RLJ Lodging posts Q3 loss to common; $28.6M buybacks, term loan upsized
Filing Impact
Filing Sentiment
Form Type
10-Q
RLJ Lodging Trust reported softer Q3 results. Total revenue was $330.0 million versus $345.7 million a year ago, and net (loss) income attributable to common shareholders was $10.0 million, or $(0.07) per share, compared with $14.3 million, or $0.09 per share, last year. Nine‑month revenue was $1,021.3 million versus $1,039.5 million, with net income to common of $9.2 million, or $0.06 per share, versus $43.8 million, or $0.28 per share.
Cash from operations for the nine months was $180.9 million; cash and cash equivalents were $374.8 million at September 30, 2025. Debt, net, was $2,222.1 million, essentially flat year‑to‑date, with the Revolver at $0 outstanding and $600.0 million of availability.
In April 2025, the company upsized and extended a term loan to $300.0 million and used the $100.0 million increase to repay the Revolver. RLJ sold the 181‑room Courtyard Atlanta Buckhead for $24.3 million and repurchased about 3.3 million common shares for approximately $28.6 million. The board authorized a $250.0 million 2025 share repurchase program; as of November 6, 2025, $245.7 million remained. RLJ owned 95 hotels with roughly 21,200 rooms as of quarter‑end.
Positive
- None.
Negative
- None.
Insights
Q3 revenue fell and EPS swung to a small loss; liquidity remains solid.
Revenue declined to
Operations generated
Capital deployment included a
Leverage steady; term loan extended; ample Revolver capacity.
Debt (net) was
Senior notes total
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2025
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number 001-35169
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||
(301 ) 280-7777
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of Each Class | Trading Symbol | Name of Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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| ☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||||||||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of October 30, 2025, 151,085,078 common shares of beneficial interest of the Registrant, $0.01 par value per share, were outstanding.
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TABLE OF CONTENTS
| Page | ||||||||
PART I. FINANCIAL INFORMATION | ||||||||
Item 1. | Financial Statements | |||||||
| Consolidated Financial Statements (unaudited) | ||||||||
Balance Sheets as of September 30, 2025 and December 31, 2024 | 1 | |||||||
Statements of Operations and Comprehensive (Loss) Income for the three and nine months ended September 30, 2025 and 2024 | 2 | |||||||
Statements of Changes in Equity for the three and nine months ended September 30, 2025 and 2024 | 4 | |||||||
Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 | 8 | |||||||
Notes to the Consolidated Financial Statements | 9 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 38 | ||||||
Item 4. | Controls and Procedures | 38 | ||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 39 | ||||||
Item 1A. | Risk Factors | 39 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 39 | ||||||
Item 3. | Defaults Upon Senior Securities | 39 | ||||||
Item 4. | Mine Safety Disclosures | 39 | ||||||
Item 5. | Other Information | 40 | ||||||
Item 6. | Exhibits | 40 | ||||||
Signatures | 41 | |||||||
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
RLJ Lodging Trust
Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
(unaudited)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Investment in hotel properties, net | $ | $ | |||||||||
| Investment in unconsolidated joint ventures | |||||||||||
| Cash and cash equivalents | |||||||||||
| Restricted cash reserves | |||||||||||
Hotel and other receivables, net of allowance of $ | |||||||||||
| Lease right-of-use assets | |||||||||||
| Prepaid expense and other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Equity | |||||||||||
| Debt, net | $ | $ | |||||||||
| Accounts payable and other liabilities | |||||||||||
| Advance deposits and deferred revenue | |||||||||||
| Lease liabilities | |||||||||||
| Accrued interest | |||||||||||
| Distributions payable | |||||||||||
| Total liabilities | |||||||||||
Commitments and Contingencies (Note 11) | |||||||||||
| Equity | |||||||||||
| Shareholders’ equity: | |||||||||||
Preferred shares of beneficial interest, $ | |||||||||||
Series A Cumulative Convertible Preferred Shares, $ | |||||||||||
Common shares of beneficial interest, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Distributions in excess of net earnings | ( | ( | |||||||||
| Accumulated other comprehensive income | |||||||||||
| Total shareholders’ equity | |||||||||||
| Noncontrolling interests: | |||||||||||
| Noncontrolling interest in the Operating Partnership | |||||||||||
| Noncontrolling interest in consolidated joint ventures | |||||||||||
| Total noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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RLJ Lodging Trust
Consolidated Statements of Operations and Comprehensive (Loss) Income
(Amounts in thousands, except share and per share data)
(unaudited)
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Operating revenues | |||||||||||||||||||||||
| Room revenue | $ | $ | $ | $ | |||||||||||||||||||
| Food and beverage revenue | |||||||||||||||||||||||
| Other revenue | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Room expense | |||||||||||||||||||||||
| Food and beverage expense | |||||||||||||||||||||||
| Management and franchise fee expense | |||||||||||||||||||||||
| Other operating expenses | |||||||||||||||||||||||
| Total property operating expenses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Property tax, insurance and other | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Transaction costs | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| (Loss) gain on sale of hotel properties, net | ( | ||||||||||||||||||||||
| Loss on extinguishment of indebtedness, net | ( | ( | ( | ||||||||||||||||||||
| (Loss) income before equity in (loss) income from unconsolidated joint ventures | ( | ||||||||||||||||||||||
| Equity in (loss) income from unconsolidated joint ventures | ( | ( | ( | ||||||||||||||||||||
| (Loss) income before income tax expense | ( | ||||||||||||||||||||||
| Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
| Net (loss) income | ( | ||||||||||||||||||||||
| Net loss (income) attributable to noncontrolling interests: | |||||||||||||||||||||||
| Noncontrolling interest in the Operating Partnership | ( | ( | ( | ||||||||||||||||||||
| Noncontrolling interest in consolidated joint ventures | |||||||||||||||||||||||
| Net (loss) income attributable to RLJ | ( | ||||||||||||||||||||||
| Preferred dividends | ( | ( | ( | ( | |||||||||||||||||||
| Net (loss) income attributable to common shareholders | $ | ( | $ | $ | $ | ||||||||||||||||||
| Basic per common share data: | |||||||||||||||||||||||
| Net (loss) income per share attributable to common shareholders | $ | ( | $ | $ | $ | ||||||||||||||||||
| Weighted-average number of common shares | |||||||||||||||||||||||
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| Diluted per common share data: | |||||||||||||||||||||||
| Net (loss) income per share attributable to common shareholders | $ | ( | $ | $ | $ | ||||||||||||||||||
| Weighted-average number of common shares | |||||||||||||||||||||||
| Comprehensive (loss) income: | |||||||||||||||||||||||
| Net (loss) income | $ | ( | $ | $ | $ | ||||||||||||||||||
| Unrealized loss on interest rate derivatives | ( | ( | ( | ( | |||||||||||||||||||
| Comprehensive (loss) income | ( | ||||||||||||||||||||||
| Comprehensive loss (income) attributable to noncontrolling interests: | |||||||||||||||||||||||
| Noncontrolling interest in the Operating Partnership | ( | ( | ( | ||||||||||||||||||||
| Noncontrolling interest in consolidated joint ventures | |||||||||||||||||||||||
| Comprehensive (loss) income attributable to RLJ | $ | ( | $ | $ | $ | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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RLJ Lodging Trust
Consolidated Statements of Changes in Equity
(Amounts in thousands, except share data)
(unaudited)
| Shareholders’ Equity | Noncontrolling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Par Value | Additional Paid-in Capital | Distributions in excess of net earnings | Accumulated Other Comprehensive Income | Operating Partnership | Consolidated Joint Ventures | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized loss on interest rate derivatives | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | — | — | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of share-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares acquired as part of a share repurchase program | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forfeiture of restricted stock | — | — | ( | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions on preferred shares | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions on common shares and units | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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RLJ Lodging Trust
Consolidated Statements of Changes in Equity
(Amounts in thousands, except share data)
(unaudited)
| Shareholders’ Equity | Noncontrolling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Par Value | Additional Paid-in Capital | Distributions in excess of net earnings | Accumulated Other Comprehensive Income | Operating Partnership | Consolidated Joint Ventures | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized loss on interest rate derivatives | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of share-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares acquired as part of a share repurchase program | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forfeiture of restricted stock | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions on preferred shares | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions on common shares and units | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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RLJ Lodging Trust
Consolidated Statements of Changes in Equity
(Amounts in thousands, except share data)
(unaudited)
| Shareholders’ Equity | Noncontrolling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Par Value | Additional Paid-in Capital | Distributions in excess of net earnings | Accumulated Other Comprehensive Income | Operating Partnership | Consolidated Joint Ventures | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized loss on interest rate derivatives | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | — | — | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of share-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares acquired as part of a share repurchase program | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forfeiture of restricted stock | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions on preferred shares | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions on common shares and units | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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RLJ Lodging Trust
Consolidated Statements of Changes in Equity
(Amounts in thousands, except share data)
(unaudited)
| Shareholders’ Equity | Noncontrolling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Par Value | Additional Paid-in Capital | Distributions in excess of net earnings | Accumulated Other Comprehensive Income | Operating Partnership | Consolidated Joint Ventures | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized loss on interest rate derivatives | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of share-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares acquired as part of a share repurchase program | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forfeiture of restricted stock | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions on preferred shares | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions on common shares and units | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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RLJ Lodging Trust
Consolidated Statements of Cash Flows
(Amounts in thousands)
(unaudited)
| For the nine months ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to cash flow provided by operating activities: | |||||||||||
| Gain on sale of hotel properties, net | ( | ( | |||||||||
| Loss on extinguishment of indebtedness, net | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of deferred financing costs | |||||||||||
| Non-cash lease expense and other amortization | |||||||||||
| Equity in loss (income) from unconsolidated joint ventures | ( | ||||||||||
| Distribution of income from unconsolidated joint venture | |||||||||||
| Amortization of share-based compensation | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Hotel and other receivables, net | ( | ( | |||||||||
| Prepaid expense and other assets | ( | ( | |||||||||
| Accounts payable and other liabilities | |||||||||||
| Advance deposits and deferred revenue | |||||||||||
| Accrued interest | ( | ( | |||||||||
| Net cash flow provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Acquisitions, net | ( | ||||||||||
| Proceeds from sales of hotel properties, net | |||||||||||
| Improvements and additions to hotel properties and other assets | ( | ( | |||||||||
| Net cash flow used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Borrowings under Revolver | |||||||||||
| Repayments of Revolver | ( | ( | |||||||||
| Borrowings on Term Loans | |||||||||||
| Repayment of Term Loan | ( | ||||||||||
| Repayment of mortgage loan | ( | ||||||||||
| Repurchase of common shares under share repurchase programs | ( | ( | |||||||||
| Repurchase of common shares to satisfy employee tax withholding requirements | ( | ( | |||||||||
| Distributions on preferred shares | ( | ( | |||||||||
| Distributions on common shares | ( | ( | |||||||||
| Distributions on Operating Partnership units | ( | ( | |||||||||
| Payments of deferred financing costs | ( | ( | |||||||||
| Net cash flow used in financing activities | ( | ( | |||||||||
| Net change in cash, cash equivalents, and restricted cash reserves | ( | ( | |||||||||
| Cash, cash equivalents, and restricted cash reserves, beginning of period | |||||||||||
| Cash, cash equivalents, and restricted cash reserves, end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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RLJ Lodging Trust
Notes to the Consolidated Financial Statements
(unaudited)
1. General
Organization
RLJ Lodging Trust (the "Company") was formed as a Maryland real estate investment trust ("REIT") on January 31, 2011. The Company is a self-advised and self-administered REIT that owns primarily premium-branded, rooms-oriented, high-margin, focused-service and compact full-service hotels located within heart of demand locations. The Company elected to be taxed as a REIT, for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2011.
