transfers    23
6.4.    Insurance    23
6.5.    Operation of Property Prior to Closing    23
6.6.    New Employees    24
6.7.    Termination of Hotel Employees; WARN Act    24
6.8.    Employee Claims    24
6.9.    Estoppels    25
6.10.    Tax Status Letters    25
Article VII. CLOSING    25
7.1.    Closing    25
7.2.    Seller’s Deliveries    26
7.3.    Purchaser’s Deliveries    27
7.4.    Mutual Deliveries    27
7.5.    Closing Costs    27
7.6.    Revenue and Expense Allocations    28
7.7.    Safe Deposit Boxes    31
7.8.    Inventory of Baggage    31
7.9.    Acquisition and Payment for Inventory    31
7.10.    Assumption of Liabilities    31
Article VIII. GENERAL PROVISIONS    32
8.1.    Fire or Other Casualty    32
8.2.    Condemnation    33
8.3.    Broker    34
8.4.    Bulk Sale    34
8.5.    Confidentiality    34
8.6.    Liquor Licenses    36
Article IX. DEFAULT; TERMINATION RIGHTS    37
9.1.    Default by Seller/Failure of Conditions Precedent    37
9.2.    Default by Purchaser/Failure of Conditions Precedent    39
9.3.    Costs and Attorneys’ Fees    39
9.4.    Limitation of Liability    39
9.5.    Indemnification of Purchaser    39
9.6.    Indemnification of Seller    39
Article X. MISCELLANEOUS PROVISIONS    40
10.1.    Completeness; Modification    40
10.2.    Assignments    40
10.3.    Successors and Assigns    40
10.4.    Days    40
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10.5.    Governing Law    40
10.6.    Counterparts    40
10.7.    Severability    41
10.8.    Costs    41
10.9.    Notices    41
10.10.    Escrow Agent    42
10.11.    Incorporation by Reference    43
10.12.    Survival    43
10.13.    Further Assurances    43
10.14.    No Partnership    44
10.15.    Time of Essence    44
10.16.    Signatory Exculpation    44
10.17.    Rules of Construction    44
10.18.    No Recording    44
10.19.    Facsimile or Electronic Signatures    44
10.20.    Seller    44
10.21.    Survival    45
10.22.    Energy-Efficiency    45
10.23.    Radon    45


EXHIBIT A        LAND
EXHIBIT B        FORM OF DEED
EXHIBIT C        SPECIAL WARRANTY BILL OF SALE
EXHIBIT D        ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT E        FORM OF ASSIGNMENT OF OCCUPANCY AGREEMENTS
EXHIBIT F        FORM OF FIRPTA CERTIFICATE
EXHIBIT G        FORM OF TRADEMARK ASSIGNMENT
EXHIBIT H        FORM OF ISLAND DOGS LEASE ESTOPPEL
EXHIBIT I        FORM OF HYDROTHUNDER LEASE ESTOPPEL
EXHIBIT J    FORM OF BUILDING PERMIT ALLOCATION SYSTEM EXEMPTION TRANSFER AGREEMENT
SCHEDULE 1        CLOSING COST ALLOCATIONS
SCHEDULE 3.4    VIOLATIONS OF LAW
SCHEDULE 3.7    ACTIONS OR PROCEEDINGS
SCHEDULE 3.9    EXPIRED AUTHORIZATIONS
SCHEDULE 3.20    TRADEMARKS
SCHEDULE 6.5(g)    OPEN PERMITS

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AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is made as of July 2, 2026 (the “Effective Date”), by and among LAST MANGO OWNER, LLC, a Delaware limited liability company (“Purchaser”), and ASHFORD PIER HOUSE LP, a Delaware limited partnership (“Fee Owner”) and ASHFORD TRS PIER HOUSE LLC, a Delaware limited liability company (“Operating Lessee” and, together with Fee Owner collectively, “Seller”).
R E C I T A T I O N S:
A.    Fee Owner is the owner of those certain parcels of real property more particularly described on Exhibit A attached hereto and made a part hereof, and the Improvements situated thereon operated by Seller as the Pier House Resort & Spa (the “Hotel”), situate, lying and being in Key West, Florida.
B.    Purchaser is desirous of purchasing such hotel property from Seller and Seller is desirous of selling such hotel property to Purchaser, for the purchase price and upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants, promises and undertakings of the parties hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, it is agreed:
Article I.
DEFINITIONS
1.1.Definitions. The following terms shall have the indicated meanings:
“Action” shall have the meaning ascribed to such term in Section 3.7 hereof.
“Additional Objections” shall have the meaning ascribed to such term in Section 2.4(d) hereof.
“Advance Bookings” shall mean reservations and agreements made or entered into by Seller or Manager in the ordinary course of business prior to Closing and assumed by Purchaser for hotel rooms or meeting rooms to be utilized after Closing, or for catering services or other hotel services to be provided after Closing at or by the Hotel.
“Affiliate” of a Person shall mean (i) any other Person that is directly or indirectly (through one or more intermediaries) controlled by, under common control with, or controlling such Person, or (ii) any other Person in which such Person has a direct or indirect equity interest constituting at least a majority interest of the total equity of such other Person. For purposes of this definition, “control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any Person or the power to veto major policy decisions of any Person, whether through the ownership of voting securities, by contract or otherwise.
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“Anti-Money Laundering and Anti-Terrorism Laws” shall have the meaning ascribed to such term in Section 3.19.
“Applicable Laws” shall mean any applicable building, zoning, subdivision, environmental, health, safety or other governmental laws, statutes, ordinances, resolutions, rules, codes, regulations, orders or determinations of any Governmental Authority affecting the Property or the ownership, operation, use, maintenance or condition thereof.
“Approval Standard” shall have the meaning ascribed to such term in Section 6.1 hereof.
“Assignment and Assumption Agreement” shall mean an assignment and assumption agreement in substantially the form attached hereto as Exhibit D whereby Seller assigns and Purchaser assumes all of its or their respective right, title and interest in and to the Operating Agreements and the Leased Property Agreements that have not been terminated prior to Closing in accordance herewith.
“Assignment of Occupancy Agreements” shall mean an assignment agreement in substantially the form attached hereto as Exhibit E whereby Seller assigns and Purchaser assumes all of its or their respective right, title and interest in and to the Occupancy Agreements.
“Assumed Liabilities” shall have the meaning ascribed to such term in Section 7.10 hereof.
“Authorizations” shall mean all licenses, permits and approvals required by any governmental or quasi-governmental agency, body, department, commission, board, bureau, instrumentality or office, or otherwise appropriate with respect to the construction, ownership, operation, leasing, maintenance, or use of the Property or any part thereof. “Authorizations” shall expressly exclude any liquor license or permit for the sale or service of alcoholic beverages at the Property, which such liquor licenses are held by Operating Lessee.
“Bill of Sale” shall mean a bill of sale in substantially the form attached hereto as Exhibit C whereby Seller conveys its or their respective right, title and interest in and to the Personal Property (other than Leased Property) to Purchaser, together with any Warranties and Guaranties and Authorizations related thereto.
“Broker” shall mean The Plasencia Group.
“Claims” shall have the meaning ascribed to such term in Section 9.5.
“Closing” shall mean the consummation of the purchase and sale of the Property pursuant to this Agreement and shall be deemed to occur on the Closing Date.
“Closing Date” shall mean the date on which the Closing shall occur, which shall be August 12, 2026.
“Closing Documents” shall mean the documents defined as such in Section 7.1 hereof.
“Closing Obligations” shall have the meaning ascribed thereto in Section 9.1.
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“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Cut-Off Time” shall have the meaning ascribed to such term in Section 7.6.
“Data Site” shall mean the data site regarding the Property located at https://rillercapital.app.box.com/s/0t6rxzz8dm8zp7koms1ci32ev6bqm7yi.
“Deed” shall mean a special warranty deed in substantially the form attached hereto as Exhibit B conveying title to the Real Property from Fee Owner to Purchaser.
“Deposit” shall mean all amounts deposited from time to time with Escrow Agent by Purchaser pursuant to and as defined in Section 2.3 hereof, plus all interest or other earnings that may accrue thereon.
“Effective Date” (or other similar phrases such as “date of this Agreement” or “date hereof”) shall have the meaning ascribed to such term in the preamble hereof.
“Environmental Laws” shall have the meaning ascribed to such term in Section 3.21.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended (ERISA).
“Escrow Agent” shall mean Kensington Vanguard National Title, 5949 Sherry Lane, Suite 111, Dallas, Texas 75225, Attn:  Trey Lentz; Email: TLentz@kvnational.com; Phone: (214) 273-2514, as agent for First American Title Insurance Company.
“Executive Order” shall have the meaning ascribed to such term in Section 3.19.
“Fee Owner” shall have the meaning ascribed to such term in the Preamble.
“FIRPTA Certificate” shall mean the affidavit of Seller under Section 1445 of the Internal Revenue Code, as amended, in substantially the form attached hereto as Exhibit F.
“Governmental Authority” shall mean any federal, state, county, municipal or other government or any governmental or quasi-governmental agency, department, commission, board, bureau, office or instrumentality, foreign or domestic, or any of them.
“Hazardous Substances” or “Toxic Substances” shall have the meaning ascribed to such terms in Section 3.21.
“Hotel” shall have the meaning ascribed to such term in the Recitations.
“Hotel Employees” shall mean all employees of Seller, Manager or any Affiliate thereof employed at the Property or to operate the Hotel.
“Hotel IP” shall have the meaning ascribed to such term in Section 3.20 hereof.
“HydroThunder Lease” means that certain Lease Agreement dated as of September 1, 2024, by and between Operating Lessee, as landlord, and Key West Toyz, LLC d/b/a
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HydroThunder, as tenant, as amended by that certain First Amendment to Lease Agreement effective as of September 1, 2025.
“Improvements” shall mean the Hotel and all other buildings, improvements, fixtures, all mechanical, heating, air conditioning, plumbing, electrical and ventilating systems, parking facilities and appurtenances and other items of real estate located on or affixed to the Land.
“Initial Deposit” shall have the meaning ascribed to such term in Section 2.3 hereof.
“Inspection Agreement” shall mean that certain Inspection Agreement dated June 11, 2026, executed by and between Purchaser and Fee Owner.
“Insurance Policies” shall mean all policies of insurance maintained by or on behalf of Seller pertaining to the Property, its operation, or any part thereof.
“Intangible Personal Property” shall mean, to the extent assignable, all intangible personal property owned or possessed by Seller and used in connection with the ownership or operation of the Property, including, without limitation, (1) Seller’s right, title and interest in and to Authorizations, (2) Seller’s right, title and interest in and to utility and development rights and privileges (including the ROGOs), general intangibles, business records and specifications pertaining to the Real Property and the Personal Property, (3) Seller’s right, title and interest in and to any unpaid award for taking by condemnation or any damage to the Land by reason of a change of grade or location of or access to any street or highway, (4) Advance Bookings, (5) subject to a corresponding credit to Seller, all cash on hand or on deposit in any house bank at the Hotel, and (6) the Trademarks.
“Inventory” shall mean all inventories of food and beverage (to the extent permitted by Applicable Laws, alcoholic and non-alcoholic) in opened or unopened cases whether in use or held in reserve storage for future use or ordered for future use, all china, glassware, silverware, kitchen and bar small goods, guest supplies, operating supplies, printing, stationary and uniforms, whether in use or held in reserve storage for future use or ordered for future use in connection with the operation of a hotel and all in-use or reserve stock of linens, towels, paper goods, soaps, cleaning supplies and the like with respect to the Hotel.
“Island Dogs Lease” shall mean that certain Lease Agreement dated as of December 18, 2003, by and between Pier House Joint Venture, a Florida general partnership, as landlord, and Island Dogs, Inc., a Florida corporation, as tenant, as thereafter amended, assigned, and assumed, and as currently by and between Operating Lessee, as Landlord, and Front Street Hospitality, LLC, as tenant.
“Land” shall mean those certain parcels of real estate lying and being in Monroe County, Florida, and more particularly described on Exhibit A hereof, together with all rights, titles, benefits, easements, privileges, remainders, tenements, hereditaments, interests, reversions and appurtenances thereunto belonging or in any way appertaining, and all of the estate, right, title, interest, claim or demand whatsoever of Seller therein, in and to adjacent strips and gores, if any, between the Land and abutting properties, and in and to adjacent streets, highways, roads, alleys or rights-of-way, and the beds thereof (except to the extent, if any, that such strips or gores or
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such streets, highways, roads, alleys or rights-of-way abut or provide access to or benefit other properties owned by Seller), either at law or in equity, in possession or expectancy, now or hereafter acquired.
“Land Code” means the City of Key West Code of Ordinances, Land Development Regulations.
“Leased Property” shall mean all items of Tangible Personal Property that are subject to any capital lease, operating lease, financing lease, or any similar agreement.
“Leased Property Agreements” shall mean the lease agreements pertaining to the Leased Property.
“Limitation Date” shall have the meaning ascribed to such term in Section 10.12.
“Management Agreement” shall mean the management agreement between Operating Lessee and Manager for the Management or operation of the Hotel.
“Manager” shall mean Remington Lodging & Hospitality LLC.
“Must Cure Encumbrance Release” shall have the meaning ascribed to such term in Section 2.4(c) hereof.
“Must Cure Title Encumbrances” shall mean any title or survey matters affecting the Hotel which are comprised of (i) liens for taxes that would be delinquent if unpaid on or before Closing, (ii) mortgages, deeds of trust, or security agreements (including the documents referred to as Items 6 and 7 in Schedule B, Part I of the Title Commitment), (iii) other similar liens or charges in a fixed sum (or capable of computation as a fixed sum) securing indebtedness or obligations which were created or expressly assumed by Seller, (iv) liens against the Property in the nature of those arising from judgments or pending litigation, (v) liens against the Property in the nature of or construction, mechanics, materialman’s or other liens or charges, (vi) encumbrances created by or through Seller after the Effective Date in violation of this Agreement, and (vii) the Operating Lease.
“Non-Breach Inaccuracy” shall mean a breach or inaccuracy of a representation or warranty contained in Article III of this Agreement of which Seller gives Purchaser written notice prior to Closing or Purchaser otherwise obtains actual knowledge prior to Closing which does not constitute a breach or inaccuracy of any such representation or warranty made as of the Effective Date but would constitute a breach or inaccuracy of such representation or warranty if made as of the Closing Date (such as, for example, because Seller did not have knowledge, as such term is defined in Article III, of such matters as of the Effective Date).
“Occupancy Agreements” shall mean all leases, licenses, concession or occupancy agreements in effect with respect to the Real Property and/or Hotel under which any tenants or licensees (other than Hotel guests and Operating Lessee) or concessionaires occupy space upon the Real Property.
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“Operating Agreements” shall mean all service, supply, maintenance, construction, capital improvement and other similar contracts in effect with respect to the Property (other than the Occupancy Agreements, Leased Property Agreements, Management Agreement, or any master service contracts of Manager that apply to properties managed by Manager in addition to the Property) related to construction, operation, or maintenance of the Property.
“Operating Lease” shall mean that certain Lease Agreement between Fee Owner and Operating Lessee with respect to the Property, as the same may have been amended from time to time.
“Operating Lessee” shall have the meaning ascribed to such term in the Preamble.
“Owner’s Title Policy” shall mean an owner’s policy of title insurance issued to Purchaser by the Title Company, pursuant to which First American Title Insurance Company insures Purchaser’s ownership of fee simple to the Real Property, subject only to Permitted Title Exceptions. The Owner’s Title Policy shall insure Purchaser in the amount of the Purchase Price and shall be in the ALTA 2021 form customarily used by First American Title Insurance Company for like transactions in the state where the Land is located, providing for extended coverage.
“Permitted Title Exceptions” shall mean those exceptions to title insurance coverage over the Real Property that are satisfactory or deemed satisfactory to Purchaser as determined pursuant to Section 2.4 hereof.
“Person” shall mean an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Authority.
“Personal Property” shall mean collectively the Tangible Personal Property and the Intangible Personal Property.
“Property” shall mean collectively the Real Property and Personal Property.
“Property Agreements” shall have the meaning ascribed to such term in Section 3.21.
“Purchase Price” shall mean One Hundred Ninety Million and No/100 Dollars ($190,000,000.00) payable in the manner described in Section 2.2 hereof.
“Pure Contract” shall mean that certain Hotel Participation Agreement between Operating Lessee (d/b/a The Pier House Resort & Caribbean Spa) and Pre OPCO, LLC (d/b/a Pure Solutions/Pure), dated May 28, 2024.
“Purchaser Parties” shall have the meaning ascribed to such term in Section 2.4(a) hereof.
“Purchaser’s Objections” shall mean the objections defined as such in Section 2.4(c) hereof.
“Real Property” shall mean the Land and the Improvements with respect to the Hotel.
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“RED Dockage Lease” means that certain Commercial Dockage Lease executed on March 26, 2024, but effective as of May 1, 2023, by and between Operating Lessee, as company, and RED Hospitality & Leisure Key West LLC, as vessel owner, pertaining to dockage space at the Hotel. / “RED Slip Lease” means that certain Slip Lease Agreement executed on March 26, 2024, but effective as of May 1, 2023, by and between Operating Lessee, as company, and RED Hospitality & Leisure Key West LLC, as vessel owner, pertaining to the boat slip and/or pilings located on the northwest side of the Hotel.
“Reimbursement Cap” shall have the meaning ascribed to such term in Section 9.1.
“Representatives” shall have the meaning ascribed to such term in Section 8.5.
“Required Estoppel” shall mean an estoppel certificate from the Tenant of the Island Dogs Lease in substantially the same form as that attached hereto as Exhibit H.
“ROGOs” means the total one hundred forty-two (142) transient units vested with the Land exempt from the City of Key West’s BPAS system (as set forth in the Land Code) along with associated one hundred forty-two (142) transient business tax licenses.
“Rooms Ledger” shall mean the final night’s room revenue for the Hotel (revenue from rooms occupied as of 6:00 a.m. on the Closing Date, exclusive of food, beverage, telephone and similar charges charged or incurred as of such time), including any sales taxes, room taxes or other taxes thereon, which shall be shared equally by Purchaser and Seller.
“Seller Knowledge Party” shall have the meaning ascribed to such term in Article III hereof.
“Seller’s Response” shall have the meaning ascribed thereto in Section 2.4(c).
“Seller’s Response Period” shall have the meaning ascribed thereto in Section 2.4(c).
“Study Period” shall mean the period commencing on the date of the Inspection Agreement and continuing through 5:00 p.m. on July 13, 2026. Except as expressly noted herein to the contrary, time periods herein referred to shall mean the time periods as in effect, from time to time, at Dallas, Texas.
“Submerged Land Lease” shall mean that certain Sovereignty Submerged Lands Lease Renewal BOT No. 44041985, dated effective as of May 30, 2023, by and between the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida, as lessor, and Ashford Pier House, LP, as lessee, recorded in the Official Records Book 3286 at Page 1889 of the Public Records of Monroe County, Florida, together with any renewals thereof.
“Submission Matters” shall have the definition ascribed to such term in Section 2.4(b) hereof.
“Survey” shall mean the survey defined as such in Section 2.4(c) hereof.
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“Tangible Personal Property” shall mean the items of tangible personal property including, but not limited to, all vehicles, furniture, fixtures, equipment, machinery, telephone systems, computer hardware and software (to the extent assignable), security systems, the books and records pertaining to the Hotel, Inventory and other tangible personal property of every kind and nature (which does not include cash-on-hand and petty cash funds) located at the Hotel and owned or leased by Seller in connection with the operation of the Hotel or ordered for future use at the Hotel, including, without limitation, Seller’s interest as lessee with respect to any such leased Tangible Personal Property.
“Tax Status Letter” shall have the meaning ascribed to such term in Section 5.1(e).
“Taxes” shall mean federal, state or local income, personal property, sales, use, room, lodgers, occupancy, ad valorem or other taxes, assessments, levies, charges or fees (other than property taxes) imposed by any Governmental Authority with respect to the Property or the Hotel.
“Title Commitment” shall mean the title commitment and exception documents defined as such in Section 2.4(c) hereof.
“Title Company” shall mean Kensington Vanguard National Title, 5949 Sherry Lane, Suite 111, Dallas, Texas 75225, Attn:  Trey Lentz; Email: TLentz@kvnational.com; Phone: (214) 273-2514, as agent for First American Title Insurance Company.
“Title Update” shall have the meaning ascribed to such term in Section 2.4(d) hereof.
“Trademarks” shall mean all service marks, trade names, trademarks, brands, symbols, logos, trade dress and all other intellectual property rights, marks, designations or characteristics associated with or otherwise proprietary to the Hotel (together with all goodwill associated with any of the foregoing), including, without limitation, the name “Pier House”.
“Trademark Assignment” shall mean a trademark assignment in substantially the form attached hereto as Exhibit G whereby Seller conveys its or their respective right, title and interest in and to all registered Trademarks.
“Transfer Premium” shall have the meaning ascribed to such term in Section 9.1.
“Unpaid Taxes” shall have the meaning set forth in Section 5.1(e) hereof.
“WARN Act” shall mean the Worker Adjustment and Retraining Notification Act.
“Warranties and Guaranties” shall mean any subsisting and assignable warranties and guaranties relating to the Improvements or the Tangible Personal Property or any part thereof.
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Article II.
PURCHASE AND SALE; DEPOSIT; PAYMENT OF PURCHASE PRICE;
STUDY PERIOD
2.1.Purchase and Sale. Seller agrees to sell and Purchaser agrees to purchase the Property for the Purchase Price and in accordance with and subject to the other terms and conditions set forth herein. At least ten (10) business days prior to Closing, Purchaser will notify Seller in writing of the proposed allocation of the Purchase Price among the Real Property, the Tangible Personal Property and the Intangible Personal Property. Seller and Purchaser agree to use good faith efforts to agree upon such allocation prior to the Closing. If Purchaser and Seller cannot agree upon such allocation of the Purchase Price, the parties agree to file all transfer tax declarations based on the Purchaser’s determination of the allocations of the Purchase Price, but Seller shall not be required to file income tax returns on Purchaser’s determination of the tax allocation.
2.2.Payment of Purchase Price. The Purchase Price shall be paid to Seller in the following manner:
(a)Purchaser shall receive a credit against the Purchase Price in an amount equal to the amount of the Deposit.
(b)Purchaser shall pay the balance of the Purchase Price, as adjusted in the manner specified in Article VII and as set forth below, to Seller (or other party designated by Seller) at Closing by making a wire transfer of immediately available federal funds to the account of Seller (or other party designated by Seller). Such wire transfer shall be sent by Purchaser to the Escrow Agent for the account of Seller no later than 1:00 PM, Key West, Florida time on the Closing Date.
2.3.Deposit. No later than five (5) business days after the Effective Date, Purchaser shall deliver to Escrow Agent a wire transfer or cashier’s or certified check in the sum of Six Million and No/100 Dollars ($6,000,000.00) (the “Initial Deposit”). If Purchaser fails to timely deposit the Initial Deposit with Escrow Agent, Seller shall be entitled, as Seller’s sole and exclusive remedy, to terminate this Agreement by written notice to Purchaser at any time before the Initial Deposit is delivered to Escrow Agent, in which event neither party shall have any obligations hereunder, except those which expressly survive a termination of this Agreement. The Deposit shall be invested by Escrow Agent in a commercial bank or banks acceptable to Seller and Purchaser at money market rates, or in such other investments as shall be approved in writing by Seller and Purchaser. The Deposit shall be held and disbursed by Escrow Agent in strict accordance with the terms and provisions of this Agreement. All accrued interest or other earnings on the Deposit shall become part of the Deposit. The Initial Deposit shall be returned to Purchaser if Purchaser, prior to the end of the Study Period, notifies Seller in writing, pursuant to Section 2.4 hereof, that Purchaser is electing to terminate this Agreement. The Deposit shall be either (a) applied at the Closing against the Purchase Price, (b) returned to Purchaser pursuant hereto, or (c) paid to Seller pursuant hereto. Upon receipt of the Initial Deposit, Escrow Agent shall release a portion of the Initial Deposit to Seller in an amount equal to Fifty Dollars ($50.00) representing the independent consideration for Seller’s execution of this Agreement and agreement to provide Purchaser with the Study Period (which shall not be a part of the Deposit).
2.4.Study Period.
(a)Purchaser and its agents, contractors, auditors, engineers, attorneys, employees, consultants, other representatives and potential lessees, partners, and lenders (collectively, “Purchaser Parties”) shall have the right, until 5:00 p.m., Dallas, Texas time on the last day of the Study Period, and thereafter if Purchaser does not notify Seller in
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writing prior to the expiration of the Study Period that Purchaser has elected to terminate this Agreement, to perform such examinations, tests, investigations and studies of the Property as Purchaser reasonably deems advisable, subject to the terms of the Inspection Agreement, the terms of which are hereby incorporated by reference and which shall remain in full force and effect notwithstanding the second sentence of Section 2(b) of the Inspection Agreement. If, in Purchaser’s sole, absolute and unreviewable discretion, Purchaser elects to proceed with the purchase of the Property for the purposes contemplated by Purchaser, then Purchaser shall proceed with this transaction in accordance with and subject to the terms of this Agreement; provided, however, if, prior to the expiration of the Study Period, Purchaser provides written notice to Seller and Escrow Agent that it has determined in its sole, absolute and unreviewable discretion, to terminate this Agreement, this Agreement automatically shall terminate, the Deposit shall be promptly returned to Purchaser and Purchaser and Seller shall be released from all further liability or obligation hereunder except those which expressly survive a termination of this Agreement. If Purchaser does not provide such written notice of termination prior to the expiration of the Study Period, the Deposit shall be non-refundable to Purchaser except as otherwise expressly provided herein. Purchaser Parties shall have no discussions, correspondence, or other contact with any Hotel Employees unless coordinated in advance with Seller.
(b)Purchaser acknowledges its receipt of the due diligence materials set forth on the Data Site as of the Effective Date. Seller shall, promptly upon request by Purchaser, make available to Purchaser on the Data Site, such additional due diligence materials which are in Seller’s possession or control relating to the Property and the operation thereof which are reasonably requested by Purchaser from time to time. All documents and materials provided by Seller to Purchaser pursuant to this Agreement (including, without limitation, any and all documents and materials set forth on the Data Site), together with any copies or reproductions of such documents or materials, or any summaries, abstracts, compilations or other analyses made by or for Purchaser based on the information in such documents or materials, are referred to collectively herein as the “Submission Matters”. Except as expressly set forth in Article III, Purchaser acknowledges and agrees that the Submission Matters are provided without warranty or representation whatsoever. In the event Seller does not provide the Submission Matters or items specified in Section 2.4(c) prior to the expiration of the Study Period, Purchaser’s sole remedy shall be to terminate this Agreement on or before the expiration of the Study Period. In the event Purchaser does not so terminate this Agreement prior to the expiration of the Study Period, Purchaser shall be deemed to have waived such failure.
(c)Within two (2) days following the Effective Date (if same has not already been ordered), Seller shall (i) order from the Title Company for delivery to Purchaser and Seller, a title insurance commitment issued by the Title Company covering the Real Property, binding the Title Company to issue the Owner’s Title Policy together with legible copies (to the extent such legible copies are available) of all documents identified in such title insurance commitment as exceptions to title (collectively, the “Title Commitment”), with respect to the state of title to the Property, and (ii) deliver a copy of Seller’s most recent survey of the Property in its possession (the “Survey”). No later than July 9, 2026, Purchaser shall notify Seller of any matters shown on such Survey or identified in the Title Commitment that Purchaser is unwilling to accept (collectively, “Purchaser’s Objections”). If any of Purchaser’s Objections consist of Must Cure Title Encumbrances, then, to that extent, notwithstanding anything herein to the contrary, Seller shall be obligated to either (i) pay and discharge, (ii) bond against in a manner legally sufficient to cause to be released, or (iii) indemnify or escrow money with or otherwise cause the Title Company to insure over, such Must Cure Title Encumbrances
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(individually and collectively, a “Must Cure Encumbrance Release”). For such purposes, Seller may use all or a portion of the Purchase Price to effectuate a Must Cure Encumbrance Release with respect to any such Must Cure Title Encumbrances at the Closing. Other than as specifically required in this Agreement, Seller shall not be obligated to incur any expenses or incur any liability to cure any Purchaser’s Objections. Seller may notify Purchaser within two (2) business days after receipt of notice of Purchaser’s Objections (“Seller’s Response Period”) whether Seller, in its sole discretion, agrees to attempt to cure any of such Purchaser’s Objections (“Seller’s Response”). If Seller agrees in Seller’s Response to attempt to cure any of such Purchaser’s Objections, Seller shall use good faith efforts (without the obligation to expend any money or incur any liability except with regards to the release of Must Cure Encumbrances which Seller shall cause to be released) to cure such Purchaser’s Objections which Seller has agreed to attempt to cure on or before the Closing Date to the reasonable satisfaction of Purchaser. If Seller is unable to cure such Purchaser’s Objections by the Closing Date, Purchaser shall, on the Closing Date, elect (1) to waive such Purchaser’s Objections without any abatement in the Purchase Price, or (2) to terminate this Agreement in which case the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released from all further obligations hereunder, except those which expressly survive a termination of this Agreement. If Seller does not provide Seller’s Response to Purchaser within Seller’s Response Period, Seller shall be deemed to have elected not to attempt to cure Purchaser’s Objections. If Seller elects in Seller’s Response not to attempt to cure all or any number of Purchaser’s Objections or if Seller is deemed to have elected not to attempt to cure Purchaser’s Objections pursuant to the preceding sentence, prior to the expiration of the Study Period, Purchaser shall elect (1) to waive any Purchaser’s Objections which Seller has elected or is deemed to have elected not to attempt to cure without any abatement in the Purchase Price, or (2) to terminate this Agreement in which case the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released from all further obligations hereunder, except those which expressly survive a termination of this Agreement. In the event Purchaser does not provide to Seller notice of Purchaser’s election under the preceding sentence within such five (5) day period, Purchaser shall be deemed to have elected clause (1) of the preceding sentence. Except as otherwise provided herein, Seller shall not, after the date of this Agreement, voluntarily subject the Real Property to any liens, encumbrances, covenants, conditions, restrictions, easements or other title matters or seek any zoning changes without Purchaser’s prior written consent, which consent shall not be unreasonably withheld or delayed provided that it shall not be considered unreasonable for Purchaser to withhold consent to any lien, encumbrance, covenant, condition, restriction, easement, title matter or zoning change which may have an adverse effect on the Property or the business conducted thereon, unless such matters or changes will not be binding on Purchaser and/or the Property after the Closing. All title matters revealed by the Title Commitment and Survey (or any update obtained by Purchaser) which are not objected to by Purchaser as provided above (other than Must Cure Title Encumbrances which will be covered by a Must Cure Encumbrance Release at Closing), or which are waived or deemed waived by Purchaser as provided above, shall all be deemed Permitted Title Exceptions.
(d)Purchaser shall have the right to obtain an updated Title Commitment prior to Closing (each, a “Title Update”). Purchaser shall have three (3) business days after receipt of any Title Update to notify Seller in writing of any additional objections Purchaser may have to any exception contained in such Title Update for agreements filed of record or any liens created or becoming effective after the effective date of the initial Title Commitment that are not (i) created by, through or under Purchaser or (ii) relate to any matter previously disclosed by the Survey or initial Title Commitment (“Additional Objections”). If Purchaser notifies Seller in writing of any Additional Objections, Seller shall have the right, but not the obligation (other than with respect to Must Cure Title
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Encumbrances which shall be subject to a Must Cure Encumbrance Release at Closing), to cure such Additional Objections. Within three (3) business days after receipt of Purchaser’s notice of Additional Objections, Seller shall notify Purchaser in writing whether Seller elects to attempt to cure any or all of such Additional Objections. If Seller elects to attempt to cure, Seller shall have the right to attempt to remove, satisfy or cure the same, and for this purpose, Seller shall, at Seller’s election, be entitled to a one-time right to extend the Closing Date for up to thirty (30) days upon written notice to Purchaser in order for Seller to attempt to cure such Additional Objections. If Seller elects not to cure any Additional Objections or if Seller is unable to effect a cure of those Purchaser’s Objections which it elected to cure prior to the Closing Date (or any later date to which the Closing has been adjourned), and so notifies Purchaser in writing, or if Seller fails to respond to Purchaser’s notice within said three (3) business day period, Purchaser may (as its sole and exclusive remedy) terminate this Agreement by delivering written notice thereof to Seller on or before the Closing Date (as such date may have been extended by Seller as set forth above), in which event the Deposit shall be returned to Purchaser and neither party shall have any further obligations hereunder, except those which expressly survive a termination of this Agreement. If applicable, Closing shall be extended to provide Seller and Purchaser with the full response periods provided in this Section 2.4(d).
(e)No later than five (5) business days after the Closing, Purchaser shall apply for a transfer of the Submerged Land Lease (the “Submerged Land Lease Transfer”) by delivering a copy of the recorded Deed together with all necessary forms to the lessor in connection with same. Purchaser shall hold harmless, indemnify and defend Seller and Manager and their Affiliates from and against any and all claims, causes of action, proceedings, judgments, damages, penalties, liabilities, costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Seller or Manager or any Affiliate thereof after the Closing relating to the Submerged Land Lease or Purchaser’s failure to cause the Submerged Land Lease Transfer to be completed. The provisions of this Section 2.4(e) shall survive the Closing.
Article III.
SELLER’S REPRESENTATIONS AND WARRANTIES
To induce Purchaser to enter into this Agreement and to purchase the Property, and to pay the Purchase Price therefor, Seller, except as expressly disclosed by information included on the Data Site two (2) business days before the expiration of the Study Period, or for which Purchaser otherwise has or obtained knowledge on or before the expiration of the Study Period, hereby makes the following representations and warranties as of the Effective Date and as of the Closing Date:

