group pace up double digits. At Marriott Boston Long Wharf, the quarterly performance benefited from strength across all demand segments. Going into the quarter, our hotel had a solid base of group business on the books, which then allowed our operators to compress leisure rates, especially during the World Cup. While we were pleased to see summer events drive more demand than anticipated in Boston, the strength we are seeing in the market is broader based with pace up meaningfully for the remainder of the year and into 2027 with the added benefit of a better citywide calendar. Performance at our convention hotels reflected a continuation of the same themes we saw earlier in the year. San Francisco continued to perform well with rate compression in June from the World up adding to what was already a strong setup for corporate transient demand throughout the quarter. RevPar grew 16% in the quarter which was impressive but down 11 points sequentially from the first quarter. Our expectation was that the pace of growth in San Francisco for the remainder of the year would continue to moderate which is consistent with what we saw during our ownership period in July. Performance in Washington, D.C. came in better than expected as incremental transient demand offset what has been a more subdued group backdrop in the market due to lower government-related activity. As we noted at the start of the year, we expected that a weaker convention calendar in San Diego, along with our meeting space renovation, would present some headwinds for us with the biggest impact happening in the second quarter, which saw total rev par decline 8.4%. While transient demand increased 19% in the quarter, given the importance of group business to this hotel and its associated out-of-room contribution, the increased transient business was only able to offset a portion of the group shortfall looking ahead the hotel is already seeing the benefit of our new meeting space the sales team had a fantastic booking quarter achieving the hotel's highest q2 group revenue production on record with 26 million of business booked in the quarter we expect to see sequential improvement in san diego for the remainder of the year with particular strength in the fourth quarter The setup in San Diego in 2027 is much better across the market with increased citywide nights, and our hotel is also benefiting from better group patterns and our new meeting space, which is contributing to a double-digit increase in group pace for next year. On the expense side, we knew coming into the quarter that it would be our most challenging comparison of the year given our anticipated mix of business and the benefit of favorable tax appeals that were received in the prior year. Overall, our comparable portfolio excluding Ondas saw expense growth for all costs increase 4.4% on an absolute basis during the quarter or 3.6% per occupied room, which led to a 100 basis point headwind to margins. Our cost and margin performance was impacted by a shift to a higher transient mix at a couple of our larger group hotels, which kept them from running at peak efficiency. This was particularly the case at the Hilton San Diego Bayfront, which, as I noted earlier, also had meeting space under renovation for part of the quarter and had a softer backdrop across the market. If we exclude San Diego, our expense growth per occupied room was 120 basis points lower and margins expanded by 10 basis points. We continue to focus on driving labor efficiencies where possible and working with operators to mitigate growth in energy expenses and property-level G&A costs. We have also been focused on minimizing expenses at the corporate level and ensuring that our G&A costs are aligned with the needs of the company. In late July, we closed on the previously announced sale of the Hyatt Regency San Francisco realizing an attractive private market value for a low yielding asset. While we expect there will be incremental revenue growth at the hotel, we know that ongoing cost pressures in the market will elongate and create risk to the recovery in earnings. So, we took advantage of strong investor interest in the market and sold the hotel at an implied multiple that is well in excess of where we are trading and delivered to our shareholders the value of future growth today and with certainty. We have accretively deployed a portion of the sale proceeds into the discounted repurchase of common and preferred stock and expect to generate additional shareholder value and grow NAV per share through the redeployment of the remaining proceeds. We have adjusted our full-year outlook to reflect the sale of our San Francisco hotel and the better-than-expected performance in the second quarter. While many of the factors that gave rise to macroeconomic uncertainty earlier in the year and warranted a cautious view have not abated, we believe that the strength of recent trends allows us to incorporate a modest amount of incremental revenue and profitability expectations for the second half of the year in our revised outlook. While we are optimistic that if trends continue, we can deliver stronger performance, we believe it remains prudent to retain a degree of caution. In terms of the transaction market, the interest we saw in our San Francisco sale process was encouraging and reflects continued momentum. The environment looks to be more conducive to further executing our capital recycling strategy and continuing to demonstrate the value of our portfolio. In the interim, we delivered value to shareholders through an additional $70 million of accretive common and preferred stock repurchase activity so far this year. We expect to continue opportunistic repurchase activity as pricing allows, while we focus on generating profitability growth from operations and realizing the benefits of our investment projects. And with that, I'll turn the call over to Robert to give some additional details on our capital investment activity.

