# EDGAR Filing Document

**Accession Number:** 0001301236
**File Stem:** 0001193125-26-157013
**Filing Date:** 2026-4
**Character Count:** 784183
**Document Hash:** 7959708c5079282316ba4c59aa3e715e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-157013.hdr.sgml**: 20260415

**ACCESSION NUMBER**: 0001193125-26-157013

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 107

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260415

**DATE AS OF CHANGE**: 20260415

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Sotherly Hotels Inc.
- **CENTRAL INDEX KEY:** 0001301236
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE INVESTMENT TRUSTS [6798]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 000000000
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-32379
- **FILM NUMBER:** 26864271

**BUSINESS ADDRESS:**
- **STREET 1:** 306 SOUTH HENRY STREET
- **STREET 2:** SUITE 100
- **CITY:** WILLIAMSBURG
- **STATE:** VA
- **ZIP:** 23185
- **BUSINESS PHONE:** 757-229-5648

**MAIL ADDRESS:**
- **STREET 1:** 306 SOUTH HENRY STREET
- **STREET 2:** SUITE 100
- **CITY:** WILLIAMSBURG
- **STATE:** VA
- **ZIP:** 23185

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Sotherly Hotel Inc.
- **DATE OF NAME CHANGE:** 20130416

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MHI Hospitality CORP
- **DATE OF NAME CHANGE:** 20040823
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SOTHERLY HOTELS LP
- **CENTRAL INDEX KEY:** 0001313536
- **STANDARD INDUSTRIAL CLASSIFICATION:** HOTELS & MOTELS [7011]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 000000000
- **STATE OF INCORPORATION:** DE

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-36091
- **FILM NUMBER:** 26864272

**BUSINESS ADDRESS:**
- **STREET 1:** 306 SOUTH HENRY STREET
- **STREET 2:** SUITE 100
- **CITY:** WILLIAMSBURG
- **STATE:** VA
- **ZIP:** 23185
- **BUSINESS PHONE:** 757-229-5648

**MAIL ADDRESS:**
- **STREET 1:** 306 SOUTH HENRY STREET
- **STREET 2:** SUITE 100
- **CITY:** WILLIAMSBURG
- **STATE:** VA
- **ZIP:** 23185

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MHI HOSPITALITY LP
- **DATE OF NAME CHANGE:** 20050106

?xml version='1.0' encoding='ASCII'? 10-K

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, DC 20549**

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**FORM** 10-K

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**(Mark One)**

☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended** December 31**,** 2025

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from to** 

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SOTHERLY HOTELS INC.

**(Exact name of registrant as specified in its charter)**

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| | | |
|:---|:---|:---|
| maryland | 001-32379 | 20-1531029 |
| **(State or Other Jurisdiction of**<br>**Incorporation or Organization)** | **(Commission File Number)** | **(I.R.S. Employer**<br>**Identification No.)** |

---

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SOTHERLY HOTELS LP

**(Exact name of registrant as specified in its charter)**

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| | | |
|:---|:---|:---|
| delaware | 001-36091 | 20-1965427 |
| **(State or Other Jurisdiction of**<br>**Incorporation or Organization)** | **(Commission File Number)** | **(I.R.S. Employer**<br>**Identification No.)** |

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20 Huling Avenue

Memphis**,** Tennessee 38103

**(Address of Principal Executive Officers) (Zip Code)**

901**-**346-8800

**(Registrant's telephone number, including area code)**

**Securities registered pursuant to Section 12(b) of the Act:**

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| | | | |
|:---|:---|:---|:---|
| **<u>Registrant</u>** | **<u>Title of Each Class</u>** | **<u>Trading Symbols</u>** | **<u>Name of Each Exchange on Which Registered</u>** |
| **Sotherly Hotels Inc.** | 8.0% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value | SOHOB | The NASDAQ Stock Market LLC |
| **Sotherly Hotels Inc.** | 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value | SOHOO | The NASDAQ Stock Market LLC |
| **Sotherly Hotels Inc.** | 8.25% Series D Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value | SOHON | The NASDAQ Stock Market LLC |

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**Securities registered pursuant to Section 12(g) of the Act: None**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.

**Sotherly Hotels Inc.** Yes ☐ No ☒ **Sotherly Hotels LP** Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

**Sotherly Hotels Inc.** Yes ☐ No ☒ **Sotherly Hotels LP** Yes ☐ No ☒

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.

**Sotherly Hotels Inc.** Yes ☒ No ☐ **Sotherly Hotels LP** 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).

**Sotherly Hotels Inc.** Yes ☒ No ☐ **Sotherly Hotels LP** 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 emerging growth company. (See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934).

**Sotherly Hotels Inc.**

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☒ Smaller Reporting Company ☒ Emerging growth company ☐

**Sotherly Hotels LP**

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☒ Smaller Reporting Company ☐ Emerging growth company ☐

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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 has filed a report on and attestation to its management's assessment of the effectiveness of internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

**Sotherly Hotels Inc**. Yes ☐ No ☒ **Sotherly Hotels LP** Yes ☐ No ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

**Sotherly Hotels Inc**. Yes ☐ No ☒ **Sotherly Hotels LP** Yes ☐ No ☒

The aggregate market value of common stock held by non-affiliates of Sotherly Hotels Inc. as of June 30, 2025, the last business day of Sotherly Hotels Inc.'s most recently completed second fiscal quarter, was approximately $15,881,126 based on the closing price quoted on the NASDAQ® Stock Market.

As of April 1, 2026, there were 100 shares of Sotherly Hotels Inc.'s common stock issued and outstanding.

Auditor Firm ID: 677 Auditor Name: Cherry Bekaert LLP Auditor Location: Richmond, Virginia <br> Auditor Firm ID: 686 Auditor Name: Forvis Mazars, LLP Auditor Location: Jacksonville, Florida

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**SOTHERLY HOTELS INC.**

**SOTHERLY HOTELS LP**

**INDEX**

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| | | |
|:---|:---|:---|
|  |  | **Page** |
|  | &nbsp;&nbsp;&nbsp;[<u>PART I</u>](#part_i) |  |
| Item 1. | &nbsp;&nbsp;&nbsp;<u>Business</u> | 7 |
| Item 1A. | &nbsp;&nbsp;&nbsp;[<u>Risk Factors</u>](#item_1a_risk_factors) | 18 |
| Item 1B. | &nbsp;&nbsp;&nbsp;[<u>Unresolved Staff Comments</u>](#item_1b_unresolved_staff_comments) | 41 |
| Item 1C. | &nbsp;&nbsp;&nbsp;[<u>Cybersecurity</u>](#item_1c) | 41 |
| Item 2. | &nbsp;&nbsp;&nbsp;[<u>Properties</u>](#item_2_properties) | 43 |
| Item 3. | &nbsp;&nbsp;&nbsp;[<u>Legal Proceedings</u>](#item_3_legal_proceedings) | 43 |
| Item 4. | &nbsp;&nbsp;&nbsp;[<u>Mine Safety Disclosure</u>](#item_4_mine_safety_disclosure) | 43 |
|  | &nbsp;&nbsp;&nbsp;[<u>PART II</u>](#part_ii) |  |
| Item 5. | &nbsp;&nbsp;&nbsp;[<u>Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities</u>](#item_5_market_for_registrants_common_equ) | 44 |
| Item 6. | &nbsp;&nbsp;&nbsp;[<u>\[Reserved\]</u>](#item_6_selected_financial_data) | 46 |
| Item 7. | &nbsp;&nbsp;&nbsp;[<u>Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#item_7_managements_discussion_analysis_f) | 47 |
| Item 7A. | &nbsp;&nbsp;&nbsp;[<u>Quantitative and Qualitative Disclosures About Market Risk</u>](#item_7a_quantitative_qualitative_disclos) | 61 |
| Item 8. | &nbsp;&nbsp;&nbsp;[<u>Financial Statements and Supplementary Data</u>](#item_8_financial_statements_supplementar) | 62 |
| Item 9. | &nbsp;&nbsp;&nbsp;[<u>Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</u>](#item_9_changes_in_disagreements_with_acc) | 62 |
| Item 9A. | &nbsp;&nbsp;&nbsp;[<u>Controls and Procedures</u>](#item_9a_controls_procedures) | 63 |
| Item 9B. | &nbsp;&nbsp;&nbsp;[<u>Other Information</u>](#item_9b_or_information) | 64 |
| Item 9C. | &nbsp;&nbsp;&nbsp;[<u>Disclosure Regarding Foreign Jurisdictions that Prevent Inspections</u>](#item_9c) | 64 |
|  | &nbsp;&nbsp;&nbsp;[<u>PART III</u>](#part_iii) |  |
| Item 10. | &nbsp;&nbsp;&nbsp;[<u>Information about our Directors, Executive Officers and Corporate Governance</u>](#item_10_directors_executive_ficers_corpo) | 65 |
| Item 11. | &nbsp;&nbsp;&nbsp;[<u>Executive Compensation</u>](#item_11_executive_compensation) | 69 |
| Item 12. | &nbsp;&nbsp;&nbsp;[<u>Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</u>](#item_12_security_ownership_certain_benef) | 78 |
| Item 13. | &nbsp;&nbsp;&nbsp;[<u>Certain Relationships and Related Transactions, and Director Independence</u>](#item_13_certain_relationships_related_tr) | 80 |
| Item 14. | &nbsp;&nbsp;&nbsp;[<u>Principal Accountant Fees and Services</u>](#item_14_principal_accountant_fees_servic) | 83 |
|  | &nbsp;&nbsp;&nbsp;[<u>PART IV</u>](#part_iv) |  |
| Item 15. | &nbsp;&nbsp;&nbsp;[<u>Exhibits and Financial Statement Schedules</u>](#item_15_exhibits_financial_statement_sch) | 85 |

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**EXPLANATORY NOTE**

We refer to Sotherly Hotels Inc. as the "Company" or "Sotherly", Sotherly Hotels LP as the "Operating Partnership," the Company's common stock as "common stock," the Company's preferred stock as "preferred stock," the Operating Partnership's partnership interests as "partnership units," and the Operating Partnership's preferred interests as the "preferred units." References to "we" and "our" mean the Company, its Operating Partnership and its subsidiaries and predecessors, collectively, unless the context otherwise requires or where otherwise indicated.

The Company is a real estate investment trust, or a "REIT." It conducts virtually all of its activities through the Operating Partnership and is its sole general partner. The Operating Partnership holds substantially all of the Company's assets. The partnership agreement provides that the Operating Partnership will assume and pay when due, or reimburse the Company for payment of, all costs and expenses relating to the ownership and operations of, or for the benefit of, the Operating Partnership. The partnership agreement of the Operating Partnership further provides that all expenses of the Company are deemed to be incurred for the benefit of the Operating Partnership. The Company does not conduct business itself, other than (a) acting as the sole general partner of the Operating Partnership, (b) issuing public equity from time to time, and (c) guaranteeing certain unsecured debt of the Operating Partnership and certain of its subsidiaries and affiliates. The Operating Partnership holds substantially all of the assets of the business, directly or indirectly. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances made by the Company, which are generally contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the business through the Operating Partnership's operations, incurrence of indebtedness, and issuance of partnership units to third parties.

This report combines the Annual Reports on Form 10-K for the period ended December 31, 2025 of the Company and the Operating Partnership. We believe combining the annual reports into this single report results in the following benefits:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•combined reports better reflect how management and investors view the business as a single operating unit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•combined reports are more efficient for the Company and the Operating Partnership and result in savings of time, effort and expense; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Item 5 – Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – selected portions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Item 9A – Controls and Procedures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Consolidated Financial Statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the following Notes to Consolidated Financial Statements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Note 7 – Preferred Stock and Units;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Note 8 – Common Stock and Units;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Note 13 – Earnings (Loss) per Share and per Unit; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Certifications of CEO and CFO Pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.

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**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**

Information included and incorporated by reference in this Form 10-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our current strategies, expectations and future plans, are generally identified by our use of words, such as "intend," "plan," "may," "should," "will," "project," "estimate," "anticipate," "believe," "expect," "continue," "potential," "opportunity," and similar expressions, whether in the negative or affirmative, but the absence of these words does not necessarily mean that a statement is not forward looking. All statements regarding our expected financial position, business and financing plans are forward-looking statements.

Factors which could have a material adverse effect on the Company's future operations, results, performance and prospects include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•national and local economic and business conditions that affect occupancy rates and revenues at our hotels and the demand for hotel products and services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks associated with the hotel industry, including competition and new supply of hotel rooms, increases in wages, energy costs and other operating costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks associated with the level of our indebtedness and our ability to meet covenants in our debt agreements, and, as necessary, to refinance or seek an extension of the maturity of such indebtedness or further modification of such debt agreements on similar or more favorable terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks associated with adverse weather conditions, including hurricanes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•impacts on the travel industry from pandemic diseases, including COVID-19;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the availability and terms of financing and capital and the general volatility of the securities markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•management and performance of our hotels;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks associated with maintaining our system of internal controls;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks associated with the conflicts of interest of the Company's officers and directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks associated with redevelopment and repositioning projects, including delays and cost overruns;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•supply and demand for hotel rooms in our current and proposed market areas;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks associated with our ability to maintain our franchise agreements with our third party franchisors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to acquire additional properties and the risk that potential acquisitions may not perform in accordance with expectations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to successfully expand into new markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•legislative/regulatory changes, including changes to laws governing taxation of real estate investment trusts ("REITs");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Company's ability to maintain its qualification as a REIT and the limitations imposed on the Company's business due to such maintenance; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to maintain adequate insurance coverage.

Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore there can be no assurance that such statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the results or conditions described in such statements or the objectives and plans of the Company will be achieved.

Additional factors that could cause actual results to vary from our forward-looking statements are set forth under the Section titled "Risk Factors" in Item 1A of this annual report.

These risks and uncertainties should be considered in evaluating any forward-looking statement contained in this report or incorporated by reference herein. All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section. We undertake no

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obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report, except as required by law. In addition, our past results are not necessarily indicative of our future results.

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**PART I**

**Item 1. *Business***

**Organization**

Sotherly Hotels Inc. (the "Company") is a lodging real estate investment trust, or REIT, that was formed in August 2004 to own, acquire, renovate and reposition full-service, primarily upscale and upper-upscale hotel properties located in primary markets in the mid-Atlantic and southern United States. On December 21, 2004, the Company successfully completed its initial public offering and elected to be treated as a self-advised REIT for federal income tax purposes.

On February 12, 2026, the Company, KW Kingfisher LLC, a Delaware limited liability company ("Parent"), and Sparrows Nest LLC, a Maryland limited liability company ("Merger Sub"), completed the transactions (the "Merger") contemplated by the Agreement and Plan of Merger (the "Merger Agreement"), dated as of October 24, 2025, by and among the Company, Parent and Merger Sub. Defined terms used herein but not defined shall have the meaning set forth in the Merger Agreement. Pursuant to the Merger Agreement, at the closing, Merger Sub merged with and into the Company. Upon completion of the Merger, the Company survived as a wholly owned subsidiary of Parent (and the surviving entity, the "Surviving Company"), the separate existence of the Merger Sub ceased and Sotherly Hotels LP, a Delaware limited partnership (the "Operating Partnership"), became an indirect subsidiary of Parent.

As contemplated by the Merger Agreement, the Articles of Merger were filed with the State Department of Assessments and Taxation of Maryland, and the Merger was effective at 8:45 am Eastern time on February 12, 2026 (the "Effective Time").

As a result of the Merger, in accordance with the terms and conditions of the Merger Agreement, at the Effective Time, each share of common stock, par value $0.01 per share of the Company (the "Company Common Stock") issued and outstanding immediately before the Effective Time (other than Cancelled Shares) was automatically converted into the right to receive an amount in cash equal to $2.25 per share, without interest (the "Per Company Share Merger Consideration," and in the aggregate, the "Merger Consideration"); (B) each share of the Company's 8.0% Series B Cumulative Redeemable Perpetual Preferred Stock, 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock, and 8.25% Series D Cumulative Redeemable Perpetual Preferred Stock (collectively, the "Company Preferred Stock") issued and outstanding immediately before the Effective Time shall be entitled to receive the Merger Consideration if the holder thereof elects to convert, subject to the terms and conditions contained in the Company's charter (including any articles supplementary) (the "Charter"), including the share cap as defined therein, their respective shares of Company Preferred Stock into Company Common Stock after the closing of the Merger; and (C) the Limited Partnership Interests held by the limited partners (other than the Company) were purchased by an affiliate of Parent for the same per share Merger Consideration that each share of Company Common Stock receives pursuant to the Merger Agreement.

In connection with the Merger, the Company's common stock ceased trading on the NASDAQ® Global Market ("Nasdaq") Nasdaq on February 12, 2026, and Nasdaq filed a Form 25 on February 13, 2026, to affect the delisting and deregistration of the Company's common stock under Section 12(b) of the Exchange Act. Due to the Company Preferred Stock, the Company will continue reporting with the SEC under the Exchange Act.

Prior to the Merger, the Company was self-managed and administered. Following the Merger, the Company is externally managed and administered. The Company conducts its business through Sotherly Hotels LP, its operating partnership (the "Operating Partnership"), of which the Company is the general partner. As of the filing date, the Company owns more than 99.9% of the general and limited partnership units in the Operating Partnership. Another individual owns the remaining limited partnership units in the Operating Partnership.

As of December 31, 2025, our portfolio consisted of ten full-service, primarily upscale and upper-upscale hotels located in seven states with an aggregate of 2,786 hotel rooms, and interests in two condominium hotels and their associated rental programs. All of our hotels are wholly-owned by subsidiaries of the Operating Partnership and are managed on a day-to-day basis by Schulte Hospitality Group, Inc. ("Schulte") as of February 12, 2026 pursuant to hotel management agreements entered into in connection with the Merger (the "Schulte Management Agreements"). Our portfolio is concentrated in markets that we believe possess multiple demand generators and have significant barriers to entry for new product delivery, which are important factors for us in identifying hotel properties that we expect will be capable of providing strong risk-adjusted returns.

In order for the Company to qualify as a REIT, it cannot directly manage or operate our hotels. Therefore, we lease our wholly-owned hotel properties to entities that we refer to as our "TRS Lessees", which are wholly-owned subsidiaries of MHI Hospitality TRS Holding, Inc. ("MHI Holding", and collectively with the TRS Lessees, the "MHI TRS Entities"). The MHI TRS Entities, in turn, have engaged Schulte, which is an eligible independent contractor, to manage the day-to-day operations at our hotels. MHI Holding is a taxable REIT subsidiary ("TRS") for federal income tax purposes.

Our corporate office is located at 20 Huling Avenue, Memphis, Tennessee 38103. Our telephone number is (901) 346-8800.

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**Our Properties**

As of December 31, 2025, our hotels were located in Florida, Georgia, Maryland, Virginia, North Carolina, Pennsylvania and Texas. Seven of these hotels operate under franchise agreements with major hotel brands, and three are independent hotels. We also own the hotel commercial condominium units of the Lyfe Resort & Residences and Hyde Beach House Resort & Residences condominium hotels. See Item 2 in Part I and Item 7 in Part II of this Form 10-K for additional detail on our properties.

**Our Strategy and Investment Criteria** 

Following the Merger, our strategy is focused on maximizing the performance of our existing portfolio of full-service, primarily upscale and upper-upscale hotels through disciplined operations, targeted capital investment and active balance sheet management. We believe our portfolio benefits from scale and diversification across Southeastern and Mid-Atlantic markets, and we intend to leverage these attributes to generate durable cash flow and improve long-term asset value.

We have transitioned day-to-day hotel management to Schulte, a scaled national hotel operator, to work towards advancing operational discipline and enhancing property-level execution. We expect this transition to support improved cost controls and operating efficiencies through initiatives such as disciplined expense management, centralized systems and procurement strategies, including insurance procurement. We also believe that our post-Merger ownership and governance structure enables greater organizational efficiency and a more agile decision-making framework. Through these efforts, we hope to reduce overhead and redirect cash flow toward property-level initiatives and balance sheet priorities.

A central component of our strategy is implementing a guest-facing capital reinvestment program designed to improve competitive positioning, address deferred maintenance and generate attractive returns on invested capital. We expect this program to include ROI-driven improvements across the portfolio, including renovations of guestrooms and public spaces and other projects intended to improve guest experience and support revenue growth. We also continually evaluate the Company with the objective of optimizing long-term performance and stockholder value. Where appropriate, we may seek to divest non-core or lower-contributing assets and redeploy proceeds to reduce leverage and fund value-enhancing reinvestment initiatives. Our reinvestment decisions are guided by a focus on return-driven capital allocation and disciplined underwriting, including (i) projects expected to enhance revenue, margins and asset value, (ii) maintenance of brand and franchise standards where applicable, (iii) initiatives that improve operational efficiency and (iv) maintaining appropriate liquidity and financial flexibility under our debt agreements.

We may grow through acquisitions of full-service, upscale and upper-upscale hotel properties located in the primary markets of the southern United States. The Company may also opportunistically acquire hotels throughout other regions of the United States. In the event of growth, we expect our portfolio will expand through disciplined acquisitions of hotel properties, and we believe that we will be able to source significant external growth opportunities through our management team's extensive network of industry, corporate and institutional relationships. Current market conditions and the terms of our loan agreements limit our ability to pursue a growth strategy, but as economic conditions improve and demand and consumer confidence increase, we intend to position the Company to execute on our growth strategy. We are not subject to limitations on the concentration of investments in any one location or facility type. Our investment criteria are further detailed below:

Our investment criteria are further detailed below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Geographic Growth Markets:* Our growth strategy focuses on the major markets in the Southern region of the United States. Our management team remains confident in the long-term growth potential associated with this part of the United States. We believe these markets have, during the Company's and our predecessors' existence, been characterized by population growth, economic expansion, growth in new businesses and growth in the resort, recreation and leisure segments. We will continue to focus on these markets, including coastal locations, and will investigate other markets for acquisitions only if we believe these new markets will provide similar long-term growth prospects. Sotherly may also opportunistically acquire hotels throughout the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Full-Service Hotels:* Our acquisition strategy focuses on the full-service hotel segment. Our full-service hotels fall primarily under the upscale to upper-upscale categories and include such brands as Doubletree by Hilton, Tapestry Collection by Hilton, and Hyatt Centric, as well as independent hotels. We may also acquire commercial unit(s) within upscale to upper-upscale condominium hotel projects, allowing us to establish and operate unit rental programs. We do not own limited service or extended-stay hotels. We believe that full-service hotels, in the upscale to upper-upscale categories, will outperform the broader U.S. hotel industry, and thus offer the highest returns on invested capital. Sotherly may also opportunistically acquire hotels outside of the full-service, upscale or upper-upscale category.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Significant Barriers to Entry:* We intend to execute a strategy that focuses on the acquisition of hotels in prime locations with significant barriers to entry.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Proximity to Demand Generators:* We seek to acquire hotel properties located in central business districts for both leisure and business travelers within the respective markets, including large state universities, airports, convention centers, corporate headquarters, sports venues and office buildings. We seek to be in walking locations that are proximate to the markets' major demand generators.

We generally have a bias to acquiring underperforming hotels, which we typically define as those that are poorly managed, suffer from significant deferred maintenance and capital investment and that are not properly positioned in their respective markets. In pursuing these opportunities, we hope to improve revenue and cash flow and increase the long-term value of the underperforming hotels we acquire. Our ultimate goal is to achieve a total investment that is substantially less than replacement cost of a hotel or the acquisition cost of a market performing hotel. In analyzing a potential investment in an underperforming hotel property, we typically characterize the investment opportunity as one of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Branding Opportunity:* The acquisition of properties that includes a repositioning of the property through a change in brand affiliation, which may include positioning the property as an independent hotel. Branding opportunities typically include physical upgrades and enhanced efficiencies brought about by changes in operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Shallow-Turn Opportunity:* The acquisition of an underperforming but structurally sound hotel that requires moderate renovation to re-establish the hotel's appeal in its market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Deep-Turn Opportunity:* The acquisition of a hotel that is closed or functionally obsolete and requires a restructuring of both the business components of the operations as well as the physical plant of the hotel, including extensive renovation of the building, furniture, fixtures and equipment.

In our experience, a deep-turn opportunity typically takes a total of approximately four years from the initial acquisition of a property until it achieves full post-renovation stabilization. Therefore, when evaluating future opportunities in underperforming hotels, we intend to focus on up-branding and shallow-turn opportunities, and to pursue deep-turn opportunities on a more limited basis, preferably within the structure of joint venture or partnership.

*Investment Vehicles.* In pursuit of our investment strategy, we may employ various traditional and non-traditional investment vehicles:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Direct Purchase Opportunity:* Our traditional investment strategy is to acquire direct ownership interests via our Operating Partnership in properties that meet our investment criteria, including opportunities that involve full-service, upscale and upper-upscale properties in identified geographic growth markets that have significant barriers to entry for new product delivery. Such properties, or portfolio of properties, may or may not be acquired subject to a mortgage, or other financing or lending instruments, by the seller or third-party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Joint Venture/Mezzanine Lending Opportunities:* We may, from time to time, undertake a significant renovation and rehabilitation project that we characterize as a deep-turn opportunity. In such cases, we may acquire a functionally obsolete hotel whose renovation may be very lengthy and require significant capital. In these projects, we may choose to structure such acquisitions as a joint venture, or mezzanine lending program, to avoid severe short-term dilution and loss of current income commonly referred to as the "negative carry" associated with such extensive renovation programs. We do not intend to pursue joint venture or mezzanine programs in which we would become a "de facto" lender to the real estate community.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Investments in Mortgages, Structured Financings and Other Lending Policies:* In sourcing acquisitions for our core turnaround growth strategy, we may pursue investments in debt instruments that are collateralized by underperforming hotel properties. In certain circumstances, we believe that owning these debt instruments is a way to (i) ultimately acquire the underlying real estate asset and (ii) provide a non-dilutive current return to the Company's stockholders in the form of interest payments derived from the ownership of the debt. Our principal goal in pursuing distressed debt opportunities is ultimately to acquire the underlying real estate. By owning the debt, we believe that we may be in a position to acquire deeds to properties that fit our investment criteria in lieu of foreclosures. We do not have a policy limiting our ability to invest in loans secured by properties or to make loans to other persons. We may consider offering purchase money financing in connection with the sale of properties where the provision of that financing will increase the value to be received by us for the property sold. We may make loans to joint ventures in which we may participate in the future. However, neither Sotherly nor the Operating Partnership intend to engage in significant lending activities.

**Portfolio and Asset Management Strategy** 

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We intend to ensure that the management of our hotel properties maximizes market share, as evidenced by revenue per available room ("RevPAR") penetration indices, and that our market share yields the optimum level of revenues for our hotels in their respective markets. Our strategy is designed to actively monitor our hotels' operating expenses in an effort to maximize hotel earnings before interest, taxes, depreciation and amortization ("Hotel EBITDA").

Over our long history in the lodging industry, we have refined many portfolio and asset management techniques that we believe provide for exceptional cash returns at our hotels. We undertake extensive budgeting due diligence wherein we examine market trends, one-time or exceptional revenue opportunities, and/or changes in the regulatory climate that may impact costs. We review daily revenue results and revenue management strategies at the hotels, and we focus on our manager's ability to produce high quality revenues that translate to higher profit margins. We look for ancillary forms of revenue, such as leasing roof-top space for cellular towers and other communication devices and also look to lease space to third parties in our hotels, which may include, but are not limited to, gift shops or restaurants. We have and will continue to engage parking management companies to maximize parking revenue. Our efforts further include periodic review of property insurance costs and coverage, and the cost of real and personal property taxes. We generally appeal tax increases in an effort to secure lower tax payments and routinely pursue strategies that allow for lower overall insurance costs, such as purchasing re-insurance.

We also require detailed and refined reporting data from our hotel manager, which includes detailed accounts of revenues, revenue segments, expenses and forecasts based on current and historic booking patterns. We also believe we optimize and successfully manage capital costs at our hotels while ensuring that adequate product standards are maintained to provide positive guest experiences.

As of December 31, 2025, none of our hotels were managed by a major national or global hotel franchise company. Effective as of February 12, 2026, Schulte became the manager of the Hyde Beach House Resort & Residences and, pursuant to the Schulte Management Agreements, was engaged to manage the Company's wholly-owned hotels. Our portfolio management strategy includes efforts to optimize labor costs. Our hotel manager is responsible for hiring and maintaining the labor force at each of our hotels. Although we do not directly employ or manage employees at our hotels, we monitor our hotel manager's human resource strategy and make recommendations regarding the operation of our hotels, if appropriate. The labor force in our hotels is predominately non-unionized, with only one property, the DoubleTree by Hilton Jacksonville Riverfront, having approximately 94 employees electing to participate under a collective bargaining arrangement.

*Asset Disposition Strategy.* When a property no longer fits with our investment objectives, we plan to pursue a direct sale of the property for cash so that our investment capital can be redeployed according to the investment strategies outlined above. Where possible, we may seek to subsequently purchase a hotel in connection with the requirements of a tax-free exchange. Such a strategy may be deployed in order to mitigate the tax consequence that a direct sale may cause.

**Our Principal Agreements**

**Management Agreements**

As of December 31, 2025, our hotels were managed on a day-to-day basis by Our Town, an eligible independent contractor. The base management fee for each of our hotels was a percentage of the gross revenues of the hotel and is due monthly. The applicable percentages of gross revenue for the base management fee for each of our wholly-owned hotels and our condominium hotel rental programs are shown below:

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| | | | |
|:---|:---|:---|:---|
| **Hotel Name** | **Commencement**<br>**Date** | **Expiration**<br>**Date** | **Percentage Fee**  |
| Hotel Ballast Wilmington, Tapestry Collection by Hilton | January 1, 2020 | March 31, 2035 | 2.50% |
| The DeSoto | January 1, 2020 | March 31, 2035 | 2.50% |
| DoubleTree by Hilton Philadelphia Airport | January 1, 2020 | March 31, 2035 | 2.50% |
| Hotel Alba Tampa, Tapestry Collection by Hilton | January 1, 2020 | March 31, 2035 | 2.50% |
| DoubleTree by Hilton Jacksonville Riverfront | January 1, 2020 | March 31, 2035 | 2.50% |
| DoubleTree by Hilton Laurel | January 1, 2020 | March 31, 2035 | 2.50% |
| Georgian Terrace | January 1, 2020 | March 31, 2035 | 2.50% |
| The Whitehall | January 1, 2020 | March 31, 2035 | 2.50% |
| DoubleTree Resort by Hilton Hollywood Beach | April 1, 2020 | March 31, 2035 | 2.50% |
| Lyfe Resort & Residences | April 1, 2020 | March 31, 2035 | 2.50% |
| Hyde Beach House Resort & Residences | April 1, 2020 | March 31, 2035 | 2.50% |
| Hyatt Centric Arlington | November 15, 2020 | March 31, 2035 | 2.50% |

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*Agreements with Our Town*. Our Town was the management company for each of our ten wholly-owned hotels, as well as the manager for our two condominium rental programs as of December 31, 2025 and through February 11, 2026.

On September 6, 2019, we entered into a master agreement with Our Town and the former majority owner of Our Town related to the management of certain of our hotels, as amended and restated on November 6, 2024 (as amended, the "OTH Master Agreement"). On December 13, 2019, and subsequent dates we entered into a series of individual hotel management agreements for the management of our hotels. Those hotel management agreements for our ten wholly-owned hotels and the two rental programs are each referred to as an "OTH Hotel Management Agreement" and, together, the "OTH Hotel Management Agreements".

As of December 31, 2025, the OTH Master Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•was set to expire on March 31, 2035, or earlier if all of the OTH Hotel Management Agreements expired or were terminated prior to that date. The OTH Master Agreement would have been extended beyond 2035 for such additional periods as an OTH Hotel Management Agreement remained in effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•set an incentive management fee for each of the hotels managed by Our Town, and any future hotels, equal to 10% of the amount by which gross operating profit, as defined in the OTH Hotel Management Agreements, for a given year exceeded the budgeted gross operating profit for such year; provided, however, that the incentive management fee payable in respect of any such year could not exceed 0.25% of the gross revenues of the hotel included in such calculation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•provided a mechanism and established conditions on which the Company could offer Our Town the opportunity to manage hotels acquired by the Company in the future, pursuant to a negotiated form of single facility management agreement, with the caveat that the Company was not required to offer the management of future hotels to Our Town; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•set a base management fee for future hotels of 2.00% of gross revenue for the first year of the term, 2.25% of gross revenue for the second year of the term, and 2.50% of gross revenue for the third and any additional years of the term.

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Each of the OTH Hotel Management Agreements had an initial term ending March 31, 2035. Each of the OTH Hotel Management Agreements could be extended for up to two additional periods of five years subject to the approval of both parties with respect to any such extension. The agreements provided that Our Town would be the sole and exclusive manager of the hotels as the agent of the respective TRS Lessee, at the sole cost and expense of the TRS Lessee, and subject to certain operating standards. Each OTH Hotel Management Agreement could be terminated in connection with a sale of the related hotel. In connection with a termination upon the sale of the hotel, Our Town would be entitled to receive a termination fee equal to the lesser of the management fee paid with respect to the prior twelve months or the management fees paid for that number of months prior to the closing date of the hotel sale equal to the number of months remaining on the current term of the OTH Hotel Management Agreement. Upon the sale of a hotel, no termination fee would be due in the event the Company elected to provide Our Town with the opportunity to manage another comparable hotel and Our Town was not precluded from accepting such opportunity. Our Town was required to qualify as an eligible independent contractor in order to permit the Company to continue to operate as a real estate investment trust.

Pursuant to the management agreements for the Lyfe Resort & Residences and the Hyde Beach House Resort & Residences, Our Town managed the rental of individually owned condominium units pursuant to rental agreements entered into with individual condominium unit owners. We also entered into an Association Sub Management and Assignment Agreement with Our Town for the management and operation of the condominium association responsible for the operation of the Hyde Beach House Resort & Residences, and a Rental Sales Management Agreement pursuant to which Our Town agreed to manage the marketing and negotiation of rental agreements with individual condominium unit owners.

As of December 31, 2025, an affiliate of Andrew M. Sims, our Chairman, an affiliate of David R. Folsom, our President and Chief Executive Officer, and Andrew M. Sims Jr., our Vice President - Operations & Investor Relations, beneficially owned approximately 58.5%, 6.5%, and 15.0%, respectively, of the total outstanding ownership interests in Our Town. Mr. Sims, Mr. Folsom, and Mr. Sims Jr. served as directors of Our Town.

In connection with the Merger, the Company terminated the OTH Master Agreement with Our Town and Our Town ceased acting as the Company's property management company effective February 12, 2026.

On February 12, 2026, the TRS lessee subsidiaries for the Company's hotels entered into hotel management agreements with Schulte and certain of its affiliates. Under each Schulte Management Agreement, Schulte is appointed as the sole and exclusive operator and manager of the applicable hotel and is responsible for the supervision, direction, control, management and operation of the hotel, subject to certain third-party operations.

*Agreements with Schulte*. Under each Schulte Management Agreement, Schulte is entitled to (i) a base management fee equal to 2.75% of total revenues (paid monthly in arrears), (ii) an overhead fee of $4,500 per month, and (iii) an incentive fee ranging from 0% to 10% of gross operating profits based on specified performance thresholds. The Schulte Management Agreements have an initial term of ten (10) years and automatically renew for one successive five (5)-year period unless earlier terminated in accordance with their terms.

Pursuant to its management agreements for the Hyde Beach House Resort & Residences, Schulte manages the rental of individually owned condominium units pursuant to rental agreements entered into with individual condominium unit owners. We have also entered into an Association Sub Management and Assignment Agreement with Schulte for the management and operation of the condominium association responsible for the operation of the Hyde Beach House Resort & Residences, and a Rental Sales Management Agreement pursuant to which Schulte agreed to manage the marketing and negotiation of rental agreements with individual condominium unit owners.

Accordingly, the table below is updated to reflect Schulte as manager and the updated base fee structure:

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| | | |
|:---|:---|:---|
| **Hotel Name** | **Commencement**<br>**Date** | **Percentage Fee**  |
| Hotel Ballast Wilmington, Tapestry Collection by Hilton | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |
| The DeSoto | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |
| DoubleTree by Hilton Philadelphia Airport | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |
| Hotel Alba Tampa, Tapestry Collection by Hilton | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |
| DoubleTree by Hilton Jacksonville Riverfront | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |
| DoubleTree by Hilton Laurel | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |
| Georgian Terrace | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |
| The Whitehall | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |
| DoubleTree Resort by Hilton Hollywood Beach | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |
| Hyatt Centric Arlington | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |
| Hyde Beach House Resort & Residences | February 12, 2026<br> February 11, 2036 <sup>(1)</sup> | 2.75% |

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<sup>(1)</sup> with automatic renewal through February 11, 2041 unless terminated.

In addition to the base fee above, each Schulte Management Agreement includes an overhead fee of $4,500 per month and an incentive fee based on gross operating profits.

**Franchise Agreements**

As of December 31, 2025, all but three of our wholly-owned hotels operate under franchise licenses from national hotel companies. As our franchise agreements expire, we will continue to evaluate each hotel on a case-by-case basis and decide whether to re-license or re-brand with the existing franchisor, re-brand and license with a new franchisor, or re-brand as an independent hotel. We also periodically review our independent hotels to determine whether they would be better served by operating under a franchise license.

Our TRS Lessees hold the franchise licenses for our wholly-owned hotels. Under the terms of each hotel management agreement, our hotel manager must operate each of our hotels in accordance with and pursuant to the terms of the franchise agreement for the hotel.

The franchise licenses generally specify certain management, operational, record keeping, accounting, reporting and marketing standards and procedures with which the franchisee must comply. Under the franchise licenses, the franchisee must comply with the franchisors' standards and requirements with respect to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•training of operational personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•safety;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•maintaining specified insurance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the types of services and products ancillary to guest room services that may be provided;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•display of signage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•marketing standards including print media, billboards, and promotions standards; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the type, quality and age of furniture, fixtures and equipment included in guest rooms, lobbies and other common areas.

As the franchisee, our TRS Lessees are required to pay franchise/royalty fees, as well as certain other fees for marketing and reservations services in amounts that range from approximately 3.0% to 4.0% of gross revenues. The following table sets forth certain information for the franchise licenses of our wholly-owned hotel properties as of December 31, 2025:

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| | | |
|:---|:---|:---|
|  | **Franchise/Royalty** | **Expiration** |
|  | **Fee** <sup>(1)</sup> | **Date** |
| Hotel Alba Tampa, Tapestry Collection by Hilton | 5.0% | June 2029 |
| DoubleTree by Hilton Jacksonville Riverfront | 5.0% | September 2035 |
| DoubleTree by Hilton Laurel <sup>(2)</sup> | 5.0% | October 2030 |
| DoubleTree by Hilton Philadelphia – Airport | 5.0% | October 2034 |
| DoubleTree Resort by Hilton Hollywood Beach | 5.0% | October 2027 |
| Hotel Ballast Wilmington, Tapestry Collection by Hilton | 5.0% | April 2028 |
| Hyatt Centric Arlington | 5.0% | March 2038  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Percentage of room revenues payable to the franchisor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Franchise/Royalty Fee was temporarily reduced to 4.0% from December 2023 through November 2025.

**Lease Agreements**

 **TRS Leases**

In order for the Company to maintain qualification as a REIT, neither the Company nor the Operating Partnership nor its subsidiaries can operate our hotels directly. Our wholly-owned hotels are leased to our TRS Lessees, which have engaged Schulte to manage the hotels. As of December 31, 2025, each lease had a non-cancelable term ranging from four to thirty years. Pursuant to an amendment effective as of February 12, 2026, each lease has a non-cancelable term extended for five years from the previous expiration date, subject to earlier termination upon the occurrence of certain contingencies described in the lease.

During the term of each lease, our TRS Lessees are obligated to pay a fixed annual base rent plus a percentage rent and certain other additional charges. Base rent accrues and is paid monthly. Percentage rent is calculated by multiplying fixed percentages by gross room revenues, in excess of certain threshold amounts and is paid monthly or quarterly, according to the terms of the agreement.

 **Other Leases**

We lease the land underlying the Hyatt Centric Arlington hotel pursuant to a ground lease. The initial term of the ground lease required us to make rental payments of $50,000 per year in base rent and percentage rent equal to 3.5% of gross room revenue in excess of certain thresholds, as defined in the ground lease agreement. The ground lease allowed for five additional rental periods of 10 years each. Upon commencement of each renewal period, we will be required to make lease payments each year equal to 8.0% of the appraised value of the land. We exercised the renewal option for the first renewal period expiring July 1, 2035, during which total annual lease payments will be $1,792,000. In order to sell the Hyatt Centric Arlington hotel and assign our leasehold interest in the ground lease, we are required to obtain the consent of the third-party lessor.

In connection with the acquisition of the Hyde Beach House Resort & Residences hotel commercial condominium unit in 2019, we entered into a 20-year parking and cabana management agreement for the parking garage and poolside cabanas associated with the resort. In exchange for rights to the parking and cabana revenue, we paid the condominium association an annual payment of $271,000 for the initial five years of the term, which increases 5.0% every five years through the duration of the term.

We lease approximately 8,500 square feet of commercial office space in Williamsburg, Virginia for our corporate offices, under an agreement with a ten-year term beginning January 1, 2020. The initial annual rent under the agreement is $218,875, with the rent for each successive annual period increasing by 3.0% over the prior annual period's rent. The annual rent was offset by a tenant improvement allowance of $200,000, applied against one-half of each monthly rent payment until the tenant improvement allowance was exhausted in 2021. In December 2023, we received a rent concession of $257,731 against accrued and unpaid rents, and effective January 1, 2024, the landlord agreed to a one-third reduction in future rents.

**Capital Structure / Material Agreements**

*Apollo Loan.* On February 12, 2026, in connection with the Merger and pursuant to that certain Loan Agreement dated as of such date (the "Apollo Loan Agreement") with various affiliates of Apollo Global Management, Inc., collectively, as lender, and Laurel Hotel Associates LLC, Philadelphia Hotel Associates LP, MHI Jacksonville LLC, SOHO Atlanta LLC, Houston Hotel Owner, LLC, SOHO Wilmington LLC, Hollywood Hotel Associates LLC, SOHO Arlington LLC, subsidiaries of the Company, as borrower and respective owners of the DoubleTree by Hilton Laurel, DoubleTree by Hilton Philadelphia Airport, DoubleTree by Hilton Jacksonville Riverfront, The Georgian Terrace, Houston/Whitehall, Hotel Ballast, DoubleTree Resort by Hilton Hollywood Beach, and Hyatt Centric Arlington (the "Subject Hotels"), the existing indebtedness on such hotels was refinanced. The Apollo Loan Agreement provides for a loan amount of $308.0 million, with an initial maturity date of February 12, 2029, with two (2) extension options of one (1) year each, subject to the satisfaction of certain extension conditions and provided initial

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proceeds of approximately $243.0 million.

On March 24, 2026, we accessed $15.0 million in additional proceeds to redeem a portion of the preferred stock. On April 8, 2026, we accessed approximately $35.0 million in additional proceeds when Tampa Hotel Associates LLC became an additional borrower as owner of the Hotel Alba, which became one of the Subject Hotels. The proceeds were used to repay the existing indebtedness on the Hotel Alba. The loan also has availability fund a portion of certain property improvement plans.

The Apollo Loan Agreement contains customary affirmative covenants for a transaction of this nature, including, among other things, covenants relating to (i) maintenance of adequate financial and accounting books and records, (ii) delivery of financial statements and other information, (iii) preservation of existence of each borrower and subsidiaries, (iv) payment of taxes and claims, (v) compliance with laws, (vi) maintenance of insurance, (vii) use of proceeds, (viii) maintenance of properties, and (xi) conduct of business.

The Apollo Loan Agreement also contains customary negative covenants for a transaction of this nature, including, among other things, covenants relating to (i) debt, (ii) liens, (iii) restriction on fundamental changes, (iv) transfer or pledges of assets, (v) transactions with affiliates, and (vi) entrance into or modifications of material agreements. The Apollo Loan Agreement also contains various customary events of default (subject to certain grace periods, to the extent applicable).

*Mezzanine Loan.* On February 12, 2026, in connection with the Merger and pursuant to that certain Mezzanine Loan Agreement dated as of such date (the "Mezzanine Loan Agreement") with ACF II SOHO Mezz Lender LLC, an affiliate of Ascendant Capital Partners LP, as lender, and Sotherly Hotels Mezz LLC, a subsidiary of the Company, as borrower, and indirect owner of the Subject Hotels, the existing indebtedness on such Subject Hotels was refinanced. The Mezzanine Loan Agreement provides for a loan amount of up to $45.0 million, with an initial maturity date of February 12, 2030, with one (1) extension option of (1) year, subject to the satisfaction of certain extension conditions and provided initial proceeds of approximately $26.7 million.

On March 24, 2026, we accessed approximately $13.3 million in additional proceeds to redeem a portion of the preferred stock. The loan also has availability fund a portion of certain property improvement plans.

The Mezzanine Loan Agreement also contains customary affirmative and negative covenants for a transaction of this nature, and also contains various customary events of default (subject to certain grace periods, to the extent applicable).

**Other Agreements**

*Asset Management Agreement.* On March 24, 2026, the Operating Partnership entered into a consulting agreement effective February 12, 2026 (the "Consulting Agreement") with KWC Management, LLC, a Delaware limited liability company and an affiliate of the Operating Partnership ("KWC"). Pursuant to the Consulting Agreement, KWC is responsible for providing consultation and management services to the Operating Partnership, as more particularly described in the Consulting Agreement (the "Services"), for the assets listed on Exhibit A thereto (the "Assets").

The Consulting Agreement has an initial term of twelve (12) months until February 11, 2027 (the "Initial Term"), following which it shall renew for successive one-year terms unless terminated by either party upon thirty (30) days written notice to the non-cancelling party. Notwithstanding the foregoing, in the event of a sale of the Assets, the Consulting Agreement shall terminate immediately upon the closing of such sale; provided the Operating Partnership shall use commercially reasonable efforts to provide written notice of the proposed sale at least thirty (30) days prior to the anticipated closing date of such sale.

Pursuant to the Consulting Agreement, the Operating Partnership will pay an annual asset management fee (the "Asset Management Fee") in the amount approved by the Operating Partnership as part of its annual budget approval process. For the Initial Term, the Asset Management Fee shall be at the annualized rate of Six Hundred Fifty Thousand Dollars ($650,000) per year, payable in equal monthly installments in advance on the first day of each calendar month. The fee for any partial month at the commencement or expiration of the current term shall be prorated on a per diem basis based on a 365-day year. The Operating Partnership will also pay reasonable out-of-pocket expenses incurred in connection with KWC's the performance of the Services within thirty (30) days after receipt of an invoice detailing such amounts and accompanied by reasonable supporting documentation.

**Competition**

The hotel industry is highly competitive with various participants competing on the basis of price, level of service and geographic location. Each of our hotels is located in a developed area that includes other hotel properties. The number of competitive hotel properties in a particular geographic area could have a material adverse effect on occupancy, ADR and RevPAR of our hotels or at hotel properties we acquire in the future. We believe that brand recognition, location, the quality of the hotel, consistency of services provided, and price are the principal competitive factors affecting our hotels.

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Our hotels currently compete primarily in the full-service upscale and upper-upscale segments of the market. Positive competitive factors affecting our position include geographic location, markets with growth potential and strong franchise partners, while certain disadvantages to our position include limited geographic diversity and smaller size in relation to larger competitors.

**Seasonality**

The operations of our hotel properties have historically been seasonal. The months of April and May are traditionally strong, as is October. The periods from mid-November through mid-February are traditionally slow with the exception of hotels located in certain markets, namely Florida and Texas, which typically experience significant room demand during this period.

**Tax Status**

The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its taxable year ended December 31, 2004. In order to maintain its qualification as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute, as "qualifying distributions," at least 90.0% of its taxable income (determined without regard to the deduction for dividends paid and by excluding its net capital gains and reduced by certain non-cash items) to its stockholders. The Company has adhered to these requirements each taxable year since its formation in 2004 and intends to continue to adhere to these requirements and maintain its qualification for taxation as a REIT. As a REIT, the Company generally will not be subject to federal corporate income tax on that portion of its taxable income (including its net capital gain) that is distributed to its stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, and no relief provision applies, it will be subject to federal income taxes at regular corporate rates and it would be disqualified from re-electing treatment as a REIT until the fifth taxable year after the year in which it failed to qualify as a REIT. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries, or TRSs, is subject to federal, state and local income taxes.

While the Operating Partnership is generally not subject to federal and state income taxes, the unit holders of the Operating Partnership, including the Company, are subject to tax on their respective allocable shares of the Operating Partnership's taxable income.

The Company has one TRS, MHI Holding, in which it owns an interest through the Operating Partnership. MHI Holding is subject to federal, state and local income taxes. MHI Holding has operated at a cumulative taxable loss, through December 31, 2025, of approximately $57.0 million and deferred timing differences of approximately $3.7 million attributable to accrued, but not currently deductible, vacation and sick pay amounts, business interest, depreciation and other miscellaneous differences. Neither the Company nor MHI Holding has incurred federal income taxes since its formation. With the onset of the COVID-19 pandemic and the anticipation of significant losses to MHI Holding, we reduced our deferred tax asset through the establishment of a 100% valuation allowance. As of December 31, 2025, we have a valuation allowance of approximately $14.5 million.

**Environmental Matters**

In connection with the ownership and operation of the hotels, we are subject to various federal, state and local laws, ordinances and regulations relating to environmental protection. Under these laws, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on, under, or in such property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances. In addition, the presence of contamination from hazardous or toxic substances, or the failure to remediate such contaminated property properly, may adversely affect the owner's ability to borrow using such property as collateral. Furthermore, a person who arranges for the disposal or treatment of a hazardous or toxic substance at a property owned by another, or who transports such substance to or from such property, may be liable for the costs of removal or remediation of such substance released into the environment at the disposal or treatment facility. The costs of remediation or removal of such substances may be substantial, and the presence of such substances may adversely affect the owner's ability to sell such real estate or to borrow using such real estate as collateral. In connection with the ownership and operation of the hotels, we may be potentially liable for such costs.

We believe that our hotels are in compliance, in all material respects, with all federal, state and local environmental ordinances and regulations regarding hazardous or toxic substances and other environmental matters, the violation of which would have a material adverse effect on us. We have not received written notice from any governmental authority of any material noncompliance, liability or claim relating to hazardous or toxic substances or other environmental matters in connection with any of our present hotel properties.

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**Employees and Human Capital**

As of December 31, 2025, we employed seven full-time individuals, all of whom work at our corporate office in Williamsburg, Virginia. Following the Merger, we have three full-time employees in the Williamsburg office. We believe relations with our employees are positive. Our human capital resources objectives include attracting and retaining talented and well-qualified employees. Our compensation program, including competitive salaries and other benefits, are designed to attract, hire, retain and motivate highly qualified employees and executives. We are committed to enhancing our culture through efforts to promote and preserve inclusion and by providing and maintaining a safe work environment. All persons employed in the day-to-day operations of each of our hotels are employees of our third-party hotel manager engaged by our TRS Lessees to operate such hotels.

**Available Information**

We maintain an Internet site, http://www.sotherlyhotels.com, which contains additional information concerning Sotherly Hotels Inc. We make available free of charge through our Internet site all our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, definitive proxy statements and other reports filed with the Securities and Exchange Commission as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. We have also posted on this website the Company's Code of Business Conduct. We intend to disclose on our website any changes to, or waivers from, the Company's Code of Business Conduct. Information on the Company's internet site is neither part of nor incorporated into this Form 10-K.

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**Item 1A. *Risk Factors***

The following are the material risks that may affect us. Any of the risks discussed herein can materially adversely affect our business, liquidity, operations, industry or financial position or our future financial performance.

**SUMMARY**

***Risks Related to Our Business and Properties***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to the Merger and the resulting change in control, ownership structure and delisting of our common stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our recent refinancing transactions and new credit facilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to the limited number of hotels that we own.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to increased hotel operating expenses and decreased hotel revenues.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our investment strategy, and the acquisition, renovation, or repositioning of hotels.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our third-party hotel management company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our ability to make distributions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to the geographic concentration of our hotels.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to the concentration of our hotel franchise agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our ground lease for the Hyatt Centric Arlington.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to hedging against interest rate exposure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to investment opportunities and growth prospects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to internal controls.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to information technology.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to natural disasters and the physical effects of climate change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to restrictions on our investments and business activities by the applicable REIT laws.

***Risks Related to the Lodging Industry***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to the overall economy and our financial performance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to operating risks, seasonality of the hotel business, investment concentration in particular segments of a single industry, and capital expenditures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to operating hotels with franchise agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to restrictive covenants in certain of our franchise agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to hotel re-development.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to obtaining financing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to uninsured and underinsured losses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to governmental regulations, including regulations covering environmental matters or the Americans with Disabilities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to unknown or contingent liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to future terrorist activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to pandemic diseases.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to heightened focus on corporate responsibility.

***General Risks Related to the Real Estate Industry***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to illiquidity of real estate investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to future acquisitions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to property damage including harmful mold.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to increases in property taxes or insurance costs.

***Risks Related to Our Debt and Financing***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our financial leverage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our financial covenants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our debt maturities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our borrowing costs and fluctuations in interest rates.

***Risks Related to Our Organization and Structure***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to change of control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to the delisting of our common stock and preferred stock from Nasdaq.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to ownership limitations on our preferred stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to litigation in connection with the execution of a merger agreement and the consummation of a merger

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our preferred stock.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to future indebtedness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our REIT status.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our major corporate policies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to key personnel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to conflict of interest and related party transactions

***Risks Related to Conflicts of Interest of Our Officers and Directors***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to conflicts of interest of our officers and directors.

***Federal Income Tax Risks Related to the Company's Status as a REIT.*** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to potential failure to qualify as a REIT.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to potential failure to make distributions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to MHI Holding, including its TRS qualification and potential tax liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to potential tax liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to highly technical and complex REIT compliance requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to Operating Partnership's qualification as a partnership for federal income tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to the qualification of our hotel manager as an "eligible independent contractor".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to our TRS leases.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to taxation of dividend income and U.S. withholding tax.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to foreign investors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Risks related to U.S. tax reform and related regulatory action.

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**DETAIL**

**Risks Related to Our Business and Properties**

***The completion of the merger with KW Kingfisher LLC has materially changed our ownership structure and capital profile, and the anticipated benefits of the transaction may not be realized.***

On February 12, 2026, we completed our merger with KW Kingfisher LLC (the "Merger"). As a result of the Merger, affiliates of KW Kingfisher became the controlling stockholders of the Company, and our ownership structure, governance profile and capital structure were materially altered.

The Merger presents a number of risks and uncertainties, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the possibility that the anticipated strategic, operational and financial benefits of the Merger will not be realized within the expected time period, or at all;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the incurrence of substantial transaction-related costs and expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in our stockholder base and reduced public float, which may result in reduced liquidity and increased volatility in the trading price of our capital stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•potential conflicts of interest between the controlling stockholder and our other stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in our strategic direction, capital allocation policies or operating priorities under new ownership; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks associated with the significant debt financing incurred in connection with the Merger.

Following the Merger, affiliates of KW Kingfisher beneficially own a controlling interest in our outstanding common stock and have the ability to influence or control matters requiring stockholder approval, including the election of directors, amendments to our charter documents, approval of mergers or other strategic transactions and other significant corporate actions. This concentration of ownership may delay, deter or prevent a change in control that other stockholders may view as beneficial, or otherwise limit the ability of minority stockholders to influence corporate matters.

In addition, as a result of the Merger and related financings, we have a significantly increased level of indebtedness and ongoing debt service obligations. The combination of a concentrated ownership structure and increased leverage may limit our financial flexibility and could adversely affect our ability to respond to competitive pressures, economic downturns or changes in the hospitality industry.

If the anticipated benefits of the Merger are not realized, or if we experience difficulties operating under our new ownership and capital structure, our business, financial condition and results of operations could be materially and adversely affected.

***Our substantial indebtedness under the Apollo senior loan and Ascendant mezzanine loan increases our financial risk and may adversely affect our liquidity, results of operations and ability to refinance.***

In connection with the closing of our merger on February 12, 2026, we entered into a new senior secured loan agreement with affiliates of Apollo Global Management, Inc. providing up to $308.0 million of indebtedness (the "Senior Loan"), and a mezzanine loan agreement with an affiliate of Ascendant Capital Partners LP providing for up to $45.0 million of mezzanine indebtedness (the "Mezzanine Loan"). These financings materially increased our consolidated indebtedness and significantly changed our capital structure.

The Senior Loan is secured by, among other things, mortgages on eight of our hotel properties and includes customary affirmative and negative covenants, financial and operational restrictions and events of default. The Mezzanine Loan is secured by equity interests in certain property-owning subsidiaries and is structurally subordinate to the Senior Loan and other property-level indebtedness. Both loans have initial maturities in 2029 and 2030, respectively, subject to extension options that are conditioned on satisfaction of specified requirements.

Our substantial indebtedness could have important consequences, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•requiring us to dedicate a significant portion of our cash flow from operations to the payment of principal and interest, thereby reducing funds available for operations, capital expenditures, dividends and other corporate purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•increasing our vulnerability to adverse economic, industry or property-level operating conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•limiting our flexibility in planning for, or reacting to, changes in our business and the hospitality industry;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•restricting our ability to incur additional indebtedness, make certain investments, sell assets or engage in other transactions due to covenant limitations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•increasing the risk of a default under the Senior Loan or Mezzanine Loan if we fail to satisfy financial or other covenants; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•limiting our ability to refinance indebtedness at maturity or on favorable terms.

In addition, the mezzanine structure of the Mezzanine Loan may increase enforcement risk in a default scenario, as the mezzanine lender could foreclose on the pledged equity interests in certain subsidiaries, potentially resulting in a change of control of those entities without a foreclosure on the underlying real estate. Defaults under either the Senior Loan or the Mezzanine Loan could result in the acceleration of indebtedness, the imposition of default interest, the exercise of remedies against collateral, and, in certain circumstances, cross-defaults under other agreements.

The maturity dates of these loans will require us to refinance, extend or repay a substantial amount of indebtedness within a relatively concentrated timeframe. Our ability to do so will depend on prevailing market conditions, the performance and value of the underlying hotel properties, lender underwriting standards and other factors beyond our control. If we are unable to refinance or extend these loans on acceptable terms, we may be required to seek alternative capital, sell assets, or pursue other strategic transactions, any of which could materially and adversely affect our financial condition and results of operations.

***We own a limited number of hotels and significant adverse changes at one hotel could have a material adverse effect on our financial performance and may limit our ability to make distributions to stockholders.***

As of December 31, 2025, our portfolio consisted of ten wholly-owned hotels with a total of 2,786 rooms and the hotel commercial condominium units of the Lyfe Resort & Residences and the Hyde Beach House Resort & Residences condominium hotels. Significant adverse changes in the operations of any one hotel could have a material adverse effect on our financial performance and, accordingly, on our ability to make distributions to stockholders.

***We are subject to risks of increased hotel operating expenses and decreased hotel revenues.***

Our leases with our TRS Lessees provide for the payment of rent based in part on gross revenues from our hotels. Our TRS Lessees are subject to hotel operating risks including decreased hotel revenues and increased hotel operating expenses, including but not limited to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•wage and benefit costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•repair and maintenance expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•energy costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•insurance costs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•other operating expenses.

Any increases in these operating expenses can have a significant adverse impact on our TRS Lessees' ability to pay rent and other operating expenses and, consequently, our earnings and cash flow.

***In keeping with our investment strategy, we may acquire, renovate and/or re-brand hotels in new or existing geographic markets as part of our repositioning strategy. Unanticipated expenses and insufficient demand for newly repositioned hotels could adversely affect our financial performance and our ability to comply with loan covenants and to make distributions to the Company's stockholders.***

We have in the past, and may in the future, develop or acquire hotels in geographic areas in which our management may have little or no operating experience. Additionally, those properties may also be renovated and re-branded as part of a repositioning strategy. Potential customers may not be familiar with our newly renovated hotel or be aware of the brand change. As a result, we may have to incur costs relating to the opening, operation and promotion of those new hotel properties that are substantially greater than those incurred in other geographic areas. These hotels may attract fewer customers than expected and we may choose to increase spending on advertising and marketing to promote the hotel and increase customer demand. Unanticipated expenses and insufficient demand at new hotel properties, therefore, could adversely affect our financial performance and our ability to comply with loan covenants and to make distributions to the Company's stockholders.

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***We do not have the authority to require any hotel to be operated in a particular manner or to govern any particular aspect of the daily operations of any hotel and as a result, our returns are dependent on the management of our hotels by our hotel management company.***

Since federal income tax laws restrict REITs and their subsidiaries from operating or managing hotels, we do not operate or manage our hotels. Instead, we lease all of our hotels to our TRS Lessees, and our TRS Lessees retain managers to operate our hotels pursuant to management agreements. As of December 31, 2025, all of our hotels currently were managed by Our Town. On February 12, 2026, in connection with the Merger pursuant to which we became a wholly owned subsidiary of KW Kingfisher LLC, we terminated our prior management agreements with Our Town and entered into hotel management agreements with Schulte to manage all of our hotels.

Under the terms of our management agreements with our hotel manager and the REIT qualification rules, our ability to participate in operating decisions regarding the hotels is limited. We will depend on our hotel manager to operate our hotels as provided in the management agreements. We do not have the authority to require any hotel to be operated in a particular manner or to govern any particular aspect of the daily operations of any hotel. Thus, even if we believe our hotels are being operated inefficiently or in a manner that does not result in satisfactory occupancy rates, RevPAR, and average daily rates ("ADR"), we may not be able to force a hotel management company to change its method of operating our hotels. Additionally, in the event that we need to replace the manager of one or more of our hotels, we may be required by the terms of the applicable management agreement to pay substantial termination fees and may experience significant disruptions at the affected hotels.

***Our ability to make distributions to the Company's stockholders is subject to fluctuations in our financial performance, operating results and capital improvement requirements.***

As a REIT, the Company is required to distribute, as "qualifying distributions," at least 90.0% of its REIT taxable income (determined without regard to the dividends-paid deduction and by excluding its net capital gains, and reduced by certain noncash items), each year to the Company's stockholders. However, several factors may make us unable to declare or pay distributions to the Company's stockholders, including poor operating results and financial performance or unanticipated capital improvements to our hotels, including capital improvements that may be required by our franchisors.

We lease all of our hotels to our TRS Lessees. Our TRS Lessees are subject to hotel operating risks, including risks of sustaining operating losses after payment of hotel operating expenses, including management fees. Among the factors which could cause our TRS Lessees to fail to make required rent payments are reduced net operating profits or operating losses, increased debt service requirements and capital expenditures at our hotels, including capital expenditures required by the franchisors of our hotels. Among the factors that could reduce the net operating profits of our TRS Lessees are decreases in hotel revenues and increases in hotel operating expenses. Hotel revenue can decrease for a number of reasons, including increased competition from a new supply of hotel rooms and decreased demand for hotel rooms. These factors can reduce both occupancy and room rates at our hotels and limit the volume of food and beverage revenue and other operating revenue such as parking revenue.

The declaration of distributions to holders of our securities is subject to the sole discretion of the Company's board of directors, which will consider, among other factors, our financial performance, debt service obligations, debt covenants and capital expenditure requirements. We cannot assure you that we will generate sufficient cash to fund distributions. We have not paid any common stock dividend distributions following the payment of dividends in January 2020. Once the payment of all preferred dividends in arrears has been made, the Company may make the common stock dividend distribution that was declared in January 2020 to stockholders of record on March 13, 2020.

***Geographic concentration of our hotels makes our business vulnerable to economic downturns in the mid-Atlantic and southern United States.***

Our hotels are located in the mid-Atlantic and southern United States. As a result, economic conditions in the mid-Atlantic and southern United States significantly affect our revenues and the value of our hotels to a greater extent than if we had a more geographically diversified portfolio. Business layoffs or downsizing, industry slowdowns, changing demographics and other similar factors that may adversely affect the economic climate in these areas could have a significant adverse impact on our business. Any resulting oversupply or reduced demand for hotels in the mid-Atlantic and southern United States and in our markets in particular would therefore have a disproportionate negative impact on our revenues and limit our ability to make distributions to stockholders.

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***A substantial number of our hotels operate under brands owned by Hilton Worldwide Holdings, Inc.("Hilton"); therefore, we are subject to risks associated with concentrating our portfolio in one brand. We also own a hotel operated under the brand owned by Hyatt Hotels Corporation ("Hyatt").***

In our portfolio, the majority of the hotels that we owned as of December 31, 2025, utilize brands owned by Hilton. As a result, our success is dependent in part on the continued success of Hilton and their respective brands. If market recognition or the positive perception of Hilton is reduced or compromised, the goodwill associated with the Hilton-branded hotels in our portfolio may be adversely affected, which may have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders. As of April 1, 2026, we owned one property that utilizes a brand owned by Hyatt. Our success is also dependent in part on the continued success, market recognition, and positive perception of these brands.

***Our ground lease for the Hyatt Centric Arlington may constrain us from acting in the best interest of stockholders or require us to make certain payments.***

The Hyatt Centric Arlington is subject to a ground lease with a third-party lessor which requires us to obtain the consent of the relevant third-party lessor in order to sell the Hyatt Centric Arlington hotel or to assign our leasehold interest in the ground lease. Accordingly, we may be prevented from completing such a transaction if we are unable to obtain the required consent from the lessor, even if we determine that the sale of this hotel or the assignment of our leasehold interest in the ground lease is in the best interest of the Company or our stockholders. In addition, at any given time, potential purchasers may be less interested in buying a hotel subject to a ground lease and may demand a lower price for the hotel than for a comparable property without such a restriction, or they may not purchase the hotel at any price. For these reasons, we may have a difficult time selling the hotel or may receive lower proceeds from any such sale. The ground lease is subject to four additional renewal periods of 10 years each, following the first renewal period which expires in 2035. At the beginning of each renewal period, certain provisions of the lease may be adjusted by the lessor, which could impact payments we are required to make to the lessor. The ground lease contains a rent reset provision that re-set the rent in June 2025 and will be re-set each successive 10-year period, to a fixed amount per annum equal to 8.0% of the land value, subject to an appraisal process. The appraisal process was completed in 2024 and, beginning in July 2025, the rent adjusted to $149,333 per month. If we cannot come to reasonable terms with the lessor at the end of the term or if we are found to have breached certain obligations under the ground lease, the hotel may suffer a substantial decline in value and we may be forced to dispose of the hotel at a substantial loss.

***Hedging against interest rate exposure may adversely affect us and our hedges may fail to protect us from the losses that the hedges were designed to offset.***

Subject to maintaining the Company's qualification as a REIT, we may elect to manage our exposure to interest rate volatility by using interest rate hedging arrangements, such as cap agreements and swap agreements. These agreements involve the risks that these arrangements may fail to protect or adversely affect us because, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•available interest rate hedges may not correspond directly with the interest rate risk for which protection is sought;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the financial instruments we select may not have the effect of reducing our interest rate risk;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the duration of the hedge may not match the duration of the related liability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the credit quality of the hedging counterparty owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the hedging counterparty owing money in the hedging transaction may default on its obligation to pay.

As a result of any of the foregoing, our hedging transactions, which are intended to limit losses, may fail to protect us from the losses that the hedges were designed to offset and could have a material adverse effect on us.