3.1.Organization and Power. Seller is duly organized, validly existing and in good standing under the laws of Delaware, is qualified to do business in the state where the Land is located, and has all requisite power and authority to enter into and perform its obligations hereunder and under any document or instrument required to be executed and delivered on behalf of Seller hereunder.
3.2.Authorization and Execution. This Agreement has been duly authorized by all necessary action on the part of Seller, has been duly executed and delivered by Seller, constitutes the valid and binding agreement of Seller and is enforceable in accordance with its terms. The person executing this Agreement on behalf of Seller has the authority to do so.
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3.3.Non-contravention. Subject to any consent to the assignment of any particular Operating Agreement, Occupancy Agreement or Leased Property Agreement required by the terms thereof or by applicable law and to the payment in full at the Closing of any Must Cure Title Encumbrances, the execution and delivery of, and the performance by Seller of its obligations under, this Agreement does not and will not contravene, or constitute a default under, any provision of applicable law or regulation, Seller’s organizational documents or any agreement, judgment, injunction, order, decree or other instrument binding upon Seller or to which the Property is subject, or result in the creation of any lien or other encumbrance on any asset of Seller.
3.4.Compliance with Existing Laws. Except as set forth on Schedule 3.4, Seller has not received from any Governmental Authority written notice of any violation of any provision of Applicable Laws, including, but not limited to, those of environmental agencies, with respect to the ownership, operation, use, maintenance or condition of the Property which violation has not been remedied. To Seller’s knowledge, no administrative proceeding, investigation or inquiry is pending or threatened with respect to any violation of Applicable Laws with respect to the Property or the operation of the Hotel.
3.5.Operating Agreements. To Seller’s knowledge, there are no management, service, supply, or maintenance contracts in effect with respect to the Property other than the Management Agreement, Operating Agreements or Leased Property Agreements made available to Purchaser in the Data Site, or those disclosed in the Title Commitment. To Seller’s knowledge, all parties to Operating Agreements or Leased Property Agreements have performed all of their obligations thereunder in all material respects, and are not in default thereunder in any material respect. To Seller’s knowledge, Seller has posted to the Data Site true, correct and complete copies of the Management Agreement, Operating Agreements and Leased Property Agreements, and all amendments and modifications thereto. To Seller’s knowledge, the Management Agreement, Operating Agreements and Leased Property Agreements are each in full force and effect. Seller has neither given nor received any written notice of a default under any of the Management Agreement, Operating Agreements or Leased Property Agreements which default remains uncured and, to Seller’s knowledge, there is no existing condition that, with notice or passage of time or both, would constitute a material default by any party under any of the Management Agreement, Operating Agreements or Leased Property Agreements. To Seller’s knowledge, all fees and charges due and payable by Seller under the Management Agreement, Operating Agreements and Leased Property Agreements prior to the Effective Date have been paid pursuant to the terms thereof.
3.6.Condemnation Proceedings; Roadways. To Seller’s knowledge, there is no pending condemnation action or special assessment against the Property and Seller has received no written notice of any condemnation or eminent domain proceeding pending against the Property or any part thereof.
3.7.Actions or Proceedings. Seller has received no written notice of any action, suit or proceeding in any court, before any arbitrator, or before or by any Governmental Authority which (a) in any manner raises any question affecting the validity or enforceability of this Agreement or any other agreement or instrument to which Seller is a party or by which it is bound and that is or is to be used in connection with, or is contemplated by, this Agreement, (b) would materially and adversely affect the business, results of operations or operation of the Property as presently conducted, or (c) would create a lien on the Property, any part thereof or any interest therein which would not be discharged at Closing (each, an “Action”), except as set forth on Schedule 3.7 hereto.
3.8.Occupancy Agreements.
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(a)There are no leases, concessions or occupancy agreements in effect with respect to the Real Property, except those Occupancy Agreements provided to Purchaser in the Data Site.
(b)To Seller’s knowledge, Seller has posted to the Data Site true, correct and complete copies of the Occupancy Agreements and all amendments and modifications thereto. To Seller’s knowledge, the Occupancy Agreements are in full force and effect. Seller has neither given nor received any written notice of a default under any Occupancy Agreements which default remains uncured and, to Seller’s knowledge, there is no existing condition that, with notice or passage of time or both, would constitute a material default by any party under the Occupancy Agreements. To Seller’s knowledge, all fees and charges due and payable by Seller under Occupancy Agreements prior to the Effective Date have been paid pursuant to the terms thereof.
3.9.Permits. Seller has not received any written notice from any Governmental Authority (i) of any violation, suspension, revocation or non-renewal of any Authorizations, nor (ii) that it does not have all Authorizations required to be issued by any Governmental Authority and used in or necessary to the operation of the Hotel. To Seller’s knowledge, except for those expired Authorizations set forth on Schedule 3.9 hereto, all Authorizations are in full force and effect.
3.10.Capital Improvements. To Seller’s knowledge, other than repairs and maintenance in the ordinary course of business, no renovations, construction or capital improvements are being conducted with respect to the Hotel.
3.11.ERISA. Seller is not (and, throughout the period transactions are occurring pursuant to this Agreement, will not be) and is not acting on behalf of (and, throughout the period transactions are occurring pursuant to this Agreement, will not be acting on behalf of) an “employee benefit plan” as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, a “plan” as defined in and subject to Section 4975 of the Code or an entity deemed to hold the plan assets of any of the foregoing pursuant to 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA. None of the transactions contemplated by this Agreement are in violation of any statutes applicable to Seller that regulate investments of, and fiduciary obligations with respect to, governmental plans and that are similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.
3.12.Seller Is Not a “Foreign Person”. Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code, as amended (i.e., Seller is not a foreign corporation, foreign partnership, foreign trust, foreign estate or foreign person as those terms are defined in the Internal Revenue Code and regulations promulgated thereunder).
3.13.Bankruptcy. Seller has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Seller’s creditors that remains pending, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of Seller’s assets that remains pending, (iv) suffered the attachment or other judicial seizure of all, or substantially all of Seller’s assets that remains pending, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally; and, to Seller’s knowledge, no person or entity has threatened to bring any bankruptcy proceeding, receivership proceeding or other insolvency, dissolution, reorganization or similar proceeding against Seller.
3.14.Employees. Seller has no employees. To Seller’s knowledge, all Hotel Employees are employed by Manager.
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3.15.Labor and Employment. Neither Operating Lessee nor, to Seller’s knowledge, Manager is a party to any written employment agreements with respect to the Property. To Seller’s knowledge, there are no unions at the Hotel.
3.16.Financial Statements. The financial statements made available to Purchaser in the Data Site include true, correct and complete copies of such financial statements delivered to Seller by Manager and, to Seller’s knowledge, present accurately, in all material respects, the results of operations and cash flows of the Hotel for the periods set forth therein.
3.17.Right of First Refusal. There are no parties which hold a right of first refusal, right of first offer, option to lease, option to purchase or other similar right as to the Property.
3.18.Taxes. Seller has filed, or has caused to be filed, all federal, state and local tax returns or statements required to be filed with any Governmental Authority with respect to the Property and the Hotel and has paid, or caused to be paid, all Taxes due.
3.19.Terrorism. None of Seller or its Affiliates is in violation of any laws relating to terrorism, money laundering or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Action of 2001, Public Law 107-56 and Executive Order No. 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) (the “Executive Order”) (collectively, the “Anti-Money Laundering and Anti-Terrorism Laws”). For purposes of this Section 3.19, any interest in Seller or its Affiliates held via public shares is not included in this representation.
(1)None of Seller or its Affiliates, is acting, directly or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.
(2)None of Seller or its Affiliates (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person included in the lists set forth in the preceding paragraph; (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Money Laundering and Anti-Terrorism Laws.
3.20.Trademarks. Seller does not own any service marks, copyrights, trade names, trademarks, symbols, logos, or other intellectual property rights, marks, or characteristics associated with or otherwise proprietary to the Hotel (collectively, “Hotel IP”), other than the Trademarks described in Schedule 3.20 attached hereto. To Seller’s knowledge, the registrations set forth on Schedule 3.20 hereto are each in full force and effect. Seller has not received written notice from any Person challenging the validity of any Trademarks or registrations thereof.
3.21.Submerged Lands Lease.
(a)The Submerged Land Lease is in full force and effect and has not been modified or amended.
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(b)Seller is not in default under the Submerged Land Lease and no event has occurred which, with the passage of time or the giving of notice or both, would constitute a default thereunder.
(c)Seller has delivered to Purchaser a true, correct and complete copy of the Submerged Land Lease together with all amendments and modifications (if any) thereto.
(d)The Submerged Land Lease constitutes part of the Real Property for purposes of this Agreement.
3.22.LIMITATION ON SELLER’S REPRESENTATIONS AND WARRANTIES. PURCHASER ACKNOWLEDGES AND AGREES THAT, OTHER THAN A REPRESENTATION OR WARRANTY EXPRESSLY SET FORTH IN THIS AGREEMENT (A BREACH OF WHICH PURCHASER MAY MAINTAIN AN ACTION IN ACCORDANCE WITH AND SUBJECT TO ARTICLE IX AND SECTION 10.12 OF THIS AGREEMENT) OR AS EXPRESSLY SET FORTH IN A CLOSING DOCUMENT, THE PROPERTY IS SOLD “AS IS” “WHERE IS” AND “WITH ALL FAULTS” AND NEITHER SELLER, NOR ANY AGENT OR REPRESENTATIVE OF SELLER, HAS MADE, NOR IS SELLER LIABLE FOR OR BOUND IN ANY MANNER BY ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTEES, PROMISES, STATEMENTS, INDUCEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR ANY PART THEREOF, THE PHYSICAL CONDITION, ENVIRONMENTAL CONDITION, INCOME, EXPENSES OR OPERATION THEREOF, THE USES WHICH CAN BE MADE OF THE SAME OR ANY OTHER MATTER OR THING WITH RESPECT THERETO, INCLUDING ANY EXISTING OR PROSPECTIVE LEASES; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL SELLER BE RELEASED BY OPERATION OF THIS SECTION 3.22 FROM (A) ANY CLAIMS ARISING PURSUANT TO THE PROVISIONS OF THIS AGREEMENT THAT EXPRESSLY SURVIVE CLOSING OR (B) ANY CLAIMS ARISING FROM ANY FRAUDULENT ACTS COMMITTED BY THE SELLER TO THE PURCHASER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. IN ADDITION, NOTHING IN THIS SECTION SHALL PRECLUDE PURCHASER FROM RAISING AS A DEFENSE AGAINST ANY CLAIM BROUGHT AGAINST PURCHASER BY ANY THIRD PARTY RELATING TO ANY OF THE FOREGOING THAT SUCH CLAIM WAS ATTRIBUTABLE TO A PERIOD OF TIME PRIOR TO THE CLOSING. WITHOUT LIMITING THE FOREGOING, PURCHASER ACKNOWLEDGES AND AGREES THAT, OTHER THAN A REPRESENTATION OR WARRANTY EXPRESSLY SET FORTH IN THIS AGREEMENT (A BREACH OF WHICH PURCHASER MAY MAINTAIN AN ACTION IN ACCORDANCE WITH AND SUBJECT TO ARTICLE IX AND SECTION 10.12 OF THIS AGREEMENT) OR AS EXPRESSLY SET FORTH IN A CLOSING DOCUMENT, SELLER IS NOT LIABLE FOR OR BOUND BY (AND PURCHASER HAS NOT RELIED UPON) ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS, OR FINANCIAL STATEMENTS PERTAINING TO THE OPERATION OF THE PROPERTY, OR ANY OTHER INFORMATION RESPECTING THE PROPERTY FURNISHED BY SELLER OR ANY EMPLOYEE, AGENT, CONSULTANT OR OTHER PERSON REPRESENTING OR PURPORTEDLY REPRESENTING SELLER. PURCHASER FURTHER ACKNOWLEDGES, AGREES, AND REPRESENTS THAT, OTHER THAN A REPRESENTATION OR WARRANTY SET FORTH IN THIS AGREEMENT (A BREACH OF WHICH PURCHASER MAY MAINTAIN AN ACTION IN ACCORDANCE WITH AND SUBJECT TO ARTICLE IX AND SECTION 10.12 OF THIS AGREEMENT) OR AS EXPRESSLY SET FORTH IN A CLOSING DOCUMENT, IT SHALL BE PURCHASING THE PROPERTY IN AN “AS IS” “WHERE IS” AND “WITH ALL FAULTS” CONDITION AT THE CLOSING DATE WITH RESPECT TO THE STRUCTURAL AND MECHANICAL ELEMENTS OF THE PROPERTY, THE PHYSICAL AND ENVIRONMENTAL CONDITION OF THE PROPERTY, THE FIRE-LIFE SAFETY SYSTEMS AND THE FURNITURE, FIXTURES AND EQUIPMENT
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LOCATED THEREON OR ATTACHED THERETO, ALL OF WHICH PURCHASER AND ITS CONSULTANTS SHALL HAVE INSPECTED AND EITHER APPROVED OR WAIVED OBJECTION TO ON OR PRIOR TO THE EXPIRATION OF THE STUDY PERIOD AND/ OR THE CLOSING AND PURCHASER HEREBY RELEASES SELLER AND ITS AFFILIATES FROM ANY AND ALL OBLIGATIONS, LIABILITIES, CLAIMS, DEMANDS, SUITS, CAUSES OF ACTION, DAMAGES, JUDGMENTS, COSTS AND EXPENSES RELATING TO ANY OF THE FOREGOING. PURCHASER ALSO ACKNOWLEDGES THAT, AS OF THE CLOSING DATE, IT SHALL HAVE INDEPENDENTLY INVESTIGATED, ANALYZED AND APPRAISED TO ITS SATISFACTION THE VALUE AND THE PROFITABILITY OF THE PROPERTY. PURCHASER ACKNOWLEDGES THAT, TO THE EXTENT REQUIRED TO BE OPERATIVE, THE DISCLAIMERS OF WARRANTIES CONTAINED IN THIS SECTION ARE “CONSPICUOUS” DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE LAW, RULE, REGULATION OR ORDER. THE PROVISIONS OF THIS SECTION 3.22 SHALL SURVIVE THE CLOSING.
Purchaser recognizes that the Hotel and Personal Property are not new and that there exists a possibility that the Property is not in compliance with the requirements which would be imposed on a newly constructed hotel by presently effective federal, state and local building, plumbing, electrical, fire, health, handicap, environmental and life safety laws, codes, ordinances, rules, orders and/or regulations (collectively, the “building codes”). The Hotel and other improvements on the Land may contain substances or materials no longer permitted to be used in newly constructed buildings including, without limitation, asbestos or other insulation materials, lead or other paints, wiring, electrical, or plumbing materials and may not contain other materials or equipment required to be installed in a newly constructed building. Purchaser shall have the opportunity to review the results of such investigations and inspections of the Property as Purchaser deemed necessary with respect to all such matters. Subject to Purchaser’s rights to terminate pursuant to Section 2.4 and Purchaser’s rights set forth in this Agreement, Purchaser agrees to accept and shall purchase the Property in an “AS-IS, WHERE IS” condition and at Closing to accept and assume the risk of noncompliance of the Property with all such building codes. Except with respect to those representations and warranties expressly set forth in this Agreement, Purchaser waives any right to excuse or delay performance of its obligations under this Agreement or to assert any claim against Seller (before or after Closing) arising out of any failure of the Property to comply with any such building codes. Seller shall provide copies to Purchaser all of the Operating Agreements, Occupancy Agreements, Leased Property Agreements, the Authorizations, and the Warranties and Guaranties (the “Property Agreements”). Purchaser further acknowledges that Seller is relying on Manager to provide copies of the Property Agreements. Purchaser acknowledges that Purchaser is assuming all Property Agreements whether or not copies of which have been provided to Purchaser, and except with respect to those representations and warranties expressly set forth in this Agreement (a breach of which Purchaser may maintain an action in accordance with and subject to Article IX and Section 10.12 of this Agreement), Purchaser hereby waives any claims Purchaser may have for the fact that a particular Property Agreement may not have been provided to Purchaser for its review; provided, however, as its sole and exclusive remedy (except with respect to those representations and warranties expressly set forth in this Agreement (a breach of which Purchaser may maintain an action in accordance with and subject to Article IX and Section 10.12 of this Agreement)), Purchaser shall not be required to assume any Property Agreement which has not been provided to Purchaser to the extent Seller is a direct party to such Property
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Agreement or Seller’s prior consent was required in order for Manager to enter into such Property Agreement pursuant to the terms of the Management Agreement.
Except with respect to those representations and warranties expressly set forth in this Agreement (a breach of which Purchaser may maintain an action in accordance with and subject to Article IX and Section 10.12 of this Agreement), and except as set forth in the proviso in the first paragraph of this Section 3.22, it is specifically understood and agreed by Seller and Purchaser that Seller does not make, and shall not be deemed to have made, any representation, warranty or covenant with respect to (1) any Environmental Laws that may affect any of the Property or (2) the presence or absence of any Hazardous or Toxic Substances in, on, above, under or about any of the Property. Purchaser, for itself and its successors in interest, hereby releases Seller and its Affiliates from, and waives all claims and liability against Seller and its Affiliates for or attributable to, any structural, physical and/or environmental condition at the Property, including without limitation the presence, discovery or removal of any Hazardous Substances or Toxic Substances in, at, about or under such Property, or connected with or arising out of any and all claims or causes of action based upon any Environmental Laws or any related claims or causes of action or any other federal or state based statutory or regulatory or other causes of action for environmental contamination at, in or under any Property. As used in this Section 3.22, (A) the term “Environmental Laws” means, collectively, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. §§ 9601 et seq.) and as may be further amended from time to time, the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), the Federal Water Pollution Control Act, as amended by the Clean Water Act (33 U.S.C. §§ 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. §§ 2601 et seq.), Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. §§ 11001 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. §§ 136 et seq.), the Hazardous Material Transportation Act, as amended (49 U.S.C. §§ 5101 et seq.), as the same are amended, any other applicable federal, state and local laws, and any and all rules and regulations which have become effective prior to the Effective Date under any and all of the aforementioned laws, and other federal, state, and local environmental statutes, codes, ordinances, rules, orders and regulations now or hereafter in effect relating to pollution or the protection of the environment, including without limitation, all laws, statutes, codes, ordinances, rules, common law, orders, regulatory directives, guidance documents, consent decrees, permits, regulations and other requirements of governmental authorities governing or relating to the generation, use, collection, preservation, conservation, treatment, storage, transportation, recovery, removal, discharge, spill or disposal of any or all Hazardous or Toxic Substances, and (B) the term “Hazardous Substances” or “Toxic Substances” means (I) materials and substances listed or defined as “hazardous”, “extremely hazardous”, “hazardous substances”, “hazardous materials”, “hazardous waste”, “extremely hazardous waste”, “restricted hazardous waste”, “toxic substances” or “toxic wastes” in (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601-9675, as amended by the Superfund Amendments and Reauthorization Act of 1988, and any further amendments thereto and rules, orders and regulations thereunder; (ii) the Resource Conservation and Recovery Act of 1976, 42
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U.S.C. Sections 6901-6992, as amended by the Hazardous and Solid Waste Amendments of 1984, and any further amendments thereto and rules, orders and regulations thereunder; (iii) Federal Resource Conservation and Recovery Act § 1004 (42 U.S.C. §6901 et seq.) or (iv) any other Environmental Laws, and (II) any pollutants, contaminants, hazardous, dangerous or toxic chemicals, materials, substances or wastes (including petroleum, petroleum by-products, radon, asbestos and asbestos containing materials, per- and polyfluoroalkyl substances, polychlorinated biphenyls, PCB-containing equipment, radioactive elements, infectious agents, and urea formaldehyde), as such terms may be used in any Environmental Laws (but excluding solvents, cleaning fluids, and other lawful substances used in the ordinary operation and maintenance of the Property).
Each of the representations and warranties contained in this Article III and its various subparagraphs are intended for the benefit of Purchaser and may be waived in whole or in part, by Purchaser. Subject to the limitations contained in Section 10.12 hereof, all rights and remedies arising in connection with the untruth or inaccuracy of any such representations and warranties shall survive the Closing of the transaction contemplated hereby as provided in Section 10.12.
The term “to Seller’s knowledge” or similar phrase as used in this Article III, shall mean the then actual current conscious knowledge of Mark Svenjak and/or Adam Tegge (each, a “Seller Knowledge Party”) without any duty of investigation or inquiry, other than the inquiry of the general manager of the Hotel. The Seller Knowledge Parties shall have no personal liability for such representations. Seller represents and warrants that the Seller Knowledge Parties are the individuals that are familiar with the operation of the Property and the business of Seller.
Article IV.
PURCHASER’S REPRESENTATIONS AND WARRANTIES
To induce Seller to enter into this Agreement and to sell the Property, Purchaser hereby makes the following representations and warranties:

4.1.Organization and Power. Purchaser is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to enter into and perform its obligations under this Agreement and any document or instrument required to be executed and delivered on behalf of Purchaser hereunder.
4.2.Authorization and Execution. This Agreement has been duly authorized by all necessary action on the part of Purchaser, has been duly executed and delivered by Purchaser, constitutes the valid and binding agreement of Purchaser and is enforceable in accordance with its terms. The person executing this Agreement on behalf of Purchaser has the authority to do so.
4.3.Non-contravention. The execution and delivery of this Agreement and the performance by Purchaser of its obligations hereunder do not and will not contravene, or constitute a default under, any provisions of applicable law or regulation, Purchaser’s organizational documents, or any agreement, judgment, injunction, order, decree or other instrument binding upon Purchaser or result in the creation of any lien or other encumbrance on any asset of Purchaser.
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4.4.Litigation. There is no action, suit or proceeding, pending or known to be threatened, against or affecting Purchaser in any court or before any arbitrator or before any Governmental Authority which (a) in any manner raises any question affecting the validity or enforceability of this Agreement or any other agreement or instrument to which Purchaser is a party or by which it is bound and that is to be used in connection with, or is contemplated by, this Agreement, (b) would materially and adversely affect the business, financial position or results of operations of Purchaser, or (c) would materially and adversely affect the ability of Purchaser to perform its obligations hereunder, or under any document to be delivered pursuant hereto.
4.5.Patriot Act. Purchaser is not acting, directly or indirectly, for or on behalf of any person, group, entity or nation named by the United States Treasury Department as a Specifically Designated National and Blocked person, or for or on behalf of any person, group, entity or nation designated in Presidential Executive Order 13224 as a person who commits, threatens to commit, or supports terrorism; and it is not engaged in this transaction directly or indirectly on behalf of, or facilitating this transaction directly or indirectly on behalf of, any such person, group, entity or nation.
4.6.Terrorism. None of Purchaser or, to Purchaser’s actual knowledge, its Affiliates, is in violation of any Anti-Money Laundering and Anti-Terrorism Laws.
(a)None of Purchaser or, to Purchaser’s actual knowledge, its Affiliates, is acting, directly or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.
(b)None of Purchaser or, to Purchaser’s actual knowledge, its Affiliates or, without inquiry, any of its brokers or other agents, in any capacity in connection with the purchase of the Property (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person included in the lists set forth in the preceding paragraph; (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Money Laundering and Anti-Terrorism Laws.
The term “to Purchaser’s knowledge” or similar phrase as used in this Agreement shall mean the then actual current conscious knowledge of Aman Gupta without further investigation or inquiry.