Thanks, Brian. As we head into the second half of 2026, we are pleased to be wrapping up a few of the larger projects we had slated for this year. In San Diego, we are now done with the renovation of the meeting space and are already seeing the benefits of that investment in our booking velocity and expect group activity to pick up in the latter part of this year and into 2027. At the Andaz Miami Beach, construction is complete at Bizarre Meet and the space looks We are starting training activities and remain on track to debut the restaurant in the fall to take advantage of the full high season in the market. We look forward to the incremental earnings and appeal that this dining destination will add to the resort. On July 1st, we converted the Ocean's Edge Resort to the Hilton Key West Resort & Marina. This change is intended to drive incremental earnings at the resort as the property benefits from Hilton's stronger distribution channels, operating expertise, and lower customer acquisition costs compared to its prior independent operating model. As part of this conversion, the resort is undergoing a focused renovation, which includes a room's refresh and some facade work. This work is being done in phases over the rest of 2026 and into 2027 and is being partially funded by the resort's new operator. As we shared with you last quarter, Wailea Beach Resort was impacted by a series of severe storms that came through the Hawaiian Islands in March and caused wind and water damage in some parts of the resort. We are now substantially complete with most of the repair work on the guest rooms and public spaces, but we'll have some roof and exterior work that will be performed later this year. As Brian noted earlier, demand at the resort has rebounded sharply this year, so we have been navigating around peak periods to minimize disruption. To date, we have received approximately $6 million in reimbursements from our insurers, including $1.2 million in business interruption associated with lost income in March and April. We are working closely with our insurers to pursue additional cost recovery for the remaining repair work. With that, I'll turn it over to Aaron. Please go ahead.

Thanks, Robert. As we noted at the top of the call, our earnings results for the second quarter came in ahead of expectations, driven by stronger leisure performance and sustained strength in corporate and group demand. Par for the total portfolio grew an impressive 9.3% in the quarter, including a 500 basis point benefit from Onda's Miami Beach. Total rev par for all hotels increased 37.7%, including a 470 basis point benefit from ONDOS. The stronger top-line performance in the quarter contributed to earnings that were ahead of our expectations, including adjusted EBITDA RE in the second quarter of $77 million, an increase of 6% combined with the added benefit of our accretive repurchase activity. Adjusted FFO per diluted share was $0.32, an increase of 14% from our balance sheet remains strong and has been further bolstered by the receipt of the sale proceeds from Hyatt Regency San Francisco. On a transaction-adjusted basis, as of Q2, was approximately $430 million, including restricted cash, and our net leverage stood at only 2.6 times trailing earnings, or 3.6 times including our preferred equity. We have no debt maturities prior to 2028, and we have restored full availability on our credit. Included in our press release this morning, are the details of our updated outlook for 2026. As part of that information, we are providing an adjusted view of our reflect the July sale of the Hyatt Regency San Francisco. These adjustments include the estimated gain from the sale and the net impact of the removal of the hotel's earnings for the remainder of the year, which are partially offset by the estimated interest income we expect to generate, assuming the net sale proceeds are retained in our cash reserves. From here, we have increased our expectations for the year to reflect the outperformance we saw in the second quarter along with a modest increase from improved near-term trends while still retaining a degree of caution for the balance of the year. Our updated guidance also includes the benefit of lower corporate GNA resulting from a management transition that occurred earlier in the year and the benefit of higher created by our accretive common and preferred stock repurchase activity based on what we see today we now expect that rev par for all 13 hotels in the current portfolio will grow between seven percent and nine percent or an increase of 175 basis points at the midpoint to a range of 239 dollars to 244 the full year benefit of ondod's miami beach which is expected to contribute approximately 450 basis points of growth at the midpoint. It's also expected to increase between 7 percent, a range of $404 to $411, with a similar 450 basis point benefit from ONDOS. As noted in our supplemental, our year-to-date REVPAR and total REVPAR growth for the current 13-hotel portfolio with a robust 10.5 percent and 9.7 percent. Based on the midpoint of our updated ranges, this would imply a mid-single-digit revenue growth expectation for the third and fourth quarters with approximately 200 basis points benefit. This revised revenue growth is now expected to translate into adjusted EBITDA RE in the range of $245 million to $255 million. Her diluted share also incorporates $1 million of lower preferred dividends as a result of our repurchase activity and is now expected to range from $0.93 to $0.98. In terms of the distribution of our EBITDA by quarter, based on the midpoint of our updated range, the first half of the year will account for roughly 58% of our full-year earnings, with the third quarter expected to contribute an additional 20% and the balance coming. As we noted in the press release this morning, we also adjusted our estimate for full-year capital expenditures to a range of $105 million to $115 million. This increase is the result of additional repair work at YLA Beach resort following the storms earlier this year, and is consistent with our commentary from last quarter in which we thought we were likely to end up in the upper end of our prior range once we had the opportunity to more fully assess the required resources. We expect a vast majority of our additional spend will be reimbursed by our insurance programs, and as Robert noted earlier, we have already received a portion of the expected proceeds. Moving to our return of capital, since the start of the year up through this week, we We have repurchased approximately $40 million of common stock at a blended price of $9.24 per share, a meaningful discount to consensus estimates of NAB. In addition, we have also purchased nearly $30 million of our preferred stock at a blended price of $20.44 per share, or an 18% discount to its liquidation value. This common and preferred stock repurchase activity has been accretive to both NAB and earnings per share. While we retain capacity and appetite for additional share repurchases, our revised 2026 outlook does not assume the benefit of additional buyback activity. In addition to our share repurchases, our Board of Directors has authorized a $0.09 per share common dividend for the third quarter and has also declared the routine distributions for our Series H and I Preferred Securities. Before we conclude our prepared remarks, I'll turn it back over to Brian for some additional thoughts.