***Our investment opportunities and growth prospects may be affected by competition for acquisitions.***

We compete for investment opportunities with other entities, some of which have substantially greater financial resources than we do. This competition may generally limit the number of suitable investment opportunities offered to us, which may limit our ability to grow. This competition may also increase the bargaining power of property owners seeking to sell to us, making it more difficult for us to acquire new properties on attractive terms, or at all.

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***If we fail to maintain an effective system of internal controls, we may not be able to accurately determine our financial results or prevent fraud. As a result, the Company's stockholders could lose confidence in our financial results, which could harm our business and the value of the Company's shares.***

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal controls over financial reporting. Our internal controls and financial reporting are not subject to attestation by our independent registered public accounting firm pursuant to the Sarbanes-Oxley Act of 2002. While we have undertaken substantial work to maintain effective internal controls, we cannot be certain that we will be successful in maintaining adequate internal controls over our financial reporting and financial processes in the future. In the future, we may discover areas of our internal controls that need improvement. Furthermore, as we grow our business, our internal controls will become more complex, and we will require significantly more resources to ensure our internal controls remain effective. If we or our independent auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market value of the Company's shares and make it more difficult for the Company to raise capital. Additionally, the existence of any material weakness or significant deficiency would require management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner.

***We and our hotel manager rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.***

We and our hotel manager rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, reservations, billing and operating data. We and our hotel manager purchase some of our information technology from vendors, on whom our systems depend. We and our hotel manager rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential operator and other customer information, such as individually identifiable information, including information relating to financial accounts. Although we and our hotel manager have taken steps we believe are necessary to protect the security of our information systems and the data maintained in those systems, it is possible that the safety and security measures taken will not be able to prevent the systems' improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. Any failure to maintain proper functionality, security and availability of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a material adverse effect on our business, financial condition and results of operations. Our hotel manager carries cyber insurance policies to protect and offset a portion of potential costs incurred from a security breach. Additionally, we currently have cyber risk coverage to provide supplemental coverage above the coverage carried by our hotel manager. Despite various precautionary steps to protect our hotels from losses resulting from cyber-attacks, any cyber-attack occurrence could still result in losses at our properties, which could affect our results of operations. As of December 31, 2025, no risk from cybersecurity threats, including as a result of any previous cybersecurity incidents, has materially affected or is reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition. We also rely on the reservation systems of our brand partners and others to transmit and manage customer and payment information. Those systems may be hacked or subject to denial-of-service attacks which in turn may result in losses at our properties.

***We face possible risks associated with natural disasters and the physical effects of climate change.***

We are subject to the risks associated with natural disasters and the physical effects of climate change, which can include more frequent or severe storms, droughts, hurricanes and flooding, any of which could have a material adverse effect on our hotels, operations and business. Over time, our coastal markets are expected to experience increases in storm intensity and rising sea-levels causing damage to our properties. As a result, we could become subject to significant losses and/or repair costs that may or may not be fully covered by insurance. Other markets may experience prolonged variations in temperature or precipitation that may limit access to the water needed to operate our hotels or significantly increase energy costs, which may subject those hotels to additional regulatory burdens, such as limitations on water usage or stricter energy efficiency standards. Climate change also may affect our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable in areas most vulnerable to such events, increasing operating costs at our hotels, such as the cost of water or energy, and requiring us to expend funds as we seek to repair and protect our hotels against such risks. There can be no assurance that climate change will not have a material adverse effect on our hotels, operations or business.

***Our investments and business activities are restricted by the applicable REIT laws.***

As a REIT, the Company is subject to various restrictions on the types of revenue it can earn, assets it can own and activities in which it can engage. Business activities that could be restricted by applicable REIT laws include, but are not limited to, developing

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alternative uses of real estate and the ownership of hotels that are not leased to a TRS, including the development and/or sale of timeshare or condominium units or the related land parcels. Due to these restrictions, we anticipate that we will continue to conduct certain business activities through MHI Holding. MHI Holding is taxable as a C corporation and is subject to federal, state, local, and, if applicable, foreign taxation on its taxable income.

**Risks Related to the Lodging Industry**

***If the economy falls into a recessionary period or fails to maintain positive growth, our operating performance and financial results may be harmed by declines in occupancy, average daily room rates and/or other operating revenues.***

The performance of the lodging industry and the general economy historically have been closely linked. In an economic downturn, business and leisure travelers may seek to reduce costs by limiting travel and/or reducing costs on their trips. Our hotels, which are all full-service hotels, may be more susceptible to a decrease in revenue, as compared to hotels in other categories that have lower room rates. A decrease in demand for hotel stays and hotel services, such as the decrease experienced due to COVID-19, will negatively affect our operating revenues, which will lower our cash flow and may affect our ability to make distributions to stockholders and to maintain compliance with our loan obligations. An economic downturn, such as the one caused by COVID-19, may result in losses or reduce our income in the future. A weakening of the economy may adversely and materially affect our industry, business and results of operations and we cannot predict the likelihood, severity or duration of any such downturn. Moreover, reduced revenues as a result of a weakening economy may also reduce our working capital and impact our long-term business strategy.

***Our ability to comply with the terms of our loan covenants, our ability to make distributions to the Company's stockholders and the value of our hotels in general, may be adversely affected by factors in the lodging industry.***

*Operating Risks*

Our hotel properties are subject to various operating risks common to the lodging industry, many of which are beyond our control, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•competition from other hotel properties in our markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•over-building of hotels in our markets, which adversely affects occupancy and revenues at our hotels;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•dependence on business and commercial travelers and tourism;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•increases in energy costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•increases in operating costs due to inflation and other factors, including increases in labor costs, that may not be offset by increased room rates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in interest rates and in the availability, cost and terms of debt financing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•adverse effects of international, national, regional and local economic and market conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•adverse effects of a downturn in the lodging industry; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks generally associated with the ownership of hotel properties and real estate, as we discuss in detail below.

These factors could reduce the net income of our TRS Lessees, which in turn could adversely affect the value of our hotels and our ability to make distributions to the Company's stockholders.

*Seasonality of the Hotel Business*

The lodging industry is seasonal in nature, which can be expected to cause quarterly fluctuations in our revenues. Our quarterly earnings may be adversely affected by factors outside our control, including weather conditions and poor economic factors. As a result, we may have to enter into short-term borrowings in certain quarters in order to offset these fluctuations in revenues and to make distributions to the Company's stockholders.

*Investment Concentration in Particular Segments of a Single Industry*

Our entire business is lodging-related. Therefore, a downturn in the lodging industry, in general, and the full-service, upscale and upper-upscale segments in which we operate, in particular, will have a material adverse effect on the value of our hotels, our financial condition and the extent to which cash may be available for distribution to the Company's stockholders.

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*Capital Expenditures*

Our hotel properties have an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment. The franchisors of our hotels also require us to make periodic capital improvements as a condition of keeping the franchise licenses. In addition, several of our mortgage lenders require that we set aside amounts for capital improvements to the secured properties on a monthly basis. For the years ended December 31, 2025 and 2024, we spent approximately $14.9 million and approximately $14.6 million, respectively, on capital improvements to our hotels. Capital improvements and renovation projects may give rise to the following risks:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•possible environmental problems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•construction cost overruns and delays;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a possible shortage of available cash to fund capital improvements and the related possibility that financing for these capital improvements may not be available to us on affordable terms; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•uncertainties as to market demand or a loss of market demand after capital improvements have begun.

The costs of all these capital improvements as well as future capital improvements could adversely affect our financial condition and amounts available for distribution to the Company's stockholders.

***Operating our hotels under franchise agreements could increase our operating costs and lower our net income.***

Most of our hotels operate under franchise agreements which subject us to risks in the event of negative publicity related to one of our franchisors.

The maintenance of the franchise licenses for our hotels is subject to our franchisors' operating standards and other terms and conditions. Many operating standards and other terms can be modified or expanded at the sole discretion of the franchisor. Our franchisors periodically inspect our hotels to ensure that we, our TRS Lessees, and our management company follow their standards. Failure by us, our TRS Lessees or our management company to maintain these standards or other terms and conditions could result in a franchise license being canceled. If a franchise license terminates due to our failure to make required improvements or to otherwise comply with its terms, we may also be liable to the franchisor for a termination payment, which varies by franchisor and by hotel. As a condition of continuing a franchise license, a franchisor may require us to make capital expenditures, even if we do not believe the capital improvements are necessary or desirable or will result in an acceptable return on our investment. Nonetheless, we may risk losing a franchise license if we do not make franchisor-required capital expenditures.

If a franchisor terminates the franchise license, we may try either to obtain a suitable replacement franchise license or to operate the hotel without a franchise license. The loss of a franchise license could significantly decrease the revenues at the hotel and reduce the underlying value of the hotel because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the franchisor. A loss of a franchise license for one or more hotels could materially and adversely affect our revenues. This loss of revenue could, therefore, also adversely affect our financial condition and results of operations, our ability to comply with the terms of the loan covenants and reduce our cash available for distribution to stockholders.

***Restrictive covenants in certain of our franchise agreements contain provisions that may operate to limit our ability to sell or refinance our hotels, which could have a material adverse effect on us.***

Franchise agreements typically contain covenants that may affect our ability to sell or refinance a hotel, including requirements to obtain the consent of the franchisor in the event of such a sale or refinancing transaction. In the event that a franchisor's consent is not forthcoming, the terms of a sale or refinancing may be less favorable to us than would otherwise be the case. Some of our franchise agreements provide the franchisor with a right of first offer in the event of certain sales or transfers of a hotel and provide that the franchisor has the right to approve any change in the hotel management company engaged to manage the hotel. Generally, we may be limited in our ability to sell, lease or otherwise transfer hotels unless the transferee is not a competitor of the franchisor and the transferee agrees to assume the related franchise agreements. If the franchisor does not consent to the sale or financing of our hotels, we may be unable to consummate transactions that are in our best interests or the terms of those transactions may be less favorable to us, which could have a material adverse effect on our financial condition and the execution of our strategies.

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***Hotel re-development is subject to timing, budgeting and other risks that would increase our operating costs and limit our ability to make distributions to stockholders.***

We intend to acquire hotel properties from time to time as suitable opportunities arise, taking into consideration general economic conditions, and seek to re-develop or reposition these hotels. Redevelopment of hotel properties involves a number of risks, including risks associated with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•construction delays or cost overruns that may increase project costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•receipt of zoning, occupancy and other required governmental permits and authorizations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•development costs incurred for projects that are not pursued to completion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•acts of God such as earthquakes, hurricanes, floods or fires that could adversely impact a project;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•financing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•governmental restrictions on the nature or size of a project.

We cannot assure you that any re-development project will be completed on time or within budget. Our inability to complete a project on time or within budget would increase our operating costs and reduce our net income.

***The hotel business is capital intensive and our inability to obtain financing could limit our growth.***

Our hotel properties will require periodic capital expenditures and renovation to remain competitive. Acquisitions or development of additional hotel properties will require significant capital expenditures. In addition, several of our mortgage lenders require that we set aside annual amounts for capital improvements to the secured property. We may not be able to fund capital improvements or acquisitions solely from cash provided by our operating activities because we must distribute at least 90.0% of our REIT taxable income, excluding net capital gains, each year to maintain our REIT tax status. As a result, our ability to fund significant capital expenditures, acquisitions or hotel development through retained earnings is very limited. Consequently, we rely upon the availability of debt or equity capital to fund any significant investments or capital improvements. Our ability to grow through acquisitions or development of hotels will be limited if we cannot obtain satisfactory debt or equity financing which will depend on market conditions. Neither our charter nor our bylaws limit the amount of debt that we can incur. However, we cannot assure you that we will be able to obtain additional equity or debt financing or that we will be able to obtain such financing on favorable terms.

***Uninsured and underinsured losses could adversely affect our operating results and our ability to make distributions to the Company's stockholders.***

We maintain comprehensive insurance on each of our hotel properties, including liability, fire and extended coverage, of the type and amount we believe are customarily obtained for or by hotel owners. There are no assurances that current coverage will continue to be available at reasonable rates. Various types of catastrophic losses, like hurricanes, earthquakes and floods, such as Hurricane Helene in September 2024, Hurricane Ian in September 2022, Hurricanes Harvey and Irma in August and September 2017, respectively, Hurricane Matthew in October 2016 and Hurricane Sandy in October 2012, losses from foreign terrorist activities, such as those on September 11, 2001, losses from power outages or losses from domestic terrorist activities, such as the Oklahoma City bombing on April 19, 1995, may not be insurable or may not be economically insurable. Currently, our insurers provide terrorism coverage in conjunction with the Terrorism Risk Insurance Program sponsored by the federal government through which insurers are able to receive compensation for insured losses resulting from acts of terrorism.

In the event of a substantial loss, our insurance coverage may not be sufficient to cover the full current market value or replacement cost of our lost investment. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a hotel, as well as the anticipated future revenue from the hotel. In that event, we might nevertheless remain liable for any mortgage debt or other financial obligations related to the property. Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate a hotel after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed property.

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***Noncompliance with government regulations could adversely affect our operating results.***

*Environmental Matters*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our knowledge of the contamination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the timing of the contamination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the cause of the contamination; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the party responsible for the contamination of the property.

There may be unknown environmental problems associated with our properties. If environmental contamination exists on our properties, we could become subject to strict, joint and several liability for the contamination by virtue of our ownership interest.

The presence of hazardous substances on a property may adversely affect our ability to sell the property and we may incur substantial remediation costs. The discovery of environmental liabilities attached to our properties could have a material adverse effect on our results of operations and financial condition and our ability to comply with our covenants and to pay distributions to stockholders.

*Americans with Disabilities Act and Other Changes in Governmental Rules and Regulations*

Under the Americans with Disabilities Act of 1990 ("ADA"), all public accommodations must meet various federal requirements related to access and use by disabled persons. Compliance with the ADA's requirements could require removal of access barriers, and non-compliance could result in the U.S. government imposing fines or in private litigants winning damages. If we are required to make substantial modifications to our hotels, whether to comply with the ADA or other changes in governmental rules and regulations, our financial condition, results of operations and ability to comply with the terms of our loan covenants and to make distributions to the Company's stockholders could be adversely affected.

***Our hotels may be subject to unknown or contingent liabilities which could cause us to incur substantial costs.***

The hotel properties that we acquire may be subject to unknown or contingent liabilities for which we may have no recourse, or only limited recourse, against the sellers. Contingent or unknown liabilities with respect to entities or properties acquired might include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•liabilities for environmental conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•losses in excess of our insured coverage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•accrued but unpaid liabilities incurred in the ordinary course of business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•tax, legal and regulatory liabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•claims of customers, vendors or other persons dealing with the Company's predecessors prior to our acquisition transactions that had not been asserted or were unknown prior to the Company's acquisition transactions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•claims for indemnification by the general partners, officers and directors and others indemnified by the former owners of our properties.

In general, the representations and warranties provided under the transaction agreements related to the sales of the hotel properties may not survive the closing of the transactions. While we will likely seek to require the sellers to indemnify us with respect to breaches of representations and warranties that survive, such indemnification may be limited and subject to various materiality thresholds, a significant deductible or an aggregate cap on losses. As a result, there is no guarantee that we will recover any amounts with respect to losses due to breaches by the sellers of their representations and warranties. In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with these hotels may exceed our expectations, and we may experience other unanticipated adverse effects, all of which may adversely affect our financial condition, results of operations and our ability to make distributions to the Company's stockholders.

***Future terrorist activities may adversely affect, and create uncertainty in, our business.***

Terrorism in the United States or elsewhere could have an adverse effect on our business, although the degree of impact will depend on a number of factors, including the U.S. and global economies and global financial markets. Previous terrorist attacks in the

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United States and subsequent terrorism alerts have adversely affected the travel and hospitality industries in the past. Such attacks, or the threat of such attacks, could have a material adverse effect on our business, our ability to finance our business, our ability to insure our properties and/or our results of operations and financial condition.

***We face risks related to pandemic diseases, which could materially and adversely affect travel and result in reduced demand for our hotels.***

Our business could be materially and adversely affected by the effect of a pandemic disease on the travel industry. For example, the perceived threat of a Zika virus outbreak in 2016 had an impact on the south Florida market, and the COVID-19 pandemic had a severe impact on the travel industry. A prolonged recurrence of COVID-19, Zika virus or another pandemic disease also may result in health or other government authorities imposing restrictions on travel. Any of these events could result in a significant drop in demand for our hotels and adversely affect our financial conditions and results of operations.

***Heightened focus on corporate responsibility, specifically related to ESG practices, may impose additional costs and expose the Company to new risks.***

Companies across industries face increasing scrutiny from various stakeholders on how they address a variety of Environmental, Social and Governance ("ESG") matters. Potential and current employees, hotel brands, hotel management companies and vendors may consider these factors when establishing and extending business relationships and hotel guests may consider these factors when choosing a hotel. With this increased focus, public reporting regarding ESG practices is becoming more broadly expected. The focus on and activism around ESG and related matters may constrain business operations or cause the Company to incur additional costs. The Company may face reputational damage in the event the Company's corporate responsibility initiatives do not meet the expectations set by various constituencies, including those of third-party providers of corporate responsibility ratings and reports. Furthermore, if competitors outperform the Company in such expectations, potential or current investors may elect to invest with the Company's competitors, and employees, hotel brands, hotel management companies, vendors and guests may choose not to do business with the Company, which could have a material and adverse impact on the Company's financial condition, the market price of its common shares and ability to raise capital.

As the Company continues to invest and focus on ESG practices that the Company believes are appropriate for its business, the Company could also be criticized by ESG detractors for the scope or nature of its initiatives or goals. The Company could be subjected to negative responses of governmental actors (such as anti-ESG legislation or retaliatory legislative treatment), hotel brands, hotel management companies and hotel guests, that could have a material adverse effect on the Company's reputation, financial condition and results of operations.

**General Risks Related to the Real Estate Industry**

***Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.***

Because real estate investments are relatively illiquid, our ability to promptly sell one or more hotel properties in our portfolio in response to changing economic, financial and investment conditions is limited.

The real estate market is affected by many factors that are beyond our control, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•adverse changes in international, national, regional and local economic and market conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in interest rates and in the cost and terms of debt financing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•absence of liquidity in credit markets which limits the availability and amount of debt financing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the ongoing need for capital improvements, particularly in older structures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in operating expenses; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•civil unrest, acts of war or terrorism and the consequences of terrorist acts, acts of God, including earthquakes, hurricanes, floods and other natural disasters, which may result in uninsured losses.

We may decide to sell our hotels in the future. We cannot predict whether we will be able to sell any hotel property for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a hotel property.

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We may be required to expend funds to correct defects or to make improvements before a hotel property can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements. In acquiring a hotel property, we may agree to lock-out provisions that materially restrict us from selling that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that property. These factors and any others that would impede our ability to respond to adverse changes in the performance of our properties could have a material adverse effect on our operating results and financial condition, as well as our ability to pay distributions to stockholders.

***Future acquisitions may not yield the returns expected, may result in disruptions to our business, may strain management resources and may result in stockholder dilution.***

Our business strategy may not ultimately be successful and may not provide positive returns on our investments. Acquisitions may cause disruptions in our operations and divert management's attention away from day-to-day operations. The issuance of equity securities in connection with any acquisition could be substantially dilutive to the Company's stockholders.

***Our hotels may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.***

When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing, as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected property, which would reduce our cash available for distribution. In addition, the presence of significant mold could expose us to liability from our guests, employees or the management company and others if property damage or health concerns arise and could harm our reputation.

***Increases in property taxes or insurance costs would increase our operating costs, reduce our income and adversely affect our ability to make distributions to the Company's stockholders.***

Each of our hotel properties is subject to real and personal property taxes. These taxes may increase as tax rates change and as the properties are assessed or reassessed by taxing authorities. Additionally, we must procure property and casualty, general liability, and other lines of insurance for our hotels. The premiums we pay for insurance may increase significantly due to a number of factors, including natural disasters. If property taxes or insurance costs increase, our financial condition, results of operations and our ability to make distributions to the Company's stockholders could be materially and adversely affected and the market price of the Company's shares could decline.

**Risks Related to Our Debt**

***We have substantial financial leverage, which could adversely affect our business, liquidity and results of operations.***

On February 12, 2026, in connection with the Merger, we entered into a senior secured credit facility (the "Senior Loan") and a mezzanine loan facility (the "Mezzanine Loan"). The Senior Loan provides a term loan facility with an aggregate principal amount of up to $308.0 million and matures on February 12, 2029 (subject to extension options). The Mezzanine Loan provides for borrowings of up to $45.0 million and matures on February 12, 2030 (subject to extension options). These facilities increase our leverage and may include restrictive covenants and events of default; any default or failure to comply could result in acceleration of our indebtedness and could have a material adverse effect on our financial condition and results of operations.

As of December 31, 2025, the aggregate principal balances of our mortgages and unsecured debt amounted to approximately $324.8 million, not accounting for reductions of unamortized premiums or deferred financing costs as shown on our balance sheet. Giving effect to the indebtedness incurred in connection with the Merger, our total outstanding indebtedness has increased substantially. Historically, we have incurred debt for acquisitions and to fund our renovation, redevelopment and rebranding programs. Limitations upon our access to additional indebtedness or access capital markets following the Merger could adversely affect our ability to fund these programs or pursue future acquisitions.

Our financial leverage could negatively affect our business and financial results, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, working capital, capital expenditures, future business opportunities, paying dividends or other purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•limit our ability to obtain additional financing for working capital, renovation, redevelopment and rebranding plans, acquisitions, debt service requirements and other purposes;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•adversely affect our ability to satisfy our financial obligations, including those related to our loan covenants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•limit our ability to refinance existing debt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•require us to agree to additional restrictions and limitations on our business operations and capital structure to obtain financing or to modify the terms of existing obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•force us to dispose of one or more of our properties, possibly on unfavorable terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•increase our vulnerability to adverse economic and industry conditions, and to interest rate fluctuations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•force us to issue additional equity, possibly on terms unfavorable to existing stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•limit our flexibility to make, or react to, changes in our business and our industry; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•place us at a competitive disadvantage, compared to our competitors that have less debt.

***We must comply with financial covenants in our Senior and Mezzanine loan agreements, and failure to comply with these covenants could result in defaults, acceleration of indebtedness, and loss of assets.***

In connection with the closing of the Merger, we entered into the Senior Loan and the Mezzanine Loan. These agreements, together with our existing mortgage indebtedness, contain affirmative and negative covenants, financial tests and customary events of default. The Senior Loan is secured by mortgages and related collateral on certain of our hotel properties, and the Mezzanine Loan is secured by pledges of equity interests in certain property-owning subsidiaries. The loan agreements restrict our ability and the ability of certain subsidiaries to incur additional indebtedness, create liens, dispose of assets, make investments, pay distributions, or engage in certain transactions. They also require compliance with specified financial and operational performance standards. Our ability to comply with these covenants may be affected by factors beyond our control, including declines in hotel performance, adverse economic conditions, increased interest rates, renovation disruptions or severe weather events. If we fail to comply, we may seek waivers or amendments; however, there can be no assurance that lenders would grant them or do so on favorable terms. If a default is not cured or waived, lenders could accelerate the indebtedness, impose default interest and exercise remedies against collateral. Foreclosure under the Senior Loan could result in the loss of hotel properties, and foreclosure under the Mezzanine Loan could result in the loss of equity interests in property-owning subsidiaries. Certain defaults could also trigger cross-defaults under other agreements. In addition, a foreclosure may result in taxable income without corresponding cash proceeds. If the outstanding debt exceeds our tax basis in the property, we could recognize taxable income and be required to use other cash sources to satisfy distribution requirements necessary to maintain our REIT qualification. Any of these events could materially and adversely affect our financial condition, cash flow, and results of operations.

***Our existing mortgage loan agreement contains, and mortgage loan agreements we may enter into in the future may contain, "cash trap" provisions that could limit our ability to make distributions to our stockholders.*** 

Our existing mortgage loan agreement contains, and mortgage loan agreements we may enter into in the future may contain, cash trap provisions that may be triggered if the performance of the hotels securing the loans declines below a threshold. If these provisions are triggered, substantially all of the profit generated by the hotel will be deposited directly into a lockbox account and then swept into a cash management account for the benefit of the lender. In that event, cash would be distributed to us only after certain items are paid, including deposits into leasing and maintenance reserves and the payment of debt service, insurance, taxes, operating expenses and extraordinary capital expenditures and leasing expenses. This could adversely affect our liquidity and our ability to make distributions to our stockholders.

***Our borrowing costs are sensitive to fluctuations in interest rates and credit market conditions***

Higher interest rates and wider credit spreads could increase our debt service requirements and increase our interest expense. In connection with the closing of the Merger, we entered into the Senior Loan and the Mezzanine Loan, which together significantly increased our overall indebtedness and changed our capital structure. As a result, all of our hotels other than The DeSoto in Savannah, Georgia ("DeSoto") are encumbered under the Senior Loan and related mezzanine structure. To the extent the Senior Loan or Mezzanine Loan bears interest at variable rates tied to SOFR or another benchmark rate, increases in such benchmark rates will increase our interest expense. In addition, even if all or a portion of the Senior Loan or Mezzanine Loan bears interest at a fixed rate, we will be exposed to prevailing market interest rates upon refinancing at maturity. The only remaining property-level mortgage indebtedness consists of the fixed-rate loans secured by The DeSoto. While these loans do not currently expose us to floating-rate risk, they subject us to refinancing risk at maturity and may require refinancing at higher interest rates depending on market conditions at that time.

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The current interest rate environment has been volatile, and future monetary policy decisions, inflationary pressures, financial market disruptions and broader macroeconomic conditions may result in continued benchmark rate volatility and elevated borrowing costs. Higher interest rates may also reduce the value of our hotel properties and limit our refinancing alternatives. Should we obtain new debt financing or refinance existing indebtedness, including the Senior Loan, the Mezzanine Loan or The DeSoto loan, we may incur additional floating rate debt or refinance at higher interest rates and less favorable terms. In addition, adverse economic conditions or reduced hotel operating performance could cause the terms on which we borrow to be unfavorable, including higher spreads, increased amortization requirements, stricter covenants or reduced loan proceeds. Any of these factors could materially and adversely affect our liquidity, financial condition, and results of operations.

**Risks Related to Our Organization and Structure**

***Our ability to effect a merger or other business combination transaction may be restricted by our Operating Partnership agreement.***

In the event of a change of control of the Company, the limited partners of our Operating Partnership will have the right, for a period of 30 days following the change of control event, to cause the Operating Partnership to redeem all of the units held by the limited partners for a cash amount equal to the cash redemption amount otherwise payable upon redemption pursuant to the partnership agreement. This cash redemption right may make it more unlikely or difficult for a third party to propose or consummate a change of control transaction, even if such transaction was in the best interests of the Company's stockholders.

***Provisions of the Company's charter may limit the ability of a third party to acquire control of the Company.***

*Aggregate Share Ownership Limits*

The Company's charter provides that no person may directly or indirectly own more than 9.9% of the value of the Company's outstanding shares of capital stock. These ownership limitations may prevent an acquisition of control of the Company by a third party without the Company's board of directors' approval, even if the Company's stockholders believe the change of control is in their best interest. The Company's board of directors has discretion to waive that ownership limit if, including other considerations, the board receives evidence that ownership in excess of the limit will not jeopardize the Company's REIT status.

*Authority to Issue Stock*

The Company's amended and restated charter authorizes our board of directors to issue up to 69,000,000 shares of common stock and up to 11,000,000 shares of preferred stock, to classify or reclassify any unissued shares of common stock or preferred stock and to set the preferences, rights and other terms of the classified or reclassified shares. Issuances of additional shares of stock may have the effect of delaying or preventing a change in control of the Company, including transactions at a premium over the market price of the Company's stock, even if stockholders believe that a change of control is in their best interest. The Company will be able to issue additional shares of common or preferred stock without stockholder approval, unless stockholder approval is required by applicable law or the rules of any stock exchange or automated quotation system on which the Company's securities may be listed or traded.

***Provisions of Maryland law may limit the ability of a third party to acquire control of the Company.***

Certain provisions of the Maryland General Corporation Law ("MGCL") may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of the Company's common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•"business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested stockholder" (defined generally as any person who beneficially owns 10.0% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes special appraisal rights and special stockholder voting requirements on these combinations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•"control share" provisions that provide that "control shares" of the Company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of "control shares") have no voting rights except to the extent approved by the Company's stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

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The Company has opted out of these provisions of the MGCL, in the case of the business combination provisions of the MGCL, by resolution of the Company's board of directors, and in the case of the control share provisions of the MGCL pursuant to a provision in the Company's bylaws. However, the Company's board of directors may by resolution elect to opt into the business combination provisions of the MGCL and the Company may, by amendment to its bylaws, opt into the control share provisions of the MGCL in the future. The Company's board of directors has the exclusive power to amend the Company's bylaws.

Additionally, Title 8, Subtitle 3 of the MGCL permits the Company's board of directors, without stockholder approval and regardless of what is currently provided in the Company's charter or bylaws, to implement takeover defenses, some of which (for example, a classified board) the Company does not currently have. These provisions may have the effect of inhibiting a third party from making an acquisition proposal for the Company or of delaying, deferring or preventing a change in control of the Company under the circumstances that otherwise could provide the holders of the Company's common stock with the opportunity to realize a premium over the then current market price.

***Our ownership limitations may restrict or prevent you from engaging in certain transfers of the Company's preferred stock.***<sup>[2]</sup>

In order to maintain the Company's REIT qualification, it cannot be closely held (i.e., more than 50.0% in value of our outstanding stock cannot be owned, directly or indirectly, by five or fewer individuals during the last half of any taxable year). To preserve the Company's REIT qualification, the Company's charter contains a 9.9% aggregate share ownership limit. Generally, any shares of the Company's stock owned by affiliated persons will be added together for purposes of the aggregate share ownership limit, and any shares of common stock owned by affiliated owners will be added together for purposes of the common share ownership limit.

If anyone transfers shares in a way that would violate the aggregate share ownership limit or the common share ownership limit, or prevent the Company from continuing to qualify as a REIT under the federal income tax laws, those shares instead will be transferred to a trust for the benefit of a charitable beneficiary and will be either redeemed by us or sold to a person whose ownership of the shares will not violate the aggregate share ownership limit or the common share ownership limit. If this transfer to a trust fails to prevent such a violation or fails to preserve the Company's continued qualification as a REIT, then the Company will consider the initial intended transfer to be null and void from the outset. The intended transferee of those shares will be deemed never to have owned the shares. Anyone who acquires shares in violation of the aggregate share ownership limit, the common share ownership limit or the other restrictions on transfer in the Company's charter bears the risk of suffering a financial loss when the shares are redeemed or sold if the market price of the Company's stock falls between the date of purchase and the date of redemption or sale. Following the Merger, KW Kingfisher LLC became the sole owner of the Company's common stock.

The Company's articles supplementary establishing and fixing the rights and preferences of each of our 8.0% Series B Cumulative Redeemable Perpetual Preferred Stock (the "Series B Preferred Stock"), 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock (the "Series C Preferred Stock"), and 8.25% Series D Cumulative Redeemable Perpetual Preferred Stock (the "Series D Preferred Stock", and together with the Series B Preferred Stock and the Series C Preferred Stock, the "Preferred Stock"), provide that no person may directly or indirectly own more than 9.9% of the aggregate number of outstanding shares of Series B Preferred Stock, Series C Preferred Stock, or Series D Preferred Stock, respectively, excluding any outstanding shares of Series B Preferred Stock, Series C Preferred Stock, or Series D Preferred Stock not treated as outstanding for federal income tax purposes. The Company's board of directors has discretion to waive that ownership limit if, including other considerations, the board receives evidence that ownership in excess of the limit will not jeopardize the Company's REIT status.

***Holders of our outstanding preferred shares have dividend, liquidation and other rights that are senior to the rights of the holders of our common shares.***

Our board of directors has the authority to designate and issue preferred shares with liquidation, dividend and other rights that are senior to those of our common shares. As of December 31, 2025, 1,464,100 shares of our Series B Preferred Stock were issued and outstanding, 1,346,110 shares of our Series C Preferred Stock were issued and outstanding, and 1,163,100 shares of our Series D Preferred Stock were issued and outstanding. The aggregate liquidation preference with respect to the outstanding shares of Series B Preferred Stock is approximately $45.4 million, and annual dividends on our outstanding shares of Series B Preferred Stock are approximately $2.9 million. The aggregate liquidation preference with respect to the outstanding shares of Series C Preferred Stock is approximately $41.6 million, and annual dividends on our outstanding shares of Series C Preferred Stock are approximately $2.7 million. The aggregate liquidation preference with respect to the outstanding shares of Series D Preferred Stock is approximately $36.3 million, and annual dividends on our outstanding shares of Series D Preferred Stock are approximately $2.4 million. Holders of our Preferred Stock are entitled to cumulative dividends before any dividends may be declared or set aside on our common shares. Upon our voluntary or involuntary liquidation, dissolution or winding up, before any payment is made to holders of our common shares, holders of these preferred shares are entitled to receive a liquidation preference of $25.00 per share plus any accrued and unpaid distributions. This will reduce the remaining amount of our assets, if any, available to distribute to holders of our common shares. In addition, holders of the Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock voting together as

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a separate class have the right to elect two additional directors to our board of directors whenever dividends on the preferred shares are in arrears in an aggregate amount equivalent to six or more quarterly dividends (whether or not consecutive). As of December 31, 2025, distributions on our Preferred Stock are in arrears for the last thirteen quarterly payments. Therefore, the holders of our Preferred Stock are entitled to vote for the election of a total of two additional directors of the Company, at a special meeting or at the next annual meeting of stockholders and at each subsequent annual meeting of the stockholders until full cumulative distributions for all past unpaid periods are paid or declared and a sum sufficient for the payment thereof in cash is set aside. No dividends may be paid on our common stock until such time as the Preferred Stock distributions are made current.

***The change of control conversion and redemption features of the Company's preferred stock may make it more difficult for a party to take over our Company or discourage a party from taking over our Company.***

Upon a change of control (as defined in our charter), holders of our Preferred Stock will have the right (unless, as provided in our charter, we have provided or provide notice of our election to exercise our special optional redemption right before the relevant date) to convert some or all of their shares of preferred stock into shares of our common stock (or equivalent value of alternative consideration). Upon such a conversion, holders will be limited to a maximum number of shares equal to the share cap, subject to adjustments. Each holder of Series B Preferred Stock is entitled to receive a maximum of 8.29187 shares of our common stock per share of Series B Preferred Stock, which may result in the holder receiving value that is less than the liquidation preference of the Series B Preferred Stock. Each holder of Series C Preferred Stock is entitled to receive a maximum of 8.50340 shares of our common stock per share of Series C Preferred Stock, which may result in the holder receiving value that is less than the liquidation preference of the Series C Preferred Stock. Each holder of Series D Preferred Stock is entitled to receive a maximum of 7.39645 shares of our common stock per share of Series D Preferred Stock, which may result in the holder receiving value that is less than the liquidation preference of the Series D Preferred Stock. In addition, those features of our Preferred Stock may have the effect of inhibiting or discouraging a third party from making an acquisition proposal for our Company or of delaying, deferring or preventing a change in control of our Company under circumstances that otherwise could provide the holders of shares of our common stock and shares of our Preferred Stock with the opportunity to realize a premium over the then current market price or that stockholders may otherwise believe is in their best interests.

Consistent with these provisions, following the closing of the Merger, each share of the Preferred Stock issued and outstanding immediately before the Effective Time (as defined in the Merger Agreement) became entitled to receive the Merger Consideration (as defined in the Merger Agreement) if the holder thereof elected to convert, subject to the terms and conditions contained in the Articles Supplementary of the Preferred Stock, including the share cap as defined therein, their respective shares of Preferred Stock into Common Stock after the closing of the Merger. As such, on February 27, 2026, the Company posted to its corporate website, and provided, the holders of the Company Preferred Stock, a notice of Change of Control (as defined in the Articles) informing the Preferred Stockholders of the Change of Control and describing the resulting Change of Control Conversion Right (as defined in the Articles). The Company designated March 20, 2026, as the Change in Control Conversion Date (as defined in the Articles).

***Our organizational documents have no limitation on the amount of indebtedness we may incur. As a result, we may become highly leveraged in the future, which could materially and adversely affect us.***

Our business strategy contemplates the use of both secured and unsecured debt to finance long-term growth. In addition, our organizational documents contain no limitations on the amount of debt that we may incur, and the Company's board of directors may change our financing policy at any time. As a result, we may be able to incur substantial additional debt, including secured debt, in the future. Incurring debt could subject us to many risks, including the risks that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our cash flows from operations may be insufficient to make required payments of principal and interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our debt may increase our vulnerability to adverse economic and industry conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•we may be required to dedicate a substantial portion of our cash flows from operations to payments on our debt, thereby reducing cash available for funds available for operations and capital expenditures, future business opportunities or other purposes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the terms of any refinancing may not be in the same amount or on terms as favorable as the terms of the existing debt being refinanced.

***The board of directors' revocation of the Company's REIT status without stockholder approval may decrease the Company's stockholders' total return.***

The Company's charter provides that the Company's board of directors may revoke or otherwise terminate the Company's REIT election, without the approval of the Company's stockholders, if the Company's board of directors determines that it is no longer in the Company's best interest to continue to qualify as a REIT. If the Company ceases to be a REIT, it would become subject

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to federal income tax on its taxable income and would no longer be required to distribute most of its taxable income to the Company's stockholders, which may have adverse consequences on our total return to the Company's stockholders.

***The ability of the Company's board of directors to change the Company's major corporate policies may not be in your best interest.***

The Company's board of directors determines the Company's major corporate policies, including its acquisition, financing, growth, operations and distribution policies. The Company's board of directors may amend or revise these and other policies from time to time without the vote or consent of the Company's stockholders.

***Our success depends on key personnel whose continued service is not guaranteed.***

We depend on the efforts and expertise of our Chief Executive Officer, Zachary Schmidt, our Chief Financial Officer, William Ryan Pellum, and other key personnel to manage our day-to-day operations and strategic business direction. In connection with the Merger, certain of our prior executive officers resigned and new executive officers were appointed. The loss of the services of one or more of our key personnel or our inability to attract and retain qualified personnel could have an adverse effect on our operations.

**Risks Related to Conflicts of Interest of Our Officers and Directors**

***Conflicts of interest could result in our officers and directors acting in a manner other than in the best interests of holders of our outstanding preferred stock.***

As a result of the Merger, we are a wholly owned subsidiary of KW Kingfisher LLC. Our parent has the ability to control matters requiring stockholder approval and to control our policies and affairs. The interests of our parent and its affiliates may differ from the interests of holders of our outstanding preferred stock, including with respect to business strategies, capital allocation, the incurrence of indebtedness and related-party transactions. In connection with the Merger and related transactions, we have entered into, and may in the future enter into, transactions with affiliates and third parties that may give rise to conflicts of interest, including hotel management agreements with Schulte, financing arrangements with affiliates of Apollo and Ascendant, and board observer rights granted to certain counterparties. These conflicts could influence our decision-making, and transactions may not be negotiated on an arm's-length basis, which could adversely affect our financial condition and results of operations.

*There can be no assurance that provisions in our bylaws will always be successful in mitigating conflicts of interest.*

Under our bylaws, a committee consisting of only independent directors must approve any transaction between us and Our Town, or any interested director. However, there can be no assurance that these policies always will be successful in mitigating such conflicts, and decisions could be made that might not fully reflect the interests of all of the Company's outstanding preferred stockholders.

**Federal Income Tax Risks Related to the Company's Status as a REIT**

***The federal income tax laws governing REITs are complex.***

The Company intends to operate in a manner that will maintain its qualification as a REIT under the federal income tax laws. The REIT qualification requirements are extremely complex, however, and interpretations of the federal income tax laws governing qualification as a REIT are limited. The Company has not requested or obtained a ruling from the Internal Revenue Service ("IRS") that it qualifies as a REIT. Accordingly, we cannot be certain that the Company will be successful in operating in a manner that will permit it to qualify as a REIT. At any time, new laws, interpretations or court decisions may change the federal tax laws or the federal income tax consequences of the Company's qualification as a REIT. We cannot predict when or if any new federal income tax law, regulation or administrative interpretation, or any amendment to any existing federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactively. The Company and its stockholders could be adversely affected by any such change in, or any new, federal income tax law, regulation or administrative interpretation. We are not aware, however, of any pending tax legislation that would adversely affect the Company's ability to qualify as a REIT.

***Failure to make distributions could subject the Company to tax.***

In order to maintain its qualification as a REIT, each year the Company must pay out to its stockholders in distributions, as "qualifying distributions," at least 90.0% of its REIT taxable income, computed without regard to the deductions for dividends paid and excluding net capital gains and reduced by certain noncash items. To the extent that the Company satisfies this distribution requirement but distributes less than 100.0% of its taxable income (including its net capital gain), it will be subject to federal corporate

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income tax on its undistributed taxable income. In addition, the Company will be subject to a 4.0% nondeductible excise tax if the actual amount that it pays out to its stockholders as a "qualifying distribution" for a calendar year is less than the sum of: (A) 85.0% of our ordinary income for such calendar year, plus (B) 95.0% of our capital gain net income for such calendar year. The Company's only recurring source of funds to make these distributions comes from rent received from its TRS Lessees whose only recurring source of funds with which to make these payments and distributions is the net cash flow (after payment of operating and other costs and expenses and management fees) from hotel operations, and any dividend and other distributions that we may receive from MHI Holding. Accordingly, the Company may be required to borrow money or sell assets to make sufficient distributions to pay out enough of its taxable income to satisfy the distribution requirement and to avoid corporate income tax and the 4.0% non-deductible excise tax in a particular year.

***Failure to qualify as a REIT would subject the Company to federal income tax.***

If the Company fails to qualify as a REIT in any taxable year, it will be required to pay federal income tax on its taxable income at regular corporate rates. The resulting tax liability might cause the Company to borrow funds, liquidate some of its investments or take other steps that could negatively affect its operating results in order to pay any such tax. Unless it is entitled to relief under certain statutory provisions, the Company would be disqualified from treatment as a REIT for the four taxable years following the year in which it lost its qualification. If the Company lost its REIT status, its net earnings available for investment or distribution to stockholders would be significantly reduced for each of the years involved. In addition, the Company would no longer be required to make distributions to its stockholders, and it would not be able to deduct any stockholder distributions in computing its taxable income. This would substantially reduce the Company's earnings, cash available to pay distributions, and the value of common stock.

***Failure to qualify as a REIT may cause the Company to reduce or eliminate distributions to its stockholders, and the Company may face increased difficulty in raising capital or obtaining financing.***

If the Company fails to remain qualified as a REIT, it may have to reduce or eliminate any distributions to its stockholders in order to satisfy its income tax liabilities. Any distribution that the Company makes to its stockholders would be treated as a taxable dividend to the extent of its current and accumulated earnings and profits. This may result in negative investor and market perception regarding the market value of the Company's stock, and the value of its stock may be reduced. In addition, the Company and the Operating Partnership may face increased difficulty in raising capital or obtaining financing if the Company fails to qualify or remain qualified as a REIT because of the resulting tax liability and potential reduction of its market valuation.

***If MHI Holding exceeds certain value thresholds, this could cause the Company to fail to qualify as a REIT.***

A REIT may own up to 100% of the stock of one or more TRSs. A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT. Overall, no more than 20.0% of the value of a REIT's assets may consist of stock or securities of one or more TRSs. MHI Holding is a TRS and the Company may form other TRSs in the future. The Company plans to monitor the value of its shares of MHI Holding and of any other TRS the Company may form. However, there can be no assurance that the IRS will not attempt to attribute additional value to the shares of MHI Holding or to the shares of any other TRS that the Company may form. If the Company is treated as owning securities of one or more TRSs with an aggregate value that is in excess of the thresholds outlined above, the Company could lose its status as a REIT or become subject to penalties.

***The Company's transactions with MHI Holding may cause it to be subject to a 100% excise tax on certain income or deductions if such transactions are not conducted on arm's-length terms.***

Rent paid to the Company by the TRS Lessees cannot be based on net income or profits for such rents to qualify as "rents from real property." We receive some percentage rent from the TRS Lessees that is calculated based on the gross revenues—not based on net income or profits. If the IRS determines that the rent paid pursuant to our leases with the TRS Lessees are excessive, the deductibility thereof by the TRS Lessees may be challenged, and we could be subject to a 100% excise tax on "re-determined rent" or "re-determined deductions" to the extent that such rent exceeds an arm's-length amount. We believe that our rent and other transactions with the TRS Lessees are based on arm's-length amounts and reflect normal business practices, but there can be no assurance that the IRS will agree with our belief.

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***Even if the Company remains qualified as a REIT, it may face other tax liabilities that reduce its cash flow.***

Even if the Company remains qualified for taxation as a REIT, it may be subject to certain federal, state and local taxes on its income and assets. For example:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•it will be required to pay federal and state corporate income tax on undistributed REIT taxable income (including net capital gain);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•if it has net income from the disposition of foreclosure property held primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, it must pay federal corporate income tax on such income;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•if it (or the Operating Partnership or any subsidiary of the Operating Partnership other than a TRS) sells a property in a "prohibited transaction," its gain, or its share of such gain, from the sale would be subject to a 100.0% penalty tax. A "prohibited transaction" would be a sale of property, other than a foreclosure property, held primarily for sale to customers in the ordinary course of business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•it may, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Code to maintain its qualification as a REIT;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•MHI Holding is a fully taxable corporation and is required to pay federal and state taxes on its taxable income; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•it may experience increases in its state and/or local income tax burdens as states and localities continue to look to modify their tax laws in order to raise revenues, including by (among other things) changing from a net taxable income-based regime to a gross receipts-based regime, suspending and/or limiting the use of net operating losses ("NOL"), increasing tax rates and fees, imposing surcharges and subjecting partnerships to an entity-level tax, and limiting or disallowing certain U.S. federal deductions such as the dividends-paid deduction.

***Complying with REIT requirements may cause the Company to forgo attractive opportunities that could otherwise generate strong risk-adjusted returns and instead pursue less attractive opportunities, or none at all.***

To qualify as a REIT for federal income tax purposes, the Company must continually satisfy tests concerning, among other things, the sources of its income, the nature and diversification of its assets, the amounts it distributes to its stockholders and the ownership of its stock.

In general, when applying these tests, the Company is treated as owning its proportionate share of the Operating Partnership's assets (which share is determined in accordance with the Company's capital interest in the Operating Partnership) and as being entitled to the Operating Partnership's income attributable to such share. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of generating strong risk-adjusted returns on invested capital for our stockholders.

***Complying with REIT requirements may force the Company to liquidate otherwise attractive investments, which could result in an overall loss on its investments.***

To maintain qualification as a REIT, the Company must ensure that at the end of each calendar quarter at least 75.0% of the value of its assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of the Company's assets (other than securities of one or more TRSs) generally cannot include more than 10.0% of the outstanding voting securities of any one issuer or more than 10.0% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5.0% of the value of the Company's assets (other than government securities, qualified real estate assets and securities of one or more TRSs) can consist of the securities of any one issuer, and no more than 20.0% of the value of the Company's total assets can be represented by securities of one or more TRSs.

When applying these asset tests, the Company is treated as owning its proportionate share of the Operating Partnership's assets (which is determined in accordance with the Company's capital interest in the Operating Partnership). If the Company fails to comply with these requirements at the end of any calendar quarter, it must correct such failure within 30 days after the end of the calendar quarter to avoid losing its REIT status and suffering adverse tax consequences. If the Company fails to comply with these requirements at the end of any calendar quarter, and the failure exceeds a de-minimis threshold, the Company may be able to preserve its REIT status if the failure was due to reasonable cause and not to willful neglect. In this case, we will be required to dispose of the assets causing the failure within six months after the last day of the quarter in which the failure occurred, and we will be required to pay an additional tax of the greater of $50,000 or the product of the net income generated on those assets multiplied by the federal corporate income tax rate of 21.0%.

As a result, we may be required to liquidate otherwise attractive investments.

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***If the Operating Partnership fails to qualify as a partnership for federal income tax purposes, the Company could cease to qualify as a REIT and suffer other adverse consequences.***

We believe that the Operating Partnership will continue to qualify to be treated as a partnership for U.S. federal income tax purposes for so long as the Operating Partnership has more than one partner. As a partnership, the Operating Partnership is not subject to federal income tax on its income. Instead, each of its partners, including the Company, will be required to pay tax on its allocable share of the Operating Partnership's income. We cannot assure you, however, that the IRS will not challenge the Operating Partnership's status as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating the Operating Partnership as a corporation for federal income tax purposes, the Company could fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, cease to qualify as a REIT. Also, if the Operating Partnership were to be classified as a corporation for federal income tax purposes, the Operating Partnership would become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners, including the Company.

***The Company's failure to qualify as a REIT would have serious adverse consequences to its stockholders.***

The Company elected to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with its taxable year ended December 31, 2004. The Company believes it has operated so as to qualify as a REIT under the Code and believes that its current organization and method of operation comply with the rules and regulations promulgated under the Code to enable the Company to continue to qualify as a REIT. However, it is possible that the Company has been organized or has operated in a manner that would not allow it to qualify as a REIT, or that its future operations could cause it to fail to qualify. Qualification as a REIT requires the Company to satisfy numerous requirements (some on an annual and others on a quarterly basis) established under highly technical and complex sections of the Code for which there are only limited judicial and administrative interpretations and involves the determination of various factual matters and circumstances not entirely within its control. For example, in order to qualify as a REIT, the Company must satisfy a 75.0% gross income test pursuant to Code Section 856(c)(3) and a 95.0% gross income test pursuant to Code Section 856(c)(2) each taxable year. In addition, the Company must pay dividends, as "qualifying distributions," to its stockholders aggregating annually at least 90.0% of its REIT taxable income (determined without regard to the dividends-paid deduction and by excluding capital gains and reduced by certain noncash items) and must satisfy specified asset tests on a quarterly basis. While historically the Company has satisfied the distribution requirement discussed above, by making cash distributions to its stockholders, the Company may choose to satisfy this requirement by making distributions of cash or other property, including, in limited circumstances, its stock. The provisions of the Code and applicable Treasury regulations regarding qualification as a REIT are more complicated in the Company's case because it holds its assets through the Operating Partnership.

***If MHI Holding does not qualify as a TRS, or if the Company's hotel manager does not qualify as an "eligible independent contractor," the Company would fail to qualify as a REIT and would be subject to higher taxes and have less cash available for distribution to its stockholders.***

Rent paid by a lessee that is a "related party tenant" of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs, as noted above. The Company currently leases substantially all of its hotels to the TRS Lessees, which are disregarded entities for U.S. federal income tax purposes and are wholly-owned by MHI Holding, a TRS, and expects to continue to do so. So long as MHI Holding qualifies as a TRS, it will not be treated as a "related party tenant" with respect to the Company's properties that are managed by an independent hotel management company that qualifies as an "eligible independent contractor." The Company believes that MHI Holding will continue to qualify to be treated as a TRS for federal income tax purposes, but there can be no assurance that the IRS will not challenge this status or that a court would not sustain such a challenge. If the IRS were successful in such challenge, it is possible that the Company would fail to meet the asset tests applicable to REITs and substantially all of its income would fail to be qualifying income for purposes of the two gross income tests. If the Company failed to meet any of the asset or gross income tests, it would likely lose its REIT qualification for federal income tax purposes.

Additionally, if the Company's hotel manager does not qualify as an "eligible independent contractor," the Company would fail to qualify as a REIT. Each hotel manager that enters into a management contract with the TRS Lessees must qualify as an "eligible independent contractor" under the REIT rules in order for the rent paid by the TRS Lessees to be qualifying income for purposes of the REIT gross income tests. Among other requirements, in order to qualify as an eligible independent contractor, a hotel manager must not own, directly or through its stockholders, more than 35.0% of the Company's outstanding shares, taking into account certain ownership attribution rules. The ownership attribution rules that apply for purposes of these 35.0% thresholds are complex. Although the Company intends to monitor ownership of its shares by its hotel manager and its owners, there can be no assurance that these ownership levels will not be exceeded.

In addition, for the Company's hotel management company to qualify as an "eligible independent contractor," such company or a related person must be actively engaged in the trade or business of operating "qualified lodging facilities" (as defined below) for one or more persons not related to the REIT or its TRSs at each time that such company enters into a hotel management contract with a

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TRS. The Company believes the hotel manager operates qualified lodging facilities for certain persons who are not related to the REIT or its TRSs. However, no assurances can be provided that this will continue to be the case or that any other hotel management companies that the Company may engage in the future will in fact comply with this requirement in the future. Failure to comply with this requirement would require the Company to find other managers for future contracts, and, if the Company hired a management company without knowledge of the failure, it could jeopardize the Company's status as a REIT.

As noted above, each hotel with respect to which a TRS Lessee pays rent must be a "qualified lodging facility". A "qualified lodging facility" is a hotel, motel, or other establishment more than one-half of the dwelling units in which are used on a transient basis, including customary amenities and facilities, provided that no wagering activities are conducted at or in connection with such facility by any person who is engaged in the business of accepting wagers and who is legally authorized to engage in such business at or in connection with such facility. The Company believes that all of the hotels leased to the TRS Lessees are qualified lodging facilities. Although the Company intends to monitor future acquisitions and improvements of hotels, the REIT provisions of the Code provide only limited guidance for making determinations under the requirements for qualified lodging facilities, and there can be no assurance that these requirements will be satisfied in all cases.

***Foreign investors may be subject to U.S. tax on the disposition of the Company's stock if the Company does not qualify as a "domestically controlled" REIT.***

A foreign person disposing of a "U.S. real property interest," which includes stock of a U.S. corporation whose assets consist principally of U.S. real property interests, is generally subject to U.S. federal income tax under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") on the gain recognized on the disposition, unless such foreign person is a "qualified foreign pension fund" or one of the certain publicly traded non-U.S. "qualified collective investment vehicles". Additionally, the transferee will be required to withhold 15.0% on the amount realized on the disposition if the foreign transferor is subject to U.S. federal income tax under FIRPTA. This 15.0% is creditable against the U.S. federal income tax liability of the foreign transferor in connection with such transferor's disposition of the Company's stock. FIRPTA does not apply, however, to the disposition of stock in a REIT if the REIT is "domestically controlled" (i.e., less than 50.0% of the REIT's capital stock, by value, has been owned directly or indirectly by persons who are not qualifying U.S. persons during a continuous five-year period ending on the date of disposition or, if shorter, during the entire period of the REIT's existence). Effective April 25, 2024, the IRS released final regulations under FIRPTA that require a new REIT to "look-through" any nonpublic domestic corporation if more than 50% of the corporation's stock (by value) is owned (directly or indirectly) by foreign persons in determining whether such REIT is considered to be "domestically controlled." The final regulations included a transition rule that exempts existing domestically controlled REITs from the "look-through" rule until April 24, 2034 (i.e., 10 years following the effective date of the final regulations) if the following conditions are met—(a) the aggregate value of U.S. real property interests acquired by the REIT after April 25, 2024 does not exceed 20% of the aggregate value of U.S. real property interest held by the REIT as of April 25, 2024, and (b) the REIT does not undergo what is essentially a more than 50% change in ownership (measured by value) by a "non-look-through person" following April 25, 2024. The final regulations are complex and we cannot be sure that the Company will qualify as a "domestically controlled" REIT. If the Company does not so qualify, gain realized by foreign investors on a sale of the Company's stock would be subject to U.S. income and withholding tax under FIRPTA, unless the Company's stock were traded on an established securities market.

***If the leases between the Operating Partnership and the TRS Lessees are recharacterized, the Company may fail to qualify as a REIT.***

To qualify as a REIT for federal income tax purposes, the Company must satisfy two gross income tests, under which specified percentages of the Company's gross income must be derived from certain sources, including "rents from real property". Rents paid by the TRS Lessees to the Operating Partnership and its subsidiaries pursuant to the leases of the Company's hotel properties will constitute substantially all of the Company's gross income. In order for such rent to qualify as "rents from real property" for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and not be treated as service contracts, joint ventures, or some other type of arrangement. If the leases between the TRS Lessees to the Operating Partnership and its subsidiaries are not respected as true leases for federal income tax purposes, the Company could fail to qualify as a REIT for federal income tax purposes.

***MHI Holding increases our overall tax liability.***

Our TRS Lessees are single-member limited liability companies that are wholly-owned, directly or indirectly, by MHI Holding, a TRS that is wholly-owned by the Operating Partnership. Each of our TRS Lessees is disregarded as an entity separate from MHI Holding for U.S. federal income tax purposes, such that the assets, liabilities, income, gains, losses, credits and deductions of our TRS Lessees are treated as the assets, liabilities, income, gains, losses, credits and deductions of MHI Holding for U.S. federal income tax purposes. MHI Holding is subject to federal and state income tax on its taxable income, which will consist of the revenues from the hotels leased by the Company's TRS Lessees, net of the operating expenses for such hotels and rent payments. Accordingly, although the Company's ownership of MHI Holding and the TRS Lessees will allow it to participate in the operating income from its hotels in

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addition to receiving rent, that operating income will be fully subject to federal and state corporate income tax. The after-tax net income of MHI Holding, if any, will be available for distribution to the Company via the Operating Partnership.

The Company will incur a 100.0% excise tax on its transactions with MHI Holding and the TRS Lessees that are not conducted on an arm's-length basis. For example, to the extent that the rent paid by the TRS Lessees exceeds an arm's-length rental amount, such amount potentially will be subject to this excise tax. The Company intends that all transactions among itself, MHI Holding and the TRS Lessees will be conducted on an arm's-length basis and, therefore, that the rent paid by the TRS Lessees will not be subject to this excise tax. While the Company believes its leases have customary terms and reflect normal business practices and that the rents paid thereto reflect market terms, there can be no assurance that the IRS will agree.

***Taxation of dividend income could make the Company's stock less attractive to certain investors and reduce the market price of its stock.***

The federal income tax laws governing REITs, or the administrative interpretations of those laws, may be amended at any time. Any new laws or interpretations may take effect retroactively and could adversely affect the Company or could adversely affect its stockholders. Currently, "qualified dividends," which include dividends from domestic C corporations that are paid to non-corporate stockholders, are subject to a reduced maximum U.S. federal income tax rate of 20.0%, plus a 3.8% "Medicare surtax" discussed below. Because REITs generally do not pay corporate-level taxes as a result of the dividends-paid deduction to which they are entitled, dividends from REITs generally are not treated as qualified dividends and thus do not qualify for a reduced tax rate. Under the Tax Cuts and Jobs Act ("TCJA"), for taxable years prior to January 1, 2026, a non-corporate taxpayer may deduct 20% of ordinary REIT dividends that are not "capital gain dividends" or "qualified dividend income" resulting in an effective maximum U.S. federal income tax rate of 29.6% (based on the current maximum U.S. federal income tax rate for individuals of 37%). Individuals, trusts and estates whose income exceeds certain thresholds are also subject to a 3.8% Medicare surtax on dividends received from the Company. The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the Company's stock. Moreover, there is no assurance that we will always distribute ordinary income dividends, or that Congress will not repeal such legislation.

***Investors may be subject to a 3.8% Medicare surtax in connection with an investment in the Company's stock.***

The U.S. tax laws impose a 3.8% Medicare surtax on the "net investment income" (i.e., interest, dividends, capital gains, annuities, and rents that are not derived in the ordinary course of a trade or business) of individuals with income exceeding $200,000 ($250,000 if married filing jointly or $125,000 if married filing separately), and of estates and trusts. Dividends on the Company's stock as well as gains from the disposition of the Company's stock may be subject to the Medicare surtax. Prospective investors should consult with their independent advisors as to the applicability of the Medicare surtax to an investment in the Company's stock in light of such investors' particular circumstances.

***Investors may be subject to U.S. withholding tax under the "Foreign Account Tax Compliance Act."***

Under the Foreign Account Tax Compliance Act ("FATCA"), a 30.0% U.S. withholding tax generally is imposed on "withhold-able payments," which consist of (i) U.S.-source dividends, interest, rents and other "fixed or determinable annual or periodical income" and (ii) certain U.S.-source gross proceeds paid to (a) "foreign financial institutions" unless (x) they enter into an agreement with the IRS to collect and disclose to the IRS information regarding their direct and indirect U.S. owners or (y) they comply with the terms of any FATCA intergovernmental agreement executed between the authorities in their jurisdiction and the U.S., and (b) "non-financial foreign entities" (i.e., foreign entities that are not foreign financial institutions) unless they certify certain information regarding their direct and indirect U.S. owners. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of our shares on or after January 1, 2019, recently proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely, and Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued. FATCA does not replace the existing U.S. withholding tax regime. However, the FATCA regulations contain coordination provisions to avoid double withholding on U.S.-source income.

A foreign investor that receives dividends on the Company's stock or gross proceeds from a disposition of shares of the Company's stock may be subject to FATCA withholding tax with respect to such dividends or gross proceeds.

***Foreign investors will be subject to U.S. withholding tax on the receipt of ordinary dividends on the Company's stock.***

The portion of dividends received by a foreign investor payable out of the Company's current and accumulated earnings and profits which are not attributable to capital gains and which are not effectively connected with a U.S. trade or business of the foreign investor will generally be subject to U.S. withholding tax at a statutory rate of 30.0%. This 30.0% withholding tax may be reduced by an applicable income tax treaty. The FATCA and nonresident withholding regulations are complex. Even if the 30.0% withholding is

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reduced or eliminated by treaty for payments made to a foreign investor, FATCA withholding of 30.0% could apply depending upon the foreign investor's FATCA status. Foreign investors should consult with their independent advisors as to the U.S. withholding tax consequences to such investors with respect to their investment in the Company's stock in light of their particular circumstances, as well as determining the appropriate documentation required to reduce or eliminate U.S. withholding tax.

***Foreign investors will be subject to U.S. income tax on the receipt of capital gain dividends on the Company's stock.***

Under FIRPTA, distributions that we make to a foreign investor that are attributable to gains from our dispositions of U.S. real property interests ("capital gain dividends") will be treated as income that is effectively connected with a U.S. trade or business, and therefore subject to U.S. federal income tax, in the hands of the foreign investor, unless such foreign person is a "qualified foreign pension fund" or one of certain publicly traded non-U.S. "qualified collective investment vehicles". A foreign investor who is subject to tax under FIRPTA will be subject to U.S. federal income tax (at the rates applicable to U.S. investors) on any capital gain dividends and will also be required to file U.S. federal income tax returns to report such capital gain dividends. Furthermore, capital gain dividends are subject to an additional 30.0% "branch profits tax" (which may be reduced by an applicable income tax treaty) in the hands of a foreign investor who is subject to tax under FIRPTA if such foreign investor is treated as a corporation for U.S. federal income tax purposes.

***U.S. tax reform and related regulatory action could adversely affect you and the Company.***

The IRS, the U.S. Treasury Department and Congress frequently review U.S. federal income tax legislation, regulations and other guidance. At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be amended or modified. Changes to the tax laws, possibly with retroactive application, may adversely affect taxation of the Company or the Company's stockholders. The Company urges stockholders and prospective stockholders to consult with their tax advisors with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in the Company's shares. We cannot predict whether any of these proposed changes will become law, or the long-term effect of any future law changes on the Company and its stockholders. We and our stockholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation.

**Item 1B. *Unresolved Staff Comments***

Not applicable.

**Item 1C. *Cybersecurity***

The Company's management recognizes the critical importance of monitoring for and properly addressing cybersecurity threats. Our Chief Financial Officer is the executive primarily responsible for identifying and managing risks to the Company from cybersecurity threats and has over 13 years of experience providing oversight of information technology infrastructure, system and security. With respect to the Company's information systems, we rely on third-party technology and software providers to manage the cybersecurity risk to which those systems are subject. For elements of cybersecurity risk which fall outside the purview of the third-party technology and software providers, our Chief Financial Officer oversees the implementation of additional controls to reduce the likelihood of a cybersecurity incident occurring as well as to reduce the impact of any such incident, should it occur. At least annually, he discusses cybersecurity risk and the Company's mitigation efforts and effectiveness of controls with the Board of Directors. The Board of Directors reviews and discusses our cybersecurity risk and reviews the tests of controls performed by consultants that perform the Company's internal audit function.

As of December 31, 2025, no risk from cybersecurity threats, including as a result of any previous cybersecurity incidents, has materially affected or is reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition. Although we have implemented controls to protect our data and information systems and monitor our systems on an ongoing basis, such efforts may not prevent material compromises to our information systems in the future, including those that could have a material adverse effect on our business. We maintain cybersecurity insurance coverage to mitigate our financial exposure to certain incidents, and we consult with our consultants that perform the Company's internal audit function regarding opportunities and enhancements to strengthen our policies and procedures.

We do not retain any confidential information from our customers. While we have control over our corporate information systems, we do not manage hotel operations and the day-to-day operation of our properties, including many of the information systems used at the hotels. Controls over these systems are maintained by our hotel managers and, where applicable, our franchisors. Although we set expectations for our hotel managers and our franchisors, we rely on them to manage the cybersecurity risk to which they are subject. Our hotel managers maintain separate cybersecurity insurance coverage to offset a portion of potential costs incurred from a security breach.

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We currently do not have a cybersecurity incident response plan with respect to our data and information systems. We rely on our hotel manager and their cybersecurity consultants as well as our franchisors, to maintain cybersecurity incident response plans applicable to their systems and hotel-level systems they manage on our behalf.

For additional information about cybersecurity risk, see "Item 1A. Risk Factors - We and our hotel manager rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business."

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**Item 2. *Properties***

As of December 31, 2025, our portfolio consisted of the following properties (*see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Operating Metrics, for definitions of Occupancy, ADR, and RevPAR in Part II of this Annual Report on Form 10-K*):

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Number of** | **Occupancy** | **ADR** | **RevPAR** | **Occupancy** | **ADR** | **RevPAR** | **Occupancy** | **ADR** | **RevPAR** |
| **Wholly-Owned Properties** | **Rooms** | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** | **2023** | **2023** | **2023** |
| The DeSoto, Savannah, Georgia | 246 | 67.9% | $207.62 | $141.05 | 72.4% | $209.24 | $151.51 | 69.2% | $211.26 | $146.23 |
| DoubleTree by Hilton Jacksonville Riverfront, Jacksonville, Florida | 293 | 63.7% | $136.69 | $87.12 | 67.7% | $140.85 | $95.29 | 70.0% | $148.42 | $103.90 |
| DoubleTree by Hilton Laurel, Laurel, Maryland | 208 | 61.4% | $123.34 | $75.72 | 57.1% | $128.94 | $73.67 | 57.8% | $127.29 | $73.55 |
| DoubleTree by Hilton Philadelphia Airport, Philadelphia, Pennsylvania | 331 | 66.1% | $131.98 | $87.17 | 64.7% | $139.27 | $90.15 | 61.7% | $141.15 | $87.13 |
| DoubleTree Resort by Hilton Hollywood Beach, Hollywood, Florida | 311 | 67.5% | $190.35 | $128.52 | 67.9% | $187.58 | $127.35 | 59.9% | $201.48 | $120.70 |
| Georgian Terrace, Atlanta, Georgia | 326 | 54.6% | $183.57 | $100.32 | 57.8% | $177.93 | $102.85 | 52.2% | $194.12 | $101.33 |
| Hotel Alba Tampa, Tapestry Collection by Hilton, Tampa, Florida | 222 | 73.1% | $178.06 | $130.22 | 78.1% | $175.16 | $136.76 | 77.8% | $177.00 | $137.75 |
| Hotel Ballast Wilmington, Tapestry Collection by Hilton, Wilmington, North Carolina | 272 | 71.7% | $187.39 | $134.40 | 72.3% | $185.96 | $134.46 | 69.2% | $186.91 | $129.39 |
| Hyatt Centric Arlington, Arlington, Virginia | 318 | 73.3% | $204.11 | $149.54 | 77.0% | $209.44 | $161.35 | 74.5% | $207.98 | $154.99 |
| The Whitehall, Houston, Texas | 259 | 59.4% | $148.86 | $88.43 | 59.4% | $153.50 | $91.21 | 44.1% | $159.13 | $70.25 |
| &nbsp;&nbsp;Wholly-Owned Properties Total | 2786 |  |  |  |  |  |  |  |  |  |
| **Condominium Hotels** |  |  |  |  |  |  |  |  |  |  |
| Lyfe Resort & Residences | 47<br><sup>(1)</sup> | 58.5% | $281.76 | $164.73<br><sup>(1)</sup> | 60.7% | $297.70 | $180.77<br><sup>(1)</sup> | 51.9% | $345.39 | $179.23 |
| Hyde Beach House Resort & Residences | 65<br><sup>(1)</sup> | 62.1% | $267.09 | $165.85<br><sup>(1)</sup> | 62.6% | $271.51 | $169.89<br><sup>(1)</sup> | 46.4% | $305.56 | $141.93 |
| **Total Hotel & Participating Condominium Hotel Rooms** | **2898** |  |  |  |  |  |  |  |  |  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)We own the hotel commercial unit and operate a rental program. Reflects only those condominium units that were participating in the rental program as of December 31, 2025. At any given time, some portion of the units participating in our rental program may be occupied by the unit owners and unavailable for rent to hotel guests. We sometimes refer to each participating condominium unit as a "room."