Article V.
CONDITIONS PRECEDENT
5.1.As to Purchaser’s Obligations. Purchaser shall have the remedies and Closing obligations set forth in Section 9.1 hereof, which section contains the sole and exclusive remedies and Closing obligations of Purchaser, if any of the following conditions are not satisfied or waived by Purchaser on or before the Closing Date (unless the failure to satisfy such condition is caused by the default of Purchaser or its Affiliates under this Agreement, or is otherwise within the reasonable control of Purchaser):
(a)Seller’s Deliveries. Seller shall have delivered to or for the benefit of Purchaser, on or before the Closing Date, all of the documents required of Seller pursuant to Sections 7.2 and 7.4 hereof.
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(b)Representations, Warranties and Covenants; Obligations of Seller. All of Seller’s representations and warranties made in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date as if then made (except for untruths or inaccuracies of which Purchaser obtains actual knowledge prior to the expiration of the Study Period); and Seller shall have performed in all material respects all of its covenants and other obligations under this Agreement, including the obligation to cure or correct all Must Cure Title Encumbrances and any other of Purchaser’s Additional Objections that Seller has agreed to cure or correct in writing pursuant to this Agreement. For the avoidance of doubt, any Operating Agreement entered into subsequent to the Effective Date that is approved by Purchaser (or for which Purchaser has no right to approve) pursuant to Section 6.1 of this Agreement shall not constitute a failure of this condition or give rise to a Claim pursuant to Section 10.12.
(c)Operating Lease and Management Agreement. The Operating Lease and the Management Agreement shall be terminated without cost or expense to Purchaser.
(d)Title Policy. Title Company shall have irrevocably and unconditionally committed to Purchaser to issue the Owner’s Title Policy, dated as of the date the Deed is recorded.
(e)Tax Status Letter. Receipt of the items described in Section 6.10 (the “Tax Status Letters”); provided, if this condition is not satisfied at Closing (i) due to the disclosure of unpaid Taxes with respect to the Hotel as set forth in the Tax Status Letters (“Unpaid Taxes”), this condition shall be deemed satisfied if Seller pays such Unpaid Taxes at Closing, or (ii) due to the failure to have timely received the Tax Status Letters, then this condition shall be deemed satisfied provided that Seller shall promptly provide such Tax Status Letters to Purchaser upon receipt following the Closing and pay any Unpaid Taxes disclosed therein, which obligations shall survive Closing.
(f)Required Estoppel. Purchaser shall have received the Required Estoppel.
(g)RED Dockage Lease Termination. Seller shall have caused the RED Dockage Lease to be terminated at Seller’s sole cost and expense, and Seller shall have provided Purchaser with evidence of such termination reasonably acceptable to Purchaser.
(h)Pure Contract Termination. If requested by Purchaser in writing no later than five (5) business days prior to Closing, Seller shall have caused the Pure Contract to be terminated at Seller’s sole cost and expense, and Seller shall have provided Purchaser with evidence of such termination reasonably acceptable to Purchaser.
Each of the conditions contained in this Section are intended for the benefit of Purchaser and may be waived in whole or in part, in writing, by Purchaser or automatically if Purchaser proceeds to Closing.
5.2.As to Seller’s Obligations. Seller shall have the remedies and Closing obligations set forth in Section 9.2 hereof, which section contains the sole and exclusive remedies and Closing obligations of Seller, if any of the following conditions are not satisfied or waived by Seller on or before the Closing Date (unless the failure to satisfy such condition is caused by the default of Seller or its Affiliates under this Agreement, or is otherwise within the reasonable control of Seller):
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(a)Purchaser’s Deliveries. Purchaser shall have delivered to or for the benefit of Seller, on or before the Closing Date, all of the documents and payments required of Purchaser pursuant to Sections 7.3 and 7.4 hereof.
(b)Representations, Warranties and Covenants; Obligations of Purchaser. All of Purchaser’s representations and warranties made in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date as if then made and Purchaser shall have performed in all material respects all of its covenants and other obligations under this Agreement.
Each of the conditions contained in this Section are intended for the benefit of Seller and may be waived in whole or in part, in writing, by Seller or automatically if Seller proceeds to Closing.
Article VI.
COVENANTS OF SELLER AND PURCHASER
6.1.Operating Agreements/Occupancy Agreements/Leased Property Agreements. From and after the Effective Date, and subject to the terms of the Management Agreement, Seller shall not enter into any new Operating Agreements, Occupancy Agreements or Leased Property Agreements or any modifications to any such agreements except as required by the terms thereof, unless (a) any such agreement or modification will not bind Purchaser or the Property after the Closing Date or is subject to termination on not more than thirty (30) days’ notice without penalty, or (b) Seller has obtained Purchaser’s prior written consent to such agreement or modification, which consent (i) prior to the expiration of the Study Period shall not be unreasonably withheld or delayed and shall be deemed given if, within five (5) business days following Purchaser’s receipt of Seller’s request, Purchaser fails to provide Seller with a reasonably detailed written description of the reason Purchaser withholds its consent and, if applicable, a statement of those changes, which, if made, would cause Purchaser to grant its consent, and (ii) after the expiration of the Study Period shall be in Purchaser’s sole and absolute discretion with no deemed approval (clauses (i) and (ii) together, the “Approval Standard”). Seller, at no cost to Seller, shall take reasonable efforts to assist Purchaser in obtaining any required consents to the assignment to Purchaser of the Operating Agreements or Leased Property Agreements; provided, however, Seller shall pay all fees, charges and expenses relating to such consents. Seller may cancel any Operating Agreement, Occupancy Agreement or Leased Property Agreement at any time prior to the Closing with the prior written consent of Purchaser, which consent shall be subject to the Approval Standard; provided, however, if Seller elects to cancel any such agreement, Seller shall pay any termination fee associated with such termination, and shall give Purchaser notice of such termination. Notwithstanding anything contained in this paragraph to the contrary, in no event shall the Approval Standard apply or Purchaser’s consent be required to the extent Manager enters into any agreement which the Management Agreement expressly provides is within Manager’s discretion and does not require Seller’s consent.
6.2.Warranties and Guaranties. Seller shall not before or after Closing release or modify any Warranties and Guaranties, if any, except with the prior written consent of Purchaser, which consent shall be subject to the Approval Standard.
6.3.No Transfers. Seller shall not sell, exchange, assign, transfer, convey, lease, option, or otherwise dispose of all or any part of the Real Property or any interest therein, except to the extent within Manager’s authority without Seller’s consent under the Management Agreement.
6.4.Insurance. Seller shall pay all premiums on, and shall not cancel or voluntarily allow to expire, any of Seller’s Insurance Policies unless such policy is replaced, without any
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lapse of coverage, by another policy or policies providing coverage at least as extensive as the policy or policies being replaced.
6.5.Operation of Property Prior to Closing. Seller covenants and agrees with Purchaser that, to the extent it is legally entitled to do so, between the Effective Date and the Closing Date and subject to the terms of the Management Agreement:
(a)Subject to the restrictions contained herein, and events or conditions beyond Seller’s reasonable control, Seller shall operate and maintain the Property in substantially the same manner in which it operated the Property prior to the execution of this Agreement.
(b)Seller shall pay (subject to legal rights of appeal and protest) prior to delinquency all ad valorem, occupancy and sales taxes due and payable with respect to the Property or the operation of the Hotel.
(c)Subject to seasonal differences, market conditions and events or conditions beyond Seller’s reasonable control, Seller shall continue to take guest room reservations and to book functions and meetings and otherwise to promote the business of the Property in generally the same manner as it did prior to the execution of this Agreement; and all advance room bookings and reservations and all meetings and function bookings shall be booked at rates, prices and charges charged by Seller for such purposes in the ordinary course of business consistent with past practices. Seller acknowledges that the Purchase Price includes the transfer of Advance Bookings and any payments and/or deposits made pursuant to such Advance Bookings.
(d)Seller shall promptly advise Purchaser of any material litigation, arbitration or administrative hearing concerning the Property of which Seller obtains actual knowledge.
(e)Seller shall maintain its books and records in the ordinary course of business in accordance with sound accounting principles applied on a basis consistent with the basis used in keeping its books and records in prior years.
(f)Seller shall refrain from removing or causing or permitting to be removed any part or portion of the Real Property, Tangible Personal Property owned by Seller other than in the normal course of business without the prior written consent of Purchaser, which consent shall be subject to the Approval Standard, unless the same is replaced, prior to Closing, with similar items of at least equal or better suitability, quality and value, free and clear of any liens or security interests.
(g)Seller shall use commercially reasonable efforts (i) to renew or replace, or cause Manager to renew or replace, any Authorizations that are expired as of the Effective Date (including the expired Authorizations set forth on Schedule 3.9 hereto) or which will expire prior to the Closing Date, (ii) to cure the violations and deficiencies disclosed on Schedule 3.4 hereto, and (iii) close out the open permits disclosed on Schedule 6.5(g), in each case prior to Closing.
6.6.New Employees. Beginning two (2) weeks prior to the Closing Date, Seller shall provide to Purchaser, at no cost or expense to Purchaser, a meeting room suitable for Purchaser to conduct interviews and evaluate employment applications of those parties who may seek employment at the Property following Closing and Seller shall reasonably cooperate with Purchaser’s efforts to conduct such interviews.
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6.7.Termination of Hotel Employees; WARN Act. On the Closing Date the employment of all Hotel Employees shall be terminated. (For purposes of WARN Act liability, the Closing Date is considered to be the “effective date of sale”). With respect to such terminations, Purchaser (or its Affiliate or manager) shall extend or cause to be extended offers of employment to any active Hotel Employees as Purchaser deems appropriate; provided, however, that Purchaser (or its Affiliate or manager) shall offer employment to a sufficient number of terminated active Hotel Employees as is necessary to prevent Seller from incurring any liabilities under the WARN Act with respect to the active Hotel Employees for failure to provide sufficient notice to such active Hotel Employees prior to such termination. The terminated active Hotel Employees who accept such offers of employment are referred to collectively herein as the “Rehired Employees”. Seller shall pay any severance or termination fees payable to any Hotel Employee who is terminated by Seller that does not become a Rehired Employee. The provisions of this Section 6.7 shall survive the Closing.
6.8.Employee Claims. Purchaser shall hold harmless, indemnify and defend Seller and Manager from and against any and all claims, causes of action, proceedings, judgments, damages, penalties, liabilities, costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Seller or Manager with respect to claims, causes of action, judgments, damages (excluding punitive damages), penalties and liabilities asserted by Hotel Employees to the extent arising out of or related to any act, failure to act, any transaction or any facts or circumstances occurring from and after the Closing Date, including, without limitation (A) the termination of any such Hotel Employees from and after the Closing Date; (B) any and all liability under the WARN Act; (C) the failure of Manager to comply with the provisions of any Union Contract from and after the Closing; (D) any claim arising under the Family and Medical Leave Act or other state leave of absence statute made by someone on a statutorily approved leave of absence at the time of Closing; (E) any alleged discrimination, breach of contract or other wrongful termination (under federal statutes, state statutes or common law); and (F) any alleged right to workers’ compensation benefits, unemployment compensation or statutory or contractual severance, including claims for any withdrawal liability or unfunded liability incurred because of participation in any pension plan covered by the Multiemployer Pension Plan Amendments Act of 1980 or other multiemployer pension plan or similar fund.
6.9.Estoppels. Seller shall use commercially reasonable efforts to obtain and deliver to Purchaser estoppel certificates from the counterparties under (i) any reciprocal easement agreements, operating easement agreements, and covenants, conditions and restrictions, affecting all or any portion of the Property, and (ii) the Occupancy Agreements, in each case in such form as Purchaser provides to Seller and/or appended hereto as Exhibit H (with respect to the Island Dogs Lease) and Exhibit I (with respect to the HydroThunder Lease), subject to reasonable comments from the counterparty thereto consistent with its requirements in the underlying document or consistent with past estoppels provided. In no event shall failure to obtain an estoppel under this Section 6.9 that is not the Required Estoppel be a default by Seller or a condition to Purchaser’s obligation to close hereunder.
6.10.Tax Status Letters. Seller shall reasonably cooperate with Purchaser in securing (a) a tax clearance letter or certificate of compliance from the Florida Department of Revenue with respect to sales tax payable in Florida and (b) evidence reasonably acceptable to Purchaser from Monroe County, or the applicable governmental authority who issues such status letters, for all tourist development tax paid over last 12 months and due on any rentals prior to Closing. Promptly following the Effective Date, Seller shall apply to the Florida Department of Revenue for a tax status letter showing that all sales taxes with respect to the Property to be paid by Seller to the State of Florida have been paid or that none are owing and Seller shall thereafter diligently pursue obtaining the same and Seller shall deliver the same to Purchaser as soon as received.
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Article VII.
CLOSING
7.1.Closing. The Closing shall occur on the Closing Date. As more particularly described below, at the Closing the parties hereto will (i) execute or cause to be executed, or instruct the Escrow Agent to release, all of the documents required to be delivered in connection with the transactions contemplated hereby (the “Closing Documents”), (ii) deliver or cause to be delivered the same to Escrow Agent, and (iii) take or cause to be taken all other action required to be taken in respect of the transactions contemplated hereby. The Closing will occur through escrow at the offices of the Title Company or at such other place as Purchaser and Seller may mutually agree. At the Closing, Purchaser shall deliver the balance of the Purchase Price to Escrow Agent as provided herein. As provided herein, the parties hereto will agree upon adjustments and prorations to certain items which cannot be exactly determined at the Closing and will make the appropriate adjustments with respect thereto. Possession of the Property shall be delivered to Purchaser at the Closing, subject only to Permitted Title Exceptions and the rights of tenants, licensees and concessionaires under the Occupancy Agreements and guests in possession.
7.2.Seller’s Deliveries. At the Closing, Seller shall deliver or shall cause Manager to deliver, as applicable, to Escrow Agent all of the following instruments, each of which shall have been duly executed and, where applicable, acknowledged and/or sworn, on behalf of Seller, and shall be dated to be effective as of the Closing Date:
(a)The Deed.
(b)The Bill of Sale.
(c)The Assignment and Assumption Agreement.
(d)The Assignment of Occupancy Agreements.
(e)The FIRPTA Certificate.
(f)A Building Permit Allocation System Exemption Transfer Agreement in the form of Exhibit J, assigning the ROGO and any development rights.
(g)Evidence of termination of the Operating Lease and the Management Agreement.
(h)The originals of all Property Agreements being assumed by Purchaser at Closing, to the extent in the possession or control of Seller, Manager or Seller’s agents (which will be satisfied if such items are maintained at the Hotel).
(i)All keys, the books and records and all Warranties and Guaranties and Authorizations, in the possession of Seller, Manager or Seller’s agents, together with such property files and records in connection with the continued operation, leasing and maintenance of the Property in Seller’s or Manager’s possession (which will be satisfied if such items are maintained at the Hotel).
(j)Any real estate transfer tax declarations, forms, or similar document required under applicable law in connection with the conveyance of the Property.
(k)The Trademark Assignment.
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(l)Any other document or instrument specifically required by this Agreement to be delivered by Seller on or before the Closing Date.
(m)Such agreements, affidavits or other documents as may be reasonably required by the Title Company from the Seller to issue the Owner’s Title Policy, including an owner’s affidavit in the form required by the Title Company.
7.3.Purchaser’s Deliveries. At or prior to the Closing, Purchaser shall deliver or cause to be delivered to Escrow Agent the following, duly executed and, where applicable, acknowledged and/or sworn on behalf of Purchaser, and dated as of the Closing Date:
(a)The Assignment and Assumption Agreement.
(b)The Assignment of Occupancy Agreements.
(c)The Trademark Assignment.
(d)Any other documents or instruments specifically required by this Agreement to be delivered by Purchaser on or before the Closing Date.
(e)At the Closing, Purchaser shall deliver to Escrow Agent the portion of the Purchase Price described in Section 2.2 hereof.
7.4.Mutual Deliveries. At the Closing, Purchaser and Seller shall mutually execute and deliver or cause to be delivered:
(a)A closing statement reflecting the Purchase Price and the adjustments and prorations required hereunder and the allocation of income and expenses required hereby.
(b)Such other and further documents, papers and instruments as may be reasonably required by the parties hereto or their respective counsel or the Title Company which are not inconsistent with this Agreement or the other Closing Documents.
To the extent the delivery of any of the items in Sections 7.2, 7.3 or 7.4 of this Agreement are conditions precedent to the obligation of a party pursuant to Sections 5.1 or 5.2 of this Agreement, and the condition relating to any such item is not satisfied as of Closing, but the party for whose benefit such unsatisfied condition is made elects, nonetheless, to proceed to Closing, the delivery of the item applicable to the unsatisfied condition shall not be required pursuant to the provisions of Section 7.2, 7.3 or 7.4 of this Agreement.
7.5.Closing Costs. Except as is explicitly provided in this Agreement, each party hereto shall pay its own legal fees and expenses. All filing fees for the Deed and the transfer, recording, sales or other similar taxes and surtaxes due with respect to the transfer of title, as well as the cost for title insurance, endorsements and surveys, and any other costs specified on Schedule 1 attached hereto, shall all be paid in accordance with allocations set forth in Schedule 1. To the extent releases or corrective instruments are required to be delivered by Seller pursuant to the terms of this Agreement, Seller shall pay for the costs associated with the releases of any deeds of trust, mortgages and other Must Cure Title Encumbrances encumbering the Property and for any costs associated with any corrective instruments. For the avoidance of doubt, Purchaser shall not be responsible for, and shall have no obligation to reimburse Seller for, any costs or expenses incurred by Seller in connection with the procurement, commissioning, or updating of any third-party reports, studies, or assessments obtained by or on behalf of Seller prior to, or independent of, Purchaser's due diligence review of the Property or
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the Transaction, including any reports previously posted to the Data Site. Purchaser shall be solely responsible for the costs and expenses of any third-party reports, studies, or assessments independently commissioned by Purchaser in connection with its due diligence review. All other costs (except any costs incurred by either party for its own account) which are necessary to carry out the transactions contemplated hereunder shall be allocated between Purchaser and Seller in accordance with local custom in the jurisdiction in which the Hotel is located. The provisions of this Section 7.5 shall survive the Closing and any termination of this Agreement.
7.6.Revenue and Expense Allocations. All revenues and expenses with respect to the Property, and applicable to the period of time before and after Closing, determined in accordance with sound accounting principles consistently applied, shall be allocated between Seller and Purchaser as provided herein. Pursuant to such allocation, Seller shall be entitled to all revenue and shall be responsible for all expenses for the period of time up to but not including the Closing Date, and Purchaser shall be entitled to all revenue and shall be responsible for all expenses for the period of time from, after and including the Closing Date. Such allocations and adjustments shall be shown on the closing statement (with such supporting documentation as the parties hereto may reasonably require being attached as exhibits to the closing statements) and shall increase or decrease (as the case may be) the cash amount payable by Purchaser pursuant to Section 2.2 hereof. All prorations shall be made on the basis of the actual number of days in the year and month in which the Closing occurs or in the period of computation. Without limiting the generality of the foregoing, the following items of revenue and expense shall be allocated and prorated as of 11:59 p.m. on the night prior to the Closing Date (the “Cut-Off Time”):
(a)Current rents (excluding rent under the Operating Lease).
(b)Real estate and personal property taxes.
(c)Revenue and expenses under the Operating Agreements and Leased Property Agreements to be assigned to and assumed by Purchaser. Seller and Purchaser agree that expenses under Operating Agreements which constitute repairs and/or maintenance shall be allocated to Seller as to work completed prior to the Closing Date (and applicable retainage related thereto), and shall be allocated to Purchaser as to work completed from and after the Closing Date (and applicable retainage related thereto).
(d)Utility charges (including, but not limited to, charges for phone service, cable television, gas, water, sewer and electricity).
(e)Municipal or other governmental improvement liens and special assessments, which shall be paid by Seller at Closing where the work has been completed, and which shall be assumed by Purchaser at Closing and paid by Purchaser where the work has been authorized or started, but not completed; provided, however, that if such liens or assessments are payable in installments, the amount of the installment applicable to the period which includes the Closing Date shall be allocated in the same manner as other items of expenses herein; and for all other installments, Seller shall be responsible for the payment of and shall pay such installments relating to periods prior to the Closing Date and Purchaser shall be responsible for the payment of and shall pay such installments relating to periods from and after the Closing Date.
(f)License and permit fees, where transferable.
(g)All other revenues and expenses of the Property, including, but not limited to, such things as restaurant, bar and meeting room income and expenses and the like.
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(h)Such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the City and County where the Property is located.
Seller shall receive a credit for any documented prepaid expenses accruing to periods on or after the Closing Date. Purchaser shall receive a credit against the Purchase Price for the total of (i) prepaid rents, (ii) prepaid room receipts and deposits, function receipts and deposits and other reservation receipts and deposits, and (iii) unforfeited security deposits together with any interest payable to a tenant thereon held by Seller under Occupancy Agreements. At Closing, Seller shall sell to Purchaser in connection with the Hotel, and Purchaser shall purchase from Seller, in addition to the Purchase Price: (i) all cash funds in connection with the Hotel guest operations at the Property and any cash amounts, utility deposits, liquor deposits, security deposits, and Seller’s proportionate share of cash balances of any property or condominium associations in which Seller is a member, in each case that are transferred to Purchaser or remains in accounts or reserves or as deposits for the benefit of the Property following the Closing; (ii)  the so-called “guest ledger” as mutually approved by Purchaser and Seller for the Hotel of guest accounts receivable payable to the Hotel less actual collection costs (i.e. fees retained by credit card companies) as of the check-out time for the Hotel on the Closing Date (based on guests and customers then using the Hotel) both (1) in occupancy from the preceding night through check out time the morning of the Closing Date, and (2) previously in occupancy prior to check out time on the Closing Date, less accounting charges for rooms furnished on a gratuity or complimentary basis to any hotel staff or as an accommodation to other parties and less Purchaser’s one-half (1/2) share of the Rooms Ledger; and (iii) any accounts receivable for the Hotel (other than the Rooms Ledger) in an amount equal to (1) one hundred percent (100%) of the amount of those receivables which are aged thirty (30) days or less as of the Closing Date, plus (2) seventy-five percent (75%) of those receivables aged thirty-one to sixty (31-60) days as of the Closing Date, plus (3) zero percent (0%) of those receivables aged greater than sixty (60) days as of the Closing Date. For purposes of this Agreement, transfer or sale at face value for cash and cash reserve amounts shall mean an amount equal to the total of all cash funds and cash reserve amounts that are transferred to Purchaser (or retained by Manager for the benefit of the Property).  The purchase price of said petty cash fund and guest ledger shall be paid to Seller at Closing by a credit to Seller in the computation of the adjustments and prorations on the Closing Date.
Seller shall be solely responsible and liable for payment of all costs and expenses associated with accrued but unpaid salary, wages and bonuses, accrued but unpaid profit sharing and pension, retirement, health and welfare benefits, accrued but unpaid fringe benefits, accrued but unpaid employee severance payments, and other accrued but unpaid compensation and fringe benefits, earned vacation pay, and all accrued and/or earned sick leave and there shall be a credit against the Purchase Price equal to the amount of any such amounts that are accrued and/or earned, but unpaid, as of the Closing Date. To the extent that Hotel Employees have, as of the Closing Date, any accrued but unused vacation days, holidays, sick leave, personal days and any other form of paid time off or leave (whether under the Management Agreement or otherwise) or will be entitled to an annual or other bonus at the end of the annual or other period in which the Closing Date occurs, (i) there shall be a credit against the Purchase Price equal to the amount of the value of any such days or time (and the anticipated amounts of any such bonuses based on
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budgeted performance as of the Closing Date, if applicable, to the extent attributable to the period prior to the Closing Date, such bonuses to be trued-up during the post-Closing prorations reconciliation period based on actual performance), and (ii) Purchaser shall be solely responsible and liable for payment of all such amounts to the extent of such credit.
Seller shall be required to pay or cause to be paid all retail sales (as distinguished from any tax on the sale of any Tangible Personal Property effected pursuant to this Agreement), occupancy taxes and like impositions up to but not including the Closing Date. Any such taxes applicable to the Rooms Ledger shall be apportioned equally between Seller and Purchaser.
Purchaser shall receive a credit at Closing for the value equivalent to seventy-five percent (75%) of all outstanding: (i) gift certificates, vouchers, donations and other similar obligations which have been issued by Seller or Manager, (ii) trade credits, trade-out or barter arrangements payable by Seller to any other party for services rendered in the past or to be rendered in the future, in each case which may be used in full or partial payment for any Hotel service, including room rentals, food and beverage service, or any other item.
If accurate allocations cannot be made at Closing because current bills are not obtainable (as, for example, in the case of utility bills and/or real estate or personal property taxes) or obligations are subject to future reconciliation, the parties shall allocate such revenue or expenses at Closing on the best available information, subject to adjustment upon receipt of the final bill or other evidence of the applicable revenue or expense. The obligations to make the adjustment pursuant to this provision shall survive the closing of the transaction contemplated by this Agreement. Any revenue received or expense incurred by Seller or by Purchaser with respect to the Property after the date of Closing shall be promptly allocated in the manner described herein and the parties shall promptly pay or reimburse any amount due. The Closing adjustments and prorations, as provided for in this Section 7.6, shall be tentatively determined by Seller and Purchaser as of the Cut-Off Time and payment of the net figure resulting therefrom shall be paid by adjusting the Purchase Price, except as otherwise provided herein. Seller shall prepare a draft prorations schedule to be delivered to Purchaser no later than five (5) business days prior to the Closing Date and the Closing shall occur and a preliminary closing statement, which prorations shall remain subject to further agreement and finalization per the preparation of the Final Statement (as defined below) shall be signed by Seller and Purchaser.
Except for prorations for real estate taxes and other assessments (which shall be adjusted within thirty (30) days of receipt of the tax bill for the tax year in which the Closing occurs or subsequently, to the extent the Closing occurs in a year for which the assessed valuation has not yet been determined), and amounts of accrued bonus and other compensation which are typically paid at year-end (which shall be adjusted within thirty (30) days after they are actually paid), Purchaser and Seller shall make a one-time post-Closing adjustment of any item of income and expense subject to adjustment as provided above which was either incomplete, incorrect (whether as a result of an error in calculation or a lack of complete and accurate information) or otherwise not finally agreed by and between Seller and Purchaser as of the Closing. Purchaser will prepare and deliver to Seller for its review and approval a statement of prorations (the “Final Statement”) within one hundred twenty (120) days following the Closing Date, and the party in whose favor the original incorrect adjustment or error was made (“Adjusting Party”) shall pay to
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the other party (“Requesting Party”) the sum necessary to correct such prior incorrect adjustment or error within ten (10) business days after completion of the Final Statement. Notwithstanding any provision of this Agreement to the contrary, all items required to be adjusted pursuant to this Section 7.6 shall be adjusted within one hundred twenty (120) days of Closing (except real estate taxes and accrued bonuses and other year-end compensation, which shall be re-adjusted within the periods set forth above), and such adjustment shall be final and no further adjustment to the prorations or the Purchase Price shall be made; provided that if such amounts or issues are not fully agreed upon and paid within one hundred twenty (120) days after the Closing, then, in such event, such amounts or issues shall be submitted to an independent certified public accountant with a hospitality practice reasonably acceptable to Seller and Purchaser, for final resolution, and Seller and Purchaser agree to be bound by the determination of such accountant. The costs and expenses incurred in connection with the services of such accountant shall be borne and paid equally by Purchaser and Seller. The provisions of this Section 7.6 shall survive the Closing.
7.7.Safe Deposit Boxes. On the Closing Date, Seller shall cause Manager to make available to Purchaser at the Hotel all receipts and agreements in Manager’s possession relating to all safe deposit boxes in use at the Hotel, other than safes or lockboxes, if any, located inside individual guest rooms in the Hotel. From and after the Closing, Seller and Manager shall be relieved of any and all responsibility in connection with each said box, and Purchaser shall indemnify Seller, Manager and any Affiliate thereof and hold them harmless from and against any claim, liability, cost or expense (including reasonable attorneys’ fees) incurred by them with respect thereto. Seller shall indemnify and hold Purchaser harmless from any other liability, claim, cost or expense (including reasonable attorney’s fees) with respect to such safety deposit box arising prior to the Closing Date. The provisions of this Section 7.7 shall survive the Closing.
7.8.Inventory of Baggage. The representatives of Seller and/or Manager, and of Purchaser shall prepare an inventory of baggage at the Hotel as of 12:00 noon on the Closing Date (which inventory of baggage shall be binding on all parties thereto) of (i) all luggage, valises and trunks checked or left in the care of the Hotel by guests then or formerly in the Hotel, (ii) parcels, laundry, valet packages and other property of guests checked or left in the care of the Hotel by guests then or formerly in the Hotel (excluding, however, property in Hotel safe deposit boxes), (iii) all luggage or other property of guests retained by Seller as security for any unpaid accounts receivable, and (iv) all items contained in the Hotel lost and found. Purchaser shall be responsible from and after the Closing Date for all baggage and other items listed in such inventory of baggage, and Purchaser shall indemnify and hold Seller, Manager and any Affiliate thereof harmless from and against any claim, liability, cost or expense (including reasonable attorneys’ fees) incurred by them with respect thereto. Seller hereby agrees to indemnify and hold Purchaser harmless from any other liability or claims with respect to such inventory of baggage arising prior to the Closing Date. The provisions of this Section 7.8 shall survive the Closing.
7.9.Acquisition and Payment for Inventory. Seller agrees to sell to Purchaser and Purchaser agrees to purchase from Seller the Inventory as part of the Property with no adjustment to the Purchase Price.
7.10.Assumption of Liabilities. At Closing, Purchaser shall assume all (i) obligations which Purchaser expressly assumes under this Agreement, (ii) Advance Bookings, (iii) liabilities for which Purchaser receives a credit to the Purchase Price on the closing statement or pursuant to any post-closing adjustments, and (iv) obligations under Permitted Title Exceptions which accrue to the period from and after the Closing Date, or which accrue to the period prior to the
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Closing Date but only to the extent to which Purchaser receives a credit to the Purchase Price on the closing statement or pursuant to any post-closing adjustments (collectively, the “Assumed Liabilities”). The provisions of this Section 7.10 shall survive the Closing.
Article VIII.
GENERAL PROVISIONS
8.1.Fire or Other Casualty. Seller agrees to give Purchaser prompt notice of any fire or other casualty to the Property costing more than Twenty-Five Thousand Dollars ($25,000) to repair and occurring between the Effective Date and the Closing Date of which Seller has knowledge. If, prior to Closing, the Property is damaged by fire or other casualty which is fully insured (without regard to deductibles) and would cost not more than Five Hundred Thousand Dollars ($500,000) and require less than 120 days to repair, then neither party shall have the right to terminate its obligations under this Agreement to purchase or sell the Property by reason thereof and the Closing shall take place without abatement of the Purchase Price, but Seller shall assign to Purchaser at the Closing all of Seller’s interest in any insurance proceeds (except use and occupancy insurance, rent loss and business interruption insurance, and any similar insurance for the period preceding the Closing Date) that may be payable to Seller on account of any such fire or other casualty, to the extent such proceeds have not been previously expended or are otherwise required to reimburse Seller for actual expenditures of restoration, plus Seller shall credit the amount of any deductibles under any policies related to such proceeds to the Purchase Price. If any such damage due to fire or other casualty is insured and would cost in excess of Five Hundred Thousand Dollars ($500,000) or require more than 120 days to repair, then Purchaser may terminate its obligations under this Agreement to purchase the Property by written notice given to Seller within ten (10) days after Seller has given Purchaser the notice of damage or casualty referred to in this Section 8.1, or on the Closing Date, whichever is earlier, in which case the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released of all further obligations hereunder with respect to the Property except those which expressly survive a termination of this Agreement. Should Purchaser elect to proceed to Closing notwithstanding the amount of the insured loss or the time required for repairs, the Closing shall take place without abatement of the Purchase Price and at Closing Seller shall assign to Purchaser the insurance proceeds and grant to Purchaser a credit against the Purchase Price equal to the amount of the applicable deductible. If, prior to Closing, any Property is damaged by fire or other casualty which is uninsured, then Purchaser may terminate its obligations under this Agreement to purchase the Property by written notice given to the Seller within ten (10) days after Seller has given Purchaser the notice of damage or casualty or on the Closing Date, whichever is earlier, in which case the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released of all further obligations hereunder, except those which expressly survive a termination of this Agreement. Notwithstanding the preceding sentence, if the estimated amount to repair such uninsured casualty is not more than Five Hundred Thousand Dollars ($500,000), Seller, at its option, may elect to provide Purchaser with a credit to the Purchase Price at Closing for the estimated amount to repair such casualty, in which event Purchaser shall proceed to Closing and the Purchase Price shall be reduced by the estimated amount to repair such casualty. If Purchaser does not elect to terminate its obligations under this Agreement with respect to an uninsured casualty as aforesaid, or if any uninsured fire or casualty would cost not more than One Hundred Thousand Dollars ($100,000) to repair, then the Closing shall take place as provided herein, and the Purchase Price shall be reduced by the estimated amount to repair such casualty, not to exceed One Hundred Thousand Dollars ($100,000). All estimates made pursuant to this Section shall be made by a professional engineer selected by Purchaser in its reasonable discretion.
8.2.Condemnation. After the Effective Date, Seller agrees to give Purchaser prompt notice of any notice it receives of any taking or threat of taking by condemnation of any part of or rights appurtenant to the Real Property. If such taking will materially interfere with the
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operation or use of the Hotel which constitutes a part of such Real Property, the Purchaser may terminate its obligations under this Agreement to purchase the Property by written notice to Seller within ten (10) days after Seller has given Purchaser the notice of taking referred to in this Section 8.2, or on the Closing Date, whichever is earlier. For purposes of this Section 8.2, a taking will materially interfere with the operation or use of the Hotel if it leaves remaining a balance of the Real Property in a condition which, in Purchaser’s sole reasonable discretion, may not reasonably be anticipated to be economically operated for the purposes and in the manner in which the Real Property was operated prior to such taking. If Purchaser exercises its option to terminate its obligations to purchase the Property pursuant to this Section 8.2, the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released from all further obligations hereunder with respect to the Property, except those which expressly survive a termination of this Agreement. If Purchaser does not so elect to terminate its obligations to purchase the Property, then the Closing shall take place as provided herein, and Seller shall assign to Purchaser at the Closing all of Seller’s interest in any condemnation award or payments in lieu of condemnation which may be payable to Seller on account of any such condemnation or threat thereof and, at Closing, Seller shall credit to the amount of the Purchase Price payable by Purchaser the amount, if any, of condemnation proceeds or payments in lieu of condemnation received by Seller between the Effective Date and Closing less (i) any amounts reasonably expended by Seller or Manager in collecting such sums, (ii) any amounts reasonably used by Seller or Manager to repair the Property as a result of such condemnation, and (iii) any amounts which are reasonably allocated to lost earnings or other damages or losses (other than unrepaired property damages) reasonably allocated or attributed to the period of time prior to Closing. If, prior to the Closing, there shall occur a taking by condemnation of any part of or rights appurtenant to the Property that does not materially interfere with the operation or use of the Hotel which constitutes a part of the Property, Purchaser shall not have the right to terminate its obligations to purchase the Property under this Agreement by reason thereof and the Closing shall take place without abatement of the Purchase Price, but Seller shall assign to Purchaser at the Closing all of Seller’s interest in any condemnation award or payments in lieu of condemnation which may be payable to Seller on account of any such condemnation or threat thereof and, at Closing, Seller shall credit to the amount of the Purchase Price payable by Purchaser the amount, if any, of condemnation proceeds or payments in lieu of condemnation received by Seller between the Effective Date and Closing less (i) any amounts reasonably expended by Seller or Manager in collecting such sums, (ii) any amounts reasonably used by Seller or Manager to repair the Property as a result of such condemnation, and (iii) any amounts which are reasonably allocated to lost earnings or other damages or losses (other than unrepaired property damages) reasonably allocated or attributed to the period of time prior to Closing. Provided Purchaser has not exercised its right to terminate this Agreement pursuant to this Section 8.2, Seller shall notify Purchaser in advance regarding any proceeding or negotiation with respect to the condemnation and Purchaser shall have a reasonable right, at its own cost and expense, to appear and participate in any such proceeding or negotiation. For purposes of Sections 8.1 and 8.2 of this Agreement, estimates of costs and time required for restoration or repair shall be made by an architect or engineer, as appropriate, designated by Seller and reasonably acceptable to Purchaser.
8.3.Broker. The parties acknowledge that Broker has been the procuring cause of this Agreement. It shall be the obligation of Seller to pay Broker its commission, when, as and if, and only if, the transaction contemplated hereby actually closes, in accordance with a separate agreement between the Broker and Seller. There is no other real estate broker involved in this transaction. Purchaser warrants and represents to Seller that Purchaser has not dealt with any other real estate broker in connection with this transaction, nor has Purchaser been introduced to the Property or to Seller by any other real estate broker, and Purchaser shall indemnify Seller and hold Seller harmless from and against any claims, suits, demands or liabilities of any kind or nature whatsoever arising on account of the claim of any other person, firm or corporation to a real estate brokerage commission or a finder’s fee as a result of having dealt with Purchaser, or
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as a result of having introduced Purchaser to Seller or to the Property. In like manner, Seller warrants and represents to Purchaser that Seller has not dealt with any other real estate broker in connection with this transaction, nor has Seller been introduced to Purchaser by any other real estate broker, and Seller shall indemnify Purchaser and save and hold Purchaser harmless from and against any claims, suits, demands or liabilities of any kind or nature whatsoever arising on account of the claim of any person, firm or corporation to a real estate brokerage commission or a finder’s fee as a result of having dealt with Seller in connection with this transaction. The provisions of this Section 8.3 shall survive the Closing and any termination of this Agreement.
8.4.Bulk Sale. Seller and Purchaser acknowledge that they do not intend to comply with and have agreed to waive the provisions of any statutory bulk sale or similar requirements applicable to the transaction to be effected by this Agreement.
8.5.Confidentiality. Except as hereinafter provided, Purchaser and Seller and their Affiliates shall keep the terms, conditions and provisions of this Agreement and all documents or information disclosed to or made available to or discovered by each party in connection with this Agreement (including, without limitation, information in the Data Site) confidential and such information shall be used solely for the purpose of evaluating or effecting the transactions contemplated by this Agreement, and neither Purchaser nor Seller shall make any public announcements hereof unless and until the Closing occurs unless the other first reasonably approves of same in writing, nor shall either disclose unless and until the Closing occurs the terms, conditions and provisions of this Agreement or such other documents or information, except to persons who, in the reasonable business judgment of Seller or Purchaser, as applicable, “need to know” for the purpose of evaluating or effecting the transactions contemplated by this Agreement, and who are instructed to keep such information confidential, such as their respective officers, directors, employees, attorneys, accountants, engineers, surveyors, consultants, financiers, partners, investors, potential lessees and bankers and such other third parties whose assistance is required in connection with the consummation of this transaction (collectively, “Representatives”); provided, however, that information or documents shall not be subject to the provisions of this Section 8.5 if, not otherwise in violation of this Section 8.5, such information or documents, (i) were or become(s) generally available to the public, or (ii) were or become(s) available to Purchaser or its Affiliates on a non-confidential basis from a source other than Seller or its Affiliates or Manager. Upon full execution of this Agreement and if the Closing occurs, the parties may either make a joint press release, or each party may make an individual press release. Notwithstanding the foregoing, it is acknowledged that Seller is, or is an Affiliate of, a REIT, and the REIT has and will seek to sell shares to the general public; consequently, Seller shall have the absolute and unbridled right to disclose any information regarding the Transaction required by law or as determined to be necessary or appropriate by Seller or Seller’s attorneys to satisfy disclosure and reporting obligations of Seller or its Affiliates. Notwithstanding the foregoing, on or at any time following the expiration of the Study Period, Seller may make a press release or file with the United States Securities Exchange Commission information regarding the Transaction. Seller and Purchaser and their Representatives are cautioned that United States securities laws restrict the purchase and sale of securities by anyone who possesses non-public information about the issue of such securities. Accordingly, neither Purchaser nor any of its Affiliates nor its Representatives may buy or sell any of the securities of the Seller or any of its Affiliates so long as any of them is in possession of any material non-public information about the Seller or any of its Affiliates, including information contained in or derived from confidential information. The terms of this Section 8.5 shall supersede any prior confidentiality agreements executed by Seller, Purchaser, or any of their respective Affiliates, parents, or subsidiaries, to the extent such confidentiality agreements relate or refer, directly or indirectly, to the transactions contemplated by this Agreement. The provisions of this Section 8.5 relating to press releases shall survive the Closing and all the provisions of this Section 8.5 shall survive a termination of this Agreement for a period of one (1) year after such termination; provided, however, that any liabilities or obligations of either
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Seller, Purchaser or any of their respective Affiliates, parents, or subsidiaries that may have accrued or arisen under any confidentiality agreements prior to the Effective Date shall survive such confidentiality agreements being superseded hereby.
If either Seller or Purchaser or any of their Affiliates or any of their Representatives is required by any subpoena, interrogatories, request for production, or other legal process or by any Applicable Laws, or if it is determined to be necessary or appropriate by Seller or Seller’s attorneys to satisfy disclosure and reporting obligations of Seller or its Affiliates, to disclose any confidential information, Seller or Purchaser, as applicable, will give the other party prompt written notice of the requirement and will cooperate with the other party so that the other party, at its expense, may seek an appropriate protective order. In the absence of a protective order, the party required to disclose, including any Representatives, may disclose only such confidential information as may be necessary to avoid any penalty, sanction, or other material adverse consequence, and the party required to disclose will use reasonable efforts to secure confidential treatment of any confidential information so disclosed.
Seller and Purchaser stipulate that the breach of the provisions of this Section 8.5 by the other party or its respective Affiliates or Representatives may cause irreparable harm to the non-breaching party for which damages may not constitute an adequate remedy. Accordingly, the parties agree that any attempted, threatened, or actual breach of the provisions of this Section 8.5 by one party or its Affiliates or Representatives may be enjoined by an appropriate court order or judgment. The parties waive any requirement for the posting of a bond or other security as a condition to such court order or judgment. Injunctive relief will not be the sole remedy of the non-breaching party for a breach of the provisions of this Section 8.5, and all legal and equitable remedies will continue to be available to the non-breaching party. If the non-breaching party is the prevailing party in any litigation relating to the breach of the provisions of this Section 8.5 by the other party or its Affiliates or Representatives, the non-breaching party will be entitled to recover (in addition to any damages or other relief granted) its reasonable legal fees and other expenses in connection with such litigation.
Notwithstanding anything to the contrary set forth herein or in any other agreement to which the parties hereto are parties or by which they are bound, any and all obligations of confidentiality contained herein and therein (the “Confidentiality Obligations”), as they relate to the transactions and events contemplated by this Agreement (collectively, the “Transaction”), shall not apply to the “structure or tax aspects” (as that phrase is used in Section 1.6011-4T(b)(3) or any successor provision of the Treasury Regulations (the “Confidentiality Regulation”) promulgated under Section 6011 of the Internal Revenue Code of 1986, as amended) of the Transaction; provided, however, that the Confidentiality Obligations nevertheless shall apply at a given time to any and all items of information not required to be freely disclosable at such time in order for the Transaction not to be treated as “offered under conditions of confidentiality” within the meaning of the Confidentiality Regulation.
8.6.Liquor Licenses. Purchaser shall have the sole responsibility (at Purchaser’s sole cost and expense) for obtaining the transfer of all alcoholic beverage licenses or the issuance of new alcoholic beverage licenses and permits, (the “Liquor Licenses”), issued by the State of Florida’s Division of Alcoholic Beverages & Tobacco (“DABT”). Purchaser, at its cost and expense, shall submit all necessary applications and other materials to the appropriate
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Governmental Authority and take such other actions to effect the transfer of the Liquor Licenses or issuance of new alcoholic beverage licenses and permits as of the Closing. Seller shall cooperate in all reasonable respects in connection with the Liquor Licenses (which shall include, without limitation, timely supplying information in Operating Lessee’s possession that is reasonably requested by Purchaser and executing documents, in each such instance as may be required to consummate any such transfer). Seller makes no representations or warranties as to whether Purchaser will qualify with DABT for the transfer of the Liquor Licenses or the issuance of new liquor licenses. It is the intent of the parties that all such transfers or issuances of new Liquor Licenses be effective as of Closing. The transfer by Operating Lessee of any Liquor Licenses shall be free and clear of all obligations, liens, mortgages and encumbrances of any nature or kind, in accordance with applicable law; provided that such transfer and cooperation of Operating Lessee (i) shall not create any potential liability for Seller and (ii) shall be at no cost or expense to Seller. Purchaser agrees to pay all fees, charges, and related costs in connection with the transfer of the Liquor Licenses and for the issuance of the Temporary Liquor Licenses (defined below). Purchaser shall complete, execute, and file with the DABT all necessary applications (a) for transfer of the Liquor Licenses to Purchaser or its designee, and (b) obtain, no later than the Closing Date, temporary liquor licenses in the name of Purchaser or its designee (the “Temporary Liquor Licenses”). Upon request, Seller will furnish to Purchaser a Department of Revenue Clearance (Section 13 of DBPR ABT-6002 form), fully executed by an individual on file with DABT authorized to execute on behalf of Operating Lessee, for each of the Liquor Licenses, for Purchaser or Purchaser’s designee to obtain DOR’s completion of the Sales Tax portion of Section 5 of the ABT-6002 transfer form for each Liquor License. Should DOR refuse to complete the Sales Tax portion of Section 5 of the ABT-6002 transfer form for the Liquor Licenses due to any outstanding taxes or assessments, or delinquent returns related to Seller’s tax accounts with DOR associated with the operation of the Property, and not due to any reasons associated with Purchaser, Seller shall obtain and provide to Purchaser a Certificate of Compliance from the DOR issued under Subsection 213.758(4)(a)1.a. of the Florida Statutes for Seller’s tax accounts with DOR associated with the operation of the Property, no later than three (3) business days prior to Closing, evidencing the necessary clearance for Purchaser or Purchaser’s designee to obtain DOR’s completion of the Sales Tax portion of Section 5 of the ABT-6002 transfer form for the Liquor Licenses. Upon request,, Seller shall deliver to Purchaser, an Affidavit of Transferor (Section 10 of DBPR ABT-6002 form), fully executed by an individual on file with the DABT authorized to execute on behalf of Operating Lessee, for each Liquor License. Notwithstanding anything to the contrary, the issuance of new liquor licenses, the issuance of Temporary Liquor Licenses, or the transfer of the existing Liquor Licenses to Purchaser shall not be a condition to Closing. If upon Closing Purchaser has not obtained the Temporary Liquor Licenses, despite commercially reasonable good faith efforts by Purchaser, then, subject to Applicable Laws, Seller shall (not to include by Seller the expenditure of any money or guaranty of any obligation) cause the holder of the existing liquor license (the “Existing Permittee”) to enter into an interim liquor agreement (an “Interim Liquor Agreement”) or any other such license agreements, management agreements and/or other interim agreements, with Purchaser or Purchaser’s designee as may be reasonably necessary for the continuation of the sale and consumption of alcoholic beverages at the Hotel after the Closing and before such time as Purchaser obtains the Temporary Liquor License; provided, however, that (i) Purchaser shall indemnify, defend and hold Seller and Existing Permittee harmless from any liability, damages, costs, expenses or claims encountered in connection with such operations during said period of time, and Purchaser shall procure and pay for dram shop liability insurance (in amounts and with deductibles as previously maintained by Seller) naming Purchaser and Seller and Existing Permittee as insureds thereunder, and (ii) the obligation of Seller to cooperate and keep open the liquor facilities of the Hotel shall terminate one hundred eighty (180) days after the Closing Date, or earlier, if Purchaser obtains the Temporary Liquor License at an earlier date. At such time after Closing as the Temporary Liquor License is obtained, Existing Permittee or Seller, as applicable, will convey, at no additional costs, all alcoholic beverages to Purchaser by a conveyance document in form reasonably acceptable to Seller and Purchaser and in accordance
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with the requirements of the Applicable Laws. Seller and Purchaser shall use good faith efforts to agree on the form of the Interim Liquor Agreement at least ten (10) days prior to Closing. This Section 8.6 shall survive the Closing.
Article IX.
DEFAULT; TERMINATION RIGHTS
9.1.Default by Seller/Failure of Conditions Precedent. If (i) any condition set forth herein for the benefit of Purchaser cannot or will not be satisfied prior to Closing (unless the failure to satisfy such condition is caused by the default of Purchaser or its Affiliates under this Agreement, or is otherwise within the reasonable control of Purchaser or its Affiliates), or (ii) Seller breaches any of its covenants, representations, and/or warranties set forth in this Agreement, and, if curable, if Seller fails to cure any such matter or satisfy such condition within ten (10) calendar days after written notice thereof from Purchaser (or such other time period as may be explicitly provided for herein), (which ten (10) calendar day or other such time periods shall, if necessary, automatically extend the Closing Date to the expiration date of such ten (10) calendar day or other such time period), or upon the occurrence of any other event that would entitle Purchaser to terminate this Agreement and its obligations hereunder, unless otherwise provided for in this Agreement, Purchaser, as its sole and exclusive remedy shall elect either (a) to terminate this Agreement, in which event (i) the Deposit shall be promptly returned to Purchaser and Purchaser shall retain its right to enforce the indemnities and other provisions of this Agreement which expressly survive a termination of this Agreement, provided that, if such termination is due to Seller defaulting in any material respect (after notice and expiration of cure periods provided above) under any of Seller’s obligations in this Agreement, Purchaser shall be entitled to reimbursement by Seller of the actual third party out-of-pocket costs and expenses incurred by Purchaser in connection with entering into this Agreement, inspecting the Property and preparing for Closing, including, without limitation, Purchaser’s reasonable attorney fees incurred in connection therewith, such reimbursement not to exceed One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) in the aggregate, or if such default is in Seller’s obligation to execute and deliver the documents required of Seller pursuant to Section 7.2 of this Agreement, such that Closing does not occur, such reimbursement (without duplication) shall not exceed Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00) in the aggregate (the “Reimbursement Cap”), and (ii) all other rights and obligations of Seller and Purchaser hereunder (except those set forth herein which expressly survive a termination of this Agreement) shall terminate immediately; or (b) to waive such matter or condition and proceed to Closing with no reduction in the Purchase Price. Notwithstanding the preceding sentence, if, at the Closing, Seller fails to comply in any material respect with any of its obligations contained in Section 7.2 or 7.4 (the “Closing Obligations”), and if all conditions precedent to Seller’s obligations hereunder have been waived or satisfied, Purchaser shall have, in addition to Purchaser’s remedies contained in the preceding sentence, the option to waive all other actions, rights, or claims for damages for the failure to perform such Closing Obligations (other than costs and expenses incurred in enforcing this Agreement and its right to enforce the indemnities and other provisions of this Agreement which expressly survive a termination of this Agreement or Closing), and to bring an equitable action to enforce the Closing Obligations; provided, (i) Purchaser shall provide written notice of Purchaser’s intention to enforce the Closing Obligations by specific performance and Seller shall not have cured performance of the Closing Obligations within ten (10) calendar days following delivery of such notice, and (ii) Purchaser’s suit for specific performance shall be filed against Seller in a court having jurisdiction in the county and state in which the Property is located, on or before ninety (90) days following the Closing Date, failing which, Purchaser shall be barred from enforcing this Agreement by specific performance and shall be deemed to have elected to terminate this Agreement as provided herein; provided, further, that in the event specific performance is not available to Purchaser because Seller has sold, transferred, or otherwise conveyed all or any portion of the Property to a third party in violation of this Agreement, then, in addition to any other remedies available to Purchaser
36