Substantially all of the Company’s assets and liabilities are held by, and all of its operations are conducted through, RLJ Lodging Trust, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership. As of September 30, 2025, there were 151,820,572 units of limited partnership interest in the Operating Partnership ("OP units") outstanding and the Company owned, through a combination of direct and indirect interests, 99.5 % of the outstanding OP units.
2. Summary of Significant Accounting Policies
The Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission ("SEC") on February 26, 2025 (the "Annual Report"), contains a discussion of the Company's significant accounting policies. Other than noted below, there have been no significant changes to the Company's significant accounting policies since December 31, 2024.
Basis of Presentation and Principles of Consolidation
The unaudited consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conformity with the rules and regulations of the SEC applicable to financial information. The unaudited financial statements include all adjustments of a normal recurring nature that are necessary, in the opinion of management, to fairly state the consolidated balance sheets, statements of operations and comprehensive (loss) income, statements of changes in equity and statements of cash flows.
The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2024, included in the Annual Report.
The consolidated financial statements include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries, and joint ventures in which the Company has a majority voting interest and control. For the controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. The Company also records the real estate interest in one hotel property in which it holds a 50 % non-controlling interest using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating this ASU to determine its impact on the Company’s consolidated financial statements and related disclosures in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, which requires public entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items in the notes to the financial statements. Public entities are required to apply the guidance prospectively and may elect to apply it retrospectively. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating this ASU to determine its impact on the Company’s consolidated financial statements and related disclosures.
3. Investment in Hotel Properties
Investment in hotel properties consisted of the following (in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||
| Land and improvements | $ | $ | |||||||||
| Buildings and improvements | |||||||||||
| Furniture, fixtures and equipment | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Investment in hotel properties, net | $ | $ | |||||||||
For the three and nine months ended September 30, 2025, the Company recognized depreciation expense related to its investment in hotel properties of approximately $46.8 million and $138.7 million, respectively. For the three and nine months ended September 30, 2024, the Company recognized depreciation expense related to its investment in hotel properties of approximately $44.9 million and $133.9 million, respectively.
4. Acquisitions
On January 29, 2024, the Company acquired the fee simple interest in the Wyndham Boston Beacon Hill in Boston, Massachusetts, which was previously owned via a leasehold interest that was subject to a ground lease, for a purchase price of approximately $125.0 million. The acquisition was accounted for as an asset acquisition, whereby approximately $0.2 million of transaction costs were capitalized as part of the cost of the acquisition. The existing right-of-use asset of $1.3 million, lease liability of $0.1 million and $125.2 million cost of the acquisition were recorded as land in the accompanying consolidated balance sheets.
Also during the nine months ended September 30, 2024, the Company acquired a 100 % interest in the following property:
| Property | Location | Acquisition Date | Management Company | Rooms | Purchase Price (in thousands) | |||||||||||||||||||||||||||
| Hotel Teatro | Denver, CO | June 13, 2024 | Sage Hospitality | $ | ||||||||||||||||||||||||||||
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The acquisition of Hotel Teatro was accounted for as an asset acquisition, whereby approximately $0.6 million of transaction costs were capitalized as part of the cost of the acquisition. The allocation of the costs for the property acquired was as follows (in thousands):
| September 30, 2024 | |||||||||||
| Land and improvements | $ | ||||||||||
| Buildings and improvements | |||||||||||
| Furniture, fixtures and equipment | |||||||||||
| Total purchase price | $ | ||||||||||
The value of the asset acquired was primarily based on a sales comparison approach (for land) and a depreciated replacement cost approach (for building and improvements and furniture, fixtures and equipment). The sales comparison approach used inputs of recent land sales in the hotel market. The depreciated replacement cost approach used inputs of both direct and indirect replacement costs using a nationally recognized authority on replacement cost information as well as the age, square footage and number of rooms of the asset.
5. Sales of Hotel Properties
In connection with the sales of hotel properties, the Company recorded a net loss of $0.1 million and a net gain of $0.8 million for the three and nine months ended September 30, 2025, respectively, and net gains of $4.8 million and $8.3 million for the three and nine months ended September 30, 2024, respectively.
On March 6, 2025, the Company sold the 181 -room Courtyard Atlanta Buckhead hotel property in Atlanta, Georgia for a sales price of $24.3 million.
During the nine months ended September 30, 2024, the Company sold the following hotel properties in two separate transactions for a combined sales price of approximately $20.8 million.
| Hotel Property Name | Location | Sale Date | Rooms | |||||||||||||||||
| Residence Inn Merrillville | Merrillville, IN | May 21, 2024 | ||||||||||||||||||
| Fairfield Inn & Suites Denver Cherry Creek | Denver, CO | September 9, 2024 | ||||||||||||||||||
| Total | ||||||||||||||||||||
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6. Revenue
The Company recognized revenue from the following geographic markets (in thousands):
| For the three months ended September 30, 2025 | For the three months ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Room Revenue | Food and Beverage Revenue | Other Revenue | Total Revenue | Room Revenue | Food and Beverage Revenue | Other Revenue | Total Revenue | ||||||||||||||||||||||||||||||||||||||||
| Southern California | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Northern California | |||||||||||||||||||||||||||||||||||||||||||||||
| South Florida | |||||||||||||||||||||||||||||||||||||||||||||||
| New York City | |||||||||||||||||||||||||||||||||||||||||||||||
| Chicago | |||||||||||||||||||||||||||||||||||||||||||||||
| Boston | |||||||||||||||||||||||||||||||||||||||||||||||
| Louisville | |||||||||||||||||||||||||||||||||||||||||||||||
| Washington, DC | |||||||||||||||||||||||||||||||||||||||||||||||
| Charleston | |||||||||||||||||||||||||||||||||||||||||||||||
| Houston | |||||||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| For the nine months ended September 30, 2025 | For the nine months ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Room Revenue | Food and Beverage Revenue | Other Revenue | Total Revenue | Room Revenue | Food and Beverage Revenue | Other Revenue | Total Revenue | ||||||||||||||||||||||||||||||||||||||||
| Southern California | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Northern California | |||||||||||||||||||||||||||||||||||||||||||||||
| South Florida | |||||||||||||||||||||||||||||||||||||||||||||||
| New York City | |||||||||||||||||||||||||||||||||||||||||||||||
| Chicago | |||||||||||||||||||||||||||||||||||||||||||||||
| Louisville | |||||||||||||||||||||||||||||||||||||||||||||||
| Washington, DC | |||||||||||||||||||||||||||||||||||||||||||||||
| Boston | |||||||||||||||||||||||||||||||||||||||||||||||
| Charleston | |||||||||||||||||||||||||||||||||||||||||||||||
| Houston | |||||||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
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7. Debt
The Company's debt consisted of the following (in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||
| Senior Notes, net | $ | $ | |||||||||
| Revolver Outstanding | |||||||||||
| Term Loans, net | |||||||||||
| Mortgage loans, net | |||||||||||
| Debt, net | $ | $ | |||||||||
Senior Notes
The Company's senior notes (collectively, the "Senior Notes") consisted of the following (dollars in thousands):
| Carrying Value at | ||||||||||||||||||||||||||
| Interest Rate | Maturity Date | September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||
| 2029 Senior Notes (1) | September 2029 | $ | $ | |||||||||||||||||||||||
| 2026 Senior Notes (1) | July 2026 | |||||||||||||||||||||||||
| Deferred financing costs, net | ( | ( | ||||||||||||||||||||||||
| Total senior notes, net | $ | $ | ||||||||||||||||||||||||
(1)Requires payment of interest only through maturity.