**Item 3. *Legal Proceedings***

We are not involved in any material legal proceedings, nor to our knowledge, are any material legal proceedings threatened against us. We are involved in routine litigation arising out of the ordinary course of business, most of which is expected to be covered by insurance, and none of which is expected to have a material impact on our financial condition or results of operations.

**Item 4. *Mine Safety Disclosure***

Not applicable.

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**PART II**

**Item 5. *Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities***

*Sotherly Hotels Inc.*

**Market Information**

The Company's common stock traded on Nasdaq under the symbol "SOHO". In connection with the consummation of the Merger, the final day of trading of the Company's common stock was February 12, 2026.

**Stockholder Information**

As of April 1, 2026, there was one holder of record of the Company's common stock.

**Recent Sales of Unregistered Securities**

There were no sales of unregistered securities in the Company during 2025.

**Issuer Purchases of Equity Securities**

There were no issuer purchases of equity securities during 2025.

*Sotherly Hotels LP*

**Market Information**

There is no established trading market for partnership units of the Operating Partnership. The Operating Partnership does not currently propose offering partnership units to the public and does not currently expect that a public market for those units will develop.

**Partnership Unitholder Information**

As of April 1, 2026, there were two (2) holders of the Operating Partnership's partnership units, including Sotherly Hotels Inc., which owned more than 99.9% of the outstanding general and limited partnership units as well as 100.0% of the preferred partnership units.

**Recent Sales of Unregistered Securities**

From time to time, the Operating Partnership may issue and/or repurchase limited partnership units (common and/or preferred) to the Company, as required by the Amended and Restated Agreement of Limited Partnership of the Operating Partnership, to mirror the capital structure of the Company to reflect additional issuances by the Company and to preserve equitable ownership ratios.

There were no sales of unregistered securities in the Operating Partnership during 2025.

**Issuer Purchases of Equity Securities**

There were no issuer purchases of equity securities during 2025.

*Sotherly Hotels Inc. and Sotherly Hotels LP*

**Dividend and Distribution Information**

The Company elected to be taxed as a REIT commencing with our taxable year ending December 31, 2004. To maintain qualification as a REIT, we are required to make annual distributions to the Company's stockholders of at least 90.0% of our REIT taxable income, excluding net capital gain, which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles. Our ability to pay distributions to the Company's stockholders will depend, in part, upon our receipt of distributions from our Operating Partnership which may depend upon receipt of lease payments with respect to our properties from our TRS Lessees, and in turn, upon the management of our properties by our hotel manager. Distributions to the Company's stockholders will generally be taxable to the Company's stockholders as ordinary income; however, because a portion of our investments are equity ownership interests in hotels, which will result in depreciation and noncash charges against our income, a

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portion of our distributions may constitute a tax-free return of capital. To the extent not inconsistent with maintaining our REIT status, our TRS Lessees may retain any after-tax earnings.

In March 2020, as a result of the impact of COVID-19 on our business, our board of directors suspended our common and preferred stock dividends. On January 24, 2023, the Company resumed quarterly distributions to holders of its preferred stock with five payments made in 2023, four payments made in 2024 and two payments made in 2025. We anticipate that our board of directors will re-evaluate our dividend policy on an ongoing basis. As of April 1, 2026, distributions on our preferred stock are in arrears for the last fourteen quarterly payments. No dividends may be paid on our common stock until such time as the preferred stock distributions are made current.

In order to maintain our qualification as a REIT, we must make distributions to our stockholders each year in an amount equal to at least:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•90% of our REIT taxable income determined without regard to the dividends paid deduction and excluding net capital gains; plus

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code; minus

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Any excess noncash income (as defined in the Code).

The Company did not pay any common stock dividends in 2025 or 2024. As of December 31, 2025, there were unpaid common dividends and distributions to holders of record as of March 13, 2020 in the amount of approximately $2.1 million.

The following tables set forth information regarding the declaration, payment and income tax characterization of distributions by the Company on its preferred shares to the Company's preferred stockholders for fiscal years 2025 and 2024. The same table sets forth the Operating Partnership's distributions per preferred partnership units for fiscal years 2023 and 2024:

The amount of future common stock distributions will be based upon quarterly operating results, general economic conditions, requirements for capital improvements, the availability of debt and equity capital, the Code's annual distribution requirements, and other factors, which the Company's board of directors deems relevant. The amount, timing and frequency of distributions will be authorized by the Company's board of directors and declared by us based upon a variety of factors deemed relevant by our directors, and no assurance can be given that our distribution policy will not change in the future.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Dividend (Distribution) Payments - Series B Preferred Stock** | **Dividend (Distribution) Payments - Series B Preferred Stock** | **Dividend (Distribution) Payments - Series B Preferred Stock** | **Dividend (Distribution) Payments - Series B Preferred Stock** | **Dividend (Distribution) Payments - Series B Preferred Stock** | **Dividend (Distribution) Payments - Series B Preferred Stock** |
| **Date Declared** | **For the Quarter Ended** | **Date Paid** | **Amount per Share and Unit** | **Ordinary Income** | **Return of Capital** |
| March 2024 | June 30, 2021 | March 13, 2024 | $0.500000 | 100.00% | 0.00% |
| June 2024 | September 30, 2021 | June 13, 2024 | $0.500000 | 100.00% | 0.00% |
| September 2024 | December 31, 2021 | September 12, 2024 | $0.500000 | 100.00% | 0.00% |
| December 2024 | March 31, 2022 | December 13, 2024 | $0.500000 | 100.00% | 0.00% |
| March 2025 | June 30, 2022 | March 14, 2025 | $0.500000 | 100.00% | 0.00% |
| June 2025 | September 30, 2022 | June 16, 2025 | $0.500000 | 100.00% | 0.00% |
| **Dividend (Distribution) Payments - Series C Preferred Stock** | **Dividend (Distribution) Payments - Series C Preferred Stock** | **Dividend (Distribution) Payments - Series C Preferred Stock** | **Dividend (Distribution) Payments - Series C Preferred Stock** | **Dividend (Distribution) Payments - Series C Preferred Stock** | **Dividend (Distribution) Payments - Series C Preferred Stock** |
| **Date Declared** | **For the Quarter Ended** | **Date Paid** | **Amount per Share and Unit** | **Ordinary Income** | **Return of Capital** |
| March 2024 | June 30, 2021 | March 13, 2024 | $0.492188 | 100.00% | 0.00% |
| June 2024 | September 30, 2021 | June 13, 2024 | $0.492188 | 100.00% | 0.00% |
| September 2024 | December 31, 2021 | September 12, 2024 | $0.492188 | 100.00% | 0.00% |
| December 2024 | March 31, 2022 | December 13, 2024 | $0.492188 | 100.00% | 0.00% |
| March 2025 | June 30, 2022 | March 14, 2025 | $0.492188 | 100.00% | 0.00% |
| June 2025 | September 30, 2022 | June 16, 2025 | $0.492188 | 100.00% | 0.00% |
| **Dividend (Distribution) Payments - Series D Preferred Stock** | **Dividend (Distribution) Payments - Series D Preferred Stock** | **Dividend (Distribution) Payments - Series D Preferred Stock** | **Dividend (Distribution) Payments - Series D Preferred Stock** | **Dividend (Distribution) Payments - Series D Preferred Stock** | **Dividend (Distribution) Payments - Series D Preferred Stock** |
| **Date Declared** | **For the Quarter Ended** | **Date Paid** | **Amount per Share and Unit** | **Ordinary Income** | **Return of Capital** |
| March 2024 | June 30, 2021 | March 13, 2024 | $0.515625 | 100.00% | 0.00% |
| June 2024 | September 30, 2021 | June 13, 2024 | $0.515625 | 100.00% | 0.00% |
| September 2024 | December 31, 2021 | September 12, 2024 | $0.515625 | 100.00% | 0.00% |
| December 2024 | March 31, 2022 | December 13, 2024 | $0.515625 | 100.00% | 0.00% |
| March 2025 | June 30, 2022 | March 14, 2025 | $0.515625 | 100.00% | 0.00% |
| June 2025 | September 30, 2022 | June 16, 2025 | $0.515625 | 100.00% | 0.00% |

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**Item 6. *[Reserved]***

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**Item 7. *Management's Discussion and Analysis of Financial Condition and Results of Operations***

**Overview**

The Company is a lodging REIT incorporated in Maryland in August 2004 to pursue opportunities in the full-service, primarily upscale and upper-upscale segments of the hotel industry located in primary and secondary markets in the mid-Atlantic and southern United States. The Company may also opportunistically acquire hotels throughout the United States. For the years ended December 31, 2025, 2024 and 2023, we made no acquisitions and had no dispositions of hotel properties.

As of December 31, 2025, our hotel portfolio consisted of ten full-service, primarily upscale and upper-upscale hotels with an aggregate total of 2,786 rooms, as well as interests in two condominium hotels and their associated rental programs. Seven (7) of our hotels operate under well-known brands such as DoubleTree by Hilton, Tapestry Collection by Hilton, and Hyatt Centric, and three (3) operate as independent hotels. As of December 31, 2025, our portfolio consisted of the following hotel properties:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number** |  |  | **Chain/Class** |
| **<u>Property</u>** | **of Rooms** | **Location** | **Date of Acquisition** | **Designation** |
| **Wholly-owned Hotels** |  |  |  |  |
| The DeSoto | 246 | Savannah, <br>GA | December 21, 2004 | Upper Upscale<sup>(1)</sup> |
| DoubleTree by Hilton Jacksonville Riverfront | 293 | Jacksonville, <br>FL | July 22, 2005 | Upscale |
| DoubleTree by Hilton Laurel | 208 | Laurel, <br>MD | December 21, 2004 | Upscale |
| DoubleTree by Hilton Philadelphia Airport | 331 | Philadelphia, <br>PA | December 21, 2004 | Upscale |
| DoubleTree Resort by Hilton Hollywood Beach | 311 | Hollywood, <br>FL | August 9, 2007 | Upscale |
| Georgian Terrace | 326 | Atlanta, <br>GA | March 27, 2014 | Upper Upscale<sup>(1)</sup> |
| Hotel Alba Tampa, Tapestry Collection by Hilton | 222 | Tampa, <br>FL | October 29, 2007 | Upscale |
| Hotel Ballast Wilmington, Tapestry Collection by Hilton | 272 | Wilmington, <br>NC | December 21, 2004 | Upscale |
| Hyatt Centric Arlington | 318 | Arlington, <br>VA | March 1, 2018 | Upper Upscale |
| The Whitehall | 259 | Houston, <br>TX | November 13, 2013 | Upper Upscale<sup>(1)</sup> |
| Hotel Rooms Subtotal | 2786 |  |  |  |
| **Condominium Hotels** |  |  |  |  |
| Lyfe Resort & Residences <sup>(2)</sup> | 47<br><sup>(3)</sup> | Hollywood, <br>FL | January 30, 2017 | Luxury<sup>(1)</sup> |
| Hyde Beach House Resort & Residences | 65<br><sup>(3)</sup> | Hollywood, <br>FL | September 27, 2019 | Luxury<sup>(1)</sup> |
| Total Hotel & Participating Condominium Hotel Rooms | 2898 |  |  |  |

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<sup>(1)</sup> Operated as an independent hotel.

<sup>(2)</sup> On December 31, 2025, the Company entered into a settlement agreement to convey its interest in the hotel commercial condominium unit at the Lyfe Resort & Residences and assign its interest in the hotel condominium unit rental program. The Company assigned its interest in the rental program effective February 1, 2026 and anticipates conveyance of the condominium unit to occur before May 1, 2026.

<sup>(3)</sup> We own the hotel commercial unit and operate a hotel condominium unit rental program. Reflects only those hotel condominium units that were participating in the rental program as of December 31, 2025. At any given time, some portion of the units participating in our rental program may be occupied by the unit owner(s) and unavailable for rental to hotel guests. We sometimes refer to each participating hotel condominium unit as a "room."

We conduct substantially all our business through the Operating Partnership, Sotherly Hotels LP. The Company is the sole general partner of the Operating Partnership and currently owns more than a 99.9% interest in the Operating Partnership, with the remaining interest being held by limited partners who were contributors of our initial hotel properties and related assets.

To qualify as a REIT, neither the Company nor the Operating Partnership can operate our hotels. Therefore, our wholly-owned hotel properties are leased to our TRS Lessees that are wholly-owned subsidiaries of the Operating Partnership, which then engage an

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eligible independent contractor to operate the hotels under a management agreement. For the years ended December 31, 2025, 2024 and 2023, Our Town was engaged by our TRS Lessees to operate our hotels. Our TRS Lessees, and their parent, MHI Holding (MHI Hospitality TRS Holding, Inc.), are consolidated into each of our financial statements for accounting purposes. The earnings of MHI Holding are taxable as regular C corporations and are subject to federal, state, local, and, if applicable, foreign taxation on its taxable income.

**Key Operating Metrics**

In the hotel industry, room revenue is considered the most important category of revenue and drives other revenue categories such as food, beverage, catering, parking and telephone. There are three key performance indicators used in the hotel industry to measure room revenues:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Occupancy, or the number of rooms sold, usually expressed as a percentage of total rooms available;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Average daily rate, or ADR, which is total room revenue divided by the number of rooms sold; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Revenue per available room, or RevPAR, which is total room revenue divided by the total number of available rooms.

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 (such as housekeeping services, laundry, utilities, room supplies, franchise fees, management fees, credit card commissions and reservations expenses), but could also result in increased non-room revenue from the hotel's restaurant, banquet or parking facilities. Changes in RevPAR that are primarily driven by changes in ADR typically have a greater impact on operating margins and profitability as they do not generate all the additional variable operating costs associated with higher occupancy. When calculating composite portfolio metrics, we include available rooms at the Lyfe Resort & Residences and the Hyde Beach House Resort & Residences that participate in our rental programs and are not reserved for owner-occupancy.

We also use Funds from Operations ("FFO"), Adjusted FFO and Hotel EBITDA as measures of our operating performance. See "Non-GAAP Financial Measures".

**Results of Operations**

***Comparison of Year Ended December 31, 2025 to Year Ended December 31, 2024***

The following table illustrates the key operating metrics for the years ended December 31, 2025 and 2024 for our wholly-owned hotels and the condominium hotel units, during each respective reporting period ("composite portfolio" properties), as well as the key operating metrics for the ten wholly-owned hotel properties that were under our control during all of 2025 ("actual" properties).

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Twelve Months Ended December 31, 2025** | **Twelve Months Ended December 31, 2025** | **Twelve Months Ended December 31, 2024** | **Twelve Months Ended December 31, 2024** |
|  | **Composite** | **Actual** | **Composite** | **Actual** |
| Occupancy % | 65.6% | 65.8% | 67.2% | 67.4% |
| ADR | $174.63 | $171.03 | $177.56 | $173.25 |
| RevPAR | $114.52 | $112.50 | $119.26 | $116.78 |

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*Revenue*. Total revenue for the year ended December 31, 2025 was approximately $176.4 million, a decrease of approximately $5.5 million, or 3.0%, from total revenue for the year ended December 31, 2024 of approximately $181.9 million. There was an aggregate decrease in total revenue of approximately $6.0 million from eight of our properties, offset by an increase of approximately $0.5 million, at four of our properties. The overall decreases in revenue are reflected individually in room revenues, food and beverage revenues and other operating revenues, as noted below:

Room revenues at our properties for the year ended December 31, 2025 decreased approximately $4.7 million, or 3.9%, to approximately $114.4 million compared to room revenues for the year ended December 31, 2024 of approximately $119.1 million Two of our properties experienced increased room revenue by approximately $0.2 million, offset by a decrease of approximately $4.9 million at our other properties. Occupancy decreased by 2.4% for the year ended December 31, 2025, compared to the same period in 2024, as a result of decreases in transient consumers, group business, and other business travel. ADR also decreased 1.3% in 2025 compared to 2024.

Food and beverage revenues at our properties for the year ended December 31, 2025 decreased approximately $0.1 million, or 0.5%, to approximately $36.5 million compared to food and beverage revenues of approximately $36.6 million for the year ended December 31, 2024, with a majority of our properties experiencing decreased demand for food and beverage services as a result of decreased occupancy as well as a decrease in meetings, banqueting and catering from the group business segment. The decrease in

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food and beverage revenues for the year ended December 31, 2025, resulted from an aggregate decrease of approximately $1.4 million from six of our properties, offset by an increase in food and beverage revenue of approximately $1.3 million at the other four properties.

Other operating revenues for the year ended December 31, 2025 decreased approximately $0.7 million, or 2.5%, to approximately $25.5 million compared to other operating revenues for the year ended December 31, 2024 of approximately $26.2 million. A decrease of approximately $1.9 million in other operating revenues was realized at six of our properties was offset by increases of approximately $1.2 million at the remaining six properties.

*Hotel Operating Expenses*. Hotel operating expenses, which consist of room expenses, food and beverage expenses, other direct expenses, indirect expenses, and management fees, decreased approximately $1.2 million, or 0.8%, for the year ended December 31, 2025 to approximately $133.9 million compared to hotel operating expenses for the year ended December 31, 2024 of approximately $135.1 million. The aggregate decrease of approximately $1.2 million in hotel operating expenses for the twelve months ended December 31, 2025, is directly related to the decrease in hotel occupancy and gross revenue.

Rooms expense at our properties for the year ended December 31, 2025 decreased approximately $0.7 million, or 2.4%, to approximately $26.7 million compared to rooms expense of approximately $27.4 million for the year ended December 31, 2024. The decrease in rooms expense for the year ended December 31, 2025, resulted from an aggregate decrease of approximately $0.8 million from seven of our hotel properties, offset by an increase of approximately $0.1 million from the remaining hotel properties.

Food and beverage expenses at our properties for the year ended December 31, 2025 increased approximately $0.2 million, or 0.7%, to approximately $25.6 million compared to food and beverage expense of approximately $25.4 million for the year ended December 31, 2024. The net increase in food and beverage expenses for the twelve months ended December 31, 2025, resulted from an aggregate increase of approximately $0.9 million at four of our hotels, offset by a decrease of approximately $0.7million from the remaining hotel properties.

Expenses from other operating departments decreased approximately $0.2 million, or 2.6%, to approximately $9.2 million for the year ended December 31, 2025, compared to expenses from other operating departments of approximately $9.4 million for the year ended December 31, 2024. The decrease in expenses from other operating departments for the twelve months ended December 31, 2025, resulted from aggregate decreases at six of our properties by approximately $0.4 million, which were offset by increases in other operating expenses of approximately $0.2 million from our remaining properties.

Indirect expenses at our properties for the year ended December 31, 2025 decreased approximately $0.4 million, or 0.6%, to approximately $72.4 million compared to indirect expenses of approximately $72.8 million for the year ended December 31, 2024. The increase in utilities, property taxes and insurance for the twelve months ended December 31, 2025, were offset by decreases in other indirect expenses.

*Depreciation and Amortization*. Depreciation and amortization for the year ended December 31, 2025 increased by approximately $0.3 million or 1.4%, to approximately $19.7 million, compared to depreciation and amortization expense of approximately $19.4 million for the year ended December 31, 2024.

*Corporate General and Administrative*. Corporate general and administrative expenses for the year ended December 31, 2025 increased approximately $2.0 million, or 29.4%, to approximately $8.8 million compared to corporate general and administrative expenses of approximately $6.8 million for the year ended December 31, 2024. The increase in corporate general and administrative expenses was mainly due to expenses related to the Merger, which were expensed as incurred.

*Interest Expense*. Interest expense for the year ended December 31, 2025 increased approximately $3.9 million, or 18.8%, to approximately $24.8 million, compared to approximately $20.9 million of interest expense for the year ended December 31, 2024. The increase in interest expense for the twelve months ended December 31, 2025, was substantially related to the imputed interest on the finance lease obligation on the Hyatt Centric Arlington. Additionally, we had increased interest expense related to new indebtedness in mid-2024, on the DoubleTree by Hilton Jacksonville Riverfront and The DeSoto and a refinance of the mortgage on the DeSoto in September 2025. Lastly, we incurred default interest on the mortgages on The Georgian Terrace beginning in June 2025 and on the DoubleTree Resort by Hilton Hollywood Beach beginning in October 2025.

*Interest Income.* Interest income for the year ended December 31, 2025, decreased approximately $0.4 million, or 63.5%, to approximately $0.3 million compared to approximately $0.7 million of interest income for the year ended December 31, 2024. The decrease in interest income for the twelve months ended December 31, 2025, was substantially related to decreases in cash balances in interest-bearing accounts.

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*Loss on Early Extinguishment of Debt.* The loss for the year ended December 31, 2025 relates to the refinance of the mortgage on the DeSoto, resulting in a loss on early extinguishment of debt consisting of a prepayment penalty and the write-off of unamortized origination costs which totaled approximately $0.5 million. The loss for the year ended December 31, 2024 relates to the refinance of the mortgage on the Hotel Alba, resulting in a loss on early extinguishment of debt consisting of the write-off of unamortized origination costs, which totaled approximately $0.2 million.

*Net Gain on Involuntary Conversion of Assets.* The net gain on involuntary conversion of assets for the year ended December 31, 2025 relates to insurance proceeds received for the replacement of components of our hotel properties in Jacksonville, Florida and Tampa, Florida affected by casualties including Hurricane Helene in September 2024 which totaled approximately $4.0 million. Gain on involuntary conversion of assets for the year ended December 31, 2024 relates to insurance proceeds received for the replacement of components of our hotel properties at our properties in Jacksonville, Florida and Hollywood, Florida.

*Income Tax (Expense) Benefit*. We had income tax expense of approximately $0.1 million for the year ended December 31, 2025, compared to an income tax provision of approximately $0.1 million, for the year ended 2024. MHI TRS realized an operating loss for each of the years ended December 31, 2025 and 2024, respectively.

*Net Income (Loss).* We realized a net loss for the year ended December 31, 2025 of approximately $7.8 million compared to net income of approximately $1.2 million for the year ended December 31, 2024, as a result of the operating results discussed above.

*Distributions to Preferred Stockholders*. During the year ended December 31, 2025, we accounted for undeclared distributions to preferred stockholders of approximately $8.0 million, compared to undeclared distributions to preferred stockholders of approximately $8.0 million for the year ended December 31, 2024.

***Comparison of Year Ended December 31, 2024 to Year Ended December 31, 2023***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table illustrates the key operating metrics for the years ended December 31, 2024 and 2023 for our wholly-owned hotels and the condominium hotel units, during each respective reporting period ("composite portfolio" properties), as well as the key operating metrics for the ten wholly-owned hotel properties that were under our control during all of 2024 ("actual" properties).

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** |
|  | **Composite** | **Actual** | **Composite** | **Actual** |
| Occupancy % | 67.2% | 67.4% | 62.8% | 63.5% |
| ADR | $177.56 | $173.25 | $182.97 | $177.74 |
| RevPAR | $119.26 | $116.78 | $114.96 | $112.84 |

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*Revenue*. Total revenue for the year ended December 31, 2024 was approximately $181.9 million, an increase of approximately $8.1 million, or 4.6%, from total revenue for the year ended December 31, 2023 of approximately $173.8 million. There was an aggregate increase in total revenue of approximately $8.9 million from nine of our properties, offset by a decrease of approximately $0.8 million, at three of our properties. The overall increases in revenue are reflected individually in room revenues, food and beverage revenues and other operating revenues, as noted below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Room revenues at our properties for the year ended December 31, 2024 increased approximately $4.4 million, or 3.8%, to approximately $119.1 million compared to room revenues for the year ended December 31, 2023 of approximately $114.7 million Eight of our properties experienced increased room revenue by approximately $5.3 million, offset by a decrease of approximately $0.9 million at our other properties. Occupancy increased by 4.4% for the year ended December 31, 2024, compared to the same period in 2023, as a result of increases in transient consumers, group business, and other business travel. Although ADR decreased by 3.0% in 2024 compared to 2023, the RevPAR increased by 3.7% for year ended December 31, 2024, compared to the same period in 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Food and beverage revenues at our properties for the year ended December 31, 2024 increased approximately $1.4 million, or 4.0%, to approximately $36.6 million compared to food and beverage revenues of approximately $35.2 million for the year ended December 31, 2023, with a majority of our properties experiencing increased demand for food and beverage services as a result of increased occupancy as well as an increase in meetings, banqueting and catering from the group business segment. The increase in food and beverage revenues for the year ended December 31, 2024, resulted from an aggregate increase of approximately $2.5 million from six of our properties, offset by a decrease in food and beverage revenue of approximately $1.1 million at the other four properties.

Other operating revenues for the year ended December 31, 2024 increased approximately $2.3 million, or 9.8%, to approximately $26.2 million compared to other operating revenues for the year ended December 31, 2023 of approximately $23.9

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million. The increase in other operating revenues was realized at eight of our properties with an increase of approximately $3.2 million, with the remaining offsetting properties decreases of approximately $0.9 million.

*Hotel Operating Expenses*. Hotel operating expenses, which consist of room expenses, food and beverage expenses, other direct expenses, indirect expenses, and management fees, increased approximately $6.0 million, or 4.7%, for the year ended December 31, 2024 to approximately $135.1 million compared to hotel operating expenses for the year ended December 31, 2023 of approximately $129.0 million. The aggregate increase of approximately $6.9 million in hotel operating expenses for the twelve months ended December 31, 2024, is directly related to the increase in hotel occupancy and gross revenue at ten of our properties, and reductions in hotel operating expenses at two properties of approximately $0.9 million.

Rooms expense at our properties for the year ended December 31, 2024 increased approximately $1.2 million, or 4.6%, to approximately $27.4 million compared to rooms expense of approximately $26.2 million for the year ended December 31, 2023. The increase in rooms expense for the year ended December 31, 2024, resulted from an aggregate increase of approximately $1.5 million from seven of our hotel properties, offset by a decrease of approximately $0.3 million from the remaining hotel properties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Food and beverage expenses at our properties for the year ended December 31, 2024 increased approximately $1.2 million, or 5.0%, to approximately $25.4 million compared to food and beverage expense of approximately $24.2 million for the year ended December 31, 2023. The net increase in food and beverage expenses for the twelve months ended December 31, 2024, resulted from an aggregate increase of approximately $1.4 million, offset by a decrease of approximately $0.2 million from the remaining hotel properties.

Expenses from other operating departments increased approximately $0.4 million, or 4.4%, to approximately $9.4 million for the year ended December 31, 2024, compared to expenses from other operating departments of approximately $9.0 million for the year ended December 31, 2023. The increase in expenses from other operating departments for the twelve months ended December 31, 2024, resulted from aggregate increases at eight of our properties by approximately $0.6 million, which were offset by decreases in other operating expenses of approximately $0.2 million from four of our properties. These increases were seen mainly from bringing back parking servicing contractors.

Indirect expenses at our properties for the year ended December 31, 2024 increased approximately $3.2 million, or 4.6%, to approximately $72.8 million compared to indirect expenses of approximately $69.6 million for the year ended December 31, 2023. The increase in indirect expenses for the twelve months ended December 31, 2024, resulted from an aggregate increase in total indirect expenses of approximately $3.9 million from ten of our properties, offset by decreases of approximately $0.7 million.

*Depreciation and Amortization*. Depreciation and amortization for the year ended December 31, 2024 increased by approximately $0.6 million or 3.2%, to approximately $19.4 million, compared to depreciation and amortization expense of approximately $18.8 million for the year ended December 31, 2023.

*Corporate General and Administrative*. Corporate general and administrative expenses for the year ended December 31, 2024 decreased approximately $0.3 million, or 4.1%, to approximately $6.8 million compared to corporate general and administrative expenses of approximately $7.1 million for the year ended December 31, 2023. The decrease in corporate general and administrative expenses was mainly due to decreases in professional fees and legal fees offset by an increase in audit fees.

*Interest Expense*. Interest expense for the year ended December 31, 2024 increased approximately $3.3 million, or 18.7%, to approximately $20.9 million, compared to approximately $17.6 million of interest expense for the year ended December 31, 2023. The increase in interest expense for the twelve months ended December 31, 2024, was substantially related to the new mortgage obtained in early 2024 on the Hotel Alba, higher interest cost on the mortgage on the DoubleTree by Hilton Philadelphia as well as imputed interest on the finance lease obligation on the Hyatt Centric Arlington. An increase in interest expense was also realized on the new indebtedness in mid-2024, on the DoubleTree by Hilton Jacksonville Riverfront and The DeSoto.

*Interest Income.* Interest income for the year ended December 31, 2024, decreased approximately $0.1 million, or 13.6%, to approximately $0.7 million compared to approximately $0.8 million of interest income for the year ended December 31, 2023. The decrease in interest income for the twelve months ended December 31, 2024, was substantially related to decreases in cash balances receiving interest.

*Loss on Early Extinguishment of Debt.* The fiscal year 2024 loss relates to the refinancing of the Hotel Alba mortgage, resulting in a loss on early extinguishment of debt consisting of the unamortized origination costs, which totaled approximately $0.2 million for the twelve months ended December 31, 2024. No losses were recorded for the twelve months ended December 31, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Realized Gain on Hedging Activities.* The realized gain on hedging activities during the twelve months ended December 31, 2024, was approximately $1.0 million, due to termination of the Hotel Alba Tampa, Tapestry Collection by Hilton interest rate swap.

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*PPP Loan Forgiveness.* During the year ended December 31, 2024, there were no other notifications of PPP Loan Forgiveness. During the year ended December 31, 2023, we received notification from our banks and the Small Business Administration that we received partial forgiveness on one of our unsecured notes, relating to the original PPP Loans we received in 2020. We received approximately $0.3 million PPP loan forgiveness, which includes principal forgiveness and the accrued interest on that portion of the loans.

*Net Gain on Involuntary Conversion of Assets.* The net gain on involuntary conversion of assets decreased approximately $0.9 million, to approximately $0.5 million for the year ended December 31, 2024 from approximately $1.4 million, for the year ended December 31, 2023. The gains were related to casualties at our properties in Savannah, Georgia, Arlington, Virginia, Jacksonville and Hollywood, Florida.

*Income Tax (Expense) Benefit*. We had income tax expense of approximately $0.1 million for the year ended December 31, 2024, compared to an income tax benefit of approximately $0.3 million, for the year ended 2023. MHI TRS realized an operating loss for each of the years ended December 31, 2024 and 2023, respectively.

*Net Income.* Net income for the year ended December 31, 2024 decreased approximately $2.6 million, or 69.0%, to approximately $1.2 million, compared to a net income of approximately $3.8 million for the year ended December 31, 2023, as a result of the operating results discussed above.

*Distributions to Preferred Stockholders*. During the year ended December 31, 2024, we accounted for undeclared distributions to preferred stockholders of approximately $8.0 million, compared to undeclared distributions to preferred stockholders of approximately $8.0 million for the year ended December 31, 2023.

**Sources and Uses of Cash**

Our principal sources of cash are cash from hotel operations, proceeds from the sale of common and preferred stock, proceeds from the sale of secured and unsecured notes, proceeds of mortgage or other debt and hotel property sales. Our principal uses of cash are acquisitions of hotel properties, capital expenditures, debt service and balloon maturities, operating costs, corporate expenses and dividends. As of December 31, 2025, we had unrestricted cash of approximately $7.0 million and restricted cash of approximately $21.5 million. Our net decrease in cash for the year ended December 31, 2025, was approximately $0.2 million, generally consisting of net cash flow used in investing activities.

*Operating Activities*. Our cash provided by operating activities for the year ended December 31, 2025, was approximately $10.3 million. Our cash provided by operating activities for the year ended December 31, 2024, was approximately $25.9 million. Our cash provided by operating activities for the year ended December 31, 2023, was approximately $21.4 million. Cash used in or provided by operating activities generally consists of the cash flow from hotel operations, offset by the interest portion of our debt service, corporate expenses and positive or negative changes in working capital.

*Investing Activities.* Our cash used in investing activities for the year ended December 31, 2025 was approximately $10.7 million. Of this amount approximately $14.9 million was used for capital expenditures, including the replacement and refurbishment of furniture, fixtures and equipment offset by insurance proceeds of approximately $4.2 million.

Our cash used in investing activities for the year ended December 31, 2024, was approximately $14.1 million. Of this amount approximately $14.6 million was used for capital expenditures, including the replacement and refurbishment of furniture, fixtures and equipment offset by insurance proceeds of approximately $0.5 million.

Our cash used in investing activities for the year ended December 31, 2023, was approximately $6.7 million. Of this amount approximately $8.2 million was used for capital expenditures, including the replacement and refurbishment of furniture, fixtures and equipment offset by insurance proceeds of approximately $1.3 million.

*Financing Activities*. Our cash provided by financing activities for the year ended December 31, 2025, was approximately $0.2 million. During the year ended December 31, 2025, the Company and Operating Partnership received proceeds of $42.0 million from the refinance of the mortgage loan on The DeSoto, received proceeds of $7.5 million from a new line of credit and made scheduled principal payments and other prepayments on its mortgages of approximately $43.4 million, paid approximately $0.7 million in unsecured notes, and paid approximately $1.2 million in deferred financing costs. We also paid distributions to preferred stockholders of approximately $4.0 million.

During the year ended December 31, 2024, cash used in financing activities was approximately $9.3 million. The Company and Operating Partnership received proceeds of $66.3 million from the refinance of the DoubleTree by Hilton Philadelphia and the Hotel

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Alba mortgage loans, made scheduled principal payments on its mortgages of approximately $65.0 million, paid approximately $1.7 million in deferred financing costs, and made scheduled principal payments of approximately $0.9 million on its unsecured notes. We received a redemption payment from the interest rate swap on the refinance of the Hotel Alba mortgage loan for approximately $1.0 million. We also paid distributions to preferred stockholders in the amount of approximately $8.0 million.

During the year ended December 31, 2023, cash used in financing activities was approximately $15.8 million. The Company and Operating Partnership received proceeds of $2.7 million from the refinance of the DoubleTree by Hilton Laurel mortgage loan, made scheduled principal payments on its mortgages of approximately $7.3 million, paid approximately $0.5 million in deferred financing costs, and made scheduled principal payments of approximately $0.7 million on its unsecured notes. We also paid distributions to preferred stockholders in the amount of approximately $10.0 million.

**Capital Expenditures**

We intend to maintain all our hotels, including any hotel we acquire in the future, in good repair and condition, in conformity with applicable laws and regulations and, when applicable, with franchisor's standards. Routine capital improvements are determined through the annual budget process over which we maintain approval rights, and which are implemented or administered by our management company.

Historically, we have aimed to maintain overall capital expenditures, except for those required by our franchisors as a condition to a franchise license or license renewal, at 4.0% of gross revenue. In anticipation of renovations and improvements at our properties in conjunction with product improvement programs ("PIP"s) that will be required by one or more of our franchisors in the coming years, we intend to reduce expenditures for the routine replacement of furniture, fixtures and equipment from historical levels and anticipate total capital expenditures for 2026 to be approximately $3.5 million.

We expect a substantial portion of our capital expenditures for the routine replacement or refurbishment of furniture, fixtures and equipment at our properties will be funded by our replacement reserve accounts, other than costs that we incur to make capital improvements required by our franchisors. Reserve accounts are escrowed accounts with funds deposited monthly and reserved for capital improvements or expenditures with respect to most of our hotels. Under the mortgages to which we were subject on December 31, 2025, we were required to deposit an amount equal to 4.0% of gross revenue for The DeSoto, the Hotel Ballast Wilmington, the DoubleTree by Hilton Laurel, the DoubleTree Resort by Hilton Hollywood Beach, The Whitehall, Hotel Alba, and the Georgian Terrace, as well as 4.0% of room revenues for the DoubleTree by Hilton Philadelphia Airport and the Hyatt Centric Arlington on a monthly basis. With the refinance of our indebtedness on February 12, 2026, we are required to deposit an amount equal to 4.0% of gross revenue with the respective lender for each of our hotels.

From time to time, certain of our hotel properties may undergo renovations as a result of our decision to upgrade portions of the hotel, such as guestrooms, meeting space and restaurants, in order to better compete with other hotels in our markets. In addition, we may be required by one or more of our franchisors to complete a property improvement program ("PIP") in order to bring the hotel up to the franchisor's standards. Generally, we expect to fund such renovations and improvements out of working capital, including reserve accounts established by our lenders, and proceeds of mortgage debt or equity offerings.

In October 2024, we renewed the franchise license for the DoubleTree by Hilton Philadelphia Airport, subject to a product improvement plan. We expect total capital expenditures related to the renovation of that property of approximately $11.8 million as a condition to the renewal of our franchise license. As of December 31, 2025, we had incurred costs totaling approximately $5.3 million.

We expect total capital expenditures related to the renovation of our property in Jacksonville, Florida of approximately $14.6 million, as a condition to the renewal of our franchise license. As of December 31, 2025, we had incurred costs totaling approximately $2.3 million.

**Liquidity and Capital Resources** 

As of December 31, 2025, we had cash, cash equivalents and restricted cash of approximately $28.5 million, of which approximately $21.5 million was in restricted reserve accounts for cash collateral, capital improvements, real estate tax and insurance escrows. We expect that our cash on hand combined with our cash flow from our hotels should be adequate to fund continuing operations, recurring capital expenditures for the refurbishment and replacement of furniture, fixtures and equipment, and monthly scheduled payments of principal and interest (excluding any balloon payments due upon maturity of our mortgage debt or secured notes).

On February 7, 2024, we secured a $35.0 million mortgage loan on the Hotel Alba located in Tampa, Florida with Citi Real Estate Funding Inc. Pursuant to the loan documents, the loan has a maturity date of March 6, 2029; carries a fixed rate of interest of

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8.49%; requires monthly payments of interest only; and cannot be prepaid until the last four months of the loan term. We used a portion of the proceeds to repay the existing first mortgage on the hotel and will use the balance of the proceeds for general corporate purposes.

On September 12, 2025, we secured a $42.0 million mortgage loan on The DeSoto hotel located in Savannah, Georgia with Citi Real Estate Funding Inc. The loan has a maturity date of October 6, 2030, carries a fixed rate of interest of 7.13% and requires monthly payments of interest only; and cannot be prepaid without penalty until the last four months of the loan term. We used a portion of the proceeds to repay the existing first and second mortgages on the hotel. The remainder of the proceeds were used for working capital.

On February 12, 2026, we completed the transaction with the Parent Parties contemplated by the Merger Agreement. Upon completion of the Merger, we survived as a wholly owned subsidiary of Parent and the separate existence of the Merger Sub ceased. As a result of the Merger, limited partnership units which we did not own were purchased by an affiliate of Parent for the same per share Merger Consideration that each share of Company Common Stock received pursuant to the Merger Agreement. In connection with the Merger, we received approximately $21.2 million in additional paid-in-capital.

On February 12, 2026, in connection with the consummation of the Merger and as required by the Merger Agreement, Andrew M. Sims resigned as Chairman of the Board of Directors of the Company, David R. Folsom resigned as the President and Chief Executive Officer of the Company, Anthony E. Domalski resigned as the Vice President, Chief Financial Officer and Secretary of the Company, Scott M. Kucinski resigned as the Executive Vice President and Chief Operating Officer of the Company, and Robert E. Kirkland IV resigned as General Counsel and Chief Compliance Officer of the Company. Messrs. Sims, Folsom, Domalski, Kucinski and Kirkland received payments in accordance with the change of control provision of their respective employment agreements totaling approximately $7.3 million.

On February 12, 2026, in connections with the Merger and pursuant to the Asset Purchase Agreement between Our Town and Parent, we terminated the OTH Master Management Agreement and each OTH Hotel Management Agreement. Termination fees totaled $9.7 million.

On February 12, 2026, we secured an approximately $243.0 million mortgage loan on the DoubleTree by Hilton Laurel, DoubleTree by Hilton Philadelphia Airport, DoubleTree by Hilton Jacksonville Riverfront, The Georgian Terrace, The Whitehall, Hotel Ballast, DoubleTree Resort by Hilton Hollywood Beach, and Hyatt Centric Arlington with various affiliates of Apollo Global Management, Inc. The loan may be increased to as much as $308.0 million pursuant to certain terms and provisions including the pledge of additional collateral. Pursuant to the loan documents, the mortgage loan: (i) has an initial term of 3 years term maturing on February 12, 2029 with two (2) extension options of one (1) year each, subject to certain terms and conditions; (ii) requires monthly payments of interest at a floating interest rate of SOFR plus 3.60%; (iii) is guaranteed by an affiliate of Parent; (iv) cannot be prepaid in whole or in part before August 1, 2027 without penalty; (v) required the Company to enter into an interest-rate cap agreement with (A) a notional amount equal to the balance of the loan; (B) a strike rate of 5.50% indexed to SOFR and (C) a term expiring no later than the maturity date of the loan; and (vi) contains customary representations, warranties, covenants and events of default for a mortgage loan. Proceeds of the loan were used to repay existing indebtedness.

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On February 12, 2026, in connection with the Merger, we secured an approximately $26.7 million loan with an affiliate of Ascendant Capital Partners LP. The loan may be increased to as much as $45.0 million pursuant to certain terms and conditions. Pursuant to the loan documents, the loan: (i) has an initial term of four (4) years term maturing on February 12, 2030 with one (1) extension option of one (1) year, subject to certain terms and conditions; (ii) requires quarterly payments of interest at a fixed rate of 16.0% for the first year of the loan term, increasing to 16.25% for the second year of the loan term, and increasing to 16.50% for the remainder of the loan term; (iii) is guaranteed by an affiliate of Parent; (iv) requires mandatory partial prepayment coincident with the sale of property collateralized by the mortgage loan with affiliates of Apollo Global Management, Inc.; and (vi) contains customary representations, warranties, covenants and events of default for a mezzanine loan. Proceeds of the loan were used to repay existing indebtedness.

On March 24, 2026, we received additional proceeds from the mortgage loan with affiliates of Apollo Global Management Inc. in the amount of $15.0 million; additional proceeds from the loan with an affiliate of Ascendant Capital Partners LP in the amount of approximately $13.3 million; and proceeds of approximately $22.7 million from our sole stockholder. The equity proceeds were contributed to the Operating Partnership.

On March 25, 2026, we redeemed in connection with the Merger, holders of 1,188,042 shares of the Company's Series B Preferred Stock exercised their Change of Control Conversion Right described in the Articles Supplementary. The Company canceled the shares in exchange for approximately $22.2 million. Additionally, holders of 1,202,415 shares of the Company's Series C Preferred Stock exercised their Change of Control Conversion Right described in the Articles Supplementary. The Company canceled the shares in exchange for approximately $23.0 million. Lastly, holders of 820,066 shares of the Company's Series D Preferred Stock exercised their Change of Control Conversion Right described in the Articles Supplementary. The Company canceled the shares in exchange for approximately $13.7 million.

As of the date of this report, we were current on all loan payments on all other mortgages per the terms of our mortgage agreements, as amended.

**Mortgage Debt**

As of December 31, 2025, we had a principal mortgage debt balance of approximately $315.2 million. The following table sets forth our mortgage debt obligations on our hotels:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31,** | **Prepayment** | **Maturity** | **Amortization** |  |
| **Property** | **2025** | **Penalties** | **Date** | **Provisions** | **Interest Rate** |
| The DeSoto <sup>(1)</sup> | $42000000 | Yes | 10/6/2030 | <sup>(1)</sup> | 7.13% |
| DoubleTree by Hilton Jacksonville <br> Riverfront <sup>(2)</sup> | 25592100 |  | 7/8/2029 | 25 years | SOFR plus 3.00% |
| DoubleTree by Hilton Laurel <sup>(3)</sup> | 10000000 | <sup>(3)</sup> | 5/6/2028 | <sup>(3)</sup> | 7.35% |
| DoubleTree by Hilton Philadelphia Airport <sup>(4)</sup> | 35915488 |  | 4/29/2026 | <sup>(4)</sup> | SOFR plus 3.50% |
| DoubleTree Resort by Hilton Hollywood <br> Beach <sup>(5)</sup> | 48966397 |  | <sup>(5)</sup> | 30 years | 4.91% |
| Georgian Terrace <sup>(6)</sup> | 33469112 |  | 6/1/2026 | 30 years | 4.42% <sup>(6)</sup> |
| Hotel Alba Tampa, Tapestry Collection by Hilton <sup>(7)</sup> | 35000000 | <sup>(7)</sup> | 3/6/2029 | <sup>(7)</sup> | 8.49% |
| Hotel Ballast Wilmington, Tapestry Collection by Hilton <sup>(8)</sup> | 28742014 | Yes | 1/1/2027 | 25 years | 4.25% |
| Hyatt Centric Arlington <sup>(9)</sup> | 44118386 | Yes | 10/1/2028 | 30 years | 5.25% |
| The Whitehall <sup>(10)</sup> | 13486401 |  | 2/26/2028 | 25 years | PRIME plus 1.25% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Mortgage Principal Balance | 317289898 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred Financing Costs, Net | (2090036) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Mortgage Loans, Net | $315199862 |  |  |  |  |

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(1) The note requires payments of interest only and cannot be prepaid without penalty until the last four months of the loan term.

(2) The note provides for an initial tranche in the amount of $26.25 million and a renovation tranche in the amount of $9.49 million.

(3) The note requires payments of interest only and cannot be prepaid without penalty until the last four months of the loan term.

(4) The note requires payments of interest only. On May 3, 2024, we entered into an interest rate cap with a notional amount of $26.0 million with Webster Bank, N.A. The cap has a strike rate of 3.0%, is indexed to SOFR, and expires on May 1, 2026.

(5) The note matured on October 1, 2025 went into default. The Company subsequently entered into discussion with the special servicer for an extension.

(6) The note matured on June 1, 2025 and went into default. On December 16, 2025, obtained a 1-year extension to June 1, 2026. Principal and interest are payable monthly, with default interest accruing through the maturity date.

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(7) The note requires payments of interest only and cannot be prepaid without penalty until the last four months of the term.

(8) The note amortizes on a 25-year schedule after an initial interest-only period of one year and cannot be prepaid without penalty until the last four months of the loan term.

(9) The note cannot be prepaid without penalty until the final 4 months of the term.

(10) The note bears a floating interest rate of New York Prime Rate plus 1.25%, with a floor of 7.50%.

As discussed in Liquidity and Capital Resources, on February 12, 2026, we secured an approximately $243.0 million mortgage loan on the DoubleTree by Hilton Laurel, DoubleTree by Hilton Philadelphia Airport, DoubleTree by Hilton Jacksonville Riverfront, The Georgian Terrace, The Whitehall, Hotel Ballast, DoubleTree Resort by Hilton Hollywood Beach, and Hyatt Centric Arlington with various affiliates of Apollo Global Management, Inc. The loan may be increased up to $308.0 million pursuant to certain terms and provisions including the pledge of additional collateral. Pursuant to the loan documents, the mortgage loan: (i) has an initial term of 3 years term maturing on February 12, 2029 with two (2) extension options of one (1) year each, subject to certain terms and conditions; (ii) requires monthly payments of interest at a floating interest rate of SOFR plus 3.60%; (iii) is guaranteed by an affiliate of Parent; (iv) cannot be prepaid in whole or in part before August 1, 2027 without penalty; (v) required the Company to enter into an interest-rate cap agreement with (A) a notional amount equal to the balance of the loan; (B) a strike rate of 5.50% indexed to SOFR and (C) a term expiring no later than the maturity date of the loan; and (vi) contains customary representations, warranties, covenants and events of default for a mortgage loan. Proceeds of the loan were used to repay existing indebtedness.

On March 24, 2026, we received additional proceeds from the mortgage loan with affiliates of Apollo Global Management Inc. in the amount of $15.0 million. Proceeds of the loan were used to pay a portion of the amounts due holders of preferred stock that exercised their Change of Control Conversion Right.

On April 8, 2026, we accessed approximately $35.0 million in additional proceeds from the mortgage loan with affiliates of Apollo Global Management Inc. when Tampa Hotel Associates LLC became an additional borrower as owner of the Hotel Alba, which became one of the Subject Hotels. The proceeds were used to repay the existing indebtedness on the Hotel Alba.

On February 12, 2026, in connection with the Merger, we secured an approximately $26.7 million loan with an affiliate of Ascendant Capital Partners LP. The loan may be increased up to $45.0 million pursuant to certain terms and conditions. Pursuant to the loan documents, the loan: (i) has an initial term of four (4) years term maturing on February 12, 2030 with one (1) extension option of one (1) year, subject to certain terms and conditions; (ii) requires quarterly payments of interest at a fixed rate of 16.0% for the first year of the loan term, increasing to 16.25% for the second year of the loan term, and increasing to 16.50% for the remainder of the loan term; (iii) is guaranteed by an affiliate of Parent; (iv) requires mandatory partial prepayment coincident with the sale of property collateralized by the mortgage loan with affiliates of Apollo Global Management, Inc.; and (vi) contains customary representations, warranties, covenants and events of default for a mezzanine loan. Proceeds of the loan were used to repay existing indebtedness.

On March 24, 2026, we received additional proceeds from the loan with an affiliate of Ascendant Capital Partners LP in the amount of approximately $13.3 million. Proceeds of the loan were used to pay a portion of the amounts due holders of preferred stock that exercised their Change of Control Conversion Right.

**Financial Covenants** 

*Mortgage Loans*

Our mortgage loan agreements contain various financial covenants directly related to the financial performance of the collateralized properties. Failure to comply with these financial covenants could result from, among other things, changes in the local competitive environment, disruption caused by renovation activity, major weather disturbances, as well as general economic conditions.

As described in "Liquidity and Capital Resources," as of December 31, 2025, we were in compliance with all debt covenants, current on all loan payments and not otherwise in default under any of our mortgage loans, with the exception (i) a payment at maturity default on the non-recourse mortgage on the Georgian Terrace; (2) a payment at maturity default on the mortgage the on the DoubleTree Resort by Hilton Hollywood Beach ; and (iii) a covenant default on the mortgage on the DoubleTree by Hilton Jacksonville Riverfront. On February 12, 2026, each of these loans was repaid.

Certain of our loan agreements, including our new loan agreement with affiliates of Apollo Global Management, Inc., contain "cash trap" provisions that may be triggered if the performance of our hotels declines below a certain threshold. At December 31, 2025, we continued to meet the provisions under the mortgage secured by the DoubleTree Resort by Hilton Hollywood Beach as well as the mortgage secured by The Georgian Terrace, which required substantially all the revenue generated by these hotels to be deposited directly into a lockbox account and swept into a cash management account for the benefit of the lender until the property meets the criteria in the loan agreement for exiting the "cash trap". On February 12, 2026, these two mortgage loans were repaid and the respective cash management periods terminated.

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**Contractual Obligations** 

The following table outlines our contractual obligations as of December 31, 2025, and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands).

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Payments due by period (in thousands)** | **Payments due by period (in thousands)** | **Payments due by period (in thousands)** | **Payments due by period (in thousands)** | **Payments due by period (in thousands)** |
|  |  | **Less than** |  |  | **More than** |
| **Contractual Obligations** | **Total** | **1 year** | **1-3 years** | **3-5 years** | **5 years** |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans, including interest | $360417 | $135442 | 117198 | 107777 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Line of credit | 7500 | 7500 | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Ground, building, parking garage, office and equipment leases | 101570 | 2455 | 4873 | 4614 | 89628 |
| &nbsp;&nbsp;&nbsp;&nbsp;Totals | $469487 | $145397 | $122071 | $112391 | $89628 |

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**Dividend Policy**

The Company has elected to be taxed as a REIT commencing with our taxable year ending December 31, 2004. To maintain qualification as a REIT, the Company is required to make annual distributions to its stockholders of at least 90.0% of our REIT taxable income, (excluding net capital gain, which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles). The Company's ability to pay distributions to its stockholders will depend, in part, upon its receipt of distributions from the Operating Partnership which may depend upon receipt of lease payments with respect to our properties from our TRS Lessees, and in turn, upon the management of our properties by our hotel manager. Distributions to the Company's stockholders will generally be taxable to the Company's stockholders as ordinary income; however, because a portion of our investments are equity ownership interests in hotels, which will result in depreciation and noncash charges against our income, a portion of our distributions may constitute a non-taxable return of capital. To the extent not inconsistent with maintaining the Company's REIT status, our TRS Lessees may retain any after-tax earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Distributions to Stockholders and Holders of Units in the Operating Partnership.* The Company may not make distributions with respect to any shares of its common stock, unless and until full cumulative distributions on the outstanding preferred stock for all past unpaid periods are paid or declared and a sum sufficient for the payment thereof in cash is set aside.

*Distributions to Preferred Stockholders and Holders of Preferred Partnership Units in the Operating Partnership.* On January 24, 2023, the Company announced that it will resume quarterly distribution to holders of our preferred stock and set a record date of February 28, 2023 with a payment date of March 15, 2023.

On April 24, 2023, the Company announced the declaration of a quarterly distribution to holders of our preferred stock and with a record date of May 31, 2023 with a payment date of June 15, 2023.

On May 30, 2023, the Company announced the declaration of a quarterly distribution to holders of our preferred stock and with a record date of June 30, 2023 with a payment date of July 14, 2023.

On August 1, 2023, the Company announced the declaration of a quarterly distribution to holders of our preferred stock and with a record date of August 31, 2023 with a payment date of September 15, 2023.

On October 31, 2023, the Company announced the declaration of a quarterly distribution to holders of our preferred stock and with a record date of November 30, 2023 with a payment date of December 15, 2023.

On January 30, 2024, the Company announced the declaration of a quarterly distribution to holders of our preferred stock and with a record date of February 29, 2024 with a payment date of March 15, 2024.

On April 30, 2024, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of May 31, 2024 and a payment date of June 17, 2024.

On July 30, 2024, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of August 30, 2024 and a payment date of September 16, 2024.

On October 29, 2024, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of November 29, 2024 and a payment date of December 16, 2024**.**

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On January 28, 2025, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of February 28, 2025 and a payment date of March 14, 2025**.**

On April 29, 2025, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of May 30, 2025 and a payment date of June 16, 2025.

On July 24, 2025, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of October 31, 2025 and a payment date of November 20, 2025. On October 27, 2025, we approved the deferral of payment of this previously announced distribution to holders of our preferred stock. In connection with that payment deferral, the October 31, 2025 record date for each of those series of preferred stock has been cancelled. The Company is also suspending future preferred stock dividends.

As of December 31, 2025, the amount of cumulative unpaid dividends on our outstanding preferred shares was approximately $25.9 million, of which approximately $2.0 million has been declared. The aggregate liquidation preference with respect to our outstanding preferred shares was approximately $123.3 million. The preferred stock is not redeemable by the holders, has no maturity date and is not convertible into any other security of the Company or its affiliates, except in the event of a change of control.

Pursuant to the exercise of the Change of Control Conversion Right by holders of Series B, Series C and Series D preferred stock, the amount of cumulative unpaid dividends as of April 1, 2026, has been reduced to approximately $5.4 million, of which approximately $0.4 million has been declared. The aggregate liquidation preference with respect to our outstanding preferred shares has been reduced to approximately $24.1 million.

**Inflation**

We generate revenues primarily from lease payments from our TRS Lessees and net income from the operations of our TRS Lessees. Therefore, we rely primarily on the financial performance of properties in our portfolio and the ability of the management company to increase revenue and to keep pace with inflation. Operators of hotels, in general, possess the ability to adjust room rates daily to keep pace with inflation. However, competitive pressures at some or all of our hotels may limit the ability of the management company to raise room rates.

Our expenses, including hotel operating expenses, administrative expenses, real estate taxes, and property and casualty insurance are subject to inflation. These expenses are expected to grow with the general rate of inflation, except for energy, liability insurance, property and casualty insurance, property tax rates, employee benefits, and some wages, which may vary at rates that differ from the general rate of inflation.

**Geographic Concentration and Seasonality**

Our hotels are located in Florida, Georgia, Maryland, North Carolina, Pennsylvania, Texas and Virginia. As a result, we are particularly susceptible to adverse market conditions in these geographic areas, including industry downturns, relocation of businesses and any oversupply of hotel rooms or a reduction in lodging demand. Adverse economic developments in the markets in which we have a concentration of hotels, or in any of the other markets in which we operate, or any increase in hotel supply or decrease in lodging demand resulting from the local, regional or national business climate, could materially and adversely affect us.

The operations of our hotel properties have historically been seasonal. The months of April and May are traditionally strong, as is October. The periods from mid-November through mid-February are traditionally slow with the exception of hotels located in certain markets, namely Florida and Texas, which experience significant room demand during this period.

**Competition**

The hotel industry is highly competitive with various participants competing on the basis of price, level of service and geographic location. Each of our hotels is located in a developed area that includes other hotel properties. The number of competitive hotel properties in a particular area could have a material adverse effect on occupancy, ADR and RevPAR of our hotels or at hotel properties acquired in the future. We believe that brand recognition, location, the quality of the hotel, consistency of services provided, and price, are the principal competitive factors affecting our hotels.

**Critical Accounting Policies** 

Our consolidated financial statements, prepared in conformity with U.S. GAAP, require management to make estimates and assumptions that affect the reported amount of assets and liability at the date of our financial statements, the reported amounts of revenue and expenses during the reporting periods and the related disclosures in the consolidated financial statements and

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accompanying footnotes. We believe that of our significant accounting policies, which are described in Note 2, *Summary of Significant Accounting Policies*, in the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, the following accounting policies are critical because they require difficult, subjective and complex judgments and include estimates about matters that are inherently uncertain, involve various assumptions, require management judgment, and because they are important for understanding and evaluating our financial position, results of operations and related disclosures. We evaluate our estimates, assumptions and judgments on an ongoing basis, based on information that is available to us, our historical experiences and various matters that we believe are reasonable and appropriate for consideration under the circumstances. Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on our financial position or results of operations.

*Investment in Hotel Properties*. Hotel properties are stated at cost, net of any impairment charges, and are depreciated using the straight-line method over an estimated useful life of 7-39 years for buildings and improvements and 3-10 years for furniture and equipment. In accordance with generally accepted accounting principles, the controlling interests in hotels comprising our accounting predecessor, MHI Hotels Services Group, and noncontrolling interests held by the controlling holders of our accounting predecessor in hotels, which were acquired from third parties contributed to us in connection with the Company's initial public offering, are recorded at historical cost basis. Noncontrolling interests in those entities that comprise our accounting predecessor and the interests in hotels, other than those held by the controlling members of our accounting predecessor, acquired from third parties are recorded at fair value at the time of acquisition.

We review our hotel properties for impairment whenever events or changes in circumstances indicate the carrying value of a hotel property may not be recoverable. Events or circumstances that may cause us to perform our review include, but are not limited to, adverse permanent changes in the demand for lodging at our properties due to declining national or local economic conditions and/or new hotel construction in markets where our hotels are located. When such conditions exist, management performs a recoverability analysis to determine if the estimated undiscounted future cash flows from operating activities and the estimated proceeds from the ultimate disposition of a hotel property exceed its carrying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of the hotel property, an adjustment to reduce the carrying value to the related hotel property's estimated fair market value would be recorded and an impairment loss recognized.

As of December 31, 2025, the Company determined that its investment in the hotel commercial condominium unit at the Lyfe Resort to be impaired based on the consideration to be received pursuant a settlement agreement with the condominium association. Accordingly, the Company recognized an impairment loss of approximately $1.3 million for the year ended December 31, 2025. No impairment loss was recognized for the year ended December 31, 2024.

*Income Taxes.* The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax. The MHI TRS Entities, which leases our hotels from subsidiaries of the Operating Partnership, are subject to federal and state income taxes.

We account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is required for deferred tax assets if, based on all available evidence, it is "more-likely-than-not" that all or a portion of the deferred tax asset will or will not be realized due to the inability to generate sufficient taxable income in certain financial statement periods. The "more-likely-than-not" analysis means the likelihood of realization is greater than 50%, that we either will or will not be able to fully utilize the deferred tax assets against future taxable income. The net amount of deferred tax assets that are recorded on the financial statements must reflect the tax benefits that are expected to be realized using these criteria. As of December 31, 2025, we have determined that it is more-likely-than-not that we will not be able to fully utilize our deferred tax assets for future tax consequences, therefore a 100% valuation allowance is required. As of December 31, 2025 and 2024, deferred tax assets each totaled $0, respectively.

As of December 31, 2025, we had no uncertain tax positions. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025, the tax years that remain subject to examination by the major tax jurisdictions to which the Company is subject generally include 2011 through 2025. In addition, as of December 31, 2025, the tax years that remain subject to examination by the major tax jurisdictions to which the MHI TRS Entities are subject, because of available NOL carryforwards, generally include 2014 through 2025.

The Operating Partnership is generally not subject to federal and state income taxes as the unit holders of the Partnership are subject to tax on their respective shares of the Partnership's taxable income.

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**Recent Accounting Pronouncements**

For a summary of recently adopted and newly issued accounting pronouncements, please refer to the *New Accounting Pronouncements* section of Note 2, *Summary of Significant Accounting Policies,* in the Notes to Consolidated Financial Statements.

**Non-GAAP Financial Measures**

We consider the non-GAAP financial measures of FFO attributable to common stockholders and unitholders (including FFO per common share and unit), Adjusted FFO attributable to common stockholders and unitholders, EBITDA and Hotel EBITDA to be key supplemental measures of the Company's performance and could be considered along with, not alternatives to, net income (loss) as a measure of the Company's performance. These measures do not represent cash generated from operating activities determined by generally accepted accounting principles ("GAAP") or amounts available for the Company's discretionary use and should not be considered alternative measures of net income, cash flows from operations or any other operating performance measure prescribed by GAAP.

*FFO and Adjusted FFO*. Industry analysts and investors use FFO as a supplemental operating performance measure of an equity REIT. FFO is calculated in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). FFO, as defined by NAREIT, represents net income or loss determined in accordance with GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, gains or losses from involuntary conversion of assets, plus certain non-cash items such as real estate asset depreciation and amortization or impairment and after adjustment for any noncontrolling interest from unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by itself.

We consider FFO to be a useful measure of adjusted net income (loss) for reviewing comparative operating and financial performance because we believe FFO is most directly comparable to net income (loss), which remains the primary measure of performance, because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO assists in comparing the operating performance of a company's real estate between periods or as compared to different companies. Although FFO is intended to be a REIT industry standard, other companies may not calculate FFO in the same manner as we do, and investors should not assume that FFO as reported by us is comparable to FFO as reported by other REITs.

We further adjust FFO attributable to common stockholders and unitholders for certain additional items that are not in NAREIT's definition of FFO, including changes in deferred income taxes, any unrealized gain (loss) on hedging instruments, loss on early extinguishment of debt, gain on extinguishment of preferred stock, aborted offering costs, loan modification fees, franchise termination costs, costs associated with the departure of executive officers, litigation settlement, management contract termination costs, operating asset depreciation and amortization, gain or loss on a change in control, ESOP and stock compensation expenses, negative lease amortization on our finance ground lease obligation and acquisition costs. We exclude these items as we believe it allows for meaningful comparisons between periods and among other REITs and is more indicative than FFO of the on-going performance of our business and assets. Our calculation of adjusted FFO may be different from similar measures calculated by other REITs.

The following is a reconciliation of net income (loss) to FFO and Adjusted FFO for the years ended December 31, 2025, 2024, and 2023.

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended** | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2024** | **2023** |
| **Net (loss) income** | $**(7779133)** | $**1179854** | $**3809711** |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization - real estate | 19600615 | 19321684 | 18735804 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of investment in hotel properties held for sale | 1310308 |  | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on disposal of assets |  | (4400) | (4700) |
| &nbsp;&nbsp;&nbsp;&nbsp;Distributions to preferred stockholders | (7977251) | (7977250) | (7977250) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gain on involuntary conversion of assets | (3985417) | (502808) | (1371041) |
| **FFO attributable to common stockholders and unitholders** | $**1169122** | $**12017080** | $**13192524** |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization | 58287 | 59222 | 52944 |
| &nbsp;&nbsp;&nbsp;&nbsp;ESOP and stock - based compensation | 424117 | 497500 | 559220 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized loss (gain) on hedging activities | (131803) | 937783 | 737682 |
| &nbsp;&nbsp;&nbsp;&nbsp;Negative lease amortization | 830373 | 536758 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on early debt extinguishment | 463195 | 241878 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs | 2059731 |  |  |
| **Adjusted FFO attributable to common stockholders and unitholders** | $**4873022** | $**14290221** | $**14542370** |

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*Hotel EBITDA*. We define Hotel EBITDA as net income or loss excluding: (1) interest expense, (2) interest income, (3) income tax expense or benefit, (4) depreciation and amortization, (5) impairment of long-lived assets or investments, (6) gains and losses on disposal and/or sale of assets, (7) gains and losses on involuntary conversions of assets, (8) realized and unrealized gains and losses on derivative instruments not included in other comprehensive income, (9) other income at the properties, (10) loss on early debt extinguishment, (11) Paycheck Protection Program (PPP) debt forgiveness, (12) gain on exercise of development right, (13) corporate general and administrative expense, and (14) other income. We believe this provides a more complete understanding of the operating results over which our wholly-owned hotels and their operators have direct control. We believe Hotel EBITDA provides investors with supplemental information on the on-going operational performance of our hotels and the effectiveness of third-party management companies operating our business on a property-level basis.

Our calculation of Hotel EBITDA may be different from similar measures calculated by other REITs.

The following is a reconciliation of net income to Hotel EBITDA for the years ended December 31, 2025, 2024, and 2023.

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended** | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2024** | **2023** |
| **Net (loss) income** | $**(7779133)** | $**1179854** | $**3809711** |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 24799871 | 20882681 | 17588091 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | (252961) | (692756) | (802183) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax expense (benefit) | 50120 | 132491 | (304947) |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 19658902 | 19380906 | 18788748 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of investment in hotel properties, net | 1310308 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Realized and unrealized (gain) loss on hedging activities | (131803) | (104211) | 737682 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on early debt extinguishment | 463195 | 241878 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on disposal of assets |  | (4400) | (4700) |
| &nbsp;&nbsp;&nbsp;&nbsp;PPP loan forgiveness |  |  | (275494) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other income | (467599) | (489267) | (456388) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gain on involuntary conversion of assets | (3985417) | (502808) | (1371041) |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate general and administrative expenses | 8786311 | 6788460 | 7078222 |
| **Hotel EBITDA** | $**42451794** | $**46812828** | $**44787701** |

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**Item 7A. *Quantitative and Qualitative Disclosures about Market Risk*** 

The effects of potential changes in interest rates are discussed below. Our market risk discussion includes "forward-looking statements" and represents an estimate of possible changes in fair value or future earnings that could occur assuming hypothetical future movements in interest rates. These disclosures are not precise indicators of expected future losses, but only indicators of

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reasonably possible losses. As a result, actual future results may differ materially from those presented. The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates.