Before we open the call to questions, I want to provide an update on our 2026 objectives. The board and management remain focused on realizing the value of our portfolio. This was demonstrated by our recent sale of the Hyatt Regency San Francisco for a nearly 20 times trailing EBITDA multiple. As we have shared in the past, San Francisco had been and was expected to be one of our better growth markets, and that growth is reflected in the high purchase price multiple. While San Francisco represented a portion of our 2026 and 2027 growth, it was only a piece of it. We continue to see and expect further growth in Miami and Wailea, and between strong 2027 group pace and more constructive citywide demand in Washington, D.C., Boston, San Diego, and San Antonio, portfolio, our focus portfolio is set to continue to deliver above industry average growth. In addition, we have proceeds from the San Francisco sale to deploy in a manner that will deliver incremental value to our shareholders. We have established a track record of recycling capital at what have proven to be attractive valuations and redeploying proceeds into the most accretive option available at the time. Given the improving transaction market, we expect to continue to selectively take advantage of strong private market values for certain assets. This would then allow us to redeploy proceeds in the manner that would result in the best return to shareholders. To date, that has been common and preferred stock repurchases. The board and management remain committed to maximizing value for shareholders and are open to pursuing any alternative that would reasonably be expected to result in value creation. With that, we can now open the call to questions. Operator, please go ahead.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. The first question comes from the line of Smeeds Rose with Citibank. Your line is now open.

Thank you. Brian, I realize it's early, but I wanted to ask you a little bit on your thoughts around um the pace of expense growth i guess through the balance of the year and how you're thinking just early on about 2027 now that you have um obviously more visibility around um that the union contracts and i think the wage hike for next year maybe it's is a little lower than what you saw this year but maybe just kind of all in can you just maybe give us some um some um high level thoughts around just kind of the pace of property level expense growth Sure.