hereunder (including Purchaser's right to the return of the Deposit and reimbursement of its out-of-pocket costs and expenses as provided above but not subject to the Reimbursement Cap), Purchaser shall be entitled to recover from Seller, as damages, an amount equal to fifty percent (50%) of the excess, if any, of (a) the total consideration received by Seller (or any Affiliate of Seller) in connection with such third-party sale, transfer, or conveyance, over (b) the Purchase Price (as the same may have been adjusted in accordance with this Agreement) (such excess, the “Transfer Premium”). For the avoidance of doubt, the Transfer Premium shall be in addition to, and not in lieu of, any other damages to which Purchaser may be entitled under this Section 9.1, and the limitation on consequential, punitive, exemplary, and speculative damages set forth in Section 9.4 hereof shall not apply to Purchaser's recovery of the Transfer Premium. Seller shall provide Purchaser with reasonable documentation of the consideration received in connection with any such third-party sale within five (5) business days following Purchaser's written request therefor. The provisions of this Section 9.1 shall survive the termination of this Agreement.
9.2.Default by Purchaser/Failure of Conditions Precedent. If any condition set forth herein for the benefit of Seller (other than a default by Purchaser) cannot or will not be satisfied prior to Closing, and if Purchaser fails to satisfy that condition within ten (10) business days after notice thereof from Seller, unless otherwise provided for in this Agreement, Seller, as its sole and exclusive remedy, shall elect either (a) to terminate this Agreement in which event the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released from all further obligations hereunder except those which expressly survive a termination of this Agreement, or (b) to waive its right to terminate, and instead, to proceed to Closing. If Purchaser defaults in performing any of its obligations under this Agreement, and Purchaser fails to cure any such default within the earlier of (i) the Closing, or (ii) ten (10) business days after notice thereof from Seller, then Seller’s sole remedy for such default shall be to terminate this Agreement and receive the Deposit and to retain its right to enforce the indemnities and other provisions of this Agreement which expressly survive a termination of this Agreement; provided, however, that Purchaser shall not be entitled to any notice and right to cure in the event it wrongfully fails to proceed to Closing as required by this Agreement. The provisions of this Section 9.2 shall survive the termination of this Agreement.
9.3.Costs and Attorneys’ Fees. In the event of any litigation or dispute between the parties arising out of or in any way connected with this Agreement, resulting in any litigation, then the prevailing party in such litigation shall be entitled to recover its costs of prosecuting and/or defending same, including, without limitation, reasonable attorneys’ fees at trial and all appellate levels. The provisions of this Section 9.3 shall survive the Closing or any termination of this Agreement.
9.4.Limitation of Liability. The liability of each party hereto resulting from the breach or default by such party shall be limited to direct actual damages incurred by the injured party and each party hereto hereby waives its rights to recover from the other party consequential, punitive, exemplary, and speculative damages. The provisions of this Section 9.4 shall survive the termination of this Agreement. The provisions of this Section 9.4 shall not limit or affect the rights of Seller to receive the Deposit as liquidated damages as and when provided in this Agreement.
9.5.Indemnification of Purchaser. From and after Closing, Seller shall indemnify, defend, and hold harmless Purchaser from and against any and all claims, demands, causes of action, liabilities, judgments, losses, damages, costs and expenses of any kind whatsoever (including, without limitation, reasonable attorneys’ fees) (collectively, “Claims”) arising out of, or in any way relating to the business or operation of the Property prior to Closing (but excluding liabilities related to the physical and/or environmental conditions of the Property and/or the compliance (or lack of compliance) of the Property with Applicable Laws, including any expired Authorizations), such obligations to survive Closing; provided, however, that this indemnity
37


shall expressly exclude all liabilities for payment of obligations first arising or accruing prior to the Closing Date to the extent that Purchaser has assumed such obligations or receives a credit therefor pursuant to this Agreement. The provisions of this Section 9.5 shall survive the Closing.
9.6.Indemnification of Seller. From and after Closing, Purchaser shall indemnify, defend, and hold harmless Seller from and against any and all such Claims resulting from or arising out, or in any way relating to the business or operation of the Property from and after Closing, such obligations to survive Closing. The provisions of this Section 9.6 will survive the Closing Date.
Article X.
MISCELLANEOUS PROVISIONS
10.1.Completeness; Modification. This Agreement constitutes the entire agreement between the parties hereto with respect to the transactions contemplated hereby and supersedes all prior discussions, understandings, agreements and negotiations between the parties hereto. This Agreement may be modified only by a written instrument duly executed by the parties hereto.
10.2.Assignments. Purchaser shall have the right to (i) assign all or a portion of its right, title and interest in this Agreement in whole or in part to one or more Affiliates or subsidiaries, and/or (ii) designate one or more Affiliates or subsidiaries as its nominee to receive title to any portion the Property; provided, however, that (a) such Person remains an Affiliate or subsidiary of Purchaser as of the Closing, (b) Purchaser shall not be released from any of its Liabilities under this Agreement by reason of such designation or assignment prior to the Closing, and (c) such designation or assignment shall not be effective until Purchaser has provided Seller with a fully executed copy of such designation or assignment and assumption instrument. Other than to an Affiliate of Purchaser, Purchaser may not assign its rights hereunder without the prior consent of Seller; however, any such assignment (including one to Purchaser’s Affiliate) shall not relieve Purchaser of its obligations under this Agreement. To be effective hereunder, any assignment by Purchaser hereunder, even one to an Affiliate of Purchaser, must be accompanied by a fully executed and effective assignment and assumption and/or designation agreement provided to Seller no later than ten (10) days prior to the Closing Date. Notwithstanding any assignment of this Agreement, Purchaser shall not be released from its obligations hereunder unless and until the Closing occurs, and the assignment and assumption agreement in connection therewith shall include a statement that all representations and warranties of Purchaser in Article IV of this Agreement are true of such assignee taking assignment of this Agreement as of the date of such assignment and will be true as of the Closing in all material respects.
10.3.Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their permitted respective successors and assigns.
10.4.Days. If any action is required to be performed, or if any notice, consent or other communication is given, on a day that is a Saturday or Sunday or a legal holiday in the jurisdiction in which the action is required to be performed or in which is located the intended recipient of such notice, consent or other communication, such performance shall be deemed to be required, and such notice, consent or other communication shall be deemed to be given, on the first business day following such Saturday, Sunday or legal holiday. Unless otherwise specified herein, all references herein to a “day” or “days” shall refer to calendar days and not business days.
10.5.Governing Law. This Agreement and all documents referred to herein shall be governed by and construed and interpreted in accordance with the laws of the state in which the
38


Property is located without regard to its principles of conflicts of law. This paragraph shall survive the closing or consummation of the conveyance contemplated by this Agreement, and any termination of this Agreement.
10.6.Counterparts. To facilitate execution, this Agreement may be executed in as many counterparts as may be required. It shall not be necessary that the signature on behalf of both parties hereto appear on each counterpart hereof. All counterparts hereof shall collectively constitute a single agreement. Telecopied signatures (including signatures delivered by DocuSign, AdobeSign, or other electronic methods of transmission) shall have the same valid and binding effect as original signatures.
10.7.Severability. If any term, covenant or condition of this Agreement, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to other persons or circumstances, shall not be affected thereby, and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
10.8.Costs. Regardless of whether Closing occurs hereunder, and except as otherwise expressly provided herein, each party hereto shall be responsible for its own costs in connection with this Agreement and the transactions contemplated hereby, including, without limitation, fees of attorneys, engineers and accountants.
10.9.Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be delivered (i) by hand, (ii) transmitted by email transmission, (iii) sent prepaid for next-day delivery by Federal Express (or a comparable overnight delivery service) or (iv) sent by the United States mail, certified, postage prepaid, return receipt requested, at the addresses and with such copies as designated below. Any notice, request, demand or other communication delivered or sent in the manner aforesaid may be given by the party required to give such notice, etc., or its attorney, and shall be deemed given or made (as the case may be) when actually delivered to or refused by the intended recipient.
If to Seller:        Ashford Pier House LP
14185 Dallas Parkway, Suite 1200
Dallas, Texas 75254
Attn: Christopher Peckham
Email: cpeckham@ashfordinc.com

and:            Jackson Walker LLP
2323 Ross Avenue, Suite 600
Dallas, Texas 75201
Attn: Cynthia B. Nelson
Email: cbnelson@jw.com

If to Purchaser:    c/o Sixth Street Partners, LLC
888 7th Avenue
New York, New York 10106
Attn: Aman Gupta
Email: amangupta@sixthstreet.com

39


and:                c/o Sixth Street Partners, LLC
2100 McKinney Avenue, Suite 1500
Dallas, TX 75201
Attn: Joshua Peck and Sixth Street Legal
Email: jpeck@sixthstreet.com and sixthstreetlegal@sixthstreet.com

and:            c/o Riller Capital, LLC
621 San Juan Avenue, Suite A
Venice, California 90291
Attn: Akshay Goyal
Email: akshay.goyal@rillercapital.com

With a copy to:    Latham & Watkins LLP
330 N. Wabash Avenue, 28th Floor
Chicago, Illinois 60601
Attn: Gary E. Axelrod
Email: gary.axelrod@lw.com

If to Escrow Agent:    Kensington Vanguard National Title
5949 Sherry Lane, Suite 111
Dallas, Texas 75225
Attn:  Trey Lentz
Email: TLentz@kvnational.com

or to such other address as the intended recipient may have specified in a notice to the other party. Any party hereto may change its address or designate different or other persons or entities to receive copies by notifying the other party and Escrow Agent in a manner described in this Section.

10.10.Escrow Agent. Escrow Agent referred to in the definition thereof contained in Section 1.1 hereof has agreed to act as such for the convenience of the parties without fee or other charges for such services as Escrow Agent. Escrow Agent shall not be liable: (a) to any of the parties for any act or omission to act except for its own willful misconduct; (b) for any legal effect, insufficiency, or undesirability of any instrument deposited with or delivered by Escrow Agent or exchanged by the parties hereunder, whether or not Escrow Agent prepared such instrument; (c) for any loss or impairment of funds that have been deposited in escrow while those funds are in the course of collection, or while those funds are on deposit in a financial institution, if such loss or impairment results from the failure, insolvency or suspension of a financial institution; (d) for the expiration of any time limit or other consequence of delay, unless a properly executed written instruction, accepted by Escrow Agent, has instructed Escrow Agent to comply with said time limit; (e) for the default, error, action or omission of either party to the escrow. Escrow Agent, in its capacity as escrow agent, shall be entitled to rely on any document or paper received by it, believed by such Escrow Agent, in good faith, to be bona fide and genuine. In the event of any dispute as to the disposition of the Deposit or any other monies held in escrow, or of any documents held in escrow, Escrow Agent may continue to hold the Deposit pursuant to the terms hereof, or if Escrow Agent so elects, interplead the matter at the joint and several cost of Purchaser and Seller by filing an interpleader action in a court of general
40


jurisdiction in the county or circuit where the Real Property is located (to the jurisdiction of which both parties do hereby consent), and pay into the registry of the court the Deposit, or deposit any such documents with respect to which there is a dispute in the Registry of such court, whereupon such Escrow Agent shall be relieved and released from any further liability as Escrow Agent hereunder. Escrow Agent shall not be liable for Escrow Agent’s compliance with any legal process, subpoena, writ, order, judgment and decree of any court, whether issued with or without jurisdiction, and whether or not subsequently vacated, modified, set aside or reversed. Purchaser and Seller agree to jointly and severally indemnify, defend and hold harmless the Escrow Agent from and against any loss, cost, damage, expense and attorney’s fee in connection with or in any way arising out of the escrow arrangement, other than expenses resulting from the Escrow Agent’s own gross negligence or willful misconduct.
10.11.Incorporation by Reference. All of the exhibits and schedules attached hereto are by this reference incorporated herein and made a part hereof.
10.12.Survival. Except to the extent (i) that Seller gives Purchaser written notice prior to Closing of the untruth or inaccuracy of any representation or warranty contained herein, (ii) Purchaser otherwise obtains actual knowledge prior to Closing of the untruth or inaccuracy of any representation or warranty contained herein, or (iii) of a Non-Breach Inaccuracy, and Purchaser nevertheless elects to close this transaction, the representations and warranties made herein shall survive the Closing through but not beyond the Limitation Date (as hereinafter defined) after which such representations and warranties shall merge into the Closing Documents, provided that the aforesaid limitation shall not apply to the prosecution of any Claim made and action commenced in accordance with the other provisions of this Section 10.12 prior to the Limitation Date. Subject to the foregoing limitations, the representations, warranties, indemnities and agreements of Seller set forth in this Agreement and the Closing Documents shall survive until December 31, 2026 (the “Limitation Date”). Seller and Purchaser hereby agree that, notwithstanding any provision of this Agreement or any provision of law to the contrary, any action which may be brought for the untruth or inaccuracy of any representation or warranty by Seller in this Agreement or in any of the Closing Documents (other than the Deed) shall be forever barred unless, (a) no later than the Limitation Date, Purchaser delivers to Seller a written notice of the Claim setting forth the basis for such Claim, and (b) no later than one hundred twenty (120) days after the Limitation Date, files a complaint or petition against Seller alleging such Claim in an appropriate Federal district or state court and serves the same upon Seller, in which case the Limitation Date, as to such breach, shall be extended pending resolution of such complaint or petition. Notwithstanding anything to the contrary contained in this Agreement, any Claim for the untruth or inaccuracy of any representation or warranty that Purchaser may have at any time against Seller will not be valid or effective, and Seller shall have no liability with respect thereto, unless all valid Claims exceed Twenty-Five Thousand Dollars ($25,000) in the aggregate; provided, that once such Claims meet the foregoing threshold Purchaser shall be entitled to recover all such Claims from “dollar one.” Seller’s liability for damages resulting from valid Claims for the untruth or inaccuracy of any representation or warranty by Seller shall in no event exceed three percent (3%) of the Purchase Price in the aggregate.
10.13.Further Assurances. Seller and Purchaser each covenant and agree to sign, execute and deliver, or cause to be signed, executed and delivered, and to do or make, or cause to be done or made, upon the written request of the other party, any and all agreements, instruments, papers, deeds, acts or things, supplemental, confirmatory or otherwise, as may be reasonably required by either party hereto for the purpose of or in connection with consummating the transactions described herein provided that compliance with the provision of this Section 10.13 shall not increase the liability of the complying party.
41


10.14.No Partnership. This Agreement does not and shall not be construed to create a partnership, joint venture or any other relationship between the parties hereto except the relationship of seller and purchaser specifically established hereby.
10.15.Time of Essence. Time is of the essence with respect to every provision hereof.
10.16.Signatory Exculpation. The signatory(ies) for Purchaser and Seller is/are executing this Agreement in his/their capacity as representative of such party and not individually and, therefore, shall have no personal or individual liability of any kind in connection with this Agreement and the transactions contemplated by it.
10.17.Rules of Construction. The following rules shall apply to the construction and interpretation of this Agreement, unless otherwise indicated by the context:
(a)Singular words shall connote the plural number as well as the singular and vice versa, and the masculine shall include the feminine and the neuter.
(b)All references herein to particular articles, sections, subsections, clauses or exhibits are references to articles, sections, subsections, clauses or exhibits of this Agreement.
(c)The table of contents and headings contained herein are solely for convenience of reference and shall not constitute a part of this Agreement nor shall they affect its meaning, construction or effect.
(d)Each party hereto and its counsel have reviewed and revised (or requested revisions of) this Agreement and have participated in the preparation of this Agreement, and therefore any usual rules of construction requiring that ambiguities are to be resolved against a particular party shall not be applicable in the construction and interpretation of this Agreement or any exhibits hereto.
(e)Except as expressly noted herein to the contrary, time periods herein referred to shall mean the time periods as in effect, from time to time in Key West, Florida.
10.18.No Recording. Neither this Agreement nor any memorandum hereof, or any other instrument intended to give notice hereof (or which actually gives notice hereof) shall be recorded. Notwithstanding the foregoing, if the same is permitted pursuant to Applicable Laws, Purchaser shall be entitled to record a notice of lis pendens if Purchaser is entitled to seek (and is actually seeking) specific performance of this Agreement by Seller in accordance with the terms of Section 9.1. This Section shall survive the Closing or the earlier termination of this Agreement.
10.19.Facsimile or Electronic Signatures. The execution of this Agreement and all notices given hereunder and all amendments hereto, may be effected by facsimile or electronic signatures, all of which shall be treated as originals; provided, however, that the party receiving a document with a facsimile or electronic signature may, by notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile or electronic signature.
10.20.Seller. The use of the term “Seller” hereunder shall apply to Operating Lessee and Fee Owner as applicable and appropriate.
10.21.Survival. The provisions of this Article X shall survive Closing. Except for provisions of this Agreement that expressly survive the Closing, and except as expressly
42


provided in Section 10.12 hereof, all of the representations and warranties and covenants of the parties contained in this Agreement shall not survive the Closing and shall merge into the Closing Documents. Upon Closing, any breach or default of any such representations or warranties or covenants that do not expressly survive the Closing, whether known or unknown, shall be deemed waived by the Closing.
10.22.Energy-Efficiency. The prospective buyer of real property with a building for occupancy located thereon is notified that the buyer may have the building’s energy efficiency rating determined. Purchaser hereby acknowledges that Seller has, simultaneously with the execution hereof, delivered to Purchaser a copy of the Florida Building Energy Efficiency Rating System pamphlet prepared by the State of Florida Department of Community Affairs.
10.23.Radon. Seller and Purchaser hereby acknowledge that the following serves as notification required by Section 404.056(5), Florida Statutes: “RADON GAS: Radon is a naturally occurring radioactive gas that when it has been accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county health unit.”
43


IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be executed in their names by their respective duly authorized representatives as of the Effective Date.
SELLER:

ASHFORD PIER HOUSE LP,
a Delaware limited partnership

By:    Ashford Pier House GP LLC,
a Delaware limited liability company,
its general partner


By: /s/ Richard Stockton    
Name: Richard Stockton    
Title: President    


ASHFORD TRS PIER HOUSE LLC,
a Delaware limited liability company

By: /s/ Jim Phlog    
Name: Jim Phlog    
Title: President    

PURCHASER:

LAST MANGO OWNER, LLC,
a Delaware limited liability company

By:    Last Mango REIT, LLC,
a Delaware limited liability company
Its:    Sole Member

By:    Last Mango JV, LLC,
a Delaware limited liability company
Its:    Sole Member

By: Last Mango Evergreen Holdings, LLC,
a Delaware limited liability company
Its: Sole Member
By: /s/ Joshua Peck
Name: Joshua Peck
Title: Vice President
Signature Page

Joinder by Braemar Hospitality Limited Partnership
Braemar Hospitality Limited Partnership, a Delaware limited partnership (“Joinder Party”) hereby irrevocably and unconditionally guarantees, as primary obligor and not as surety, to Purchaser, the full and prompt payment and performance of Seller’s obligations set forth in this Agreement, subject to the terms and conditions of this Agreement (including the limitations on the duration of, the amount of any claims, and the procedures on certain obligations as provided in Section 10.12 of this Agreement). Joinder Party agrees that Purchaser shall not be first required to enforce against Seller or any other Person any liability, obligation and/or duty guaranteed hereby before seeking enforcement thereof against Joinder Party. Suit may be brought and maintained against Joinder Party by Purchaser to enforce any liability, obligation and/or duty guaranteed hereby without joinder of any other Person. To the fullest extent permitted by Applicable Laws, Joinder Party unconditionally waives any guarantor or suretyship defenses that might otherwise be available to Joinder Party. Joinder Party hereby covenants and agrees that, from the Closing Date until the Limitation Date, Joinder Party shall maintain a net worth (determined in accordance with generally accepted accounting principles, consistently applied) of not less than Ten Million Dollars ($10,000,000). The obligations of Joinder Party in this Joinder and pursuant to this Agreement shall be binding upon the successors and assigns of Joinder Party.
DATED this ___ day of ___________, 2026
BRAEMAR HOSPITALITY LIMITED PARTNERSHIP,
a Delaware limited partnership

By: Braemar OP General Partner LLC


By:________________________________
Name: Richard Stockton
Title: President



Signature Page

RECEIPT OF ESCROW AGENT
Kensington Vanguard National Title, as Escrow Agent, acknowledges receipt of the sum of Six Million and No/100 Dollars $6,000,000.00 by wire transfer from Purchaser as described in Section 2.3 of the Agreement, said wire transfer to be held pursuant to the terms and provisions of the Agreement.
DATED this ___ day of ________________, 2026.