To meet in part our long-term liquidity requirements, we will borrow funds at a combination of fixed and variable rates. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. From time to time, we may enter into interest rate hedge contracts such as collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We do not intend to hold or issue derivative contracts for trading or speculative purposes.

As of December 31, 2025, we had approximately $242.3 million of fixed-rate debt with a weighted-average interest rate of 5.83%. A change in market interest rates on the fixed portion of our debt would impact the fair value of the debt but have no impact on interest incurred or cash flows. Our variable-rate debt is exposed to changes in interest rates, specifically changes in the 1-month SOFR and in Prime Rate, except for a $26.0 million portion of the mortgage on the DoubleTree by Hilton Philadelphia which is subject to a cap on SOFR of 3.00%. Assuming that the aggregate amount outstanding on our line of credit and the mortgages on our Philadelphia, Pennsylvania, Jacksonville, Florida and Houston, Texas hotels remains at approximately $82.5 million, the balance at December 31, 2025, the impact on our annual interest incurred and cash flows of a one percent increase in 1-month SOFR and the Prime Rate, would be approximately $0.6 million.

As of December 31, 2024, had approximately $243.6 million of fixed-rate debt, including the PPP Loans of $0.7 million, with a fixed rate of 1.0% and approximately $75.7 million of variable-rate debt. The weighted-average interest rate on the fixed-rate debt was 5.39%. A change in market interest rates on the fixed portion of our debt would impact the fair value of the debt but have no impact on interest incurred or cash flows. Our variable-rate debt is exposed to changes in interest rates, specifically changes in the 1-month SOFR and in Prime Rate, except for a $26.0 million portion of the mortgage on the DoubleTree by Hilton Philadelphia which is subject to a cap on SOFR of 3.00%. Assuming that the aggregate amount outstanding on the mortgages on our Philadelphia, Pennsylvania, Jacksonville, Florida and Houston, Texas hotels remains at approximately $75.7 million, the balance at December 31, 2024, the impact on our annual interest incurred and cash flows of a one percent increase in 1-month SOFR and in Prime Rate, would be approximately $0.5 million.

**Item 8. *Financial Statements and Supplementary Data***

See Index to Financial Statements and Financial Statement Schedules on page F-1.

**Item 9. *Changes in and Disagreements with Accountants on Accounting and Financial Disclosure***

On September 11, 2025, the Audit Committee approved the dismissal of Forvis Mazars, LLP ("Forvis") as our independent registered public accounting firm effective immediately.

No accountant's report on our financial statements for either of the past two (2) fiscal years contained an adverse opinion or a disclaimer of opinion or was qualified or modified as to uncertainty, audit scope or accounting principles.

During our two most recent fiscal years (ended December 31, 2024 and 2023) and from January 1, 2025 through September 11, 2025, there were no disagreements with Forvis on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Forvis, would have caused Forvis to make reference thereto in connection with its reports on our financial statements. During this same period, there were no "reportable events" as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

The Company provided Forvis with a copy of the foregoing disclosure and requested Forvis to furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements made therein.

On September 15, 2025, the Audit Committee approved the appointment and engagement of Cherry Bekaert LLP ("Cherry Bekaert") as our independent registered public accounting firm for the fiscal year ending December 31, 2025.

During the Company's two most recent fiscal years (ended December 31, 2024 and 2023) and from January 1, 2025 to the date of this current report on Form 8-K, neither the Company, nor anyone on the Company's behalf, consulted Cherry Bekaert regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report nor oral advice was provided to the Company that Cherry Bekaert concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Item

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304(a)(1)(iv) of Regulation S-K and the related instructions) or a "reportable event" (as defined in Item 304(a)(1)(v) of Regulation S-K).

**Item 9A. *Controls and Procedures***

*Sotherly Hotels Inc.* 

**Disclosure Controls and Procedures** 

The Company's management, under the supervision and participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act), as of December 31, 2025. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2025, its disclosure controls and procedures were effective and designed to ensure that (i) information required to be disclosed in its reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and instructions, and (ii) information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The Company's management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company's disclosure controls and procedures or its internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within Sotherly Hotels Inc. have been detected.

**Management's Report on Internal Control over Financial Reporting** 

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). The Company's management assessed the effectiveness over internal control over financial reporting as of December 31, 2025. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") 2013 *Internal Control-Integrated Framework.* The Company's management has concluded that, as of December 31, 2025, the Company's internal control over financial reporting is effective based on these criteria.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to the exemption provided to issuers that are not "large accelerated filers" or "accelerated filers" under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

**Changes in Internal Control over Financial Reporting**

There was no change in Sotherly Hotels Inc.'s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during Sotherly Hotels Inc.'s last fiscal quarter that materially affected, or is reasonably likely to materially affect, Sotherly Hotels Inc.'s internal control over financial reporting.

*Sotherly Hotels LP* 

**Disclosure Controls and Procedures** 

The Operating Partnership's management, under the supervision and participation of the Chief Executive Officer and Chief Financial Officer of Sotherly Hotels Inc., as general partner, has evaluated the effectiveness of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act), as of December 31, 2025. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2025, the disclosure controls and procedures were effective and designed to ensure that (i) information required to be disclosed in the reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and instructions, and (ii) information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

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The Operating Partnership's management, including the Chief Executive Officer and Chief Financial Officer of Sotherly Hotels Inc., as general partner, does not expect that the disclosure controls and procedures or the internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within Sotherly Hotels LP have been detected.

**Management's Report on Internal Control over Financial Reporting** 

The Operating Partnership's management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). Management assessed the effectiveness over internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by COSO in 2013 *Internal Control-Integrated Framework.* Management has concluded that, as of December 31, 2025, the Operating Partnership's internal control over financial reporting is effective based on these criteria.

This annual report does not include an attestation report of the Operating Partnership's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Operating Partnership's independent registered public accounting firm pursuant to the exemption provided to issuers that are not "large accelerated filers" or "accelerated filers" under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

**Changes in Internal Control over Financial Reporting** 

There was no change in Sotherly Hotels LP's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during Sotherly Hotels LP's last fiscal quarter that materially affected, or is reasonably likely to materially affect, Sotherly Hotels LP's internal control over financial reporting.

**Item 9B. *Other Information***

During the three months ended December 31, 2025, none of our directors or officers adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" as such terms are defined under Item 408 of Regulation S-K.

**Item 9C. *Disclosure Regarding Foreign Jurisdictions that Prevent Inspections***

None.

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**PART III**

**Item 10. *Information about our Directors, Executive Officers and Corporate Governance***

The directors of the Company are elected by the stockholders annually. As of December 31, 2025, the Board consisted of six (6) members as follows:

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Position with the Company** | **Age as of March 31, 2026** | **History of Service** <br>**as a Director** |
| David R. Folsom | Director, President and <br>Chief Executive Officer | 61 | 2011 - February 12, 2026 |
| Andrew M. Sims | Chairman of the <br>Board of Directors | 69 | 2004 - February 12, 2026 |
| Maria L. Caldwell | Director  | 62 | 2019 - February 12, 2026 |
| G. Scott Gibson IV  | Director | 60 | 2017 - February 12, 2026 |
| Walter S. Robertson III | Director | 72 | 2024 - February 12, 2026 |
| Anthony C. Zinni | Director | 82 | 2004 - February 12, 2026 |

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As of February 12, 2026, in connection with the consummation of the Merger and, as required pursuant to the Merger Agreement, David R. Folsom, Andrew M. Sims, Maria L. Caldwell, G. Scott Gibson IV, Walter S. Robertson III and Anthony C. Zinni resigned from and ceased serving on the Company's Board.

Effective February 12, 2026, the following individuals became officers and directors of the Company following the resignation of the prior directors:

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Position with the Company** | **Age as of March 31, 2026** | **History of Service** <br>**as a Director** |
| Zachary Schmidt | Director, Chief Executive Officer | 33 | February 12, 2026 – Present |
| William Ryan Pellum | Director, Chief Financial Officer | 41 | February 12, 2026 – Present |
| Jay Schulte | Director  | 33 | February 12, 2026 – Present |

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**Biographical Information**

The principal business experience of each director and executive officer of the Company as of December 31, 2025 is set forth below.

**Directors**

**David R. Folsom** served as Sotherly's President and Chief Executive Officer until his resignation on February 12, 2026. He was appointed to the position of President in January 2011 and to the position of Chief Executive Officer in January 2020. Mr. Folsom was appointed as a director in 2011. As Chief Executive Officer, Mr. Folsom was responsible for developing and implementing Sotherly's strategic business plan and managing all aspects of Sotherly's business. Prior to his appointment as Chief Executive Officer, Mr. Folsom served as Sotherly's Chief Operating Officer beginning in 2006. Prior to joining Sotherly, Mr. Folsom was Vice President of Paragon Real Estate, a Cleveland-based early-stage real estate venture focusing on distressed multi-family assets in 2005. From 2001 to 2005, he was an investment banker with BB&T Capital Markets, where he served in the Real Estate Securities Group and Debt Capital Markets Groups. While at BB&T, Mr. Folsom participated in over 70 equity, debt and preferred stock offerings, as well as financial advisory on transactions across many industries. He was a member of the lead underwriting team that took Sotherly public in 2004. Mr. Folsom served as a commissioned officer in the U.S. Marine Corps, is a graduate of the U.S. Naval Academy and received a Master of Business Administration degree from Georgetown University. In 2012, Mr. Folsom also acted as an adjunct professor at the College of William and Mary. He was also a director of The Sotherly Foundation, a charitable foundation established by Sotherly to provide assistance to veterans.

**Andrew M. Sims** served as Sotherly's Chairman of the Board in such capacity since its inception in August 2004 until his resignation from the Board on February 12, 2026. In addition, Mr. Sims served as Sotherly's Chief Executive Officer from its inception through December 31, 2019, and as President from its inception through December 31, 2010. He served as President of MHI Hotels Services LLC, which does business as Chesapeake Hospitality ("Chesapeake Hospitality") from 1995 until August 2004 after serving for seven years as Vice President of Finance and Development. As President of Chesapeake Hospitality, Mr. Sims oversaw

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company operations as well as the areas of accounting and finance, marketing, development and franchise relations. Mr. Sims has a Bachelor of Science degree in commerce from Washington & Lee University.

**Maria L. Caldwell** became a director of Sotherly in 2019 and served as a member of Sotherly's Audit Committee until her resignation from the Board on February 12, 2026. From 2013 to 2024, Ms. Caldwell served as the Chief Legal Officer and Director of Compliance Services of the National Association of State Boards of Accountancy (NASBA), a 110-year-old non-profit corporation that serves as a forum for the 55 boards of accountancy charged with regulating the CPA profession and has served in that capacity and others since 2003. From 1996 to 1999, Ms. Caldwell served as the General Counsel for Sirrom Capital Corporation, where she managed Sirrom's initial public offering, numerous follow-on public equity and debt offerings, and an aggregate of over $300 million in private loan closings. In addition, she developed and managed the corporate governance program, managed SEC reporting and investor relations, and advised Sirrom's board on a range of matters. Ms. Caldwell has also practiced law with both Bass, Berry & Sims and Gibson, Dunn & Crutcher in the areas of securities law, mergers and acquisitions, real estate, and corporate law. Ms. Caldwell is a current member of the Tennessee Bar and a former member of the State Bar of California. She received a juris doctor degree from Duke University School of Law and a Bachelor of Arts degree in economics from Fairfield University.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**G. Scott Gibson IV**, **Ph.D**., became a director of Sotherly in 2017 and served as chair of Sotherly's Audit Committee until his resignation from the Board on February 12, 2026. Mr. Gibson joined the faculty of the College of William and Mary's Mason School of Business in 2005, where he is currently the K. Dane Brooksher Professor of Business. From 2001 until 2005, he was a professor at the Cornell University School of Hotel Administration, where he continues as an online executive education instructor. Since 2005, he has served on the editorial board of *Cornell Hotel and Restaurant Administration Quarterly.* His research interests include hospitality financing strategies, real estate investment trusts, investor targeting, and conflicts of interest in the delegated investment management industry. His research has appeared in leading hospitality, real estate, and finance journals and in the financial press, including the *Wall Street Journal*, *Financial Times*, *New York Times*, *Barons*, *Business Week,* and *Bloomberg*. He was a professor at the University of Minnesota Carlson School of Management from 1996 to 2001. Prior to his academic career, he worked as an analyst with Fidelity Investments from 1987 to 1988 and as a credit team leader serving Fortune 500 clientele with HSBC Bank from 1988 to 1991. He has a Bachelor of Science degree in finance from Boston College and a Doctor of Philosophy in finance from Boston College.

**Walter S. Robertson III** became a director of Sotherly in 2024 and served as lead director and chair of Sotherly's NCGC Committee and a member of Sotherly's Audit Committee until his resignation from the Board on February 12, 2026. Mr. Robertson is Managing Director and Director of Strategic Development for Brockenbrough, an independent financial services firm. He is primarily responsible for leading client development, client relations, and marketing efforts for the firm's clients. Walter also sits on the firm's five-person executive committee and has over 45 years investment experience. Prior to joining Brockenbrough in 2016, Mr. Robertson served as President and Chief Operating Officer of Sterne Agee and Leach, Inc. He also served as CEO, COO and President of the Private Client Group at BB&T/Scott & Stringfellow from 2001-2012. From 1998 to 2001, Walter served as a Senior Executive Officer, a member of the Executive Committee, and a member of the Board of BB&T Insurance, Inc. Mr. Robertson holds a B.A. in History from Washington and Lee University. Additionally, Mr. Robertson has served on the board of directors of dozens of businesses and philanthropic institutions as a director and leader. He currently sits on the board of directors of the Colonial Williamsburg Foundation, The Boys and Girls Club of Richmond Foundation, The American Civil War Museum, St. Christopher's School, and Westminster Canterbury Foundation.

**General Anthony C. Zinni** became a director of Sotherly in December 2004 upon completion of its initial public offering and served as a member of Sotherly's NCGC Committee until his resignation from the Board on February 12, 2026. General Zinni served as a director at BAE Systems from 2001 to 2014 and served as Chief Executive Officer on an interim basis during 2009. General Zinni also served as a director of DynCorp International from 2006-2008 and served as the Executive Vice President of DynCorp International, from July 2008 to December 2008. He retired from the U.S. Marine Corps after 39 years of service in October 2000. During his military career, General Zinni served as the Commanding General, First Marine Expeditionary Force from 1994 to 1996, and as Commander-in-Chief, U.S. Central Command from 1997 to 2000. General Zinni has participated in numerous humanitarian operations and Presidential diplomatic missions. In November 2001, General Zinni was appointed senior adviser and U.S. envoy to the Middle East by Secretary of State Colin Powell. Since November 2000, General Zinni has consulted in the areas of defense, military, national security, foreign policy and regional issues. Since 2008, he has served as a professor at Cornell University. In 2008, he also served as a professor at Duke University. General Zinni received a Bachelor of Arts degree in economics from Villanova University. He also earned a Master of Arts degree in international relations from Salve Regina College, a Master of Science degree in management and supervision from Central Michigan University, and honorary Doctor of Philosophy degrees from both the College of William and Mary and the Marine Maritime Academy.

The principal business experience of each director and executive officer of the Company as of February 12, 2026 is set forth below.

**Zachary Schmidt** currently serves as the Company's Chief Executive Officer and as a member of the board of directors. He was appointed to the position of Chief Executive Officer and to the board of directors on February 12, 2026, following the Merger.

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Mr. Schmidt joined Kemmons Wilson Companies ("KWC"), an affiliate of Parent, in 2017 and has served in various roles within KWC's hospitality leadership group, most recently as Head of Portfolio Management. In this role, he is responsible for portfolio-level execution of investment mandates, including underwriting hospitality investments and overseeing asset-level performance alongside the firm's asset management function. Prior to joining KWC, Mr. Schmidt was an investment banking analyst at Bank of America Merrill Lynch from June 2015 to June 2017. Mr. Schmidt holds a Bachelor of Arts degree in Economics from Dartmouth College.

**William Ryan Pellum** currently serves as the Company's Chief Financial Officer and as a member of the board of directors. He was appointed to the position of Chief Financial Officer and to the board of directors on February 12, 2026, following the Merger. Mr. Pellum also currently serves as Chief Operating Officer and Senior Vice President of Finance of KWC Management. Prior to this role, Mr. Pellum served as corporate controller from January 2014 to December 2022. Mr. Pellum's responsibilities include oversight of enterprise-wide finance functions, including cash management, accounting, audit processes, tax strategy, payroll, and technology systems. He also oversees financial reporting and operational matters for the Kemmons Wilson Hospitality Funds, including internal controls, fund performance, investor reporting, and compliance. Mr. Pellum holds a Bachelor of Business Administration degree in accounting and computer information systems from Delta State University, a Master of Accountancy from the University of Mississippi, and he has been a Certified Public Accountant since 2012.

**Jay Schulte** is currently a director of the Company. He was appointed to the board of directors on February 12, 2026, following the Merger. Schulte leads the capital deployment strategy for (Kemmons Wilson Hospitality Partners "KWHP") as Head of Acquisitions. Mr. Schulte joined KWHP in 2018 after serving as a research analyst for Nomura Securities International in New York City from 2015 to 2017. Mr. Schulte's experience includes more than 35 hospitality investment and development projects, as well as service in financial and operational roles across several Kemmons Wilson-affiliated companies. Mr. Schulte also serves on the boards of certain private entities and charitable organizations primarily focused on leadership development. Mr. Schulte holds his Bachelor of Arts degree in Economics from Dartmouth College.

**Executive Officers of the Company Who Are Not Directors** 

**Anthony E. Domalski,** age 64, is Sotherly's Corporate Controller, a position he has held since February 12, 2026, and will continue to hold until May 31, 2026. Mr. Domalski previously served as Sotherly's Vice President, Secretary, and Chief Financial Officer, the latter being a position to which he was appointed as of January 1, 2013, until his resignation on February 12, 2026. Prior to this role, Mr. Domalski served as Sotherly's Chief Accounting Officer beginning in May 2005. He joined Sotherly in May 2005 and was appointed an officer by the Board in July 2006. A certified public accountant, he is responsible for financial analysis, cash management, investment, risk management and financial and tax reporting. From 2001 to 2005, Mr. Domalski served as Chief Financial Officer for SwissFone, Inc., a Washington, D.C. based telecommunications company, where he assisted in a management-led buyout of the U.S. international wholesale division from Swisscom, AG. Prior to his tenure at SwissFone, Inc., Mr. Domalski held several other senior financial positions in the telecommunications and hospitality industry and spent nine years at a local public accounting firm. Mr. Domalski is a member of the American Institute of Certified Public Accountants. Mr. Domalski received a Bachelor of Science degree in accounting and finance from the University of Maryland.

**Scott M. Kucinski,** age 44, is Sotherly's Executive Vice President and Chief Operating Officer, a position to which he was appointed as of January 1, 2020, and is expected to hold until July 31, 2026. Mr. Kucinski joined the Company in 2004 as Development Analyst, and since 2014 has served as the Company's Vice President - Operations and Investor Relations. In that role, he has helped oversee the Company's corporate operations activities including capital markets transactions, acquisitions and dispositions, asset management, investor relations, and compliance matters. Mr. Kucinski received a Bachelor of Arts degree from Washington and Lee University and holds a Masters of Business Administration degree from the Mason School of Business at the College of William and Mary.

**Meetings and Certain Committees of the Board**

The Board conducts its business through meetings of the Board and through its committees. As of December 31, 2025, the Board had two (2) standing committees: the Nominating, Corporate Governance and Compensation Committee ("NCGC Committee") and the Audit Committee. During the fiscal year ended December 31, 2025, the Board held 4 (four) regular meetings and 5 (five) special meetings. No director of the Company attended fewer than 75% of the total meetings of the Board and committee meetings on which such Board member served during this period. All of the Company's directors, except for Mr. Robertson, attended the Company's 2025 annual meeting of stockholders.

As of February 12, 2026, the Board now acts as a whole in place of the former Audit Committee.

**Independent Directors**

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All of the members of the Audit Committee and the NCGC Committee and a majority of the Board must meet the test of "independence" as defined by the listing standards of the NASDAQ<sup>®</sup> Stock Market ("NASDAQ"). NASDAQ standards provide that to qualify as an "independent" director, in addition to satisfying certain bright-line criteria, the Board has a responsibility to make an affirmative determination that a director has no relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) that would interfere with the exercise of independent judgment. For the year ending December 31, 2025, the Board has determined that each of directors Caldwell, Gibson, Robertson and Zinni satisfies the bright-line criteria and that none has a relationship with the Company that would interfere with such person's ability to exercise independent judgment as a member of the Board. Therefore, we believe that each of such directors was independent under NASDAQ rules.

For the year ended December 31, 2025, the NCGC Committee comprised directors Mr. Robertson, Ms. Caldwell and General Zinni. Mr. Herschel J. Walker served on the NCGC Committee until October 17, 2025. Subsequently, Ms. Caldwell was appointed to fill the vacancy. All of the members of the NCGC Committee who served during the fiscal year ended December 31, 2025 were determined to be independent in accordance with the listing standards of NASDAQ. This standing committee approved the salary for the Chairman of the Board, the President and Chief Executive Officer, the Executive Vice President and Chief Operating Officer, the Vice President and Chief Financial Officer, and the General Counsel. The purpose of the NCGC Committee was to make recommendations to the Board regarding corporate governance policies and practices, recommend criteria for membership on the Board, make recommendations to the Board of potential director nominees, make recommendations to the Board concerning the membership, size and responsibilities of each of the committees, develop general policies relating to compensation and benefits, determine compensation for, and evaluate the performance of, our executive officers and administer our 2022 Long-Term Incentive Plan (the "2022 Plan"). The NCGC Committee met two (2) times in fiscal year 2025. The NCGC Committee adopted a written charter that was reviewed and approved on October 27, 2025, which set forth the specific functions and responsibilities of the committee. The NCGC Committee reviewed and assessed the adequacy of its written charter on an annual basis.

For the year ended December 31, 2025, the Audit Committee, was comprised of directors Gibson, Caldwell and Robertson. The Board determined that G. Scott Gibson IV, chairman of the Audit Committee, qualified as an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S-K. The Board determined that all members of the Audit Committee were independent in accordance with the listing standards of NASDAQ. The Audit Committee met with the Company's independent registered public accounting firm to discuss the annual audit and any related matters. The Audit Committee was further responsible for internal control over financial reporting. The Audit Committee met thirteen (13) times in fiscal year 2025.

All independent directors as of December 31, 2025 continued to serve until their resignations on February 12, 2026.

**Stockholder Communications** 

The Board does not have a formal process for stockholders to send communications to the Board. In view of the infrequency of stockholder communications to the Board, the Board does not believe that a formal process is necessary. Written communications received by our Company from stockholders are shared with the full Board no later than the next regularly scheduled Board meeting. The Board encourages, but does not require, directors to attend the annual meeting of stockholders.

**Prohibition on Hedging** 

Our insider trading policy prohibits the Company's directors, officers, key employees and their respective family members from trading any interest or position relating to the future price of Company securities, such as a put, call or short sale.

**Delinquent Section 16(a) Reports**

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and the beneficial owners of more than 10.0% of the common stock (each, a "Reporting Person") to file reports of ownership and changes in ownership of equity securities of the Company with the Commission and to furnish the Company with copies of such reports. Based solely on a review of the copies of such forms furnished to us and written representations from our directors and executive officers, all Section 16(a) filing requirements were met for the fiscal year ended December 31, 2025. We are not aware of any beneficial owners of more than 10.0% of our common stock other than as disclosed in the Principal Holders Table.

**Code of Ethics**

The Company has adopted a code of business conduct and ethics, including a conflicts of interest policy that applies to its principal executive officer, principal financial officer, principal accounting officer or controller performing similar functions. We intend to maintain high standards of ethical business practices and compliance with all laws and regulations applicable to our business.

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A copy of the Company's Code of Business Conduct is posted on the Company's external website at www.sotherlyhotels.com. The Company and the Operating Partnership intend to post to its website any amendments to or waivers of its code. The Operating Partnership is managed by the Company, its sole general partner and parent company. Consequently, the Operating Partnership does not have its own separate directors or executive officers.

**Insider Trading Arrangements and Policies**

During the three months ended December 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" as defined in Item 408(c) of Regulation S-K

The Company has adopted an insider trading policy that governs the purchase and sale of the Company's securities by its directors, officers, and key employees, and the policy is designed to promote compliance with insider trading laws, rules and regulations. The Company's policy does not address the Company's trading in its own securities. The Company's insider trading policy is included as Exhibit 19.1 to this Form 10-K.

**Item 11*. Executive Compensation***

**Compensation Discussion and Analysis**

The NCGC Committee is responsible for developing our policies relating to compensation and benefits, determining compensation for, and evaluating the performance of, certain of our executive officers, and administering the 2022 Plan. As of December 31, 2025, the NCGC Committee determines and approves compensation for our Chairman and our Chief Executive Officer, and approves compensation for our Chief Financial Officer as determined by our Chief Executive Officer. These three (3) individuals are our most highly paid executive officers as of December 31, 2025, and we refer to these three (3) executive officers as our named executive officers.

As of December 31, 2025, the NCGC Committee reviews and approves, at least annually, corporate goals and objectives relevant to the compensation of the Chairman and the CEO. The NCGC Committee also:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Evaluates at least annually the performance of the Company's named executive officers in light of the corporate goals and objectives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•At least annually, either as the NCGC Committee or together with the other independent directors, as directed by the Board, in light of the corporate goals and objectives and the performance evaluations: (i) determines and approves the compensation of the Chairman and the CEO, including individual elements of salary, bonus, supplemental retirement, incentive and equity compensation; and (ii) approves the compensation for the CFO and the COO based on recommendations from the Chairman and the CEO;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Administers the Company's incentive compensation plans and equity-based plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Reviews, as the NCGC Committee considers appropriate in setting named executive officer compensation, the Company's performance and relative stockholder return, compensation at comparable companies, past years' compensation to the Company's named executive officers and other relevant factors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Reviews and approves all employment agreements and amendments, separation and severance agreements and other compensatory contracts, arrangements, perquisites and payments with respect to the Chairman and CEO, and reviews and makes recommendations to the Board regarding all such agreements, contracts, arrangements, perquisites and payments with respect to other executive officers.

In any deliberations or voting to determine the compensation of the Chairman or the CEO, neither the Chairman nor the CEO may be present; however, in any deliberations regarding the compensation of other executive officers, the NCGC Committee may elect to invite the Chairman or the CEO to be present but not vote.

The NCGC Committee's principal objective in establishing compensation policies is to develop and administer a comprehensive program designed to attract and retain outstanding managers. The NCGC Committee's guidelines for compensation of our named executive officers are designed to provide fair and competitive levels of total compensation while linking elements of compensation with performance. A further objective of our compensation policies is to provide incentives and reward named executive officers for their contribution to our Company. To that end, the NCGC Committee believes executive compensation packages provided by us to the named executive officers should include cash compensation that rewards performance as measured against established goals. The NCGC Committee takes into account our named executive officers' existing ownership of the

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Company's common stock and allocations of common stock made to the executives' participant accounts pursuant to the Company's Employee Stock Ownership Plan ("ESOP"), which the NCGC Committee believes aligns the interests of our named executive officers with that of our stockholders and encourages a focus on long-term value creation.

It was favorably noted by the NCGC Committee that our stockholders approved our executive compensation program at the 2025 annual meeting of the stockholders of the Company. Holders of approximately 6.86 million shares of our common stock, or approximately 79.8% of the total votes cast (without regard to broker non-votes or abstentions), voted for the advisory vote approving executive compensation. The NCGC Committee generally considered the results of the 2025 advisory vote on executive compensation and considered these voting results as supportive of the NCGC Committee's general executive compensation practices.

The NCGC Committee has not retained or obtained the advice of a compensation consultant.

***Elements of our Compensation Plan for Fiscal Year 2025***

As of December 31, 2025, elements of compensation for our named executive officers consist principally of base salary, cash performance bonuses, stock awards, and non-discretionary allocations pursuant to the Company's ESOP. In determining each element of compensation for each named executive officer, the NCGC Committee primarily considers the following elements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•market data relating to an identified peer group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•third-party compensation surveys for the lodging industry and, when applicable, compensation at comparable companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•company performance in light of specified goals and guidance and taking into account general market conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•recommendations of the Chairman and the Chief Executive Officer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•individual performance of the named executive officers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the terms of each named executive officer's employment agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•past years' compensation paid to the Company's named executive officers; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•allocations to the named executive officer's participant accounts pursuant to the Company's ESOP.

For the fiscal year ended December 31, 2025, executive compensation included four main components: (i) annual base salary; (ii) cash bonus (iii) stock awards; and (iv) non-discretionary allocations pursuant to the Company's ESOP.

***Principles and Objective of the Compensation Plan for Fiscal Year 2025***

The following table summarizes the primary components and rationale of the Company's compensation philosophy and the pay elements that support that philosophy.

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| | | |
|:---|:---|:---|
| **Philosophy Component** | **Rationale/Commentary** | **Pay Element** |
| Compensation should be designed to attract and retain outstanding managers | The principal objective of the Company's executive compensation plan has been and is to achieve the Company's business objectives by attracting, retaining and motivating talented executive officers by providing incentives and economic security. | All elements (salary, annual cash bonus, ESOP allocations, restricted stock awards, health and welfare benefits, change in control severance agreements) |
| Compensation should provide fair and competitive levels of total compensation | To attract and reduce the risk of losing the services of valuable executive officers but avoid the expense of excessive pay, compensation should be competitive. The NCGC Committee assesses the competitiveness of the Company's compensation to its executive officers by comparison to compensation of executive officers at similar public companies, based on available proxy statement data and other data, or by reviewing publicly available third-party surveys to understand developments in compensation in the lodging sector. | All elements |
| Elements of compensation should be linked with performance | Performance-based pay aligns the interest of management with the Company's stockholders. Performance-based compensation motivates and rewards individual efforts and Company success. The executive officers were historically eligible to receive a cash bonus in target amounts between 25%-35% of their base salary, subject to consideration of the performance metrics described under the heading "*Cash Bonus Plan.*" | Cash bonus/stock awards |
| Compensation should align the interests of our executive officers with those of our stockholders | The Company's executive compensation is designed to reward favorable total stockholder returns, both in an absolute amount and relative to the Company's peers, taking into consideration the Company's competitive position within the real estate industry and each executive's long-term contributions to the Company. The NCGC Committee takes into account significant existing equity ownership positions of our named executive officers. | Non-discretionary ESOP allocations, restricted stock awards |
| Compensation should provide incentives and reward named executive officers for their contribution to our Company | The Company strives to provide a rewarding and professionally challenging work environment for its executive officers. The Company believes that executive officers who are motivated and challenged by their duties are more likely to achieve the individual and corporate performance goals. The Company's executive compensation plan should reflect this work environment and reward the executive officers for meeting or exceeding performance expectations. | All elements |

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***Base Salary***

The original base salary amounts of the named executive officers were provided for in their respective employment agreements and are subject to adjustment pursuant to the terms of those agreements. In setting base salaries, and annually considering adjustments, the NCGC Committee uses an evaluation process considering the named executive officer's position, level and scope of responsibility and an evaluation of base salaries and other benefits of other executive officers of comparable companies, including an analysis of our Company's current operating results. The 2025 annual base salaries for the named executive officers are provided in the Summary Compensation Table.

***Cash Bonus Plan***

Under our employment agreements with the named executive officers in effect during fiscal year 2025, each named executive officer is eligible to receive a cash bonus in target amounts between 25%-35% of base salary. The NCGC Committee has reviewed these agreements and has determined in the best interests of the Company to structure a cash bonus plan that may award above or below the 25%-35% target range indicated in the agreements subject to consideration of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the need to retain and motivate our existing executives; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•realizing the 2025 corporate goals and objectives and other personal goals established by our Board based on recommendations from our Chief Executive Officer.

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For the fiscal year ended December 31, 2025, the NCGC Committee approved cash bonuses for Mr. Sims, Mr. Folsom, and Mr. Domalski of $145,000, $125,000, and $93,000, respectively.

***Stock Awards***

See "*Stock Awards Granted*" below.

***Employee Stock Ownership Plan in Fiscal Year 2025***

The Company sponsors and maintains the Sotherly Hotels Inc. ESOP and related trust for the benefit of its eligible employees. Employees who are at least 21 years old with at least one year of service during which the employee has completed at least 1,000 hours of service with the Company are eligible to participate. On December 29, 2016, the Company entered into a loan agreement with the ESOP pursuant to which the ESOP may borrow up to $5,000,000 from the Company to purchase shares of the Company's common stock ("ESOP Loan"). Between January 3, 2017 and February 23, 2017, the ESOP purchased 682,500 shares of the Company's common stock in the open market. In accordance with the ESOP Loan documents, the common stock purchased by the ESOP serves as collateral for the ESOP Loan. The ESOP Loan was repaid principally from discretionary contributions by the Company to the ESOP during 2025. The interest rate on the ESOP Loan was 2.5% and the ESOP Loan documents provided that the ESOP Loan could be repaid over a shorter period, without penalty for prepayments. Shares purchased by the ESOP are held in a suspense account for allocation among participants as contributions are made to the ESOP by the Company.

Contributions to the ESOP and shares released from the suspense account in an amount proportional to the repayment of the ESOP Loan will be allocated among ESOP participants on the basis of compensation in the year of allocation. Participants will generally be 100% vested in their ESOP account balances upon completion of five years of credited service. A participant's interest in his or her account under the ESOP will also fully vest in the event of termination of service due to normal retirement, death, or disability. Distributions of vested ESOP account balances will be made in cash, provided that the participant will have the right to request a stock distribution, subject to the Company's governing documents and applicable law. The Company contributions to the ESOP are discretionary, subject to the ESOP Loan documents and tax law limits. Pursuant to generally accepted accounting principles, we are required to record compensation expense each year in an amount equal to the fair market value of the shares released or committed to be released from the suspense account.

***Summary Compensation Table***

The following table sets forth the cash and non-cash compensation awarded to or earned by Andrew M. Sims, David R. Folsom, and Anthony E. Domalski during the past three (3) fiscal years.

**SUMMARY COMPENSATION TABLE**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Salary**<br>**($)** | **Bonus**<br>**($)** |  | **Stock Awards**<br>**($)** |  | **All Other**<br>**Compensation ($)** |  | **Total**<br>**($)** |
| Andrew M. Sims, <br>Chairman | 2025 | 577494 | 145000 |  |  |  | 94125 | (11) | 816619 |
| Andrew M. Sims, <br>Chairman | 2024 | 559316 | 147000 | (1) |  |  | 74103 | (12) | 780419 |
| Andrew M. Sims, <br>Chairman | 2023 | 543025 | 126897 | (2)  | 138203 | (7) | 76382 | (13) | 884506 |
| David R. Folsom,<br>President and CEO | 2025 | 571719 | 125000 |  |  |  | 89278 | (11) | 785997 |
| David R. Folsom,<br>President and CEO | 2024 | 553723 | 124150 | (3) |  |  | 71271 | (12) | 749144 |
| David R. Folsom,<br>President and CEO | 2023 | 537595 | 130464 | (4) | 70023 | (8) | 76987 | (13) | 815069 |
| Anthony E. Domalski, <br>Vice President, CFO and Secretary  | 2025 | 406971 | 93000 |  |  |  | 85190 | (11) | 585161 |
| Anthony E. Domalski, <br>Vice President, CFO and Secretary  | 2024 | 394160 | 90250 | (5) |  |  | 67497 | (12) | 551907 |
| Anthony E. Domalski, <br>Vice President, CFO and Secretary  | 2023 | 382680 | 83491 | (6) | 62652 | (10) | 81032 | (13) | 609855 |

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<sup>(1)</sup> Includes (i) a cash bonus of $90,000 and (ii) the aggregate dollar value of a stock award of 60,000 shares of common stock calculated by multiplying the closing market price of our common stock of $0.95 on January 2, 2025, the date of the award, as reported on NASDAQ, by the number of shares of stock awarded.

<sup>(2)</sup> Includes (i) a cash bonus of $95,000 and (ii) the aggregate dollar value of a stock award of 23,715 shares of common stock calculated by multiplying the closing market price of our common stock of $1.345 on January 18, 2024, the date of the award, as reported on NASDAQ, by the number of shares of stock awarded.

<sup>(3)</sup> Includes (i) a cash bonus of $70,000 and (ii) the aggregate dollar value of a stock award of 57,000 shares of common stock calculated by multiplying the closing market price of our common stock of $0.95 on January 2, 2025, the date of the award, as reported on NASDAQ, by the number of shares of stock awarded.

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<sup>(4)</sup> Includes (i) a cash bonus of $70,000 and (ii) the aggregate dollar value of a stock award of 44,955 shares of common stock calculated by multiplying the closing market price of our common stock of $1.345 on January 18, 2024, the date of the award, as reported on NASDAQ, by the number of shares of stock awarded.

<sup>(5)</sup> Includes (i) a cash bonus of $47,500 and (ii) the aggregate dollar value of a stock award of 45,000 shares of common stock calculated by multiplying the closing market price of our common stock of $0.95 on January 2, 2025, the date of the award, as reported on NASDAQ, by the number of shares of stock awarded.

<sup>(6)</sup> Includes (i) a cash bonus of $50,000 and (ii) the aggregate dollar value of a stock award of 24,900 shares of common stock calculated by multiplying the closing market price of our common stock of $1.345 on January 18, 2024, the date of the award, as reported on NASDAQ, by the number of shares of stock awarded.

<sup>(7)</sup> Represents the aggregate dollar value of a stock award of 75,000 shares of common stock calculated by multiplying the closing market price of our common stock of $1.8427 on January 23, 2023, the date of the grant, as reported on NASDAQ, by the number of shares of stock awarded (pursuant to Mr. Sims current employment agreement with the Company dated as of January 1, 2020 (as amended on January 23, 2023, the "Sims Employment Agreement"), the Company issued 75,000 restricted shares of common stock to Mr. Sims on January 23, 2023, which vest as described in the section titled "*Stock Awards Granted*" below).

<sup>(8)</sup> Represents the aggregate dollar value of a stock award of 38,000 shares of common stock calculated by multiplying the closing market price of our common stock of $1.8427 on January 23, 2023, the date of the grant, as reported on NASDAQ, by the number of shares of stock awarded (pursuant to Mr. Folsom's current employment agreement with the Company dated as of January 1, 2020 (as amended on January 23, 2023, the "Folsom Employment Agreement"), the Company issued 38,000 restricted shares of common stock to Mr. Folsom on January 23, 2023, which vest as described in the section titled "*Stock Awards Granted*" below).

<sup>(9)</sup> Represents the aggregate dollar value of a stock award of 26,431 shares of common stock calculated by multiplying the closing market price of our common stock of $1.89 on January 12, 2023, the date of the grant, as reported on NASDAQ, by the number of shares of stock awarded.

<sup>(10)</sup> Represents the aggregate dollar value of a stock award of 34,000 shares of common stock calculated by multiplying the closing market price of our common stock of $1.8427 on January 23, 2023, the date of the grant, as reported on NASDAQ, by the number of shares of stock awarded (pursuant to Mr. Domalski's current employment agreement with the Company dated as of January 1, 2020 (as amended on January 23, 2023, the "Domalski Employment Agreement"), the Company issued 34,000 restricted shares of common stock to Mr. Domalski on January 23, 2023, which vest as described in the section titled "*Stock Awards Granted*" below).

<sup>(11)</sup> Includes the Company contributions to the 401(k) plan in the amount of $14,000 for each of Andrew M. Sims, David R. Folsom, and Anthony E. Domalski in 2025. Includes insurance premiums paid by our Company for life insurance policies for the named executive officers in the amount of approximately $0 for Mr. Sims, $4,899 for Mr. Folsom, and $2,685 for Mr. Domalski in 2025. Includes insurance premiums paid by our Company for health insurance policies for the named executive officers in the amount of approximately $29,846 for each of Mr. Sims, Mr. Folsom and Mr. Domalski in 2025. Includes a reimbursement of $2,100 for Mr. Sims related to an executive health program. Includes insurance premiums paid by our Company for long-term disability insurance policies for the named executive officers in the amount of approximately $15,924 for Mr. Sims, $8,163, for Mr. Folsom, and $6,289 for Mr. Domalski in 2025. Includes ESOP allocation in the amount of $32,612 for each of Andrew M. Sims, David R. Folsom, and Anthony E. Domalski in 2025, which represents the dollar value of the ESOP share allocations related to contributions made to the ESOP in 2025 for multiplied by the closing market price of our common stock of $0.9314 on December 31, 2024 and $2.15 on December 31, 2025, the effective date of the allocations, as reported on NASDAQ.

<sup>(12)</sup> Includes the Company contributions to the 401(k) plan in the amount of $13,800 for each of Andrew M. Sims, David R. Folsom, and Anthony E. Domalski in 2024. Includes insurance premiums paid by our Company for life insurance policies for the named executive officers in the amount of approximately $0 for Mr. Sims, $4,899 for Mr. Folsom, and $2,685 for Mr. Domalski in 2024. Includes insurance premiums paid by our Company for health insurance policies for the named executive officers in the amount of approximately $27,439 for Mr. Sims, $27,439 for Mr. Folsom, and $27,439 for Mr. Domalski in 2024. Includes a reimbursement of $2,100 for Mr. Sims related to an executive health program. Includes insurance premiums paid by our Company for long-term disability insurance policies for the named executive officers in the amount of approximately $12,686 for Mr. Sims, $7,055 for Mr. Folsom, and $5,496 for Mr. Domalski in 2024. Includes ESOP allocation in the amount of $18,078 for each of Andrew M. Sims, David R. Folsom, and Anthony E. Domalski in 2024, which represents the dollar value of the ESOP share allocation multiplied by the closing market price of our common stock of $0.9314 on December 31, 2024, the effective date of the allocation, as reported on NASDAQ.

<sup>(13)</sup> Includes the Company contributions to the 401(k) plan in the amount of $13,200 for each of Andrew M. Sims, David R. Folsom, and Anthony E. Domalski in 2023. Includes insurance premiums paid by our Company for life insurance policies for the named executive officers in the amount of approximately $0 for Mr. Sims, $4,899 for Mr. Folsom, and $2,685 for Mr. Domalski in 2023. Includes insurance premiums paid by our Company for health insurance policies for the named executive officers in the amount of approximately $25,019 for Mr. Sims, $25,019 for Mr. Folsom, and $32,993 for Mr. Domalski in 2023. Includes insurance premiums paid by our Company for long-term disability insurance policies for the named executive officers in the amount of approximately $11,268 for Mr. Sims, $6,975 for Mr. Folsom, and $5,259 for Mr. Domalski in 2023. Includes ESOP allocation in the amount of $26,895 for each of Andrew M. Sims, David R. Folsom, and Anthony E. Domalski in 2023, which represents the dollar value of the ESOP share allocation multiplied by the closing market price of our common stock of $1.49 on December 31, 2023, the effective date of the allocation, as reported on NASDAQ.

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**Outstanding Equity Awards at Fiscal Year End**

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Stock awards** |  |  |  |
| **Name** | **Number of shares of stock that have not vested**<br>**(#)** |  | **Market value of shares that have not vested**<br>**($)** |  |
| Andrew M. Sims,<br>Chairman | 30000 | (1) | 64500 | (4) |
| David R. Folsom,<br>President and CEO | 15200 | <br>(2) | 32680 | <br>(4) |
| Anthony E. Domalski,<br>Vice President, CFO and Secretary | 13600 | (3) | 29240 | (4) |

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<sup>(1)</sup> Pursuant to the Sims Employment Agreement, Mr. Sims was issued 75,000 restricted shares on January 23, 2023, which vest as described in the section titled "*Stock Awards Granted*" below.

<sup>(2)</sup> Pursuant to the Folsom Employment Agreement, Mr. Folsom was issued 38,000 restricted shares on January 23, 2023, which vest as described in the section titled "*Stock Awards Granted*" below.

<sup>(3)</sup> Pursuant to the Domalski Employment Agreement, Mr. Domalski was issued 34,000 restricted shares on January 23, 2023, which vest as described in the section titled "*Stock Awards Granted*" below.

<sup>(4)</sup> Represents the dollar value of shares of common stock calculated by multiplying the closing market price of our common stock of $2.15 on December 31, 2025, as reported on NASDAQ, by the number of shares.]

No other compensation has been awarded to, earned by or paid to any of our named executive officers which is required to be reported in the above tables.

***2025 Base Salary***

For the fiscal year ended December 31, 2025, Andrew M. Sims received $577,494 in base cash salary, pursuant to the terms of his employment agreement. For the fiscal year ended December 31, 2025, David R. Folsom received $571,719 in base cash salary, pursuant to the terms of his employment agreement. For the fiscal year ended December 31, 2025, Anthony E. Domalski received $406,971 in base cash salary, pursuant to the terms of his employment agreement.

***2025 Cash Bonuses Awarded***

The NCGC Committee awarded cash bonuses to the named executive officers for the fiscal year ended December 31, 2025 of $145,000, $125,000, and $93,000 to Andrew M. Sims, David R. Folsom, and Anthony E. Domsalski, respectively. In making its decisions, the NCGC Committee considered the factors described above under the caption "*Cash Bonus Plan."*

***Stock Awards Granted***

The NCGC Committee may, in connection with the entry into employment agreements and modifications to existing employment agreement and pursuant to the 2022 Plan, grant restricted stock awards to our named executive officers. The NCGC Committee met on January 12, 2023 and determined to (i) extend the term of the employment agreements for each of our named executive officers until December 31, 2027 and (ii) provide the named executive officers with restricted stock awards, in recognition for their performance during the COVID-19 pandemic. The NCGC Committee also took into account the Company's financial results for the 2022 fiscal year as compared to the 2021 fiscal year, each executive's compensation relative to compensation offered at comparable companies based on publicly available data and the need to offer competitive compensation to retain key executives.

Pursuant to the amendment, dated January 23, 2023, to the Sims Employment Agreement, the Company issued 75,000 restricted shares of common stock to Mr. Sims on January 23, 2023, which vest in equal amounts of 15,000 shares over a five-year period on March 31 of each year, commencing March 31, 2023 and ending March 31, 2027.

Pursuant to the amendment, dated January 23, 2023, to the Folsom Employment Agreement, the Company issued 38,000 restricted shares of common stock to Mr. Folsom on January 23, 2023, which vest in equal amounts of 7,600 shares over a five-year period on March 31 of each year, commencing March 31, 2023 and ending March 31, 2027.

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Pursuant to the amendment, dated January 23, 2023, to the Domalski Employment Agreement, the Company issued 34,000 restricted shares of common stock to Mr. Domalski on January 23, 2023, which vest in equal amounts of 6,800 shares over a five-year period on March 31 of each year, commencing March 31, 2023 and ending March 31, 2027.

**OPTION EXERCISES AND STOCK VESTED**

The Company has not granted any stock option awards to the named executive officers. The following table sets forth information with respect to the vesting of the named executive officers' restricted common stock during the fiscal year ended December 31, 2025.

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| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;Stock Awards | &nbsp;&nbsp;Stock Awards |
| &nbsp;&nbsp;Name | &nbsp;&nbsp;Number of<br>Shares<br>Acquired on<br>Vesting<br>(#) | &nbsp;&nbsp;Value<br>Realized on<br>Vesting<br>($) |
| &nbsp;&nbsp;Andrew M. Sims, Chairman | &nbsp;&nbsp;15000 | &nbsp;&nbsp;11094 (1) |
| &nbsp;&nbsp;David R. Folsom, President and CEO | &nbsp;&nbsp;7600 | &nbsp;&nbsp;5621 (1) |
| &nbsp;&nbsp;Anthony E. Domalski, CFO | &nbsp;&nbsp;6800 | &nbsp;&nbsp;5029 (1) |

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<sup>(1)</sup> For purposes of this table, the market value per vested share of common stock is assumed to be the closing market price per common share of $0.7396 on March 31, 2025, the vesting date for those shares, as reported on NASDAQ.

***Employment Agreements***

As of December 31, 2025, the Company was party to employment agreements with Messrs. Sims, Folsom, and Domalski, which contained provisions providing for substantial payments to these executives in the event of a change of control of our Company. Specifically, if the executive's employment was terminated without cause or if the executive resigned with good reason or in the event of a change of control, the employment agreements provided for the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any accrued but unpaid salary and bonuses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•vesting of any previously issued stock options or restricted stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•payment of the executive's life, health and disability insurance coverage for a period of five (5) years following termination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any unreimbursed expenses; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a severance payment equal to three (3) times the executive's combined salary and actual bonus compensation for the preceding fiscal year, to be paid within five (5) days of such executive officer's last day of employment.

Additionally, each employment contract allows the Company to limit payments to the executive following a change of control to the maximum amount that could be paid without giving rise to the excise tax imposed by Internal Revenue4 Code Section 4999.

As of February 12, 2026. Mr. Sims resigned as Chairman, Mr. Folsom resigned as the President and Chief Executive Officer of the Company and Anthony E. Domalski resigned as the Vice President, Chief Financial Officer. Messrs. Sims, Folsom and Domalski have entered into standard release agreements with the Company and will receive payments in accordance with their respective employment agreements.

**TERMINATION PAYMENTS TABLE**

The following table indicates the cash amounts, accelerated vesting and other payments and benefits that the named executive officers would be entitled to receive under various circumstances pursuant to the terms of their respective employment agreements. The table assumes that termination of the named executive officer from the Company under the scenario shown occurred on December 31, 2025.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Name and Termination Scenario | Cash<br>Payment<sup>(1)</sup><br>($) | Acceleration <br>of Vesting<br>of Long-<br>Term Equity<br>Incentive<br>Awards<br>($) | Excise<br>Tax<br>Gross-Up<br>Payments | Other<br>Benefits<br>($) | Total<br>($) |
| *Andrew M. Sims, Chairman* |  |  |  |  |  |
| Upon Death |  |  |  |  |  |
| Upon Disability |  |  |  |  |  |
| By Company For Cause or By Executive Without Good Reason |  |  |  |  |  |
| By Company Without Cause or By Executive for Good Reason (including Change in Control) | 2118948 | 32250 |  | 231605 | 2382803 |
| *David R. Folsom, President and CEO* |  |  |  |  |  |
| Upon Death |  |  |  |  |  |
| Upon Disability |  |  |  |  |  |
| By Company For Cause or By Executive Without Good Reason |  |  |  |  |  |
| By Company Without Cause or By Executive for Good Reason (including Change in Control) | 2033619 | 32680 |  | 217872 | 2284171 |
| Non-Renewal of Agreement by Company | 677873 |  |  | 59691 | 737564 |
| *Anthony E. Domalski, Vice President, CFO and Secretary* |  |  |  |  |  |
| Upon Death |  |  |  |  |  |
| Upon Disability |  |  |  |  |  |
| By Company For Cause or By Executive Without Good Reason |  |  |  |  |  |
| By Company Without Cause or By Executive for Good Reason (including Change in Control) | 1453230 | 29240 |  | 197433 | 1679903 |

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<sup>(1)</sup> This column assumes that termination occurred on December 31, 2025 and therefore uses 2024 salary and bonus compensation amounts in its calculations, as provided for in the respective employment agreements. This column assumes that there was neither salary nor annual performance bonus earned but unpaid as of December 31, 2025. For Mr. Folsom, these amounts include stock awards that were awarded in lieu of cash salary. Amounts shown are lump-sum payments.

<sup>(2)</sup> Reflects accelerated vesting of 30,000 unvested shares of Mr. Sim's restricted common stock awards. For purposes of this table, the market value per share of common stock is assumed to be the closing market price per common share of $2.15 on December 31, 2025, as reported on NASDAQ.

<sup>(3)</sup> Reflects accelerated vesting of 15,200 unvested shares of Mr. Folsom's restricted common stock awards. For purposes of this table, the market value per share of common stock is assumed to be the closing market price per common share of $2.15 on December 31, 2025, as reported on NASDAQ.

<sup>(4)</sup> Reflects accelerated vesting of 13,600 unvested shares of Mr. Domalski's restricted common stock awards. For purposes of this table, the market value per share of common stock is assumed to be the closing market price per common share of $2.15 on December 31, 2025, as reported on NASDAQ.

<sup>(5)</sup> This amount represents the lump-sum dollar value of five years of payments for the respective executive's life, health and disability insurance, using 2025 payments as an estimate and assuming no changes in the cost of these payments.

<sup>(6)</sup> This amount includes the lump-sum dollar value of two years of payments for the executive's health insurance, using 2025 payments as an estimate and assuming no changes in the cost of these payments.

For the fiscal year ended December 31, 2025, there were no pension benefits or non-qualified deferred compensation.

***CEO Pay Ratio***

Our CEO to median employee pay ratio is calculated in accordance with Item 402(u) of Regulation S-K. The annual total compensation for the fiscal year ended December 31, 2025 for our CEO was $786,905, and for the median employee was $344,294. The resulting ratio of our CEO's pay to the pay of our median employee for the fiscal year ended December 31, 2025 is 2.29 to 1.00. Our methodology for calculating the CEO pay ratio is explained below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Employee Population*. We determined that our employee population, as of December 31, 2025, consisted of approximately eight (8) full-time employees, excluding our CEO.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Median Employee*. We calculated the annual total compensation of each employee as of December 31, 2025 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, then selected the median employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*CEO Pay Ratio*. We calculated our CEO's annual total compensation in the same manner as the median employee. Finally, we divided our CEO's annual total compensation by the median employee's total compensation to determine the pay ratio.

***Registrant's Action to Recover Erroneously Awarded Compensation***

The Company was not required to prepare an accounting restatement that required recovery of erroneously awarded compensation pursuant to the Company's compensation recovery policy at any time during or after the last completed fiscal year.

***Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information***

The Company does not grant stock option awards to its executives and, therefore, does not have any policies or practices in place for such awards. [The Company did not grant any stock option awards for the fiscal year ended December 31, 2025.]<sup>[4]</sup>

***NCGC Committee Interlocks and Insider Participation***

As of December 31, 2025, the NCGC Committee consisted of Mr. Robertson and Mr. Zinni. Mr. Walker served on the NCGC Committee. None of the members of our NCGC Committee is or has been one of our employees or officers. None of our executive officers currently serves, or during the past fiscal year has served, as a member of the Board or compensation committee of another entity that has one or more executive officers serving on our Board or our NCGC Committee.

***Risk Management Considerations in Fiscal Year 2025***

The NCGC Committee oversees risks associated with our executive compensation plans and arrangements. The Company does not believe that the executive compensation plan is reasonably likely to cause a material adverse impact on the Company for several reasons. First, our named executive officers own significant amounts of common stock in the Company and received additional shares of common stock pursuant to the Company's ESOP, which we believe aligns the interests of our executives with that of our stockholders and encourages a focus on long-term value creation. Second, we have historically offered cash incentive bonuses in targeted amounts of 25%-35% of base salary subject to the consideration of performance metrics that are designed to reflect benefits to the Company. We have never granted stock options.

***Impact of Accounting and Tax Treatments of Compensation***

The accounting and tax treatment of compensation generally has not been a factor in determining the amounts of compensation for our executive officers. However, the NCGC Committee and management have considered the accounting and tax impact of various program designs to balance the potential cost to the Company with the benefit/value to the executive.

While an exception exists for certain contracts in place as of November 2, 2017, only the first $1 million in compensation paid to our named executive officers generally is deductible. Therefore, the NCGC Committee retains flexibility to provide compensation under the plan to executives consistent with the Company's compensation programs, even if such compensation would not be fully deductible.

**Report of the Board** 

For the fiscal year ended December 31, 2025, the Board reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the Board has determined that the Compensation Discussion and Analysis be included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2025 for filing with the Commission.

Board:

Zachary Schmidt

William Ryan Pellum

Jay Schulte

**DIRECTOR COMPENSATION IN FISCAL YEAR 2025**

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The following table sets forth the cash and non-cash compensation earned and awarded to certain of our independent, non-employee directors for their service during the fiscal year ended December 31, 2025.

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| | | |
|:---|:---|:---|
| **Name** | **Fees**<br>**Earned**<br>**or Paid**<br>**in Cash**<br>**($)** | **Total**<br>**($)** |
| Maria L. Caldwell | $82592<br>$2850<sup>(1)</sup> | $85442 |
| G. Scott Gibson IV | $35225<br>$2850<sup>(1)</sup> | $38075 |
| Walter S. Robertson III | $106533<br>$2850<sup>(1)</sup> | $109383 |
| Herschel J. Walker<sup>(2)</sup> | $19467<br>$2850<sup>(1)</sup> | $22317 |
| Anthony C. Zinni | $75408<br>$2850<sup>(1)</sup> | $78258 |

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[(1) Represents the aggregate dollar value of a restricted stock award of 3,000 shares calculated by multiplying the closing market price of our common stock of $1.345 per share on January 18, 2024, the date of the grant, as reported on NASDAQ, by the number of shares of stock awarded.

(2) Mr. Walker's tenure as a director ended on October 17, 2025.

The NCGC Committee reviews the level of compensation of our non-employee directors on an annual basis. To determine how appropriate the current level of compensation for our non-employee directors is, the NCGC Committee has historically obtained data from a number of different sources including publicly available data describing director compensation in peer companies.

We compensate our independent, non-employee directors for their services as members of the Board and its standing and any ad hoc committees through a mixture of cash and equity-based compensation. Eligible independent, non-employee directors receive annual compensation of $20,000, plus a fee of $750 (plus out-of-pocket expenses) for attendance in person at each meeting of the Board. Directors who attend Board meetings telephonically receive a fee of $375. Members of Board committees receive meeting fees ranging from $375 to $2,250 per committee meeting, along with a $10,000 quarterly retainer fee and $4,875 quarterly chair fee for service on an ad hoc committee. Directors who are also officers or employees of our Company do not receive separate compensation for service as a director. Directors Walter S. Robertson III and G. Scott Gibson IV each receive an additional $6,500 per year for their services as chairs of the NCGC Committee and Audit Committee, respectively. Effective July 1, 2025, the Board elected to reduce their compensation by 10%.

On an annual basis, the NCGC Committee awards restricted stock to certain independent, non-employee directors pursuant to the 2022 Plan. On January 2, 2025, our independent directors received an incentive stock award of 3,000 shares each that vested on December 31, 2025. Also on January 2, 2025, director Robertson received an unrestricted stock award of 2,250 shares for his service in 2024.

*2022 Long-Term Incentive Plan* 

We have established the 2022 Plan for the purpose of recruiting and retaining our and our affiliates' executive officers, employees, non-employee directors and consultants. The 2022 Plan authorizes the issuance of options to purchase shares of common stock and the grant of stock awards, deferred shares, performance shares and performance units.

Administration of the 2022 Plan is carried out by the NCGC Committee. The NCGC Committee may delegate a portion of its authority under the 2022 Plan to one or more officers.

Our officers and employees and those of our Operating Partnership and other subsidiaries are eligible to participate in the 2022 Plan. Our non-employee directors, and other persons that provide consulting services to us and our subsidiaries, are also eligible to participate in the 2022 Plan.

**Item 12. *Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters***

(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth the beneficial ownership, as of April 1, 2026, of (i) shares of the Company's common stock for each person or group known to us to be holding more than 5.0% of the number of shares of common stock outstanding, (ii) shares of common stock for each director and named executive officer, and (iii) for the directors and named executive officers of the Company as a group. None of the named executive officers has pledged any of their common shares as collateral. As of April 1, 2026 the

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Company had outstanding 100 shares of its common stock, $0.01 par value per share. The table shows the number of shares of common stock and number of partnership interests or units in the Operating Partnership the person "beneficially owns," as determined by the rules of the Securities and Exchange Commission (the "Commission"). The Operating Partnership is controlled by the Company as its sole general partner. The Operating Partnership is obligated to redeem each unit at the request of the holder thereof for the cash value of one share of common stock or, at the Company's option, one share of common stock.

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| | | |
|:---|:---|:---|
| **Name of Beneficial Owner** | **Number of Shares** <br>**of Common Stock** | **Percent of** <br>**Class** |
| KW Kingfisher LLC | 100 | 100.0 |
| Zachary Schmidt | 0 | 0.0 |
| William Ryan Pellum | 0 | 0.0 |
| Jay Schulte | 0 | 0.0 |

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The following table sets forth the beneficial ownership, as of April 1, 2026, of shares of each class of our preferred stock that is issued and outstanding for each director and named executive officer.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Series B Preferred Stock** | **Series B Preferred Stock** | **Series C Preferred Stock** | **Series C Preferred Stock** | **Series D Preferred Stock** | **Series D Preferred Stock** |
| **Name of Beneficial Owner** | **Shares Owned** | **Percent of** <br>**Class** | **Shares Owned** | **Percent of** <br>**Class** | **Shares Owned** | **Percent of** <br>**Class** |
| Zachary Schmidt | 0 | 0.0 | 0 | 0.0 | 0 | 0.0 |
| William Ryan Pellum | 0 | 0.0 | 0 | 0.0 | 0 | 0.0 |
| Jay Schulte | 0 | 0.0 | 0 | 0.0 | 0 | 0.0 |
| All executive officers and directors as a group (3 persons) | 0 | 0.0 | 0 | 0.0 | 0 | 0.0 |

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(1) Based on 276,058 shares of our Series B Preferred Stock issued and outstanding as of April 1, 2026.

(2) Based on 143,695 shares of our Series C Preferred Stock issued and outstanding as of April 1, 2026.

(3) Based on 343,034 shares of our Series D Preferred Stock issued and outstanding as of April 1, 2026.

(b) SECURITY OWNERSHIP OF MANAGEMENT

Information required by this item is incorporated herein by reference to the section immediately above, Item 12(a).

(c) CHANGES IN CONTROL

Following completion of the Merger on February 12, 2026, the Company knows of no arrangements, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

(d) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Set forth below is information as of December 31, 2025, with respect to compensation plans under which equity securities of the Company are authorized for issuance.

**EQUITY COMPENSATION PLAN INFORMATION**

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| | | | |
|:---|:---|:---|:---|
|  | **NUMBER OF SECURITIES<br>TO BE ISSUED UPON<br>EXERCISE OF<br>OUTSTANDING OPTIONS,<br>WARRANTS AND RIGHTS** | **WEIGHTED-AVERAGE<br>EXERCISE PRICE OF<br>OUTSTANDING OPTIONS,<br>WARRANTS<br>AND RIGHTS** | **NUMBER OF SECURITIES<br>REMAINING AVAILABLE<br>FOR FUTURE ISSUANCE** |
| Equity compensation plans approved by security holders: |  |  |  |
| &nbsp;&nbsp;2022 Plan <sup>(1)</sup> | N/A | N/A | 1118722 |
| Equity compensation plans not approved by security holders: |  |  |  |
|  | N/A | N/A | N/A |
| Total | N/A | N/A | 1118722 |

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1. The Company's 2022 Long-Term Incentive Plan (the "2022 Plan"), which the Company's stockholders approved in April 2022, permits the grant of stock options, restricted stock, unrestricted stock and performance share compensation awards to its employees and directors for up to 2,000,000 shares of common stock.

On February 12, 2026, in connection with the Merger, the Company terminated the 2022 Plan. The remaining 1,118,722 shares were deregistered as of March 30, 2026.

**Item 13. *Certain Relationships and Related Transactions, and Director Independence***

**Independent Directors**

For the fiscal year ended December 31, 2025, all of the members of our Audit Committee and our NCGC Committee and a majority of the Board were required to meet the test of "independence" as defined by the listing standards of NASDAQ. NASDAQ standards provide that to qualify as an "independent" director, in addition to satisfying certain bright-line criteria, the Board has a responsibility to make an affirmative determination that a director has no relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) that would interfere with the exercise of independent judgment. For the year ended December 31, 2025, the Board determined that each of directors Caldwell, Gibson, Robertson, Zinni, and Walker, satisfied the bright-line criteria and that none had a relationship with the Company that would interfere with such person's ability to exercise independent judgment as a member of the Board.

**Certain Relationships and Related Transactions**

For the fiscal year ended December 31, 2025, our Audit Committee or another independent body of our Board, in accordance with our Audit Committee charter and procedures established by the Audit Committee, was responsible for reviewing and approving the terms and conditions of all related party transactions. Any transaction, in which the amount involved exceeds $120,000, and in which a director or executive officer of our Company or a member of the immediate family of a director or officer has a direct or indirect material interest, was required to be approved by our Audit Committee or another independent body of our Board prior to our Company entering into such transaction.

All new related party transactions that were not previously approved were reviewed and approved by our Audit Committee or another independent body of our Board in 2025, unless otherwise indicated.

**Transactions with Our Town Hospitality** 

As of December 31, 2025, Our Town Hospitality, LLC ("Our Town") served as the management company for each of our ten wholly-owned hotels, as well as the manager of our rental programs at the Lyfe Resort & Residences and the Hyde Beach House Resort & Residences. As of December 31, 2025, an affiliate of Andrew M. Sims, our Chairman; an affiliate of David R. Folsom, our President and Chief Executive Officer; and Andrew M. Sims Jr., our Vice President - Operations & Investor Relations, beneficially owned approximately 58.5%, 6.5% and 15.0%, respectively, of the total outstanding ownership interests of Our Town. Mr. Sims, Mr. Folsom, and Mr. Sims Jr. serve as directors of Our Town.

***Management Agreements***

On September 6, 2019, we entered into a master agreement with Our Town and the former majority equity holder of Our Town related to the management of certain of our hotels, as amended and restated on November 6, 2024 (as amended, the "OTH Master Agreement"). On December 13, 2019, and subsequent dates, we entered into a series of individual hotel management agreements for

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the management of our hotels. The hotel management agreements for each of our ten wholly-owned hotels and the two rental programs are each referred to as an "OTH Hotel Management Agreement" and, together, the "OTH Hotel Management Agreements."

The OTH Master Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•was set to expire on March 31, 2035, or earlier if all of the OTH Hotel Management Agreements expired or were terminated prior to that date. The OTH Master Agreement could have been extended beyond 2035 for such additional periods as an OTH Hotel Management Agreement remains in effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•set an incentive management fee for each of the hotels managed by Our Town equal to 10% of the amount by which gross operating profit, as defined in the OTH Hotel Management Agreements, for a given year exceeded the budgeted gross operating profit for such year; provided, however, that the incentive management fee payable in respect of any such year would not exceed 0.25% of the gross revenues of the hotel included in such calculation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•provided a mechanism and establishes conditions on which the Company would offer Our Town the opportunity to manage hotels acquired by the Company in the future, pursuant to a negotiated form of single facility management agreement, with the caveat that the Company is not required to offer the management of future hotels to Our Town; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•set a base management fee for future hotels of 2.00% of gross revenues for the first year of the term, 2.25% of gross revenues for the second year of the term, and 2.50% of gross revenues for the third and any additional years of the term.

Each of the OTH Hotel Management Agreements were amended to have their initial term expire March 31, 2035. Each of the OTH Hotel Management Agreements could have been extended for up to two additional periods of five years subject to the approval of both parties with respect to any such extension. The agreements provided that Our Town be the sole and exclusive manager of the hotels as the agent of the respective Company subsidiary that engages Our Town, at the sole cost and expense of that Company subsidiary, and subject to certain operating standards.