Good morning, Smedes. So for 2026, we're trending now somewhere between, for total expenses, somewhere between 3.5% and 4% total growth and call it 2.5% on a cost per occupied room basis. Our expenses and margin in the second quarter, some of the items we talked about on the call, having the lower group percentage and more transient in a large hotel like San Diego doesn't optimize the productivity of that hotel. And so as we move into the fourth quarter, second half and fourth quarter this year, and we start to get to see the growth in group contribution, and as we go into next year, which has good pace, we'll start to see that normalized a little bit more, which should help a little bit on the cost side, on the efficiency side. Looking into next year, you're correct. We do have some of our labor agreements. We'll start to normalize down to lower levels. And then also looking at some of the larger expenses, insurance, we'll see, at least for the first half of next year, some reduction. Property taxes, while we had some credits last year, seem to be a little bit more normalized. So I could see, assuming some, you know, our growth will probably come with at least half occupancy next year, we'll continue to see some incremental variable costs rise. But I would guess with labor being the biggest piece of it, we'll start to see our expense moderate down to the lower end of that range and maybe even a little below that.

Great. And I just wanted to clarify something. You took your EBITDA up by $8 million for the year. So does that include about $4 million of business interruption insurance that was more than what your FIRE estimate was?

This is Aaron. Thanks for the question. So, our revision to the full year number was, I think, three components. One was a portion of the performance that we saw in Q2 was fully carried through, and then we also had a modest amount of, call it a million dollars or so, of incremental outlook for the back half of the year that's factored in. And then the third piece would be, as we noted in our press release, lower expected GNA for the year of about a million dollars as well. So those three items account for the $8 million in incremental EBITDA that we expect for this year. What's in the numbers so far from a business interruption perspective is just the $1.2 million that we recognized in the quarter. We're continuing to work with our insurers to vet the remaining coverage for both property damage and any incremental business interruption, but there's nothing further assumed in the number from that perspective.

Thank you very much.

The next question comes from the line of Peter Lasky with Evercore ISI. Your line is now open.

Yeah. Hi. Thanks for taking the question. Brian, could you just talk about, you know, the outer room spend trends that you're seeing? And I guess in the first half, room revenue growth was higher than total revenue, but the guidance would imply that maybe that flips in the second half. So what's driving that, and what have you maybe seen so far in the third quarter?

Yeah, good morning. From an out-of-room spend, we've seen it throughout last year and into this year be very stable and growing in various hotels. The disconnect between REV PAR growth and total REV PAR growth this year, or in the quarter, is really back to San Diego. And so while we saw, and we knew going into the year that we were going to have a weaker, especially first half group-wise in San Diego. So having a hotel that's 1,200 rooms, that's a very large group box, have a larger percentage of its business transient where that transient spend is nowhere near what the group customer spend is, that's where we're seeing the flip. And as we get into the second half of this year, the strength really in San Diego starts is really fourth quarter. And then looking into next year with good pace, we'll see that flip.

Got it. Appreciate that. And then just quickly on the conversion in Key West. I know it's only been a month, but maybe just walk us through how that conversion process went. You know, if you're seeing any early wins or, you know, any changing booking patterns, realizing it's kind of the offseason there. But just things that you've learned thus far and kind of what do you expect?

Yeah, you're right. We are in early days and we have some renovation going on at the same time. So that's going to not we're not going to see the optimal output yet. But we have seen some actually some very promising and interesting observations early on. One, we are seeing ADR lift, and we're also seeing the booking window expand a little bit more, and we attribute that to the brand Hilton's booking engine and more customers booking through brand.com than they would through a shorter-term window through an OTA. So, we're seeing some very promising, you know, top-line benefits there. And then one other ancillary benefit we're seeing is with having the brand and the purchasing platform of the brand, we are seeing some benefits on some of our costs and the purchasing power of the brand uh you know being able to acquire and procure things at a at a lower cost than we were with a smaller operator thank you the next question comes from the line of patrick shoals with truest your line is now open um great thank you uh good morning good afternoon everyone

I have a bit of a three-part question here regarding the changes that some of the brands Hilton with their RISE program and Marriott, whatever they're calling it. One, are you currently seeing any financial impact on that or what are your expectations around that? That's the first part of the question. And second is, specifically within that, are you seeing differences between the two programs that the companies are rolling out, that being Hilton versus Marriott? And then third, with your Montage and Four Seasons brands, now I know they don't have guest loyalty programs or credit cards, but are they doing anything similar to what Hilton or Marriott are doing as far as fee relief? Thank you.