The indentures governing the Senior Notes contain customary covenants that limit the Operating Partnership’s ability and,
in certain instances, the ability of its subsidiaries, to incur additional debt, create liens on assets, make distributions and pay
dividends, make certain types of investments, issue guarantees of indebtedness, and make certain restricted payments. These
limitations are subject to a number of exceptions and qualifications set forth in the indentures.
A summary of the various restrictive covenants for the Senior Notes are as follows:
| Covenant | Compliance September 30, 2025 | |||||||||||||
| Maintenance Covenant | ||||||||||||||
| Unencumbered Asset to Unencumbered Debt Ratio | > | Yes | ||||||||||||
| Incurrence Covenants | ||||||||||||||
| Consolidated Indebtedness less than Adjusted Total Assets | < | Yes | ||||||||||||
| Consolidated Secured Indebtedness less than Adjusted Total Assets | < | Yes | ||||||||||||
| Interest Coverage Ratio | > | Yes | ||||||||||||
Revolver and Term Loans
The Company has the following unsecured credit agreements in place:
•$600.0 million revolving credit facility with a scheduled maturity date of May 10, 2027 and either a one-year extension option or up to two six-month extension options if certain conditions are satisfied (the "Revolver");
•$500.0 million term loan with a scheduled maturity date of September 24, 2027 and up to two one-year extension options if certain conditions are satisfied (the "$500 Million Term Loan Maturing 2027");
•$300.0 million term loan with a scheduled maturity date of April 3, 2028 and up to two one-year extension options if certain conditions are satisfied (the "$300 Million Term Loan Maturing 2028"); and
•$225.0 million term loan with a scheduled maturity date of May 10, 2026 and up to two one-year extension options if certain conditions are satisfied (the "$225 Million Term Loan Maturing 2026").
The $500 Million Term Loan Maturing 2027, the $300 Million Term Loan Maturing 2028, and the $225 Million Term Loan Maturing 2026 are collectively referred to as the "Term Loans."
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The Company's unsecured credit agreements consisted of the following (dollars in thousands):
| Carrying Value at | ||||||||||||||||||||||||||
| Interest Rate at September 30, 2025 (1) | Maturity Date | September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||
| Revolver (2) | May 2027 | $ | $ | |||||||||||||||||||||||
$ | September 2027 (3) | |||||||||||||||||||||||||
$ | April 2028 (3) | |||||||||||||||||||||||||
$ | May 2026 (3) | |||||||||||||||||||||||||
| Deferred financing costs, net (5) | ( | ( | ||||||||||||||||||||||||
| Total Revolver and Term Loans, net | $ | $ | ||||||||||||||||||||||||
(1)Interest rate at September 30, 2025 gives effect to interest rate hedges.
(2)At September 30, 2025 and December 31, 2024, there was $600.0 million and $500.0 million, respectively, of remaining capacity on the Revolver. The Company has the ability to extend the maturity date for an additional one-year period or up to two six-month periods ending May 2028 if certain conditions are satisfied.
(3)This term loan includes two one-year extension options at the Company's discretion, subject to certain conditions.
(4)In April 2025, the Company refinanced this term loan to increase the term loan to $300.0 million and extend the initial maturity to April 2028, with two additional one-year extension options at the Company's discretion, subject to certain conditions.
(5)Excludes $2.6 million and $3.9 million as of September 30, 2025 and December 31, 2024, respectively, related to deferred financing costs on the Revolver, which are included in prepaid expense and other assets in the accompanying consolidated balance sheets.
In April 2025, the Company refinanced a $200.0 million term loan with a scheduled maturity date of January 31, 2026 (the "$200 Million Term Loan Maturing 2026") to upsize the term loan to $300.0 million and extend the initial maturity to April 2028, with two additional one-year extension options at the Company's discretion, subject to certain conditions. Borrowings under the term loan bear interest at a variable rate under the same pricing grid as the $200 Million Term Loan Maturing 2026. The Company paid approximately $1.9 million in lender fees and legal costs related to the financing. In April 2025, the Company utilized the incremental $100.0 million in proceeds to pay off the full outstanding balance on the Revolver.
The Revolver and Term Loans are subject to various financial covenants. A summary of the most restrictive covenants is as follows:
| Covenant | Compliance September 30, 2025 | |||||||||||||||||||
| Leverage ratio (1) | <= | Yes | ||||||||||||||||||
| Fixed charge coverage ratio (2) | >= | Yes | ||||||||||||||||||
| Secured indebtedness ratio | <= | Yes | ||||||||||||||||||
| Unencumbered indebtedness ratio | <= | Yes | ||||||||||||||||||
| Unencumbered debt service coverage ratio | >= | Yes | ||||||||||||||||||
(1)Leverage ratio is net indebtedness, as defined in the Revolver and Term Loan agreements, to corporate earnings before interest, taxes, depreciation, and amortization ("EBITDA"), as defined in the Revolver and Term Loan agreements.
(2)Fixed charge coverage ratio is Adjusted EBITDA, generally defined in the Revolver and Term Loan agreements as EBITDA less furniture, fixtures and equipment ("FF&E") reserves, to fixed charges, which is generally defined in the Revolver and Term Loan agreements as interest expense, all regularly scheduled principal payments, preferred dividends paid, and cash taxes paid.
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Mortgage Loans
The Company's mortgage loans consisted of the following (dollars in thousands):
| Carrying Value at | ||||||||||||||||||||||||||||||||
| Number of Assets Encumbered | Interest Rate at September 30, 2025 | Maturity Date | September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| Mortgage loan (1) | (3) | April 2026 | (4) | $ | $ | |||||||||||||||||||||||||||
| Mortgage loan (1) | (3) | April 2026 | (4) | |||||||||||||||||||||||||||||
| Mortgage loan (2) | January 2029 | |||||||||||||||||||||||||||||||
| Deferred financing costs, net | ( | ( | ||||||||||||||||||||||||||||||
| Total mortgage loans, net | $ | $ | ||||||||||||||||||||||||||||||
(1)The hotels encumbered by the mortgage loan are cross-collateralized. Requires payments of interest only through maturity.
(2)Includes $1.2 million and $1.5 million at September 30, 2025 and December 31, 2024, respectively, related to a fair value adjustment on this mortgage loan from purchase price allocation at hotel property acquisition. This mortgage loan requires payments of interest only through maturity.
(3)Interest rate at September 30, 2025 gives effect to interest rate hedges.
(4)In April 2025, the Company exercised the final option to extend the maturity to April 2026.
Certain mortgage agreements are subject to various maintenance covenants requiring the Company to maintain a minimum debt yield or debt service coverage ratio ("DSCR"). Failure to meet the debt yield or DSCR thresholds is not an event of default, but instead triggers a cash trap event. At September 30, 2025, all mortgage loans exceeded the minimum debt yield or DSCR thresholds.
Interest Expense
The components of the Company's interest expense consisted of the following (in thousands):
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Senior Notes | $ | $ | $ | $ | |||||||||||||||||||
| Revolver and Term Loans | |||||||||||||||||||||||
| Mortgage loans | |||||||||||||||||||||||
| Amortization of deferred financing costs | |||||||||||||||||||||||
| Non-cash interest expense related to interest rate hedges | |||||||||||||||||||||||
| Total interest expense | $ | $ | $ | $ | |||||||||||||||||||
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8. Derivatives and Hedging Activities
The following interest rate swaps have been designated as cash flow hedges (in thousands):
| Notional value at | Fair value at | |||||||||||||||||||||||||||||||||||||||||||
| Hedge type | Swap rate | Effective Date | Maturity Date | September 30, 2025 | December 31, 2024 | September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | September 2021 | September 2025 | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | July 2021 | January 2026 | ||||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | April 2024 | April 2027 | ||||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | April 2024 | April 2027 | ||||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | April 2024 | April 2027 | ||||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | July 2024 | July 2027 | ( | |||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | July 2024 | July 2027 | ( | |||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | July 2024 | July 2027 | ( | |||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | July 2025 | July 2027 | ||||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | January 2025 | January 2028 | ||||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | January 2025 | January 2028 | ( | |||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | October 2025 | October 2028 | ( | |||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | January 2025 | January 2029 | ||||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | January 2026 | January 2029 | ||||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | January 2026 | January 2029 | ( | |||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | January 2026 | January 2029 | ( | |||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | April 2026 | April 2029 | ||||||||||||||||||||||||||||||||||||||||||
| Swap-cash flow-Daily SOFR | April 2026 | April 2029 | ||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
As of September 30, 2025 and December 31, 2024, the aggregate fair value of the interest rate swap assets of $3.5 million and $14.4 million, respectively, was included in prepaid expense and other assets in the accompanying consolidated balance sheets. As of September 30, 2025, the aggregate fair value of the interest rate swap liabilities of $0.4 million was included in accounts payable and other liabilities in the accompanying consolidated balance sheet.
As of September 30, 2025 and December 31, 2024, there was approximately $2.9 million and $13.8 million, respectively, of unrealized gains included in accumulated other comprehensive income related to interest rate swaps. There was no 2.5 million and $8.1 million, respectively, included in accumulated other comprehensive income were reclassified into interest expense for the interest rate swaps. For the three and nine months ended September 30, 2024, gains of approximately $4.9 million and $16.3 million, respectively, included in accumulated other comprehensive income were reclassified into interest expense for the interest rate swaps. Approximately $2.7 million of the unrealized gains included in accumulated other comprehensive income at September 30, 2025 is expected to be reclassified into earnings within the next 12 months.