Each OTH Hotel Management Agreement could be terminated in connection with a Sale of the related hotel. The OTH Master Agreement limited the termination right upon a Sale of a hotel to a third party purchaser that was not an affiliate or a related person of the Operating Partnership, the Company or the TRS Lessee, and the transaction was for consideration consisting of cash or a mixture of cash, debt and marketable securities with an aggregate value at least equal to the fair market value of the hotel. A "Sale" is defined in each of the OTH Hotel Management Agreements as any sale, assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary of the landlord's title in the hotel, or of a controlling interest therein, other than a collateral assignment intended to provide security for a loan, and includes any such disposition through the disposition of the ownership interests in the entity that holds such title and any lease or sublease of the hotel other than the hotel lease.

In connection with a termination upon the Sale of the hotel, Our Town would be entitled to receive a termination fee equal to the lesser of (i) the management fee paid with respect to the prior twelve months or (ii) the management fees paid for that number of months prior to the closing date of the hotel sale equal to the number of months remaining on the current term of the OTH Hotel Management Agreement. Upon the Sale of a hotel, no termination fee would be due in the event the Company elected to provide Our Town with the opportunity to manage another comparable hotel and Our Town was not precluded from accepting such opportunity. Our Town was required to qualify as an eligible independent contractor in order to permit the Company to continue to operate as a real estate investment trust.

Pursuant to the management agreements for the Lyfe Resort & Residences and the Hyde Beach House Resort & Residences, Our Town managed the rental of individually owned condominium units pursuant to rental agreements entered into with individual condominium unit owners. We also entered into an Association Sub Management and Assignment Agreement with Our Town for the management and operation of the condominium association responsible for the operation of the Hyde Beach House Resort & Residences, and a Rental Sales Management Agreement pursuant to which Our Town agreed to manage the marketing and negotiation of rental agreements with individual condominium unit owners.

The base management fee for each of our hotels was a percentage of the gross revenues of the hotel and was due monthly. The applicable percentages of gross revenue for the base management fee for each of our wholly-owned hotels managed by Our Town are shown below:

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| | | | |
|:---|:---|:---|:---|
| **Hotel Name** | **Commencement**<br>**Date** | **Expiration**<br>**Date** | **Percentage Fee**  |
| Hotel Ballast Wilmington, Tapestry Collection by Hilton | January 1, 2020 | March 31, 2035 | 2.50% |
| The DeSoto | January 1, 2020 | March 31, 2035 | 2.50% |
| DoubleTree by Hilton Philadelphia Airport | January 1, 2020 | March 31, 2035 | 2.50% |
| Hotel Alba Tampa, Tapestry Collection by Hilton | January 1, 2020 | March 31, 2035 | 2.50% |
| DoubleTree by Hilton Jacksonville Riverfront | January 1, 2020 | March 31, 2035 | 2.50% |
| DoubleTree by Hilton Laurel | January 1, 2020 | March 31, 2035 | 2.50% |
| Georgian Terrace | January 1, 2020 | March 31, 2035 | 2.50% |
| The Whitehall | January 1, 2020 | March 31, 2035 | 2.50% |
| DoubleTree Resort by Hilton Hollywood Beach | April 1, 2020 | March 31, 2035 | 2.50% |
| Lyfe Resort & Residences | April 1, 2020 | March 31, 2035 | 2.50% |
| Hyde Beach House Resort & Residences | April 1, 2020 | March 31, 2035 | 2.50% |
| Hyatt Centric Arlington | November 15, 2020 | March 31, 2035 | 2.50% |

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For the years ended December 31, 2025 and 2024, base management fees earned by Our Town under the contract were approximately $4.5 million and $4.7 million, respectively, and the incentive management fees earned by Our Town were approximately $0.0 million and $0.1 million, respectively.

Effective February 12, 2026, in connection with the Merger and pursuant to that certain Asset Purchase Agreement, dated October 24, 2025, by and among Our Town and KW Kingfisher LLC, a Delaware limited liability company, the Company terminated the OTH Master Agreement. Our Town received $9.7 million in termination fees.

***Sublease***

On December 13, 2019, we entered into a sublease agreement (the "Sublease") with Our Town pursuant to which Our Town subleases 2,245 square feet of office space from Sotherly for a period of five years, with a five-year renewal subject to approval by Sotherly, on terms and conditions similar to the terms of the prime lease entered into by Sotherly and the third-party owner of the property. In December 2023, the Company granted Our Town a lease concession in the amount of $143,774 in proportion to the rent concession the Company received under the primary lease. For the years ended December 31, 2025 and 2024, the Company recognized rent income from Our Town of approximately $99,304 and $135,511, respectively.

***Employee Medical Benefits***

We purchased employee medical benefits through a self-insurance arrangement sponsored by Our Town (or its affiliate). Our Town provides medical insurance for its employees working exclusively at our hotels and we pay Our Town the actual costs, net of employee contributions, of providing medical insurance for those employees. For the years ended December 31, 2025 and 2024, we paid approximately $3.7 million and $3.9 million, respectively, for the employer portion of the plan covering those employees that work exclusively for our properties under our management agreements with Our Town. Additionally, Our Town's policy is to rebate 70% of our pro rata share of any annual surplus in its self-insured health plan back to the Company and retain the remaining 30%.

**Transactions with Employees**

Effective as of June 24, 2013, and following the approval by a committee consisting of Sotherly's independent directors, we hired Robert E. Kirkland IV as an employee of the Company. Robert E. Kirkland IV was son-in-law to our Chairman. Effective as of September 30, 2014, and following the approval by a committee consisting of Sotherly's independent directors, we hired Andrew M. Sims Jr. as an employee of the Company. Andrew M. Sims Jr. was the son of our Chairman. Neither Robert E. Kirkland IV nor Andrew M. Sims, Jr. was an executive officer of Sotherly or the Operating Partnership. For the year ended December 31, 2025, Robert E. Kirkland IV and Andrew M. Sims Jr. received approximately $428,913 and $173,384, respectively, in total compensation. For the year ended December 31, 2024, Robert E. Kirkland IV and Andrew M. Sims Jr. received approximately $396,922 and $289,760, respectively, in total compensation. For the year ended December 31, 2025, Robert E. Kirkland IV served as General Counsel and Andrew M. Sims Jr. served as Vice President - Operations & Investor Relations.

*Sims Jr. Employment Agreement -* On January 23, 2023, the Company entered into an employment agreement with Mr. Sims Jr. (the "Sims Jr. Agreement"). The Sims Jr. Agreement had an initial term ending on December 31, 2027. The Sims Jr. Agreement provided for Mr. Sims Jr.'s annual salary and possible additional compensation in the form of a cash bonus and stock awards. The Sims Jr. Agreement provided for a restricted stock grant of 12,500 restricted shares of the Company's common stock. The shares were issued on January 23, 2023 and were to vest in equal amounts of 2,500 shares over a five-year period on March 31 of each year commencing March 31, 2023 and ending March 31, 2027.

------

Mr. Sim, Jr. resigned his position effective September 1, 2025. For the period ending September 1, 2025, Mr. Sims Jr. received a salary of $125,050 and all unvested shares were immediately vested. Pursuant to the Sims Jr. Agreement, Mr. Sims Jr. had been entitled to receive customary benefits, including a term life insurance policy of $1.0 million and disability insurance in an amount such that, upon the occurrence of any event causing disability, Mr. Sims Jr. would have been entitled to receive the one-half of the monthly payments as would have been made under his employment agreement.

*Kirkland Employment Agreement -* On January 1, 2020, the Company entered into an employment agreement with Mr. Kirkland (the "Kirkland Agreement"). The Kirkland Agreement had an initial term ending on December 31, 2027. The Kirkland Agreement provided for Mr. Kirkland's annual salary and possible additional compensation in the form of a cash bonus and stock awards. For the 12-month period ending December 31, 2025, Mr. Kirkland received a salary of $269,112. The Kirkland Agreement also provides for a restricted stock grant of 17,500 restricted shares of the Company's common stock. The shares were issued on January 23, 2023, and were scheduled to vest in equal amounts of 3,500 shares over a five-year period on March 31 of each year commencing March 31, 2023, and ending March 31, 2027.

In addition, pursuant to the Kirkland Agreement, Mr. Kirkland was entitled to receive:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.An annual cash performance bonus in a target amount between 25% and 35% of salary for that calendar year, based upon the attainment of quantitative performance goals set forth in a performance plan established by the NCGC Committee by January 31 of each year; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Customary benefits, including a term life insurance policy of $1.0 million and disability insurance in an amount such that, upon the occurrence of any event causing disability, Mr. Kirkland shall be entitled to receive the one-half of the monthly payments as would have been made under their respective employment agreements.

Mr. Kirkland was entitled to receive benefits under his agreement if the Company terminated his employment without cause or if they resign with good reason or if there is a change in control of the Company during the term of the agreement. Under these scenarios, Mr. Kirkland was entitled to receive the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.any accrued but unpaid salary and bonuses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.vesting of any previously issued stock options or restricted stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.payment of the executive's life, health and disability insurance coverage for a period of five (5) years following termination (provided, however, that such right terminates if the executive accepts other employment that would reasonably be expected to provide such insurance);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.any unreimbursed expenses; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.a severance payment equal to three (3) times the executive's combined salary and actual bonus compensation for the preceding fiscal year, to be paid within five (5) days of the executive's last day of employment.

Effective February 12, 2026, Mr. Kirkland resigned his position with the Company and has entered into standard release agreements with the Company. Mr. Kirkland is receiving payments in accordance with his employment agreement with the Company.

**Item 14. *Principal Accountant Fees and Services***

**Audit Fees**. The aggregate fees billed by Cherry Bekaert for professional services rendered for the audit of our annual consolidated financial statements, consents and the review of our filings with the Securities and Exchange Commission ("SEC") for the fiscal years ended December 31, 2025 and December 31, 2024 was $416,364 and $0, respectively. The aggregate fees billed by Forvis for professional services rendered for the audit of our annual consolidated financial statements, for the review of the consolidated financial statements included in our quarterly reports on Form 10-Q and for audits of acquisitions, consents and review of our filings with the SEC for the fiscal years ended December 31, 2025 and December 31, 2024 were $135,000 and $760,767, respectively.

**Audit-Related Fees**. The aggregate fees billed by Cherry Bekaert for fees associated with audit services not required by statute or regulation and services related to the audit of the annual financial statements and to the review of the quarterly financial statements for the fiscal years ended December 31, 2025 and December 31, 2024 were $0 and $0, respectively. The aggregate fees billed by Forvis for fees associated with audit services not required by statute or regulation and services related to the audit of the annual financial statements and to the review of the quarterly financial statements for the fiscal years ended December 31, 2025 and December 31, 2024 were $0 and $0, respectively.

------

**Tax Fees**. The aggregate fees billed by Cherry Bekaert for professional services rendered for tax compliance, tax advice or tax planning for the fiscal years ended December 31, 2025 and December 31, 2024 were $0 and $0, respectively. The aggregate fees billed by Forvis for professional services rendered for tax compliance, tax advice or tax planning for the fiscal years ended December 31, 2025 and December 31, 2024 were $60,850 and $60,425, respectively.

**All Other Fees**. The aggregate fees billed by Cherry Bekaert for professional services rendered for services or products other than those listed under the captions "Audit Fees," "Audit-Related Fees," and "Tax Fees" for the fiscal years ended December 31, 2025 and December 31, 2024 were $0 and $0, respectively. The aggregate fees billed by Forvis for professional services rendered for services or products other than those listed under the captions "Audit Fees," "Audit-Related Fees," and "Tax Fees" for the fiscal years ended December 31, 2025 and December 31, 2024 were $0 and $0, respectively.

It is the Audit Committee's policy to pre-approve all audit and non-audit services prior to the engagement of our independent auditor to perform any service. All of the services listed above for the fiscal years December 31, 2025 and December 31, 2024 were approved by the Audit Committee prior to the service being rendered.

------

**PART IV**

**Item 15. *Exhibits and Financial Statement Schedules***

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;1. [*<u>Financial Statements</u>*](#index_to_financial_statements_financial_) |  |
| &nbsp;&nbsp;&nbsp; [<u>Index to Financial Statements and Financial Statement Schedules</u>](#index_to_financial_statements_financial_) | F-1 |
| &nbsp;&nbsp;&nbsp;*Sotherly Hotels Inc.* |  |
| &nbsp;&nbsp;[<u>Report of Independent Registered Public Accounting Firm, Cherry Bekaert LLP</u>](#report_of_independent_inc_cherry) | F-2 |
| &nbsp;&nbsp;[<u>Report of Independent Registered Public Accounting Firm, Forvis Mazars, LLP</u>](#report_of_independent_inc_forvis) | F-4 |
| &nbsp;&nbsp;[<u>Consolidated Balance Sheets for Sotherly Hotels Inc. as of December 31, 2025 and 2024</u>](#consolidated_balance_sheets_inc) | F-5 |
| &nbsp;&nbsp;[<u>Consolidated Statements of Operations for Sotherly Hotels Inc. for the years ended December 31, 2025, 2024 and 2023</u>](#consolidated_statements_operations_inc) | F-6 |
| &nbsp;&nbsp;[<u>Consolidated Statements of Changes in Equity for Sotherly Hotels Inc. for the years ended December 31, 2025, 2024 and 2023</u>](#cnsolidated_statmnt_changes_in_equit_inc) | F-7 |
| &nbsp;&nbsp;[<u>Consolidated Statements of Cash Flows for Sotherly Hotels Inc. for the years ended December 31, 2025, 2024 and 2023</u>](#consolidated_statements_cash_flows_inc) | F-8 |
| &nbsp;&nbsp;&nbsp;*Sotherly Hotels LP* |  |
| &nbsp;&nbsp;[<u>Report of Independent Registered Public Accounting Firm, Cherry Bekaert LLP</u>](#report_of_independent_lp_cherry) | F-10 |
| &nbsp;&nbsp;[<u>Report of Independent Registered Public Accounting Firm, Forvis Mazars, LLP</u>](#report_of_independent_lp_forvis) | F-12 |
| &nbsp;&nbsp;[<u>Consolidated Balance Sheets for Sotherly Hotels LP as of December 31, 2025 and 2024</u>](#consolidated_balance_sheets_lp) | F-13 |
| &nbsp;&nbsp;[<u>Consolidated Statements of Operations for Sotherly Hotels LP for the years ended December 31, 2025, 2024 and 2023</u>](#consolidated_statements_operations_lp) | F-14 |
| &nbsp;&nbsp;[<u>Consolidated Statements of Changes in Partners' Capital for Sotherly Hotels LP for the years ended December 31, 2025, 2024 and 2023</u>](#changes_in_partners_capital_lp) | F-15 |
| &nbsp;&nbsp;[<u>Consolidated Statements of Cash Flows for Sotherly Hotels LP for the years ended December 31, 2025, 2024 and 2023</u>](#consolidated_statements_of_cash_flows_lp) | F-16 |
| &nbsp;&nbsp;&nbsp;[<u>Notes to Consolidated Financial Statements</u>](#notes_to_consolidated_financial_statemen) | F-18 |
| &nbsp;&nbsp;&nbsp;2. *Financial Statement Schedules* |  |
| &nbsp;&nbsp;&nbsp; [<u>Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2025</u>](#schedule_iiireal_estate_accumulated_depr) | F-45 |

---

All other schedules for which provision is made in Regulation S-X are either not required to be included herein under the related instructions or are inapplicable or the related information is included in the footnotes to the applicable financial statement and, therefore, have been omitted.

------

**The following exhibits are filed as part of this Form 10-K:**

---

| | |
|:---|:---|
| **Exhibits** |  |
| 2.1 | [<u>Agreement and Plan of Merger, dated as of October 24, 2025, by and among Sotherly Hotels Inc., KW Kingfisher LLC, and Sparrows Nest LLC (incorporated by reference to the document previously filed as Exhibit 2.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 27, 2025). †</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312525250648/soho-ex2_1.htm) |
| 3.1 | [<u>Articles of Amendment and Restatement of the Company (incorporated by reference to the document previously filed as Exhibit 3.1 to the Company's Pre-Effective Amendment No. 1 to its Registration Statement on Form S-11 filed with the Securities and Exchange Commission on October 20, 2004 (File No. 333-118873)).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312504174581/dex31.htm) |
| 3.1A | [<u>Articles of Amendment to the Articles of Amendment and Restatement of the Company, effective as of April 16, 2013 (incorporated by reference to the document previously filed as Exhibit 3.7 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2013).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312513156023/d521296dex37.htm) |
| 3.1B | [<u>Articles of Amendment to the Articles of Amendment and Restatement of the Company, effective as of August 12, 2016 (incorporated by reference to the document previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 15, 2016).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312516681226/d241570dex31.htm) |
| 3.1C | [<u>Articles of Amendment to the Articles of Amendment and Restatement of the Company, effective as of April 12, 2019 (incorporated by reference to the document previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2019).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312519107645/d733720dex31.htm) |
| 3.2 | [<u>Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.3 to the Company's Pre-Effective Amendment No. 5 to its Registration Statement on Form S-11 filed with the Securities and Exchange Commission on December 13, 2004 (File No. 333-118873)).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312504211217/dex33.htm) |
| 3.2A | [<u>Amendment No. 1 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.6 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2011).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312511100978/dex36.htm) |
| 3.2B | [<u>Amendment No. 2 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.3 to the Operating Partnership's Pre-Effective Amendment No. 1 to its Registration Statement on Form S-11 filed with the Securities and Exchange Commission on August 9, 2013 (File No. 333-189821)).</u>](https://www.sec.gov/Archives/edgar/data/1313536/000119312513329350/d559609dex33.htm) |
| 3.2C | [<u>Amendment No. 3 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 23, 2016).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312516688464/d245624dex31.htm) |
| 3.2D | [<u>Amendment No. 4 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 11, 2017).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312517307727/d469848dex31.htm) |
| 3.2E | [<u>Amendment No. 5 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.2E to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 31, 2018).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312518265149/d612953dex32e.htm) |
| 3.2F | [<u>Amendment No. 6 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2019).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312519110171/d687345dex31.htm) |
| 3.3 | [<u>Articles Supplementary of Sotherly Hotels Inc. (incorporated by reference to the document previously filed as Exhibit 3.4 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2011).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312511100978/dex34.htm) |
| 3.4 | [<u>Fourth Amended and Restated Bylaws of Sotherly Hotels Inc., dated February 12, 2026 (incorporated by reference to the document previously filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 18, 2026).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312526056144/d107217dex31.htm) |
| 3.5 | [<u>Articles Supplementary designating the Series B Preferred Stock of the Company, effective as of August 19, 2016 (incorporated by reference to the document previously filed as Exhibit 3.5 to the Company's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on August 22, 2016).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312516687125/d234708dex35.htm) |

---

------

---

| | |
|:---|:---|
| **Exhibits** |  |
| 3.6 | [<u>Articles Supplementary designating the Series C Preferred Stock of the Company, effective as of October 5, 2017 (incorporated by reference to the document previously filed as Exhibit 3.5 to the Company's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on October 10, 2017).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312517306758/d421829dex35.htm) |
| 3.7 | [<u>Articles Supplementary dated August 30, 2018 (incorporated by reference to the document previously filed as Exhibit 3.7 to our current report on Form 8-K filed with the Securities and Exchange Commission on August 31, 2018).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312518265149/d612953dex37.htm) |
| 3.8 | [<u>Articles Supplementary designating the Series D Preferred Stock of the Company, effective as of April 15, 2019 (incorporated by reference to the document previously filed as Exhibit 3.6 to the Company's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on April 16, 2019).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312519107672/d733660dex36.htm) |
| 4.0 | [<u>Form of Common Stock Certificate (incorporated by reference to the document previously filed as Exhibit 4.0 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the Securities and Exchange Commission on March 22, 2017).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459017005054/soho-ex40_484.htm) |
| 4.1 | [<u>Form of Specimen Certificate of Series B Preferred Stock of the Company (incorporated by reference to the document previously filed as Exhibit 4.1 to the Company's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on August 22, 2016).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312516687125/d234708dex41.htm) |
| 4.2 | [<u>Form of Specimen Certificate of Series C Preferred Stock of the Company (incorporated by reference to the document previously filed as Exhibit 4.1 to the Company's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on October 10, 2017).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312517306758/d421829dex41.htm) |
| 4.3 | [<u>Form of Specimen Certificate of Series D Preferred Stock of the Company (incorporated by reference to the document previously filed as Exhibit 4.1 to the Company's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on April 16, 2019).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312519107672/d733660dex41.htm) |
| 4.4 | [<u>Description of Registered Securities. \*\*</u>](soho-ex4_4.htm) |
| 10.1 | [<u>Form of Restricted Stock Award Agreement between Sotherly Hotels Inc. and Participant (incorporated by reference to the document previously filed as Exhibit 10.1A to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the Securities and Exchange Commission on March 25, 2009).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312509062538/dex101a.htm) \* |
| 10.2 | [<u>Executive Employment Agreement between Sotherly Hotels Inc. and Anthony E. Domalski, dated as of January 1, 2018 (incorporated by reference to the document previously filed as Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 5, 2018).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459018000117/soho-ex103_6.htm) \* |
| 10.3 | [<u>Master Agreement by and among Sotherly Hotels Inc., Sotherly Hotels LP, MHI Hospitality TRS, LLC, Newport Hospitality Group, Inc. and Our Town Hospitality LLC (incorporated by reference to the document previously filed as Exhibit 10.17 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 9, 2019).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459019034315/soho-ex1017_22.htm) |
| 10.4 | [<u>Amendment to Master Agreement by and among Sotherly Hotels Inc., Sotherly Hotels LP, MHI Hospitality TRS, LLC, Newport Hospitality Group, Inc. and Our Town Hospitality LLC (incorporated by reference to the document previously filed as Exhibit 10.21 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2019).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459019046083/soho-ex1021_15.htm) |
| 10.5 | [<u>Sublease Agreement between Our Town Hospitality LLC and Sotherly Hotels Inc. dated December 13, 2019 (incorporated by reference to the document previously filed as Exhibit 10.23 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2019).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459019046083/soho-ex1023_16.htm) |
| 10.6 | [<u>Executive Employment Agreement between Sotherly Hotels Inc. and Andrew M. Sims, dated as of January 1, 2020 (incorporated by reference to the document previously filed as Exhibit 10.24 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2020).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459020000287/soho-ex1024_14.htm) \* |
| 10.7 | [<u>Executive Employment Agreement between Sotherly Hotels Inc. and David R. Folsom, dated as of January 1, 2020 (incorporated by reference to the document previously filed as Exhibit 10.25 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2020).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459020000287/soho-ex1025_15.htm) \* |
| 10.8 | [<u>Executive Employment Agreement between Sotherly Hotels Inc. and Scott M. Kucinski, dated as of January 1, 2020 (incorporated by reference to the document previously filed as Exhibit 10.26 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2020).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459020000287/soho-ex1026_16.htm) \* |
| 10.9 | [<u>Executive Employment Agreement between Sotherly Hotels Inc. and Robert E. Kirkland IV, dated as of January 1, 2020 (incorporated by reference to the document previously filed as Exhibit 10.27 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2020).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459020000287/soho-ex1027_17.htm) \* |

---

------

---

| | |
|:---|:---|
| **Exhibits** |  |
| 10.10 | [<u>Promissory Note between Sotherly Hotels LP and Village Bank dated as of April 16, 2020 (incorporated by reference to the document previously filed as Exhibit 10.16 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 24, 2020).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459020030426/soho-ex1016_70.htm) |
| 10.11 | [<u>Promissory Note between MHI Hospitality TRS, LLC and Fifth Third Bank, National Association, dated as of April 28, 2020 (incorporated by reference to the document previously filed as Exhibit 10.17 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 24, 2020).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459020030426/soho-ex1017_69.htm) |
| 10.12 | [<u>Promissory Note between SOHO Arlington TRS LLC and Fifth Third Bank, National Association, dated as of May 6, 2020 (incorporated by reference to the document previously filed as Exhibit 10.18 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 24, 2020).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459020030426/soho-ex1018_68.htm) |
| 10.13 | [<u>Second Amendment to Master Agreement by and among Sotherly Hotels Inc., Sotherly Hotels LP, MHI Hospitality TRS, LLC, Newport Hospitality Group, Inc. and Our Town Hospitality (incorporated by reference to the document previously filed as Exhibit 10.20 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 9, 2021).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459021032191/soho-ex1020_16.htm) |
| 10.14 | [<u>First Amendment to Employment Agreement between Sotherly Hotels Inc. and Robert E. Kirkland IV, dated February 8, 2022 (incorporated by reference to the document previously filed as Exhibit 10.25 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 11, 2022).</u> \*](https://www.sec.gov/Archives/edgar/data/1301236/000156459022004738/soho-ex1025_77.htm) |
| 10.15 | [<u>Third Amendment to Master Agreement by and among Sotherly Hotels Inc., Sotherly Hotels LP, MHI Hospitality TRS, LLC, and Our Town Hospitality LLC (incorporated by reference to the document previously filed as Exhibit 10.27 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 27, 2022).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000156459022016061/soho-ex1027_33.htm) |
| 10.16 | [<u>Sotherly Hotels Inc. 2022 Long-Term Incentive Plan (incorporated by reference to the document previously filed as Exhibit 99.1 to the Company's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on July 20, 2022).</u> \*](https://www.sec.gov/Archives/edgar/data/1301236/000119312522198071/d346484dex991.htm) |
| 10.17 | [<u>Amendment to Employment Agreement between Sotherly Hotels Inc. and Andrew M. Sims, dated January 23, 2023 (incorporated by reference to the document previously filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 24, 2023). \*</u>](https://www.sec.gov/Archives/edgar/data/1301236/000095017023001092/soho-ex10_1.htm) |
| 10.18 | [<u>Amendment to Employment Agreement between Sotherly Hotels Inc. and David R. Folsom, dated January 23, 2023 (incorporated by reference to the document previously filed as Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 24, 2023). \*</u>](https://www.sec.gov/Archives/edgar/data/1301236/000095017023001092/soho-ex10_2.htm) |
| 10.19 | [<u>Amendment to Employment Agreement between Sotherly Hotels Inc. and Scott M. Kucinski, dated January 23, 2023 (incorporated by reference to the document previously filed as Exhibit 10.3 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 24, 2023). \*</u>](https://www.sec.gov/Archives/edgar/data/1301236/000095017023001092/soho-ex10_3.htm) |
| 10.20 | [<u>Amendment to Employment Agreement between Sotherly Hotels Inc. and Anthony E. Domalski, dated January 23, 2023 (incorporated by reference to the document previously filed as Exhibit 10.4 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 24, 2023). \*</u>](https://www.sec.gov/Archives/edgar/data/1301236/000095017023001092/soho-ex10_4.htm) |
| 10.21 | [<u>Second Amendment to Employment Agreement between Sotherly Hotels Inc. and Robert E. Kirkland IV, dated January 23, 2023 (incorporated by reference to the document previously filed as Exhibit 10.5 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 24, 2023). \*</u>](https://www.sec.gov/Archives/edgar/data/1301236/000095017023001092/soho-ex10_5.htm) |
| 10.22 | [<u>Amended and Restated Master Agreement by and among Sotherly Hotels Inc., Sotherly Hotels LP, MHI Hospitality TRS, LLC, and Our Town Hospitality LLC, dated November 6, 2024 (incorporated by reference to the document previously filed as Exhibit 10.22 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2024).</u>](https://www.sec.gov/ix?doc=/Archives/edgar/data/1301236/000095017024123250/soho-20241031.htm) |
| 10.23 | [<u>Form of Indemnification Agreement between Sotherly Hotels Inc. and its directors, officers, and certain employees (incorporated by reference to the document previously filed as Exhibit 10.23 to our Annual Report on Form 10-K for the period ended December 31, 2024, filed with the Securities and Exchange Commission on March 31, 2025). \*</u>](https://www.sec.gov/Archives/edgar/data/1301236/000095017025047657/soho-ex10_23.htm) |
| 10.24 | [<u>Promissory Note, dated as of October 24, 2025, by and among Sotherly Hotels Inc. and Kemmons Wilson Hospitality Partners II, LP (incorporated by reference to the document previously filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 27, 2025). †</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312525250648/soho-ex10_1.htm) |
| 10.25 | [<u>Sale, Purchase and Escrow Agreement between SOHO Atlanta, LLC, Banyan Street Capital LLC, and Metropolitan Title Agency, Inc., dated July 24, 2025 (incorporated by reference to the document previously filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2025).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312525282761/soho-ex10_2.htm) |

---

------

---

| | |
|:---|:---|
| **Exhibits** |  |
| 10.26 | [<u>Amendment to Sale, Purchase and Escrow Agreement between SOHO Atlanta, LLC, Banyan Street Capital LLC, and Metropolitan Title Agency, Inc., dated September 9, 2025 (incorporated by reference to the document previously filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2025).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312525282761/soho-ex10_3.htm) |
| 10.27 | [<u>Second Amendment to Sale, Purchase and Escrow Agreement between SOHO Atlanta, LLC, Banyan Street Capital LLC, and Metropolitan Title Agency, Inc., dated September 29, 2025 (incorporated by reference to the document previously filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2025).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312525282761/soho-ex10_4.htm) |
| 10.28 | [<u>Third Amendment to Sale, Purchase and Escrow Agreement between SOHO Atlanta, LLC, Banyan Street Capital LLC, and Metropolitan Title Agency, Inc., dated October 31, 2025 (incorporated by reference to the document previously filed as Exhibit 10.54 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2025).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312525282761/soho-ex10_5.htm) |
| 10.29 | [<u>Forbearance Agreement, dated December 16, 2025, by and among: Wilmington Trust, National Association, as Trustee for Morgan Stanley Bank of America Merrill Lynch Trust 2015-C23, Commercial Mortgage Pass-Through Certificates, Series 2015-C23; SOHO Atlanta LLC; SOHO Atlanta TRS LLC; and, by Joinder, Sotherly Hotels LP and Our Town Hospitality, LLC (incorporated by reference to the document previously filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 17, 2025). †</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312525322825/soho-ex10_1.htm) |
| 10.30 | [<u>Form of Board Observer Rights Agreement (incorporated by reference to the document previously filed as Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 18, 2026).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312526056144/d107217dex102.htm) |
| 10.31 | [<u>Loan Agreement, dated as of February 12, 2026, by and among various affiliates of Apollos Global Management, Inc., collectively, as lender, and certain subsidiaries of the Company named thereto, as borrowers and respective owners of the Subject Hotels (incorporated by reference to the document previously filed as Exhibit 10.3 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 18, 2026). ††</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312526056144/d107217dex103.htm) |
| 10.32 | [<u>Mezzanine Loan Agreement dated as of February 12, 2026, by and among ACF II SOHO Mezz Lender LLC, an affiliate of Ascendant Capital Partners LP, as lender, and Sotherly Hotels Mezz LLC, a subsidiary of the Company, as borrower, and indirect owner of the Subject Hotels. (incorporated by reference to the document previously filed as Exhibit 10.4 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 18, 2026).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312526056144/d107217dex104.htm) |
| 10.33 | [<u>Form of Management Agreement, dated as of February 12, 2026, by and among Schulte Hospitality Group, Inc., each operating lessee subsidiary of Sotherly Hotels Inc. for DoubleTree by Hilton Laurel, DoubleTree by Hilton Philadelphia Airport, DoubleTree by Hilton for Jacksonville Riverfront, The Georgian Terrace, Houston/Whitehall, Hotel Ballast, DoubleTree Resort by Hilton Hollywood Beach, and Hyatt Centric Arlington and the DeSoto, Savannah and Hotel Alba Tampa, Tapestry Collection by Hilton. (incorporated by reference to the document previously filed as Exhibit 10.5 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 18, 2026).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312526056144/d107217dex105.htm) |
| 10.34 | [<u>Form of Indemnification Agreement (incorporated by reference to the document previously filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 18, 2026). \*</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312526056144/d107217dex101.htm)<br>|
| 16.1 | [<u>Letter from Forvis Mazars, LLP, dated September 17, 2025 (incorporated by reference to the document previously filed as Exhibit 16.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 17, 2025).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000119312525206258/soho-ex16_1.htm) |
| 19.1 | [<u>Sotherly Hotels Inc. Insider Trading Policy. \*\*</u>](soho-ex19_1.htm) |
| 21.1 | [<u>List of Subsidiaries of Sotherly Hotels Inc. \*\*</u>](soho-ex21_1.htm) |
| 21.2 | [<u>List of Subsidiaries of Sotherly Hotels LP. \*\*</u>](soho-ex21_2.htm) |
| 31.1 | [<u>Certification of Chief Executive Officer pursuant to Exchange Act Rule 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. \*\*</u>](soho-ex31_1.htm) |
| 31.2 | [<u>Certification of Chief Financial Officer pursuant to Exchange Act Rule 13(a)-14 and 15(d)-14, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. \*\*</u>](soho-ex31_2.htm) |
| 31.3 | [<u>Certification of Chief Executive Officer pursuant to Exchange Act Rule 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. \*\*</u>](soho-ex31_3.htm) |

---

------

---

| | |
|:---|:---|
| **Exhibits** |  |
| 31.4 | [<u>Certification of Chief Financial Officer pursuant to Exchange Act Rule 13(a)-14 and 15(d)-14, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. \*\*</u>](soho-ex31_4.htm) |
| 32.1 | [<u>Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 of the Sarbanes-Oxley Act of 2002. (+)</u>](soho-ex32_1.htm) |
| 32.2 | [<u>Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 of the Sarbanes-Oxley Act of 2002. (+)</u>](soho-ex32_2.htm) |
| 32.3 | [<u>Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 of the Sarbanes-Oxley Act of 2002. (+)</u>](soho-ex32_3.htm) |
| 32.4 | [<u>Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 of the Sarbanes-Oxley Act of 2002. (+)</u>](soho-ex32_4.htm) |
| 97.1 | [<u>Executive Officer Incentive Compensation Recovery Policy (incorporated by reference to the document previously filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 4, 2023).</u>](https://www.sec.gov/Archives/edgar/data/1301236/000095017023038499/soho-ex10_1.htm) |
| 101.INS | Inline XBRL 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.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
| 104.0 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |

---

------

† Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of such schedules and exhibits, or any section thereof, to the SEC upon its request.

†† Certain portions of this exhibit have been omitted in accordance with Item 601(b)(10)(iv) of Regulation S-K. The registrant agrees to furnish supplementally an unredacted copy of this exhibit to the Securities and Exchange Commission upon its request.

\* Denotes management contract and/or compensatory plan/arrangement.

\*\* Filed herewith.

(+) This certification shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

------

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) 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.

Date: April 15, 2026

---

| | |
|:---|:---|
| SOTHERLY HOTELS INC. | SOTHERLY HOTELS INC. |
| By: | /s/ ZACHARY SCHMIDT  |
|  | **Zachary Schmidt**<br>**Chief Executive Officer** |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **<u>Signature</u>** | **<u>Title</u>** | **<u>Date</u>** |
| /s/ ZACHARY SCHMIDT<br>**Zachary Schmidt** | Chief Executive Officer and Director | April 15, 2026 |
| /s/ WILLIAM RYAN PELLUM<br>**William Ryan Pellum** | Chief Financial Officer and Director | April 15, 2026 |
| /s/ JAY SCHULTE<br>**Jay Schulte** | Director | April 15, 2026 |

---

------

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) 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.

Date: April 15, 2026

---

| | |
|:---|:---|
| SOTHERLY HOTELS LP, | SOTHERLY HOTELS LP, |
| by its General Partner, | by its General Partner, |
| SOTHERLY HOTELS INC. | SOTHERLY HOTELS INC. |
| By: | /s/ ZACHARY SCHMIDT  |
|  | **Zachary Schmidt**<br>**Chief Executive Officer** |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **<u>Signature</u>** | **<u>Title</u>** | **<u>Date</u>** |
| /s/ ZACHARY SCHMIDT<br>**Zachary Schmidt** | Chief Executive Officer and Director of the General Partner | April 15, 2026 |
| /s/ WILLIAM RYAN PELLUM<br>**William Ryan Pellum** | Chief Financial Officer and Director of the General Partner | April 15, 2026<br>|
| /s/ JAY SCHULTE<br>**Jay Schulete** | Director of the General Partner | April 15, 2026<br>|

---

------

**INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES**

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;*Sotherly Hotels Inc.* |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Report of Independent Registered Public Accounting Firm, Cherry Bekaert LLP</u>](#report_of_independent_inc_cherry) | F-2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Report of Independent Registered Public Accounting Firm, Forvis Mazars, LLP</u>](#report_of_independent_inc_forvis) | F-4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Balance Sheets for Sotherly Hotels Inc. as of December 31, 2025 and 2024</u>](#consolidated_balance_sheets_inc) | F-5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Operations for Sotherly Hotels Inc. for the years ended December 31, 2025, 2024 and 2023</u>](#consolidated_statements_operations_inc) | F-6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Changes in Equity for Sotherly Hotels Inc. for the years ended December 31, 2025, 2024 and 2023</u>](#cnsolidated_statmnt_changes_in_equit_inc) | F-7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Cash Flows for Sotherly Hotels Inc. for the years ended December 31, 2025, 2024 and 2023</u>](#consolidated_statements_cash_flows_inc) | F-8 |
| &nbsp;&nbsp;&nbsp;*Sotherly Hotels LP* |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Report of Independent Registered Public Accounting Firm, Cherry Bekaert LLP</u>](#report_of_independent_lp_cherry) | F-10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Report of Independent Registered Public Accounting Firm, Forvis Mazars, LLP</u>](#report_of_independent_lp_forvis) | F-12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Balance Sheets for Sotherly Hotels LP as of December 31, 2025 and 2024</u>](#consolidated_balance_sheets_lp) | F-13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Operations for Sotherly Hotels LP for the years ended December 31, 2025, 2024 and 2023</u>](#consolidated_statements_operations_lp) | F-14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Changes in Partners' Capital for Sotherly Hotels LP for the years ended December 31, 2025, 2024 and 2023</u>](#changes_in_partners_capital_lp) | F-15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Cash Flows for Sotherly Hotels LP for the years ended December 31, 2025, 2024 and 2023</u>](#consolidated_statements_of_cash_flows_lp) | F-16 |
| &nbsp;&nbsp;&nbsp;[<u>Notes to Consolidated Financial Statements</u>](#notes_to_consolidated_financial_statemen) | F-18 |
| &nbsp;&nbsp;&nbsp;[<u>Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2025</u>](#schedule_iiireal_estate_accumulated_depr) | F-45 |

---

F - 1

------

**Report of Independent Registered Public Accounting Firm**

To the Board of Directors and Stockholders

Sotherly Hotels, Inc

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheet of Sotherly Hotels Inc. and subsidiaries (the "Company") as of December 31, 2025, and the related consolidated statements of operations, changes in equity, and cash flows for the year ended December 31, 2025, and the related notes and schedule III (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

***Basis for Opinion***

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provide a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

**Evaluation of Investment in Hotel Properties, net, for Impairment**

*Description of Matter*

At December 31, 2025, the Company's investment in hotel properties, net, was approximately $364.1 million. As more fully described in Note 2 to the consolidated financial statements, the Company evaluates its investment in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the investment in hotel properties may not be recoverable. Management evaluates various qualitative factors in determining whether or not events or changes in circumstances indicate that the carrying amount of the investment in hotel properties may not be recoverable. We identified the Company's evaluation of investment in hotel properties for impairment as a critical audit matter.

Auditing the Company's impairment assessment involved subjectivity due to the assumptions in its consideration of events or changes in circumstances to identify whether there are indications of impairment, specifically, the judgments related to the Company's determination of market and economic conditions, hotel investing strategy, and property-specific operating revenue and costs.

F - 2

------

*How We Addressed the Matter in Our Audit*

To test the Company's evaluation of investment in hotel properties for impairment, we performed audit procedures that included, among others, obtaining an understanding of the internal controls and processes in place over the Company's investment in hotel properties impairment review process, assessing the methodologies applied, evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used in the analysis. We evaluated management's assessment of potential impairment indicators on all the Company's investment in hotel properties, including current performance of the hotel properties, general market and economic conditions, relevant industry data, and management's investment strategy related to its hotel properties. We reviewed additional qualitative factors to determine whether any events or circumstances indicated that the carrying amount of the Company's investment in hotel properties may not be recoverable. We performed site visits for a sample of hotel properties to verify there were no signs of physical impairment.

/s/ Cherry Bekaert LLP

We have served as the Company's auditor since 2025

**Richmond, Virginia**

**April 15, 2026**

F - 3

------

**Report of Independent Registered Public Accounting Firm**

To the Board of Directors and Stockholders

Sotherly Hotels Inc.

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheet of Sotherly Hotels Inc. and subsidiaries (the "Company") as of December 31, 2024, the related consolidated statements of operations, changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes and financial statement Schedule III (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

***Basis for Opinion***

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Forvis Mazars, LLP

We served as the Company's auditor from 2016 to 2025.

**Jacksonville, Florida**

**March 31, 2025**

F - 4

------

**SOTHERLY HOTELS INC.**

**CONSOLIDATED BALANCE SHEETS**

**DECEMBER 31, 2025 AND 2024**

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment in hotel properties, net | $364098439 | $372376626 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment in hotel properties held for sale | 2271491 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | 7010604 | 7327880 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash | 21507832 | 21382595 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 4847249 | 4669763 |
| &nbsp;&nbsp;&nbsp;&nbsp;Insurance receivable | 2600458 | 2855593 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses, inventory and other assets | 5577746 | 5763463 |
| **TOTAL ASSETS** | $**407913819** | $**414375920** |
| **LIABILITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans, net | $315199862 | $316516148 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unsecured notes |  | 658766 |
| &nbsp;&nbsp;&nbsp;&nbsp;Line of credit | 7500000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance lease liabilities | 24003378 | 23201751 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 25172557 | 26577504 |
| &nbsp;&nbsp;&nbsp;&nbsp;Advance deposits | 3694735 | 3734825 |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends and distributions payable | 4082472 | 2088160 |
| **TOTAL LIABILITIES** | $**379653004** | $**372777154** |
| &nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies |  |  |
| **EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Sotherly Hotels Inc. stockholders' equity |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $0.01 par value, 11,000,000 shares authorized: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.0% Series B cumulative redeemable perpetual preferred stock, <br> 1,464,100 and 1,464,100 shares issued and outstanding; aggregate liquidation <br> preference $45,387,100 at December 31, 2025 and $44,655,050 at<br> December 31, 2024, respectively. | 14641 | 14641 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.875% Series C cumulative redeemable perpetual preferred stock, <br>&nbsp;&nbsp;&nbsp;&nbsp;1,346,110 and 1,346,110 shares issued and outstanding; aggregate liquidation <br> preference $41,603,220 at December 31, 2025 and $40,940,681 at<br> December 31, 2024, respectively. | 13461 | 13461 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.25% Series D cumulative redeemable perpetual preferred stock, <br> 1,163,100 and 1,163,100 shares issued and outstanding; aggregate liquidation <br> preference $36,274,181 at December 31, 2025 and $35,674,458 at<br> December 31, 2024, respectively. | 11631 | 11631 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, par value $0.01, 69,000,000 shares authorized, 20,490,501<br> shares issued and outstanding at December 31, 2025 and 19,849,165 <br> shares issued and outstanding at December 31, 2024. | 204905 | 198492 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 173382413 | 175372798 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unearned ESOP shares |  | (862107) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions in excess of retained earnings | (145365837) | (131695891) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Sotherly Hotels Inc. stockholders' equity | 28261214 | 43053025 |
| &nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interest | (399) | (1454259) |
| **TOTAL EQUITY** | **28260815** | **41598766** |
| **TOTAL LIABILITIES AND EQUITY** | $**407913819** | $**414375920** |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

F - 5

------

**SOTHERLY HOTELS INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2024** | **2023** |
| **REVENUE** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Rooms department | $114400434 | $119079903 | $114748834 |
| &nbsp;&nbsp;&nbsp;&nbsp;Food and beverage department | 36458606 | 36626906 | 35231959 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other operating departments | 25528188 | 26187478 | 23857264 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total revenue** | **176387228** | **181894287** | **173838057** |
| **EXPENSES** |  |  |  |
| Hotel operating expenses |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Rooms department | 26732018 | 27376330 | 26177539 |
| &nbsp;&nbsp;&nbsp;&nbsp;Food and beverage department | 25606512 | 25429218 | 24211133 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other operating departments | 9184742 | 9428889 | 9031960 |
| &nbsp;&nbsp;&nbsp;&nbsp;Indirect | 72412162 | 72847022 | 69629724 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total hotel operating expenses** | **133935434** | **135081459** | **129050356** |
| Depreciation and amortization | 19658902 | 19380906 | 18788748 |
| Impairment of investment in hotel properties held for sale | 1310308 |  |  |
| Gain on disposal of assets |  | (4400) | (4700) |
| Corporate general and administrative | 8786311 | 6788460 | 7078222 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total operating expenses** | **163690955** | **161246425** | **154912626** |
| **NET OPERATING INCOME** | **12696273** | **20647862** | **18925431** |
| **Other income (expense)** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (24799871) | (20882681) | (17588091) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | 252961 | 692756 | 802183 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other income | 467599 | 489267 | 456388 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on early extinguishment of debt | (463195) | (241878) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Realized gain on hedging activities |  | 1041994 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain (loss) on hedging activities | 131803 | (937783) | (737682) |
| &nbsp;&nbsp;&nbsp;&nbsp;PPP loan forgiveness |  |  | 275494 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gain on involuntary conversion of assets | 3985417 | 502808 | 1371041 |
| **Net (loss) income before income taxes** | **(7729013)** | **1312345** | **3504764** |
| Income tax (expense) benefit | (50120) | (132491) | 304947 |
| **Net (loss) income** | **(7779133)** | **1179854** | **3809711** |
| Add: Net loss attributable to noncontrolling interest | 92124 | 122515 | 131710 |
| **Net (loss) income attributable to the Company** | **(7687009)** | **1302369** | **3941421** |
| Undeclared distributions to preferred stockholders | (7977251) | (7977250) | (7977250) |
| **Net loss attributable to common stockholders** | $**(15664260)** | $**(6674881)** | $**(4035829)** |
| Net loss per share attributable to common stockholders: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted | $(0.77) | $(0.34) | $(0.22) |
| Weighted average number of common shares outstanding |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted | 20247077 | 19417448 | 18843032 |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

F - 6

------

**SOTHERLY HOTELS INC.**

**CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | **Additional** | **Unearned** | **Distributions** |  |  |
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | **Paid-** | **ESOP** | **in Excess of** | **Noncontrolling** |  |
|  | **Shares** | **Par Value** | **Shares** | **Par Value** | **In Capital** | **Shares** | **Retained Earnings** | **Interest** | **Total** |
| **Balances at December 31, 2022** | **3973310** | $**39733** | **18951525** | $**189515** | $**175611370** | $**(2601134)** | $**(120985183)** | $**(733578)** | $**51520723** |
| Net income |  |  |  |  |  |  | 3941421 | (131710) | 3809711 |
| Issuance of common stock awards |  |  | 284278 | 2843 | 222543 |  |  |  | 225386 |
| Conversion of units in<br> Operating Partnership to <br> shares of common stock |  |  | 461002 | 4610 | 461846 |  |  | (466456) | (0) |
| Amortization of ESOP<br> shares |  |  |  |  | (664730) | 836627 |  |  | 171897 |
| Amortization of restricted<br> stock award |  |  |  |  | 148193 |  |  |  | 148193 |
| Dividends and distributions<br> declared |  |  |  |  |  |  | (7977251) |  | (7977251) |
| **Balances at December 31, 2023** | **3973310** | $**39733** | **19696805** | $**196968** | $**175779222** | $**(1764507)** | $**(125021013)** | $**(1331744)** | $**47898659** |
| Net income |  |  |  |  |  |  | 1302369 | (122515) | 1179854 |
| Issuance of common stock awards |  |  | 152360 | 1524 | 203400 |  |  |  | 204924 |
| Amortization of ESOP<br> shares |  |  |  |  | (776905) | 902400 |  |  | 125495 |
| Amortization of restricted<br> stock award |  |  |  |  | 167081 |  |  |  | 167081 |
| Dividends and distributions<br> declared |  |  |  |  |  |  | (7977247) |  | (7977247) |
| **Balances at December 31, 2024** | **3973310** | $**39733** | **19849165** | $**198492** | $**175372798** | $**(862107)** | $**(131695891)** | $**(1454259)** | $**41598766** |
| Net loss |  |  |  |  |  |  | (7687009) | (92124) | (7779133) |
| Issuance of common stock awards |  |  | 277250 | 2773 | 260615 |  |  |  | 263388 |
| Conversion of units in<br> Operating Partnership to <br> shares of common stock |  |  | 364086 | 3640 | (1549624) |  |  | 1545984 |  |
| Amortization of ESOP<br> shares |  |  |  |  | (783069) | 862107 |  |  | 79038 |
| Amortization of restricted<br> stock award |  |  |  |  | 81693 |  |  |  | 81693 |
| Dividends and distributions<br> declared |  |  |  |  |  |  | (5982937) |  | (5982937) |
| **Balances at December 31, 2025** | **3973310** | $**39733** | **20490501** | $**204905** | $**173382413** | $**—** | $**(145365837)** | $**(399)** | $**28260815** |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

F - 7

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**SOTHERLY HOTELS INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2024** | **2023** |
| **Cash flows from operating activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net (loss) income | $(7779133) | $1179854 | $3809711 |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net (loss) income to net cash <br>&nbsp;&nbsp;&nbsp;&nbsp; provided by operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 19658902 | 19380906 | 18788748 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of investment in hotel properties held for sale | 1310308 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred financing costs | 1655153 | 745409 | 598237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred lease expense | 27988 | 423382 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of mortgage premium | (18203) | (24681) | (24681) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of finance lease liabilities | 830372 | 536758 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net gain on involuntary conversion of assets | (3985417) | (502808) | (1371041) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized and realized (gain) loss on hedging activities | (131803) | 937783 | 737682 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on disposal of assets |  | (4400) | (4700) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on early extinguishment of debt | 43294 | 241878 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PPP loan forgiveness |  |  | (275494) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ESOP and stock - based compensation | 424117 | 497500 | 559220 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | (177486) | 1275961 | (42453) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insurance receivable | 255135 | (2855593) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses, inventory and other assets | (534675) | 429109 | 1824607 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and other accrued liabilities | (1223397) | 2508244 | (3581342) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance deposits | (40090) | 1119844 | 381968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by operating activities** | **10315065** | **25889146** | **21400462** |
| **Cash flows from investing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Improvements and additions to hotel properties | (14909318) | (14648934) | (8181496) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from involuntary conversion | 4170429 | 502808 | 1312675 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of assets |  | 4400 | 141952 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash used in investing activities** | **(10738889)** | **(14141726)** | **(6726869)** |
| **Cash flows from financing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from mortgage loans | 42000000 | 66250000 | 2715833 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds of line of credit | 7500000 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Redemption of interest rate swap |  | 965000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments on mortgage loans | (43352703) | (64961688) | (7256859) |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments on unsecured notes | (658766) | (878043) | (740857) |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments on finance lease liabilities | (82295) | (31339) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments of deferred financing costs | (1185827) | (1723964) | (525437) |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of interest rate cap |  | (916000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred dividends paid | (3988624) | (7977251) | (9971563) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by (used in) financing activities** | **231785** | **(9273285)** | **(15778883)** |
| &nbsp;&nbsp;**Net (decrease) increase in cash, cash equivalents and restricted cash** | (192039) | 2474135 | (1105290) |
| **Cash, cash equivalents and restricted cash at the beginning of the period** | **28710475** | **26236340** | **27341630** |
| **Cash, cash equivalents and restricted cash at the end of the period** | $**28518436** | $**28710475** | $**26236340** |

---

F - 8

------

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**Supplemental disclosures:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid during the period for interest | $**19937374** | $**20375075** | $**17084338** |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid during the period for income taxes | $**143364** | $**158789** | $**164450** |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating cash flows for operating leases | $**563715** | $**1135237** | $**1013605** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating cash flows for finance leases | $**1261987** | $**85491** | $**4486** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing cash flows for finance leases | $**82296** | $**31339** | $**9070** |
| &nbsp;&nbsp;**Non-cash investing and financing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in accrued capital expenditures | $**(126402)** | $**165566** | $**(471661)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Remeasurement of finance lease asset and liability | $**—** | $**22352075** | $**—** |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition of finance lease assets and liabilities | $**53550** | $**241978** | $**63424** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2024** | **2023** |
| Cash and cash equivalents | $7010604 | $7327880 | $17101993 |
| Restricted cash | 21507832 | 21382595 | 9134347 |
| &nbsp;&nbsp;**Cash, cash equivalents and restricted cash at the end of the period** | $**28518436** | $**28710475** | $**26236340** |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

F - 9

------

**Report of Independent Registered Public Accounting Firm**

To the Board of Directors of the General Partner

Sotherly Hotels LP

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheet of Sotherly Hotels LP and subsidiaries (the "Partnership") as of December 31, 2025, and the related consolidated statements of operations, changes in partners' capital, and cash flows for the year ended December 31, 2025, and the related notes and schedule III (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the Partnership's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provide a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

**Evaluation of Investment in Hotel Properties, net, for Impairment**

*Description of Matter*

At December 31, 2025, the Partnership's investment in hotel properties, net, was approximately $364.1 million. As more fully described in Note 2 to the consolidated financial statements, the Partnership evaluates its investment in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the investment in hotel properties may not be recoverable. Management evaluates various qualitative factors in determining whether or not events or changes in circumstances indicate that the carrying amount of the investment in hotel properties may not be recoverable. We identified the Partnership's evaluation of investment in hotel properties for impairment as a critical audit matter.

Auditing the Partnership's impairment assessment involved subjectivity due to the assumptions in its consideration of events or changes in circumstances to identify whether there are indications of impairment, specifically, the judgments related to the Partnership's determination of market and economic conditions, hotel investing strategy, and property-specific operating revenue and costs.

*How We Addressed the Matter in Our Audit*

F - 10

------

To test the Partnership's evaluation of investment in hotel properties for impairment, we performed audit procedures that included, among others, obtaining an understanding of the internal controls and processes in place over the Partnership's investment in hotel properties impairment review process, assessing the methodologies applied, evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used in the analysis. We evaluated management's assessment of potential impairment indicators on all the Partnership's investment in hotel properties, including current performance of the hotel properties, general market and economic conditions, relevant industry data, and management's investment strategy related to its hotel properties. We reviewed additional qualitative factors to determine whether any events or circumstances indicated that the carrying amount of the Partnership's investment in hotel properties may not be recoverable. We performed site visits for a sample of hotel properties to verify there were no signs of physical impairment.

/s/ Cherry Bekaert LLP

We have served as the Partnership's auditor since 2025.

**Richmond, Virginia**

**April 15, 2026**

F - 11

------

**Report of Independent Registered Public Accounting Firm**

To the Board of Directors of the General Partner

Sotherly Hotels LP

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheet of Sotherly Hotels LP and subsidiaries (the "Partnership") as of December 31, 2024, the related consolidated statements of operations, changes in partners' capital, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes and financial statement Schedule III (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2024, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

***Basis for Opinion***

These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the Partnership's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Forvis Mazars, LLP

We served as the Partnership's auditor from 2016 to 2025.

Jacksonville, Florida

**March 31, 2025**

F - 12

------

**SOTHERLY HOTELS LP**

**CONSOLIDATED BALANCE SHEETS**

**DECEMBER 31, 2025 AND 2024**

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment in hotel properties, net | $364098439 | $372376626 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment in hotel properties held for sale | 2271491 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | 7010604 | 7327880 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash | 21507832 | 21382595 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 4847249 | 4669763 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loan receivable - affiliate |  | 807160 |
| &nbsp;&nbsp;&nbsp;&nbsp;Insurance receivable | 2600458 | 2855593 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses, inventory and other assets | 5577746 | 5763463 |
| **TOTAL ASSETS** | $**407913819** | $**415183080** |
| **LIABILITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans, net | $315199862 | $316516148 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unsecured notes, net |  | 658766 |
| &nbsp;&nbsp;&nbsp;&nbsp; Line of credit | 7500000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance lease liabilities | 24003378 | 23201751 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and other accrued liabilities | 25172557 | 26577504 |
| &nbsp;&nbsp;&nbsp;&nbsp;Advance deposits | 3694735 | 3734825 |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends and distributions payable | 4082472 | 2088160 |
| **TOTAL LIABILITIES** | **379653004** | **372777154** |
| &nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies (see Note 5) |  |  |
| **PARTNERS' CAPITAL** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred units, 11,000,000 units authorized; |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.0% Series B cumulative redeemable perpetual preferred unit; <br> 1,464,100 and 1,464,100 units issued and outstanding; aggregate liquidation <br> preference $45,387,100 at December 31, 2025 and $44,655,050 at<br> December 31, 2024, respectively. | $34344086 | $34344086 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.875% Series C cumulative redeemable perpetual preferred units, <br> 1,346,110 and 1,346,110 units issued and outstanding; aggregate liquidation <br> preference $41,603,220 at December 31, 2025 and $40,940,681 at<br> December 31, 2024, respectively. | 31571778 | 31571778 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.25% Series D cumulative redeemable perpetual preferred units, <br> 1,163,100 and 1,163,100 units issued and outstanding; aggregate liquidation <br> preference $36,274,181 at December 31, 2025 and $35,674,458 at<br> December 31, 2024, respectively. | 27504901 | 27504901 |
| &nbsp;&nbsp;&nbsp;&nbsp;General Partner: 209,517 units and 206,744 units issued and outstanding as of<br> December 31, 2025 and December 31, 2024, respectively. | (377946) | (234736) |
| &nbsp;&nbsp;&nbsp;&nbsp;Limited Partners: 20,281,084 units and 20,006,607 units issued and outstanding as<br> of December 31, 2025 and December 31, 2024, respectively. | (64782004) | (50780103) |
| **TOTAL PARTNERS' CAPITAL** | **28260815** | **42405926** |
| **TOTAL LIABILITIES AND PARTNERS' CAPITAL** | $**407913819** | $**415183080** |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

F - 13

------

**SOTHERLY HOTELS LP**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2024** | **2023** |
| **REVENUE** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Rooms department | $114400434 | $119079903 | $114748834 |
| &nbsp;&nbsp;&nbsp;&nbsp;Food and beverage department | 36458606 | 36626906 | 35231959 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other operating departments | 25528188 | 26187478 | 23857264 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total revenue** | **176387228** | **181894287** | **173838057** |
| **EXPENSES** |  |  |  |
| Hotel operating expenses |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Rooms department | 26732018 | 27376330 | 26177539 |
| &nbsp;&nbsp;&nbsp;&nbsp;Food and beverage department | 25606512 | 25429218 | 24211133 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other operating departments | 9184742 | 9428889 | 9031960 |
| &nbsp;&nbsp;&nbsp;&nbsp;Indirect | 72412162 | 72847022 | 69629724 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total hotel operating expenses** | **133935434** | **135081459** | **129050356** |
| Depreciation and amortization | 19658902 | 19380906 | 18788748 |
| Impairment of investment in hotel properties held for sale | 1310308 |  |  |
| Gain on disposal of assets |  | (4400) | (4700) |
| Corporate general and administrative | 8786311 | 6788460 | 7078222 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total operating expenses** | **163690955** | **161246425** | **154912626** |
| **NET OPERATING INCOME** | **12696273** | **20647862** | **18925431** |
| Other income (expense) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (24799871) | (20882681) | (17588091) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | 252961 | 692756 | 802183 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other income | 467599 | 489267 | 456388 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on early extinguishment of debt | (463195) | (241878) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Realized gain on hedging activities |  | 1041994 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain (loss) on hedging activities | 131803 | (937783) | (737682) |
| &nbsp;&nbsp;&nbsp;&nbsp;PPP loan forgiveness |  |  | 275494 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gain on involuntary conversion of assets | 3985417 | 502808 | 1371041 |
| **Net (loss) income before income taxes** | **(7729013)** | **1312345** | **3504764** |
| Income tax (expense) benefit | (50120) | (132491) | 304947 |
| **Net (loss) income** | **(7779133)** | **1179854** | **3809711** |
| Undeclared distributions to preferred unit holders | (7977251) | (7977250) | (7977250) |
| **Net loss attributable to general and limited partnership unit holders** | $**(15756384)** | $**(6797396)** | $**(4167539)** |
| Net loss attributable per general and limited partner unit: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted | $(0.77) | $(0.34) | $(0.21) |
| Weighted average number of general and limited partner units<br> outstanding |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted | 20384444 | 19997274 | 19808602 |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

F - 14

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**SOTHERLY HOTELS LP**

**CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL**

**YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred Units** | **Preferred Units** | **Preferred Units** | **Preferred Units** | **General Partner** | **General Partner** | **Limited Partner** | **Limited Partner** |  |
|  | **Units** | **Series B Amounts** | **Series C Amounts** | **Series D Amounts** | **Units** | **Amounts** | **Units** | **Amounts** | **Total** |
| **Balances at December 31, 2022** | **3973310** | $**34344086** | $**31571778** | $**27504901** | **197767** | $**(106022)** | **19578946** | $**(39143494)** | $**54171249** |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of partnership units |  |  |  |  | 7453 | 2254 | 276825 | 223132 | 225386 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of restricted<br> units award |  |  |  |  |  | 1482 |  | 146711 | 148193 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unit based compensation |  |  |  |  |  | (7203) |  | (726894) | (734097) |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred units distributions<br> declared |  |  |  |  |  | (79773) |  | (7897478) | (7977251) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  | 17432 |  | 3792279 | 3809711 |
| **Balances at December 31, 2023** | **3973310** | $**34344086** | $**31571778** | $**27504901** | **205220** | $**(171830)** | **19855771** | $**(43605744)** | $**49643191** |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of partnership units |  |  |  |  | 1524 | 2049 | 150836 | 202875 | 204924 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of restricted<br> units award |  |  |  |  |  | 1671 |  | 165410 | 167081 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unit based compensation |  |  |  |  |  | (8119) |  | (803758) | (811877) |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred units distributions<br> declared |  |  |  |  |  | (79772) |  | (7897475) | (7977247) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  | 21265 |  | 1158589 | 1179854 |
| **Balances at December 31, 2024** | **3973310** | $**34344086** | $**31571778** | $**27504901** | **206744** | $**(234736)** | **20006607** | $**(50780103)** | $**42405926** |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of partnership units |  |  |  |  | 2773 | 2634 | 274477 | 260754 | 263388 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of restricted<br> units award |  |  |  |  |  | 817 |  | 80876 | 81693 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unit based compensation |  |  |  |  |  | (7281) |  | (720841) | (728122) |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred units distributions<br> declared |  |  |  |  |  | (59829) |  | (5923108) | (5982937) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss |  |  |  |  |  | (79551) |  | (7699582) | (7779133) |
| **Balances at December 31, 2025** | **3973310** | $**34344086** | $**31571778** | $**27504901** | **209517** | $**(377946)** | **20281084** | $**(64782004)** | $**28260815** |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

F - 15

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**SOTHERLY HOTELS LP**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023**

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| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2024** | **2023** |
| **Cash flows from operating activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net (loss) income | $(7779133) | $1179854 | $3809711 |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net (loss) income to net cash <br>provided by operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 19658902 | 19380906 | 18788748 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of investment in hotel properties held for sale | 1310308 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred financing costs | 1655153 | 745409 | 598237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred lease expense | 27988 | 423382 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of mortgage premium | (18203) | (24681) | (24681) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of finance lease liabilities | 830372 | 536758 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net gain on involuntary conversion of assets | (3985417) | (502808) | (1371041) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized and realized (gain) loss on hedging activities | (131803) | 937783 | 737682 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on early extinguishment of debt | 43294 | 241878 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PPP loan forgiveness |  |  | (275494) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on disposal of assets |  | (4400) | (4700) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ESOP and unit-based compensation | (383043) | (439871) | (346774) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | (177486) | 1275961 | (42453) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insurance receivable | 255135 | (2855593) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses, inventory and other assets | (534675) | 429109 | 1824607 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and other accrued liabilities | (1223397) | 2508244 | (3581342) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance deposits | (40090) | 1119844 | 381968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by operating activities** | **9507905** | **24951775** | **20494468** |
| **Cash flows from investing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Improvements and additions to hotel properties | (14909318) | (14648934) | (8181496) |
| &nbsp;&nbsp;&nbsp;&nbsp;ESOP loan payments received | 807160 | 937371 | 905994 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of assets |  | 4400 | 141952 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from involuntary conversion | 4170429 | 502808 | 1312675 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash used in investing activities** | **(9931729)** | **(13204355)** | **(5820875)** |
| **Cash flows from financing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from mortgage loans | 42000000 | 66250000 | 2715833 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds of line of credit | 7500000 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Redemption of interest rate swap |  | 965000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments on mortgage loans | (43352703) | (64961688) | (7256859) |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments on unsecured notes | (658766) | (878043) | (740857) |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of interest rate cap |  | (916000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments on finance lease liabilities | (82295) | (31339) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments of deferred financing costs | (1185827) | (1723964) | (525437) |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred dividends paid | (3988624) | (7977251) | (9971563) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by (used in) financing activities** | **231785** | **(9273285)** | **(15778883)** |
| &nbsp;&nbsp;**Net (decrease) increase in cash, cash equivalents and restricted cash** | (192039) | 2474135 | (1105290) |
| **Cash, cash equivalents and restricted cash at the beginning of the period** | 28710475 | 26236340 | 27341630 |
| **Cash, cash equivalents and restricted cash at the end of the period** | $**28518436** | $**28710475** | $**26236340** |

---

F - 16

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---

| | | | |
|:---|:---|:---|:---|
| **Supplemental disclosures:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid during the period for interest | $**19937374** | $**20375075** | $**17116639** |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid during the period for income taxes | $**143364** | $**158789** | $**164450** |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating cash flows for operating leases | $**563715** | $**1135237** | $**1013605** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating cash flows for finance leases | $**1261987** | $**85491** | $**4486** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing cash flows for finance leases | $**82296** | $**31339** | $**9070** |
| **Non-cash investing and financing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in accrued capital expenditures | $**(126402)** | $**165566** | $**(471661)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Remeasurement of finance lease asset and liability | $**—** | $**22352075** | $**—** |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition of finance lease assets and liabilities | $**53550** | $**241978** | $**63424** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2024** |  | **2023** |
| Cash and cash equivalents | $7010604 | $7327880 |  | $17101993 |
| Restricted cash | 21507832 | 21382595 |  | 9134347 |
| &nbsp;&nbsp;**Cash, cash equivalents and restricted cash at the end of the period** | $**28518436** | $**28710475** | $**-** | $**26236340** |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

F - 17

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**SOTHERLY HOTELS INC.**

**SOTHERLY HOTELS LP**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**1. Organization and Description of Business**

Sotherly Hotels Inc. (the "Company") is a lodging real estate investment trust ("REIT") that was incorporated in Maryland on August 20, 2004. The Company historically has focused on the acquisition, renovation, up-branding and repositioning of upscale to upper-upscale full-service hotels in the southern United States. The Company's portfolio, as of December 31, 2025, consisted of investments in ten hotel properties, comprising 2,786 rooms and two hotel commercial condominium units and their associated rental programs. Seven of our hotels operated under the DoubleTree by Hilton, Tapestry Collection by Hilton, and Hyatt Centric brands, and three are independent hotels.