KENSINGTON VANGUARD NATIONAL TITLE


By:    
Name:    
Title:    
Date:    


Receipt of Escrow Agent

EXHIBIT 10.8
AGREEMENT OF PURCHASE AND SALE

by and among

EVERGREEN ACQUISITIONS, LLC
a Delaware limited liability company

(“Purchaser”)

and

BHR SCOTTSDALE LP,
a Delaware limited partnership

and
BHR SCOTTSDALE STORAGE LLC,
a Delaware limited liability company

and
BHR TRS SCOTTSDALE LLC,
a Delaware limited liability company

(collectively, “Seller”)


Four Seasons Scottsdale,
10600 E. Crescent Moon Dr.,
Scottsdale, Arizona




TABLE OF CONTENTS
Page
Article I. DEFINITIONS1
1.1.    Definitions
1
Article II. PURCHASE AND SALE; DEPOSIT; PAYMENT OF PURCHASE PRICE; STUDY PERIOD10
2.1.    Purchase and Sale
10
2.2.    Payment of Purchase Price
10
2.3.    Deposit
10
2.4.    Study Period
11
Article III. SELLER’S REPRESENTATIONS AND WARRANTIES12
3.1.    Organization and Power
12
3.2.    Authorization and Execution
12
3.3.    Non-contravention
12
3.4.    Compliance with Existing Laws
13
3.5.    Operating Agreements
13
3.6.    Condemnation Proceedings; Roadways
13
3.7.    Actions or Proceedings
13
3.8.    Occupancy Agreements
13
3.9.    Permits
14
3.10.    Capital Improvements
14
3.11.    ERISA
14
3.12.    Seller Is Not a “Foreign Person”
14
3.13.    Bankruptcy
14
3.14.    Employees
14
3.15.    Labor and Employment
15
3.16.    Financial Statements
15
3.17.    Right of First Refusal
15
3.18.    Taxes
15
3.19.    Terrorism
15
3.20.    LIMITATION ON SELLER’S REPRESENTATIONS AND WARRANTIES
15
Article IV. PURCHASER’S REPRESENTATIONS AND WARRANTIES19
4.1.    Organization and Power
19
4.2.    Authorization and Execution
19
4.3.    Non-contravention
19
4.4.    Litigation
19
4.5.    Patriot Act
19
4.6.    Terrorism
20
Article V. CONDITIONS PRECEDENT20
5.1.    As to Purchaser’s Obligations
20
5.2.    As to Seller’s Obligations
21
i


Article VI. COVENANTS OF SELLER AND PURCHASER22
6.1.    Operating Agreements/Occupancy Agreements/Leased Property Agreements
22
6.2.    Warranties and Guaranties
22
6.3.    No Transfers
22
6.4.    Insurance
22
6.5.    Operation of Property Prior to Closing
22
6.6.    Intentionally Omitted
23
6.7.    Employee Claims
23
6.8.    Estoppels
24
6.9.    Tax Status Letters
24
Article VII. CLOSING24
7.1.    Closing
24
7.2.    Seller’s Deliveries
25
7.3.    Purchaser’s Deliveries
25
7.4.    Mutual Deliveries
26
7.5.    Closing Costs
26
7.6.    Revenue and Expense Allocations
27
7.7.    Safe Deposit Boxes
31
7.8.    Inventory of Baggage
31
7.9.    Acquisition and Payment for Inventory
31
7.10.    Assumption of Liabilities
31
Article VIII. GENERAL PROVISIONS32
8.1.    Fire or Other Casualty
32
8.2.    Condemnation
32
8.3.    Broker
33
8.4.    Bulk Sale
34
8.5.    Confidentiality
34
Article IX. DEFAULT; TERMINATION RIGHTS36
9.1.    Default by Seller/Failure of Conditions Precedent
36
9.2.    Default by Purchaser/Failure of Conditions Precedent
37
9.3.    Costs and Attorneys’ Fees
38
9.4.    Limitation of Liability
38
9.5.    Indemnification of Purchaser
38
9.6.    Indemnification of Seller
38
Article X. MISCELLANEOUS PROVISIONS38
10.1.    Indemnification of Seller
38
10.2.    Assignments
38
10.3.    Successors and Assigns
39
10.4.    Days
39
10.5.    Governing Law
39
10.6.    Counterparts
39
10.7.    Severability
39
ii


10.8.    Costs
39
10.9.    Notices
39
10.10.    Escrow Agent
41
10.11.    Incorporation by Reference
41
10.12.    Survival
41
10.13.    Further Assurances
42
10.14.    No Partnership
42
10.15.    Time of Essence
42
10.16.    Signatory Exculpation
42
10.17.    Rules of Construction
42
10.18.    No Recording
43
10.19.    Facsimile or Electronic Signatures
43
10.20.    Seller
43
10.21.    Survival
43

EXHIBIT ALAND
EXHIBIT A-1STORAGE UNIT
EXHIBIT BFORM OF DEED
EXHIBIT CSPECIAL WARRANTY BILL OF SALE
EXHIBIT DASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT EFORM OF ASSIGNMENT OF OCCUPANCY AGREEMENTS
EXHIBIT FFORM OF FIRPTA CERTIFICATE
EXHIBIT GFORM OF ASSIGNMENT AND ASSUMPTION OF MANAGEMENT AGREEMENT
EXHIBIT HFORM OF MANAGER ESTOPPEL
SCHEDULE 1CLOSING COST ALLOCATIONS
SCHEDULE 3.4VIOLATIONS OF LAW
SCHEDULE 3.7ACTIONS OR PROCEEDINGS
SCHEDULE 3.9EXPIRED AUTHORIZATIONS

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AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is made as of September 23, 2026 (the “Effective Date”), by and among EVERGREEN ACQUISITIONS, LLC, a Delaware limited liability company (“Purchaser”), and BHR SCOTTSDALE LP, a Delaware limited partnership (“Fee Owner”), BHR SCOTTSDALE STORAGE LLC, a Delaware limited liability company (“Storage Owner”) and BHR TRS SCOTTSDALE LLC, a Delaware limited liability company (“Operating Lessee” and, together with Fee Owner and Storage Owner, collectively, “Seller”).
R E C I T A T I O N S:
A.    Fee Owner is the owner of those certain parcels of real property more particularly described on Exhibit A attached hereto and made a part hereof, and the improvements situated thereon operated by Seller as the Four Seasons Scottsdale (the “Hotel”), situate, lying and being in Maricopa County, Arizona.
B.    Storage Owner is the owner of the Storage Unit (hereinafter defined), situate, lying and being in Maricopa County, Arizona.
C.    Purchaser is desirous of purchasing such hotel property from Seller and Seller is desirous of selling such hotel property to Purchaser, for the purchase price and upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants, promises and undertakings of the parties hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, it is agreed:
Article I.
DEFINITIONS
1.1.Definitions. The following terms shall have the indicated meanings:
“Action” shall have the meaning ascribed to such term in Section 3.7 hereof.
“Additional Objections” shall have the meaning ascribed to such term in Section 2.4(b) hereof.
“Advance Bookings” shall mean reservations and agreements made or entered into by Seller or Manager in the ordinary course of business prior to Closing and assumed by Purchaser for hotel rooms or meeting rooms to be utilized after Closing, or for catering services or other hotel services to be provided after Closing at or by the Hotel.
“Advance Deposits” shall have the meaning ascribed to such term in Section 7.6.
“Affidavit of Property Value” shall have the meaning ascribed in Section 7.2(i).
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“Affiliate” of a Person shall mean (i) any other Person that is directly or indirectly (through one or more intermediaries) controlled by, under common control with, or controlling such Person, or (ii) any other Person in which such Person has a direct or indirect equity interest constituting at least a majority interest of the total equity of such other Person. For purposes of this definition, “control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any Person or the power to veto major policy decisions of any Person, whether through the ownership of voting securities, by contract or otherwise.
“Anti-Money Laundering and Anti-Terrorism Laws” shall have the meaning ascribed to such term in Section 3.19.
“Applicable Laws” shall mean any applicable building, zoning, subdivision, environmental, health, safety or other governmental laws, statutes, ordinances, resolutions, rules, codes, regulations, orders or determinations of any Governmental Authority affecting the Property or the ownership, operation, use, maintenance or condition thereof.
“Approval Standard” shall have the meaning ascribed to such term in Section 6.1 hereof.
“Assignment and Assumption Agreement” shall mean an assignment and assumption agreement in substantially the form attached hereto as Exhibit D whereby Seller assigns and Purchaser assumes all of its or their respective right, title and interest in and to the Operating Agreements, the Leased Property Agreements and the Assumed Hotel Agreements that have not been terminated prior to Closing in accordance herewith.
“Assignment and Assumption of Management Agreement” shall have the meaning ascribed to such term in Section 7.2(k) hereof.
“Assignment of Occupancy Agreements” shall mean an assignment agreement in substantially the form attached hereto as Exhibit E whereby Seller assigns and Purchaser assumes all of its or their respective right, title and interest in and to the Occupancy Agreements.
“Assumed Hotel Agreements” shall mean, collectively, the Cost Sharing Agreement, the Hotel Facilities Agreement, the Revenue Sharing Agreement, the Revenue Management Services Agreement, and the Kids for All Seasons Lease.
“Assumed Liabilities” shall have the meaning ascribed to such term in Section 7.10 hereof.
“Authorizations” shall mean all licenses, permits and approvals required by any governmental or quasi-governmental agency, body, department, commission, board, bureau, instrumentality or office, or otherwise appropriate with respect to the construction, ownership, operation, leasing, maintenance, or use of the Property or any part thereof. “Authorizations” shall expressly exclude any liquor license or permit for the sale or service of alcoholic beverages at the Property, which such liquor licenses are held by Manager.
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“Bill of Sale” shall mean a bill of sale in substantially the form attached hereto as Exhibit C whereby Seller conveys its or their respective right, title and interest in and to the Personal Property (other than Leased Property) to Purchaser, together with any Warranties and Guaranties and Authorizations related thereto.
“Broker” shall mean Eastdil Secured.
“Capital Reserve” shall mean any capital expenditure reserve account maintained with Manager pursuant to the Management Agreement, including but not limited to the “Capital Reserve” (as defined in the Management Agreement).
“Claims” shall have the meaning ascribed to such term in Section 9.5.
“Closing” shall mean the consummation of the purchase and sale of the Property pursuant to this Agreement and shall be deemed to occur on the Closing Date.
“Closing Date” shall mean the date on which the Closing shall occur, which shall be October 22, 2026.
“Closing Documents” shall mean the documents defined as such in Section 7.1 hereof.
“Closing Obligations” shall have the meaning ascribed thereto in Section 9.1.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Cost Sharing Agreement” shall mean that certain Residence Club & Hotel Cost Sharing Agreement, dated February 28, 2005, by and between PR Hotel, LLC and Four Seasons Resort Club Management, Inc., as assigned by PR Hotel, LLC to Walton PR Hotel III, L.L.C., a Delaware limited liability company, pursuant to that certain Assignment and Assumption Agreement, dated July 28, 2008, by and between PR Hotel, LLC and Walton PR Hotel III, L.L.C., as further assigned by Walton PR Hotel III, L.L.C. to DTRS FSST, LLC, a Delaware limited liability company, pursuant to that certain Omnibus Assignment, dated as of December 9, 2014, by and between Walton PR Hotel III, L.L.C. and DTRS FSST, LLC, and as further assigned by DTRS FSST, LLC to Operating Lessee pursuant to that certain Assignment and Assumption of Cost Sharing Agreement, dated as of December 1, 2022, by and between DTRS FSST, LLC and Operating Lessee.
“Cut-Off Time” shall have the meaning ascribed to such term in Section 7.6.
“Data Site” shall mean the data site maintained by Broker regarding the Property located at https://datarooms.eastdilsecured.com/dataroom/8ec3c7ab-1471-47c3-bf8d-04b1fcc46b1e/dataroom?utm_campaign=website&utm_medium=email&utm_source=sendgrid.com.
“Deed” shall mean one or more deeds in substantially the form attached hereto as Exhibit B conveying title to the Real Property from Fee Owner and Storage Owner to Purchaser.
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“Deposit” shall mean all amounts deposited from time to time with Escrow Agent by Purchaser pursuant to and as defined in Section 2.3 hereof, plus all interest or other earnings that may accrue thereon.
“Effective Date” (or other similar phrases such as “date of this Agreement” or “date hereof”) shall have the meaning ascribed to such term in the preamble hereof.
“Employee Side Letter” shall have the meaning ascribed to such term in Section 3.14.
“Environmental Laws” shall have the meaning ascribed to such term in Section 3.21.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended (ERISA).
“Escrow Agent” shall mean Kensington Vanguard National Title, 5949 Sherry Lane, Suite 111, Dallas, Texas 75225, Attn:  Trey Lentz; Email: TLentz@kvnational.com; Phone: (214) 273-2514, as agent for First American Title Insurance Company.
“Executive Order” shall have the meaning ascribed to such term in Section 3.19.
“Fee Owner” shall have the meaning ascribed to such term in the Preamble.
“FIRPTA Certificate” shall mean the affidavit of Seller under Section 1445 of the Internal Revenue Code, as amended, in substantially the form attached hereto as Exhibit F.
“Golf Course Agreement” shall mean that certain Golf Course Use Agreement, dated as of January 31, 1996, by and among Troon North Golf Company, an Arizona corporation, PR Hotel, LLC, an Arizona limited liability company, and PR Resort Club, LLC, an Arizona limited liability company, recorded March 29, 1996 as Document No. 96-0217094 of the Official Records of Maricopa County, Arizona, as amended by that certain First Amendment to Golf Course Use Agreement, dated as of January 30, 1998, and recorded February 3, 1998 as Document No. 98-0085156 of the Official Records of Maricopa County, Arizona.
“Golf Course Use Allocation Agreement” shall mean that certain Golf Course Use Allocation Agreement, dated as of July 9, 1999, by and between PR Hotel, LLC, an Arizona limited liability company, and PR Resort Club, LLC, an Arizona limited liability company, recorded July 9, 1999 as Document No. 99-0655185 of the Official Records of Maricopa County, Arizona, as assigned by Resort Club Developer to Resort Club Scottsdale at Troon North Owner’s Association, Inc., an Arizona nonprofit corporation, pursuant to that certain Assignment of Golf Course Use Allocation Agreement, dated as of December 28, 1999, and recorded January 14, 2000 as Document No. 00-0034050 of the Official Records of Maricopa County, Arizona.
“Governmental Authority” shall mean any federal, state, county, municipal or other government or any governmental or quasi-governmental agency, department, commission, board, bureau, office or instrumentality, foreign or domestic, or any of them.
“Hazardous Substances” or “Toxic Substances” shall have the meaning ascribed to such terms in Section 3.21.
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“Hotel” shall have the meaning ascribed to such term in the Recitations.
“Hotel Employees” shall mean all employees of Seller, Manager or any Affiliate thereof employed at the Property or to operate the Hotel.
“Hotel Facilities Agreement” shall mean that certain Hotel Facilities License Agreement, dated February 28, 2005, between PR Hotel, LLC and PR Resort Club, LLC, a memorandum of which was recorded on July 13, 2005, in Recording No. 20050963340 of the Clerk’s Office, as assigned by DTRS FSST, LLC, a Delaware limited liability company (as successor-in-interest to PR Hotel, LLC), to Operating Lessee pursuant to that certain Assignment and Assumption of Hotel Facilities Agreement, dated as of December 1, 2022, by and between DTRS FSST, LLC and Operating Lessee.
“Improvements” shall mean the Hotel and all other buildings, improvements, fixtures, all mechanical, heating, air conditioning, plumbing, electrical and ventilating systems, parking facilities and appurtenances and other items of real estate located on or affixed to the Land.
“Initial Deposit” shall have the meaning ascribed to such term in Section 2.3 hereof.
“Inspection Agreement” shall mean that certain Inspection Agreement dated August 11, 2026, executed by and between Purchaser and Fee Owner.
“Insurance Policies” shall mean all policies of insurance maintained by or on behalf of Seller pertaining to the Property, its operation, or any part thereof.
“Intangible Personal Property” shall mean, to the extent assignable, all intangible personal property owned or possessed by Seller and used in connection with the ownership or operation of the Property, including, without limitation, (1) Seller’s right, title and interest in and to Authorizations, (2) Seller’s right, title and interest in and to utility and development rights and privileges, general intangibles, business records and specifications pertaining to the Real Property and the Personal Property, (3) Seller’s right, title and interest in and to any unpaid award for taking by condemnation or any damage to the Land by reason of a change of grade or location of or access to any street or highway, (4) Advance Bookings, (5) all development plans, architectural drawings, engineering studies, site plans, entitlements, land use approvals, surveys, renderings and other development-related materials in Seller's possession or control in each case relating to the Real Property, including any undeveloped or development-ready portion of the Real Property, and (6) subject to a corresponding credit to Seller, all cash on hand or on deposit in any house bank at the Hotel.
“Inventory” shall mean all inventories of food and beverage (to the extent permitted by Applicable Laws, alcoholic and non-alcoholic) in opened or unopened cases whether in use or held in reserve storage for future use or ordered for future use, all china, glassware, silverware, kitchen and bar small goods, guest supplies, operating supplies, printing, stationary and uniforms, whether in use or held in reserve storage for future use or ordered for future use in connection with the operation of a hotel and all in-use or reserve stock of linens, towels, paper goods, soaps, cleaning supplies and the like with respect to the Hotel.
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“Kids for All Seasons Lease” shall mean that certain License Agreement dated March 13, 2025, between Four Seasons Residence Club Scottsdale and Operating Lessee.
“Land” shall mean those certain parcels of real estate lying and being in Maricopa County, Arizona, and more particularly described on Exhibit A hereof, together with all rights, titles, benefits, easements, privileges, remainders, tenements, hereditaments, interests, reversions and appurtenances thereunto belonging or in any way appertaining, all water and water rights, all sewer rights, and all water courses, wells, ditches and flumes located in or appurtenant to the Land; all air and development rights pertaining to the Land; all oil, gas and other mineral interests in, on, or under or above the Land; and all of the estate, right, title, interest, claim or demand whatsoever of Seller therein, in and to adjacent strips and gores, if any, between the Land and abutting properties, and in and to adjacent streets, highways, roads, alleys or rights-of-way, and the beds thereof (except to the extent, if any, that such strips or gores or such streets, highways, roads, alleys or rights-of-way abut or provide access to or benefit other properties owned by Seller), either at law or in equity, in possession or expectancy, now or hereafter acquired.
“Leased Property” shall mean all items of Tangible Personal Property that are subject to any capital lease, operating lease, financing lease, or any similar agreement.
“Leased Property Agreements” shall mean the lease agreements pertaining to the Leased Property.
“Limitation Date” shall have the meaning ascribed to such term in Section 10.12.
“Management Agreement” shall mean collectively the (a) Hotel Management Agreement dated March 29, 1996, as amended, between Operating Lessee and Manager, and (b) Hotel License Agreement dated March 29, 1996, as amended, between Operating Lessee and Manager.
“Manager” shall mean Four Seasons Hotels Limited, a corporation incorporated under the laws of the Province of Ontario, Canada.
“Must Cure Encumbrance Release” shall have the meaning ascribed to such term in Section 2.4(a) hereof.
“Must Cure Title Encumbrances” shall mean any title or survey matters affecting the Hotel or Storage Unit which are comprised of (i) liens for taxes that would be delinquent if unpaid on or before Closing, (ii) mortgages, deeds of trust, or security agreements (including the documents referred to as Requirements 8, 9, and 10 in Schedule B, Part I of the Title Commitment), (iii) other similar liens or charges in a fixed sum (or capable of computation as a fixed sum) securing indebtedness or obligations which were created or expressly assumed by Seller, (iv) liens against the Property in the nature of those arising from judgments or pending litigation, (v) liens against the Property in the nature of or construction, mechanics, materialman’s or other liens or charges, (vi) encumbrances created by or through Seller after the Effective Date in violation of this Agreement, and (vii) the Operating Lease.
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“Non-Breach Inaccuracy” shall mean a breach or inaccuracy of a representation or warranty contained in Article III of this Agreement of which Seller gives Purchaser written notice prior to Closing or Purchaser otherwise obtains actual knowledge prior to Closing which does not constitute a breach or inaccuracy of any such representation or warranty made as of the Effective Date but would constitute a breach or inaccuracy of such representation or warranty if made as of the Closing Date (such as, for example, because Seller did not have knowledge, as such term is defined in Article III, of such matters as of the Effective Date).
“Occupancy Agreements” shall mean all leases, licenses, concession or occupancy agreements in effect with respect to the Real Property and/or Hotel under which any tenants or licensees (other than Hotel guests and Operating Lessee) or concessionaires occupy space upon the Real Property.
“Operating Agreements” shall mean all service, supply, maintenance, construction, capital improvement and other similar contracts in effect with respect to the Property (other than the Occupancy Agreements, Leased Property Agreements, Assumed Hotel Agreements, Management Agreement, or any master service contracts of Manager that apply to properties managed by Manager in addition to the Property) related to construction, operation, or maintenance of the Property.
“Operating Lease” shall mean that certain Lease Agreement between Fee Owner and Operating Lessee with respect to the Property, as the same may have been amended from time to time.
“Operating Lessee” shall have the meaning ascribed to such term in the Preamble.
“Owner’s Title Policy” shall mean an owner’s policy of title insurance issued to Purchaser by the Title Company, pursuant to which First American Title Insurance Company insures Purchaser’s ownership of fee simple to the Real Property, subject only to Permitted Title Exceptions. The Owner’s Title Policy shall insure Purchaser in the amount of the Purchase Price and shall be in the ALTA 2021 form customarily used by First American Title Insurance Company for like transactions in the state where the Land is located, providing for extended coverage.
“Permitted Title Exceptions” shall mean those exceptions to title insurance coverage over the Real Property that are satisfactory or deemed satisfactory to Purchaser as determined pursuant to Section 2.4 hereof.
“Person” shall mean an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Authority.
“Personal Property” shall mean collectively the Tangible Personal Property and the Intangible Personal Property.
“Property” shall mean collectively the Real Property and Personal Property.
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“Property Agreements” shall have the meaning ascribed to such term in Section 3.21.
“Purchase Price” shall mean Three Hundred Seventy Two Million and No/100 Dollars ($372,000,000.00) payable in the manner described in Section 2.2 hereof.
“Real Property” shall mean the Land and the Improvements with respect to the Hotel and the Storage Unit.
“Reimbursement Cap” shall have the meaning ascribed to such term in Section 9.1.
“Representatives” shall have the meaning ascribed to such term in Section 8.5.
“Revenue Management Services Agreement” means that certain Amended and Restated Revenue Management Services Agreement, dated as of June 30, 2015, by and between Manager and DTRS FSST, LLC, as affected by (i) that certain Letter re: Amended and Restated Revenue Management Services Agreement, dated May 2, 2016, from Manager to DTRS FSST, LLC, (ii) that certain Letter re: Renewal Term Fees, dated April 3, 2018, from Manager to DTRS FSST, LLC, (iii) that certain Notice re: Renewal Term Fees, dated March 28, 2019, from Manager to DTRS FSST, LLC, (iv) that certain Letter re: Notice re: Revenue Management Services Agreement, dated March 28, 2019, from Manager to DTRS FSST, LLC, (v) that certain Letter re: Amendment of Renewal Terms and Notice re: Revenue Management Services Agreement, dated January 17, 2022, between Manager and DTRS FSST, LLC, and (vi) that certain Notice re: Renewal Term Fees, dated October 26, 2022, from Manager to DTRS FSST, LLC, as assigned to Operating Lessee pursuant to that certain Assignment and Assumption of HMA Documents, dated as of December 1, 2022, by and between DTRS FSST, LLC and Operating Lessee, as further affected by (vii) that certain Amendment to Amended and Restated Revenue Management Services Agreement, dated April 1, 2023, by and between Manager and Operating Lessee, and as further affected by (viii) that certain Letter re: Four Seasons Resort Scottsdale Notice re Amended and Restated Revenue Management Services Agreement, dated as of October 26, 2023, from Manager to Operating Lessee.
“Revenue Sharing Agreement” means that certain Residence Club Rental Revenue Sharing Agreement, dated as of February 28, 2005, by and between PR Hotel, LLC and PR Resort Club, LLC, as assigned pursuant to that certain Omnibus Assignment, executed as of December 9, 2014, by and between Walton PR Hotel III, L.L.C., a Delaware limited liability company, and DTRS FSST, LLC, a Delaware limited liability company, and as further assigned by DTRS FSST, LLC to Operating Lessee pursuant to that certain Assignment and Assumption of Revenue Sharing Agreement, dated as of December 1, 2022, by and between DTRS FSST, LLC and Operating Lessee.
“Rooms Ledger” shall mean the final night’s room revenue for the Hotel (revenue from rooms occupied as of 6:00 a.m. on the Closing Date, exclusive of food, beverage, telephone and similar charges charged or incurred as of such time), including any sales, use, excise, and transaction privilege taxes, room taxes or other taxes thereon, which shall be shared equally by Purchaser and Seller.
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“Seller Knowledge Party” shall have the meaning ascribed to such term in Article III hereof.
“Storage Unit” shall mean Unit I14 of Premier Storage Condominiums of North Phoenix, located in Maricopa County, Arizona, as more particularly described on Exhibit A-1 attached hereto.
“Study Period” shall have the meaning set forth in Section 2.4 hereof. The parties acknowledge and agree that Purchaser is waiving the Study Period contingency contemporaneously with the execution of this Agreement. Except as expressly noted herein to the contrary, time periods herein referred to shall mean the time periods as in effect, from time to time, at Scottsdale, Arizona.
“Survey” shall mean the survey defined as such in Section 2.4(a) hereof.
“Tangible Personal Property” shall mean the items of tangible personal property including, but not limited to, all vehicles, furniture, fixtures, equipment, machinery, telephone systems, computer hardware and software (to the extent assignable), security systems, the books and records pertaining to the Hotel, Inventory and other tangible personal property of every kind and nature (which does not include cash-on-hand and petty cash funds) located at the Hotel and owned or leased by Seller in connection with the operation of the Hotel or ordered for future use at the Hotel, including, without limitation, Seller’s interest as lessee with respect to any such leased Tangible Personal Property.
“Tax Clearance Certificate” shall have the meaning ascribed to such term in Section 6.9.
“Taxes” shall mean federal, state or local income, personal property, sales, use, excise and transaction privilege, room, lodgers, occupancy, ad valorem or other taxes, assessments, levies, charges or fees (other than property taxes) imposed by any Governmental Authority with respect to the Property or the Hotel.
“Tennis License Agreement” shall mean that certain Tennis Facilities License Agreement, dated as of December 15, 1999, by and between PR Hotel, LLC, an Arizona limited liability company, and Resort Club Scottsdale at Troon North Owner’s Association, Inc., an Arizona nonprofit corporation, recorded January 14, 2000 as Document No. 00-0032108 of the Official Records of Maricopa County, Arizona.
“Title Commitment” shall mean the title commitment and exception documents defined as such in Section 2.4(a) hereof.
“Title Company” shall mean Kensington Vanguard National Title, 5949 Sherry Lane, Suite 111, Dallas, Texas 75225, Attn:  Trey Lentz; Email: TLentz@kvnational.com; Phone: (214) 273-2514, as agent for First American Title Insurance Company.
“Title Update” shall have the meaning ascribed to such term in Section 2.4(b) hereof.
“Trade Payables” shall have the meaning ascribed to such term in Section 7.6.
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“Transfer Premium” shall have the meaning ascribed to such term in Section 9.1.
“Unpaid Taxes” shall have the meaning set forth in Section 5.1(e) hereof.
“WARN Act” shall mean the Worker Adjustment and Retraining Notification Act.
“Warranties and Guaranties” shall mean any subsisting and assignable warranties and guaranties relating to the Improvements or the Tangible Personal Property or any part thereof.
Article II.
PURCHASE AND SALE; DEPOSIT; PAYMENT OF PURCHASE PRICE; STUDY PERIOD
2.1.Purchase and Sale. Seller agrees to sell and Purchaser agrees to purchase the Property for the Purchase Price and in accordance with and subject to the other terms and conditions set forth herein. At least ten (10) business days prior to Closing, Purchaser will notify Seller in writing of the proposed allocation of the Purchase Price among the Real Property, the Tangible Personal Property and the Intangible Personal Property. Seller and Purchaser agree to use good faith efforts to agree upon such allocation prior to the Closing. If Purchaser and Seller cannot agree upon such allocation of the Purchase Price, then the parties agree to file the Affidavit of Value based on the Purchaser’s determination of the allocations of the Purchase Price, but Seller shall not be required to file income tax returns on Purchaser’s determination of the tax allocation.
2.2.Payment of Purchase Price. The Purchase Price shall be paid to Seller in the following manner:
(a)Purchaser shall receive a credit against the Purchase Price in an amount equal to the amount of the Deposit.
(b)Purchaser shall pay the balance of the Purchase Price, as adjusted in the manner specified in Article VII and as set forth below, to Seller (or other party designated by Seller) at Closing by making a wire transfer of immediately available federal funds to the account of Seller (or other party designated by Seller). Such wire transfer shall be sent by Purchaser to the Escrow Agent for the account of Seller no later than 1:00 PM, Scottsdale, Arizona time on the Closing Date.
2.3.Deposit. No later than two (2) business days after the Effective Date, Purchaser shall deliver to Escrow Agent a wire transfer or cashier’s or certified check in the sum of Ten Million and No/100 Dollars ($10,000,000.00) (the “Initial Deposit”). If Purchaser fails to timely deposit the Initial Deposit with Escrow Agent, Seller shall be entitled, as Seller’s sole and exclusive remedy, to terminate this Agreement by written notice to Purchaser at any time before the Initial Deposit is delivered to Escrow Agent, in which event neither party shall have any obligations hereunder, except those which expressly survive a termination of this Agreement. The Deposit shall be invested by Escrow Agent in a commercial bank or banks acceptable to Seller and Purchaser at money market rates, or in such other investments as shall be approved in writing by Seller and Purchaser. The Deposit shall be held and disbursed by Escrow Agent in strict accordance with the terms and provisions of this Agreement. All accrued interest or other earnings on the Deposit shall become part of the Deposit. Purchaser acknowledges that it is waiving its due diligence contingency and its right to terminate this Agreement under the Study Period contemporaneously with the execution of this Agreement, and accordingly, as of the Effective Date, the Deposit shall be non-refundable except as otherwise expressly provided herein. The Deposit shall be either (a) applied at the Closing against the Purchase Price,
10


(b) returned to Purchaser pursuant hereto, or (c) paid to Seller pursuant hereto. Upon receipt of the Initial Deposit, Escrow Agent shall release a portion of the Initial Deposit to Seller in an amount equal to Fifty Dollars ($50.00) representing the independent consideration for Seller’s execution of this Agreement and agreement to provide Purchaser with the Study Period (which shall not be a part of the Deposit).
2.4.Study Period. Purchaser acknowledges and agrees that it has completed its due diligence with respect to the Property pursuant to the Inspection Agreement and is waiving its due diligence contingency and its right to terminate this Agreement under this Section 2.4 (except for any Additional Objections as set forth below in Section 2.4(b)) contemporaneously with the execution of this Agreement. Notwithstanding the foregoing, for purposes of this Agreement, references to the “Study Period” shall mean the time period between the date of the Inspection Agreement and 5:00 p.m., Scottsdale, Arizona time on September 23, 2026 and references to the “expiration of the Study Period” shall be deemed to refer to the Effective Date. Notwithstanding anything to the contrary set forth in the Inspection Agreement, the parties agree that the Inspection Agreement shall remain in effect and shall govern Purchaser’s rights, responsibilities and obligations in connection with Purchaser’s access onto the Property through the earlier of the termination of this Agreement or the Closing Date.
(a)Purchaser acknowledges its receipt of (A) a title insurance commitment issued by the Title Company covering the Real Property (the “Title Commitment”) and (B) an updated survey of the Real Property (the “Survey”) and Purchaser has not identified any matters shown on such Survey or identified in the Title Commitment that Purchaser is unwilling to accept other than the Must Cure Title Encumbrances, and that all title matters revealed by the Title Commitment and Survey other than Must Cure Title Encumbrances (which will be covered by a Must Cure Encumbrance Release at Closing), shall all be deemed Permitted Title Exceptions. Notwithstanding anything to the contrary set forth herein, Seller shall reasonably cooperate with Purchaser's efforts to obtain (i) an updated Survey of the Hotel and (ii) a survey of the Storage Unit. Seller shall be obligated to either (i) pay and discharge, (ii) bond against in a manner legally sufficient to cause to be released, or (iii) indemnify or escrow money with or otherwise cause the Title Company to insure over in a manner reasonably acceptable to Purchaser, such Must Cure Title Encumbrances (individually and collectively, a “Must Cure Encumbrance Release”). For such purposes, Seller may use all or a portion of the Purchase Price to effectuate a Must Cure Encumbrance Release with respect to any such Must Cure Title Encumbrances at the Closing. Except as otherwise provided herein, Seller shall not, after the date of this Agreement, voluntarily subject the Real Property to any liens, encumbrances, covenants, conditions, restrictions, easements or other title matters or seek any zoning changes without Purchaser’s prior written consent, which consent shall not be unreasonably withheld or delayed; provided that it shall not be considered unreasonable for Purchaser to withhold consent to any lien, encumbrance, covenant, condition, restriction, easement, title matter or zoning change which may have an adverse effect on the Property or the business conducted thereon.
(b)Purchaser shall have the right to obtain an updated Title Commitment prior to Closing (each, a “Title Update”). Purchaser shall have three (3) business days after receipt of any Title Update to notify Seller in writing of any additional objections Purchaser may have to any exception contained in such Title Update for agreements filed of record or any liens created or becoming effective after the effective date of the initial Title Commitment that are not (i) created by, through or under Purchaser or (ii) relate to any matter previously disclosed by the Survey or initial Title Commitment (“Additional Objections”). If Purchaser notifies Seller in writing of any Additional Objections, Seller shall have the right, but not the obligation (other than with respect to Must Cure Title Encumbrances which shall be subject to a Must Cure Encumbrance Release at Closing),
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to cure such Additional Objections. Within three (3) business days after receipt of Purchaser’s notice of Additional Objections, Seller shall notify Purchaser in writing whether Seller elects to attempt to cure any or all of such Additional Objections. If Seller elects to attempt to cure, Seller shall have the right to attempt to remove, satisfy or cure the same, and for this purpose, Seller shall, at Seller’s election, be entitled to a one-time right to extend the Closing Date for up to thirty (30) days upon written notice to Purchaser in order for Seller to attempt to cure such Additional Objections. If Seller elects not to cure any Additional Objections or if Seller is unable to effect a cure of those Purchaser’s Objections which it elected to cure prior to the Closing Date (or any later date to which the Closing has been adjourned), and so notifies Purchaser in writing, or if Seller fails to respond to Purchaser’s notice within said three (3) business day period, Purchaser may (as its sole and exclusive remedy) terminate this Agreement by delivering written notice thereof to Seller on or before the Closing Date (as such date may have been extended by Seller as set forth above), in which event the Deposit shall be returned to Purchaser and neither party shall have any further obligations hereunder, except those which expressly survive a termination of this Agreement. If applicable, Closing shall be extended to provide Seller and Purchaser with the full response periods provided in this Section 2.4(b).
(c)Prior to Closing, Purchaser shall use diligent efforts, with Seller’s commercially reasonable assistance, to obtain (i) the written consent of the Manager, if required, to an assignment of the Management Agreement pursuant to the Assignment and Assumption of Management Agreement, and (ii) the Manager Estoppel.
Article III.
SELLER’S REPRESENTATIONS AND WARRANTIES
To induce Purchaser to enter into this Agreement and to purchase the Property, and to pay the Purchase Price therefor, Seller, except as expressly disclosed by information included on the Data Site two (2) business days before the expiration of the Study Period, or for which Purchaser otherwise has or obtained knowledge on or before the expiration of the Study Period, hereby makes the following representations and warranties as of the Effective Date and as of the Closing Date:

3.1.Organization and Power. Seller is duly organized, validly existing and in good standing under the laws of Delaware, is qualified to do business in the state where the Land is located, and has all requisite power and authority to enter into and perform its obligations hereunder and under any document or instrument required to be executed and delivered on behalf of Seller hereunder.
3.2.Authorization and Execution. This Agreement has been duly authorized by all necessary action on the part of Seller, has been duly executed and delivered by Seller, constitutes the valid and binding agreement of Seller and is enforceable in accordance with its terms. The person executing this Agreement on behalf of Seller has the authority to do so.
3.3.Non-contravention. Subject to any consent to the assignment of any particular Operating Agreement, Occupancy Agreement, Management Agreement, Assumed Hotel Agreements or Leased Property Agreement required by the terms thereof or by applicable law and to the payment in full at the Closing of any Must Cure Title Encumbrances, the execution and delivery of, and the performance by Seller of its obligations under, this Agreement does not and will not contravene, or constitute a default under, any provision of applicable law or regulation, Seller’s organizational documents or any agreement, judgment, injunction, order,
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decree or other instrument binding upon Seller or to which the Property is subject, or result in the creation of any lien or other encumbrance on any asset of Seller.
3.4.Compliance with Existing Laws. Except as set forth on Schedule 3.4, Seller has not received from any Governmental Authority written notice of any violation of any provision of Applicable Laws, including, but not limited to, those of environmental agencies, with respect to the ownership, operation, use, maintenance or condition of the Property which violation has not been remedied. To Seller’s knowledge, no administrative proceeding, investigation or inquiry is pending or threatened with respect to any violation of Applicable Laws with respect to the Property or the operation of the Hotel.
3.5.Operating Agreements. To Seller’s knowledge, there are no management, service, supply, or maintenance contracts in effect with respect to the Property other than the Management Agreement, Assumed Hotel Agreements, Operating Agreements or Leased Property Agreements made available to Purchaser in the Data Site, or those disclosed in the Title Commitment. To Seller’s knowledge, all parties to Operating Agreements or Leased Property Agreements have performed all of their obligations thereunder in all material respects, and are not in default thereunder in any material respect. To Seller’s knowledge, Seller has posted to the Data Site true, correct and complete copies of the Management Agreement, Assumed Hotel Agreements, Operating Agreements and Leased Property Agreements, and all amendments and modifications thereto. To Seller’s knowledge, the Management Agreement, Assumed Hotel Agreements, Operating Agreements and Leased Property Agreements are each in full force and effect. Seller has neither given nor received any written notice of a default under any of the Management Agreement, Assumed Hotel Agreements, Operating Agreements or Leased Property Agreements which default remains uncured and, to Seller’s knowledge, there is no existing condition that, with notice or passage of time or both, would constitute a material default by any party under any of the Management Agreement, Assumed Hotel Agreements, Operating Agreements or Leased Property Agreements. To Seller’s knowledge, all fees and charges due and payable by Seller under the Management Agreement, Assumed Hotel Agreements, Operating Agreements and Leased Property Agreements prior to the Effective Date have been paid pursuant to the terms thereof.
3.6.Condemnation Proceedings; Roadways. To Seller’s knowledge, there is no pending condemnation action or special assessment against the Property and Seller has received no written notice of any condemnation or eminent domain proceeding pending against the Property or any part thereof.
3.7.Actions or Proceedings. Seller has received no written notice of any action, suit or proceeding in any court, before any arbitrator, or before or by any Governmental Authority which (a) in any manner raises any question affecting the validity or enforceability of this Agreement or any other agreement or instrument to which Seller is a party or by which it is bound and that is or is to be used in connection with, or is contemplated by, this Agreement, (b) would materially and adversely affect the business, results of operations or operation of the Property as presently conducted, or (c) would create a lien on the Property, any part thereof or any interest therein which would not be discharged at Closing (each, an “Action”), except as set forth on Schedule 3.7 hereto.
3.8.Occupancy Agreements.
(a)There are no leases, concessions or occupancy agreements in effect with respect to the Real Property, except those Occupancy Agreements provided to Purchaser in the Data Site.
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(b)To Seller’s knowledge, Seller has posted to the Data Site true, correct and complete copies of the Occupancy Agreements and all amendments and modifications thereto. To Seller’s knowledge, the Occupancy Agreements are in full force and effect. Seller has neither given nor received any written notice of a default under any Occupancy Agreements which default remains uncured and, to Seller’s knowledge, there is no existing condition that, with notice or passage of time or both, would constitute a material default by any party under the Occupancy Agreements. To Seller’s knowledge, all fees and charges due and payable by Seller under Occupancy Agreements prior to the Effective Date have been paid pursuant to the terms thereof.
3.9.Permits. Seller has not received any written notice from any Governmental Authority (i) of any violation, suspension, revocation or non-renewal of any Authorizations, nor (ii) that it does not have all Authorizations required to be issued by any Governmental Authority and used in or necessary to the operation of the Hotel. To Seller’s knowledge, except for those expired Authorizations set forth on Schedule 3.9 hereto, all Authorizations are in full force and effect.
3.10.Capital Improvements. To Seller’s knowledge, other than repairs and maintenance in the ordinary course of business, no renovations, construction or capital improvements are being conducted with respect to the Hotel.
3.11.ERISA. Seller is not (and, throughout the period transactions are occurring pursuant to this Agreement, will not be) and is not acting on behalf of (and, throughout the period transactions are occurring pursuant to this Agreement, will not be acting on behalf of) an “employee benefit plan” as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, a “plan” as defined in and subject to Section 4975 of the Code or an entity deemed to hold the plan assets of any of the foregoing pursuant to 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA. None of the transactions contemplated by this Agreement are in violation of any statutes applicable to Seller that regulate investments of, and fiduciary obligations with respect to, governmental plans and that are similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.
3.12.Seller Is Not a “Foreign Person”. Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code, as amended (i.e., Seller is not a foreign corporation, foreign partnership, foreign trust, foreign estate or foreign person as those terms are defined in the Internal Revenue Code and regulations promulgated thereunder).
3.13.Bankruptcy. Seller has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Seller’s creditors that remains pending, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of Seller’s assets that remains pending, (iv) suffered the attachment or other judicial seizure of all, or substantially all of Seller’s assets that remains pending, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally; and, to Seller’s knowledge, no person or entity has threatened to bring any bankruptcy proceeding, receivership proceeding or other insolvency, dissolution, reorganization or similar proceeding against Seller.
3.14.Employees. Seller has no employees. Notwithstanding anything contained in the Management Agreement to the contrary, pursuant to a side letter agreement between Operating Lessee and Manager (the “Employee Side Letter”), which is personal to Operating Lessee and not assignable to Purchaser, Operating Lessee and Manager have agreed that all Hotel Employees are employed by Manager. To Seller’s knowledge, all Hotel Employees are employed by Manager.
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3.15.Labor and Employment Matters. Neither Seller nor Manager in respect of the Hotel is a party to any collective bargaining agreement or other labor contract. To Seller’s knowledge, neither Seller nor Manager in respect of the Hotel has been the subject of any union organizing activity, strike, lockout, or other material labor dispute. Neither Seller nor, to Seller’s knowledge, Manager, is a party to any written employment agreements with respect to the Property. There are no unions at the Hotel. To Seller’s knowledge, there are no union organization efforts pending or threatened with respect to any Hotel Employees.
3.16.Financial Statements. The financial statements made available to Purchaser in the Data Site include true, correct and complete copies of such financial statements delivered to Seller by Manager and, to Seller’s knowledge, present accurately, in all material respects, the results of operations and cash flows of the Hotel for the periods set forth therein.
3.17.Right of First Refusal. There are no parties which hold a right of first refusal, right of first offer, option to lease, option to purchase or other similar right as to the Property.
3.18.Taxes. Seller has filed, or has caused to be filed, all federal, state and local tax returns or statements required to be filed with any Governmental Authority with respect to the Property and the Hotel and has paid, or caused to be paid, all Taxes due.
3.19.Terrorism. None of Seller or its Affiliates is in violation of any laws relating to terrorism, money laundering or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Action of 2001, Public Law 107-56 and Executive Order No. 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) (the “Executive Order”) (collectively, the “Anti-Money Laundering and Anti-Terrorism Laws”). For purposes of this Section 3.19, any interest in Seller or its Affiliates held via public shares is not included in this representation.
(1)None of Seller or its Affiliates, is acting, directly or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.
(2)None of Seller or its Affiliates (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person included in the lists set forth in the preceding paragraph; (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Money Laundering and Anti-Terrorism Laws.
3.20.Intellectual Property. Seller does not own any service marks, copyrights, trade names, trademarks, symbols, logos, or other intellectual property rights, marks, or characteristics associated with or otherwise proprietary to the Hotel.
3.21.LIMITATION ON SELLER’S REPRESENTATIONS AND WARRANTIES. PURCHASER ACKNOWLEDGES AND AGREES THAT, OTHER THAN A REPRESENTATION OR WARRANTY EXPRESSLY SET FORTH IN THIS AGREEMENT (A BREACH OF WHICH PURCHASER MAY MAINTAIN AN ACTION IN ACCORDANCE WITH AND SUBJECT TO ARTICLE IX AND SECTION 10.12 OF THIS AGREEMENT) OR
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AS EXPRESSLY SET FORTH IN A CLOSING DOCUMENT, THE PROPERTY IS SOLD “AS IS” “WHERE IS” AND “WITH ALL FAULTS” AND NEITHER SELLER, NOR ANY AGENT OR REPRESENTATIVE OF SELLER, HAS MADE, NOR IS SELLER LIABLE FOR OR BOUND IN ANY MANNER BY ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTEES, PROMISES, STATEMENTS, INDUCEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR ANY PART THEREOF, THE PHYSICAL CONDITION, ENVIRONMENTAL CONDITION, INCOME, EXPENSES OR OPERATION THEREOF, THE USES WHICH CAN BE MADE OF THE SAME OR ANY OTHER MATTER OR THING WITH RESPECT THERETO, INCLUDING ANY EXISTING OR PROSPECTIVE LEASES; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL SELLER BE RELEASED BY OPERATION OF THIS SECTION 3.21 FROM (A) ANY CLAIMS ARISING PURSUANT TO THE PROVISIONS OF THIS AGREEMENT THAT EXPRESSLY SURVIVE CLOSING OR (B) ANY CLAIMS ARISING FROM ANY FRAUDULENT ACTS COMMITTED BY THE SELLER TO THE PURCHASER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. IN ADDITION, NOTHING IN THIS SECTION SHALL PRECLUDE PURCHASER FROM RAISING AS A DEFENSE AGAINST ANY CLAIM BROUGHT AGAINST PURCHASER BY ANY THIRD PARTY RELATING TO ANY OF THE FOREGOING THAT SUCH CLAIM WAS ATTRIBUTABLE TO A PERIOD OF TIME PRIOR TO THE CLOSING. WITHOUT LIMITING THE FOREGOING, PURCHASER ACKNOWLEDGES AND AGREES THAT, OTHER THAN A REPRESENTATION OR WARRANTY EXPRESSLY SET FORTH IN THIS AGREEMENT (A BREACH OF WHICH PURCHASER MAY MAINTAIN AN ACTION IN ACCORDANCE WITH AND SUBJECT TO ARTICLE IX AND SECTION 10.12 OF THIS AGREEMENT) OR AS EXPRESSLY SET FORTH IN A CLOSING DOCUMENT, SELLER IS NOT LIABLE FOR OR BOUND BY (AND PURCHASER HAS NOT RELIED UPON) ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS, OR FINANCIAL STATEMENTS PERTAINING TO THE OPERATION OF THE PROPERTY, OR ANY OTHER INFORMATION RESPECTING THE PROPERTY FURNISHED BY SELLER OR ANY EMPLOYEE, AGENT, CONSULTANT OR OTHER PERSON REPRESENTING OR PURPORTEDLY REPRESENTING SELLER. PURCHASER FURTHER ACKNOWLEDGES, AGREES, AND REPRESENTS THAT, OTHER THAN A REPRESENTATION OR WARRANTY SET FORTH IN THIS AGREEMENT (A BREACH OF WHICH PURCHASER MAY MAINTAIN AN ACTION IN ACCORDANCE WITH AND SUBJECT TO ARTICLE IX AND SECTION 10.12 OF THIS AGREEMENT) OR AS EXPRESSLY SET FORTH IN A CLOSING DOCUMENT, IT SHALL BE PURCHASING THE PROPERTY IN AN “AS IS” “WHERE IS” AND “WITH ALL FAULTS” CONDITION AT THE CLOSING DATE WITH RESPECT TO THE STRUCTURAL AND MECHANICAL ELEMENTS OF THE PROPERTY, THE PHYSICAL AND ENVIRONMENTAL CONDITION OF THE PROPERTY, THE FIRE-LIFE SAFETY SYSTEMS AND THE FURNITURE, FIXTURES AND EQUIPMENT LOCATED THEREON OR ATTACHED THERETO, ALL OF WHICH PURCHASER AND ITS CONSULTANTS SHALL HAVE INSPECTED AND EITHER APPROVED OR WAIVED OBJECTION TO ON OR PRIOR TO THE EXPIRATION OF THE STUDY PERIOD AND/OR THE CLOSING AND PURCHASER HEREBY RELEASES SELLER AND ITS AFFILIATES FROM ANY AND ALL OBLIGATIONS, LIABILITIES, CLAIMS, DEMANDS, SUITS, CAUSES OF ACTION, DAMAGES, JUDGMENTS, COSTS AND EXPENSES RELATING TO ANY OF THE FOREGOING. PURCHASER ALSO ACKNOWLEDGES THAT, AS OF THE CLOSING DATE, IT SHALL HAVE INDEPENDENTLY INVESTIGATED, ANALYZED AND APPRAISED TO ITS SATISFACTION THE VALUE AND THE PROFITABILITY OF THE PROPERTY. PURCHASER ACKNOWLEDGES THAT, TO THE EXTENT REQUIRED TO BE OPERATIVE, THE DISCLAIMERS OF WARRANTIES CONTAINED IN THIS SECTION ARE “CONSPICUOUS” DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE LAW, RULE, REGULATION OR ORDER. THE PROVISIONS OF THIS SECTION 3.21 SHALL SURVIVE THE CLOSING.
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Purchaser recognizes that the Hotel and Personal Property are not new and that there exists a possibility that the Property is not in compliance with the requirements which would be imposed on a newly constructed hotel by presently effective federal, state and local building, plumbing, electrical, fire, health, handicap, environmental and life safety laws, codes, ordinances, rules, orders and/or regulations (collectively, the “building codes”). The Hotel and other improvements on the Land may contain substances or materials no longer permitted to be used in newly constructed buildings including, without limitation, asbestos or other insulation materials, lead or other paints, wiring, electrical, or plumbing materials and may not contain other materials or equipment required to be installed in a newly constructed building. Purchaser shall have the opportunity to review the results of such investigations and inspections of the Property as Purchaser deemed necessary with respect to all such matters. Subject to Purchaser’s rights to terminate pursuant to Section 2.4 and Purchaser’s rights set forth in this Agreement, Purchaser agrees to accept and shall purchase the Property in an “AS-IS, WHERE IS” condition and at Closing to accept and assume the risk of noncompliance of the Property with all such building codes. Except with respect to those representations and warranties expressly set forth in this Agreement, Purchaser waives any right to excuse or delay performance of its obligations under this Agreement or to assert any claim against Seller (before or after Closing) arising out of any failure of the Property to comply with any such building codes. Seller shall provide copies to Purchaser all of the Operating Agreements, Occupancy Agreements, Leased Property Agreements, the Authorizations, and the Warranties and Guaranties (the “Property Agreements”). Purchaser further acknowledges that Seller is relying on Manager to provide copies of the Property Agreements. Purchaser acknowledges that Purchaser is assuming all Property Agreements whether or not copies of which have been provided to Purchaser, and except with respect to those representations and warranties expressly set forth in this Agreement (a breach of which Purchaser may maintain an action in accordance with and subject to Article IX and Section 10.12 of this Agreement), Purchaser hereby waives any claims Purchaser may have for the fact that a particular Property Agreement may not have been provided to Purchaser for its review; provided, however, as its sole and exclusive remedy (except with respect to those representations and warranties expressly set forth in this Agreement (a breach of which Purchaser may maintain an action in accordance with and subject to Article IX and Section 10.12 of this Agreement)), Purchaser shall not be required to assume any Property Agreement which has not been provided to Purchaser to the extent Seller is a direct party to such Property Agreement or Seller’s prior consent was required in order for Manager to enter into such Property Agreement pursuant to the terms of the Management Agreement.
Except with respect to those representations and warranties expressly set forth in this Agreement (a breach of which Purchaser may maintain an action in accordance with and subject to Article IX and Section 10.12 of this Agreement), and except as set forth in the proviso in the first paragraph of this Section 3.21, it is specifically understood and agreed by Seller and Purchaser that Seller does not make, and shall not be deemed to have made, any representation, warranty or covenant with respect to (1) any Environmental Laws that may affect any of the Property or (2) the presence or absence of any Hazardous or Toxic Substances in, on, above, under or about any of the Property. Purchaser, for itself and its successors in interest, hereby releases Seller and its Affiliates from, and waives all claims and liability against Seller and its Affiliates for or attributable to, any structural, physical and/or environmental condition at the
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Property, including without limitation the presence, discovery or removal of any Hazardous Substances or Toxic Substances in, at, about or under such Property, or connected with or arising out of any and all claims or causes of action based upon any Environmental Laws or any related claims or causes of action or any other federal or state based statutory or regulatory or other causes of action for environmental contamination at, in or under any Property. As used in this Section 3.21, (A) the term “Environmental Laws” means, collectively, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. §§ 9601 et seq.) and as may be further amended from time to time, the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), the Federal Water Pollution Control Act, as amended by the Clean Water Act (33 U.S.C. §§ 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. §§ 2601 et seq.), Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. §§ 11001 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. §§ 136 et seq.), the Hazardous Material Transportation Act, as amended (49 U.S.C. §§ 5101 et seq.), as the same are amended, any other applicable federal, state and local laws, and any and all rules and regulations which have become effective prior to the Effective Date under any and all of the aforementioned laws, and other federal, state, and local environmental statutes, codes, ordinances, rules, orders and regulations now or hereafter in effect relating to pollution or the protection of the environment, including without limitation, all laws, statutes, codes, ordinances, rules, common law, orders, regulatory directives, guidance documents, consent decrees, permits, regulations and other requirements of governmental authorities governing or relating to the generation, use, collection, preservation, conservation, treatment, storage, transportation, recovery, removal, discharge, spill or disposal of any or all Hazardous or Toxic Substances, and (B) the term “Hazardous Substances” or “Toxic Substances” means (I) materials and substances listed or defined as “hazardous”, “extremely hazardous”, “hazardous substances”, “hazardous materials”, “hazardous waste”, “extremely hazardous waste”, “restricted hazardous waste”, “toxic substances” or “toxic wastes” in (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601-9675, as amended by the Superfund Amendments and Reauthorization Act of 1988, and any further amendments thereto and rules, orders and regulations thereunder; (ii) the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901-6992, as amended by the Hazardous and Solid Waste Amendments of 1984, and any further amendments thereto and rules, orders and regulations thereunder; (iii) Federal Resource Conservation and Recovery Act § 1004 (42 U.S.C. §6901 et seq.) or (iv) any other Environmental Laws, and (II) any pollutants, contaminants, hazardous, dangerous or toxic chemicals, materials, substances or wastes (including petroleum, petroleum by-products, radon, asbestos and asbestos containing materials, per- and polyfluoroalkyl substances, polychlorinated biphenyls, PCB-containing equipment, radioactive elements, infectious agents, and urea formaldehyde), as such terms may be used in any Environmental Laws (but excluding solvents, cleaning fluids, and other lawful substances used in the ordinary operation and maintenance of the Property).
Each of the representations and warranties contained in this Article III and its various subparagraphs are intended for the benefit of Purchaser and may be waived in whole or in part,
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by Purchaser. Subject to the limitations contained in Section 10.12 hereof, all rights and remedies arising in connection with the untruth or inaccuracy of any such representations and warranties shall survive the Closing of the transaction contemplated hereby as provided in Section 10.12.
The term “to Seller’s knowledge” or similar phrase as used in this Article III, shall mean the then actual current conscious knowledge of Adam Tegge (the “Seller Knowledge Party”) without any duty of investigation or inquiry, other than the inquiry of the general manager of the Hotel. The Seller Knowledge Party shall have no personal liability for such representations. Seller represents and warrants that the Seller Knowledge Party is the individual that is familiar with the operation of the Property and the business of Seller.
Article IV.
PURCHASER’S REPRESENTATIONS AND WARRANTIES
To induce Seller to enter into this Agreement and to sell the Property, Purchaser hereby makes the following representations and warranties:

4.1.Organization and Power. Purchaser is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to enter into and perform its obligations under this Agreement and any document or instrument required to be executed and delivered on behalf of Purchaser hereunder.
4.2.Authorization and Execution. This Agreement has been duly authorized by all necessary action on the part of Purchaser, has been duly executed and delivered by Purchaser, constitutes the valid and binding agreement of Purchaser and is enforceable in accordance with its terms. The person executing this Agreement on behalf of Purchaser has the authority to do so.
4.3.Non-contravention. The execution and delivery of this Agreement and the performance by Purchaser of its obligations hereunder do not and will not contravene, or constitute a default under, any provisions of applicable law or regulation, Purchaser’s organizational documents, or any agreement, judgment, injunction, order, decree or other instrument binding upon Purchaser or result in the creation of any lien or other encumbrance on any asset of Purchaser.
4.4.Litigation. There is no action, suit or proceeding, pending or known to be threatened, against or affecting Purchaser in any court or before any arbitrator or before any Governmental Authority which (a) in any manner raises any question affecting the validity or enforceability of this Agreement or any other agreement or instrument to which Purchaser is a party or by which it is bound and that is to be used in connection with, or is contemplated by, this Agreement, (b) would materially and adversely affect the business, financial position or results of operations of Purchaser, or (c) would materially and adversely affect the ability of Purchaser to perform its obligations hereunder, or under any document to be delivered pursuant hereto.
4.5.Patriot Act. Purchaser is not acting, directly or indirectly, for or on behalf of any person, group, entity or nation named by the United States Treasury Department as a Specifically Designated National and Blocked person, or for or on behalf of any person, group, entity or nation designated in Presidential Executive Order 13224 as a person who commits, threatens to commit, or supports terrorism; and it is not engaged in this transaction directly or indirectly on behalf of, or facilitating this transaction directly or indirectly on behalf of, any such person, group, entity or nation.
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4.6.Terrorism. None of Purchaser or, to Purchaser’s actual knowledge, its Affiliates, is in violation of any Anti-Money Laundering and Anti-Terrorism Laws.
(a)None of Purchaser or, to Purchaser’s actual knowledge, its Affiliates, is acting, directly or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.
(b)None of Purchaser or, to Purchaser’s actual knowledge, its Affiliates or, without inquiry, any of its brokers or other agents, in any capacity in connection with the purchase of the Property (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person included in the lists set forth in the preceding paragraph; (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Money Laundering and Anti-Terrorism Laws.
The term “to Purchaser’s knowledge” or similar phrase as used in this Agreement shall mean the then actual current conscious knowledge of Aman Gupta without further investigation or inquiry.