OK, thank you, Patrick. So a lot there, yes, a lot there. But let's let's unpack it from the brands. We we are seeing various initiatives come out that are lessening the either the percentage of the cost load. Not all of them necessarily would apply to our assets and some of them are more limited service based or focused. But we are seeing some sales and marketing and some other costs that are benefiting us. Our expectation is that over the next several years that there should be a pretty steady increase in some of these savings that the brands are going to be able to recognize through various technology initiatives. so we're we are expecting and hopeful that this is just the early stage of this I I'm not gonna I think it's not it's not fair to compare one to the other on this but I think both the brands that you you mentioned are taking a very good first step towards finding efficiencies and then sharing them with with the owners. As far as the luxury brands, I have not heard of any of those programs yet. Our focus really, especially in wine country, is just on maximizing the productivity and working with with the brands to streamline operations which we've been very successful at and we think that there is more to do there okay I appreciate the color thank you the next question comes from the line of Michael Bellisario with Baird your line is now open thanks good morning guys Brian it's a two-parter here for you it's capital allocation and transactions one what are you

seeing in terms of investment opportunities and where our deals may be pricing relative to your expectations or underwriting? And then second, you sort of addressed it in your closing remarks, but sort of how do you balance that potential capital deployment with maximizing value and continuing to close the valuation discount? Thanks.

On the transaction environment, we're we're definitely seeing you know volume volume pick up I think earlier in the year it was more luxury focus and so I think that that is something that you know has starting to broaden out a little bit more where we're starting to see not just luxury or big large super tanker hotels on the market and so you We're seeing more in the $75 to $150 million range of full service in primary or secondary markets. So more of that is on the market. I think that when we look at those type of hotels, there are definitely more bidders out there. And we, from a pricing standpoint, we still see a bit of a disconnect of where things are getting done just because of the competitive nature of a marketed process. And so, you know, more interesting, but not where they need to be from our standpoint at this time. And, you know, we have been very active over the last several years of recycling capital and trying to find the best, you know, redeployment of that on a risk-adjusted return basis. And when we look at the transaction market improving now, I think that this is a time where we really have to remain disciplined. And so as we look at having proceeds that have not been fully deployed from the sale of San Francisco, our focus still is to repurchase at a discount to NAV because we believe that compared to redeploying into an asset at current pricing, that provides the best return to our shareholders, especially when we can monetize a low-yielding asset into the market and get paid for that future growth while eliminating the risk of getting there. So I think that we still trade. We believe it into consensus and to where we believe is a discount to NAV. And repurchase is our best alternative we see at this time. As stock prices change and valuations change, and maybe more if the transaction market improves, maybe that changes. But where we sit right now, we think that that is somewhat of a continuation of what we've been doing, but we think it's the best spot for us.

Helpful. Thank you.

The next question comes from the line of jack armstrong with wells fargo your line is now open hey good afternoon and thanks for taking the question you put in a really strong group pace the back half of the year and into 2027 can you break out some of the markets where you're seeing that strength and maybe provide that pace number externally as well um sure looking at the beginning of this year it was always a story of of the the back half of this year from a group pace perspective and that was You know, in our larger hotels, in our largest hotel of San Diego, it was the case. When we get into, you know, the fourth quarter and into 2027, we start to see really broad-based strength across the larger group boxes. And, you know, it's not just group. It's transient pace is extremely strong for, you know, it's not as long of a window. but for the next six months is what we have, you know, a view on. Transient pace, you know, portfolio is up 22 percent, a combination of room nights and rate compared to last year. And it is across hotel types. Urban is up 25 percent. Conventions are up 12 percent. Resorts are up 27 percent. So it really is broad based. And then when you layer on top of that, The group side and important hotels to our portfolio like San Diego, those really start to contribute into the second half, specifically the fourth quarter. And then into next year, while we haven't given a full year pace for 27, we do have positive pace in 27 and into 28. So, you know, we have a more favorable citywide calendar going into next year, too, with several of our major markets, D.C., San Antonio, San Diego, and Boston all having stronger citywide calendars also. So, you know, you put all that together, and when you look at the specifics of our portfolio and the market that our portfolio, our hotels are in, you know, not only is it the second half of this year, but it really is a multi-year story looking at strength.

Helpful. Thank you.

The next question comes from the line of Michael Hirsch with J.P. Morgan. Your line is now open.

