Company: DRH-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0001298946-25-000077
Chunk: 98

Company: DiamondRock Hospitality Co
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 8
Chunk 98
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 in our business. Volatility in our financial performance from the seasonality of the lodging industry could adversely affect our financial condition and results of operations. 

Supplemental U.S. Federal Income Tax Considerations

The following discussion supplements and updates the disclosures under the heading “Material U.S. Federal Income Tax Considerations” in the prospectus dated August 5, 2024, contained in our Registration Statement on Form S-3 (File No. 333-281236) filed with the SEC on August 5, 2024 (the “S-3 Tax Disclosure”) and as supplemented by the disclosures under the headings “Supplemental Material U.S. Federal Income Tax Considerations” and “Risk Factors” on the Form 10-K filed with the SEC on February 28, 2025 (together with the S-3 Tax Disclosure, the “Existing Tax Disclosure”). Capitalized terms herein that are not otherwise defined shall have the same meaning as when used in the Existing Tax Disclosure.

On July 4, 2025, H.R. 1, informally known as the One Big Beautiful Bill Act (the “OBBB”), was enacted.  The OBBB makes significant changes to the Code, including some provisions of the Code that affect the taxation of REITs and their investors.  In particular,

•For taxable years beginning on or after January 1, 2026, the OBBB increased the allowable percentage of a REIT’s assets that can consist of  securities of taxable REIT subsidiaries, providing that not more than 25% (increased from 20%) of the gross value of a REIT’s assets may be represented by securities of one or more taxable REIT subsidiaries. 

•The OBBB permanently extended the pass-through qualified business income deduction, generally allowing individuals to deduct 20% of the aggregate amount of ordinary REIT dividends distributed by a REIT.  This deduction was due to expire for tax years beginning after December 31, 2025.  

Additionally, the OBBB made certain changes to provisions of the Code regarding “global intangible low-tax income” or “GILTI.” Although in the past we may have been subject to those rules, we no longer have any non-U.S. taxable REIT subsidiaries and do not currently expect to be subject to the regime in the foreseeable future. Accordingly, the section of the S-3 Tax Disclosure entitled “Global Intangible Low-Tax Income” is hereby deleted.

To the