Article V.
CONDITIONS PRECEDENT
5.1.As to Purchaser’s Obligations. Purchaser shall have the remedies and Closing obligations set forth in Section 9.1 hereof, which section contains the sole and exclusive remedies and Closing obligations of Purchaser, if any of the following conditions are not satisfied or waived by Purchaser on or before the Closing Date (unless the failure to satisfy such condition is caused by the default of Purchaser or its Affiliates under this Agreement, or is otherwise within the reasonable control of Purchaser):
(a)Seller’s Deliveries. Seller shall have delivered to or for the benefit of Purchaser, on or before the Closing Date, all of the documents required of Seller pursuant to Sections 7.2 and 7.4 hereof.
(b)Representations, Warranties and Covenants; Obligations of Seller. All of Seller’s representations and warranties made in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date as if then made (except for untruths or inaccuracies of which Purchaser obtains actual knowledge prior to the expiration of the Study Period); and Seller shall have performed in all material respects all of its covenants and other obligations under this Agreement, including the obligation to cure or correct all Must Cure Title Encumbrances and any other of Purchaser’s Additional Objections that Seller has agreed to cure or correct in writing pursuant to this Agreement. For the avoidance of doubt, any Operating Agreement entered into subsequent to the Effective Date that is approved by Purchaser (or for which Purchaser has no right to approve) pursuant to Section 6.1 of this Agreement shall not constitute a failure of this condition or give rise to a Claim pursuant to Section 10.12.
(c)Operating Lease. The Operating Lease shall be terminated without cost or expense to Purchaser.
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(d)Title Policy. Title Company shall have irrevocably and unconditionally committed to Purchaser to issue the Owner’s Title Policy, dated as of the date the Deed is recorded.
(e)Tax Clearance Certificates. Receipt of the Pre-Closing Tax Clearance Certificates (as defined in Section 6.9); provided, if this condition is not satisfied at Closing (i) due to the disclosure of unpaid Taxes with respect to the Hotel as set forth in the Pre-Closing Tax Clearance Certificates (“Unpaid Taxes”), this condition shall be deemed satisfied if Seller pays such Unpaid Taxes at Closing, or (ii) due to the failure to have timely received the Pre-Closing Tax Clearance Certificates, then this condition shall be deemed satisfied provided that Seller shall promptly provide the Post-Closing Tax Clearance Certificates (as defined in Section 6.9) to Purchaser upon receipt following the Closing and pay any Unpaid Taxes disclosed therein, which obligations shall survive Closing.
(f)Management Agreement. Purchaser shall have received (i) Manager’s consent to the assignment and assumption of the Management Agreement between Seller and Purchaser as evidenced by its executed counterpart to the Assignment and Assumption of Management Agreement, (ii) a side letter substantially similar to the Employee Side Letter, and (iii) an estoppel certificate from Manager in the form attached hereto as Exhibit H which, for the avoidance of doubt, shall also address the Assumed Hotel Agreements through one or more estoppel certificates executed by Manager or its applicable Affiliate (collectively, the “Manager Estoppel”), subject to reasonable comments from Manager consistent with any requirements in the Management Agreement and the Assumed Hotel Agreements or consistent with past estoppels provided, so long as such comments do not reflect defaults, events of defaults or any other information inconsistent with the representations and warranties made by Seller in this Agreement.
Each of the conditions contained in this Section are intended for the benefit of Purchaser and may be waived in whole or in part, in writing, by Purchaser or automatically if Purchaser proceeds to Closing.
5.2.As to Seller’s Obligations. Seller shall have the remedies and Closing obligations set forth in Section 9.2 hereof, which section contains the sole and exclusive remedies and Closing obligations of Seller, if any of the following conditions are not satisfied or waived by Seller on or before the Closing Date (unless the failure to satisfy such condition is caused by the default of Seller or its Affiliates under this Agreement, or is otherwise within the reasonable control of Seller):
(a)Purchaser’s Deliveries. Purchaser shall have delivered to or for the benefit of Seller, on or before the Closing Date, all of the documents and payments required of Purchaser pursuant to Sections 7.3 and 7.4 hereof.
(b)Representations, Warranties and Covenants; Obligations of Purchaser. All of Purchaser’s representations and warranties made in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date as if then made and Purchaser shall have performed in all material respects all of its covenants and other obligations under this Agreement.
(c)Management Agreement. Manager shall have approved Purchaser assuming all obligations of Seller and Operating Lessee, as applicable, under the
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Management Agreement, as evidenced by its executed counterpart to the Assignment and Assumption of Management Agreement.
Each of the conditions contained in this Section are intended for the benefit of Seller and may be waived in whole or in part, in writing, by Seller or automatically if Seller proceeds to Closing.
Article VI.
COVENANTS OF SELLER AND PURCHASER
6.1.Operating Agreements/Occupancy Agreements/Leased Property Agreements. From and after the Effective Date, and subject to the terms of the Management Agreement, Seller shall not enter into any new Operating Agreements, Occupancy Agreements or Leased Property Agreements or any modifications to any such agreements except as required by the terms thereof, unless (a) any such agreement or modification will not bind Purchaser or the Property after the Closing Date or is subject to termination on not more than thirty (30) days’ notice without penalty, or (b) Seller has obtained Purchaser’s prior written consent to such agreement or modification, which consent shall be in Purchaser’s sole and absolute discretion with no deemed approval (the “Approval Standard”). Seller, at no cost to Seller, shall take reasonable efforts to assist Purchaser in obtaining any required consents to the assignment to Purchaser of the Operating Agreements or Leased Property Agreements; provided, however, Seller shall pay all fees, charges and expenses relating to such consents. Seller may cancel any Operating Agreement, Occupancy Agreement or Leased Property Agreement at any time prior to the Closing with the prior written consent of Purchaser, which consent shall be subject to the Approval Standard; provided, however, if Seller elects to cancel any such agreement, Seller shall pay any termination fee associated with such termination, and shall give Purchaser notice of such termination. Notwithstanding anything contained in this paragraph to the contrary, in no event shall the Approval Standard apply or Purchaser’s consent be required to the extent Manager enters into any agreement which the Management Agreement expressly provides is within Manager’s discretion and does not require Seller’s consent. Seller agrees that Seller shall not amend, cause to be amended, or permit the amendment of the Management Agreement or the Assumed Hotel Agreements without obtaining Purchaser’s prior written consent, which such consent shall be given in Purchaser’s sole and absolute discretion.
6.2.Warranties and Guaranties. Seller shall not before or after Closing release or modify any Warranties and Guaranties, if any, except with the prior written consent of Purchaser, which consent shall be subject to the Approval Standard.
6.3.No Transfers. Seller shall not sell, exchange, assign, transfer, convey, lease, option, or otherwise dispose of all or any part of the Real Property or any interest therein, except to the extent within Manager’s authority without Seller’s consent under the Management Agreement.
6.4.Insurance. Seller shall pay all premiums on, and shall not cancel or voluntarily allow to expire, any of Seller’s Insurance Policies unless such policy is replaced, without any lapse of coverage, by another policy or policies providing coverage at least as extensive as the policy or policies being replaced.
6.5.Operation of Property Prior to Closing. Seller covenants and agrees with Purchaser that, to the extent it is legally entitled to do so, between the Effective Date and the Closing Date and subject to the terms of the Management Agreement:
(a)Subject to the restrictions contained herein, and events or conditions beyond Seller’s reasonable control, Seller shall operate and maintain the Property in
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substantially the same manner in which it operated the Property prior to the execution of this Agreement.
(b)Seller shall pay (subject to legal rights of appeal and protest) prior to delinquency all ad valorem, occupancy and sales, use excise, and transaction privilege taxes due and payable with respect to the Property or the operation of the Hotel.
(c)Subject to seasonal differences, market conditions and events or conditions beyond Seller’s reasonable control, Seller shall continue to take guest room reservations and to book functions and meetings and otherwise to promote the business of the Property in generally the same manner as it did prior to the execution of this Agreement; and all advance room bookings and reservations and all meetings and function bookings shall be booked at rates, prices and charges charged by Seller for such purposes in the ordinary course of business consistent with past practices. Seller acknowledges that the Purchase Price includes the transfer of Advance Bookings and any payments and/or deposits made pursuant to such Advance Bookings.
(d)Seller shall promptly advise Purchaser of any material litigation, arbitration or administrative hearing concerning the Property of which Seller obtains actual knowledge.
(e)Seller shall maintain its books and records in the ordinary course of business in accordance with sound accounting principles applied on a basis consistent with the basis used in keeping its books and records in prior years.
(f)Seller shall refrain from removing or causing or permitting to be removed any part or portion of the Real Property, Tangible Personal Property owned by Seller other than in the normal course of business without the prior written consent of Purchaser, which consent shall be subject to the Approval Standard, unless the same is replaced, prior to Closing, with similar items of at least equal or better suitability, quality and value, free and clear of any liens or security interests.
(g)Seller shall use commercially reasonable efforts (i) to renew or replace, or cause Manager to renew or replace, any Authorizations that are expired as of the Effective Date (including the expired Authorizations set forth on Schedule 3.9 hereto) or which will expire prior to the Closing Date, and (ii) to cure the violations and deficiencies disclosed on Schedule 3.4 hereto, in each case prior to Closing.
6.6.Intentionally Deleted.
6.7.Employee Claims. Purchaser shall hold harmless, indemnify and defend Seller and Manager from and against any and all claims, causes of action, proceedings, judgments, damages, penalties, liabilities, costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Seller or Manager with respect to claims, causes of action, judgments, damages (excluding punitive damages), penalties and liabilities asserted by Hotel Employees to the extent arising out of or related to any act, failure to act, any transaction or any facts or circumstances occurring from and after the Closing Date, including, without limitation (A) the termination of any such Hotel Employees from and after the Closing Date; (B) any and all liability under the WARN Act; (C) [intentionally omitted]; (D) any claim arising under the Family and Medical Leave Act or other state leave of absence statute made by someone on a statutorily approved leave of absence at the time of Closing; (E) any alleged discrimination, breach of contract or other wrongful termination (under federal statutes, state statutes or common law); and (F) any alleged right to workers’ compensation benefits, unemployment compensation or statutory or contractual severance, including claims for any withdrawal liability or unfunded
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liability incurred because of participation in any pension plan covered by the Multiemployer Pension Plan Amendments Act of 1980 or other multiemployer pension plan or similar fund.
6.8.Estoppels. Seller shall use commercially reasonable efforts to obtain and deliver to Purchaser estoppel certificates from the counterparties under (i) any reciprocal easement agreements, operating easement agreements, and covenants, conditions and restrictions, affecting all or any portion of the Property, (ii) the Occupancy Agreements, (iii) [reserved], (iv) the Golf Course Agreement, (v) the Golf Course Use Allocation Agreement, and (vi) the Tennis License Agreement, in each case in such form as Purchaser provides to Seller, subject to reasonable comments from the counterparty thereto consistent with its requirements in the underlying document or consistent with past estoppels provided. In no event shall failure to obtain an estoppel under this Section 6.8 be a default by Seller or a condition to Purchaser’s obligation to close hereunder.
6.9.Tax Clearance Certificates. Fee Owner and Operating Lessee will timely file with the Arizona Department of Revenue their monthly transaction privilege tax returns and pay the transaction privilege taxes for any business and occupation taxes, sale, use, excise, and transaction privilege taxes, parking taxes and gross receipts taxes for all business and privilege tax numbers related to Fee Owner’s and Operating Lessee’s operations on the Property (each, a “Privilege Tax Return”). Promptly following the Effective Date, Fee Owner and Operating Lessee shall file with the Arizona Department of Revenue a Tax Clearance Application (each, a “Tax Clearance Application”) for issuance of a letter of good standing for Arizona state, Maricopa County, and City of Scottsdale excise and transaction privilege taxes for all business and privilege tax numbers related to Fee Owner’s and Operating Lessee’s operations on the Property and indicating that Fee Owner and Operating Lessee have filed and paid all excise and transaction privilege taxes to the effective date of the certificate (each, a “Pre-Closing Tax Clearance Certificate”). Fee Owner and Operating Lessee shall thereafter diligently pursue obtaining the same and Seller shall deliver the same to Purchaser as soon as received. Promptly after Fee Owner and Operating Lessee files the Privilege Tax Returns for the period including the Closing Date, Fee Owner and Operating Lessee will file Tax Clearance Applications for issuance of a letter of good standing for Arizona state, Maricopa County and City of Scottsdale excise and transaction privilege taxes with an effective date on or after the dates Fee Owner and Operating Lessee file their respective Privilege Tax Return for the period including the Closing Date and indicating that Fee Owner and Operating Lessee have filed and paid all taxes to the effective date of the certificate (each, a “Post-Closing Tax Clearance Certificate” and together with the Pre-Closing Tax Clearance Certificate, the “Tax Clearance Certificates”). Fee Owner and Operating Lessee shall thereafter diligently pursue obtaining the same and Seller shall deliver the same to Purchaser as soon as received. The provisions of this Section shall survive Closing and the indemnification obligations in Section 9.5 will apply.
Article VII.
CLOSING
7.1.Closing. The Closing shall occur on the Closing Date. As more particularly described below, at the Closing the parties hereto will (i) execute or cause to be executed, or instruct the Escrow Agent to release, all of the documents required to be delivered in connection with the transactions contemplated hereby (the “Closing Documents”), (ii) deliver or cause to be delivered the same to Escrow Agent, and (iii) take or cause to be taken all other action required to be taken in respect of the transactions contemplated hereby. The Closing will occur through escrow at the offices of the Title Company or at such other place as Purchaser and Seller may mutually agree. At the Closing, Purchaser shall deliver the balance of the Purchase Price to Escrow Agent as provided herein. As provided herein, the parties hereto will agree upon adjustments and prorations to certain items which cannot be exactly determined at the Closing and will make the appropriate adjustments with respect thereto. Possession of the Property shall
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be delivered to Purchaser at the Closing, subject only to Permitted Title Exceptions and the rights of tenants, licensees and concessionaires under the Occupancy Agreements and guests in possession.
7.2.Seller’s Deliveries. At the Closing, Seller shall deliver or shall cause Manager to deliver, as applicable, to Escrow Agent all of the following instruments, each of which shall have been duly executed and, where applicable, acknowledged and/or sworn, on behalf of Seller, and shall be dated to be effective as of the Closing Date:
(a)The Deed.
(b)The Bill of Sale.
(c)The Assignment and Assumption Agreement.
(d)The Assignment of Occupancy Agreements.
(e)The FIRPTA Certificate.
(f)Evidence of termination of the Operating Lease.
(g)The originals of all Property Agreements being assumed by Purchaser at Closing, to the extent in the possession or control of Seller, Manager or Seller’s agents (which will be satisfied if such items are maintained at the Hotel).
(h)All keys, the books and records and all Warranties and Guaranties and Authorizations, in the possession of Seller, Manager or Seller’s agents, together with such property files and records in connection with the continued operation, leasing and maintenance of the Property in Seller’s or Manager’s possession (which will be satisfied if such items are maintained at the Hotel).
(i)One original duly executed and acknowledged Affidavit of Property Value in the form required under Section 11-1133 of Arizona Revised Statutes (the “Affidavit of Property Value”), together with any other real estate transfer tax declarations, forms, or similar document required under applicable law in connection with the conveyance of the Property.
(j)Any other document or instrument specifically required by this Agreement to be delivered by Seller on or before the Closing Date.
(k)An Assignment and Assumption of Management Agreement in the form attached hereto as Exhibit G, subject to the changes required by Manager which are reasonably acceptable to Seller and Purchaser (the “Assignment and Assumption of Management Agreement”).
(l)Such agreements, affidavits or other documents as may be reasonably required by the Title Company from the Seller to issue the Owner’s Title Policy, including an owner’s affidavit in the form required by the Title Company.
7.3.Purchaser’s Deliveries. At or prior to the Closing, Purchaser shall deliver or cause to be delivered to Escrow Agent the following, duly executed and, where applicable, acknowledged and/or sworn on behalf of Purchaser, and dated as of the Closing Date:
(a)The Assignment and Assumption Agreement.
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(b)The Assignment of Occupancy Agreements.
(c)The Assignment and Assumption of Management Agreement.
(d)The Affidavit of Property Value.
(e)Any other documents or instruments specifically required by this Agreement to be delivered by Purchaser on or before the Closing Date.
(f)At the Closing, Purchaser shall deliver to Escrow Agent the portion of the Purchase Price described in Section 2.2 hereof.
7.4.Mutual Deliveries. At the Closing, Purchaser and Seller shall mutually execute and deliver or cause to be delivered:
(a)A closing statement reflecting the Purchase Price and the adjustments and prorations required hereunder and the allocation of income and expenses required hereby.
(b)Such other and further documents, papers and instruments as may be reasonably required by the parties hereto or their respective counsel or the Title Company which are not inconsistent with this Agreement or the other Closing Documents.
To the extent the delivery of any of the items in Sections 7.2, 7.3 or 7.4 of this Agreement are conditions precedent to the obligation of a party pursuant to Sections 5.1 or 5.2 of this Agreement, and the condition relating to any such item is not satisfied as of Closing, but the party for whose benefit such unsatisfied condition is made elects, nonetheless, to proceed to Closing, the delivery of the item applicable to the unsatisfied condition shall not be required pursuant to the provisions of Section 7.2, 7.3 or 7.4 of this Agreement.
Prior to the Closing, Seller will deliver to Purchaser copies of all development plans, architectural drawings, engineering studies, site plans, entitlements, land use approvals, surveys, renderings and other development-related materials in Seller's or Manager's possession or control in each case relating to the Real Property, including any undeveloped or development-ready portion of the Real Property.
7.5.Closing Costs. Except as is explicitly provided in this Agreement, each party hereto shall pay its own legal fees and expenses. All filing fees for the Deed and the transfer, recording, sales or other similar taxes and surtaxes due with respect to the transfer of title, as well as the cost for title insurance, endorsements and surveys, and any other costs specified on Schedule 1 attached hereto, shall all be paid in accordance with allocations set forth in Schedule 1. To the extent releases or corrective instruments are required to be delivered by Seller pursuant to the terms of this Agreement, Seller shall pay for the costs associated with the releases of any deeds of trust, mortgages and other Must Cure Title Encumbrances encumbering the Property and for any costs associated with any corrective instruments. For the avoidance of doubt, Purchaser shall not be responsible for, and shall have no obligation to reimburse Seller for, any costs or expenses incurred by Seller in connection with the procurement, commissioning, or updating of any third-party reports, studies, or assessments obtained by or on behalf of Seller prior to, or independent of, Purchaser's due diligence review of the Property or the Transaction, including any reports previously posted to the Data Site. Purchaser shall be solely responsible for the costs and expenses of any third-party reports, studies, or assessments independently commissioned by Purchaser in connection with its due diligence review. All other
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costs (except any costs incurred by either party for its own account) which are necessary to carry out the transactions contemplated hereunder shall be allocated between Purchaser and Seller in accordance with local custom in the jurisdiction in which the Hotel is located. The provisions of this Section 7.5 shall survive the Closing and any termination of this Agreement.
7.6.Revenue and Expense Allocations. All revenues and expenses with respect to the Property, and applicable to the period of time before and after Closing, determined in accordance with sound accounting principles consistently applied, shall be allocated between Seller and Purchaser as provided herein. Pursuant to such allocation, Seller shall be entitled to all revenue and shall be responsible for all expenses for the period of time up to but not including the Closing Date, and Purchaser shall be entitled to all revenue and shall be responsible for all expenses for the period of time from, after and including the Closing Date. Such allocations and adjustments shall be shown on the closing statement (with such supporting documentation as the parties hereto may reasonably require being attached as exhibits to the closing statements) and shall increase or decrease (as the case may be) the cash amount payable by Purchaser pursuant to Section 2.2 hereof. All prorations shall be made on the basis of the actual number of days in the year and month in which the Closing occurs or in the period of computation. Without limiting the generality of the foregoing, the following items of revenue and expense shall be allocated and prorated as of 11:59 p.m. on the night prior to the Closing Date (the “Cut-Off Time”):
(a)Current rents (excluding rent under the Operating Lease).
(b)Real estate and personal property taxes.
(c)Revenue and expenses under the Operating Agreements, Leased Property Agreements and Assumed Hotel Agreements to be assigned to and assumed by Purchaser. Seller and Purchaser agree that expenses under Operating Agreements which constitute repairs and/or maintenance shall be allocated to Seller as to work completed prior to the Closing Date (and applicable retainage related thereto), and shall be allocated to Purchaser as to work completed from and after the Closing Date (and applicable retainage related thereto).
(d)Utility charges (including, but not limited to, charges for phone service, cable television, gas, water, sewer and electricity). The parties shall use commercially reasonable efforts to obtain meter readings for all utilities as of the Cut-Off Time. If such readings cannot be obtained, such charges shall be prorated on the basis of the most recent bill for such service, subject to re-proration promptly upon receipt of the actual bill for the relevant billing period, which obligation shall survive the Closing.
(e)Municipal or other governmental improvement liens and special assessments, which shall be paid by Seller at Closing where the work has been completed, and which shall be assumed by Purchaser at Closing and paid by Purchaser where the work has been authorized or started, but not completed; provided, however, that if such liens or assessments are payable in installments, the amount of the installment applicable to the period which includes the Closing Date shall be allocated in the same manner as other items of expenses herein; and for all other installments, Seller shall be responsible for the payment of and shall pay such installments relating to periods prior to the Closing Date and Purchaser shall be responsible for the payment of and shall pay such installments relating to periods from and after the Closing Date.
(f)License and permit fees, where transferable.
(g)All other revenues and expenses of the Property, including, but not limited to, such things as restaurant, bar and meeting room income and expenses and the like.
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(h)Such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the City and County where the Property is located.
Seller shall receive a credit for any reasonably documented prepaid expenses accruing to periods on or after the Closing Date. Purchaser shall receive a credit against the Purchase Price for the total of (i) prepaid rents, (ii) Advance Deposits, and (iii) unforfeited security deposits together with any interest payable to a tenant thereon held by Seller or Operating Lessee under Occupancy Agreements. For purposes hereof, “Advance Deposits” shall mean amounts actually received by Seller, Operating Lessee or Manager and recorded (or which was required to be recorded) as a liability on the Hotel’s balance sheet as of the Cut-Off Time in respect of rooms, functions, reservations and other Hotel services to be utilized after Closing, and shall exclude forfeited deposits and amounts previously recognized as revenue (provided that Advance Deposits shall include non-refundable deposits in respect of rooms, functions, reservations or other Hotel services to be utilized after Closing regardless of how they were recognized). At Closing, Seller shall sell to Purchaser in connection with the Hotel, and Purchaser shall purchase from Seller, in addition to the Purchase Price: (i) all cash funds in connection with the Hotel guest operations at the Property and any cash amounts, including those held in reserve by Manager (including the Capital Reserve), utility deposits, liquor deposits, security deposits, and management fee deposits, in each case as of the Cut-Off Time and that are transferred to Purchaser or remains in accounts or reserves or as deposits for the benefit of the Hotel after Closing; (ii)  the so-called “guest ledger” as mutually approved by Purchaser and Seller or Operating Lessee for the Hotel of guest accounts receivable payable to the Hotel less actual collection costs (i.e. fees retained by credit card companies) as of the check-out time for the Hotel on the Closing Date (based on guests and customers then using the Hotel) both (1) in occupancy from the preceding night through check out time the morning of the Closing Date, and (2) previously in occupancy prior to check out time on the Closing Date, less accounting charges for rooms furnished on a gratuity or complimentary basis to any hotel staff or as an accommodation to other parties and less Purchaser’s one-half (1/2) share of the Rooms Ledger; and (iii) any guest accounts receivable for the Hotel (other than the Rooms Ledger), in each case solely to the extent recorded on the Hotel's balance sheet as of the Cut-Off Time, in an amount equal to (1) one hundred percent (100%) of the amount of those receivables which are aged thirty (30) days or less as of the Closing Date, plus (2) seventy-five percent (75%) of those receivables aged thirty-one to sixty (31-60) days as of the Closing Date, plus (3) zero percent (0%) of those receivables aged greater than sixty (60) days as of the Closing Date; and (iv) all other accounts receivable of the Hotel (other than the Rooms Ledger and the guest account receivables), in each case solely to the extent recorded on the Hotel's balance sheet as of the Cut-Off Time, in an amount equal to (1) one hundred percent (100%) of the amount of those receivables which are aged thirty (30) days or less as of the Closing Date, plus (2) seventy-five percent (75%) of those receivables aged thirty-one to sixty (31-60) days as of the Closing Date, plus (3) fifty percent (50%) of those receivables aged sixty-one to ninety (61-90) days as of the Closing Date, plus (4) zero percent (0%) of those receivables aged greater than ninety (90) days as of the Closing Date. Seller shall deliver to Purchaser, no later than five (5) business days prior to the Closing Date (and updated as of the Cut-Off Time at Closing), an aging schedule of all accounts receivable described in clauses (iii) and (iv) above, to the extent such aging schedule is available or can be
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produced from Seller's or Manager's books and records. For purposes of this Agreement, transfer or sale at face value for cash and cash reserve amounts shall mean an amount equal to the total of all cash funds and cash reserve amounts that are transferred to Purchaser (or retained by Manager for the benefit of the Property).  The purchase price of said petty cash fund and guest ledger shall be paid to Seller at Closing by a credit to Seller in the computation of the adjustments and prorations on the Closing Date.
With respect to amounts payable to vendors or other suppliers of goods or services for the Hotel (including accrued but uninvoiced amounts in respect of goods or services received) (the “Trade Payables”): (i) Seller shall pay in the ordinary course all Trade Payables which are due and payable as of the Closing Date for goods or services delivered to the Hotel prior to Closing; (ii) Purchaser shall receive a credit for those Trade Payables which have accrued but are not yet due and payable as of the Closing Date, and Purchaser shall pay all such Trade Payables when the same become due and payable; and (iii) Seller and Purchaser shall make a one-time re-proration of the Trade Payables as of the re-proration date set forth in this Section 7.6, based upon the actual invoices therefor received as of such date, and Seller shall be credited for any amount by which the credit given at Closing exceeded the amount actually paid, and Seller shall pay Purchaser for any amount by which the credit given at Closing was less than the amount actually paid.
Seller shall be solely responsible and liable for payment of all costs and expenses associated with accrued but unpaid salary, wages and bonuses, accrued but unpaid profit sharing and pension, retirement, health and welfare benefits, accrued but unpaid fringe benefits, accrued but unpaid employee severance payments, and other accrued but unpaid compensation and fringe benefits, earned vacation pay, and all accrued and/or earned sick leave and there shall be a credit against the Purchase Price equal to the amount of any such amounts that are accrued and/or earned, but unpaid, as of the Closing Date. To the extent that Hotel Employees have, as of the Closing Date, any accrued but unused vacation days, holidays, sick leave, personal days and any other form of paid time off or leave (whether under the Management Agreement or otherwise) or will be entitled to an annual or other bonus at the end of the annual or other period in which the Closing Date occurs, (i) there shall be a credit against the Purchase Price equal to the amount of the value of any such days or time (and the anticipated amounts of any such bonuses based on budgeted performance as of the Closing Date, if applicable, to the extent attributable to the period prior to the Closing Date, such bonuses to be trued-up during the post-Closing prorations reconciliation period based on actual performance), and (ii) Purchaser shall be solely responsible and liable for payment of all such amounts to the extent of such credit. In furtherance of the foregoing, such amounts will consist of, but not be limited to, all such accrued liabilities in the amount recorded on the Hotel’s balance sheet.
Seller shall be required to pay or cause to be paid all retail sales, use, excise and transaction privilege taxes (as distinguished from any tax on the sale of any Tangible Personal Property effected pursuant to this Agreement), occupancy taxes and like impositions up to but not including the Closing Date. Any such taxes applicable to the Rooms Ledger shall be apportioned equally between Seller and Purchaser.
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Purchaser shall receive a credit at Closing for the value equivalent to seventy-five percent (75%) of all outstanding: (i) gift certificates, vouchers, donations and other similar obligations which have been issued by Seller or Manager, (ii) trade credits, trade-out or barter arrangements payable by Seller to any other party for services rendered in the past or to be rendered in the future, in each case which may be used in full or partial payment for any Hotel service, including room rentals, food and beverage service, or any other item. For the avoidance of doubt, there are no Property-level gift certificates, so the credit amount shall be zero dollars ($0).
If accurate allocations cannot be made at Closing because current bills are not obtainable (as, for example, in the case of utility bills and/or real estate or personal property taxes) or obligations are subject to future reconciliation (as, for example, in the case of the Incentive Fee), the parties shall allocate such revenue or expenses at Closing on the best available information, subject to adjustment upon receipt of the final bill or other evidence of the applicable revenue or expense (which, in the case of the Incentive Fee shall be the annual statement of profit and loss delivered pursuant to Section 11.08(b) of the Management Agreement with respect to the Fiscal Year (as defined in the Management Agreement) in which the Closing occurs). The obligations to make the adjustment pursuant to this provision shall survive the closing of the transaction contemplated by this Agreement. Any revenue received or expense incurred by Seller or by Purchaser with respect to the Property after the date of Closing shall be promptly allocated in the manner described herein and the parties shall promptly pay or reimburse any amount due. The Closing adjustments and prorations, as provided for in this Section 7.6, shall be tentatively determined by Seller and Purchaser as of the Cut-Off Time and payment of the net figure resulting therefrom shall be paid by adjusting the Purchase Price, except as otherwise provided herein. Seller shall prepare a draft prorations schedule to be delivered to Purchaser no later than five (5) business days prior to the Closing Date and the Closing shall occur and a preliminary closing statement, which prorations shall remain subject to further agreement and finalization per the preparation of the Final Statement (as defined below) shall be signed by Seller and Purchaser.
Except for prorations for real estate taxes and other assessments (which shall be adjusted within thirty (30) days of receipt of the tax bill for the tax year in which the Closing occurs); prorations for the Incentive Fee (which shall be adjusted within thirty (30) days of receipt of the annual statement of profit and loss), and amounts of accrued bonus and other compensation which are typically paid at year-end (which shall be adjusted within thirty (30) days after they are actually paid), Purchaser and Seller shall make a one-time post-Closing adjustment of any item of income and expense subject to adjustment as provided above which was either incomplete, incorrect (whether as a result of an error in calculation or a lack of complete and accurate information) or otherwise not finally agreed by and between Seller and Purchaser as of the Closing. Purchaser will prepare and deliver to Seller for its review and approval a statement of prorations (the “Final Statement”) within one hundred twenty (120) days following the Closing Date, and the party in whose favor the original incorrect adjustment or error was made (“Adjusting Party”) shall pay to the other party (“Requesting Party”) the sum necessary to correct such prior incorrect adjustment or error within ten (10) business days after completion of the Final Statement. Notwithstanding any provision of this Agreement to the contrary, all items required to be adjusted pursuant to this Section 7.6 shall be adjusted within one hundred twenty (120) days of Closing (except real estate taxes, the Incentive Fee, and accrued bonuses and other
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year-end compensation, which shall be re-adjusted within the periods set forth above), and such adjustment shall be final and no further adjustment to the prorations or the Purchase Price shall be made; provided that if such amounts or issues are not fully agreed upon and paid within one hundred twenty (120) days after the Closing, then, in such event, such amounts or issues shall be submitted to an independent certified public accountant with a hospitality practice reasonably acceptable to Seller and Purchaser, for final resolution, and Seller and Purchaser agree to be bound by the determination of such accountant. The costs and expenses incurred in connection with the services of such accountant shall be borne and paid equally by Purchaser and Seller. The provisions of this Section 7.6 shall survive the Closing.
7.7.Safe Deposit Boxes. On the Closing Date, Seller shall cause Manager to make available to Purchaser at the Hotel all receipts and agreements in Manager’s possession relating to all safe deposit boxes in use at the Hotel, other than safes or lockboxes, if any, located inside individual guest rooms in the Hotel. From and after the Closing, Seller and Manager shall be relieved of any and all responsibility in connection with each said box, and Purchaser shall indemnify Seller, Manager and any Affiliate thereof and hold them harmless from and against any claim, liability, cost or expense (including reasonable attorneys’ fees) incurred by them with respect thereto. Seller shall indemnify and hold Purchaser harmless from any other liability, claim, cost or expense (including reasonable attorney’s fees) with respect to such safety deposit box arising prior to the Closing Date. The provisions of this Section 7.7 shall survive the Closing.
7.8.Inventory of Baggage. The representatives of Seller and/or Manager, and of Purchaser shall prepare an inventory of baggage at the Hotel as of 12:00 noon on the Closing Date (which inventory of baggage shall be binding on all parties thereto) of (i) all luggage, valises and trunks checked or left in the care of the Hotel by guests then or formerly in the Hotel, (ii) parcels, laundry, valet packages and other property of guests checked or left in the care of the Hotel by guests then or formerly in the Hotel (excluding, however, property in Hotel safe deposit boxes), (iii) all luggage or other property of guests retained by Seller as security for any unpaid accounts receivable, and (iv) all items contained in the Hotel lost and found. Purchaser shall be responsible from and after the Closing Date for all baggage and other items listed in such inventory of baggage, and Purchaser shall indemnify and hold Seller, Manager and any Affiliate thereof harmless from and against any claim, liability, cost or expense (including reasonable attorneys’ fees) incurred by them with respect thereto. Seller hereby agrees to indemnify and hold Purchaser harmless from any other liability or claims with respect to such inventory of baggage arising prior to the Closing Date. The provisions of this Section 7.8 shall survive the Closing.
7.9.Acquisition and Payment for Inventory. Seller agrees to sell to Purchaser and Purchaser agrees to purchase from Seller the Inventory as part of the Property with no adjustment to the Purchase Price.
7.10.Assumption of Liabilities. At Closing, Purchaser shall assume all (i) obligations which Purchaser expressly assumes under this Agreement, (ii) Advance Bookings, (iii) liabilities for which Purchaser receives a credit to the Purchase Price on the closing statement or pursuant to any post-closing adjustments, and (iv) obligations under Permitted Title Exceptions which accrue to the period from and after the Closing Date, or which accrue to the period prior to the Closing Date but only to the extent to which Purchaser receives a credit to the Purchase Price on the closing statement or pursuant to any post-closing adjustments (collectively, the “Assumed Liabilities”). The provisions of this Section 7.10 shall survive the Closing.
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Article VIII.
GENERAL PROVISIONS
8.1.Fire or Other Casualty. Seller agrees to give Purchaser prompt notice of any fire or other casualty to the Property costing more than Twenty-Five Thousand Dollars ($25,000) to repair and occurring between the Effective Date and the Closing Date of which Seller has knowledge. If, prior to Closing, the Property is damaged by fire or other casualty which is fully insured (without regard to deductibles) and would cost not more than Five Hundred Thousand Dollars ($500,000) and require less than 120 days to repair, then neither party shall have the right to terminate its obligations under this Agreement to purchase or sell the Property by reason thereof and the Closing shall take place without abatement of the Purchase Price, but Seller shall assign to Purchaser at the Closing all of Seller’s interest in any insurance proceeds (except use and occupancy insurance, rent loss and business interruption insurance, and any similar insurance for the period preceding the Closing Date) that may be payable to Seller on account of any such fire or other casualty, to the extent such proceeds have not been previously expended or are otherwise required to reimburse Seller for actual expenditures of restoration, plus Seller shall credit the amount of any deductibles under any policies related to such proceeds to the Purchase Price. If any such damage due to fire or other casualty is insured and would cost in excess of Five Hundred Thousand Dollars ($500,000) or require more than 120 days to repair, then Purchaser may terminate its obligations under this Agreement to purchase the Property by written notice given to Seller within ten (10) days after Seller has given Purchaser the notice of damage or casualty referred to in this Section 8.1, or on the Closing Date, whichever is earlier, in which case the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released of all further obligations hereunder with respect to the Property except those which expressly survive a termination of this Agreement. Should Purchaser elect to proceed to Closing notwithstanding the amount of the insured loss or the time required for repairs, the Closing shall take place without abatement of the Purchase Price and at Closing Seller shall assign to Purchaser the insurance proceeds and grant to Purchaser a credit against the Purchase Price equal to the amount of the applicable deductible. If, prior to Closing, any Property is damaged by fire or other casualty which is uninsured, then Purchaser may terminate its obligations under this Agreement to purchase the Property by written notice given to the Seller within ten (10) days after Seller has given Purchaser the notice of damage or casualty or on the Closing Date, whichever is earlier, in which case the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released of all further obligations hereunder, except those which expressly survive a termination of this Agreement. Notwithstanding the preceding sentence, if the estimated amount to repair such uninsured casualty is not more than Five Hundred Thousand Dollars ($500,000), Seller, at its option, may elect to provide Purchaser with a credit to the Purchase Price at Closing for the estimated amount to repair such casualty, in which event Purchaser shall proceed to Closing and the Purchase Price shall be reduced by the estimated amount to repair such casualty. If Purchaser does not elect to terminate its obligations under this Agreement with respect to an uninsured casualty as aforesaid, or if any uninsured fire or casualty would cost not more than One Hundred Thousand Dollars ($100,000) to repair, then the Closing shall take place as provided herein, and the Purchase Price shall be reduced by the estimated amount to repair such casualty, not to exceed One Hundred Thousand Dollars ($100,000). All estimates made pursuant to this Section shall be made by a professional engineer selected by Purchaser in its reasonable discretion.
8.2.Condemnation. After the Effective Date, Seller agrees to give Purchaser prompt notice of any notice it receives of any taking or threat of taking by condemnation of any part of or rights appurtenant to the Real Property. If such taking will materially interfere with the operation or use of the Hotel which constitutes a part of such Real Property, the Purchaser may terminate its obligations under this Agreement to purchase the Property by written notice to Seller within ten (10) days after Seller has given Purchaser the notice of taking referred to in this Section 8.2, or on the Closing Date, whichever is earlier. For purposes of this Section 8.2, a
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taking will materially interfere with the operation or use of the Hotel if it leaves remaining a balance of the Real Property in a condition which, in Purchaser’s sole reasonable discretion, may not reasonably be anticipated to be economically operated for the purposes and in the manner in which the Real Property was operated prior to such taking. If Purchaser exercises its option to terminate its obligations to purchase the Property pursuant to this Section 8.2, the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released from all further obligations hereunder with respect to the Property, except those which expressly survive a termination of this Agreement. If Purchaser does not so elect to terminate its obligations to purchase the Property, then the Closing shall take place as provided herein, and Seller shall assign to Purchaser at the Closing all of Seller’s interest in any condemnation award or payments in lieu of condemnation which may be payable to Seller on account of any such condemnation or threat thereof and, at Closing, Seller shall credit to the amount of the Purchase Price payable by Purchaser the amount, if any, of condemnation proceeds or payments in lieu of condemnation received by Seller between the Effective Date and Closing less (i) any amounts reasonably expended by Seller or Manager in collecting such sums, (ii) any amounts reasonably used by Seller or Manager to repair the Property as a result of such condemnation, and (iii) any amounts which are reasonably allocated to lost earnings or other damages or losses (other than unrepaired property damages) reasonably allocated or attributed to the period of time prior to Closing. If, prior to the Closing, there shall occur a taking by condemnation of any part of or rights appurtenant to the Property that does not materially interfere with the operation or use of the Hotel which constitutes a part of the Property, Purchaser shall not have the right to terminate its obligations to purchase the Property under this Agreement by reason thereof and the Closing shall take place without abatement of the Purchase Price, but Seller shall assign to Purchaser at the Closing all of Seller’s interest in any condemnation award or payments in lieu of condemnation which may be payable to Seller on account of any such condemnation or threat thereof and, at Closing, Seller shall credit to the amount of the Purchase Price payable by Purchaser the amount, if any, of condemnation proceeds or payments in lieu of condemnation received by Seller between the Effective Date and Closing less (i) any amounts reasonably expended by Seller or Manager in collecting such sums, (ii) any amounts reasonably used by Seller or Manager to repair the Property as a result of such condemnation, and (iii) any amounts which are reasonably allocated to lost earnings or other damages or losses (other than unrepaired property damages) reasonably allocated or attributed to the period of time prior to Closing. Provided Purchaser has not exercised its right to terminate this Agreement pursuant to this Section 8.2, Seller shall notify Purchaser in advance regarding any proceeding or negotiation with respect to the condemnation and Purchaser shall have a reasonable right, at its own cost and expense, to appear and participate in any such proceeding or negotiation. For purposes of Sections 8.1 and 8.2 of this Agreement, estimates of costs and time required for restoration or repair shall be made by an architect or engineer, as appropriate, designated by Seller and reasonably acceptable to Purchaser.
8.3.Broker. The parties acknowledge that Broker has been the procuring cause of this Agreement. It shall be the obligation of Seller to pay Broker its commission, when, as and if, and only if, the transaction contemplated hereby actually closes, in accordance with a separate agreement between the Broker and Seller. There is no other real estate broker involved in this transaction. Purchaser warrants and represents to Seller that Purchaser has not dealt with any other real estate broker in connection with this transaction, nor has Purchaser been introduced to the Property or to Seller by any other real estate broker, and Purchaser shall indemnify Seller and hold Seller harmless from and against any claims, suits, demands or liabilities of any kind or nature whatsoever arising on account of the claim of any other person, firm or corporation to a real estate brokerage commission or a finder’s fee as a result of having dealt with Purchaser, or as a result of having introduced Purchaser to Seller or to the Property. In like manner, Seller warrants and represents to Purchaser that Seller has not dealt with any other real estate broker in connection with this transaction, nor has Seller been introduced to Purchaser by any other real estate broker, and Seller shall indemnify Purchaser and save and hold Purchaser harmless from
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and against any claims, suits, demands or liabilities of any kind or nature whatsoever arising on account of the claim of any person, firm or corporation to a real estate brokerage commission or a finder’s fee as a result of having dealt with Seller in connection with this transaction. The provisions of this Section 8.3 shall survive the Closing and any termination of this Agreement.
8.4.Bulk Sale. Seller and Purchaser acknowledge that they do not intend to comply with and have agreed to waive the provisions of any statutory bulk sale or similar requirements applicable to the transaction to be effected by this Agreement.
8.5.Confidentiality. Except as hereinafter provided, Purchaser and Seller and their Affiliates shall keep the terms, conditions and provisions of this Agreement and all documents or information disclosed to or made available to or discovered by each party in connection with this Agreement (including, without limitation, information in the Data Site) confidential and such information shall be used solely for the purpose of evaluating or effecting the transactions contemplated by this Agreement, and neither Purchaser nor Seller shall make any public announcements hereof unless and until the Closing occurs unless the other first reasonably approves of same in writing, nor shall either disclose unless and until the Closing occurs the terms, conditions and provisions of this Agreement or such other documents or information, except to persons who, in the reasonable business judgment of Seller or Purchaser, as applicable, “need to know” for the purpose of evaluating or effecting the transactions contemplated by this Agreement, and who are instructed to keep such information confidential, such as their respective officers, directors, employees, attorneys, accountants, engineers, surveyors, consultants, financiers, partners, investors, potential lessees and bankers and such other third parties whose assistance is required in connection with the consummation of this transaction (collectively, “Representatives”); provided, however, that information or documents shall not be subject to the provisions of this Section 8.5 if, not otherwise in violation of this Section 8.5, such information or documents, (i) were or become(s) generally available to the public, or (ii) were or become(s) available to Purchaser or its Affiliates on a non-confidential basis from a source other than Seller or its Affiliates or Manager. Upon full execution of this Agreement and if the Closing occurs, the parties may either make a joint press release, or each party may make an individual press release. Notwithstanding the foregoing, it is acknowledged that Seller is, or is an Affiliate of, a REIT, and the REIT has and will seek to sell shares to the general public; consequently, Seller shall have the absolute and unbridled right to disclose any information regarding the Transaction required by law or as determined to be necessary or appropriate by Seller or Seller’s attorneys to satisfy disclosure and reporting obligations of Seller or its Affiliates. Notwithstanding the foregoing, on or at any time following the expiration of the Study Period, Seller may make a press release or file with the United States Securities Exchange Commission information regarding the Transaction. Seller and Purchaser and their Representatives are cautioned that United States securities laws restrict the purchase and sale of securities by anyone who possesses non-public information about the issue of such securities. Accordingly, neither Purchaser nor any of its Affiliates nor its Representatives may buy or sell any of the securities of the Seller or any of its Affiliates so long as any of them is in possession of any material non-public information about the Seller or any of its Affiliates, including information contained in or derived from confidential information. The terms of this Section 8.5 shall supersede any prior confidentiality agreements executed by Seller, Purchaser, or any of their respective Affiliates, parents, or subsidiaries, to the extent such confidentiality agreements relate or refer, directly or indirectly, to the transactions contemplated by this Agreement. The provisions of this Section 8.5 relating to press releases shall survive the Closing and all the provisions of this Section 8.5 shall survive a termination of this Agreement for a period of one (1) year after such termination; provided, however, that any liabilities or obligations of either Seller, Purchaser or any of their respective Affiliates, parents, or subsidiaries that may have accrued or arisen under any confidentiality agreements prior to the Effective Date shall survive such confidentiality agreements being superseded hereby.
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If either Seller or Purchaser or any of their Affiliates or any of their Representatives is required by any subpoena, interrogatories, request for production, or other legal process or by any Applicable Laws, or if it is determined to be necessary or appropriate by Seller or Seller’s attorneys to satisfy disclosure and reporting obligations of Seller or its Affiliates, to disclose any confidential information, Seller or Purchaser, as applicable, will give the other party prompt written notice of the requirement and will cooperate with the other party so that the other party, at its expense, may seek an appropriate protective order. In the absence of a protective order, the party required to disclose, including any Representatives, may disclose only such confidential information as may be necessary to avoid any penalty, sanction, or other material adverse consequence, and the party required to disclose will use reasonable efforts to secure confidential treatment of any confidential information so disclosed.
Seller and Purchaser stipulate that the breach of the provisions of this Section 8.5 by the other party or its respective Affiliates or Representatives may cause irreparable harm to the non-breaching party for which damages may not constitute an adequate remedy. Accordingly, the parties agree that any attempted, threatened, or actual breach of the provisions of this Section 8.5 by one party or its Affiliates or Representatives may be enjoined by an appropriate court order or judgment. The parties waive any requirement for the posting of a bond or other security as a condition to such court order or judgment. Injunctive relief will not be the sole remedy of the non-breaching party for a breach of the provisions of this Section 8.5, and all legal and equitable remedies will continue to be available to the non-breaching party. If the non-breaching party is the prevailing party in any litigation relating to the breach of the provisions of this Section 8.5 by the other party or its Affiliates or Representatives, the non-breaching party will be entitled to recover (in addition to any damages or other relief granted) its reasonable legal fees and other expenses in connection with such litigation.
Notwithstanding anything to the contrary set forth herein or in any other agreement to which the parties hereto are parties or by which they are bound, any and all obligations of confidentiality contained herein and therein (the “Confidentiality Obligations”), as they relate to the transactions and events contemplated by this Agreement (collectively, the “Transaction”), shall not apply to the “structure or tax aspects” (as that phrase is used in Section 1.6011-4T(b)(3) or any successor provision of the Treasury Regulations (the “Confidentiality Regulation”) promulgated under Section 6011 of the Internal Revenue Code of 1986, as amended) of the Transaction; provided, however, that the Confidentiality Obligations nevertheless shall apply at a given time to any and all items of information not required to be freely disclosable at such time in order for the Transaction not to be treated as “offered under conditions of confidentiality” within the meaning of the Confidentiality Regulation.
8.6    Management Agreement. Within five (5) business days after the Effective Date Seller will notify Manager of the sale of the Property to Purchaser pursuant to this Agreement. Purchaser shall provide to Manager all of the information requested by Manager pursuant to the Management Agreement relating to the proposed sale of the Property, which Purchaser shall promptly submit to Manager. At Closing Purchaser shall assume the obligations, to the extent first arising from and after the Closing, of Seller and any of their Affiliates, as applicable, under the Management Agreement, or any guarantee thereof, in accordance with the Assignment and
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Assumption of Management Agreement, and the Assumed Hotel Agreements. Purchaser agrees to indemnify, and hold Seller and their Affiliates harmless from and against any and all claims, costs, penalties, damages, losses, liabilities and expenses (including reasonable attorney fees) that may at any time be incurred by Seller or any of their Affiliates arising out of, by reason of, or in connection with any obligation of, or default by, Purchaser under the Management Agreement or Assumed Hotel Agreements which first occurs, accrues or arises on or after the Closing Date. Seller agrees to indemnify, and hold Purchaser and its Affiliates harmless from and against any and all claims, costs, penalties, damages, losses, liabilities and expenses (including reasonable attorneys' fees) that may at any time be incurred by Purchaser or its Affiliates arising out of, by reason of, or in connection with any obligation of or default by Seller or any of their Affiliates under the Management Agreement or Assumed Hotel Agreements which occurs, accrues or arises prior to the Closing Date. The obligations of Purchaser and Seller contained in this Section 8.6 shall survive Closing.
Article IX.
DEFAULT; TERMINATION RIGHTS
9.1.Default by Seller/Failure of Conditions Precedent. If (i) any condition set forth herein for the benefit of Purchaser cannot or will not be satisfied prior to Closing (unless the failure to satisfy such condition is caused by the default of Purchaser or its Affiliates under this Agreement, or is otherwise within the reasonable control of Purchaser or its Affiliates), or (ii) Seller breaches any of its covenants, representations, and/or warranties set forth in this Agreement, and, if curable, if Seller fails to cure any such matter or satisfy such condition within ten (10) calendar days after written notice thereof from Purchaser (or such other time period as may be explicitly provided for herein), (which ten (10) calendar day or other such time periods shall, if necessary, automatically extend the Closing Date to the expiration date of such ten (10) calendar day or other such time period), or upon the occurrence of any other event that would entitle Purchaser to terminate this Agreement and its obligations hereunder, unless otherwise provided for in this Agreement, Purchaser, as its sole and exclusive remedy shall elect either (a) to terminate this Agreement, in which event (i) the Deposit shall be promptly returned to Purchaser and Purchaser shall retain its right to enforce the indemnities and other provisions of this Agreement which expressly survive a termination of this Agreement, provided that, if such termination is due to Seller defaulting in any material respect (after notice and expiration of cure periods provided above) under any of Seller’s obligations in this Agreement, Purchaser shall be entitled to reimbursement by Seller of the actual third party out-of-pocket costs and expenses incurred by Purchaser in connection with entering into this Agreement, inspecting the Property and preparing for Closing, including, without limitation, Purchaser’s reasonable attorney fees incurred in connection therewith, such reimbursement not to exceed One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) in the aggregate, or if such default is in Seller’s obligation to execute and deliver the documents required of Seller pursuant to Section 7.2 of this Agreement, such that Closing does not occur, such reimbursement (without duplication) shall not exceed Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00) in the aggregate (the “Reimbursement Cap”), and (ii) all other rights and obligations of Seller and Purchaser hereunder (except those set forth herein which expressly survive a termination of this Agreement) shall terminate immediately; or (b) to waive such matter or condition and proceed to Closing with no reduction in the Purchase Price. Notwithstanding the preceding sentence, if, at the Closing, Seller fails to comply in any material respect with any of its obligations contained in Section 7.2 or 7.4 (the “Closing Obligations”), and if all conditions precedent to Seller’s obligations hereunder have been waived or satisfied, Purchaser shall have, in addition to Purchaser’s remedies contained in the preceding sentence, the option to waive all other actions, rights, or claims for damages for the failure to perform such Closing Obligations (other than
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costs and expenses incurred in enforcing this Agreement and its right to enforce the indemnities and other provisions of this Agreement which expressly survive a termination of this Agreement or Closing), and to bring an equitable action to enforce the Closing Obligations; provided, (i) Purchaser shall provide written notice of Purchaser’s intention to enforce the Closing Obligations by specific performance and Seller shall not have cured performance of the Closing Obligations within ten (10) calendar days following delivery of such notice, and (ii) Purchaser’s suit for specific performance shall be filed against Seller in a court having jurisdiction in the county and state in which the Property is located, on or before ninety (90) days following the Closing Date, failing which, Purchaser shall be barred from enforcing this Agreement by specific performance and shall be deemed to have elected to terminate this Agreement as provided herein; provided, further, that in the event specific performance is not available to Purchaser because Seller has sold, transferred, or otherwise conveyed all or any portion of the Property to a third party in violation of this Agreement, then, in addition to any other remedies available to Purchaser hereunder (including Purchaser's right to the return of the Deposit and reimbursement of its out-of-pocket costs and expenses as provided above but not subject to the Reimbursement Cap), Purchaser shall be entitled to recover from Seller, as damages, an amount equal to fifty percent (50%) of the excess, if any, of (a) the total consideration received by Seller (or any Affiliate of Seller) in connection with such third-party sale, transfer, or conveyance, over (b) the Purchase Price (as the same may have been adjusted in accordance with this Agreement) (such excess, the “Transfer Premium”). For the avoidance of doubt, the Transfer Premium shall be in addition to, and not in lieu of, any other damages to which Purchaser may be entitled under this Section 9.1, and the limitation on consequential, punitive, exemplary, and speculative damages set forth in Section 9.4 hereof shall not apply to Purchaser's recovery of the Transfer Premium. Seller shall provide Purchaser with reasonable documentation of the consideration received in connection with any such third-party sale within five (5) business days following Purchaser's written request therefor. The provisions of this Section 9.1 shall survive the termination of this Agreement.
9.2.Default by Purchaser/Failure of Conditions Precedent. If any condition set forth herein for the benefit of Seller (other than a default by Purchaser) cannot or will not be satisfied prior to Closing, and if Purchaser fails to satisfy that condition within ten (10) business days after notice thereof from Seller, unless otherwise provided for in this Agreement, Seller, as its sole and exclusive remedy, shall elect either (a) to terminate this Agreement in which event the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released from all further obligations hereunder except those which expressly survive a termination of this Agreement, or (b) to waive its right to terminate, and instead, to proceed to Closing. If Purchaser defaults in performing any of its obligations under this Agreement, and Purchaser fails to cure any such default within the earlier of (i) the Closing, or (ii) ten (10) business days after notice thereof from Seller, then Seller’s sole remedy for such default shall be to terminate this Agreement and receive the Deposit and to retain its right to enforce the indemnities and other provisions of this Agreement which expressly survive a termination of this Agreement; provided, however, that Purchaser shall not be entitled to any notice and right to cure in the event it wrongfully fails to proceed to Closing as required by this Agreement. The provisions of this Section 9.2 shall survive the termination of this Agreement. SELLER AND PURCHASER AGREE THAT IF THIS AGREEMENT IS TERMINATED PURSUANT TO THIS SECTION 9.2 AS A RESULT OF A PURCHASER DEFAULT, THE DAMAGES THAT SELLER WOULD SUSTAIN AS A RESULT OF SUCH TERMINATION WOULD BE DIFFICULT IF NOT IMPOSSIBLE TO ASCERTAIN. ACCORDINGLY, SELLER AND PURCHASER AGREE THAT SELLER SHALL RETAIN THE DEPOSIT AS FULL AND COMPLETE LIQUIDATED DAMAGES AND AS SELLER’S SOLE AND EXCLUSIVE REMEDY FOR SUCH TERMINATION AND FOR TAKING THE PROPERTY OFF THE MARKET AND FOR INCURRING COSTS RELATED TO THIS AGREEMENT; PROVIDED HOWEVER, THAT SELLER SHALL RETAIN ITS RIGHT TO ENFORCE THE INDEMNITIES AND OTHER PROVISIONS OF THIS AGREEMENT WHICH EXPRESSLY SURVIVE A TERMINATION OF THIS AGREEMENT. THE PAYMENT OF THE DEPOSIT AS LIQUIDATED DAMAGES IS NOT
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INTENDED AS A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER.
9.3.Costs and Attorneys’ Fees. In the event of any litigation or dispute between the parties arising out of or in any way connected with this Agreement, resulting in any litigation, then the prevailing party in such litigation shall be entitled to recover its costs of prosecuting and/or defending same, including, without limitation, reasonable attorneys’ fees at trial and all appellate levels. The provisions of this Section 9.3 shall survive the Closing or any termination of this Agreement.
9.4.Limitation of Liability. The liability of each party hereto resulting from the breach or default by such party shall be limited to direct actual damages incurred by the injured party and each party hereto hereby waives its rights to recover from the other party consequential, punitive, exemplary, and speculative damages. The provisions of this Section 9.4 shall survive the termination of this Agreement. The provisions of this Section 9.4 shall not limit or affect the rights of Seller to receive the Deposit as liquidated damages as and when provided in this Agreement.
9.5.Indemnification of Purchaser. From and after Closing, Seller shall indemnify, defend, and hold harmless Purchaser from and against any and all claims, demands, causes of action, liabilities, judgments, losses, damages, costs and expenses of any kind whatsoever (including, without limitation, reasonable attorneys’ fees) (collectively, “Claims”) arising out of, or in any way relating to the business or operation of the Property prior to Closing (but excluding liabilities related to the physical and/or environmental conditions of the Property and/or the compliance (or lack of compliance) of the Property with Applicable Laws, including any expired Authorizations), such obligations to survive Closing; provided, however, that this indemnity shall expressly exclude all liabilities for payment of obligations first arising or accruing prior to the Closing Date to the extent that Purchaser has assumed such obligations or receives a credit therefor pursuant to this Agreement. The provisions of this Section 9.5 shall survive the Closing.
9.6.Indemnification of Seller. From and after Closing, Purchaser shall indemnify, defend, and hold harmless Seller from and against any and all such Claims resulting from or arising out, or in any way relating to the business or operation of the Property from and after Closing, such obligations to survive Closing. The provisions of this Section 9.6 will survive the Closing Date.
Article X.
MISCELLANEOUS PROVISIONS
10.1.Completeness; Modification. This Agreement constitutes the entire agreement between the parties hereto with respect to the transactions contemplated hereby and supersedes all prior discussions, understandings, agreements and negotiations between the parties hereto. This Agreement may be modified only by a written instrument duly executed by the parties hereto.
10.2.Assignments. Purchaser shall have the right to (i) assign all or a portion of its right, title and interest in this Agreement in whole or in part to one or more Affiliates or subsidiaries that qualifies as a “Qualified Person” as defined under the Management Agreement, and/or (ii) designate one or more Affiliates or subsidiaries as its nominee to receive title to any portion of the Property; provided, however, that (a) such Person remains an Affiliate or subsidiary of Purchaser as of the Closing, (b) Purchaser shall not be released from any of its Liabilities under this Agreement by reason of such designation or assignment prior to the Closing, and (c) such designation or assignment shall not be effective until Purchaser has provided Seller with a fully executed copy of such designation or assignment and assumption
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instrument. Other than to an Affiliate of Purchaser, Purchaser may not assign its rights hereunder without the prior consent of Seller; however, any such assignment (including one to Purchaser’s Affiliate) shall not relieve Purchaser of its obligations under this Agreement. To be effective hereunder, any assignment by Purchaser hereunder, even one to an Affiliate of Purchaser, must be accompanied by a fully executed and effective assignment and assumption and/or designation agreement provided to Seller no later than ten (10) days prior to the Closing Date. Notwithstanding any assignment of this Agreement, Purchaser shall not be released from its obligations hereunder unless and until the Closing occurs, and the assignment and assumption agreement in connection therewith shall include a statement that all representations and warranties of Purchaser in Article IV of this Agreement are true of such assignee taking assignment of this Agreement as of the date of such assignment and will be true as of the Closing in all material respects.
10.3.Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their permitted respective successors and assigns.
10.4.Days. If any action is required to be performed, or if any notice, consent or other communication is given, on a day that is a Saturday or Sunday or a legal holiday in the jurisdiction in which the action is required to be performed or in which is located the intended recipient of such notice, consent or other communication, such performance shall be deemed to be required, and such notice, consent or other communication shall be deemed to be given, on the first business day following such Saturday, Sunday or legal holiday. Unless otherwise specified herein, all references herein to a “day” or “days” shall refer to calendar days and not business days.
10.5.Governing Law. This Agreement and all documents referred to herein shall be governed by and construed and interpreted in accordance with the laws of the state in which the Property is located without regard to its principles of conflicts of law. This paragraph shall survive the closing or consummation of the conveyance contemplated by this Agreement, and any termination of this Agreement.
10.6.Counterparts. To facilitate execution, this Agreement may be executed in as many counterparts as may be required. It shall not be necessary that the signature on behalf of both parties hereto appear on each counterpart hereof. All counterparts hereof shall collectively constitute a single agreement. Telecopied signatures (including signatures delivered by DocuSign, AdobeSign, or other electronic methods of transmission) shall have the same valid and binding effect as original signatures.
10.7.Severability. If any term, covenant or condition of this Agreement, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to other persons or circumstances, shall not be affected thereby, and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
10.8.Costs. Regardless of whether Closing occurs hereunder, and except as otherwise expressly provided herein, each party hereto shall be responsible for its own costs in connection with this Agreement and the transactions contemplated hereby, including, without limitation, fees of attorneys, engineers and accountants.
10.9.Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be delivered (i) by hand, (ii) transmitted by email transmission, (iii) sent prepaid for next-day delivery by Federal Express (or a comparable overnight delivery service) or (iv) sent by the United States mail, certified, postage prepaid, return receipt requested,
39