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9. Fair Value
Fair Value Measurement
Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The fair value hierarchy has three levels of inputs, both observable and unobservable:
•Level 1 — Inputs include quoted market prices in an active market for identical assets or liabilities.
•Level 2 — Inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data.
•Level 3 — Inputs are unobservable and corroborated by little or no market data.
Fair Value of Financial Instruments
The Company used the following market assumptions and/or estimation methods:
•Cash and cash equivalents, restricted cash reserves, hotel and other receivables, accounts payable and other liabilities — The carrying amounts reported in the consolidated balance sheets for these financial instruments approximate fair value because of their short term maturities.
•Debt — The Company estimated the fair value of the Senior Notes by using publicly available trading prices, which are Level 1 inputs in the fair value hierarchy. The Company estimated the fair value of the Revolver and Term Loans by using a discounted cash flow model and incorporating various inputs and assumptions for the effective borrowing rates for debt with similar terms, which are Level 3 inputs in the fair value hierarchy. The Company estimated the fair value of the mortgage loans by using a discounted cash flow model and incorporating various inputs and assumptions for the effective borrowing rates for debt with similar terms and the loan to estimated fair value of the collateral, which are Level 3 inputs in the fair value hierarchy.
The fair value of the Company's debt was as follows (in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| Senior Notes, net | $ | $ | $ | $ | |||||||||||||||||||
| Revolver and Term Loans, net | |||||||||||||||||||||||
| Mortgage loans, net | |||||||||||||||||||||||
| Debt, net | $ | $ | $ | $ | |||||||||||||||||||
Recurring Fair Value Measurements
The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2025 (in thousands):
| Fair Value at September 30, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Interest rate swap asset | $ | $ | $ | $ | |||||||||||||||||||
| Interest rate swap liability | ( | ( | |||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
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The following table presents the Company’s fair value hierarchy for those financial assets measured at fair value on a recurring basis as of December 31, 2024 (in thousands):
| Fair Value at December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Interest rate swap asset | $ | $ | $ | $ | |||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
The fair values of the derivative financial instruments are determined using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows for each derivative. The Company determined that the significant inputs, such as interest yield curves and discount rates, used to value its derivatives fall within Level 2 of the fair value hierarchy and that the credit valuation adjustments associated with the Company’s counterparties and its own credit risk utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. As of September 30, 2025, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
10. Income Taxes
The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and for net operating loss ("NOL"), capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company is still continuing to provide a full valuation allowance against the deferred tax assets related to the NOL carryforwards of RLJ Lodging Trust Master TRS, Inc., the Company's primary TRS.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (the "OBBBA"). Among other changes, the OBBBA permanently extended the 20 % deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Internal Revenue Code (the “Code”). The OBBBA also increased the percentage limit under the REIT asset test applicable to TRSs (the permissible value of TRS securities that a REIT may hold) from 20 % to 25 % of the value of the REIT’s total assets for taxable years beginning after December 31, 2025, and increased the base on which the 30 % interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of “adjusted taxable income” (i.e. based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024. The Company has evaluated this legislation and determined its impact is not material to the Company’s consolidated financial statements and related disclosures.
The Company had no
11. Commitments and Contingencies
Restricted Cash Reserves
The Company may be obligated to maintain cash reserve funds for future capital expenditures, real estate taxes, insurance, and other items. The management agreements, franchise agreements and/or mortgage loan documents require the Company to reserve cash ranging typically from 3.0 % to 5.0 % of the individual hotel’s revenues for future capital expenditures (including the periodic replacement or refurbishment of FF&E). Any unexpended amounts will remain the property of the Company upon termination of the management agreements, franchise agreements or mortgage loan documents. As of September 30, 2025 and December 31, 2024, approximately $29.2 million and $23.5 million, respectively, was available in the restricted cash reserves for future capital expenditures.
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Litigation
Neither the Company nor any of its subsidiaries is currently involved in any regulatory or legal proceedings that management believes will have a material and adverse effect on the Company's financial position, results of operations or cash flows.
Management Agreements
As of September 30, 2025, 94 of the Company's consolidated hotel properties were operated pursuant to management agreements with initial terms ranging from three to 25 years. This number includes 35 consolidated hotel properties that receive the benefits of a franchise agreement pursuant to management agreements with Hilton, Hyatt, or Marriott. Each management company receives a base management fee between 1.5 % and 3.5 % of hotel revenues. Management agreements that include the benefits of a franchise agreement incur a base management fee between 1.0 % and 7.0 % of hotel revenues. The management companies are also eligible to receive an incentive management fee if hotel operating income, as defined in the management agreements, exceeds certain thresholds. The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel.
Franchise Agreements
As of September 30, 2025, 56 of the Company’s consolidated hotel properties were operated under franchise agreements with initial terms ranging from one to 30 years. This number excludes 35 consolidated hotel properties that receive the benefits of a franchise agreement pursuant to management agreements with Hilton, Hyatt, or Marriott. In addition, three hotels are not operated with a hotel brand so they do not have franchise agreements. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee between 2.0 % and 6.0 % of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs between 1.0 % and 4.3 % of room revenue. Certain hotels are also charged a royalty fee between 1.5 % and 3.0 % of food and beverage revenues.
Franchise fees are included in management and franchise fee expense in the accompanying consolidated statements of operations and comprehensive (loss) income. For the three and nine months ended September 30, 2025, the Company incurred franchise fee expense of approximately $15.7 million and $48.9 million, respectively. For the three and nine months ended September 30, 2024, the Company incurred franchise fee expense of approximately $17.1 million and $51.4 million, respectively.
12. Equity
Common Shares of Beneficial Interest
During the nine months ended September 30, 2025, the Company declared a cash dividend of $0.15 0.10 0.15 per common share in the third quarter of 2024.
On April 25, 2025, the Company's board of trustees approved a new share repurchase program to acquire up to an
aggregate of $250.0 million of common and preferred shares from May 9, 2025 to May 8, 2026 (the "2025 Share Repurchase
Program"). During the nine months ended September 30, 2025, the Company repurchased and retired approximately 3.3 million common shares for approximately $28.6 million, of which $24.3 million was repurchased under a share repurchase program authorized by the Company’s board of trustees in 2024, which expired May 8, 2025, and $4.3 million was repurchased under the 2025 Share Repurchase Program. As of November 6, 2025, the 2025 Share Repurchase Program had a remaining capacity of $245.7 million.
During the nine months ended September 30, 2024, the Company repurchased and retired approximately 2.0 million common shares for approximately $19.0 million.
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Series A Preferred Shares
During the nine months ended September 30, 2025 and 2024, the Company declared a cash dividend of $0.4875
The Series A Preferred Shares are convertible, in whole or in part, at any time, at the option of the holders into common shares at a conversion rate of 0.2806 common shares for each Series A Preferred Share.
Noncontrolling Interest in Consolidated Joint Ventures
The Company consolidates the joint venture that owns The Knickerbocker hotel property, which has a third-party partner that owns a noncontrolling 5 % ownership interest in the joint venture. The third-party ownership interest is included in the noncontrolling interest in consolidated joint ventures on the consolidated balance sheets.
Noncontrolling Interest in the Operating Partnership
The Company consolidates the Operating Partnership, which is a majority-owned limited partnership that has a noncontrolling interest. The outstanding OP units held by the limited partners are redeemable for cash, or at the option of the Company, for a like number of common shares. As of September 30, 2025, 771,831 outstanding OP units were held by the limited partners. The noncontrolling interest is included in the noncontrolling interest in the Operating Partnership on the consolidated balance sheets.
13. Equity Incentive Plan
The Company may issue share-based awards to officers, employees, non-employee trustees and other eligible persons under the RLJ Lodging Trust 2021 Equity Incentive Plan (the "2021 Plan"). The 2021 Plan provides for a maximum of 6,828,527 common shares to be issued in the form of share options, share appreciation rights, restricted share awards, unrestricted share awards, share units, dividend equivalent rights, long-term incentive units, other equity-based awards and cash bonus awards.
Share Awards
From time to time, the Company may award unvested restricted shares as compensation to officers, employees and non-employee trustees. The issued shares vest over a period of time as determined by the board of trustees at the date of grant. The Company recognizes compensation expense for time-based unvested restricted shares on a straight-line basis over the vesting period based upon the fair market value of the shares on the date of issuance, adjusted for forfeitures.
Non-employee trustees may also elect to receive unrestricted shares as compensation that would otherwise be paid in cash for their services. The shares issued to non-employee trustees in lieu of cash compensation are unrestricted and include no vesting conditions. The Company recognizes compensation expense for the unrestricted shares issued in lieu of cash compensation on the date of issuance based upon the fair market value of the shares on that date.
A summary of the unvested restricted shares as of September 30, 2025 is as follows:
| 2025 | |||||||||||
| Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
| Unvested at January 1, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Unvested at September 30, 2025 | $ | ||||||||||
For the three and nine months ended September 30, 2025, the Company recognized approximately $2.0 million and $6.5 million, respectively, of share-based compensation expense related to restricted share awards. For the three and nine months ended September 30, 2024, the Company recognized approximately $2.3 million and $9.4 million, respectively, of share-based compensation expense related to restricted share awards. As of September 30, 2025, there was $13.5 million of total
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unrecognized compensation costs related to unvested restricted share awards and these costs are expected to be recognized over a weighted-average period of 2.0 years. The total fair value of the shares vested (calculated as the number of shares multiplied by the vesting date share price) during the nine months ended September 30, 2025 and 2024 was approximately $7.6 million and $17.6 million, respectively.
Performance Units
The Company aligns its executive officers with its long-term investors by awarding a significant percentage of their equity compensation in the form of multi-year performance unit awards that use both absolute and relative total shareholder return as the primary metrics. The performance units vest at the end of a three year period (the “performance units measurement period”).