The Company commenced operations on December 21, 2004 when it completed its initial public offering ("IPO") and thereafter consummated the acquisition of six hotel properties. Substantially all of the Company's assets are held by, and all of its operations are conducted through, Sotherly Hotels LP, (the "Operating Partnership").

Pursuant to the terms of the Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement"), the Company, as general partner, is not entitled to compensation for its services to the Operating Partnership. The Company, as general partner, conducts substantially all of its operations through the Operating Partnership and the Company's administrative expenses are the obligations of the Operating Partnership. Additionally, the Company is entitled to reimbursement for any expenditure incurred by it on the Operating Partnership's behalf.

For the Company to qualify as a REIT, it cannot operate hotels. Therefore, the Operating Partnership, which, at December 31, 2025, was over 99.9% owned by the Company, and its subsidiaries, lease its hotels to direct and indirect subsidiaries of MHI Hospitality TRS Holding, Inc., MHI Hospitality TRS, LLC and certain of its subsidiaries, (collectively, "MHI TRS Entities"), each of which is a wholly-owned subsidiary of the Operating Partnership. For the years ended December 31, 2025, 2024, and 2023, the MHI TRS Entities engaged an eligible independent contractor, Our Town Hospitality, LLC ("Our Town"), to operate the hotels under individual hotel management contracts. MHI Hospitality TRS Holding, Inc. is treated as a taxable REIT subsidiary ("TRS") for federal income tax purposes. As of December 31, 2025, Our Town was the manager of each of our ten wholly-owned hotels and our two condominium hotel rental programs.

All references in these "Notes to Consolidated Financial Statements" to "we," "us" and "our" refer to the Company, its Operating Partnership and its subsidiaries and predecessors, collectively, unless the context otherwise requires or where otherwise indicated.

**Significant Transactions**

Significant transactions occurring during the current and two prior fiscal years include the following:

Between April 16 and May 6, 2020, the Company received proceeds of three separate PPP Loans administered by the U.S. Small Business Administration pursuant to the CARES Act totaling approximately $10.7 million. Each PPP Loan had an initial term of two years with the ability to extend the loan to five years, if not completely forgiven and carries an interest rate of 1.00%. Equal payments of principal and interest were required to begin no later than 10 months following origination of the loan and were to be amortized over the remaining term of the loan. Pursuant to the terms of the CARES Act, the proceeds of each PPP Loan may be used for payroll costs, mortgage interest, rent or utility costs. The promissory note for each PPP Loan contains customary events of default relating to, among other things, payment defaults and breach of representations and warranties or of provisions of the relevant promissory note. On December 9, 2022, the Company was notified it had received forgiveness for one of its PPP Loans in the principal amount of approximately $4.6 million. On February 3, 2023, the Company was notified it had received forgiveness for another PPP Loan in the principal amount of approximately $0.3 million.

On February 26, 2023, the Company entered into amended loan documents to modify the mortgage loan on The Whitehall hotel located in Houston, TX with the lender, International Bank of Commerce. The amendment (i) extends the maturity date to February 26, 2028; (ii) maintains a floating interest rate of New York Prime Rate plus 1.25%; and (iii) subjects the interest rate to a floor rate of 7.50%. The mortgage loan continues to be guaranteed by the Operating Partnership. The amendment also required us to establish a real estate tax reserve as well as a debt service reserve that approximates the aggregate amount of one year's debt service, which was initially established at approximately $1.5 million.

F - 18

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On March 14, 2023, the Company entered into amended loan documents to modify the mortgage loan on the DoubleTree by Hilton Philadelphia Airport with the lender, TD Bank, N.A. The amendment provided a waiver for non-compliance with financial covenants for the periods ended September 30 and December 31, 2022, modified the reference rate replacing 1-month LIBOR with SOFR and required us to establish a debt service coverage reserve of $0.3 million.

On May 4, 2023, the Company secured a $10.0 million mortgage loan on the DoubleTree by Hilton Laurel hotel located in Laurel, MD with Citi Real Estate Funding Inc. Pursuant to the loan documents, the mortgage loan: (i) has a principal balance of $10.0 million; (ii) has a maturity date of May 6, 2028; (iii) carries a fixed interest rate of 7.35%; (iv) requires payments of interest only; (v) cannot be prepaid until the last 4 months of the loan term; and (vi) contains customary representations, warranties, covenants and events of default for a mortgage loan.

On February 7, 2024, the Company secured a $35.0 million mortgage loan on the Hotel Alba Tampa located in Tampa, Florida with Citi Real Estate Funding Inc. The Company received approximately $10.2 million in net proceeds. Pursuant to the loan documents, the mortgage loan: (i) has a principal balance of $35.0 million; (ii) has a 5 year term maturing on March 6, 2029; (iii) carries a fixed interest rate of 8.49%; (iv) requires payments of interest only; (v) is guaranteed by the Operating Partnership only for traditional "bad boy" acts; (vi) cannot be prepaid until the last four months of the term; and (vii) contains customary representations, warranties, covenants and events of default for a mortgage loan.

On April 29, 2024, the Company entered into a loan amendment to amend the existing mortgage on the DoubleTree by Hilton Philadelphia Airport hotel with the existing lender, TD Bank, N.A. Pursuant to the amended loan documents, the mortgage loan: (i) has a principal balance of approximately $35.9 million; (ii) extends the maturity by two years to April 29, 2026; (iii) continues to carry a floating interest rate of SOFR plus 3.50%; (iv) requires payments of interest only; (v) continues to be guaranteed by the Operating Partnership; and (vi) contains customary representations, warranties, covenants and events of default for a mortgage loan. Concurrent with the execution of the loan amendment, the Company (i) made a principal payment of $3.0 million; (ii) funded $0.3 million to the interest reserve escrow, bringing the balance in the interest reserve escrow account to $1.3 million; (iii) funded $5.0 million into a product improvement plan ("PIP") reserve account; and (iv) provided $1.7 million in additional cash collateral, of which $1.2 million can be released into the PIP reserve account as early as June 30, 2025 assuming compliance with the financial covenants. On May 3, 2024, an affiliate of the Company entered into an interest rate cap with a notional amount of $26.0 million with Webster Bank, N.A. The cap has a strike rate of 3.0%, is indexed to SOFR, and expires on May 1, 2026.

On July 8, 2024, the Company secured an approximately $26.3 million mortgage loan on the DoubleTree by Hilton Jacksonville Riverfront hotel located in Jacksonville, Florida with Fifth Third Bank, N.A. The loan provides for an additional approximately $9.5 million available to fund a product improvement plan at the hotel; matures on July 8, 2029; and requires monthly payments of interest at a floating interest rate of SOFR plus 3.00% plus principal of $38,700.

On August 14, 2024, the Company secured a $5.0 million second mortgage loan on The DeSoto hotel located in Savannah, Georgia with MONY Life Insurance Company. The loan had a maturity date of July 1, 2026, and required level payments of principal and interest at a fixed interest rate of 7.50% and amortized on a 25-year schedule. Proceeds of the loan were used for working capital.

On September 12, 2025, the Company secured a $42.0 million mortgage loan on The DeSoto hotel located in Savannah, Georgia with Citi Real Estate Funding Inc. The Company received approximately $5.78 million in net proceeds, after funding of the required lender reserves and repaying the existing indebtedness. Pursuant to the loan documents, the mortgage loan: (i) has a principal balance of $42.0 million; (ii) matures on October 6, 2030; (iii) carries a fixed interest rate of 7.13%; (iv) requires payments of interest only; (v) is guaranteed by the Operating Partnership only for traditional "bad boy" acts; (vi) can be prepaid with defeasance following a lockout period ending on the earlier of (a) three years after closing, or (b) two years after the date of securitization, if any, and can be prepaid without defeasance during the last six months of the term; and (vii) contains customary representations, warranties, covenants and events of default for a mortgage loan.

On October 24, 2025, the Company, KW Kingfisher LLC, a Delaware limited liability company ("Parent"), and Sparrows Nest LLC, a Maryland limited liability company ("Merger Sub," together with the Parent, "Parent Parties"), entered into an Agreement and Plan of Merger (the "Merger Agreement").

*Agreement and Plan of Merger –* Pursuant to the Merger Agreement, the Merger Sub merged with and into the Company, with the Company continuing as the surviving entity in such merger (the "Merger," and such surviving entity, the "Surviving Company"). Upon completion of the Merger, the Surviving Company survived as a wholly owned subsidiary of Parent, the separate existence of the Merger Sub ceased, and the Operating Partnership became an indirect subsidiary of Parent.

At the effective time of the Merger (the "Effective Time"), (A) each share of common stock, par value $0.01 per share, of the Company (the "Company Common Stock") issued and outstanding immediately before the Effective Time (other than Cancelled Shares) automatically converted into the right to receive an amount in cash equal to $2.25 per share, without interest

F - 19

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(the "Per Company Share Merger Consideration," and in the aggregate, the "Merger Consideration"); (B) each share of the Company's 8.0% Series B Cumulative Redeemable Perpetual Preferred Stock, 7.875% Series C Cumulative Redeemable Perpetual Preferred Stock, and 8.25% Series D Cumulative Redeemable Perpetual Preferred Stock (collectively, the "Company Preferred Stock") issued and outstanding immediately before the Effective Time was entitled to receive the Merger Consideration if the holder thereof elects to convert, subject to the terms and conditions contained in the Company's charter (including any articles supplementary) (the "Charter"), including the share cap as defined therein, their respective shares of Company Preferred Stock into Company Common Stock after the closing of the Merger, and (C) the Company offered to purchase the Limited Partnership Interests held by the limited partners (other than the Company) for the same per share Merger Consideration that each share of Company Common Stock received pursuant to the Merger Agreement, simultaneously with the Closing of the Merger (the "Limited Partner Compensation") in accordance with the Operating Partnership's Partnership Agreement.

Notwithstanding the foregoing, each issued and outstanding share of Company Common Stock held by Parent or the Company or any of their respective direct or indirect wholly owned subsidiaries immediately before the Effective Time, if any, was automatically cancelled and retired and ceased to exist, and no consideration was delivered in exchange therefor. If not converted, each share of the Company Preferred Stock was unaffected by the Merger and remains outstanding in accordance with their respective terms.

With respect to each series of the Company Preferred Stock, pursuant to the Charter, on February 27, 2026, the Company provided notice to the holders thereof that the closing of the Merger occurred (the "Preferred Notice"). The Preferred Notice included certain details with respect to the Merger and specified that the holders of the Company Preferred Stock could elect to exercise a right to convert some or all of the Company Preferred Stock held by such holder into the right to convert, subject to the terms and conditions contained in the Charter, including the share cap as defined therein, into Company Common Stock and receive the Per Company Share Merger Consideration by March 20, 2026.

The consummation of the Merger occurred on February 12, 2026 and was subject to certain customary closing conditions, including, among others, the approval of the Merger by the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock entitled to vote on the Merger and the other transactions contemplated by the Merger Agreement (the "Company Stockholder Approval").

*Revolving Line of Credit –* In connection with the Merger Agreement, on October 24, 2025, the Operating Partnership entered into a Promissory Note (the "Note") with Kemmons Wilson Hospitality Partners II, LP ("KWHP") providing for a revolving line of credit in the principal amount of up to $25.0 million (the "Revolving Commitment"). The Note allows the Operating Partnership to borrow, prepay, and re-borrow amounts on a revolving basis during the Revolving Commitment Period, which terminates on the earliest of (i) 18 months after execution, (ii) consummation of the merger described in the Merger Agreement, (iii) sale of the Wilmington Asset (as defined in the Note), (iv) refinancing of indebtedness secured by a lien on the Wilmington Asset, or (v) acceleration following an Event of Default (as defined in the Note). Interest accrues on the Note at a floating rate equal to Term SOFR plus an applicable margin, initially 3.25% for nine months, then 7.50%, with a 3.35% SOFR floor. Interest is payable monthly and at maturity. Mandatory prepayments are required from asset sale or refinancing proceeds, and certain asset sales are restricted unless minimum proceeds are received. Each such prepayment permanently reduces the amount of the Revolving Commitment.

On December 16, 2025, the Company entered into a Forbearance Agreement with Wilmington Trust, National Association, as Trustee, with regard to the mortgage loan for the Company's Georgian Terrace hotel located in Atlanta, GA. Pursuant to the Forbearance Agreement: (i) the lender agrees not seek a judgment against the Company, nor to foreclose on the property prior to June 1, 2026; (ii) the Company repaid a portion of the principal balance of the mortgage loan of approximately $3.8 million; (iii) the Company agreed to continue to pay lender approximately $236,000 per month in principal and interest as well as funding reserve accounts in accordance with the terms of the mortgage loan; (iv) default interest will continue to accrue and will be payable upon a Termination Event (as defined in the Forbearance Agreement); and (v) the property will remain in cash management.

On December 31, 2025, the Company entered into a settlement agreement with 4111 South Ocean Drive Condominium Association, Inc. to convey its interest in the hotel commercial condominium unit at the Lyfe Resort & Residences and assign its interest in the hotel condominium unit rental program, subject to certain terms and conditions. The Company assigned its interest in the rental program effective February 1, 2026 and anticipates conveyance of the condominium unit to occur before May 1, 2026.

F - 20

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**2. Summary of Significant Accounting Policies**

*Basis of Presentation –* The consolidated financial statements of the Company presented herein include all the accounts of Sotherly Hotels Inc., the Operating Partnership and the MHI TRS Entities. All significant inter-company balances and transactions have been eliminated. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The consolidated financial statements of the Operating Partnership presented herein include all the accounts of Sotherly Hotels LP and the MHI TRS Entities. All significant inter-company balances and transactions have been eliminated. Additionally, all administrative expenses of the Company and those expenditures made by the Company on behalf of the Operating Partnership are reflected as the administrative expenses, expenditures and obligations thereto of the Operating Partnership, pursuant to the terms of the Partnership Agreement.

*Variable Interest Entities –* The Company serves as general partner of the Operating Partnership. Holders of units in the Operating Partnership other than the Company have limited rights and do not have the power to direct the Operating Partnership's activities that most significantly impact the Operating Partnership's economic performance. As such, the Operating Partnership is considered a variable interest entity of the Company, which it consolidates as the Company is the primary beneficiary. The Company's only significant asset is its investment in the Operating Partnership. Net income (loss) and distributions of the Operating Partnership not attributable to holders of preferred units, are allocable to the general and limited partnership units in accordance with their ownership percentages.

*Investment in Hotel Properties –* Investments in hotel properties include investments in operating properties which are recorded at fair value on the acquisition date and allocated to land, property and equipment and identifiable intangible assets. If substantially all the fair value of the gross assets acquired are concentrated in a single identifiable asset, the asset is not considered a business. When we conclude that an acquisition meets this threshold, acquisition costs will be capitalized as part of our allocation of the purchase price of the acquired asset. We capitalize the costs of significant additions and improvements that materially upgrade, increase the value of or extend the useful life of the property. These costs may include refurbishment, renovation, and remodeling expenditures, as well as certain direct internal costs related to construction projects. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from our accounts and any resulting gain or loss is included in the statements of operations.

&nbsp;&nbsp;&nbsp;&nbsp;Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 7 to 39 years for buildings and building improvements and 3 to 10 years for furniture, fixtures and equipment.

The Company assesses the carrying value of its investments in hotel properties whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse permanent changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel property exceeds its carrying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel property's estimated fair market value would be recorded and an impairment loss recognized. Upon reclassification of our investment in the Lyfe Resort & Residences as held for sale, as discussed below, no impairment loss was recognized for the years ended December 31, 2025, 2024 and 2023.

*Assets Held for Sale –* The Company records assets as held for sale when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year. When the carrying value of the asset is greater than the fair value, the Company reduces the carrying value to fair value less selling costs and recognizes an impairment loss.

As of December 31, 2025, the Company determined that the carrying value of its investment in the hotel commercial condominium unit at the Lyfe Resort & Residences exceeded the consideration to be received pursuant the Settlement Agreement. The Company recognized an impairment loss of approximately $1.3 million for the year ended December 31, 2025.

*Cash and Cash Equivalents –* The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

*Concentration of Credit Risk –* The Company holds cash accounts at several institutions in excess of the Federal Deposit Insurance Corporation (the "FDIC") protection limits of $250,000. Our exposure to credit loss in the event of the failure of these institutions is represented by the difference between the FDIC protection limit and the total amounts on deposit. Management

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monitors, on a regular basis, the financial condition of the financial institutions along with the balances there on deposit to minimize our potential risk.

*Restricted Cash –* Restricted cash includes real estate tax escrows, insurance escrows and reserves for replacements of furniture, fixtures and equipment pursuant to certain requirements in our various mortgage agreements.

*Accounts Receivable –* Accounts receivable consists primarily of amounts due from hotel guests including payments rendered by credit card for which we are awaiting payment from the merchant processor. Most of our revenue is collected through payment by cash or credit card on or in advance of the date of service, with limited extension of credit to a small number of customers. An allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible.

*Inventories –* Inventories, consisting primarily of food and beverages, are stated at the lower of cost or net realizable value, with cost determined on a method that approximates first-in, first-out basis.

*Franchise License Fees –* Fees expended to obtain or renew a franchise license are amortized over the life of the license or renewal. The unamortized franchise fees as of December 31, 2025 and 2024, were approximately $268,454 and $311,753, respectively. Amortization expense for the years ended December 31, 2025, 2024, and 2023, was $43,300, $44,235 and $45,050, respectively.

*Deferred Financing Costs –* Deferred financing costs are recorded at cost and consist of loan fees and other costs incurred in issuing debt and are reflected in mortgage loans, net and unsecured notes, net on the consolidated balance sheets. Deferred offering costs are recorded at cost and consist of offering fees and other costs incurred in advance of issuing equity and are reflected in prepaid expenses, inventory and other assets on the consolidated balance sheets. Amortization of deferred financing costs is computed using a method that approximates the effective interest method over the term of the related debt and is included in interest expense in the consolidated statements of operations.

*Derivative Instruments –* Our derivative instruments are reflected as assets or liabilities on the consolidated balance sheet and measured at fair value. Derivative instruments used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as an interest rate risk, are considered fair value hedges. Derivative instruments used to hedge exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For a derivative instrument designated as a cash flow hedge, the change in fair value each period is reported in accumulated other comprehensive income in stockholders' equity and partners' capital to the extent the hedge is effective. For a derivative instrument designated as a fair value hedge, the change in fair value each period is reported in earnings along with the change in fair value of the hedged item attributable to the risk being hedged. For a derivative instrument that does not qualify for hedge accounting or is not designated as a hedge, the change in fair value each period is reported in earnings.

We use derivative instruments to add stability to interest expense and to manage our exposure to interest-rate movements. To accomplish this objective, we currently use interest rate caps and an interest rate swap which act as cash flow hedges and are not designated as hedges. We value our interest-rate caps and interest rate swap at fair value, which we define as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We do not enter into contracts to purchase or sell derivative instruments for speculative trading purposes.

*Fair Value Measurements –*

We classify the inputs used to measure fair value into the following hierarchy:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 Unobservable inputs for the asset or liability.

We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table represents our assets and liabilities measured at fair value and the basis for that measurement. Our interest rate cap is the only asset or liability

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measured at fair value on a recurring basis. There were no non-recurring assets or liabilities for fair value measurements as of December 31, 2025 and 2024, respectively.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | Carrying Amount | Fair Value | Carrying Amount | Fair Value |
| &nbsp;&nbsp;Financial Assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest-rate cap<sup>(1)</sup> | $53236 | $53236 | $379433 | $379433 |
| &nbsp;&nbsp;Financial Liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans<sup>(2)</sup> | $(315199862) | $(317005598) | $(316516148) | $(315981358) |

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(1)The interest-rate cap agreement allows the Company to receive a variable rate of interest based upon the amount in which 1-month SOFR exceeds 3.0% on a notional amount of $26.0 million on the DoubleTree by Hilton Philadelphia Airport. The interest rate cap terminates on May 1, 2026. The interest-rate cap is included in prepaid assets, inventory and other assets on the consolidated balance sheets.

(2)Mortgage loans had a carrying value on our Consolidated Balance Sheets of $315,199,862 and $316,516,148 as of December 31, 2025 and December 31, 2024, respectively.

The fair value of the Company's interest rate swap and cap agreements were determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts, which is considered a Level 2 measurement under the fair value hierarchy. The variable cash receipts are based on an expectation of future interest rates (forward yield curves) derived from observable market interest rates.

The Company estimates the fair value of its mortgage loans by discounting the future cash flows of each loan at estimated market rates consistent with the maturity of a mortgage loan with similar credit terms and credit characteristics, which are Level 2 inputs under the fair value hierarchy. Market rates take into consideration general market conditions and maturity.

*Noncontrolling Interest in Operating Partnership –* Certain hotel properties have been acquired, in part, by the Operating Partnership through the issuance of limited partnership units of the Operating Partnership. The noncontrolling interest in the Operating Partnership is: (i) increased or decreased by the limited partners' pro-rata share of the Operating Partnership's net income or net loss, respectively; (ii) decreased by distributions; (iii) decreased by redemption of partnership units for the Company's common stock; and (iv) adjusted to equal the net equity of the Operating Partnership multiplied by the limited partners' ownership percentage immediately after each issuance of units of the Operating Partnership and/or the Company's common stock through an adjustment to additional paid-in capital. Net income or net loss is allocated to the noncontrolling interest in the Operating Partnership based on the weighted average percentage ownership throughout the period.

*Revenue Recognition –* Revenue consists of amounts derived from hotel operations, including the sales of rooms, food and beverage, and other ancillary services. Room revenue is recognized over a customer's hotel stay. Revenue from food and beverage and other ancillary services is generated when a customer chooses to purchase goods or services separately from a hotel room and revenue is recognized on these distinct goods and services at the point in time or over the time period that goods or services are provided to the customer. Some contracts for rooms or food and beverage services require pre-payment which is recorded as advanced deposits (or contract liabilities) shown on our consolidated balance sheets and recognized once the performance obligations are satisfied.

Certain ancillary services are provided by third parties and the Company assessed whether it is the principal or agent in these arrangements. If the Company is the agent, revenue is recognized based upon the gross commission earned from the third party. If the Company is the principal, the Company recognizes based upon the gross sales price. With respect to the hotel condominium rental programs the Company operates at the Lyfe Resort & Residences and the Hyde Beach House Resort & Residences, the Company has determined that it is an agent and recognizes revenue based on its share of revenue earned under the rental agency agreement.

The Company collects revenue, sales taxes, use taxes, occupancy taxes and similar taxes at its hotels which are reflected in revenue on a net basis on the consolidated statements of operations.

*Income Taxes –* The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax. The MHI TRS, our wholly owned taxable REIT subsidiary which leases our hotels from subsidiaries of the Operating Partnership, is subject to federal and state income taxes.

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We account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is required for deferred tax assets if, based on all available evidence, it is "more-likely-than-not" that all or a portion of the deferred tax asset will or will not be realized due to the inability to generate sufficient taxable income in certain financial statement periods. The "more-likely-than-not" analysis means the likelihood of realization is greater than 50%, that we either will or will not be able to fully utilize the deferred tax assets against future taxable income. The net amount of deferred tax assets that are recorded on the financial statements must reflect the tax benefits that are expected to be realized using these criteria. As of December 31, 2025, we determined that it is more-likely-than-not that we will not be able to fully utilize our deferred tax assets for future tax consequences; therefore, a 100% valuation allowance is required. As of December 31, 2025 and 2024, deferred tax assets each totaled $0.

As of December 31, 2025, we had no uncertain tax positions. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025, the tax years that remain subject to examination by the major tax jurisdictions to which the Company is subject generally include 2011 through 2023. In addition, as of December 31, 2025, the tax years that remain subject to examination by the major tax jurisdictions to which the MHI TRS Entities are subject, because of open NOL carryforwards, generally include 2014 through 2023.

The Operating Partnership is generally not subject to federal and state income taxes as the unit holders of the Partnership are subject to tax on their respective shares of the Partnership's taxable income.

*Stock-based Compensation –* The Company's 2013 Long-Term Incentive Plan (the "2013 Plan"), which the Company's stockholders approved in April 2013, permitted the grant of stock options, restricted stock and performance share compensation awards to its employees and directors for up to 750,000 shares of common stock. The Company made cumulative stock awards totaling 745,160 shares, of which 316,333 were originally restricted. As of December 31, 2025, there were 745,160 non-restricted shares issued to certain executives, directors and employees. All awards have vested. The remaining 4,840 shares have been deregistered.

The Company's 2022 Long-Term Incentive Plan (the "2022 Plan"), which the Company's stockholders approved in April 2022, permits the grant of stock options, restricted stock, unrestricted stock and service/performance share compensation awards to its employees and directors for up to 2,000,000 shares of common stock. The Company believes that such awards better align the interests of its employees with those of its stockholders. Under the 2022 Plan, the Company may issue a variety of service or performance-based stock awards, including nonqualified stock options. As of December 31, 2025, the Company has made cumulative stock awards totaling 881,278 shares, of which 247,750 were originally restricted. As of December 31, 2025, there were 77,000 restricted shares and 804,278 non-restricted shares.

The value of the awards is charged to compensation expense on a straight-line basis over the vesting or service period based on the value of the award as determined by the Company's stock price on the date of grant or issuance. Total stock-based compensation cost recognized under the 2013 Plan and 2022 Plan for the years ended December 31, 2025, 2024, and 2023 was $345,081, $372,005 and $373,579, respectively. No performance-based stock awards have been granted. Consequently, stock-based compensation as determined under the fair-value method would be the same under the intrinsic-value method.

Additionally, the Company sponsors and maintains an Employee Stock Ownership Plan ("ESOP") and related trust for the benefit of its eligible employees. We reflect unearned ESOP shares as a reduction of stockholders' equity. Dividends on unearned ESOP shares, when paid, are considered compensation expense. The Company recognizes compensation expense equal to the fair value of the Company's ESOP shares at the time they are committed to be released. For the years ended December 31, 2025, 2024, and 2023 the ESOP compensation cost was $79,038, $125,497 and $171,896, respectively. To the extent that the fair value of the Company's ESOP shares differs from the cost of such shares, the differential is recognized as the change in additional paid-in capital. Because the ESOP is internally leveraged through a loan from the Company to the ESOP, the loan receivable by the Company from the ESOP is not reported as an asset nor is the debt of the ESOP shown as a liability in the Company's consolidated financial statements.

*Advertising –* Advertising costs, including digital advertising, were approximately $3.1 million, $2.8 million and $2.7 million, for the years ended December 31, 2025, 2024, and 2023, respectively and are expensed as incurred. Advertising costs are included in the consolidated statements of operations in indirect hotel operating expenses.

*Business Interruption Proceeds –* Insurance recoveries for business interruption were recognized during the years ended December 31, 2025, 2024, and 2023, for $1,416,991, $1,500,000, and $230,256, respectively. The insurance proceeds were reflected in the consolidated statement of operations in other operating departments revenues.

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*Involuntary Conversion of Assets –* The Company record gains or losses on involuntary conversions of assets due to recovered insurance proceeds to the extent the undepreciated cost of a nonmonetary asset differs from the amount of monetary proceeds received. During the years ending December 31, 2025, 2024, and 2023, we recognized approximately $4.0 million, $0.5 million and $1.4 million, respectively, for gain on involuntary conversion of assets, which is reflected in the consolidated statements of operations.

*Comprehensive Income (Loss) –* Comprehensive income (loss), as defined, includes all changes in equity (net assets) during a period from non-owner sources. The Company does not have any items of comprehensive income (loss) other than net income (loss).

*Segment Information –* The Company allocates resources and assesses operating performance based on individual hotel properties. The Company considers each of our hotel properties to be an operating segment but combines each operating segment into one reportable segment because all of the hotels have similar economic characteristics, facilities and services,.

*Use of Estimates –* The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

*Reclassifications* – Certain reclassifications in the amount of approximately $2.9 million as of December 31, 2024 from accounts receivable, net to insurance receivable on the consolidated balance sheet as made to conform to current period presentation. We have also reclassified approximately $2.9 million for the year ended December 31, 2024 on the consolidated statement of cash flows from line item accounts receivable to insurance receivable in order to conform to the current period presentation.

*New Accounting Pronouncements* – In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 for years ending December 31, 2025 on a prospective basis. Please refer to Note 12, Income Taxes, for the related disclosures.

In March 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards ("ASU 2024-01"), to clarify the scope application of profits interest and similar awards by adding illustrative guidance in ASC 718, Compensation—Stock Compensation ("ASC 718"). ASU 2024-01 clarifies how to determine whether profits interest and similar awards should be accounted for as a share-based payment arrangement (ASC 718) or as a cash bonus or profit-sharing arrangement (ASC 710, Compensation—General, or other guidance) and applies to all reporting entities that account for profits interest awards as compensation to employees or non-employees. In addition to adding the illustrative guidance, ASU 2024-01 modified the language in paragraph 718-10-15-3 to improve its clarity and operability without changing the guidance. ASU 2024-01 is effective for fiscal years beginning after December 15, 2024, including interim periods within those annual periods. The adoption of ASU 2024-01 had no material impact on our consolidated financial statements and disclosures.

In November 2024, the FASB issued 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). The amendments improve the disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales and research and development). The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact that adopting ASU 2024-03 will have on its consolidated financial statements and disclosures.

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**3. Investment in Hotel Properties, Net**

Investment in hotel properties, net as of December 31, 2025 and 2024, consisted of the following:

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| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Land and land improvements | $61253346 | $61370250 |
| Buildings and improvements | 433259321 | 428355821 |
| Right of use assets | 3638319 | 3727805 |
| Finance lease right of use assets | 23075033 | 23021483 |
| Furniture, fixtures and equipment | 55158504 | 53820118 |
|  | 576384523 | 570295477 |
| Less: accumulated depreciation | (212286084) | (197918851) |
| **Investment in Hotel Properties, Net** | $**364098439** | $**372376626** |

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Investment in hotel properties held for sale as of December 31, 2025 and 2024, relate to the hotel commercial condominium unit at the Lyfe Resort & Residences in Hollywood, Florida, for which we recognized an impairment charge of approximately $1.3 million upon reclassification to held for sale during the year ended December 31, 2025, and which consisted of the following:

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| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Land and land improvements | $226242 | $**—** |
| Buildings and improvements | 4297727 |  |
| Furniture, fixtures and equipment | 179696 |  |
|  | 4703665 |  |
| Less: accumulated depreciation | (1121866) |  |
|  | 3581799 |  |
| Less: impairment | (1310308) |  |
| **Investment in Hotel Properties Held for Sale, Net** | $**2271491** | $**—** |

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**4. Debt**

*Mortgage Loans, Net.* As of December 31, 2025 and 2024, the Company had approximately $315.2 million and approximately $316.5 million of outstanding mortgage debt, respectively. The following table sets forth our mortgage debt obligations on our hotels.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Balance Outstanding as of** | **Balance Outstanding as of** |  |  |  |  |
|  | **December 31,** | **December 31,** | **Prepayment** | **Maturity** | **Amortization** | **Interest** |
| **<u>Property</u>** | **2025** | **2024** | **Penalties** | **Date** | **Provisions** | **Rate** |
| The DeSoto <sup>(1)</sup> | $42000000 | $34219589 | Yes | 10/06/2030 | <sup>(1)</sup> | 7.130% |
| DoubleTree by Hilton Jacksonville <br> Riverfront <sup>(2)</sup> | 25592100 | 26056500 |  | 07/08/2029 | 25 years | SOFR plus 3.00% |
| DoubleTree by Hilton Laurel <sup>(3)</sup> | 10000000 | 10000000 | <sup>(3)</sup> | 05/06/2028 | <sup>(3)</sup> | 7.350% |
| DoubleTree by Hilton Philadelphia Airport <sup>(4)</sup> | 35915488 | 35915488 |  | 04/29/2026 | <sup>(4)</sup> | SOFR plus 3.50% |
| DoubleTree Resort by Hilton Hollywood <br> Beach <sup>(5)</sup> | 48966397 | 50211533 |  | (5) | 30 years | 4.913% |
| Georgian Terrace <sup>(6)</sup> | 33469112 | 38375095 |  | 06/01/2026 | 30 years | 4.42% <sup>(6)</sup> |
| Hotel Alba Tampa, Tapestry Collection by Hilton <sup>(7)</sup> | 35000000 | 35000000 | <sup>(7)</sup> | 03/06/2029 | <sup>(7)</sup> | 8.490% |
| Hotel Ballast Wilmington, Tapestry Collection by<br> Hilton <sup>(8)</sup> | 28742014 | 29770045 | Yes | 01/01/2027 | 25 years | 4.250% |
| Hyatt Centric Arlington <sup>(9)</sup> | 44118386 | 45317273 | Yes | 10/01/2028 | 30 years | 5.250% |
| The Whitehall <sup>(10)</sup> | 13486401 | 13777078 |  | 02/26/2028 | 25 years | PRIME plus 1.25% |
| **Total Mortgage Principal Balance** | $**317289898** | $**318642601** |  |  |  |  |
| Deferred financing costs, net | (2090036) | (2144656) |  |  |  |  |
| Unamortized premium on loan |  | 18203 |  |  |  |  |
| **Total Mortgage Loans, Net** | $**315199862** | $**316516148** |  |  |  |  |

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(1) The note requires payments of interest only and cannot be prepaid without penalty until the last four months of the loan term.

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(2) The note provides for an initial tranche in the amount of $26.25 million and a renovation tranche in the amount of $9.49 million.

(3) The note requires payments of interest only and cannot be prepaid without penalty until the last four months of the loan term.

(4) The note requires payments of interest only. On May 3, 2024, we entered into an interest rate cap with a notional amount of $26.0 million with Webster Bank, N.A. The cap has a strike rate of 3.0 %, is indexed to SOFR, and expires on May 1, 2026 .

(5) The note matured on October 1, 2025 and went into default. The Company subsequently entered into discussion with the special servicer for an extension.

(6) The note matured on June 1, 2025 and went into default. On December 16, 2025, obtained a 1-year extension to June 1, 2026. Principal and interest are payable monthly, with default interest accruing through the maturity date.

(7) The note requires payments of interest only and cannot be prepaid without penalty until the last four months of the term.

(8) The note amortizes on a 25 -year schedule after an initial interest-only period of one year and cannot be prepaid without penalty until the last four months of the loan term.

(9) The note cannot be prepaid without penalty until the final four months of the term.

(10) The note bears a floating interest rate of New York Prime Rate plus 1.25 %, with a floor of 7.50 %.

As of December 31, 2025, we were in compliance with all debt covenants, current on all loan payments and not otherwise in default under any of our mortgage loans, with the exception of (i) a payment at maturity default on the non-recourse mortgage on the Georgian Terrace; (2) a payment at maturity default on the mortgage the on the DoubleTree Resort by Hilton Hollywood Beach ; and (iii) a covenant default on the mortgage on the DoubleTree by Hilton Jacksonville Riverfront. If we are unable to obtain a waiver for the covenant default, we may be required to provide cash collateral or reduce the outstanding indebtedness by approximately $4.9 million.

Please refer to Note 16, Subsequent Events, for details regarding the refinance of the mortgages in the table above with the exception of the mortgage on the DeSoto.

Total future mortgage debt maturities, including with respect to any extensions of loan maturity, as of December 31, 2025 were as follows:

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| | |
|:---|:---|
| December 31, 2026 | $121488754 |
| December 31, 2027 | 29830958 |
| December 31, 2028 | 64771286 |
| December 31, 2029 | 59198900 |
| December 31, 2030 | 42000000 |
| Total future maturities | $317289898 |

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*Unsecured Notes*. The Operating Partnership and certain of its subsidiaries received PPP Loans administered by the U.S. Small Business Administration pursuant to the CARES Act. Each PPP Loan had an initial term of two years, with the ability to extend the term to five years, if not forgiven, and carries an interest rate of 1.00%. Equal payments of principal and interest were required to begin no later than 10 months following origination of the loan and were to be amortized over the remaining term of the loan. Pursuant to the terms of the CARES Act, the proceeds of each PPP Loan may be used for payroll costs, mortgage interest, rent or utility costs. The promissory note for each PPP Loan contained customary events of default relating to, among other things, payment defaults and breach of the representations and warranties or of provision of the relevant promissory note.

Under the terms of the CARES Act, each borrower could apply for and be granted forgiveness for all or a portion of the PPP Loan. During the years ended December 31, 2025, 2024, and 2023, the Company received principal debt forgiveness totaling approximately $0.0, $0.0 and $0.3 million, respectively.

On April 16, 2020, our Operating Partnership entered into a promissory note with Village Bank in connection with a PPP Loan and received proceeds of $333,500. The Company made monthly payments of $18,000 through December 25, 2025 to fully extinguish the loan.

On April 28, 2020, we entered into a promissory note and received proceeds of approximately $9.4 million under a PPP Loan from Fifth Third Bank, National Association. On December 9, 2022, the Company was notified it had received principal forgiveness in the amount of approximately $4.6 million made monthly payments of $56,809 through July 1, 2025 to fully extinguish the loan.

On May 6, 2020, we entered into a second promissory note with Fifth Third Bank, National Association and received proceeds of $952,700 under a PPP Loan. On February 3, 2023, the Company was notified it had received principal forgiveness in the amount of approximately $268,309 and made monthly payments of $13,402 through May 6, 2025 to fully extinguish the loan.

*Revolving Line of Credit*. In connection with the Merger Agreement, on October 24, 2025, the Operating Partnership entered into a Note KWHP providing for a revolving line of credit in the principal amount of up to $25.0 million. Interest accrues on the Note

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at a floating rate equal to Term SOFR plus an applicable margin, initially 3.25% for nine months, then 7.50%, with a 3.35% SOFR floor. Interest is payable monthly and at maturity. Mandatory prepayments are required from asset sale or refinancing proceeds, and certain asset sales are restricted unless minimum proceeds are received. Each such prepayment permanently reduces the amount of the Revolving Commitment.

As of December 31, 2025, the outstanding balance on the revolving line of credit was $7.5 million.

**5. Commitments and Contingencies**

*Employment Agreements* - The Company has entered into various employment contracts with employees that could result in obligations to the Company in the event of a change in control or termination without cause.

*Management Agreements* – As of December 31, 2025, our ten wholly-owned hotels, and our two condo-hotel rental programs, operated under management agreements with Our Town (see Note 8). The management agreements expire on March 31, 2035 and may be extended for up to two additional periods of five years each, subject to the approval of both parties. Each of the individual hotel management agreements may be terminated earlier than the stated term upon the sale of the hotel covered by the respective management agreement, in which case we may incur early termination fees.

*Franchise Agreements* – As of December 31, 2025, seven of our hotels operate under franchise licenses from national hotel companies. Under the franchise agreements, we are required to pay a franchise fee generally between 3.0% and 5.0% of room revenues, plus additional fees for marketing, central reservation systems, and other franchisor programs and services that amount to between 3.0% and 4.0% of gross revenues from the hotels. The franchise agreements currently in force expire between October 2024 and March 2038. Each of our franchise agreements provides for early termination fees in the event the agreement is terminated before the stated term.

*Restricted Cash Reserves* – Each month, we are required to escrow with the lenders on the Hotel Ballast, The DeSoto, the DoubleTree by Hilton Laurel, the DoubleTree by Hilton Jacksonville Riverside, the DoubleTree Resort by Hilton Hollywood Beach, the Hotel Alba, the Whitehall, the Hyatt Centric Arlington and the Georgian Terrace an amount equal to one-twelfth (1/12) of the annual real estate taxes due for the properties. The lenders on the DoubleTree Resort by Hilton Hollywood Beach as well as the Hotel Alba also require us to escrow an amount each month equal to one-twelfth (1/12) of the annual insurance premiums. Several of our lenders also required us to establish individual property improvement funds to cover the cost of replacing capital assets at our properties. Each month, those contributions equal 4.0% of gross revenues for the Hotel Ballast, The DeSoto, the DoubleTree by Hilton Laurel, the DoubleTree Resort by Hilton Hollywood Beach, the Hotel Alba, The Whitehall and the Georgian Terrace and equal 4.0% of room revenues for the DoubleTree by Hilton Philadelphia Airport and the Hyatt Centric Arlington.

*ESOP Loan Commitment –* The Company's board of directors approved the ESOP on November 29, 2016, which was adopted by the Company in December 2016 and effective January 1, 2016. The ESOP is a non-contributory defined contribution plan covering all employees of the Company. The ESOP is a leveraged ESOP, meaning funds are loaned to the ESOP from the Company. The Company entered into a loan agreement with the ESOP on December 29, 2016, pursuant to which the ESOP may borrow up to $5.0 million to purchase shares of the Company's common stock on the open market. Under the loan agreement, the aggregate principal amount outstanding at any time may not exceed $5.0 million and the ESOP may borrow additional funds up to that limit in the future, until December 29, 2036. At December 31, 2025, the loan was fully repaid, leaving capacity for additional borrowing of approximately $5.0 million under the commitment.

*Litigation* –We are involved in routine litigation arising out of the ordinary course of business, all of which we expect to be covered by insurance, and we believe it is not reasonably possible such matters will have a material adverse impact on our financial condition or results of operations or cash flows.

**6. Leases**

*Lease Commitments* – We are the lessee on certain ground leases, hotel equipment leases and office space leases. Leases with durations greater than 12 months are recognized on the consolidated balance sheets as ROU assets and lease liabilities. Our leases are classified as operating or finance leases. For leases with terms greater than 12 months, at inception of the lease, we recognize a ROU asset and lease liability at the estimated present value of the minimum lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Many of our leases include rental escalation clauses (including fixed scheduled rent increases) and renewal options that are factored into the determination of lease payments, when appropriate, which adjusts the present value of the remaining lease payments.

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We determine the present value of the lease payments utilizing interest rates implicit in the lease, if determinable, or, if not, we estimate the incremental borrowing rate from information available at lease commencement, such as estimates of rates we would pay for senior collateralized loans with terms similar to each lease.

*Operating Leases –* The ROU asset operating leases that are connected to the hotel properties are primarily included in investment in hotel properties, net, with the related lease obligations included in accounts payable and accrued liabilities on the consolidated Balance Sheets. Other operating leases that are not connected to the hotel properties are reflected in prepaid expenses, inventory, and other assets with the related lease obligations included in accounts payable and accrued liabilities on the consolidated Balance Sheets. Lease expense is recognized on a straight-line basis over the term of the respective lease, and the value of each lease intangible is amortized over the term of the respective lease. Costs related to operating ground leases and hotel equipment leases are included in hotel operating expense and property taxes, insurance and other expense, and costs related to office space leases are included in general and administrative expense in our consolidated statements of operations.

As of December 31, 2025, the Company had the following significant operating leases:

We lease 2,086 square feet of commercial space next to The DeSoto for use as an office, retail or conference space, or for any related or ancillary purposes for the hotel and/or atrium space. In December 2007, we signed an amendment to the lease to include rights to the outdoor esplanade adjacent to the leased commercial space. The areas are leased under a six-year operating lease, which expired October 31, 2006 and has been renewed for the fourth of five optional five-year renewal periods expiring October 31, 2026. Rent expense for this operating lease for the twelve months ended December 31, 2025, 2024, and 2023, totaled $75,085, $75,085, and $83,932, respectively, and is included in indirect expenses.

We lease, as landlord, the entire fourteenth floor of The DeSoto hotel property to The Chatham Club, Inc. under a 99 year lease expiring July 31, 2086. This lease was assumed upon the purchase of the building under the terms and conditions agreed to by the previous owner of the property. No rental income is recognized under the terms of this lease as the original lump sum rent payment of $990 was received by the previous owner and not prorated over the life of the lease.

We lease land adjacent to the Hotel Alba Tampa for use as parking under a five-year renewable agreement with the Florida Department of Transportation that commenced in July 2009. In May 2014, we extended the agreement for an additional five years. We signed a new agreement in April 2019, which commenced in July 2019, goes for five years, and can be renewed for an additional five years. We have exercised the five year renewal, and the new agreement expires in July 2029, requires annual payments of $2,432, plus tax, and may be renewed for an additional five years. Rent expense for the twelve months ended December 31, 2025, 2024, and 2023 totaled $2,517, $2,567 and $2,602, respectively, and is included in indirect expenses.

We lease approximately 8,500 square feet of commercial office space in Williamsburg, Virginia under an agreement with a ten-year term beginning January 1, 2020. The initial annual rent under the agreement was $218,875, with the rent for each successive annual period increasing by 3.0% over the prior annual period's rent. The annual rent will be offset by a tenant improvement allowance of $200,000, to be applied against one-half of each monthly rent payment until such time as the tenant improvement allowance is exhausted. In December 2023, we received a rent concession of $257,731 against accrued and unpaid rents as well as a reduction of future lease payments by one-third. Rent expense for the twelve months ended December 31, 2025, 2024, and 2023 totaled $171,895, $18,121 and $(85,759), respectively, and is included in general and administrative expenses.

We lease the parking garage and poolside cabanas associated with the Hyde Beach House. The parking and cabana lease requires us to make rental payments of $270,100 per year with increases of 5% every five years and has an initial term that expires in 2034 and which may be extended for four additional renewal periods of 5 years each. Rent expense for the twelve months ended December 31, 2025, 2024, and 2023, totaled $323,483, $323,483 and $271,000, respectively, and is included in indirect expenses.

*Finance Leases –* We lease the land underlying all of the Hyatt Centric Arlington hotel pursuant to a ground lease. The initial term of the ground lease required us to make rental payments of $50,000 per year in base rent and percentage rent equal to 3.5% of gross room revenue in excess of certain thresholds, as defined in the ground lease agreement. The ground lease allowed for five additional rental periods of 10 years each. Upon commencement of each renewal period, we will be required to make lease payments each year equal to 8.0% of the appraised value of the land. We exercised the renewal option for the first renewal period expiring July 1, 2035, during which total annual lease payments will be $1,792,000.

Upon the determination of the lease payments commencing during the first renewal period, the lease was reassessed and re-measured as a finance lease, which we record as a finance lease asset within investment in hotel properties, net and finance lease liability on our consolidated balance sheets. As a result of the reassessment and remeasurement, we recognized a finance lease asset of $22,716,081 and a finance lease liability of $22,400,000. In addition, our finance lease asset balance includes unamortized intangible asset for the below market ground lease assumed in 2018 with the purchase of the hotel. The finance lease asset is amortized over the term of the lease including renewal periods. Costs related to the finance lease asset are included in depreciation

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and amortization expense and interest expense in the Company's consolidated statements of operations.

As of December 31, 2025, the operating and finance lease term years, weighted-average discount rates, right of use assets and lease liabilities, are as follows:

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| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** |
|  | **<u>Operating</u>** | **<u>Finance</u>** |
| Weighted-average remaining lease term, including reasonably certain extension options (years) | 27.12 | 49.00 |
| Weighted-average discount rate | 8.01% | 7.42% |
| Right of use assets | $4227290 | $23075033 |
| Lease liabilities | $(4698771) | $(24003378) |

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*Lease Position as of December 31, 2025 and 2024–* The following tables set forth the lease-related assets and liabilities included in the Company's consolidated balance sheets as of December 31, 2025 and 2024;

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| | | | |
|:---|:---|:---|:---|
| **<u>Assets</u>** | **<u>Balance Sheet Classification</u>** | **<u>December 31, 2025</u>** | **<u>December 31, 2024</u>** |
| Right of use assets | Prepaid expenses, inventory and other assets | $588971 | $723732 |
| Right of use assets | Investment in hotel properties, net | 3638319 | 3727805 |
| Finance lease right of use assets | Investment in hotel properties, net | 23075033 | 23021483 |
| **Total lease assets** |  | $**27302323** | $**27473020** |
| **<u>Liabilities</u>** |  |  |  |
| Operating lease liabilities | Accounts payable and accrued liabilities | $4698771 | $4874919 |
| Finance lease liabilities | Finance lease liabilities | 24003378 | 23201751 |
| **Total lease liabilities** |  | $**28702149** | $**28076670** |

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*Lease Costs for the Twelve Months ended December 31, 2025, 2024, and 2023–* The following table sets forth the lease costs related to the Company's operating and finance ground leases included in the Company's consolidated statement of operations for the twelve months ended December 31, 2025, 2024, and 2023:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **<u>Consolidated Statement of Operations</u>** |  |  |  |
|  | **<u>Classification</u>** | **December 31, 2025** | **December 31, 2024** | **December 31, 2023** |
| Operating lease costs: |  |  |  |  |
| &nbsp;&nbsp;Fixed | Corporate general and administrative | $188774 | $188774 | $(73104) |
|  | Hotel operating expenses - Other operating |  |  | 271000 |
|  | Hotel operating expenses - Indirect | 412691 | 468407 | 164330 |
| &nbsp;&nbsp;Variable | Hotel operating expenses - Indirect |  | 529623 | 591147 |
| Finance lease costs: |  |  |  |  |
| &nbsp;&nbsp;Amortization of lease assets | Depreciation and amortization | 518814 | 188346 |  |
| &nbsp;&nbsp;Variable | Hotel operating expenses - Indirect | 325305 | 204161 |  |
| &nbsp;&nbsp;Interest on lease liabilities | Interest expense | 936682 | 622249 | 4486 |
| **Total lease costs** |  | $**2382266** | $**2201560** | $**957859** |

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*Undiscounted Cash Flows –*The following table reconciles the undiscounted cash flows for each of the next five years and total of the remaining years to the operating lease liabilities and finance lease liabilities included in the Company's consolidated balance sheet as of December 31, 2025:

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| | | |
|:---|:---|:---|
|  | **<u>December 31, 2025</u>** | **<u>December 31, 2025</u>** |
|  | **<u>Operating</u>** | **<u>Finance</u>** |
| December 31, 2026 | $574776 | $1888913 |
| December 31, 2027 | 572184 | 1881630 |
| December 31, 2028 | 560531 | 1873335 |
| December 31, 2029 | 569472 | 1844397 |
| December 31, 2030 | 397713 | 1808662 |
| December 31, 2031 and thereafter | 9883920 | 79743998 |
| Total undiscounted lease payments | 12558596 | 89040935 |
| Less imputed interest | (7859825) | (65037557) |
| **Total lease liability** | $**4698771** | $**24003378** |

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*Lease Revenue* – Several of our properties generate revenue from leasing the restaurant space within the hotel and space on the roofs of our hotels for antennas and satellite dishes. Leases for the restaurant space within the hotels are leased under 10-year leases which expire between September 2027 and May 2034 and include two additional 5-year renewal options. The leases require periodic increases in base rent and may require payments of percentage rent as well. Leases for the space on the roofs of our hotels for antennas and satellite dishes are leased under various periods ranging from 1 year to 10 years with renewal options for as many as five additional 5-year periods, with some exceptions. As of December 31, 2025, the leases for space on the roofs of our hotels expire between December 2025 and May 2034. Several leases require periodic increases in base rent. We account for the lease income as revenue from other operating departments within the consolidated statements of operations pursuant to the terms of each lease. Lease revenue for the twelve months ended December 31, 2025, 2024, and 2023, totaled approximately $1.4 million, $1.2 million, and $1.0 million, respectively.

A schedule of minimum future lease payments receivable for the remaining twelve-month periods is as follows:

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| | |
|:---|:---|
| December 31, 2026 | $1002097 |
| December 31, 2027 | 734574 |
| December 31, 2028 | 500751 |
| December 31, 2029 | 507625 |
| December 31, 2030 | 432869 |
| December 31, 2031 and thereafter | 979074 |
| Total | $**4156990** |

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**7. Preferred Stock and Units** 

*Preferred Stock* - The Company is authorized to issue up to 11,000,000 shares of preferred stock. The following table sets forth our Cumulative Redeemable Perpetual Preferred Stock by series:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Per** |  | **Number of Shares** | **Number of Shares** | **Quarterly** |
|  | **Annum** | **Liquidation** | **Issued and Outstanding as of** | **Issued and Outstanding as of** | **Distributions** |
| **Preferred Stock - Series** | **Rate** | **Preference** | **December 31, 2025** | **December 31, 2024** | **Per Share** |
| Series B Preferred Stock | 8.000% | $25.00 | 1464100 | 1464100 | $0.500000 |
| Series C Preferred Stock | 7.875% | $25.00 | 1346110 | 1346110 | $0.492188 |
| Series D Preferred Stock | 8.250% | $25.00 | 1163100 | 1163100 | $0.515625 |

---

The Company is obligated to pay cumulative cash distributions on the preferred stock at rates in the above table per annum of the $25.00 liquidation preference per share. Holders of the Company's preferred stock are entitled to receive distributions when authorized by the Company's board of directors out of assets legally available for the payment of distributions. The preferred stock is not redeemable by the holders, has no maturity date and is not convertible into any other security of the Company or its affiliates. Alternatively, the Company, at its option, may redeem the preferred stock in part or in full for the amount of the liquidation preference plus any dividends in arrears as well as a pro-rata distribution for the portion of the quarterly period ending on the date of redemption. Notwithstanding, upon a change in control, each holder of preferred stock may elect to exchange their stock for the consideration provided common stockholders at conversion ratios prescribed in the Articles Supplementary for each series of preferred stock.

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On October 27, 2025, the Company announced that the record dates for the dividends on the Company's Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock that were to be paid November 20, 2025 to stockholders of record as of October 31, 2025 have each been deferred. The payment of future dividends on all series of the Company's preferred stock has been suspended.

The total undeclared and unpaid cash dividends due on the Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock as of December 31, 2025, were $8,784,600, $7,950,470 and $7,196,681, respectively. Undeclared preferred cumulative dividends are reported on the statements of operations but are not considered payable until declared. The preferred stock is considered permanent equity and distributions accrete as distributions are declared. As of December 31, 2025 and 2024, there are cumulative undeclared preferred dividends of approximately $23.9 million and approximately $21.9 million, respectively.

*Preferred Partnership Units –* The Company is the holder of the Operating Partnership's preferred partnership units and is entitled to receive distributions when authorized by the general partner of the Operating Partnership out of assets legally available for the payment of distributions. The following table sets forth our Cumulative Redeemable Perpetual Preferred Units by series:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Per** |  | **Number of Units** | **Number of Units** | **Quarterly** |
|  | **Annum** | **Liquidation** | **Issued and Outstanding as of** | **Issued and Outstanding as of** | **Distributions** |
| **Preferred Units - Series** | **Rate** | **Preference** | **December 31, 2025** | **December 31, 2024** | **Per Unit** |
| Series B Preferred Units | 8.000% | $25.00 | 1464100 | 1464100 | $0.500000 |
| Series C Preferred Units | 7.875% | $25.00 | 1346110 | 1346110 | $0.492188 |
| Series D Preferred Units | 8.250% | $25.00 | 1163100 | 1163100 | $0.515625 |

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The Operating Partnership pays cumulative cash distributions on the preferred units at rates in the above table per annum of the $25.00 liquidation preference per unit. The Company, which is the holder of the Operating Partnership's preferred units, is entitled to receive distributions when authorized by the Operating Partnership's general partner out of assets legally available for the payment of distributions. The preferred units are not redeemable by the holder, have no maturity date and are not convertible into any other security of the Operating Partnership or its affiliates. The Company, as general partner, may cause the Operating Partnership to redeem preferred units in the Operating Partnership in conjunction with a redemption by the Company of its preferred stock.

In conjunction with the announcement by the Company on October 27, 2025, regarding the deferral of the previously announced record date for dividends on the Company's Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, the general partner has also deferred the record date for distributions on the Series B Preferred Units, Series C Preferred Units and Series D Preferred Units that were to be paid November 20, 2025 to stockholders of record as of October 31, 2025.

The total undeclared and unpaid cash dividends due on the Series B Preferred Units, Series C Preferred Units and Series D Preferred Units as of December 31, 2025, were $8,784,600, $7,950,470 and $7,196,681, respectively. Undeclared preferred cumulative dividends are reported on the statements of operations but are not considered payable until declared. The preferred partnership units are considered permanent equity and distributions accrete as distributions are declared. As of December 31, 2025

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and 2024, there are cumulative undeclared preferred distributions to the Company from the Operating Partnership of approximately $23.9 million and approximately $21.9 million, respectively.

The following table presents the quarterly distributions in arrears that were paid by the Operating Partnership per Series B Preferred Unit and the quarterly dividends in arrears that were paid by the Company per share of Series B Preferred Stock, during the years ended December 31, 2025, 2024, and 2023:

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| | | | |
|:---|:---|:---|:---|
| **Quarter Ended in Arrears** | **2025** | **2024** | **2023** |
| &nbsp;&nbsp;March 31, 2020 | $- | $- | $0.500000 |
| &nbsp;&nbsp;June 30, 2020 | - | - | 0.500000 |
| &nbsp;&nbsp;September 30, 2020 | - | - | 0.500000 |
| &nbsp;&nbsp;December 31, 2020 | - | - | 0.500000 |
| &nbsp;&nbsp;March 31, 2021 | - | - | 0.500000 |
| &nbsp;&nbsp;June 30, 2021 | - | 0.500000 | - |
| &nbsp;&nbsp;September 30, 2021 | - | 0.500000 | - |
| &nbsp;&nbsp;December 31, 2021 | - | 0.500000 | - |
| &nbsp;&nbsp;March 31, 2022 | - | 0.500000 | - |
| &nbsp;&nbsp;June 30, 2022 | 0.500000 | - | - |
| &nbsp;&nbsp;September 30, 2022 | 0.500000 | - | - |

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The following table presents the quarterly distributions in arrears that were paid by the Operating Partnership per Series C Preferred Unit and the quarterly dividends in arrears that were paid by the Company per share of Series C Preferred Stock, during the years ended December 31, 2025, 2024, and 2023:

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| | | | |
|:---|:---|:---|:---|
| **Quarter Ended in Arrears** | **2025** | **2024** | **2023** |
| &nbsp;&nbsp;March 31, 2020 | $- | $- | $0.492188 |
| &nbsp;&nbsp;June 30, 2020 | - | - | 0.492188 |
| &nbsp;&nbsp;September 30, 2020 | - | - | 0.492188 |
| &nbsp;&nbsp;December 31, 2020 | - | - | 0.492188 |
| &nbsp;&nbsp;March 31, 2021 | - | - | 0.492188 |
| &nbsp;&nbsp;June 30, 2021 | - | 0.492188 | - |
| &nbsp;&nbsp;September 30, 2021 | - | 0.492188 | - |
| &nbsp;&nbsp;December 31, 2021 | - | 0.492188 | - |
| &nbsp;&nbsp;March 31, 2022 | - | 0.492188 | - |
| &nbsp;&nbsp;June 30, 2022 | 0.492188 | - | - |
| &nbsp;&nbsp;September 30, 2022 | 0.492188 | - | - |

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The following table presents the quarterly distributions in arrears that were paid by the Operating Partnership per Series D Preferred Unit and the quarterly dividends in arrears that were paid by the Company per share of Series D Preferred Stock, during the years ended December 31, 2025, 2024, and 2023:

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| | | | |
|:---|:---|:---|:---|
| **Quarter Ended in Arrears** | **2025** | **2024** | **2023** |
| &nbsp;&nbsp;March 31, 2020 | $- | $- | $0.515625 |
| &nbsp;&nbsp;June 30, 2020 | - | - | 0.515625 |
| &nbsp;&nbsp;September 30, 2020 | - | - | 0.515625 |
| &nbsp;&nbsp;December 31, 2020 | - | - | 0.515625 |
| &nbsp;&nbsp;March 31, 2021 | - | - | 0.515625 |
| &nbsp;&nbsp;June 30, 2021 | - | 0.515625 | - |
| &nbsp;&nbsp;September 30, 2021 | - | 0.515625 | - |
| &nbsp;&nbsp;December 31, 2021 | - | 0.515625 | - |
| &nbsp;&nbsp;March 31, 2022 | - | 0.515625 | - |
| &nbsp;&nbsp;June 30, 2022 | 0.515625 | - | - |
| &nbsp;&nbsp;September 30, 2022 | 0.515625 | - | - |

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**8. Common Stock and Units**

*Common Stock –* The Company is authorized to issue up to 69,000,000 shares of common stock, $0.01 par value per share. Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Holders of the

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Company's common stock are entitled to receive distributions when authorized by the Company's board of directors out of assets legally available for the payment of distributions.

The following is a list of issuances during the years ended December 31, 2025, 2024, and 2023 of the Company's common stock:

On May 1, 2025, three holders of limited partnership units in the Operating Partnership redeemed a total of 364,086 units for an equivalent number of shares of the Company's common stock.

On January 2, 2025, the Company was issued 277,250 units in the Operating Partnership and the Company issued 15,000 restricted shares and 2,250 unrestricted shares of common stock to its independent directors and 260,000 unrestricted shares of common stock to its officers and employees.

On January 18, 2024, the Company was issued 152,360 units in the Operating Partnership and the Company issued 12,750 restricted shares of common stock to its independent directors and 139,610 vested shares of common stock to its officers and employees.

On August 30, 2023, one holder of partnership units in the Operating Partnership converted 133,099 units for an equivalent number of shares in the Company's stock.

On August 18, 2023, one holder of partnership units in the Operating Partnership converted 252,903 units for an equivalent number of shares in the Company's stock.

On April 28, 2023, one holder of partnership units in the Operating Partnership converted 75,000 units for an equivalent number of shares in the Company's stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

On January 23, 2023, the Company was issued 205,000 units in the Operating Partnership and the Company issued 205,000 restricted shares of common stock to certain its officers and employees pursuant to their employment agreements.

On January 12, 2023, the Company was issued 15,000 units in the Operating Partnership and the Company issued 15,000 restricted shares of common stock to its independent directors and 64,278 vested shares of common stock to its independent directors and one officer.

As of December 31, 2025 and 2024, the Company had 20,490,501 and 19,849,165 shares of common stock outstanding, respectively.

*Operating Partnership Units –* Holders of Operating Partnership units, other than the Company as general partner, have certain redemption rights, which enable them to cause the Operating Partnership to redeem their units in exchange for shares of the Company's common stock on a one-for-one basis or, at the option of the Company, cash per unit equal to the average of the market price of the Company's common stock for the 10 trading days immediately preceding the notice date of such redemption. The number of shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions, which otherwise would have the effect of diluting the ownership interests of the limited partners or the stockholders of the Company.

Since January 1, 2020, there have been no issuances or redemptions of units in the Operating Partnership other than the issuances of units in the Operating Partnership to the Company described above.

As of December 31, 2025 and 2024, the total number of Operating Partnership units outstanding was 20,490,601 and 20,213,351, respectively.

As of December 31, 2025 and 2024, the total number of outstanding units in the Operating Partnership not owned by the Company was 100 and 364,186, respectively, with a fair market value of approximately $215 and approximately $0.3 million, respectively, based on the price per share of the common stock on such respective dates.

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*Common Stock Dividends and Unit Distributions –* The following table presents the quarterly stock dividends and unit distributions by us declared and payable per common stock/unit for the years ended December 31, 2025, 2024, and 2023:

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| | | | |
|:---|:---|:---|:---|
| **Quarter Ended** | **2025** | **2024** | **2023** |
| &nbsp;&nbsp;March 31, | $- | $- | $- |
| &nbsp;&nbsp;June 30, | - | - | - |
| &nbsp;&nbsp;September 30, | - | - | - |
| &nbsp;&nbsp;December 31, | - | - | - |

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As of December 31, 2025 and 2024, there were unpaid common dividends and distributions to holders of record as of March 13, 2020 of approximately $2.0 million.

**9. Related Party Transactions**

*Our Town Hospitality.* For the years ended December 31, 2025, 2024, and 2023, Our Town was the management company for each of our ten wholly-owned hotels, as well as the manager of our rental programs at the Lyfe Resort and Residences and the Hyde Beach House Resort & Residences. As of December 31, 2025, an affiliate of Andrew M. Sims, our Chairman, an affiliate of David R. Folsom, our President and Chief Executive Officer, and Andrew M. Sims Jr., son of Andrew M. Sims, beneficially owned approximately 58.0%, 6.50% and 15.0% , respectively, of the total outstanding ownership interests of Our Town and served on the its board of directors. The following is a summary of the transactions between Our Town and us:

*Accounts Receivable –* At December 31, 2025 and 2024, we were due approximately $0.02 million and $0.02 million, respectively, from Our Town Hospitality.

*Accounts Payable* – At December 31, 2025 and 2024, we owed Our Town approximately $1.0 million and $0.9 million, respectively.

*Management Agreements –* On September 6, 2019, we entered into a master agreement with Our Town related to the management of certain of our hotels, as amended on December 13, 2019 and amended and restated on November 6, 2024 (as amended, the "OTH Master Agreement"). On December 13, 2019, and subsequent dates we entered into a series of individual hotel management agreements for the management of our hotels. The hotel management agreements for each of our ten wholly-owned hotels and the two rental programs are each referred to as an "OTH Hotel Management Agreement" and, together, the "OTH Hotel Management Agreements". The term of the OTH Hotel Management Agreements extends through March 31, 2035, and may be extended for two periods of five years each.

The OTH Master Agreement expires on March 31, 2035, but shall be extended beyond 2035 for such additional periods as an OTH Hotel Management Agreement remains in effect. The base management fees for each hotel under management with Our Town is 2.50%. For any new individual hotel management agreements, Our Town will receive a base management fee of 2.00% of gross revenues for the first full year from the commencement date through the anniversary date, 2.25% of gross revenues the second full year, and 2.50% of gross revenues for every year thereafter.

Each OTH Hotel Management Agreement sets an incentive management fee equal to 10.0% of the amount by which gross operating profit, as defined in the relevant management agreement, for a given year exceeds the budgeted gross operating profit for such year; provided, however, that the incentive management fee payable in respect of any such year shall not exceed 0.25% of the gross revenues of the hotel included in such calculation.

Each OTH Hotel Management Agreement may be terminated in connection with a Sale of the related hotel. The OTH Master Agreement limits the termination right upon a Sale of a hotel to a third party purchaser that is not an affiliate or a related person of the Operating Partnership, the Company or the TRS Lessee, and the transaction is for consideration consisting of cash or a mixture of cash, debt and marketable securities with an aggregate value at least equal to the fair market value of the hotel. A "Sale" is defined in each of the OTH Hotel Management Agreements as any sale, assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary of the landlord's title in the hotel, or of a controlling interest therein, other than a collateral assignment intended to provide security for a loan, and includes any such disposition through the disposition of the ownership interests in the entity that holds such title and any lease or sublease of the hotel other than the hotel lease.

Each OTH Hotel Management Agreement provides for the payment of a termination fee upon the sale of the hotel equal to the lesser of the management fee paid with respect to the prior twelve months or the management fees paid for the number of months prior to the closing date of the hotel sale equal to the number of months remaining on the current term of the management agreement.

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For the years ended December 31, 2025, 2024, and 2023, the base management fees earned by Our Town under the contract were approximately $4.5 million, $4.7 million and $4.5 million, respectively, and the incentive management fees earned by Our Town were approximately $0.0 million, $0.1 million and $0.2 million, respectively. Management fees are included in the consolidated statement of operations in indirect hotel operating expenses.

*Sublease* – On December 13, 2019, we entered into a sublease agreement with Our Town pursuant to which Our Town subleases 2,245 square feet of office space from the Company for a period of 5 years, with a 5-year renewal subject to approval by Sotherly, on terms and conditions similar to the terms of the prime lease entered into by the Company and the third-party owner of the property. In December 2023, the Company granted Our Town a lease concession in the amount of $143,774 in proportion to the rent concession the Company received under the prime lease. For the years ended December 31, 2025, 2024, and 2023, the Company recognized rent income from Our Town of $99,304, $135,511 and $24,755, respectively. Income under the sublease agreement is included in the consolidated statement of operations in corporate general and administrative expenses.