at the addresses and with such copies as designated below. Any notice, request, demand or other communication delivered or sent in the manner aforesaid may be given by the party required to give such notice, etc., or its attorney, and shall be deemed given or made (as the case may be) when actually delivered to or refused by the intended recipient.
If to Seller:        BHR Scottsdale LP
14185 Dallas Parkway, Suite 1200
Dallas, Texas 75254
Attn: Christopher Peckham
Email: cpeckham@ashfordinc.com

and:            Jackson Walker LLP
2323 Ross Avenue, Suite 600
Dallas, Texas 75201
Attn: Cynthia B. Nelson
Email: cbnelson@jw.com

If to Purchaser:    c/o Sixth Street Partners, LLC
888 7th Avenue
New York, New York 10106
Attn: Aman Gupta
Email: amangupta@sixthstreet.com

and:                c/o Sixth Street Partners, LLC
2100 McKinney Avenue, Suite 1100
Dallas, TX 75201
Attn: Sixth Street Legal
Email: sixthstreetlegal@sixthstreet.com

and:            c/o Riller Capital, LLC
880 Apollo Street, Suite 331
El Segundo, CA 90245
Attn: Akshay Goyal
Email: akshay.goyal@rillercapital.com

With a copy to:    Latham & Watkins LLP
330 N. Wabash Avenue, 28th Floor
Chicago, Illinois 60601
Attn: Gary E. Axelrod
Email: gary.axelrod@lw.com

If to Escrow Agent:    Kensington Vanguard National Title
5949 Sherry Lane, Suite 111
Dallas, Texas 75225
Attn:  Trey Lentz
Email: TLentz@kvnational.com
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or to such other address as the intended recipient may have specified in a notice to the other party. Any party hereto may change its address or designate different or other persons or entities to receive copies by notifying the other party and Escrow Agent in a manner described in this Section.

10.10.Escrow Agent. Escrow Agent referred to in the definition thereof contained in Section 1.1 hereof has agreed to act as such for the convenience of the parties without fee or other charges for such services as Escrow Agent. Escrow Agent shall not be liable: (a) to any of the parties for any act or omission to act except for its own willful misconduct; (b) for any legal effect, insufficiency, or undesirability of any instrument deposited with or delivered by Escrow Agent or exchanged by the parties hereunder, whether or not Escrow Agent prepared such instrument; (c) for any loss or impairment of funds that have been deposited in escrow while those funds are in the course of collection, or while those funds are on deposit in a financial institution, if such loss or impairment results from the failure, insolvency or suspension of a financial institution; (d) for the expiration of any time limit or other consequence of delay, unless a properly executed written instruction, accepted by Escrow Agent, has instructed Escrow Agent to comply with said time limit; (e) for the default, error, action or omission of either party to the escrow. Escrow Agent, in its capacity as escrow agent, shall be entitled to rely on any document or paper received by it, believed by such Escrow Agent, in good faith, to be bona fide and genuine. In the event of any dispute as to the disposition of the Deposit or any other monies held in escrow, or of any documents held in escrow, Escrow Agent may continue to hold the Deposit pursuant to the terms hereof, or if Escrow Agent so elects, interplead the matter at the joint and several cost of Purchaser and Seller by filing an interpleader action in a court of general jurisdiction in the county or circuit where the Real Property is located (to the jurisdiction of which both parties do hereby consent), and pay into the registry of the court the Deposit, or deposit any such documents with respect to which there is a dispute in the Registry of such court, whereupon such Escrow Agent shall be relieved and released from any further liability as Escrow Agent hereunder. Escrow Agent shall not be liable for Escrow Agent’s compliance with any legal process, subpoena, writ, order, judgment and decree of any court, whether issued with or without jurisdiction, and whether or not subsequently vacated, modified, set aside or reversed. Purchaser and Seller agree to jointly and severally indemnify, defend and hold harmless the Escrow Agent from and against any loss, cost, damage, expense and attorney’s fee in connection with or in any way arising out of the escrow arrangement, other than expenses resulting from the Escrow Agent’s own gross negligence or willful misconduct.
10.11.Incorporation by Reference. All of the exhibits and schedules attached hereto are by this reference incorporated herein and made a part hereof.
10.12.Survival. Except to the extent (i) that Seller gives Purchaser written notice prior to Closing of the untruth or inaccuracy of any representation or warranty contained herein, (ii) Purchaser otherwise obtains actual knowledge prior to Closing of the untruth or inaccuracy of any representation or warranty contained herein, or (iii) of a Non-Breach Inaccuracy, and Purchaser nevertheless elects to close this transaction, the representations and warranties made herein shall survive the Closing through but not beyond the Limitation Date (as hereinafter defined) after which such representations and warranties shall merge into the Closing Documents, provided that the aforesaid limitation shall not apply to the prosecution of any Claim made and action commenced in accordance with the other provisions of this Section 10.12 prior to the Limitation Date. Subject to the foregoing limitations, the representations, warranties, indemnities and agreements of Seller set forth in this Agreement and the Closing Documents shall survive for six (6) months following the Closing Date (the “Limitation Date”). Seller and Purchaser hereby agree that, notwithstanding any provision of this Agreement or any provision of law to the contrary, any action which may be brought for the untruth or inaccuracy of any
41


representation or warranty by Seller in this Agreement or in any of the Closing Documents (other than the Deed) shall be forever barred unless, (a) no later than the Limitation Date, Purchaser delivers to Seller a written notice of the Claim setting forth the basis for such Claim, and (b) no later than one hundred twenty (120) days after the Limitation Date, files a complaint or petition against Seller alleging such Claim in an appropriate Federal district or state court and serves the same upon Seller, in which case the Limitation Date, as to such breach, shall be extended pending resolution of such complaint or petition. Notwithstanding anything to the contrary contained in this Agreement, any Claim for the untruth or inaccuracy of any representation or warranty that Purchaser may have at any time against Seller will not be valid or effective, and Seller shall have no liability with respect thereto, unless all valid Claims exceed Twenty-Five Thousand Dollars ($25,000) in the aggregate; provided, that once such Claims meet the foregoing threshold Purchaser shall be entitled to recover all such Claims from “dollar one.” Seller’s liability for damages resulting from valid Claims for the untruth or inaccuracy of any representation or warranty by Seller shall in no event exceed three percent (3%) of the Purchase Price in the aggregate.
10.13.Further Assurances. Seller and Purchaser each covenant and agree to sign, execute and deliver, or cause to be signed, executed and delivered, and to do or make, or cause to be done or made, upon the written request of the other party, any and all agreements, instruments, papers, deeds, acts or things, supplemental, confirmatory or otherwise, as may be reasonably required by either party hereto for the purpose of or in connection with consummating the transactions described herein provided that compliance with the provision of this Section 10.13 shall not increase the liability of the complying party.
10.14.No Partnership. This Agreement does not and shall not be construed to create a partnership, joint venture or any other relationship between the parties hereto except the relationship of seller and purchaser specifically established hereby.
10.15.Time of Essence. Time is of the essence with respect to every provision hereof.
10.16.Signatory Exculpation. The signatory(ies) for Purchaser and Seller is/are executing this Agreement in his/their capacity as representative of such party and not individually and, therefore, shall have no personal or individual liability of any kind in connection with this Agreement and the transactions contemplated by it.
10.17.Rules of Construction. The following rules shall apply to the construction and interpretation of this Agreement, unless otherwise indicated by the context:
(a)Singular words shall connote the plural number as well as the singular and vice versa, and the masculine shall include the feminine and the neuter.
(b)All references herein to particular articles, sections, subsections, clauses or exhibits are references to articles, sections, subsections, clauses or exhibits of this Agreement.
(c)The table of contents and headings contained herein are solely for convenience of reference and shall not constitute a part of this Agreement nor shall they affect its meaning, construction or effect.
(d)Each party hereto and its counsel have reviewed and revised (or requested revisions of) this Agreement and have participated in the preparation of this Agreement, and therefore any usual rules of construction requiring that ambiguities are to be resolved against a particular party shall not be applicable in the construction and interpretation of this Agreement or any exhibits hereto.
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(e)Except as expressly noted herein to the contrary, time periods herein referred to shall mean the time periods as in effect, from time to time in Scottsdale, Arizona.
10.18.No Recording. Neither this Agreement nor any memorandum hereof, or any other instrument intended to give notice hereof (or which actually gives notice hereof) shall be recorded. Notwithstanding the foregoing, if the same is permitted pursuant to Applicable Laws, Purchaser shall be entitled to record a notice of lis pendens if Purchaser is entitled to seek (and is actually seeking) specific performance of this Agreement by Seller in accordance with the terms of Section 9.1. This Section shall survive the Closing or the earlier termination of this Agreement.
10.19.Facsimile or Electronic Signatures. The execution of this Agreement and all notices given hereunder and all amendments hereto, may be effected by facsimile or electronic signatures, all of which shall be treated as originals; provided, however, that the party receiving a document with a facsimile or electronic signature may, by notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile or electronic signature.
10.20.Seller. The use of the term “Seller” hereunder shall apply to Operating Lessee, Storage Owner and Fee Owner as applicable and appropriate.
10.21.Survival. The provisions of this Article X shall survive Closing. Except for provisions of this Agreement that expressly survive the Closing, and except as expressly provided in Section 10.12 hereof, all of the representations and warranties and covenants of the parties contained in this Agreement shall not survive the Closing and shall merge into the Closing Documents. Upon Closing, any breach or default of any such representations or warranties or covenants that do not expressly survive the Closing, whether known or unknown, shall be deemed waived by the Closing.
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IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be executed in their names by their respective duly authorized representatives as of the Effective Date.
SELLER:

BHR SCOTTSDALE LP,
a Delaware limited partnership

By:    BHR Scottsdale GP LLC, a Delaware limited liability company, its general partner


By:    /s/ Richard Stockton
Name: Richard Stockton
Title: President    


BHR SCOTTSDALE STORAGE LLC,
a Delaware limited liability company

By: /s/ Richard Stockton    
Name: Richard Stockton
Title: President


BHR TRS SCOTTSDALE LLC,
a Delaware limited liability company


By: /s/ Jim Plogh    
Name: Jim Plohg
Title: President


PURCHASER:

EVERGREEN ACQUISITIONS, LLC, a Delaware limited liability company


By: /s/ Joshua Peck    
Name: Joshua Peck
Title: Vice President    
Signature Page


Joinder by Braemar Hospitality Limited Partnership
Braemar Hospitality Limited Partnership, a Delaware limited partnership (“Joinder Party”) hereby irrevocably and unconditionally guarantees, as primary obligor and not as surety, to Purchaser, the full and prompt payment and performance of Seller’s obligations set forth in this Agreement, subject to the terms and conditions of this Agreement (including the limitations on the duration of, the amount of any claims, and the procedures on certain obligations as provided in Section 10.12 of this Agreement). Joinder Party agrees that Purchaser shall not be first required to enforce against Seller or any other Person any liability, obligation and/or duty guaranteed hereby before seeking enforcement thereof against Joinder Party. Suit may be brought and maintained against Joinder Party by Purchaser to enforce any liability, obligation and/or duty guaranteed hereby without joinder of any other Person. To the fullest extent permitted by Applicable Laws, Joinder Party unconditionally waives any guarantor or suretyship defenses that might otherwise be available to Joinder Party. Joinder Party hereby covenants and agrees that, from the Closing Date until the Limitation Date, Joinder Party shall maintain a net worth (determined in accordance with generally accepted accounting principles, consistently applied) of not less than Eleven Million Five Hundred Fifty Thousand Dollars ($11,550,000). The obligations of Joinder Party in this Joinder and pursuant to this Agreement shall be binding upon the successors and assigns of Joinder Party.
DATED this 23rd day of September, 2026
BRAEMAR HOSPITALITY LIMITED PARTNERSHIP,
a Delaware limited partnership

By: Braemar OP General Partner LLC


By:/s/ Richard Stockton
Name: Richard Stockton
Title: President



Signature Page


RECEIPT OF ESCROW AGENT
Kensington Vanguard National Title, as Escrow Agent, acknowledges receipt of the sum of Ten Million and No/100 Dollars $10,000,000.00 by wire transfer from Purchaser as described in Section 2.3 of the Agreement, said wire transfer to be held pursuant to the terms and provisions of the Agreement.
DATED this ___ day of September, 2026.

KENSINGTON VANGUARD NATIONAL TITLE


By:________________________________________    
Name:_____________________________________
Title:______________________________________
Date:______________________________________


Receipt of Escrow Agent


EXHIBIT 31.1
CERTIFICATION
I, Richard J. Stockton, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Braemar Hotels & Resorts Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2026

/s/ RICHARD J. STOCKTON
Richard J. Stockton
President and Chief Executive Officer



EXHIBIT 31.2
CERTIFICATION
I, Justin R. Coe, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Braemar Hotels & Resorts Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2026

/s/ JUSTIN R. COE
Justin R. Coe
Chief Accounting Officer and Principal Financial Officer



EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Braemar Hotels & Resorts Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard J. Stockton, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
 
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 5, 2026

/s/ RICHARD J. STOCKTON
Richard J. Stockton
President and Chief Executive Officer



EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Braemar Hotels & Resorts Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Justin R. Coe, Chief Accounting Officer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
 
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 5, 2026

/s/ JUSTIN R. COE
Justin R. Coe
Chief Accounting Officer and Principal Financial Officer