The performance units granted in 2024 and 2025 may convert into restricted shares at a range of 0 % to 200 % of the number of performance units granted contingent upon the Company achieving a relative shareholder return over the measurement period at specified percentiles of the peer group, as defined by the awards. These performance units are subject to modification based on the Company's absolute total shareholder return performance as follows: (1) if at the end of the measurement period the relative total shareholder return performance exceeds target and absolute total shareholder return is less than zero , payouts will be reduced by 25 %, but not below target and (2) if the absolute total shareholder return is down more than 15 % during the entire measurement period, the maximum payout will be capped at 115 % of target. The performance units granted prior to 2024 may convert into restricted shares at a range of 0 % to 200 % of the number of performance units granted contingent upon the Company achieving an absolute total shareholder return (25 % of award) and a relative shareholder return (75 % of award) over the measurement period at specified percentiles of the peer group, as defined by the awards.
At the end of the performance units measurement period, if the target criterion is met, 100 % of the performance units that are earned will vest immediately. The fair value of the performance units was determined using a Monte Carlo simulation. The Company estimates the compensation expense for the performance units on a straight-line basis using a calculation that recognizes 100 % of the grant date fair value over three years .
A summary of the performance unit awards is as follows:
| Date of Award | Number of Units Granted | Grant Date Fair Value | Conversion Range | Risk Free Interest Rate | Volatility | |||||||||||||||||||||||||||
| February 2022 (1) | $ | |||||||||||||||||||||||||||||||
| February 2023 | $ | |||||||||||||||||||||||||||||||
| February 2024 | $ | |||||||||||||||||||||||||||||||
| March 2025 | $ | |||||||||||||||||||||||||||||||
(1) In February 2025, following the end of the measurement period, the Company met certain threshold criterion and the performance units converted into approximately 240,000 restricted shares, all of which vested immediately. The total fair value of the vested shares related to the conversion of the performance units (calculated as the number of vested shares multiplied by the vesting date share price) during the nine months ended September 30, 2025 was approximately $2.1 million.
For the three and nine months ended September 30, 2025, the Company recognized approximately $2.0 million and $4.8 million, respectively, of share-based compensation expense related to the performance unit awards. This included a benefit of $1.6 million as a result of the forfeitures of approximately 217,000 performance units related to the departure of Company executives during the three months ended June 30, 2025. For the three and nine months ended September 30, 2024, the Company recognized approximately $2.3 million and $6.9 million, respectively, of share-based compensation expense related to the performance unit awards. As of September 30, 2025, there was $12.6 million of total unrecognized compensation costs related to the performance unit awards and these costs are expected to be recognized over a weighted-average period of 1.9 years.
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14. Earnings per Common Share
Basic earnings per common share is calculated by dividing net (loss) income attributable to common shareholders by the weighted-average number of common shares outstanding during the period excluding the weighted-average number of unvested restricted shares and unvested performance units outstanding during the period. Diluted earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period, plus any shares that could potentially be outstanding during the period. The potential shares consist of the unvested restricted share grants and unvested performance units, calculated using the treasury stock method, and convertible Series A Preferred Shares, calculated using the if-converted method. Any anti-dilutive shares have been excluded from the diluted earnings per share calculation.
Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating shares and are considered in the computation of earnings per share pursuant to the two-class method. If there were any undistributed earnings allocable to the participating shares, they would be deducted from net income attributable to common shareholders used in the basic and diluted earnings per share calculations.
The limited partners’ outstanding OP units (which may be redeemed for common shares under certain circumstances) have been excluded from the diluted earnings per share calculation as there was no effect on the amounts for the three and nine months ended September 30, 2025 and 2024, since the limited partners’ share of income would also be added back to net income attributable to common shareholders.
The computation of basic and diluted earnings per common share is as follows (in thousands, except share and per share data):
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net (loss) income attributable to RLJ | $ | ( | $ | $ | $ | ||||||||||||||||||
| Less: Preferred dividends | ( | ( | ( | ( | |||||||||||||||||||
| Less: Dividends paid on unvested restricted shares | ( | ( | ( | ( | |||||||||||||||||||
| Less: Undistributed earnings attributable to unvested restricted shares | |||||||||||||||||||||||
| Net (loss) income attributable to common shareholders excluding amounts attributable to unvested restricted shares | $ | ( | $ | $ | $ | ||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average number of common shares - basic | |||||||||||||||||||||||
| Unvested restricted shares | |||||||||||||||||||||||
| Unvested performance units | |||||||||||||||||||||||
| Weighted-average number of common shares - diluted | |||||||||||||||||||||||
| Net (loss) income per share attributable to common shareholders - basic | $ | ( | $ | $ | $ | ||||||||||||||||||
| Net (loss) income per share attributable to common shareholders - diluted | $ | ( | $ | $ | $ | ||||||||||||||||||
15. Segment Information
The Company’s chief operating decision maker (“CODM”) is the President and Chief Executive Officer.
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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. Hotel EBITDA is defined as net income or loss excluding: (1) interest expense; (2) income tax expense; and (3) depreciation and amortization expense, adjusted for corporate-level expenses, certain non-cash items, and certain other items that the Company considers outside the normal course of operations.
The following table presents information about profit or loss for the hotel segment:
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Room revenue | $ | $ | $ | $ | |||||||||||||||||||
| Food and beverage revenue | |||||||||||||||||||||||
| Other revenue | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Room expense | |||||||||||||||||||||||
| Food and beverage expense | |||||||||||||||||||||||
| Management and franchise fee expense | |||||||||||||||||||||||
| Other operating expenses | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Property tax, insurance and other | |||||||||||||||||||||||
| Other, net (1) | ( | ( | ( | ( | |||||||||||||||||||
| Hotel EBITDA | $ | $ | $ | $ | |||||||||||||||||||
The following table provides a reconciliation of the hotel segment profit and loss to the Company’s consolidated totals:
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (Loss) income before income tax expense | $ | ( | $ | $ | $ | ||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Interest expense, net of interest income | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Loss (gain) on sale of hotel properties, net | ( | ( | ( | ||||||||||||||||||||
| Other, net | |||||||||||||||||||||||
| Hotel EBITDA | $ | $ | $ | $ | |||||||||||||||||||
A measure of segment assets is not currently provided to the CODM and has therefore not been included herein.
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16. Supplemental Information to Statements of Cash Flows (in thousands)
| For the nine months ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Reconciliation of cash, cash equivalents, and restricted cash reserves | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash reserves | |||||||||||
| Cash, cash equivalents, and restricted cash reserves | $ | $ | |||||||||
| Interest paid | $ | $ | |||||||||
| Income taxes paid | $ | $ | |||||||||
| Operating cash flow lease payments for operating leases | $ | $ | |||||||||
| Right-of-use asset and lease liability adjustments due to remeasurement | $ | $ | ( | ||||||||
| Right-of-use asset and lease liability reclassifications to land due to acquisition | $ | $ | |||||||||
| Supplemental investing and financing transactions | |||||||||||
| In connection with acquisitions, the Company recorded the following: | |||||||||||
| Purchase prices | $ | $ | |||||||||
| Application of purchase deposit | ( | ||||||||||
| Transaction costs | |||||||||||
| Operating prorations | ( | ||||||||||
| Acquisitions, net | $ | $ | |||||||||
| In connection with the sales of hotel properties, the Company recorded the following: | |||||||||||
| Sales prices | $ | $ | |||||||||
| Transaction costs | ( | ( | |||||||||
| Operating prorations | ( | ( | |||||||||
| Proceeds from sales of hotel properties, net | $ | $ | |||||||||
| Supplemental non-cash transactions | |||||||||||
| Accrued capital expenditures | $ | $ | |||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the information contained in our Annual Report, which is accessible on the SEC’s website at www.sec.gov.
Statement Regarding Forward-Looking Information
The following information contains certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements generally are identified by the use of the words "believe," "project," "expect," "anticipate," "estimate," "plan," "may," "will," "will continue," "intend," "should," or similar expressions. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future
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events or guarantees of future performance and our actual results could differ materially from those set forth in the forward-looking statements.
Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. We caution investors not to place undue reliance on these forward-looking statements and urge investors to carefully review the disclosures we make concerning risks and uncertainties in the sections entitled "Special Note About Forward-Looking Statements," "Risk Factors," and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report, as well as the risks, uncertainties and other factors discussed in this Quarterly Report on Form 10-Q and identified in other documents filed by us with the SEC.
Overview
We are a self-advised and self-administered Maryland REIT that owns primarily premium-branded, rooms-oriented, high-margin, focused-service and compact full-service hotels located within heart of demand locations. We own a geographically diversified portfolio of hotels located in high-growth urban markets that exhibit multiple demand generators and attractive long-term growth prospects. We believe that our investment strategy allows us to generate high levels of Revenue per Available Room ("RevPAR"), strong operating margins and attractive returns. Our focused-service and compact full-service hotels typically generate most of their revenue from room rentals, have limited food and beverage outlets and meeting space, and require fewer employees than traditional full-service hotels. We believe these types of hotels have the potential to generate attractive returns relative to other types of hotels due to their ability to achieve RevPAR levels at or close to those achieved by traditional full-service hotels while achieving higher profit margins due to their more efficient operating model and less volatile cash flows.
As of September 30, 2025, we owned 95 hotel properties with approximately 21,200 rooms, located in 23 states and the District of Columbia. We owned, through wholly-owned subsidiaries, a 100% interest in 93 of our hotel properties, a 95% controlling interest in one hotel property, and a 50% non-controlling interest in an entity owning one hotel property. We consolidate our real estate interests in the 94 hotel properties in which we hold a controlling interest, and we record the real estate interest in the one hotel property in which we hold an indirect 50% non-controlling interest using the equity method of accounting. We lease 94 of the 95 hotel properties to our TRSs, of which we own a controlling financial interest.