Hi, thank you for taking my question. On your EBITDA guidance, you mentioned 22% of full-year EBITDA would be in the fourth quarter, while also noting Andaz and San Diego should have outsized fourth quarters. So would you view your second half or implied fourth quarter guidance as conservative here?

Hey, Micah, Darren. You know, I think as we look at the back half of the year, certainly, you know, what's implied by our guidance is, you know, that we – the growth was somewhat front half-loaded. And so, that's what we've seen, certainly, as you look through the, you know, the double-digit REVPAR growth that we've seen year-to-date. Our expectation for the remainder of the year is that we move more into a mid-single-digit REVPAR growth environment. You know, we've been pleased with what we've seen relative to, you know, actual performance to our expectations. I wouldn't call our rest of the year guidance conservative. I would say based on everything that we've seen and what we know, it's a reasonable expectation. But we'll see how things play out. If we look at what we've seen so far in July, I would say we've been surprised a bit to the upside, which is good. So that bet is one of the months. But we'll see how the remaining five transpire. But I think it's our reasonable best guess of what we think is going to happen as of now.

You have to look at the total amounts of business for each quarter, too, and so we have third quarter tends to be our lowest quarter, and second quarter is one of our largest. So, you know, when you look at that, I think that, you know, if we see a continuation, and we are absolutely seeing very strong production for not only future years group bookings, but, you know, I think all but one of our hotels had more in the year, for the year bookings in the second quarter than we had last year. And so we're also seeing short-term pickup. And then from the transient side, that remains very strong. If these trends continue, there's definitely upside we can see. I think that what we saw in the second quarter and moving the guidance up to incorporate some additional earnings in the third and fourth quarter is a step forward that shows our confidence in our performance. And, you know, again, we want to make sure that we are, you know, with all of the external headwinds that can be out there, that we do remain cautious, too, and have some level of conservatism when we're looking forward.

Thank you.

The next question comes from the line of Chris Darling with Green Street. Your line is now open.

Thanks. Brian, as you think about deploying your dry powder, what's the latest thinking around the Montage Preferred Security, just given the rising coupon there?

It is a freely prepayable option that we weigh against the other alternatives we have to deploy capital. So you're completely right. It does increase, and so there will be a point in time where the yield on it will make it more attractive than some other options. So we have a menu of where we can deploy, And I think that we have, you know, at least historically proven to not only just, you know, repurchase common, but preferred and other securities. So, you know, it's out there as an option and it's something that we'll evaluate. But we do have flexibility on it and we can redeem a portion of it or all of it. And it's it's it's up to us the cadence that we want to have, how much we want to redeem.

OK, understood. And then shifting gears back to D.C., you know, I know you spoke about the better citywide calendar in the next year. Just putting that aside, what's the opportunity in your mind for that property to continue to take share on a relative basis in the market? I'm just wondering, irrespective of the broader market movements, if there's sort of relative upside there as well.

Yeah, I mean, D.C. has been a difficult group market this year, but we have seen considerable pickup on the transient side. Transient pace is 30% going forward. And even with it being a challenging group market, our group production was fantastic during the second quarter. And so we're seeing future bookings from a group side. We're seeing future transient bookings. And the transient bookings, I really attribute to the brand change or the, yeah, going from the Renaissance to the West End. Because if you look at, if you just go back on a full year basis, so in 2019 as a Renaissance, the transient, the hotel's transient rate index was 106. At the end of last year, the transient rate index was 123. The occupancy, transient occupancy index went from 89 to 119. If you look at just quarter over quarter and the total amounts will change quarter to quarter based on each quarter, transient rate index was 117 to 100 and occupancy was 111 to 94. So the answer is, is that transient business has been better in the market, and our share of that business continues to improve based on the Western flag and the renovation and everything that we've done to that hotel. it's you know it is a it has the notoriety of the brand it's a great transient box it's a great location it has probably one of the best you know gyms in the city and like it it's just a very um you know it was always a really good group hotel and now it's a good complete hotel thank you for the time that is all the time we have for the q a period today

I will now turn the call back to Brian Gillia for closing remarks.

Thank you, everyone, for your interest in the company. And we look forward to a very strong second half and meeting with many of you over the coming months at various conferences.

This concludes today's call. Thank you for attending. You may now disconnect.