*Employee Medical Benefits –* We purchase employee medical benefits through Our Town (or its affiliate) for those employees that are employed by Our Town that work exclusively for our properties, starting January 1, 2020. For the years ended December 31, 2025, 2024, and 2023, the employer portion of the plan covering those employees that work exclusively at our properties under our management agreements with Our Town was approximately $3.7 million, $3.9 million and $2.7 million, respectively. Employee medical benefits is included in the consolidated statement of operations in hotel operating expenses.

*Other Related Parties –* The Company employed Robert E. Kirkland IV, the son-in-law of our Chairman, who served as General Counsel, as an employee. Prior to September 1, 2025, the Company also employed Andrew M. Sims, Jr. the son of our Chairman, as Vice President – Operations & Investor Relations. Compensation for these two employees, including benefits, for the years ended December 31, 2025, 2024, and 2023, totaled $589,331, $804,223 and $549,088 respectively. Compensation costs for these individuals is included in the consolidated statement of operations in corporate general and administrative expenses.

On August 18, 2023, a trust in which our Chairman has a beneficial interest converted 252,903 partnership units for an equivalent number of shares in the Company's common stock, pursuant to the terms of the partnership agreement.

On August 30, 2023, a trust controlled by one of our directors converted 133,099 partnership units for an equivalent number of shares in the Company's common stock, pursuant to the terms of the partnership agreement.

On April 28, 2023, a trust in which our Chairman has a beneficial interest converted 75,000 partnership units for an equivalent number of shares in the Company's common stock, pursuant to the terms of the partnership agreement.

**10. Retirement Plans**

*401(k) Plan -* The Company maintains a 401(k) plan for qualified employees. Prior to May 16, 2020, the plan was subject to "safe harbor" provisions requiring that we match 100.0% of the deferral equal to 3.0% of eligible employee compensation and 50.0% of the deferral equal to the next 2.0% of eligible employee compensation. All employer matching funds vested immediately in accordance with the "safe harbor" provisions. For the year ended December 31, 2021, the Company elected to make a discretionary contribution of 3.0% of eligible employee compensation in order to comply with requirements associated with top-heavy plans. The Company's contributions to the plan for the years ended December 31, 2025, 2024, and 2023, were $85,883, $88,139 and $84,573, respectively.

*Employee Stock Ownership Plan -* The Company adopted an ESOP effective January 1, 2016, which is a non-contributory defined contribution plan covering all employees of the Company. The Company sponsors and maintains the ESOP and related trust for the benefit of its eligible employees. The ESOP is a leveraged ESOP, with funds loaned to the ESOP from the Company. The Company entered into a loan agreement with the ESOP on December 29, 2016, pursuant to which the ESOP may maintain aggregate borrowings of up to $5.0 million to purchase shares of the Company's common stock on the open market, which serve as collateral for the loan. Coincident with the loan between the Company and the ESOP, the Operating Partnership entered into a loan with the Company to facilitate borrowings between the Company and the ESOP.

Between January 3, 2017 and February 28, 2017, the Company's ESOP purchased 682,500 shares of the Company's common stock of an aggregate cost of approximately $4.9 million. Shares purchased by the ESOP are held in a suspense account for allocation among participants. Dividends on the shares in the ESOP as well as contributions by the Company are used to make repayment on loan to the Company. Shares are released based on the ratio of each loan repayment to the projected future loan repayments.

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Committed-to-be-released shares are allocated to plan participants on the last day of the plan year. The share releases are accounted for at fair value on the date of each loan repayment.

At December 31, 2025 and 2024, a total of 659,212 and 538,511 shares with a fair value of $1,417,306 and $501,569, respectively, were allocated to participants accounts. The Company recognized compensation cost of $79,038, $125,497 and $171,896 during the years ended December 31, 2025, 2024, and 2023, respectively. At December 31, 2025, all the shares in the ESOP had been allocated.

The share allocations are accounted for at fair value on the date of allocation as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | **Number of Shares** | **Fair Value** | **Number of Shares** | **Fair Value** |
| Allocated shares | 659212 | $1417306 | 538511 | $501569 |
| Committed to be released shares |  |  |  |  |
| &nbsp;&nbsp;Total Allocated and Committed-to-be-Released | 659212 | $1417306 | 538511 | $501569 |
| Unallocated shares |  |  | 120701 | 112421 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total ESOP Shares** | **659212** | $**1417306** | **659212** | $**613990** |

---

**11. Indirect Hotel Operating Expenses**

Indirect hotel operating expenses consist of the following expenses incurred by the hotels:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2024** | **2023** |
| Sales and marketing | $15942062 | $16079144 | $16095696 |
| General and administrative | 14812359 | 15113649 | 14105674 |
| Repairs and maintenance | 8558585 | 9070165 | 8634637 |
| Utilities | 6737987 | 6149994 | 5873095 |
| Property taxes | 6361005 | 5751544 | 5241790 |
| Management fees, including incentive | 4536703 | 4767469 | 4659261 |
| Franchise fees | 4131054 | 4286432 | 4271435 |
| Insurance | 6655393 | 6347150 | 5842930 |
| Information and telecommunications | 3804604 | 4010693 | 3779019 |
| Other | 872410 | 1270782 | 1126187 |
| **Total indirect hotel operating expenses** | $**72412162** | $**72847022** | $**69629724** |

---

**12. Income Taxes**

The Company has elected to be treated as a REIT under the provision of the Internal Revenue Code, which requires that it distribute at least 90% of its taxable income annually to our stockholders and comply with certain other organizational and operating requirements. As a REIT, the Company is generally not subject to federal corporate income tax on the portion of its taxable income that is paid to stockholders within the same tax year. However, as a REIT, the Company is still subject to certain state and local taxes

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on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, its taxable REIT subsidiaries are subject to federal, state and local taxes.

For income tax purposes, dividends paid on the Company's preferred stock were 100.0% taxable as ordinary non-qualified income.

The components of the income tax expense (benefit) for the years ended December 31, 2025, 2024, and 2023 are as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended** | **Year Ended** | **Year Ended** |
|  | **December 31, 2025** | **December 31, 2024** | **December 31, 2023** |
| Current: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;State | 50120 | 132491 | (304947) |
|  | 50120 | 132491 | (304947) |
| Deferred: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal | (194932) | (1109938) | (1559177) |
| &nbsp;&nbsp;&nbsp;&nbsp;State | 8146 | (210919) | (254558) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotals | (186786) | (1320857) | (1813735) |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in deferred tax valuation allowance | 186786 | 1320857 | 1813735 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax expense (benefit) | $**50120** | $**132491** | $**(304947)** |

---

A reconciliation of the U.S. statutory federal income tax expense (benefit) to the Company's provision for income tax is as follows:

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| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31, 2025** | **December 31, 2025** |
| Statutory federal income tax expense (benefit) | $(1623092) | 21.0% |
| Nontaxable and nondeductible items |  |  |
| &nbsp;&nbsp;Federal tax impact of REIT election | 1433531 | (18.6)% |
| &nbsp;&nbsp;Federal impact of PPP loan forgiveness |  | —% |
| State income taxes, net of federal income tax effect <sup>(1)</sup> | 52895 | (0.7)% |
| Change in valuation allowance | 186786 | (2.4)% |
| **Income tax expense (benefit)** | $**50120** | (0.7)% |
| <sup>(1)</sup> For the year ended December, 31 2025 , state and local income taxes in Texas comprise the majority | <sup>(1)</sup> For the year ended December, 31 2025 , state and local income taxes in Texas comprise the majority | <sup>(1)</sup> For the year ended December, 31 2025 , state and local income taxes in Texas comprise the majority |
| (greater than 50 percent) of the tax effect in this category. | (greater than 50 percent) of the tax effect in this category. | (greater than 50 percent) of the tax effect in this category. |

---

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31, 2024** | **December 31, 2023** |
| Statutory federal income tax expense | $275593 | $736001 |
| Federal tax impact of REIT election | (1357871) | (2231835) |
| Statutory federal income tax expense (benefit) at TRS | (1082278) | (1495834) |
| Federal impact of PPP loan forgiveness |  | (56470) |
| State income tax benefit, net of federal expense (benefit) | (106088) | (566378) |
| Change in valuation allowance | 1320857 | 1813735 |
| **Income tax expense (benefit)** | $**132491** | $**(304947)** |

---

The Company paid income taxes as follows:

F - 38

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---

| | |
|:---|:---|
|  | **Year Ended** |
|  | **December 31, 2025** |
| U.S. federal | $— |
| U.S. state and local |  |
| &nbsp;&nbsp;Maryland | 38712 |
| &nbsp;&nbsp;Pennsylvania | 60691 |
| &nbsp;&nbsp;Texas | 43886 |
| &nbsp;&nbsp;Other | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total U.S. state and local | 143364 |
| Total income taxes paid, net of refunds | $**143364** |

---

Deferred income taxes are recognized for temporary differences between the financial reporting bases of asset and liabilities and their respective tax bases and for operating losses and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realizable based on consideration of available evidence, including future reversal of taxable temporary differences, projected taxable income and tax planning strategies.

Due to the uncertainty of realizing the loss in future years attributable to the changes in travel demand and market conditions in various markets in which the Company does business and the effectiveness of the Company's tax planning strategies, as of December 31, 2025, the Company believes it is more likely than not that the Company will not realize the benefits of these assets. Therefore, the Company has determined that a full valuation allowance should be recorded against the deferred tax asset. The amount of the deferred tax assets considered unrealizable, however, could change in the future based on revised estimates of future taxable income during the carryforward period.

The significant components of our deferred tax asset as of December 31, 2025 and 2024, are as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31, 2025** | **December 31, 2024** |
| Deferred tax asset: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net operating loss carryforwards | $13321350 | $13247852 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued compensation | 123117 | 549538 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other | 1056700 | 516991 |
|  | 14501167 | 14314381 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Valuation allowance | (14501167) | (14314381) |
| &nbsp;&nbsp;&nbsp;&nbsp;**&nbsp;&nbsp;&nbsp;&nbsp; Total** | $**—** | $**—** |

---

**13. Earnings (Loss) per Share and per Unit**

*Earnings (Loss) Per Share*. The limited partners' outstanding limited partnership units in the Operating Partnership (which may be redeemed for common stock upon notice from the limited partner and following our election to redeem the units for stock rather than cash) have been excluded from the diluted earnings per share calculation as there would be no effect on the amounts since the limited partners' share of income would also be added back to net loss. The shares of the Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock are not convertible into or exchangeable for any other property or securities of the Company, except upon the occurrence of a change of control and have been excluded from the diluted earnings per share calculation as there would be no impact on the current controlling stockholders. For the years ended December 31, 2025, 2024, and 2023, the amount of 0, 120,701 and 247,043 non-committed, unearned ESOP shares are treated as reducing the number of issued and outstanding common shares and similarly reducing the weighted average number of common shares outstanding, respectively. The effect of allocated and committed to be released shares during the years ended December 31, 2025, 2024, and 2023, have not been included in the weighted

F - 39

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average diluted earnings per share calculation, since there would be an anti-dilutive effect from the dilution by these shares, although the amount of compensation for allocated shares is reflected in net loss available to common stockholders for basic computation.

The computation of the Company's basic net earnings (loss) per share is presented below:

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| | | | |
|:---|:---|:---|:---|
|  | **Twelve Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** |
|  | **December 31, 2025** | **December 31, 2024** | **December 31, 2023** |
| **Numerator** |  |  |  |
| Net (loss) income | $(7779133) | $1179854 | $3809711 |
| &nbsp;&nbsp;Less: Net loss (income) allocated to participating share awards | 35531 | (13194) | (49118) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to non-controlling interest | 92124 | 122515 | 131710 |
| &nbsp;&nbsp;&nbsp;&nbsp;Undeclared distributions to preferred stockholders | (7977251) | (7977250) | (7977250) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net loss attributable to common stockholders for EPS computation** | $**(15628729)** | $**(6688075)** | $**(4084947)** |
| **Denominator** |  |  |  |
| Weighted average number common shares outstanding for basic EPS computation | 20247077 | 19417448 | 18843032 |
| Basic and diluted net loss per common share: |  |  |  |
| &nbsp;&nbsp;Undistributed loss | $(0.77) | $(0.34) | $(0.22) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total basic and diluted** | $**(0.77)** | $**(0.34)** | $**(0.22)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accounting for unvested share-based payment awards (share-based awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid), are participating securities and included in the computation of basic earnings per share. Our grants of restricted stock awards to our employees and directors are considered participating securities, and we have prepared our earnings per share calculations to include outstanding unvested restricted stock awards in the numerator for basic weighted average shares outstanding calculation. However, since the participating outstanding unvested restricted stock awards of 26,940 and 25,936 as of December 31, 2024 and 2023, respectively, in the denominator are anti-dilutive, due to net losses, they are not included in a dilutive calculation.

*Earnings (Loss) Per Unit*. The Series B Preferred Units, Series C Preferred Units, and Series D Preferred Units are not convertible into or exchangeable for any other property or securities of the Operating Partnership, except upon the occurrence of a change of control and have been excluded from the diluted earnings per unit calculation as there would be no impact on the current unitholders. The number of non-committed, unearned shares in the Company's ESOP have no impact on the calculation of the loss per unit in the Operating Partnership.

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The computation of basic earnings (loss) per general and limited partnership unit in the Operating Partnership is presented below:

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| | | | |
|:---|:---|:---|:---|
|  | **Twelve Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** |
|  | **December 31, 2025** | **December 31, 2024** | **December 31, 2023** |
| **Numerator** |  |  |  |
| Net (loss) income | $(7779133) | $1179854 | $3809711 |
| &nbsp;&nbsp;Less: Net loss (income) allocated to participating unit awards | 35531 | (13194) | (49118) |
| &nbsp;&nbsp;&nbsp;&nbsp;Undeclared distributions to preferred unitholders | (7977251) | (7977250) | (7977250) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net loss attributable to unitholders for EPU computation** | $**(15720853)** | $**(6810590)** | $**(4216657)** |
| **Denominator** |  |  |  |
| Weighted average number of units outstanding for basic EPU computation | 20384444 | 19997274 | 19808602 |
| Effect of dilutive participating securities: |  |  |  |
| Basic and diluted net income (loss) per unit: |  |  |  |
| &nbsp;&nbsp;Undistributed loss | $(0.77) | $(0.34) | $(0.21) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total basic and diluted** | $**(0.77)** | $**(0.34)** | $**(0.21)** |

---

The accounting for unvested unit-based payment awards (unit-based awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid), are participating securities and included in the computation of basic earnings per unit. Our grants of restricted unit awards to our employees and directors are considered participating securities, and we have prepared our earnings per unit calculations to include outstanding unvested restricted unit awards in the numerator for basic weighted average shares outstanding calculation. However, since the participating outstanding unvested restricted unit awards 26,940 and 25,936 as of December 31, 2024 and 2023, respectively, in the denominator are anti-dilutive, due to net losses, they are not included in a dilutive calculation.

**14. Quarterly Operating Results - Unaudited**

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Quarters Ended 2025** | **Quarters Ended 2025** | **Quarters Ended 2025** | **Quarters Ended 2025** |
|  | **March 31** | **June 30** | **September 30** | **December 31** |
| Total revenue | $48312344 | $48794144 | $38013122 | $41267618 |
| Total operating expenses | 42199620 | 42219391 | 37498364 | 41773580 |
| Net operating income (loss) | $6112724 | $6574753 | $514758 | $(505962) |
| Net income (loss) | $4733526 | $1556424 | $(5558390) | $(8510693) |
| Net income (loss) attributable to common stockholders | $2690529 | $(416328) | $(7484536) | $(10453925) |
| Income (loss) per share attributable to common stockholders– basic and diluted | $0.13 | $(0.02) | $(0.37) | $(0.51) |
| Net income (loss) available to operating partnership unitholders | $2739214 | $(437889) | $(7552703) | $(10505006) |
| Income (loss) per unit attributable to operating partnership unitholders– basic and diluted | $0.13 | $(0.02) | $(0.37) | $(0.51) |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Quarters Ended 2024** | **Quarters Ended 2024** | **Quarters Ended 2024** | **Quarters Ended 2024** |
|  | **March 31** | **June 30** | **September 30** | **December 31** |
| Total revenue | $46548432 | $50694367 | $40699981 | $43951507 |
| Total operating expenses | 40874320 | 41394584 | 38945047 | 40032474 |
| Net operating income | $5674112 | $9299783 | $1754934 | $3919033 |
| Net income (loss) | $1322821 | $4664232 | $(3689621) | $(1117578) |
| Net income (loss) attributable to common stockholders | $(659373) | $2621768 | $(5603761) | $(3033515) |
| Income (loss) per share attributable to common stockholders– basic and diluted | $(0.03) | $0.13 | $(0.29) | $(0.15) |
| Net income (loss) available to operating partnership unitholders | $(671491) | $2669919 | $(5683934) | $(3111890) |
| Income (loss) per unit attributable to operating partnership unitholders– basic and diluted | $(0.03) | $0.13 | $(0.28) | $(0.16) |

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**15. Segment Information** 

The Company's chief operating decision maker ("CODM") is the President and Chief Executive Officer.

The CODM separately evaluates the performance of each of the Company's hotel properties and each hotel property is an operating segment. However, because each of the hotels has similar economic characteristics, facilities, and services, the hotel properties have been aggregated into a single reportable segment.

The hotel segment revenues are derived from the operation of hotel properties. The hotel segment generates room revenue by renting hotel rooms to customers at the Company's hotel properties. The hotel segment generates food and beverage revenue from the sale of food and beverage to customers at the Company's hotel properties. The hotel segment generates other revenue from parking fees, resort fees, gift shop sales and other guest service fees at the Company's hotel properties.

The CODM assesses performance for the hotel segment and decides how to allocate resources based on Hotel EBITDA, which is a non-GAAP financial measure. We define Hotel EBITDA as net income or loss excluding: (1) interest expense, (2) interest income, (3) income tax expense or benefit, (4) depreciation and amortization, (5) impairment of long-lived assets or investments, (6) gains and losses on disposal and/or sale of assets, (7) gains and losses on involuntary conversions of assets, (8) realized and unrealized gains and losses on derivative instruments not included in other comprehensive income, (9) other income at the properties, (10) loss on early debt extinguishment, (11) Paycheck Protection Program (PPP) debt forgiveness, (12) gain on exercise of development right, (13) corporate general and administrative expense, and (14) other income.

The following table presents information about profit or loss for the hotel segment:

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| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **REVENUE** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Rooms department | $114400434 | $119079903 | $114748834 |
| &nbsp;&nbsp;&nbsp;&nbsp;Food and beverage department | 36458606 | 36626906 | 35231959 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other operating departments | 25528188 | 26187478 | 23857264 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total revenue** | **176387228** | **181894287** | **173838057** |
| **EXPENSES** |  |  |  |
| Hotel operating expenses |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Rooms department | 26732018 | 27376330 | 26177539 |
| &nbsp;&nbsp;&nbsp;&nbsp;Food and beverage department | 25606512 | 25429218 | 24211133 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other operating departments | 9184742 | 9428889 | 9031960 |
| &nbsp;&nbsp;&nbsp;&nbsp;Indirect | 72412162 | 72847022 | 69629724 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total hotel operating expenses** | **133935434** | **135081459** | **129050356** |
| **Hotel EBITDA** | $**42451794** | $**46812828** | $**44787701** |

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The following table provides a reconciliation of the hotel segment profit and loss to the Company's consolidated totals:

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended** | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2024** | **2023** |
| **Net (loss) income** | $**(7779133)** | $**1179854** | $**3809711** |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 24799871 | 20882681 | 17588091 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | (252961) | (692756) | (802183) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax expense (benefit) | 50120 | 132491 | (304947) |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 19658902 | 19380906 | 18788748 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of investment in hotel properties, net | 1310308 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Realized and unrealized (gain) loss on hedging activities | (131803) | (104211) | 737682 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on early debt extinguishment | 463195 | 241878 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on disposal of assets |  | (4400) | (4700) |
| &nbsp;&nbsp;&nbsp;&nbsp;PPP loan forgiveness |  |  | (275494) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other income | (467599) | (489267) | (456388) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gain on involuntary conversion of assets | (3985417) | (502808) | (1371041) |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate general and administrative expenses | 8786311 | 6788460 | 7078222 |
| **Hotel EBITDA** | $**42451794** | $**46812828** | $**44787701** |

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A measure of segment assets is not currently provided to the CODM and has therefore not been included herein.

**16. Subsequent Events**

On February 12, 2026, the Company and the Parent Parties completed the transactions contemplated by the Merger Agreement. Upon completion of the Merger, the Company survived as a wholly owned subsidiary of Parent and the separate existence of the Merger Sub ceased. As a result of the Merger, limited partnership units not owned by the Company were purchased by an affiliate of Parent for the same per share Merger Consideration that each share of Company Common Stock received pursuant to the Merger Agreement. In connection with the Merger, the Company received approximately $21.2 million in additional paid-in-capital.

On February 12, 2026, in connection with the consummation of the Merger and as required by the Merger Agreement, Andrew M. Sims resigned as Chairman of the Board of Directors of the Company, David R. Folsom resigned as the President and Chief Executive Officer of the Company, Anthony E. Domalski resigned as the Vice President, Chief Financial Officer and Secretary of the Company, Scott M. Kucinski resigned as the Executive Vice President and Chief Operating Officer of the Company, and Robert E. Kirkland IV resigned as General Counsel and Chief Compliance Officer of the Company. Messrs. Sims, Folsom, Domalski, Kucinski and Kirkland received payments in accordance with the change of control provision of their respective employment agreements totaling approximately $7.3 million.

Pursuant to the terms and conditions set forth in the Merger Agreement, the unvested shares issued under the Company's 2022 Plan were canceled. Holders of those unvested shares were given the right to receive the same per share Merger Consideration that all other stockholders were entitled to receive under the Merger Agreement. Additionally, the Company's 401(k) and ESOP plans were terminated.

On February 12, 2026, in connections with the Merger and pursuant to the Asset Purchase Agreement between Our Town and Parent, the Company terminated the OTH Master Management Agreement and each OTH Hotel Management Agreement. Termination fees totaled $9.7 million.

F - 43

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On February 12, 2026, in connection with the Merger, the Company secured an approximately $243.0 million mortgage loan on the DoubleTree by Hilton Laurel, DoubleTree by Hilton Philadelphia Airport, DoubleTree by Hilton Jacksonville Riverfront, The Georgian Terrace, The Whitehall, Hotel Ballast, DoubleTree Resort by Hilton Hollywood Beach, and Hyatt Centric Arlington with various affiliates of Apollo Global Management, Inc. The loan may be increased to as much as $308.0 million pursuant to certain terms and provisions including the pledge of additional collateral. Pursuant to the loan documents, the mortgage loan: (i) has an initial term of 3 years maturing on February 12, 2029 with two (2) extension options of one (1) year each, subject to certain terms and conditions; (ii) requires monthly payments of interest at a floating interest rate of SOFR plus 3.60%; (iii) is guaranteed by an affiliate of Parent; (iv) cannot be prepaid in whole or in part before August 1, 2027 without penalty; (v) required the Company to enter into an interest-rate cap agreement with (A) a notional amount equal to the balance of the loan; (B) a strike rate of 5.50% indexed to SOFR and (C) a term expiring no later than the maturity date of the loan; and (vi) contains customary representations, warranties, covenants and events of default for a mortgage loan. Proceeds of the loan were used to repay existing indebtedness.

On February 12, 2026, in connection with the Merger, the Company secured an approximately $26.7 million loan with an affiliate of Ascendant Capital Partners LP. The loan may be increased to as much as $45.0 million pursuant to certain terms and conditions. Pursuant to the loan documents, the loan: (i) has an initial term of four (4) years term maturing on February 12, 2030 with one (1) extension option of one (1) year, subject to certain terms and conditions; (ii) requires quarterly payments of interest at a fixed rate of 16.0% for the first year of the loan term, increasing to 16.25% for the second year of the loan term, and increasing to 16.50% for the remainder of the loan term; (iii) is guaranteed by an affiliate of Parent; (iv) requires mandatory partial prepayment coincident with the sale of property collateralized by the mortgage loan with affiliates of Apollo Global Management, Inc.; and (vi) contains customary representations, warranties, covenants and events of default for a mezzanine loan. Proceeds of the loan were used to repay existing indebtedness.

On March 24, 2026, we received additional proceeds from the mortgage loan with affiliates of Apollo Global Management Inc. in the amount of $15.0 million; additional proceeds from the loan with an affiliate of Ascendant Capital Partners LP in the amount of approximately $13.3; and an equity contribution of approximately $22.7 million from our sole stockholder. The equity proceeds received by the Company were contributed to the Operating Partnership.

On March 25, 2026, we redeemed in connection with the Merger, holders of 1,188,042 shares of the Company's Series B Preferred Stock exercised their Change of Control Conversion Right described in the Articles Supplementary. The Company canceled the shares in exchange for approximately $22.2 million. Additionally, holders of 1,202,415 shares of the Company's Series C Preferred Stock exercised their Change of Control Conversion Right described in the Articles Supplementary. The Company canceled the shares in exchange for approximately $23.0. Lastly, holders of 820,066 shares of the Company's Series D Preferred Stock exercised their Change of Control Conversion Right described in the Articles Supplementary. The Company canceled the shares in exchange for approximately $13.7 million.

On April 8, 2026, we received additional proceeds from the mortgage loan with affiliates of Apollo Global Management Inc. in the amount of approximately $35.0 million providing the Hotel Alba as additional collateral for the mortgage loan. Proceeds of the loan as well as working capital were used to repay the existing indebtedness on the Hotel Alba and fees associated with the transaction.

F - 44

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**SOTHERLY HOTELS INC.**

**SOTHERLY HOTELS LP**

**SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION**

**AS OF DECEMBER 31, 2025**

**(in thousands)**

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | **Costs Capitalized** | **Costs Capitalized** |  |  |  |  |  |  | **Life on** |
|  |  | **Initial Costs** | **Initial Costs** | **Subsequent to Acquisition** | **Subsequent to Acquisition** | **Gross Amount At End of Year** | **Gross Amount At End of Year** | **Gross Amount At End of Year** | **Accumulated** |  |  | **Which** |
|  |  |  | **Building &** |  | **Building &** |  | **Building &** |  | **Depreciation** | **Date of** | **Date** | **Depreciation** |
| **Description** | **Encumbrances** | **Land** | **Improvements** | **Land** | **Improvements** | **Land** | **Improvements** | **Total** | **& Impairment** | **Construction** | **Acquired** | **is Computed** |
| The DeSoto – Savannah, Georgia | $42000 | $600 | $13562 | $948 | $29717 | $1548 | $43279 | $44827 | $(20232) | 1968 | 2004 | 3-39 years |
| DoubleTree by Hilton Jacksonville<br> Riverfront – Jacksonville, Florida | 25592 | 7090 | 14604 | 546 | 12181 | 7636 | 26785 | 34421 | (12982) | 1970 | 2005 | 3-39 years |
| DoubleTree by Hilton Laurel – Laurel,<br> Maryland | 10000 | 900 | 9443 | 77 | 6550 | 977 | 15993 | 16970 | (8672) | 1985 | 2004 | 3-39 years |
| DoubleTree by Hilton Philadelphia<br> Airport – Philadelphia, Pennsylvania | 35915 | 2100 | 22031 | 450 | 9893 | 2550 | 31924 | 34474 | (16115) | 1972 | 2004 | 3-39 years |
| DoubleTree Resort by Hilton<br> Hollywood Beach - Hollywood<br> Beach, Florida | 48967 | 22865 | 67660 | 830 | 10006 | 23695 | 77666 | 101361 | (22313) | 1972 | 2015 | 3-39 years |
| Georgian Terrace – Atlanta, Georgia | 33470 | 10128 | 45386 | (1135) | 11762 | 8993 | 57148 | 66141 | (18480) | 1911 | 2014 | 3-39 years |
| Hotel Alba Tampa, Tapestry Collection<br> by Hilton – Tampa, Florida | 35000 | 4153 | 9670 | 1909 | 27227 | 6062 | 36897 | 42959 | (16621) | 1973 | 2007 | 3-39 years |
| Hotel Ballast Wilmington,<br> Tapestry Collection by Hilton – Wilmington,<br> North Carolina | 28742 | 785 | 16829 | 1002 | 17230 | 1787 | 34059 | 35846 | (20035) | 1970 | 2004 | 3-39 years |
| Hyatt Centric Arlington - Arlington,<br> Virginia | 44118 | 191 | 70369 | 79 | 3053 | 270 | 73422 | 73692 | (14777) |  | 2018 | 3-39 years |
| The Whitehall – Houston, Texas | 13486 | 7374 | 22185 | 362 | 8191 | 7736 | 30376 | 38112 | (17922) | 1963 | 2013 | 3-39 years |
| Lyfe Resort & Residences | - | 226 | 4290 | - | 8 | 226 | 4298 | 4524 | (2293) | 2016 | 2017 | 3-39 years |
| Hyde Beach House Resort &<br> Residences | - | - | 5710 | - | 0 | - | 5710 | 5710 | (925) | 2019 | 2019 | 3-39 years |
|  | $317290 | $56412 | $301739 | $5067 | $135818 | $61480 | $437557 | $499037 | $(171367) |  |  |  |

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(1)For the year ending December 31, 2025, the aggregate cost of our real estate assets for federal income tax purposes was approximately $461.0 million.

F - 45

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**RECONCILIATION OF REAL ESTATE AND ACCUMULATED DEPRECIATION**

**RECONCILIATION OF REAL ESTATE**

---

| | |
|:---|:---|
| **Balance at December 31, 2022** | $**473653** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Acquisitions** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Improvements** | **6863** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Disposal of Assets** | **(568)** |
| **Balance at December 31, 2023** | $**479948** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Acquisitions** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Improvements** | **10872** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Disposal of Assets** | **(1094)** |
| **Balance at December 31, 2024** | $**489726** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Acquisitions** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Improvements** | **10669** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Disposal of Assets** | **(1358)** |
| **Balance at December 31, 2025** | $**499037** |

---

**RECONCILIATION OF ACCUMULATED DEPRECIATION**

---

| | |
|:---|:---|
| **Balance at December 31, 2022** | $**130311** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Current Expense** | **13586** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Impairment** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Disposal of Assets** | **(440)** |
| **Balance at December 31, 2023** | $**143457** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Current Expense** | **14306** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Impairment** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Disposal of Assets** | **(1096)** |
| **Balance at December 31, 2024** | $**156667** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Current Expense** | **14648** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Impairment** | **1310** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Disposal of Assets** | **(1258)** |
| **Balance at December 31, 2025** | $**171367** |

---

F - 46

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## Exhibit 4.4

**Exhibit 4.4**

**DESCRIPTION OF THE REGISTRANT'S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE<br>SECURITIES EXCHANGE ACT OF 1934**

As of December 31, 2025, Sotherly Hotels Inc. (the "<u>Company</u>") had the following classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)Common Stock, $0.01 par value, listed on the NASDAQ Stock Market LLC ("<u>NASDAQ</u>") and trading under the symbol "SOHO";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)8.0% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value (the "<u>Series B Preferred Stock</u>"), listed on NASDAQ and trading under the symbol "SOHOB";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)7.875% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value (the "<u>Series C Preferred Stock</u>"), listed on NASDAQ and trading under the symbol "SOHOO"; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)8.25% Series D Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value (the "<u>Series D Preferred Stock</u>"), listed on NASDAQ and trading under the symbol "SOHON".

The Series B Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock are collectively referred to herein as, the "<u>Preferred Stock</u>".

The following is a summary of the material terms of the Company's common stock and the Preferred Stock. It is not a complete description of the Maryland General Corporation Law ("<u>MGCL</u>"), the Company's Amended and Restated Articles of Incorporation, as amended (the "<u>Charter</u>"), the Company's Articles Supplementary establishing and fixing the rights and preferences of each series of the Preferred Stock (collectively the "<u>Articles Supplementary</u>") or the Company's Second Amended and Restated Bylaws (the "<u>Bylaws</u>"). This summary is qualified in its entirety by, and should be read in conjunction with, the Charter, the Articles Supplementary, the Bylaws, and the applicable provisions of the MGCL. Each of the Charter, Articles Supplementary and Bylaws are incorporated by reference herein and as exhibits to the Company's Annual Report on Form 10-K with which this exhibit was filed. The terms the "Company," "Sotherly," "we," "our," or "us" means Sotherly Hotels Inc.

**All Classes of Our Capital Stock**

***General***

The Charter authorizes the Company to issue up to 69,000,000 shares of common stock and 11,000,000 shares of preferred stock, of which 1,851,500 is designated as Series B, 1,700,000 is designated as Series C, and 1,242,000 is designated as Series D. As of March 10, 2025, the Company had 20,126,415 shares of common stock issued and outstanding, 1,464,100 shares of Series B Preferred Stock issued and outstanding, 1,346,110 shares of Series C Preferred Stock issued and outstanding, and 1,163,100 shares of Series D Preferred Stock issued and outstanding.

The Company previously issued shares of its Series A Preferred Stock pursuant to a private transaction. All shares of the Series A Preferred Stock have been redeemed and the Company does not intend to issue shares of the Series A Preferred Stock in the future.

The transfer agent and securities registrar for the Company's common stock and Preferred Stock is American Stock Transfer & Trust Company, LLC.

***Restrictions on Ownership and Transfer*.** 

For Sotherly to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the "<u>Code</u>"), the Company's shares of stock must be beneficially owned by 100 or more persons during at least 335 days of a

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taxable year of 12 months (other than the first year for which the Company's REIT election became effective) or during a proportionate part of a shorter taxable year. Also, not more than 50.0% of the value of the outstanding shares of stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than the first year for which the Company's REIT election became effective). In addition, we cannot receive significant amounts of rents from tenants that are related to us, directly or constructively, through ownership.

Because the board of directors believes it is beneficial at present for the Company to qualify as a REIT, the Charter, subject to certain exceptions, contains restrictions on the number of shares of the Company's common stock that a person may own. The Charter provides that no person may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.9% (the "<u>Aggregate Stock Ownership Limit</u>") in value of its outstanding shares of stock. In addition, the Charter prohibits any person from acquiring or holding, directly or indirectly, shares of common stock in excess of 9.9% of the number of Sotherly's outstanding shares of common stock (the "<u>Common Stock Ownership Limit</u>"). Additionally, the Articles Supplementary prohibit any person from acquiring or holding, directly or indirectly, shares of any one class of Preferred Stock in excess of 9.9% of the number of Sotherly's outstanding Preferred Stock in that class (the "<u>Preferred Stock Ownership Limit</u>").

Sotherly's Charter prohibits (a) any person from beneficially or constructively owning its shares of stock that would result in us being "closely held" under Section 856(h) of the Code, (b) any person from transferring Sotherly's shares of stock if such transfer would result in Sotherly's shares of stock being owned by fewer than 100 persons, (c) any transfer that would cause us to own, directly or indirectly, 10.0% or more of the ownership interests in a tenant of the Company (or a tenant of the Sotherly Hotels LP (the "<u>Operating Partnership</u>"), of which the Company is the sole general partner and through which the Company conducts virtually all of its activities, or any entity owned or controlled directly or indirectly by the Operating Partnership) other than a taxable REIT subsidiary if the requirements of Section 856(d)(8)(B) of the Code are satisfied and (d) any transfer that would cause any of our hotel management companies to fail to qualify as an "eligible independent contractor" within the meaning of Section 856(d)(9) of the Code. Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of Sotherly's shares of stock that will or may violate any of the foregoing restrictions on transferability and ownership, or any person who would have owned Sotherly's shares of stock that resulted in a transfer of shares to the Charitable Trust (as defined below), is required to give written notice immediately to us, or in the case of a proposed or attempted transaction, to give at least 15 days' prior written notice, and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT. The foregoing restrictions on transferability and ownership will not apply if Sotherly's board of directors determines that it is no longer in its best interests to attempt to qualify, or to continue to qualify, as a REIT.

Furthermore, Sotherly's board of directors, in its sole discretion, may exempt a proposed transferee from the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, the Preferred Stock Ownership Limit, and/or any of the restrictions described in the first sentence of the paragraph directly above (an "<u>Excepted Holder</u>"). However, the board of directors may not grant such an exemption to any person if such exemption would result in our failing to qualify as a REIT. Sotherly's board of directors may require a ruling from the IRS or an opinion of counsel, in either case in form and substance satisfactory to the board of directors, in its sole discretion, in order to determine or ensure Sotherly's status as a REIT.

If any transfer of Sotherly's shares of stock occurs which, if effective, would result in any person beneficially or constructively owning shares of stock in excess or in violation of the above transfer or ownership limitations (a "<u>Prohibited Owner</u>"), then that number of shares of stock the beneficial or constructive ownership of which otherwise would cause such person to violate such limitations (rounded to the nearest whole share) shall be automatically transferred to a trust (the "<u>Charitable Trust</u>") for the exclusive benefit of one or more charitable beneficiaries (the "<u>Charitable Beneficiary</u>"), and the Prohibited Owner shall not acquire any rights in such shares. Such automatic transfer shall be deemed to be effective as of the close of business on the Business Day (as defined in the Charter) prior to the date of such violative transfer. If any automatic transfer to the Charitable Trust

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is not effective, then the initial transfer of stock will be void ab initio to the extent necessary to prevent a violation of the above transfer or ownership limitations. Shares of stock held in the Charitable Trust shall be issued and outstanding shares of stock. The Prohibited Owner shall not benefit economically from ownership of any shares of stock held in the Charitable Trust, shall have no rights to dividends or other distributions and shall not possess any rights to vote or other rights attributable to the shares of stock held in the Charitable Trust. The trustee of the Charitable Trust (the "<u>Trustee</u>") shall have all voting rights and rights to dividends or other distributions with respect to shares of stock held in the Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend or other distribution paid prior to our discovery that shares of stock have been transferred to the Trustee shall be paid by the recipient of such dividend or distribution to the Trustee upon demand, and any dividend or other distribution authorized but unpaid shall be paid when due to the Trustee. Any dividend or distribution so paid to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to shares of stock held in the Charitable Trust and, subject to Maryland law, effective as of the date that such shares of stock have been transferred to the Trustee, the Trustee shall have the authority (at the Trustee's sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to our discovery that such shares have been transferred to the Trustee and (ii) to recast such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. However, if we have already taken irreversible corporate action, then the Trustee shall not have the authority to rescind and recast such vote.

Within 20 days of receiving notice from us that shares of stock have been transferred to the Charitable Trust, the Trustee shall sell the shares of stock held in the Charitable Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the ownership limitations set forth in the Charter. Upon such sale, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as follows: the Prohibited Owner shall receive the lesser of (i) the price paid by the Prohibited Owner for the shares or, if the Prohibited Owner did not give value for the shares in connection with the event causing the shares to be held in the Charitable Trust (e.g., in the case of a gift, devise or other such transaction), the Market Price (as defined in the Charter) of such shares on the day of the event causing the shares to be held in the Charitable Trust and (ii) the price per share received by the Trustee from the sale or other disposition of the shares held in the Charitable Trust. Any net sale proceeds in excess of the amount payable to the Prohibited Owner shall be paid immediately to the Charitable Beneficiary. If, prior to our discovery that shares of stock have been transferred to the Charitable Trust, such shares are sold by a Prohibited Owner, then (i) such shares shall be deemed to have been sold on behalf of the Charitable Trust and (ii) to the extent that the Prohibited Owner received an amount for such shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to the aforementioned requirement, such excess shall be paid to the Trustee upon demand.

In addition, shares of stock held in the Charitable Trust shall be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date we, or our designee, accepts such offer. We shall have the right to accept such offer until the Trustee has sold the shares of stock held in the Charitable Trust. Upon such a sale to us, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and any dividends or other distributions held by the Trustee shall be paid to the Charitable Beneficiary.

All certificates representing Sotherly's shares of stock will bear a legend referring to the restrictions described above.

Every owner of 5.0% or more (or such lower percentages as required by the Code or the Treasury Regulations promulgated thereunder) of all classes or series of Sotherly's shares of stock, including common stock, within 30 days after the end of each taxable year, is required to give written notice to the Company stating the name and address of such owner, the number of shares of each class and series of shares of stock which the owner beneficially owns and a description of the manner in which such shares are held. Each such owner shall

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provide to the Company such additional information as the Company may request in order to determine the effect, if any, of such beneficial ownership on Sotherly's status as a REIT and to ensure compliance with the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, and the Preferred Stock Ownership Limit. In addition, each stockholder shall upon demand be required to provide to the Company such information as it may request, in good faith, in order to determine Sotherly's status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance and to ensure compliance with the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, and the Preferred Stock Ownership Limit.

These ownership limitations could delay, defer or prevent a transaction or a change in control that might involve a premium price for the common stock or otherwise be in the best interest of Sotherly's stockholders.

***Power to Increase Authorized Shares*.** 

As permitted by the MGCL, the Charter authorizes the board of directors, without any action by the Company's stockholders, to amend the Charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Company has authority to issue. These actions can be taken without stockholder approval, unless stockholder approval is required by applicable law or the rules of any stock exchange or automated quotation system on which the Company's securities may be listed or traded. Although we have no current intention of doing so, we could issue a class or series of stock that could delay, defer or prevent a transaction or a change in control that might involve a premium price for holders of common stock or otherwise be in their best interest.

***Power to Reclassify Stock*.** 

The Company's Charter authorizes the board of directors, subject to the Articles Supplementary, to classify any unissued preferred stock, and to reclassify any previously classified but unissued common stock and preferred stock of any series from time to time in one or more classes or series, as authorized by the board of directors.

Shares of the Company's preferred stock may be issued from time to time, in one or more series (including additional shares of Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock), as authorized by the Company's board of directors, subject to the Articles Supplementary. Prior to the issuance of any preferred stock, the board of directors is required by Maryland law and the Charter to designate the class or series of preferred stock to distinguish it from all other classes and series of shares, specify the number of shares to be included in the class or series, and set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each such class or series and cause the Company to file articles supplementary with the State Department of Assessments and Taxation of Maryland.

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**Exhibit 4.4**

**Common Stock**

All of the outstanding shares of the Company' s common stock are duly authorized, fully paid and nonassessable.

Subject to the provisions of the Company's Charter regarding the restrictions on the transfer and ownership of shares of common stock, each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors, and, except for the rights that may be held by the holders of shares of the Preferred Stock and as may be provided with respect to any other subsequently issued class or series of common or preferred stock, the holders of such common stock possess the exclusive voting power. There is no cumulative voting in the election of directors, which means that the holders of a majority of the outstanding common stock, voting as a single class, can elect all of the directors and the holders of the remaining stock are not able to elect any directors.

Holders of the Company's common stock are entitled to receive distributions when authorized by the board of directors and declared by the Company out of assets legally available for the payment of distributions. They also are entitled to share ratably in the assets legally available for distribution to the Company's stockholders in the event of the Company's liquidation, dissolution or winding up, after payment of or adequate provision for all of the Company's known now or hereafter incurred debts and liabilities. These rights are subject to the preferential rights of any other class or series of the Company's stock, including the holders of the Preferred Stock, and to the provisions of the Charter and the Articles Supplementary regarding restrictions on transfer of its stock. Holders of the Company's common stock have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any of our securities. Subject to the restrictions on transfer of stock contained in the Charter, all shares of the Company's common stock will have equal distribution, liquidation and other rights.

The Charter provides that holders of our common stock generally have no appraisal rights unless our board of directors determines prospectively that appraisal rights will apply to one or more transactions in which holders of our common stock would otherwise be entitled to exercise appraisal rights.

Under the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, merge, consolidate, convert, sell all or substantially all of its assets or engage in a statutory share exchange unless declared advisable by its board of directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of all of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the corporation's charter. Our Charter provides for approval of any of these matters by the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast on such matters, except that the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast generally in the election of directors is required to remove a director (and such removal must be for cause) and the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on such matter is required to amend the provisions of our Charter relating to the removal of directors, the restrictions on ownership and transfer of our stock and the vote required to amend such provisions. Maryland law also permits a Maryland corporation to transfer all or substantially all of its assets without the approval of the stockholders of the corporation to an entity if all of the equity interests of the entity are owned, directly or indirectly, by the corporation. Because our operating assets may be held by our operating partnership or its subsidiaries, these subsidiaries may be able to merge or transfer all or substantially all of their assets to the operating partnership or other subsidiary without the approval of our stockholders.

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**Exhibit 4.4**

**Preferred Stock**

***Series B Preferred Stock***

*Ranking*. The Series B Preferred Stock ranks, with respect to distribution rights and rights upon voluntary or involuntary liquidation, dissolution or winding-up of our affairs, senior to all classes or series of our common stock and to any other class or series of our capital stock which is expressly designated as ranking junior to the Series B Preferred Stock (collectively, "<u>Series B Junior Stock</u>"), on parity with any class of our capital stock which is expressly designated as ranking on parity with the Series B Preferred Stock (collectively, "<u>Series B Parity Stock</u>"), including our Series C Preferred Stock and our Series D Preferred Stock, junior to any other class or series of our capital stock that we may later authorize or issue which is designated as ranking senior to the Series B Preferred Stock, and junior to our existing and future indebtedness. Any future authorization or issuance of a class or series of our capital stock expressly designated as ranking senior to the Series B Preferred Stock will require the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series B Preferred Stock and all other shares of any class or series ranking on parity with the Series B Preferred Stock that are entitled to similar voting rights, including our Series C Preferred Stock and our Series D Preferred Stock (voting together as a single class).

*Distributions*. Subject to the preferential rights of any security senior to the Series B Preferred Stock as to distributions, the holders of shares of the Series B Preferred Stock are entitled to receive, when, as and if authorized by our board of directors and declared by us out of funds legally available for the payment of distributions, cumulative cash distributions at the rate of 8.0% per annum of the $25.00 liquidation preference per share of the Series B Preferred Stock (equivalent to an annual rate of $2.00 per share of the Series B Preferred Stock). Distributions are payable quarterly in arrears on the 15th day of each January, April, July and October of each year (or if not a business day, on the next succeeding business day). Distributions payable on the Series B Preferred Stock for any partial or longer period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Accrued but unpaid distributions on the Series B Preferred Stock will accumulate as of the distribution payment date on which they first became payable. Distributions on the Series B Preferred Stock will accrue whether or not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•we have earnings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•there are funds legally available for the payment of those distributions; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•those distributions are authorized or declared.

Except as described in the next paragraph, unless full cumulative distributions on the Series B Preferred Stock for all past distribution periods shall have been, or contemporaneously are, declared and paid in cash or declared and a sum sufficient for the payment thereof in cash is set aside for payment, we will not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•declare or pay or set aside for payment of distributions, and we will not declare or make any distribution of cash or other property, directly or indirectly, on or with respect to any shares of our common stock, or any other class or series of Series B Parity Stock or Series B Junior Stock for any period; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•redeem, purchase or otherwise acquire for any consideration, or make any other distribution of cash or other property, directly or indirectly, on or with respect to, or pay or make available any monies for a sinking fund for the redemption of, any common stock, or any other class or series of Series B Parity Stock or Series B Junior Stock.

The foregoing sentence, however, will not prohibit:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•distributions payable solely in shares of our common stock or shares of Series B Junior Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the conversion into or exchange for other shares of any class or series of Series B Junior Stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our purchase of Series B Preferred Stock, Series B Parity Stock or Series B Junior Stock pursuant to our Charter to the extent necessary to preserve our status as a REIT.

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*Optional Redemption*. We may, at our option, upon not less than 30 nor more than 60 days' written notice, redeem the Series B Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share of Series B Preferred Stock, plus all accrued and unpaid distributions (whether or not declared) up to, but not including, the date fixed for redemption, without interest, to the extent we have funds legally available for that purpose. Unless full cumulative distributions on all outstanding Series B Preferred Stock shall have been or contemporaneously are authorized, declared and paid in cash or declared and a sufficient sum set aside for payment of all past distribution periods and the then-current distribution period, no shares of the Series B Preferred Stock shall be redeemed unless all outstanding shares of the Series B Preferred Stock are simultaneously redeemed. All shares of Series B Preferred Stock that we redeem or repurchase will be retired and restored to the status of authorized but unissued shares of preferred stock, without designation as to series or class.

If the Company has (i) given a notice of redemption, (ii) set aside sufficient funds for the redemption in trust for the benefit of the holders of shares of the Series B Preferred Stock called for redemption and (iii) given irrevocable instructions to pay the redemption price and all accrued and unpaid distributions, then from and after the redemption date, those shares of Series B Preferred Stock will be treated as no longer being outstanding, no further distributions will accrue and all other rights of the holders of those shares of Series B Preferred Stock will terminate (including, with respect to such shares of Series B Preferred Stock called for redemption, the conversion rights described below under "Conversion Rights"), except the right to receive the redemption price plus any accrued and unpaid distributions payable upon such redemption, without interest. The holders of those shares of Series B Preferred Stock will retain their right to receive the redemption price for their shares and any accrued and unpaid distributions payable upon such redemption, without interest.

The holders of shares of Series B Preferred Stock at the close of business on a distribution record date will be entitled to receive the distribution payable with respect to the Series B Preferred Stock on the corresponding payment date notwithstanding the redemption of the Series B Preferred Stock between such record date and the corresponding payment date.

*Special Optional Redemption*. Upon the occurrence of a Series B Change of Control (as defined below), we may, at our option, redeem the Series B Preferred Stock, in whole or in part within 120 days after the first date on which such Series B Change of Control occurred, by paying $25.00 per share of Series B Preferred Stock, plus any accrued and unpaid distributions to, but not including, the date of redemption. If, prior to the relevant Change of Control Conversion Date (as defined below), we have provided or provide notice of redemption with respect to the Series B Preferred Stock (whether pursuant to our optional redemption right or our special optional redemption right), a holder of Series B Preferred Stock will not have the conversion right described below under "Conversion Rights," in respect of the shares of Series B Preferred Stock called for redemption.

A notice of redemption is required to be mailed to the record holders of shares of our Series B Preferred Stock no less than 30 days nor more than 60 days before the redemption date. A failure to give notice of redemption or any defect in the notice or in its mailing will not affect the validity of the redemption of any Series B Preferred Stock except as to the holder to whom notice was defective. Each notice will state the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the redemption price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of shares of Series B Preferred Stock to be redeemed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the place or places where the certificates for the shares of the Series B Preferred Stock, if any, are to be surrendered for payment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the procedures for surrendering non-certificated shares of Series B Preferred Stock, to the extent the shares of Series B Preferred Stock are uncertificated, for payment of the redemption price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that distributions on the shares of Series B Preferred Stock to be redeemed will cease to accumulate on such redemption date;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that payment of the redemption price and any accumulated and unpaid distributions will be made upon presentation and surrender of such Series B Preferred Stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that the holders of the shares of our Series B Preferred Stock to which the notice relates will not be able to tender such shares of Series B Preferred Stock for conversion in connection with the Series B Change of Control and each share of Series B Preferred Stock tendered for conversion that is selected, prior to the relevant Change of Control Conversion Date, for redemption will be redeemed on the related date of redemption instead of converted on the relevant Change of Control Conversion Date.

If the Company has (i) given a notice of redemption, (ii) set aside sufficient funds for the redemption in trust for the benefit of the holders of the shares of Series B Preferred Stock called for redemption and (iii) given irrevocable instructions to pay the redemption price and all accrued and unpaid distributions, then from and after the redemption date, those shares of Series B Preferred Stock will be treated as no longer being outstanding, no further distributions will accrue and all other rights of the holders of those shares of Series B Preferred Stock will terminate, except the right to receive the redemption price plus any accrued and unpaid distributions payable upon such redemption, without interest. The holders of those shares of Series B Preferred Stock will retain their right to receive the redemption price for their shares and any accrued and unpaid distributions payable upon such redemption, without interest.

The holders of shares of Series B Preferred Stock at the close of business on a distribution record date will be entitled to receive the distribution payable with respect to the Series B Preferred Stock on the corresponding payment date notwithstanding the redemption of the Series B Preferred Stock between such record date and the corresponding payment date.

A "<u>Series B Change of Contro</u>l" is when, after the original issuance of the Series B Preferred Stock, the following have occurred and are continuing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the acquisition by any person, including any syndicate or group deemed to be a "person" under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of our company entitling that person to exercise more than 50% of the total voting power of all shares of our company entitled to vote generally in elections of directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•following the closing of any transaction referred to in the bullet point above, neither we nor the acquiring or surviving entity has a class of common securities (or ADRs representing such securities) listed on the NYSE, the NYSE MKT or NASDAQ or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE MKT or NASDAQ.

*Conversion Rights*. Upon the occurrence of a Series B Change of Control, each holder of shares of Series B Preferred Stock will have the right, unless, prior to the Change of Control Conversion Date, the Company has provided or provides notice of its election to redeem the shares of Series B Preferred Stock as described under "Optional Redemption" or "Special Optional Redemption," to convert some or all of the shares of Series B Preferred Stock held by such holder (the "<u>Change of Control Series B Conversion Right</u>") on the applicable Change of Control Conversion Date into a number of shares of common stock per share of Series B Preferred Stock (the "<u>Series B Conversion Consideration</u>") equal to the lesser of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per share of the Series B Preferred Stock to be converted plus the amount of any accrued and unpaid distributions to, but not including, the relevant Change of Control Conversion Date (unless such Change of Control Conversion Date is after a record date for a Series B Preferred Stock distribution payment and prior to the corresponding Series B Preferred Stock distribution payment date, in which case no additional amount for such accrued and unpaid distribution will be included in this sum) by (ii) the Series B Common Stock Price (as defined below); and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•8.29187(the "<u>Series B Share Cap</u>") subject to adjustments, as described below.

The Series B Share Cap is subject to pro rata adjustments for any share splits (including those effected pursuant to a common stock distribution), subdivisions or combinations (in each case, a "<u>Series B Share Split</u>") with respect to shares of our common stock as follows: the adjusted Series B Share Cap as the result of a Series B Share Split will be the number of shares of our common stock that is equivalent to the product of (i) the Series B Share Cap in effect immediately prior to such Series B Share Split multiplied by (ii) a fraction, the numerator of which is the number of shares of our common stock outstanding after giving effect to such Series B Share Split and the denominator of which is the number of shares of our common stock outstanding immediately prior to such Series B Share Split.

For the avoidance of doubt, subject to the immediately succeeding sentence, the aggregate number of shares of our common stock (or equivalent Alternative Series B Conversion Consideration (as defined below), as applicable) issuable in connection with the exercise of the Change of Control Series B Conversion Right will not exceed 13,349,910 shares of common stock (or equivalent Alternative Series B Conversion Consideration, as applicable), subject to increase on a pro rata basis if we issue additional shares of Series B Preferred Stock (the "<u>Series B Exchange Cap</u>"). The Series B Exchange Cap is subject to pro rata adjustments for any Series B Share Splits on the same basis as the corresponding adjustment to the Series B Share Cap.

In the case of a Series B Change of Control pursuant to which shares of our common stock will be converted into cash, securities or other property or assets (including any combination thereof) (the "<u>Alternative Series B Form Consideration</u>"), a holder of shares of Series B Preferred Stock will receive upon conversion of such Series B Preferred Stock the kind and amount of Alternative Series B Form Consideration which such holder would have owned or been entitled to receive upon the Series B Change of Control had such holder held a number of shares of our common stock equal to the Series B Conversion Consideration immediately prior to the effective time of the Series B Change of Control (the "<u>Alternative Series B Conversion Consideration</u>," and the Series B Conversion Consideration or the Alternative Series B Conversion Consideration, as may be applicable to a Series B Change of Control, is referred to as the "<u>Series B Conversion Consideration</u>").

If the holders of shares of our common stock have the opportunity to elect the form of consideration to be received in the Series B Change of Control, the consideration that the holders of shares of the Series B Preferred Stock will receive will be the form of consideration elected by the holders of the shares of common stock who participate in the determination (based on the weighted average of elections) and will be subject to any limitations to which all holders of shares of common stock are subject, including, without limitation, pro rata reductions applicable to any portion of the consideration payable in the Series B Change of Control.

No fractional shares of the Company's common stock will be issued upon the conversion of our Series B Preferred Stock. Instead, we will pay the cash value of such fractional shares.

Within 15 days following the occurrence of a Series B Change of Control, the Company is required to provide to holders of shares of the Series B Preferred Stock a notice of the occurrence of the Series B Change of Control that describes the resulting Change of Control Series B Conversion Right. This notice will state the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the events constituting the Series B Change of Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the date of the Series B Change of Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the last date on which the holders of shares of the Series B Preferred Stock may exercise their Change of Control Series B Conversion Right;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the method and period for calculating the Series B Common Stock Price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the applicable Change of Control Conversion Date, which will be a business day occurring within 20 to 35 days following the date of the notice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that if, prior to the applicable Change of Control Conversion Date, the Company has provided or provides notice of its election to redeem all or any portion of the Series B Preferred Stock, holders of the Series B

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Preferred Stock will not be able to convert such shares of Series B Preferred Stock called for redemption and such Series B Preferred Stock will be redeemed on the related redemption date, even if they have already been tendered for conversion pursuant to the Change of Control Series B Conversion Right;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•if applicable, the type and amount of Alternative Series B Conversion Consideration entitled to be received per share of Series B Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the name and address of the paying agent and the conversion agent; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the procedures that the holders of shares of Series B Preferred Stock must follow to exercise the Change of Control Series B Conversion Right.

To exercise the Change of Control Series B Conversion Right, the holder of shares of the Series B Preferred Stock will be required to deliver, on or before the close of business on the applicable Change of Control Conversion Date, the certificates (if any) evidencing the Series B Preferred Stock to be converted, duly endorsed for transfer, together with a written conversion notice completed, to our transfer agent. The conversion notice must state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the relevant Change of Control Conversion Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of Series B Preferred Stock to be converted; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that the Series B Preferred Stock is to be converted pursuant to the applicable terms of the Series B Preferred Stock.

The "<u>Change of Control Conversion Date</u>" will be a business day that is no less than 20 days nor more than 35 days after the date on which we provide the notice described herein to the holders of shares of the Preferred Stock of the relevant series.

The "<u>Series B Common Stock Price</u>" will be (i) if the consideration to be received in the Series B Change of Control by holders of shares of our common stock is solely cash, the amount of cash consideration per share of common stock, or (ii) if the consideration to be received in the Series B Change of Control by holders of shares of our common stock is other than solely cash, the average of the closing price per share of common stock on the 10 consecutive trading days immediately preceding, but not including, the effective date of the Series B Change of Control.

Holders of shares of the Series B Preferred Stock may withdraw any notice of exercise of a Change of Control Series B Conversion Right (in whole or in part) by a written notice of withdrawal delivered to our transfer agent prior to the close of business on the business day prior to the Change of Control Conversion Date. The notice of withdrawal must state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of withdrawn shares of Series B Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•if certificated shares of Series B Preferred Stock have been issued, the certificate numbers of the withdrawn shares of Series B Preferred Stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of shares of Series B Preferred Stock, if any, which remain subject to the conversion notice.

Notwithstanding the foregoing, if the Series B Preferred Stock is held in global form, the conversion notice and/or the notice of withdrawal, as applicable, must comply with applicable procedures of The Depository Trust Company.

Series B Preferred Stock as to which the Change of Control Series B Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn will be converted into the applicable Series B Conversion Consideration in accordance with the Change of Control Series C Conversion Right on the applicable Change of Control Conversion Date, unless prior to such Change of Control Conversion Date the Company has provided or provides notice of its election to redeem such Series B Preferred Stock, whether pursuant to the Company's optional redemption right or its special optional redemption right. If the Company elects to redeem Series B Preferred Stock that would otherwise be converted into the applicable Series

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B Conversion Consideration on a Change of Control Conversion Date, such Series B Preferred Stock will not be so converted and the holders of such shares of Series B Preferred Stock will be entitled to receive on the applicable redemption date $25.00 per share of Series B Preferred Stock, plus any accrued and unpaid distribution thereon to, but not including, the redemption date.

The Company is required to deliver amounts owing upon conversion no later than the third business day following the applicable Change of Control Conversion Date.

Notwithstanding any other provision of our Series B Preferred Stock, no holder of shares of our Series B Preferred Stock will be entitled to convert such shares Series B Preferred Stock for shares of our common stock to the extent that receipt of such shares of common stock would cause such holder (or any other person) to exceed the share ownership limits contained in our Charter, including the Articles Supplementary. See "Restrictions on Ownership and Transfer" above.

Except as provided above in connection with a Series B Change of Control, shares of Series B Preferred Stock are not convertible into or exchangeable for any other securities or property.

*Liquidation Preference*. Upon any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, and before any distribution or payment shall be made to holders of our common stock or any other class or series of Series B Junior Stock, the holders of shares of the Series B Preferred Stock are entitled to be paid out of our assets legally available for distribution to our stockholders, after payment or provision for our debts and other liabilities, payments to holders of senior securities, if any, a liquidation preference of $25.00 per share of Series B Preferred Stock, plus an amount equal to any accrued and unpaid distributions (whether or not earned or declared) up to, but not including, the date of payment or the date the amount of payment is set aside. The rights of holders of shares of the Series B Preferred Stock to receive their liquidation preference will be subject to the proportionate rights of holders of our Series C Preferred Stock, our Series D Preferred Stock and any other class or series of Series B Parity Stock. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of shares of the Series B Preferred Stock will have no right or claim to any of our remaining assets. Our consolidation, conversion or merger with or into any other corporation, trust or other entity, or the voluntary sale, lease, transfer or conveyance of all or substantially all of our property or business, will not be deemed to constitute a liquidation, dissolution or winding-up of our affairs.

*No Maturity, Sinking Fund or Mandatory Redemption*. The Series B Preferred Stock has no maturity date and we are not required to redeem shares of the Series B Preferred Stock at any time. Accordingly, the Series B Preferred Stock will remain outstanding indefinitely, unless we decide, at our option, to exercise our redemption right, or under circumstances where holders of shares of the Series B Preferred Stock have a conversion right, the holders of shares of the Series B Preferred Share Stock decide to convert them. The Series B Preferred Stock is not subject to any sinking fund.

*Voting Rights*. Holders of shares of the Series B Preferred Stock have no voting rights, except as set forth below.

If distributions on the Series B Preferred Stock are in arrears for six or more quarterly periods, whether or not consecutive, holders of shares of the Series B Preferred Stock (voting together as a single class with holders of our Series C Preferred Stock, our Series D Preferred Stock and all other classes or series of Series B Parity Stock upon which like voting rights have been conferred and are exercisable) will be entitled to vote at a special meeting or at our next annual meeting of stockholders and each subsequent annual meeting of stockholders, for the election of two additional directors to serve on our board of directors (which we refer to as a preferred stock director), until all unpaid distributions and the distribution for the then current period with respect to the Series B Preferred Stock and any other class or series of Series B Parity Stock have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. In such a case, the number of directors serving on the board of directors will be increased by two members. The preferred stock directors will be elected by a plurality of the votes cast in the election to serve until our next annual meeting and until their successors are duly elected and qualified or until such directors' right to hold the office terminates pursuant to the Series B Termination Event (as defined below), whichever occurs earlier.

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If and when all accumulated distributions and the distribution for the current distribution period on the Series B Preferred Stock and for all classes and series of Series B Parity Stock and upon which similar voting rights have been conferred and are exercisable shall have been paid in full or a sum sufficient for such payment is irrevocably deposited in trust for payment, the holders of shares of the Series B Preferred Stock shall be immediately divested of the voting rights set forth above (subject to revesting in the event of each and every preferred distribution default) and, if all distributions in arrears and the distributions for the current distribution period have been paid in full or set aside for payment in full on all other classes or series of Series B Parity Stock, the term and office of such preferred stock directors so elected will terminate immediately and the entire board of directors will be reduced accordingly (the "<u>Series B Termination Event</u>").

In addition, so long as any shares of Series B Preferred Stock remain outstanding, we will not, without the consent or the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series B Preferred Stock and each other class or series of Series B Parity Stock with respect to the payment of distributions or the distribution of assets upon our liquidation, dissolution or winding-up upon which similar voting rights have been conferred, voting as a single class, given in person or by proxy, either in writing or at a meeting:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•authorize, create or issue, or increase the authorized or issued amount of, any class or series of stock ranking senior to the Series B Preferred Stock with respect to payment of distributions, or the distribution of assets upon the liquidation, dissolution or winding-up of our affairs, or reclassify any of our authorized stock into any such stock, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such stock; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•amend, alter or repeal the provisions of our Charter or the terms of the Series B Preferred Stock, whether by merger, consolidation, transfer or conveyance of all or substantially all of our assets or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series B Preferred Stock or the holders thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•except that with respect to the occurrence of any of the events described in the second bullet point immediately above, so long as shares of the Series B Preferred Stock remain outstanding with the terms of the Series B Preferred Stock materially unchanged or the holders of shares of Series B Preferred Stock receive capital stock of the successor with substantially identical rights (taken as a whole), taking into account that, upon the occurrence of an event described in the second bullet point above, we may not be the surviving entity, the occurrence of such event will not be deemed to materially and adversely affect the rights, preferences, privileges or voting power of holders of shares of the Series B Preferred Stock, and in such case such holders shall not have any voting rights with respect to the events described in the second bullet point immediately above.

Furthermore, if the holders of shares of the Series B Preferred Stock receive the greater of the full trading price of the Series B Preferred Stock on the date of an event described in the second bullet point immediately above or the $25.00 liquidation preference per share of Series B Preferred Stock pursuant to the occurrence of any of the events described in the second bullet point immediately above, then such holders shall not have any voting rights with respect to the events described in the second bullet point immediately above. If any event described in the second bullet point above would materially and adversely affect the rights, preferences, privileges or voting powers of the Series B Preferred Stock disproportionately relative to other classes or series of Series B Parity Stock with respect to the payment of distributions and the distribution of assets upon our liquidation, dissolution or winding up, the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series B Preferred Stock voting separately as a class, will also be required.

*Information Rights*. During any period in which we are not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and any shares of Series B Preferred Stock are outstanding, the Company is required (i) to transmit by mail or other permissible means under the Exchange Act to all holders of shares of the Series B Preferred Stock as their names and addresses appear in our record books and without cost to such holders, copies of the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q that we would have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if we were subject thereto (other than any

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exhibits that would have been required) and (ii) within 15 days following written request, to supply copies of such reports to any prospective holder of shares of the Series B Preferred Stock. The Company is required to mail (or otherwise provide) the reports to the holders of shares of the Series B Preferred Stock within 15 days after the respective dates by which we would have been required to file such reports with the SEC if we were subject to Section 13 or 15(d) of the Exchange Act.

*Restrictions on Ownership and Transfer.* For information regarding restrictions on ownership and transfer of the Series B Preferred Shares, see "All Classes of Our Capital Stock" above.

Notwithstanding any other provision of the Series B Preferred Shares, no holder of the Series B Preferred Shares will be entitled to convert any Series B Preferred Shares into our common shares to the extent that receipt of our common shares would cause such holder or any other person to exceed the ownership limits contained in our declaration of trust.

***Series C Preferred Stock***

*Ranking*. The Series C Preferred Stock ranks, with respect to distribution rights and rights upon voluntary or involuntary liquidation, dissolution or winding-up of our affairs, senior to all classes or series of our common stock and to any other class or series of our capital stock which is expressly designated as ranking junior to the Series C Preferred Stock (collectively, "<u>Series C Junior Stock</u>"), on parity with any class of our capital stock which is expressly designated as ranking on parity with the Series C Preferred Stock (collectively, "<u>Series C Parity Stock</u>"), including our Series B Preferred Stock and our Series D Preferred Stock, junior to any other class or series of our capital stock that we may later authorize or issue which is designated as ranking senior to the Series C Preferred Stock, and junior to our existing and future indebtedness. Any future authorization or issuance of a class or series of our capital stock expressly designated as ranking senior to the Series C Preferred Stock will require the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series C Preferred Stock and all other shares of any class or series ranking on parity with the Series C Preferred Stock that are entitled to similar voting rights, including our Series B Preferred Stock and our Series D Preferred Stock (voting together as a single class).