For U.S. federal income tax purposes, we elected to be taxed as a REIT commencing with our taxable year ended December 31, 2011. Substantially all of our assets and liabilities are held by, and all of our operations are conducted through our Operating Partnership. We are the sole general partner of the Operating Partnership. As of September 30, 2025, we owned, through a combination of direct and indirect interests, 99.5% of the units of limited partnership interest in the OP units.
2025 Significant Activities
Our significant activities reflect our commitment to creating long-term shareholder value through enhancing our hotel portfolio's quality, recycling capital and maintaining a prudent capital structure. The following significant activities have taken place in 2025:
•Sold one hotel property for a sales price of $24.3 million.
•Refinanced a term loan to increase the term loan to $300.0 million and extend the initial maturity to April 2028.
•Paid off the $100.0 million outstanding balance on our Revolver using the incremental $100.0 million in proceeds from the refinanced term loan.
•Exercised the final one-year extension options on $181.0 million in mortgage loans to extend the maturities to April 2026.
•Approved a new share repurchase program to acquire up to an aggregate of $250.0 million of common and preferred shares from May 9, 2025 to May 8, 2026.
•Repurchased and retired approximately 3.3 million common shares for approximately $28.6 million.
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Our Customers
The majority of our hotels consist of premium-branded, focused-service and compact full-service hotels. As a result of this property profile, the majority of our customers are transient in nature. Transient business typically represents individual business or leisure travelers. The majority of our hotels are located in business districts within major metropolitan areas. Accordingly, business travelers represent the majority of the transient demand at our hotels. As a result, macroeconomic factors impacting business travel have a greater effect on our business than factors impacting leisure travel.
Group business is typically defined as a minimum of 10 guestrooms booked together as part of the same piece of business. Group business may or may not use the meeting space at any given hotel. Given the limited meeting space at the majority of our hotels, group business that utilizes meeting space represents a small component of our customer base.
A number of our hotel properties are affiliated with brands marketed toward extended-stay customers. Extended-stay customers are generally defined as those staying five nights or longer.
Our Revenues and Expenses
Our revenues are primarily derived from the operation of hotels, including the sale of rooms, food and beverage revenue and other revenue, which consists of parking fees, resort fees, gift shop sales and other guest service fees.
Our operating costs and expenses consist of the costs to provide hotel services, including room expense, food and beverage expense, management and franchise fees and other operating expenses. Room expense includes housekeeping and front office wages and payroll taxes, reservation systems, room supplies, laundry services and other costs. Food and beverage expense primarily includes the cost of food, the cost of beverages and the associated labor costs. Other operating expenses include labor and other costs associated with the other operating department revenue, as well as labor and other costs associated with administrative departments, sales and marketing, repairs and maintenance and utility costs. Our hotels that are subject to franchise agreements are charged a royalty fee, plus additional fees for marketing, central reservation systems and other franchisor costs, in order for the hotel properties to operate under the respective brands. Franchise fees are based on a percentage of room revenue and for certain hotels additional franchise fees are charged for food and beverage revenue. Our hotels are managed by independent, third-party management companies under long-term agreements pursuant to which the management companies typically earn base and incentive management fees based on the levels of revenues and profitability of each individual hotel property. We generally receive a cash distribution from the management companies on a monthly basis, which reflects hotel-level sales less hotel-level operating expenses.
Key Indicators of Financial Performance
We use a variety of operating, financial and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP as well as other financial measures that are non-GAAP measures. In addition, we use other information that may not be financial in nature, including industry standard statistical information and comparative data. We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisition opportunities to determine each hotel's contribution to cash flow and its potential to provide attractive long-term total returns. The key indicators include:
•Average Daily Rate ("ADR")
•Occupancy
•RevPAR
ADR, Occupancy and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring operating performance at the individual hotel property level and across our entire business. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only room revenue.
We also use non-GAAP measures such as FFO, Adjusted FFO, EBITDA, EBITDAre and Adjusted EBITDA to evaluate the operating performance of our business. For a more in depth discussion of these non-GAAP measures, please refer to the "Non-GAAP Financial Measures" section. In addition, we use Hotel EBITDA, a non-GAAP financial measure, to assess
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operating performance. For a more in depth discussion of Hotel EBITDA, please refer to Note 15, Segment Information, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Critical Accounting Policies and Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. It is possible that the actual amounts may differ significantly from these estimates and assumptions. We evaluate our estimates, assumptions and judgments on an ongoing basis, based on information that is available to us, our business and industry experience, and various other matters that we believe are reasonable and appropriate for consideration under the circumstances. Our Annual Report contains a discussion of our critical accounting policies and estimates. There have been no significant changes to our critical accounting policies and estimates since December 31, 2024.
Results of Operations
At September 30, 2025 and 2024, we owned 95 and 96 hotel properties, respectively. Based on when a hotel property is acquired or sold, the operating results for certain hotel properties are not comparable for the three and nine months ended September 30, 2025 and 2024. The non-comparable properties include three hotel properties that were sold in 2025 and 2024 and one hotel property that was acquired in 2024.
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Comparison of the three months ended September 30, 2025 to the three months ended September 30, 2024
| For the three months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| (amounts in thousands) | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Operating revenues | |||||||||||||||||||||||
| Room revenue | $ | 267,367 | $ | 283,614 | $ | (16,247) | |||||||||||||||||
| Food and beverage revenue | 36,884 | 36,983 | (99) | ||||||||||||||||||||
| Other revenue | 25,794 | 25,147 | 647 | ||||||||||||||||||||
| Total revenues | 330,045 | 345,744 | (15,699) | ||||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Room expense | 74,685 | 74,558 | 127 | ||||||||||||||||||||
| Food and beverage expense | 29,314 | 29,348 | (34) | ||||||||||||||||||||
| Management and franchise fee expense | 25,253 | 27,339 | (2,086) | ||||||||||||||||||||
| Other operating expenses | 94,112 | 92,350 | 1,762 | ||||||||||||||||||||
| Total property operating expenses | 223,364 | 223,595 | (231) | ||||||||||||||||||||
| Depreciation and amortization | 46,996 | 44,892 | 2,104 | ||||||||||||||||||||
| Property tax, insurance and other | 26,647 | 24,156 | 2,491 | ||||||||||||||||||||
| General and administrative | 11,782 | 12,781 | (999) | ||||||||||||||||||||
| Transaction costs | 128 | 209 | (81) | ||||||||||||||||||||
| Total operating expenses | 308,917 | 305,633 | 3,284 | ||||||||||||||||||||
| Other income, net | 670 | 791 | (121) | ||||||||||||||||||||
| Interest income | 3,502 | 4,286 | (784) | ||||||||||||||||||||
| Interest expense | (28,309) | (28,643) | 334 | ||||||||||||||||||||
| (Loss) gain on sale of hotel properties, net | (141) | 4,755 | (4,896) | ||||||||||||||||||||
| Loss on extinguishment of indebtedness, net | — | (129) | 129 | ||||||||||||||||||||
| (Loss) income before equity in loss from unconsolidated joint ventures | (3,150) | 21,171 | (24,321) | ||||||||||||||||||||
| Equity in loss from unconsolidated joint ventures | (307) | (149) | (158) | ||||||||||||||||||||
| (Loss) income before income tax expense | (3,457) | 21,022 | (24,479) | ||||||||||||||||||||
| Income tax expense | (341) | (379) | 38 | ||||||||||||||||||||
| Net (loss) income | (3,798) | 20,643 | (24,441) | ||||||||||||||||||||
| Net loss (income) attributable to noncontrolling interests: | |||||||||||||||||||||||
| Noncontrolling interest in the Operating Partnership | 52 | (49) | 101 | ||||||||||||||||||||
| Noncontrolling interest in consolidated joint ventures | 10 | 8 | 2 | ||||||||||||||||||||
| Net (loss) income attributable to RLJ | (3,736) | 20,602 | (24,338) | ||||||||||||||||||||
| Preferred dividends | (6,279) | (6,279) | — | ||||||||||||||||||||
| Net (loss) income attributable to common shareholders | $ | (10,015) | $ | 14,323 | $ | (24,338) | |||||||||||||||||
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Revenues
Total revenues decreased $15.7 million to $330.0 million for the three months ended September 30, 2025 from $345.7 million for the three months ended September 30, 2024. The decrease was the result of a $16.2 million decrease in room revenue and a $0.1 million decrease in food and beverage revenue, offset by a $0.6 million increase in other revenue.
Room Revenue
Room revenue decreased $16.2 million to $267.4 million for the three months ended September 30, 2025 from $283.6 million for the three months ended September 30, 2024. The decrease was the result of a $14.3 million decrease in room revenue attributable to the comparable properties and a $2.0 million decrease in room revenue attributable to the non-comparable properties. The decrease in room revenue from the comparable properties was primarily due to a decrease in leisure, government, corporate and group travel.
The following are the quarter-to-date key hotel operating statistics for the comparable properties:
| For the three months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Occupancy | 73.0 | % | 75.4 | % | |||||||||||||||||||
| ADR | $ | 189.45 | $ | 193.43 | |||||||||||||||||||
| RevPAR | $ | 138.29 | $ | 145.77 | |||||||||||||||||||
Food and Beverage Revenue
Food and beverage revenue decreased $0.1 million to $36.9 million for the three months ended September 30, 2025 from $37.0 million for the three months ended September 30, 2024.
Other Revenue
Other revenue increased $0.6 million to $25.8 million for the three months ended September 30, 2025 from $25.1 million for the three months ended September 30, 2024.
Property Operating Expenses
Property operating expenses decreased $0.2 million to $223.4 million for the three months ended September 30, 2025 from $223.6 million for the three months ended September 30, 2024. The decrease was due to a $1.5 million decrease in property operating expenses from the non-comparable properties partially offset by a $1.2 million increase in property operating expenses from the comparable properties.
The components of our property operating expenses for the comparable properties were as follows (in thousands):
| For the three months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| Room expense | $ | 74,313 | $ | 73,620 | $ | 693 | |||||||||||||||||
| Food and beverage expense | 28,941 | 28,896 | 45 | ||||||||||||||||||||
| Management and franchise fee expense | 25,177 | 27,002 | (1,825) | ||||||||||||||||||||
| Other operating expenses | 93,232 | 90,909 | 2,323 | ||||||||||||||||||||
| Total property operating expenses | $ | 221,663 | $ | 220,427 | $ | 1,236 | |||||||||||||||||
The increase in property operating expenses from the comparable properties was primarily due to increases in wages and benefits, as well as increases in room expenses and increases in other operating expenses, including increases in sales and marketing expenses and general liability insurance coverage. This was offset by a decrease in management and franchise fee expense, which was due to lower revenues as well as recently amended management and franchise agreements.
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Depreciation and Amortization
Depreciation and amortization expense increased $2.1 million to $47.0 million for the three months ended September 30, 2025 from $44.9 million for the three months ended September 30, 2024. The increase in depreciation and amortization expense was primarily related to recently renovated hotels.
Property Tax, Insurance and Other
Property tax, insurance and other expense increased $2.5 million to $26.6 million for the three months ended September 30, 2025 from $24.2 million for the three months ended September 30, 2024. The increase was primarily attributable to the beneficial impact of successful real estate tax appeals in the prior year, partially offset by a decrease in property insurance premiums.
General and Administrative
General and administrative expense decreased $1.0 million to $11.8 million for the three months ended September 30, 2025 from $12.8 million for the three months ended September 30, 2024. The decrease was primarily attributable to a decrease in non-cash compensation expense related to the departure of Company executives during the three months ended June 30, 2025.
Interest Income
Interest income decreased $0.8 million to $3.5 million for the three months ended September 30, 2025 from $4.3 million for the three months ended September 30, 2024. The decrease was attributable to the combination of lower interest rates and the Company holding less cash in 2025.
Interest Expense
Interest expense decreased $0.3 million to $28.3 million for the three months ended September 30, 2025 from $28.6 million for the three months ended September 30, 2024. The components of our interest expense for the three months ended September 30, 2025 and 2024 were as follows (in thousands):
| For the three months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| Senior Notes | $ | 9,695 | $ | 9,695 | $ | — | |||||||||||||||||
| Revolver and Term Loans | 13,551 | 14,228 | (677) | ||||||||||||||||||||
| Mortgage loans | 3,019 | 2,671 | 348 | ||||||||||||||||||||
| Amortization of deferred financing costs | 1,900 | 1,663 | 237 | ||||||||||||||||||||
| Non-cash interest expense related to interest rate hedges | 144 | 386 | (242) | ||||||||||||||||||||
| Total interest expense | $ | 28,309 | $ | 28,643 | $ | (334) | |||||||||||||||||
(Loss) Gain on Sale of Hotel Properties, net
During the three months ended September 30, 2024, we sold one hotel property for a sales price of approximately $12.7 million and recorded a net gain on the sale of approximately $4.8 million. There were no hotels sold during the three months ended September 30, 2025.
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Comparison of the nine months ended September 30, 2025 to the nine months ended September 30, 2024
| For the nine months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| (amounts in thousands) | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Operating revenues | |||||||||||||||||||||||
| Room revenue | $ | 831,122 | $ | 853,896 | $ | (22,774) | |||||||||||||||||
| Food and beverage revenue | 116,331 | 113,515 | 2,816 | ||||||||||||||||||||
| Other revenue | 73,814 | 72,040 | 1,774 | ||||||||||||||||||||
| Total revenues | 1,021,267 | 1,039,451 | (18,184) | ||||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Room expense | 220,101 | 217,885 | 2,216 | ||||||||||||||||||||
| Food and beverage expense | 88,978 | 88,279 | 699 | ||||||||||||||||||||
| Management and franchise fee expense | 78,848 | 82,783 | (3,935) | ||||||||||||||||||||
| Other operating expenses | 278,610 | 272,951 | 5,659 | ||||||||||||||||||||
| Total property operating expenses | 666,537 | 661,898 | 4,639 | ||||||||||||||||||||
| Depreciation and amortization | 139,147 | 134,045 | 5,102 | ||||||||||||||||||||
| Property tax, insurance and other | 80,340 | 80,743 | (403) | ||||||||||||||||||||
| General and administrative | 35,566 | 41,826 | (6,260) | ||||||||||||||||||||
| Transaction costs | 240 | 299 | (59) | ||||||||||||||||||||
| Total operating expenses | 921,830 | 918,811 | 3,019 | ||||||||||||||||||||
| Other income, net | 2,706 | 4,669 | (1,963) | ||||||||||||||||||||
| Interest income | 10,118 | 13,191 | (3,073) | ||||||||||||||||||||
| Interest expense | (83,737) | (83,150) | (587) | ||||||||||||||||||||
| Gain on sale of hotel properties, net | 802 | 8,301 | (7,499) | ||||||||||||||||||||
| Loss on extinguishment of indebtedness, net | (34) | (129) | 95 | ||||||||||||||||||||
| Income before equity in (loss) income from unconsolidated joint ventures | 29,292 | 63,522 | (34,230) | ||||||||||||||||||||
| Equity in (loss) income from unconsolidated joint ventures | (313) | 239 | (552) | ||||||||||||||||||||
| Income before income tax expense | 28,979 | 63,761 | (34,782) | ||||||||||||||||||||
| Income tax expense | (974) | (1,081) | 107 | ||||||||||||||||||||
| Net income | 28,005 | 62,680 | (34,675) | ||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests: | |||||||||||||||||||||||
| Noncontrolling interest in the Operating Partnership | (44) | (216) | 172 | ||||||||||||||||||||
| Noncontrolling interest in consolidated joint ventures | 118 | 181 | (63) | ||||||||||||||||||||
| Net income attributable to RLJ | 28,079 | 62,645 | (34,566) | ||||||||||||||||||||
| Preferred dividends | (18,836) | (18,836) | — | ||||||||||||||||||||
| Net income attributable to common shareholders | $ | 9,243 | $ | 43,809 | $ | (34,566) | |||||||||||||||||
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Revenues
Total revenues decreased $18.2 million to $1,021.3 million for the nine months ended September 30, 2025 from $1,039.5 million for the nine months ended September 30, 2024. The decrease was the result of a $22.8 million decrease in room revenue, offset by a $2.8 million increase in food and beverage revenue and a $1.8 million increase in other revenue.
Room Revenue
Room revenue decreased $22.8 million to $831.1 million for the nine months ended September 30, 2025 from $853.9 million for the nine months ended September 30, 2024. The decrease was the result of a $19.0 million decrease in room revenue attributable to the comparable properties and a $3.7 million decrease in room revenue attributable to the non-comparable properties. The decrease in room revenue from the comparable properties was primarily due to a decrease in leisure, government, corporate and group travel.
The following are the year-to-date key hotel operating statistics for the comparable properties:
| For the nine months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Occupancy | 72.6 | % | 73.9 | % | |||||||||||||||||||
| ADR | $ | 199.55 | $ | 199.91 | |||||||||||||||||||
| RevPAR | $ | 144.85 | $ | 147.72 | |||||||||||||||||||
Food and Beverage Revenue
Food and beverage revenue increased $2.8 million to $116.3 million for the nine months ended September 30, 2025 from $113.5 million for the nine months ended September 30, 2024. The increase in food and beverage revenue was primarily due to increases in outlet revenue and the ramping up of our recently converted and renovated hotels.
Other Revenue
Other revenue increased $1.8 million to $73.8 million for the nine months ended September 30, 2025 from $72.0 million for the nine months ended September 30, 2024. The increase in other revenue was primarily due to an increase in gift shop sales, parking and resort fees.
Property Operating Expenses
Property operating expenses increased $4.6 million to $666.5 million for the nine months ended September 30, 2025 from $661.9 million for the nine months ended September 30, 2024. The increase was due to a $7.2 million increase in property operating expenses from the comparable properties offset by a $2.6 million decrease in property operating expenses from the non-comparable properties.
The components of our property operating expenses for the comparable properties were as follows (in thousands):
| For the nine months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| Room expense | $ | 218,738 | $ | 215,394 | $ | 3,344 | |||||||||||||||||
| Food and beverage expense | 87,782 | 87,599 | 183 | ||||||||||||||||||||
| Management and franchise fee expense | 78,529 | 81,749 | (3,220) | ||||||||||||||||||||
| Other operating expenses | 276,246 | 269,327 | 6,919 | ||||||||||||||||||||
| Total property operating expenses | $ | 661,295 | $ | 654,069 | $ | 7,226 | |||||||||||||||||
The increase in property operating expenses from the comparable properties was primarily due to increases in wages and benefits, as well as increases in room expenses and increases in other operating expenses, including increases in sales and marketing expenses, utilities and general liability insurance coverage. This was offset by a decrease in management and franchise fee expense, which was due to lower revenues as well as recently amended management and franchise agreements.
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Depreciation and Amortization
Depreciation and amortization expense increased $5.1 million to $139.1 million for the nine months ended September 30, 2025 from $134.0 million for the nine months ended September 30, 2024. The increase in depreciation and amortization expense was primarily related to our recently renovated hotels.