*Distributions*. Subject to the preferential rights of any security senior to the Series C Preferred Stock as to distributions, the holders of shares of the Series C Preferred Stock are entitled to receive, when, as and if authorized by our board of directors and declared by us out of funds legally available for the payment of distributions, cumulative cash distributions at the rate of 7.875% per annum of the $25.00 liquidation preference per share of the Series C Preferred Stock (equivalent to an annual rate of $1.96875 per share of the Series C Preferred Stock). Distributions are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or if not a business day, on the next succeeding business day). Distributions payable on the Series C Preferred Stock for any partial or longer period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Accrued but unpaid distributions on the Series C Preferred Stock will accumulate as of the distribution payment date on which they first became payable. Distributions on the Series C Preferred Stock will accrue whether or not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•we have earnings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•there are funds legally available for the payment of those distributions; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•those distributions are authorized or declared.

Except as described in the next paragraph, unless full cumulative distributions on the Series C Preferred Stock for all past distribution periods shall have been, or contemporaneously are, declared and paid in cash or declared and a sum sufficient for the payment thereof in cash is set aside for payment, we will not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•declare or pay or set aside for payment of distributions, and we will not declare or make any distribution of cash or other property, directly or indirectly, on or with respect to any shares of our common stock, or any other class or series of Series C Parity Stock or Series C Junior Stock for any period; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•redeem, purchase or otherwise acquire for any consideration, or make any other distribution of cash or other property, directly or indirectly, on or with respect to, or pay or make available any monies for a sinking fund for the redemption of, any common stock, or any other class or series of Series C Parity Stock or Series C Junior Stock.

The foregoing sentence, however, will not prohibit:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•distributions payable solely in shares of our common stock or shares of Series C Junior Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the conversion into or exchange for other shares of any class or series of Series C Junior Stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our purchase of Series C Preferred Stock, Series C Parity Stock or Series C Junior Stock pursuant to our Charter to the extent necessary to preserve our status as a REIT.

*Optional Redemption*. We may, at our option, upon not less than 30 nor more than 60 days' written notice, redeem the Series C Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share of Series C Preferred Stock, plus all accrued and unpaid distributions (whether or not declared) up to, but not including, the date fixed for redemption, without interest, to the extent we have funds legally available for that purpose. Unless full cumulative distributions on all outstanding Series C Preferred Stock shall have been or contemporaneously are authorized, declared and paid in cash or declared and a sufficient sum set aside for payment of all past distribution periods and the then-current distribution period, no shares of the Series C Preferred Stock shall be redeemed unless all outstanding shares of the Series C Preferred Stock are simultaneously redeemed. All shares of Series C Preferred Stock that we redeem or repurchase will be retired and restored to the status of authorized but unissued shares of preferred stock, without designation as to series or class.

If the Company has (i) given a notice of redemption, (ii) set aside sufficient funds for the redemption in trust for the benefit of the holders of shares of the Series C Preferred Stock called for redemption and (iii) given irrevocable instructions to pay the redemption price and all accrued and unpaid distributions, then from and after the redemption date, those shares of Series C Preferred Stock will be treated as no longer being outstanding, no further distributions will accrue and all other rights of the holders of those shares of Series C Preferred Stock will terminate (including, with respect to such shares of Series C Preferred Stock called for redemption, the conversion rights described below under "Conversion Rights"), except the right to receive the redemption price plus any accrued and unpaid distributions payable upon such redemption, without interest. The holders of those shares of Series C Preferred Stock will retain their right to receive the redemption price for their shares and any accrued and unpaid distributions payable upon such redemption, without interest.

The holders of shares of Series C Preferred Stock at the close of business on a distribution record date will be entitled to receive the distribution payable with respect to the Series C Preferred Stock on the corresponding payment date notwithstanding the redemption of the Series C Preferred Stock between such record date and the corresponding payment date.

*Special Optional Redemption*. Upon the occurrence of a Series C Change of Control (as defined below), we may, at our option, redeem the Series C Preferred Stock, in whole or in part within 120 days after the first date on which such Series C Change of Control occurred, by paying $25.00 per share of Series C Preferred Stock, plus any accrued and unpaid distributions to, but not including, the date of redemption. If, prior to the relevant Change of Control Conversion Date, we have provided or provide notice of redemption with respect to the Series C Preferred Stock (whether pursuant to our optional redemption right or our special optional redemption right), a holder of Series C Preferred Stock will not have the conversion right described below under "Conversion Rights," in respect of the shares of Series C Preferred Stock called for redemption.

A notice of redemption is required to be mailed to the record holders of shares of our Series C Preferred Stock no less than 30 days nor more than 60 days before the redemption date. A failure to give notice of redemption or any defect in the notice or in its mailing will not affect the validity of the redemption of any Series C Preferred Stock except as to the holder to whom notice was defective. Each notice will state the following:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the redemption price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of shares of Series C Preferred Stock to be redeemed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the place or places where the certificates for the shares of the Series C Preferred Stock, if any, are to be surrendered for payment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the procedures for surrendering non-certificated shares of Series C Preferred Stock, to the extent the shares of Series C Preferred Stock are uncertificated, for payment of the redemption price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that distributions on the shares of Series C Preferred Stock to be redeemed will cease to accumulate on such redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that payment of the redemption price and any accumulated and unpaid distributions will be made upon presentation and surrender of such Series C Preferred Stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that the holders of the shares of our Series C Preferred Stock to which the notice relates will not be able to tender such shares of Series C Preferred Stock for conversion in connection with the Series B Change of Control and each share of Series C Preferred Stock tendered for conversion that is selected, prior to the relevant Change of Control Conversion Date, for redemption will be redeemed on the related date of redemption instead of converted on the relevant Change of Control Conversion Date.

If the Company has (i) given a notice of redemption, (ii) set aside sufficient funds for the redemption in trust for the benefit of the holders of the shares of Series C Preferred Stock called for redemption and (iii) given irrevocable instructions to pay the redemption price and all accrued and unpaid distributions, then from and after the redemption date, those shares of Series C Preferred Stock will be treated as no longer being outstanding, no further distributions will accrue and all other rights of the holders of those shares of Series C Preferred Stock will terminate, except the right to receive the redemption price plus any accrued and unpaid distributions payable upon such redemption, without interest. The holders of those shares of Series C Preferred Stock will retain their right to receive the redemption price for their shares and any accrued and unpaid distributions payable upon such redemption, without interest.

The holders of shares of Series C Preferred Stock at the close of business on a distribution record date will be entitled to receive the distribution payable with respect to the Series C Preferred Stock on the corresponding payment date notwithstanding the redemption of the Series C Preferred Stock between such record date and the corresponding payment date.

A "<u>Series C Change of Control</u>" is when, after the original issuance of the Series C Preferred Stock, the following have occurred and are continuing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the acquisition by any person, including any syndicate or group deemed to be a "person" under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of our company entitling that person to exercise more than 50% of the total voting power of all shares of our company entitled to vote generally in elections of directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•following the closing of any transaction referred to in the bullet point above, neither we nor the acquiring or surviving entity has a class of common securities (or ADRs representing such securities) listed on the NYSE, the NYSE American or NASDAQ or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or NASDAQ.

*Conversion Rights*. Upon the occurrence of a Series C Change of Control, each holder of shares of Series C Preferred Stock will have the right, unless, prior to the Change of Control Conversion Date, the Company has

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provided or provides notice of its election to redeem the shares of Series C Preferred Stock as described under "Optional Redemption" or "Special Optional Redemption," to convert some or all of the shares of Series C Preferred Stock held by such holder (the "<u>Change of Control Series C Conversion Right</u>") on the applicable Change of Control Conversion Date into a number of shares of common stock per share of Series C Preferred Stock (the "<u>Series C Conversion Consideration</u>") equal to the lesser of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per share of the Series C Preferred Stock to be converted plus the amount of any accrued and unpaid distributions to, but not including, the relevant Change of Control Conversion Date (unless such Change of Control Conversion Date is after a record date for a Series C Preferred Stock distribution payment and prior to the corresponding Series C Preferred Stock distribution payment date, in which case no additional amount for such accrued and unpaid distribution will be included in this sum) by (ii) the Series C Common Stock Price (as defined below); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•8.50340 (the "<u>Series C Share Cap</u>"), subject to adjustments, as described below.

The Series C Share Cap is subject to pro rata adjustments for any share splits (including those effected pursuant to a common stock distribution), subdivisions or combinations (in each case, a "<u>Series C Share Split</u>") with respect to shares of our common stock as follows: the adjusted Series C Share Cap as the result of a Series C Share Split will be the number of shares of our common stock that is equivalent to the product of (i) the Series C Share Cap in effect immediately prior to such Series C Share Split multiplied by (ii) a fraction, the numerator of which is the number of shares of our common stock outstanding after giving effect to such Series C Share Split and the denominator of which is the number of shares of our common stock outstanding immediately prior to such Series C Share Split.

For the avoidance of doubt, subject to the immediately succeeding sentence, the aggregate number of shares of our common stock (or equivalent Alternative Series C Conversion Consideration (as defined below), as applicable) issuable in connection with the exercise of the Change of Control Series C Conversion Right will not exceed 14,455,780 shares of common stock (or equivalent Alternative Series C Conversion Consideration, as applicable), subject to increase on a pro rata basis if we issue additional shares of Series C Preferred Stock (the "<u>Series C Exchange Cap</u>"). The Series C Exchange Cap is subject to pro rata adjustments for any Series C Share Splits on the same basis as the corresponding adjustment to the Series C Share Cap.

In the case of a Series C Change of Control pursuant to which shares of our common stock will be converted into cash, securities or other property or assets (including any combination thereof) (the "<u>Alternative Series C Form Consideration</u>"), a holder of shares of Series C Preferred Stock will receive upon conversion of such Series C Preferred Stock the kind and amount of Alternative Series C Form Consideration which such holder would have owned or been entitled to receive upon the Series C Change of Control had such holder held a number of shares of our common stock equal to the Series C Conversion Consideration immediately prior to the effective time of the Series C Change of Control (the "<u>Alternative Series C Conversion Consideration</u>," and the Series C Conversion Consideration or the Alternative Series C Conversion Consideration, as may be applicable to a Series C Change of Control, is referred to as the "<u>Series C Conversion Consideration</u>").

If the holders of shares of our common stock have the opportunity to elect the form of consideration to be received in the Series C Change of Control, the consideration that the holders of shares of the Series C Preferred Stock will receive will be the form of consideration elected by the holders of the shares of common stock who participate in the determination (based on the weighted average of elections) and will be subject to any limitations to which all holders of shares of common stock are subject, including, without limitation, pro rata reductions applicable to any portion of the consideration payable in the Series C Change of Control.

No fractional shares of the Company's common stock will be issued upon the conversion of our Series C Preferred Stock. Instead, we will pay the cash value of such fractional shares.

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Within 15 days following the occurrence of a Series C Change of Control, the Company is required to provide to holders of shares of the Series C Preferred Stock a notice of the occurrence of the Series C Change of Control that describes the resulting Change of Control Series C Conversion Right. This notice will state the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the events constituting the Series C Change of Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the date of the Series C Change of Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the last date on which the holders of shares of the Series C Preferred Stock may exercise their Change of Control Series C Conversion Right;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the method and period for calculating the Series C Common Stock Price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the applicable Change of Control Conversion Date, which will be a business day occurring within 20 to 35 days following the date of the notice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that if, prior to the applicable Change of Control Conversion Date, the Company has provided or provides notice of its election to redeem all or any portion of the Series C Preferred Stock, holders of the Series C Preferred Stock will not be able to convert such shares of Series C Preferred Stock called for redemption and such Series C Preferred Stock will be redeemed on the related redemption date, even if they have already been tendered for conversion pursuant to the Change of Control Series C Conversion Right;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•if applicable, the type and amount of Alternative Series C Conversion Consideration entitled to be received per share of Series C Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the name and address of the paying agent and the conversion agent; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the procedures that the holders of shares of Series C Preferred Stock must follow to exercise the Change of Control Series C Conversion Right.

To exercise the Change of Control Series C Conversion Right, the holder of shares of the Series C Preferred Stock will be required to deliver, on or before the close of business on the applicable Change of Control Conversion Date, the certificates (if any) evidencing the Series C Preferred Stock to be converted, duly endorsed for transfer, together with a written conversion notice completed, to our transfer agent. The conversion notice must state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the relevant Change of Control Conversion Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of Series C Preferred Stock to be converted; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that the Series C Preferred Stock is to be converted pursuant to the applicable terms of the Series C Preferred Stock.

The "<u>Series C Common Stock Price</u>" will be (i) if the consideration to be received in the Series C Change of Control by holders of shares of our common stock is solely cash, the amount of cash consideration per share of common stock, or (ii) if the consideration to be received in the Series C Change of Control by holders of shares of our common stock is other than solely cash, the average of the closing price per share of common stock on the 10 consecutive trading days immediately preceding, but not including, the effective date of the Series C Change of Control.

Holders of shares of the Series C Preferred Stock may withdraw any notice of exercise of a Change of Control Series C Conversion Right (in whole or in part) by a written notice of withdrawal delivered to our transfer agent prior to the close of business on the business day prior to the Change of Control Conversion Date. The notice of withdrawal must state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of withdrawn shares of Series C Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•if certificated shares of Series C Preferred Stock have been issued, the certificate numbers of the withdrawn shares of Series C Preferred Stock; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of shares of Series C Preferred Stock, if any, which remain subject to the conversion notice.

Notwithstanding the foregoing, if the Series C Preferred Stock is held in global form, the conversion notice and/or the notice of withdrawal, as applicable, must comply with applicable procedures of The Depository Trust Company.

Series C Preferred Stock as to which the Change of Control Series C Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn will be converted into the applicable Series C Conversion Consideration in accordance with the Change of Control Series C Conversion Right on the applicable Change of Control Conversion Date, unless prior to such Change of Control Conversion Date the Company has provided or provides notice of its election to redeem such Series C Preferred Stock, whether pursuant to the Company's optional redemption right or its special optional redemption right. If the Company elects to redeem Series C Preferred Stock that would otherwise be converted into the applicable Series C Conversion Consideration on a Change of Control Conversion Date, such Series C Preferred Stock will not be so converted and the holders of such shares of Series C Preferred Stock will be entitled to receive on the applicable redemption date $25.00 per share of Series C Preferred Stock, plus any accrued and unpaid distribution thereon to, but not including, the redemption date.

The Company is required to deliver amounts owing upon conversion no later than the third business day following the applicable Change of Control Conversion Date.

Notwithstanding any other provision of our Series C Preferred Stock, no holder of shares of our Series C Preferred Stock will be entitled to convert such shares Series C Preferred Stock for shares of our common stock to the extent that receipt of such shares of common stock would cause such holder (or any other person) to exceed the share ownership limits contained in our Charter, including the Articles Supplementary. See "Restrictions on Ownership and Transfer" above.

Except as provided above in connection with a Series C Change of Control, shares of Series C Preferred Stock are not convertible into or exchangeable for any other securities or property.

*Liquidation Preference*. Upon any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, and before any distribution or payment shall be made to holders of our common stock or any other class or series of Series C Junior Stock, the holders of shares of the Series C Preferred Stock are entitled to be paid out of our assets legally available for distribution to our stockholders, after payment or provision for our debts and other liabilities, payments to holders of senior securities, if any, a liquidation preference of $25.00 per share of Series C Preferred Stock, plus an amount equal to any accrued and unpaid distributions (whether or not earned or declared) up to, but not including, the date of payment or the date the amount of payment is set aside. The rights of holders of shares of the Series C Preferred Stock to receive their liquidation preference will be subject to the proportionate rights of holders of our Series B Preferred Stock, our Series D Preferred Stock and any other class or series of Series C Parity Stock. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of shares of the Series C Preferred Stock will have no right or claim to any of our remaining assets. Our consolidation, conversion or merger with or into any other corporation, trust or other entity, or the voluntary sale, lease, transfer or conveyance of all or substantially all of our property or business, will not be deemed to constitute a liquidation, dissolution or winding-up of our affairs.

*No Maturity, Sinking Fund or Mandatory Redemption*. The Series C Preferred Stock has no maturity date and we are not required to redeem shares of the Series C Preferred Stock at any time. Accordingly, the Series C Preferred Stock will remain outstanding indefinitely, unless we decide, at our option, to exercise our optional redemption right described under "Optional Redemption" or, upon a Series C Change of Control, we decide, at our option, to exercise our special redemption right described under "Special Optional Redemption" or holders of shares of the Series C Preferred Stock decide to exercise the conversion right described under "Conversion Rights." The Series C Preferred Stock is not subject to any sinking fund.

*Voting Rights*. Holders of shares of the Series C Preferred Stock have no voting rights, except as set forth below.

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If distributions on the Series C Preferred Stock are in arrears for six or more quarterly periods, whether or not consecutive, holders of shares of the Series C Preferred Stock (voting together as a single class with holders of our Series B Preferred Stock, our Series D Preferred Stock and all other classes or series of Series C Parity Stock upon which like voting rights have been conferred and are exercisable) will be entitled to vote at a special meeting or at our next annual meeting of stockholders and each subsequent annual meeting of stockholders, for the election of two additional directors to serve on our board of directors (which we refer to as a preferred stock director), until all unpaid distributions and the distribution for the then current period with respect to the Series C Preferred Stock and any other class or series of Series C Parity Stock have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. In such a case, the number of directors serving on the board of directors will be increased by two members. The preferred stock directors will be elected by a plurality of the votes cast in the election to serve until our next annual meeting and until their successors are duly elected and qualified or until such directors' right to hold the office terminates pursuant to the Series C Termination Event (as defined below), whichever occurs earlier. In no event will the holders of Series C Preferred Stock be entitled to nominate or elect an individual as a director, and no individual will be qualified to be nominated for election or to serve as a director, if the individual's service as a director would cause us to fail to satisfy a requirement relating to director independence of any national securities exchange on which any class or series of our stock is then-listed or otherwise conflict with our Charter or Bylaws.

If and when all accumulated distributions and the distribution for the current distribution period on the Series C Preferred Stock and for all classes and series of Series C Parity Stock and upon which similar voting rights have been conferred and are exercisable shall have been paid in full or a sum sufficient for such payment is irrevocably deposited in trust for payment, the holders of shares of the Series C Preferred Stock shall be immediately divested of the voting rights set forth above and, if all distributions in arrears and the distributions for the current distribution period have been paid in full or set aside for payment in full on all other classes or series of Series C Parity Stock, the term and office of such preferred stock directors so elected will terminate immediately and the number of members constituting our board of directors will be reduced accordingly (the "<u>Series C Termination Event</u>"). The right of the holders of Series C Preferred Stock to elect the additional directors will again vest if and whenever dividends are in arrears for six additional quarterly periods, whether or not consecutive, as described above.

In addition, so long as any shares of Series C Preferred Stock remain outstanding, we will not, without the consent or the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series C Preferred Stock and each other class or series of Series C Parity Stock with respect to the payment of distributions or the distribution of assets upon our liquidation, dissolution or winding-up upon which similar voting rights have been conferred, voting as a single class, given in person or by proxy, either in writing or at a meeting:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•authorize, create or issue, or increase the authorized or issued amount of, any class or series of stock ranking senior to the Series C Preferred Stock with respect to payment of distributions, or the distribution of assets upon the liquidation, dissolution or winding-up of our affairs, or reclassify any of our authorized stock into any such stock, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such stock; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•amend, alter or repeal the provisions of our Charter or the terms of the Series C Preferred Stock, whether by merger, consolidation, transfer or conveyance of all or substantially all of our assets or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series C Preferred Stock or the holders thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•except that with respect to the occurrence of any of the events described in the second bullet point immediately above, so long as shares of the Series C Preferred Stock remain outstanding with the terms of the Series C Preferred Stock materially unchanged or the holders of shares of Series C Preferred Stock receive capital stock of the successor with substantially identical rights (taken as a whole), taking into account that, upon the occurrence of an event described in the second bullet point above, we may not be the surviving entity, the occurrence of such event will not be deemed to materially and adversely affect

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the rights, preferences, privileges or voting power of holders of shares of the Series C Preferred Stock, and in such case such holders shall not have any voting rights with respect to the events described in the second bullet point immediately above.

Furthermore, if the holders of shares of the Series C Preferred Stock receive the greater of the full trading price of the Series C Preferred Stock on the date of an event described in the second bullet point immediately above or the $25.00 liquidation preference per share of Series C Preferred Stock pursuant to the occurrence of any of the events described in the second bullet point immediately above, then such holders shall not have any voting rights with respect to the events described in the second bullet point immediately above. If any event described in the second bullet point above would materially and adversely affect the rights, preferences, privileges or voting powers of the Series C Preferred Stock disproportionately relative to other classes or series of Series C Parity Stock with respect to the payment of distributions and the distribution of assets upon our liquidation, dissolution or winding up, the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series C Preferred Stock voting separately as a class, will also be required.

*Information Rights*. During any period in which we are not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and any shares of Series C Preferred Stock are outstanding, the Company is required (i) to transmit by mail or other permissible means under the Exchange Act to all holders of shares of the Series C Preferred Stock as their names and addresses appear in our record books and without cost to such holders, copies of the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q that we would have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if we were subject thereto (other than any exhibits that would have been required) and (ii) within 15 days following written request, to supply copies of such reports to any prospective holder of shares of the Series C Preferred Stock. The Company is required to mail (or otherwise provide) the reports to the holders of shares of the Series C Preferred Stock within 15 days after the respective dates by which we would have been required to file such reports with the SEC if we were subject to Section 13 or 15(d) of the Exchange Act.

*Restrictions on Ownership and Transfer*. For information regarding restrictions on ownership and transfer of the Series C Preferred Shares, see "All Classes of Our Capital Stock" above.

Notwithstanding any other provision of the Series C Preferred Shares, no holder of the Series C Preferred Shares will be entitled to convert any Series C Preferred Shares into our common shares to the extent that receipt of our common shares would cause such holder or any other person to exceed the ownership limits contained in our declaration of trust.

***Series D Preferred Stock***

*Ranking*. The Series D Preferred Stock ranks, with respect to distribution rights and rights upon voluntary or involuntary liquidation, dissolution or winding-up of our affairs, senior to all classes or series of our common stock and to any other class or series of our capital stock which is expressly designated as ranking junior to the Series D Preferred Stock (collectively, "<u>Series D Junior Stock</u>"), on parity with any class of our capital stock which is expressly designated as ranking on parity with the Series D Preferred Stock (collectively, "<u>Series D Parity Stock</u>"), including our Series B Preferred Stock and our Series C Preferred Stock, junior to any other class or series of our capital stock that we may later authorize or issue which is designated as ranking senior to the Series D Preferred Stock, and junior to our existing and future indebtedness. Any future authorization or issuance of a class or series of our capital stock expressly designated as ranking senior to the Series D Preferred Stock will require the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series D Preferred Stock and all other shares of any class or series ranking on parity with the Series D Preferred Stock that are entitled to similar voting rights, including our Series B Preferred Stock and our Series C Preferred Stock (voting together as a single class).

*Distributions*. Subject to the preferential rights of any security senior to the Series D Preferred Stock as to distributions, the holders of shares of the Series D Preferred Stock are entitled to receive, when, as and if authorized by our board of directors and declared by us out of funds legally available for the payment of

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distributions, cumulative cash distributions at the rate of 8.25% per annum of the $25.00 liquidation preference per share of the Series D Preferred Stock (equivalent to an annual rate of $2.0625 per share of the Series D Preferred Stock). Distributions are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or if not a business day, on the next succeeding business day). Distributions payable on the Series D Preferred Stock for any partial or longer period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Accrued but unpaid distributions on the Series D Preferred Stock will accumulate as of the distribution payment date on which they first became payable. Distributions on the Series D Preferred Stock will accrue whether or not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•we have earnings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•there are funds legally available for the payment of those distributions; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•those distributions are authorized or declared.

Except as described in the next paragraph, unless full cumulative distributions on the Series D Preferred Stock for all past distribution periods shall have been, or contemporaneously are, declared and paid in cash or declared and a sum sufficient for the payment thereof in cash is set aside for payment, we will not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•declare or pay or set aside for payment of distributions, and we will not declare or make any distribution of cash or other property, directly or indirectly, on or with respect to any shares of our common stock, or any other class or series of Series D Parity Stock or Series D Junior Stock for any period; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•redeem, purchase or otherwise acquire for any consideration, or make any other distribution of cash or other property, directly or indirectly, on or with respect to, or pay or make available any monies for a sinking fund for the redemption of, any common stock, or any other class or series of Series D Parity Stock or Series D Junior Stock.

The foregoing sentence, however, will not prohibit:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•distributions payable solely in shares of our common stock or shares of Series D Junior Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the conversion into or exchange for other shares of any class or series of Series D Junior Stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our purchase of Series D Preferred Stock, Series D Parity Stock or Series D Junior Stock pursuant to our Charter to the extent necessary to preserve our status as a REIT.

*Optional Redemption*. We may, at our option, upon not less than 30 nor more than 60 days' written notice, redeem the Series D Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share of Series D Preferred Stock, plus all accrued and unpaid distributions (whether or not declared) up to, but not including, the date fixed for redemption, without interest, to the extent we have funds legally available for that purpose. Unless full cumulative distributions on all outstanding Series D Preferred Stock shall have been or contemporaneously are authorized, declared and paid in cash or declared and a sufficient sum set aside for payment of all past distribution periods and the then-current distribution period, no shares of the Series D Preferred Stock shall be redeemed unless all outstanding shares of the Series D Preferred Stock are simultaneously redeemed. All shares of Series D Preferred Stock that we redeem or repurchase will be retired and restored to the status of authorized but unissued shares of preferred stock, without designation as to series or class.

If the Company has (i) given a notice of redemption, (ii) set aside sufficient funds for the redemption in trust for the benefit of the holders of shares of the Series D Preferred Stock called for redemption and (iii) given irrevocable instructions to pay the redemption price and all accrued and unpaid distributions, then from and after the redemption date, those shares of Series D Preferred Stock will be treated as no longer being outstanding, no further distributions will accrue and all other rights of the holders of those shares of Series D Preferred Stock will terminate (including, with respect to such shares of Series D Preferred Stock called for redemption, the conversion rights described below under "Conversion Rights"), except the right to receive the redemption price plus any accrued and unpaid distributions payable upon such redemption, without interest. The holders of those

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shares of Series D Preferred Stock will retain their right to receive the redemption price for their shares and any accrued and unpaid distributions payable upon such redemption, without interest.

The holders of shares of Series D Preferred Stock at the close of business on a distribution record date will be entitled to receive the distribution payable with respect to the Series D Preferred Stock on the corresponding payment date notwithstanding the redemption of the Series D Preferred Stock between such record date and the corresponding payment date.

*Special Optional Redemption*. Upon the occurrence of a Series D Change of Control (as defined below), we may, at our option, redeem the Series D Preferred Stock, in whole or in part within 120 days after the first date on which such Series D Change of Control occurred, by paying $25.00 per share of Series D Preferred Stock, plus any accrued and unpaid distributions to, but not including, the date of redemption. If, prior to the relevant Change of Control Conversion Date, we have provided or provide notice of redemption with respect to the Series D Preferred Stock (whether pursuant to our optional redemption right or our special optional redemption right), a holder of Series D Preferred Stock will not have the conversion right described below under "Conversion Rights," in respect of the shares of Series D Preferred Stock called for redemption.

A notice of redemption is required to be mailed to the record holders of shares of our Series D Preferred Stock no less than 30 days nor more than 60 days before the redemption date. A failure to give notice of redemption or any defect in the notice or in its mailing will not affect the validity of the redemption of any Series D Preferred Stock except as to the holder to whom notice was defective. Each notice will state the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the redemption price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of shares of Series D Preferred Stock to be redeemed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the place or places where the certificates for the shares of the Series D Preferred Stock, if any, are to be surrendered for payment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the procedures for surrendering non-certificated shares of Series D Preferred Stock, to the extent the shares of Series D Preferred Stock are uncertificated, for payment of the redemption price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that distributions on the shares of Series D Preferred Stock to be redeemed will cease to accumulate on such redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that payment of the redemption price and any accumulated and unpaid distributions will be made upon presentation and surrender of such Series D Preferred Stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that the holders of the shares of our Series D Preferred Stock to which the notice relates will not be able to tender such shares of Series D Preferred Stock for conversion in connection with the Series D Change of Control and each share of Series D Preferred Stock tendered for conversion that is selected, prior to the relevant Change of Control Conversion Date, for redemption will be redeemed on the related date of redemption instead of converted on the relevant Change of Control Conversion Date.

If the Company has (i) given a notice of redemption, (ii) set aside sufficient funds for the redemption in trust for the benefit of the holders of the shares of Series D Preferred Stock called for redemption and (iii) given irrevocable instructions to pay the redemption price and all accrued and unpaid distributions, then from and after the redemption date, those shares of Series D Preferred Stock will be treated as no longer being outstanding, no further distributions will accrue and all other rights of the holders of those shares of Series D Preferred Stock will terminate, except the right to receive the redemption price plus any accrued and unpaid distributions payable upon such redemption, without interest. The holders of those shares of Series D Preferred Stock will retain their right to receive the redemption price for their shares and any accrued and unpaid distributions payable upon such redemption, without interest.

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The holders of shares of Series D Preferred Stock at the close of business on a distribution record date will be entitled to receive the distribution payable with respect to the Series D Preferred Stock on the corresponding payment date notwithstanding the redemption of the Series D Preferred Stock between such record date and the corresponding payment date.

A "<u>Series D Change of Control</u>" is when, after the original issuance of the Series D Preferred Stock, the following have occurred and are continuing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the acquisition by any person, including any syndicate or group deemed to be a "person" under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of our company entitling that person to exercise more than 50% of the total voting power of all shares of our company entitled to vote generally in elections of directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•following the closing of any transaction referred to in the bullet point above, neither we nor the acquiring or surviving entity has a class of common securities (or ADRs representing such securities) listed on the NYSE, the NYSE American or NASDAQ or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or NASDAQ.

*Conversion Rights*. Upon the occurrence of a Series D Change of Control, each holder of shares of Series D Preferred Stock will have the right, unless, prior to the Change of Control Conversion Date, the Company has provided or provides notice of its election to redeem the shares of Series D Preferred Stock as described under "Optional Redemption" or "Special Optional Redemption," to convert some or all of the shares of Series D Preferred Stock held by such holder (the "<u>Change of Control Series D Conversion Righ</u>t") on the applicable Change of Control Conversion Date into a number of shares of common stock per share of Series D Preferred Stock (the "<u>Series D Conversion Consideration</u>") equal to the lesser of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per share of the Series D Preferred Stock to be converted plus the amount of any accrued and unpaid distributions to, but not including, the relevant Change of Control Conversion Date (unless such Change of Control Conversion Date is after a record date for a Series D Preferred Stock distribution payment and prior to the corresponding Series D Preferred Stock distribution payment date, in which case no additional amount for such accrued and unpaid distribution will be included in this sum) by (ii) the Series D Common Stock Price (as defined below); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•7.39645 (the "<u>Series D Share Cap</u>"), subject to adjustments, as described below.

The Series D Share Cap is subject to pro rata adjustments for any share splits (including those effected pursuant to a common stock distribution), subdivisions or combinations (in each case, a "<u>Series D Share Split</u>") with respect to shares of our common stock as follows: the adjusted Series D Share Cap as the result of a Series D Share Split will be the number of shares of our common stock that is equivalent to the product of (i) the Series D Share Cap in effect immediately prior to such Series D Share Split multiplied by (ii) a fraction, the numerator of which is the number of shares of our common stock outstanding after giving effect to such Series D Share Split and the denominator of which is the number of shares of our common stock outstanding immediately prior to such Series D Share Split.

For the avoidance of doubt, subject to the immediately succeeding sentence, the aggregate number of shares of our common stock (or equivalent Alternative Series D Conversion Consideration (as defined below), as applicable) issuable in connection with the exercise of the Change of Control Series D Conversion Right will not exceed 7,988,166 shares of common stock (or equivalent Alternative Series D Conversion Consideration, as applicable), subject to increase on a pro rata basis if we issue additional shares of Series D Preferred Stock (the "<u>Series D Exchange Cap</u>"). The Series D Exchange Cap is subject to pro rata adjustments for any Series D Share Splits on the same basis as the corresponding adjustment to the Series D Share Cap.

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In the case of a Series D Change of Control pursuant to which shares of our common stock will be converted into cash, securities or other property or assets (including any combination thereof) (the "<u>Alternative Series D Form Consideration</u>"), a holder of shares of Series D Preferred Stock will receive upon conversion of such Series D Preferred Stock the kind and amount of Alternative Series D Form Consideration which such holder would have owned or been entitled to receive upon the Series D Change of Control had such holder held a number of shares of our common stock equal to the Series D Conversion Consideration immediately prior to the effective time of the Series Change of Control (the "<u>Alternative Series D Conversion Consideration</u>," and the Series D Conversion Consideration or the Alternative Series D Conversion Consideration, as may be applicable to a Series D Change of Control, is referred to as the "<u>Series D Conversion Consideration</u>").

If the holders of shares of our common stock have the opportunity to elect the form of consideration to be received in the Series D Change of Control, the consideration that the holders of shares of the Series D Preferred Stock will receive will be the form of consideration elected by the holders of the shares of common stock who participate in the determination (based on the weighted average of elections) and will be subject to any limitations to which all holders of shares of common stock are subject, including, without limitation, pro rata reductions applicable to any portion of the consideration payable in the Series D Change of Control.

No fractional shares of the Company's common stock will be issued upon the conversion of our Series D Preferred Stock. Instead, we will pay the cash value of such fractional shares.

Within 15 days following the occurrence of a Series D Change of Control, the Company is required to provide to holders of shares of the Series D Preferred Stock a notice of the occurrence of the Series D Change of Control that describes the resulting Change of Control Series D Conversion Right. This notice will state the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the events constituting the Series D Change of Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the date of the Series D Change of Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the last date on which the holders of shares of the Series D Preferred Stock may exercise their Change of Control Series D Conversion Right;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the method and period for calculating the Series D Common Stock Price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the applicable Change of Control Conversion Date, which will be a business day occurring within 20 to 35 days following the date of the notice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that if, prior to the applicable Change of Control Conversion Date, the Company has provided or provides notice of its election to redeem all or any portion of the Series D Preferred Stock, holders of the Series D Preferred Stock will not be able to convert such shares of Series D Preferred Stock called for redemption and such Series D Preferred Stock will be redeemed on the related redemption date, even if they have already been tendered for conversion pursuant to the Change of Control Series D Conversion Right;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•if applicable, the type and amount of Alternative Series D Conversion Consideration entitled to be received per share of Series D Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the name and address of the paying agent and the conversion agent; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the procedures that the holders of shares of Series D Preferred Stock must follow to exercise the Change of Control Series D Conversion Right.

To exercise the Change of Control Series D Conversion Right, the holder of shares of the Series D Preferred Stock will be required to deliver, on or before the close of business on the applicable Change of Control Conversion Date, the certificates (if any) evidencing the Series D Preferred Stock to be converted, duly endorsed for transfer, together with a written conversion notice completed, to our transfer agent. The conversion notice must state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the relevant Change of Control Conversion Date;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of Series D Preferred Stock to be converted; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that the Series D Preferred Stock is to be converted pursuant to the applicable terms of the Series D Preferred Stock.

The "<u>Series D Common Stock Price</u>" will be (i) if the consideration to be received in the Series D Change of Control by holders of shares of our common stock is solely cash, the amount of cash consideration per share of common stock, or (ii) if the consideration to be received in the Series D Change of Control by holders of shares of our common stock is other than solely cash, the average of the closing price per share of common stock on the 10 consecutive trading days immediately preceding, but not including, the effective date of the Series D Change of Control.

Holders of shares of the Series D Preferred Stock may withdraw any notice of exercise of a Change of Control Series D Conversion Right (in whole or in part) by a written notice of withdrawal delivered to our transfer agent prior to the close of business on the business day prior to the Change of Control Conversion Date. The notice of withdrawal must state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of withdrawn shares of Series D Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•if certificated shares of Series D Preferred Stock have been issued, the certificate numbers of the withdrawn shares of Series D Preferred Stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number of shares of Series D Preferred Stock, if any, which remain subject to the conversion notice.

Notwithstanding the foregoing, if the Series D Preferred Stock is held in global form, the conversion notice and/or the notice of withdrawal, as applicable, must comply with applicable procedures of The Depository Trust Company.

Series D Preferred Stock as to which the Change of Control Series D Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn will be converted into the applicable Series D Conversion Consideration in accordance with the Change of Control Series D Conversion Right on the applicable Change of Control Conversion Date, unless prior to such Change of Control Conversion Date the Company has provided or provides notice of its election to redeem such Series D Preferred Stock, whether pursuant to the Company's optional redemption right or its special optional redemption right. If the Company elects to redeem Series D Preferred Stock that would otherwise be converted into the applicable Series D Conversion Consideration on a Change of Control Conversion Date, such Series D Preferred Stock will not be so converted and the holders of such shares of Series D Preferred Stock will be entitled to receive on the applicable redemption date $25.00 per share of Series D Preferred Stock, plus any accrued and unpaid distribution thereon to, but not including, the redemption date.

The Company is required to deliver amounts owing upon conversion no later than the third business day following the applicable Change of Control Conversion Date.

Notwithstanding any other provision of our Series D Preferred Stock, no holder of shares of our Series D Preferred Stock will be entitled to convert such shares Series D Preferred Stock for shares of our common stock to the extent that receipt of such shares of common stock would cause such holder (or any other person) to exceed the share ownership limits contained in our Charter, including the Articles Supplementary. See "—Restrictions on Ownership and Transfer" above.

Except as provided above in connection with a Series D Change of Control, shares of Series D Preferred Stock are not convertible into or exchangeable for any other securities or property.

*Liquidation Preference*. Upon any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, and before any distribution or payment shall be made to holders of our common stock or any other class or series of Series D Junior Stock, the holders of shares of the Series D Preferred Stock are entitled to be paid out of our assets legally available for distribution to our stockholders, after payment or provision for our debts and other liabilities, payments to holders of senior securities, if any, a liquidation preference of $25.00 per share of Series D

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Preferred Stock, plus an amount equal to any accrued and unpaid distributions (whether or not earned or declared) up to, but not including, the date of payment or the date the amount of payment is set aside. The rights of holders of shares of the Series D Preferred Stock to receive their liquidation preference will be subject to the proportionate rights of holders of our Series B Preferred Stock, our Series C Preferred Stock and any other class or series of Series D Parity Stock. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of shares of the Series D Preferred Stock will have no right or claim to any of our remaining assets. Our consolidation, conversion or merger with or into any other corporation, trust or other entity, or the voluntary sale, lease, transfer or conveyance of all or substantially all of our property or business, will not be deemed to constitute a liquidation, dissolution or winding-up of our affairs.

*No Maturity, Sinking Fund or Mandatory Redemption*. The Series D Preferred Stock has no maturity date and we are not required to redeem shares of the Series D Preferred Stock at any time. Accordingly, the Series D Preferred Stock will remain outstanding indefinitely, unless we decide, at our option, to exercise our optional redemption right described under "Optional Redemption" or, upon a Series D Change of Control, we decide, at our option, to exercise our special redemption right described under "Special Optional Redemption" or holders of shares of the Series D Preferred Stock decide to exercise the conversion right described under "Conversion Rights." The Series D Preferred Stock is not subject to any sinking fund.

*Voting Rights*. Holders of shares of the Series D Preferred Stock have no voting rights, except as set forth below.

If distributions on the Series D Preferred Stock are in arrears for six or more quarterly periods, whether or not consecutive, holders of shares of the Series D Preferred Stock (voting together as a single class with holders of our Series B Preferred Stock, our Series C Preferred Stock and all other classes or series of Series D Parity Stock upon which like voting rights have been conferred and are exercisable) will be entitled to vote at a special meeting or at our next annual meeting of stockholders and each subsequent annual meeting of stockholders, for the election of two additional directors to serve on our board of directors (which we refer to as a preferred stock director), until all unpaid distributions and the distribution for the then current period with respect to the Series D Preferred Stock and any other class or series of Series D Parity Stock have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. In such a case, the number of directors serving on the board of directors will be increased by two members. The preferred stock directors will be elected by a plurality of the votes cast in the election to serve until our next annual meeting and until their successors are duly elected and qualified or until such directors' right to hold the office terminates pursuant to the Series D Termination Event (as defined below), whichever occurs earlier. In no event will the holders of Series D Preferred Stock be entitled to nominate or elect an individual as a director, and no individual will be qualified to be nominated for election or to serve as a director, if the individual's service as a director would cause us to fail to satisfy a requirement relating to director independence of any national securities exchange on which any class or series of our stock is then-listed or otherwise conflict with our Charter or Bylaws.

If and when all accumulated distributions and the distribution for the current distribution period on the Series D Preferred Stock and for all classes and series of Series D Parity Stock and upon which similar voting rights have been conferred and are exercisable shall have been paid in full or a sum sufficient for such payment is irrevocably deposited in trust for payment, the holders of shares of the Series D Preferred Stock shall be immediately divested of the voting rights set forth above and, if all distributions in arrears and the distributions for the current distribution period have been paid in full or set aside for payment in full on all other classes or series of Series D Parity Stock, the term and office of such preferred stock directors so elected will terminate immediately and the number of members constituting our board of directors will be reduced accordingly (the "<u>Series D Termination Event</u>"). The right of the holders of Series D Preferred Stock to elect the additional directors will again vest if and whenever dividends are in arrears for six additional quarterly periods, whether or not consecutive, as described above.

In addition, so long as any shares of Series D Preferred Stock remain outstanding, we will not, without the consent or the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series D Preferred Stock and each other class or series of Series D Parity Stock with respect to the payment of distributions or the

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distribution of assets upon our liquidation, dissolution or winding-up upon which similar voting rights have been conferred, voting as a single class, given in person or by proxy, either in writing or at a meeting:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•authorize, create or issue, or increase the authorized or issued amount of, any class or series of stock ranking senior to the Series D Preferred Stock with respect to payment of distributions, or the distribution of assets upon the liquidation, dissolution or winding-up of our affairs, or reclassify any of our authorized stock into any such stock, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such stock; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•amend, alter or repeal the provisions of our Charter or the terms of the Series D Preferred Stock, whether by merger, consolidation, transfer or conveyance of all or substantially all of our assets or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series D Preferred Stock or the holders thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•except that with respect to the occurrence of any of the events described in the second bullet point immediately above, so long as shares of the Series D Preferred Stock remain outstanding with the terms of the Series D Preferred Stock materially unchanged or the holders of shares of Series D Preferred Stock receive capital stock of the successor with substantially identical rights (taken as a whole), taking into account that, upon the occurrence of an event described in the second bullet point above, we may not be the surviving entity, the occurrence of such event will not be deemed to materially and adversely affect the rights, preferences, privileges or voting power of holders of shares of the Series D Preferred Stock, and in such case such holders shall not have any voting rights with respect to the events described in the second bullet point immediately above.

Furthermore, if the holders of shares of the Series D Preferred Stock receive the greater of the full trading price of the Series D Preferred Stock on the date of an event described in the second bullet point immediately above or the $25.00 liquidation preference per share of Series D Preferred Stock pursuant to the occurrence of any of the events described in the second bullet point immediately above, then such holders shall not have any voting rights with respect to the events described in the second bullet point immediately above. If any event described in the second bullet point above would materially and adversely affect the rights, preferences, privileges or voting powers of the Series D Preferred Stock disproportionately relative to other classes or series of Series D Parity Stock with respect to the payment of distributions and the distribution of assets upon our liquidation, dissolution or winding up, the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series D Preferred Stock voting separately as a class, will also be required.

*Information Rights*. During any period in which we are not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and any shares of Series D Preferred Stock are outstanding, the Company is required (i) to transmit by mail or other permissible means under the Exchange Act to all holders of shares of the Series D Preferred Stock as their names and addresses appear in our record books and without cost to such holders, copies of the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q that we would have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if we were subject thereto (other than any exhibits that would have been required) and (ii) within 15 days following written request, to supply copies of such reports to any prospective holder of shares of the Series D Preferred Stock. The Company is required to mail (or otherwise provide) the reports to the holders of shares of the Series D Preferred Stock within 15 days after the respective dates by which we would have been required to file such reports with the SEC if we were subject to Section 13 or 15(d) of the Exchange Act.

*Restrictions on Ownership and Transfer*. For information regarding restrictions on ownership and transfer of the Series D Preferred Shares, see "All Classes of Our Capital Stock" above.

Notwithstanding any other provision of the Series D Preferred Shares, no holder of the Series D Preferred Shares will be entitled to convert any Series D Preferred Shares into our common shares to the extent that receipt of our common shares would cause such holder or any other person to exceed the ownership limits contained in our declaration of trust.

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## Exhibit 19.1

**EXHIBIT 19.1**

**SOTHERLY HOTELS INC. INSIDER TRADING POLICY**

**I.** **PURPOSE**

In order to comply with applicable federal and state securities laws governing (a) trading in securities of Sotherly Hotels Inc. or its operating partnership, Sotherly Hotels LP, (together, "Sotherly" or the "Company") on the basis of "material nonpublic information" concerning the Company and (b) tipping or disclosing material nonpublic information to outsiders, and in order to prevent even the appearance of improper insider trading or tipping, the Company has adopted this Insider Trading Policy (the "Policy") for all of its directors, officers and employees, their family members and specially designated outsiders who have access to the Company's material nonpublic information.

**II.** **SCOPE**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.The Policy covers all directors and executive officers designated on <u>Exhibit A</u> attached hereto ("Section 16 Individuals") and employees designated on <u>Exhibit B</u> attached hereto ("Key Employees") of the Company, their family members (collectively referred to as "Insiders") and any outsiders whom the Insider Trading Officer may designate as Insiders because they have access to material nonpublic information concerning the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.The Policy applies to any and all transactions in the Company's securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.The Policy will be delivered to all directors, officers, employees and designated outsiders upon its adoption by the Company, and to all new directors, officers, employees and designated outsiders at the start of their employment or relationship with the Company. Upon first receiving a copy of the Policy or any revised versions thereof, each Insider may be required to execute an acknowledgment that he or she has received a copy and agrees to comply with the Policy's terms. Section 16 Individuals, as defined below, may be required to certify compliance with the Policy on an annual basis.

**III.** **INSIDERS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.*Section 16 Individuals*. Section 16 Individuals are subject to the reporting provisions and trading restrictions of Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the underlying rules and regulations promulgated by the Securities and Exchange Commission (the "SEC"). The Company will amend <u>Exhibit A</u> hereto from time to time as necessary to reflect the addition, resignation or departure of Section 16 Individuals. The Company has designated those persons listed on <u>Exhibit A</u> hereto as Section 16 Individuals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.*Key Employees*. The Company has designated those persons listed on <u>Exhibit B</u> hereto as Key Employees who, because of their position with the Company, are likely to have access to material nonpublic information. The Company will

1 Sotherly Insider Trading Policy – 2026

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**EXHIBIT 19.1**

amend <u>Exhibit B</u> hereto from time to time as necessary to reflect the addition, resignation or departure of Key Employees.

**IV.** **INSIDER TRADING OFFICER** 

The Company has designated Jami K. Lazarov, Corporate Secretary, as Sotherly's Insider Trading Officer (the "Insider Trading Officer"). The Insider Trading Officer may seek guidance from outside legal counsel and outside accountants. The Insider Trading Officer will review and either approve or prohibit all proposed trades by Insiders in accordance with the procedures set forth in Section VI.C below. In addition to the trading approval duties described in Section VI.C below, the duties of the Insider Trading Officer will include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Administering the Policy and enforcing compliance with all Policy provisions and procedures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Responding to all inquiries relating to the Policy and its procedures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Designating and announcing special trading blackout periods during which no Insider may trade in Company securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Providing copies of the Policy and other appropriate materials to all current and new directors, officers and employees, and such other persons who are determined to have access to material nonpublic information concerning the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Administering, monitoring and enforcing compliance with all federal and state insider trading laws and regulations, including Sections 10(b), 16, 20A and 21A of the Exchange Act and the rules and regulations promulgated thereunder, and Rule 144 under the Securities Act of 1933 (the "Securities Act"), and assisting in the preparation and filing of all required SEC reports relating to insider trading in Company securities, including any related Forms 3, 4, 5 and 144 and Schedules 13D and 13G.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Revising the Policy as necessary to reflect changes in federal or state insider trading laws and regulations or for periodic updates, as needed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Maintaining as Company records, originals or copies of all documents required by the provisions of the Policy or the procedures set forth herein, and copies of all required SEC reports relating to insider trading, including any related Forms 3, 4, 5 and 144 and Schedules 13D and 13G.

The Insider Trading Officer may designate one or more individuals who may perform the Insider Trading Officer's duties in the event that the Insider Trading Officer is unable or unavailable to perform such duties.

2 Sotherly Insider Trading Policy – 2026

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**EXHIBIT 19.1**

**DEFINITION OF "MATERIAL NONPUBLIC INFORMATION"**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A."MATERIAL" INFORMATION

Information about the Company is "material" if it would be expected to affect the investment or voting decisions of a reasonable stockholder or investor, or if the disclosure of the information would be expected to significantly alter the total mix of the information in the marketplace about the Company. In simple terms, "material" information is any type of information which could reasonably be expected to materially affect the price of Company securities. While it is not possible to identify all information that would be deemed "material" to the Company, the following types of information ordinarily would be considered as such:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Company financial performance, especially Company quarterly and year-end earnings, and significant changes in Sotherly's financial performance or liquidity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Company projections and strategic plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Potential Company mergers and acquisitions or the sale of material Company assets or subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Material changes in the level or severity of any Company nonperforming assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•New major contracts or agreements or amendments thereto, or finance sources or the loss thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Stock splits, public or private securities/debt offerings or changes in Company dividend policies or amounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Changes in Company senior management.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Actual or threatened major litigation involving the Company or the resolution of such litigation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B."NONPUBLIC" INFORMATION

Material information is "nonpublic" if it has not been widely disseminated to the public through major newswire services, national news services and financial news services. For the purposes of the Policy, information will be considered public, i.e., no longer "nonpublic", after the close of trading on the second (2<sup>nd</sup>) full trading day following the Company's widespread public release of the information.

3 Sotherly Insider Trading Policy – 2026

------

**EXHIBIT 19.1**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.CONSULT THE INSIDER TRADING OFFICER FOR GUIDANCE

Any Insiders who are unsure whether the information they possess is material or nonpublic must consult with the Insider Trading Officer for guidance before trading in any Company securities.

**V.** **STATEMENT OF COMPANY POLICY AND PROCEDURES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.PROHIBITED ACTIVITIES

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.No Insider may trade in Company securities while he or she is aware of material nonpublic information concerning the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.No Insider may trade in Company securities during any blackout period described in Section VI.B below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.No Insider may trade in Company securities unless the trades have been approved by the Insider Trading Officer in accordance with the procedures set forth in Section VI.C.1 below or is otherwise subject to Section VI.C.2 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The Insider Trading Officer may not trade in Company securities unless the trades have been approved by outside legal counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.No Insider may "tip" or disclose material nonpublic information concerning the Company to any outside person (including family members, analysts, individual investors and members of the investment community and news media) unless required as part of that Insider's regular duties for the Company. In any instance in which such information is disclosed to outsiders, the Company will take such steps as are necessary to preserve the confidentiality of the information, including requiring the outsider to agree in writing to comply with the terms of the Policy and/or to sign a confidentiality and nondisclosure agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.No Insider may give trading advice of any kind about the Company to anyone while aware of material nonpublic information about the Company, except that Insiders should advise others not to trade if doing so might violate the law or the Policy. The Company strongly discourages all Insiders from giving trading advice concerning the Company to third parties even when the Insiders are not aware of material nonpublic information about the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.No Insider may trade in any interest or position relating to the future price of Company securities, such as a put, call or short sale.

4 Sotherly Insider Trading Policy – 2026

------

**EXHIBIT 19.1**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.No Insider may (a) trade in the securities of any other public company while aware of material nonpublic information concerning that company, (b) "tip" or disclose material nonpublic information concerning any other public company to anyone or (c) give trading advice of any kind to anyone concerning any other public company while possessing material nonpublic information about that company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.BLACKOUT PERIODS

No Insider may trade in Company securities during any blackout period that the Insider Trading Officer may designate. A customary blackout period exists beginning at the pre-opening of the NASDAQ Stock Market, or 7:00 a.m. Eastern Time, on the last full trading day of the final month of each fiscal quarter and extends through the second (2<sup>nd</sup>) full trading day following the Company's widespread public release of quarterly or year-end earnings, as the case may be. The Insider Trading Officer may impose special blackout periods in connection with pending acquisition transactions or other material unannounced events. No Insiders may disclose to any outside third party that a special blackout period has been designated.

If an Insider has an unexpected and urgent need to sell Company securities in order to generate cash during a blackout period, the Insider may request that the Insider Trading Officer consider granting a hardship exception. This type of exception will only be granted if the Insider Trading Officer concludes that the Company operating results or financial condition for the applicable quarter does not constitute material nonpublic information. No hardship exception will be granted during a special blackout period described in the paragraph above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.TRANSACTION PROCEDURES

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Insiders must get prior approval, even during non blackout periods, from the Insider Trading Officer prior to buying, selling, transferring, gifting or engaging in any other trading activity involving Company securities. Insiders are to contact the Insider Trading Officer, describe the proposed transaction and confirm that they do not possess material nonpublic information. The Insider Trading Officer will consider the request, and if granted, will assist in the completion of any required SEC securities filings documentation. Insiders should retain all records and documents that support their reasons for making each trade.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Insiders who wish to systematically buy or sell Company securities are encouraged to buy or sell their securities pursuant to a 10b5-1 Plan which is approved by the Insider Trading Officer, specifies the dates and amounts of securities to be sold and can only be modified during non blackout periods and when the individual is not in possession of material nonpublic information. Trades by Insiders in Company securities that are executed pursuant to an approved 10b5-1 Plan are not

5 Sotherly Insider Trading Policy – 2026

------

**EXHIBIT 19.1**

subject to the prohibition on trading on the basis of material nonpublic information or to the restrictions set forth above relating to pre-clearance procedures and blackout periods.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.*Derivative Securities*. The trading prohibitions and restrictions of the Policy apply to all sales of securities acquired through the exercise of derivative securities granted by the Company, but not to the acquisition of securities through such exercises. Section 16 Individuals must still comply with all related reporting requirements (see Section VII below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.PRIORITY OF STATUTORY OR REGULATORY TRADING RESTRICTIONS

The trading prohibitions and restrictions set forth in the Policy will be superseded by any greater prohibitions or restrictions prescribed by federal or state securities laws and regulations, e.g., short-swing trading by Section 16 Individuals or restrictions on the sale of securities subject to Rule 144 under the Securities Act. Any Insider who is uncertain whether other prohibitions or restrictions apply should consult with the Insider Trading Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. APPLICATION TO FORMER, TEMPORARY OR RETIRED INSIDERS

The Policy applies, and will continue to apply, to a former, temporary or retired Insider until the later of: (i) the second (2<sup>nd</sup>) full trading day following the public release of earnings for the fiscal quarter in which such person leaves or is no longer associated with the Company or (ii) the second (2<sup>nd</sup>) full trading day after any material nonpublic information known by the Insider has become public or no longer material.

**VI.** **REPORTING OF COMPLETED TRADES**

A Form 4 must be completed and filed within two (2) business days of the execution of a reportable transaction. If the Section 16 Individual has completed an acceptable power of attorney, the Insider Trading Officer may complete the Form 4 on such individual's behalf provided that such Section 16 Individual has supplied the Insider Trading Officer all necessary transaction detail.

Any late or delinquent Section 16 filing must be reported under separate caption, in the Company's proxy statement and Form 10-K.

**VII.** **POTENTIAL CIVIL, CRIMINAL AND DISCIPLINARY SANCTIONS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.CIVIL AND CRIMINAL PENALTIES

The consequences of prohibited insider trading or tipping can be severe. Persons violating insider trading or tipping rules may (i) be required to surrender the profit made or the loss avoided by the trading, (ii) pay the loss suffered by the person who purchased

6 Sotherly Insider Trading Policy – 2026

------

**EXHIBIT 19.1**

securities from or sold securities to the insider tippee, (iii) face significant civil and/or criminal penalties and face incarceration for such illegal actions. The Company and/or the supervisors of the person violating any such rules may also face significant civil and/or criminal penalties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.COMPANY DISCIPLINE

Violation of the Policy or federal or state insider trading or tipping laws by any director, officer or employee, or their family members, may subject the director to dismissal proceedings and the officer or employee to disciplinary action by the Company up to and including termination for cause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.REPORTING OF VIOLATIONS

Any Insider who violates the Policy or any federal or state laws governing insider trading or tipping, or knows of any such violation by any other Insiders, must report the violation immediately to the Insider Trading Officer. Upon learning of any such violation, the Insider Trading Officer, in consultation with the Company's legal counsel, will determine whether the Company should release any material nonpublic information or whether the Company should report the violation to the SEC or other appropriate governmental authority.

**VIII.** **POLICY APPROVAL AND REVIEW**

Approved by the Board of Directors in April 2005

Revised and approved by the Board of Directors in March 2007

Approved by the Board of Directors in January 2008

Revised and approved by the Board of Directors in March 2009

Revised and approved by the Board of Directors in October 2011

Revised and approved by the Board of Directors in October 2013

Revised and approved by the Board of Directors in October 2014

Revised and approved by the Board of Directors in October 2015

Revised and approved by the Board of Directors in October 2016

Revised and approved by the Board of Directors in October 2017

Revised and approved by the Board of Directors in October 2018

Revised and approved by the Board of Directors in October 2019

Revised and approved by the Board of Directors in October 2020

Revised and approved by the Board of Directors in October 2021

Revised and approved by the Board of Directors in October 2022

Revised and approved by the Board of Directors in October 2023

Revised and approved by the Board of Directors in October 2024

Revised and approved by the Board of Directors in October 2025

Revised and approved by the Board of Directors in March 2026

7 Sotherly Insider Trading Policy – 2026

------

**EXHIBIT 19.1**

**EXHIBIT A**

*<u>Section 16 Individuals</u>:*

Zachary Schmidt, Chief Executive Officer and Chairman of the Board

William Ryan Pellum, Chief Financial Officer and Director

Scott M. Kucinski, Executive Vice President and Chief Operating Officer

Anthony E. Domalski, Controller

Jay Schulte, Director

8 Sotherly Insider Trading Policy – 2026

------

**EXHIBIT 19.1**

**EXHIBIT B**

*<u>Key Employees</u>:*

Jami Lazarov, Corporate Secretary

9 Sotherly Insider Trading Policy – 2026

------

## Exhibit 21.1

**EXHIBIT 21.1**

**SUBSIDIARIES OF SOTHERLY HOTELS INC.**

---

| | |
|:---|:---|
| **Name** | **Jurisdiction of Organization/Incorporation** |
| &nbsp;&nbsp;&nbsp;Sotherly Hotels LP | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Hospitality TRS, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Hospitality TRS Holding, Inc. | Maryland |
| &nbsp;&nbsp;&nbsp;MHI Louisville TRS, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Raleigh TRS, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Atlanta TRS, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Jacksonville TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Hollywood Hotel TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Ocean Resort TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Ocean Resort Services TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI GP LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Sotherly-Houston GP LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Laurel Hotel Associates LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Laurel West LLC | Maryland |
| &nbsp;&nbsp;&nbsp;Philadelphia Hotel Associates LP | Pennsylvania |
| &nbsp;&nbsp;&nbsp;Brownestone Partners, LLC | North Carolina |
| &nbsp;&nbsp;&nbsp;Capitol Hotel Associates L.P., L.L.P. | Virginia |
| &nbsp;&nbsp;&nbsp;Savannah Hotel Associates LLC | Virginia |
| &nbsp;&nbsp;&nbsp;MHI Jacksonville LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Atlanta LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Louisville Hotel Associates, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Hotel Investments Holdings, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Hospitality TRS II, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Tampa Hotel Associates, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Raleigh Hotel Associates, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Houston Hotel Associates L.P., L.L.P. | Virginia |
| &nbsp;&nbsp;&nbsp;Houston Hotel Manager, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Houston Hotel Owner, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Atlanta Hotel Associates, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Wilmington LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Ocean Resort Owner LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Hollywood Hotel Associates Lessee LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Hollywood Hotel Associates LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Hollywood Hotel Holdings LLC | Delaware |
| &nbsp;&nbsp;&nbsp;EJ's Provision Co. LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Arlington LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Arlington TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO ICW Resort Owner LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO ICW Resort TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO ICW Resort COA LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Houston Beverage LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Laurel TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Tampa TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Savannah TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Sotherly Hotels Mezz LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Sotherly Hotels Mortgage Pledgor, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Sotherly Hotels Owner, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Hospitality TRS Holdco, LLC | Delaware |

---

------

## Exhibit 21.2

**EXHIBIT 21.2**

**SUBSIDIARIES OF SOTHERLY HOTELS LP**

---

| | |
|:---|:---|
| **Name** | **Jurisdiction of Organization/Incorporation** |
| &nbsp;&nbsp;&nbsp;MHI Hospitality TRS, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Hospitality TRS Holding, Inc. | Maryland |
| &nbsp;&nbsp;&nbsp;MHI Louisville TRS, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Raleigh TRS, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Atlanta TRS, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Jacksonville TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Hollywood Hotel TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Ocean Resort TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Ocean Resort Services TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI GP LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Sotherly-Houston GP LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Laurel Hotel Associates LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Laurel West LLC | Maryland |
| &nbsp;&nbsp;&nbsp;Philadelphia Hotel Associates LP | Pennsylvania |
| &nbsp;&nbsp;&nbsp;Brownestone Partners, LLC | North Carolina |
| &nbsp;&nbsp;&nbsp;Capitol Hotel Associates L.P., L.L.P. | Virginia |
| &nbsp;&nbsp;&nbsp;Savannah Hotel Associates LLC | Virginia |
| &nbsp;&nbsp;&nbsp;MHI Jacksonville LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Atlanta LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Louisville Hotel Associates, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Hotel Investments Holdings, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Hospitality TRS II, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Tampa Hotel Associates, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Raleigh Hotel Associates, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Houston Hotel Associates L.P., L.L.P. | Virginia |
| &nbsp;&nbsp;&nbsp;Houston Hotel Manager, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Houston Hotel Owner, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Atlanta Hotel Associates, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Wilmington LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Ocean Resort Owner LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Hollywood Hotel Associates Lessee LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Hollywood Hotel Associates LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Hollywood Hotel Holdings LLC | Delaware |
| &nbsp;&nbsp;&nbsp;EJ's Provision Co. LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Arlington LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Arlington TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO ICW Resort Owner LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO ICW Resort TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO ICW Resort COA LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Houston Beverage LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Laurel TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Tampa TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;SOHO Savannah TRS LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Sotherly Hotels Mezz LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Sotherly Hotels Mortgage Pledgor, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;Sotherly Hotels Owner, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;MHI Hospitality TRS Holdco, LLC | Delaware |

---

------

## Exhibit 31.1

**EXHIBIT 31.1**

**CERTIFICATION PURSUANT TO SECTION 302**

**OF THE SARBANES-OXLEY ACT OF 2002**

**FOR THE CHIEF EXECUTIVE OFFICER**

I, Zachary Schmidt, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2025 of Sotherly Hotels Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) 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):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: April 15, 2026

---

| | |
|:---|:---|
| By: | / S / ZACHARY SCHMIDT |
| **Name:** | **Zachary Schmidt** |
| **Title:** | **Chief Executive Officer** |

---

------

## Exhibit 31.2

**EXHIBIT 31.2**

**CERTIFICATION PURSUANT TO SECTION 302**

**OF THE SARBANES-OXLEY ACT OF 2002**

**FOR THE CHIEF FINANCIAL OFFICER**

I, William Ryan Pellum, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2025 of Sotherly Hotels Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) 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):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: April 15, 2026

---

| | |
|:---|:---|
| By: | / S / WILLIAM RYAN PELLUM |
| **Name:** | **William Ryan Pellum** |
| **Title:** | **Chief Financial Officer** |

---

------

## Exhibit 31.3

**EXHIBIT 31.3**

**CERTIFICATION PURSUANT TO SECTION 302**

**OF THE SARBANES-OXLEY ACT OF 2002**

**FOR THE CHIEF EXECUTIVE OFFICER**

I, Zachary Schmidt, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2025 of Sotherly Hotels LP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) 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):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: April 15, 2026

---

| | |
|:---|:---|
| By: | / S / ZACHARY SCHMIDT |
| **Name:** | **Zachary Schmidt** |
| **Title:** | **Chief Executive Officer**<br>**Sotherly Hotels Inc., sole general partner of**<br>**Sotherly Hotels LP** |

---

------

## Exhibit 31.4

**EXHIBIT 31.4**

**CERTIFICATION PURSUANT TO SECTION 302**

**OF THE SARBANES-OXLEY ACT OF 2002**

**FOR THE CHIEF FINANCIAL OFFICER**

I, William Ryan Pellum, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2025 of Sotherly Hotels LP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) 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):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: April 15, 2026

---

| | |
|:---|:---|
| By: | / S / WILLIAM RYAN PELLUM |
| **Name:** | **William Ryan Pellum** |
| **Title:** | **Chief Financial Officer**<br>**Sotherly Hotels Inc., sole general partner of**<br>**Sotherly Hotels LP** |

---

------

## Exhibit 32.1

**EXHIBIT 32.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER**

**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 Annual Report of Sotherly Hotels Inc. (the "Corporation") on Form 10-K for the period ending December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Zachary Schmidt, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: April 15, 2026

---

| | |
|:---|:---|
| By: | / S / ZACHARY SCHMIDT |
| **Name:** | **Zachary Schmidt** |
| **Title:** | **President and Chief Executive Officer** |

---

------

## Exhibit 32.2

**EXHIBIT 32.2**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER**

**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 Annual Report of Sotherly Hotels Inc. (the "Corporation") on Form 10-K for the period ending December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William Ryan Pellum, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: April 15, 2026

---

| | |
|:---|:---|
| By: | / S / WILLIAM RYAN PELLUM  |
| **Name:** | **William Ryan Pellum** |
| **Title:** | **Chief Financial Officer** |

---

------

## Exhibit 32.3

**EXHIBIT 32.3**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER**

**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 Annual Report of Sotherly Hotels LP (the "Operating Partnership") on Form 10-K for the period ending December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Zachary Schmidt, Chief Executive Officer of Sotherly Hotels Inc., sole general partner of the Operating Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.

Date: April 15, 2026

---

| | |
|:---|:---|
| By: | / S / ZACHARY SCHMIDT  |
| **Name:** | **Zachary Schmidt** |
| **Title:** | **Chief Executive Officer**<br>**Sotherly Hotels Inc., sole general partner of**<br>**Sotherly Hotels LP** |

---

------

## Exhibit 32.4

**EXHIBIT 32.4**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER**

**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 Annual Report of Sotherly Hotels LP (the "Operating Partnership") on Form 10-K for the period ending December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William Ryan Pellum, Chief Financial Officer of Sotherly Hotels Inc., sole general partner of the Operating Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.

Date: April 15, 2026

---

| | |
|:---|:---|
| By: | / S / WILLIAM RYAN PELLUM |
| **Name:** | **William Ryan Pellum** |
| **Title:** | **Chief Financial Officer**<br>**Sotherly Hotels Inc., sole general partner of**<br>**Sotherly Hotels LP** |

---

------