Property Tax, Insurance and Other
Property tax, insurance and other expense decreased $0.4 million to $80.3 million for the nine months ended September 30, 2025 from $80.7 million for the nine months ended September 30, 2024. The decrease was primarily attributable to a decrease in property insurance premiums offset by an increase in real estate tax expense due to the beneficial impact of successful real estate tax appeals in the prior year.
General and Administrative
General and administrative expense decreased $6.3 million to $35.6 million for the nine months ended September 30, 2025 from $41.8 million for the nine months ended September 30, 2024. The decrease was primarily attributable to a decrease in non-cash compensation expense, including the impact of a $1.6 million benefit as a result of the performance unit forfeitures related to the departure of Company executives during the three months ended June 30, 2025.
Other Income, net
Other income, net decreased $2.0 million to $2.7 million for the nine months ended September 30, 2025 from $4.7 million for the nine months ended September 30, 2024. The decrease was primarily attributable to the receipt of certain one-time COVID-19 relief awards during the nine months ended September 30, 2024.
Interest Income
Interest income decreased $3.1 million to $10.1 million for the nine months ended September 30, 2025 from $13.2 million for the nine months ended September 30, 2024. The decrease was attributable to the combination of lower interest rates and the Company holding less cash in 2025.
Interest Expense
Interest expense increased $0.6 million to $83.7 million for the nine months ended September 30, 2025 from $83.2 million for the nine months ended September 30, 2024. The components of our interest expense for the nine months ended September 30, 2025 and 2024 were as follows (in thousands):
| For the nine months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| Senior Notes | $ | 29,070 | $ | 29,070 | $ | — | |||||||||||||||||
| Revolver and Term Loans | 40,841 | 37,075 | 3,766 | ||||||||||||||||||||
| Mortgage loans | 7,761 | 10,939 | (3,178) | ||||||||||||||||||||
| Amortization of deferred financing costs | 5,632 | 4,779 | 853 | ||||||||||||||||||||
| Non-cash interest expense related to interest rate hedges | 433 | 1,287 | (854) | ||||||||||||||||||||
| Total interest expense | $ | 83,737 | $ | 83,150 | $ | 587 | |||||||||||||||||
Gain on Sale of Hotel Properties, net
During the nine months ended September 30, 2025, we sold one hotel property for a sales price of $24.3 million and recorded a net gain on the sale of $0.8 million. During the nine months ended September 30, 2024, we sold two hotel properties for a combined sales price of approximately $20.8 million and recorded net gains on the sales of approximately $8.3 million.
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Non-GAAP Financial Measures
We consider the following non-GAAP financial measures useful to investors as key supplemental measures of our performance: (1) FFO, (2) Adjusted FFO, (3) EBITDA, (4) EBITDAre and (5) Adjusted EBITDA. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as a measure of our operating performance. FFO, Adjusted FFO, EBITDA, EBITDAre, and Adjusted EBITDA, as calculated by us, may not be comparable to FFO, Adjusted FFO, EBITDA, EBITDAre and Adjusted EBITDA as reported by other companies that do not define such terms exactly as we define such terms.
Funds From Operations
We calculate funds from operations ("FFO") in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), which defines FFO as net income or loss, excluding gains or losses from sales of real estate, impairment, the cumulative effect of changes in accounting principles, plus depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets 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, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. We believe that the presentation of FFO provides useful information to investors regarding our operating performance and can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common shareholders. Our calculation of FFO may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. Additionally, FFO may not be helpful when comparing us to non-REITs. We present FFO attributable to common shareholders, which includes our OP units, because our OP units may be redeemed for common shares. We believe it is meaningful for the investor to understand FFO attributable to all common shares and OP units.
We further adjust FFO for certain additional items that are not in NAREIT’s definition of FFO, such as transaction costs, pre-opening costs, gains or losses on extinguishment of indebtedness, non-cash income tax expense or benefit, amortization of share-based compensation, non-cash interest expense related to discontinued interest rate hedges, derivative gains or losses in accumulated other comprehensive income reclassified to earnings, and certain other income or expenses that we consider outside the normal course of operations. We believe that Adjusted FFO provides useful supplemental information to investors regarding our ongoing operating performance that, when considered with net income and FFO, is beneficial to an investor’s understanding of our operating performance.
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The following table is a reconciliation of our GAAP net (loss) income to FFO attributable to common shareholders and unitholders and Adjusted FFO attributable to common shareholders and unitholders for the three and nine months ended September 30, 2025 and 2024 (in thousands):
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net (loss) income | $ | (3,798) | $ | 20,643 | $ | 28,005 | $ | 62,680 | |||||||||||||||
| Preferred dividends | (6,279) | (6,279) | (18,836) | (18,836) | |||||||||||||||||||
| Depreciation and amortization | 46,996 | 44,892 | 139,147 | 134,045 | |||||||||||||||||||
| Loss (gain) on sale of hotel properties, net | 141 | (4,755) | (802) | (8,301) | |||||||||||||||||||
| Noncontrolling interest in consolidated joint ventures | 10 | 8 | 118 | 181 | |||||||||||||||||||
| Adjustments related to consolidated joint venture (1) | (50) | (47) | (147) | (139) | |||||||||||||||||||
| Adjustments related to unconsolidated joint venture (2) | 225 | 227 | 706 | 685 | |||||||||||||||||||
| FFO | 37,245 | 54,689 | 148,191 | 170,315 | |||||||||||||||||||
| Transaction costs | 128 | 209 | 240 | 299 | |||||||||||||||||||
| Pre-opening costs (3) | 69 | 888 | 520 | 1,088 | |||||||||||||||||||
| Loss on extinguishment of indebtedness, net | — | 129 | 34 | 129 | |||||||||||||||||||
| Amortization of share-based compensation | 4,043 | 4,550 | 11,280 | 16,260 | |||||||||||||||||||
| Non-cash interest expense related to discontinued interest rate hedges | 144 | 386 | 433 | 1,287 | |||||||||||||||||||
| Other (income) expenses (4) | (526) | 304 | (14) | 2,256 | |||||||||||||||||||
| Adjusted FFO | $ | 41,103 | $ | 61,155 | $ | 160,684 | $ | 191,634 | |||||||||||||||
(1)Includes depreciation and amortization expense allocated to the noncontrolling interest in the consolidated joint venture.
(2)Includes our ownership interest in the depreciation and amortization expense of the unconsolidated joint venture.
(3)Represents expenses related to the brand conversions of certain hotel properties prior to opening.
(4)Represents income and expenses outside of the normal course of operations.
EBITDA and EBITDAre
EBITDA is defined as net income or loss excluding: (1) interest expense; (2) income tax expense; and (3) depreciation and amortization expense. We consider EBITDA useful to an investor in evaluating and facilitating comparisons of our operating performance between periods and between REITs by removing the impact of our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization expense) from our operating results. In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and disposals.
In addition to EBITDA, we present EBITDAre in accordance with NAREIT guidelines, which defines EBITDAre as net income or loss excluding interest expense, income tax expense, depreciation and amortization expense, gains or losses from sales of real estate, impairment, and adjustments for unconsolidated joint ventures. We believe that the presentation of EBITDAre provides useful information to investors regarding our operating performance and can facilitate comparisons of operating performance between periods and between REITs.
We also present Adjusted EBITDA, which includes additional adjustments for items such as transaction costs, pre-opening costs, gains or losses on extinguishment of indebtedness, amortization of share-based compensation, derivative gains or losses in accumulated other comprehensive income reclassified to earnings, and certain other income or expenses that we consider outside the normal course of operations. We believe that Adjusted EBITDA provides useful supplemental information to investors regarding our ongoing operating performance that, when considered with net income, EBITDA, and EBITDAre, is beneficial to an investor’s understanding of our operating performance.
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The following table is a reconciliation of our GAAP net (loss) income to EBITDA, EBITDAre and Adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024 (in thousands):
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net (loss) income | $ | (3,798) | $ | 20,643 | $ | 28,005 | $ | 62,680 | |||||||||||||||
| Depreciation and amortization | 46,996 | 44,892 | 139,147 | 134,045 | |||||||||||||||||||
| Interest expense, net of interest income | 24,807 | 24,357 | 73,619 | 69,959 | |||||||||||||||||||
| Income tax expense | 341 | 379 | 974 | 1,081 | |||||||||||||||||||
| Adjustments related to unconsolidated joint venture (1) | 382 | 331 | 1,182 | 998 | |||||||||||||||||||
| EBITDA | 68,728 | 90,602 | 242,927 | 268,763 | |||||||||||||||||||
| Loss (gain) on sale of hotel properties, net | 141 | (4,755) | (802) | (8,301) | |||||||||||||||||||
EBITDAre | 68,869 | 85,847 | 242,125 | 260,462 | |||||||||||||||||||
| Transaction costs | 128 | 209 | 240 | 299 | |||||||||||||||||||
| Pre-opening costs (2) | 69 | 888 | 520 | 1,088 | |||||||||||||||||||
| Loss on extinguishment of indebtedness, net | — | 129 | 34 | 129 | |||||||||||||||||||
| Amortization of share-based compensation | 4,043 | 4,550 | 11,280 | 16,260 | |||||||||||||||||||
| Other (income) expenses (3) | (526) | 304 | (14) | 2,256 | |||||||||||||||||||
| Adjusted EBITDA | $ | 72,583 | $ | 91,927 | $ | 254,185 | $ | 280,494 | |||||||||||||||
(1)Includes our ownership interest in the interest, depreciation, and amortization expense of the unconsolidated joint venture.
(2)Represents expenses related to the brand conversions of certain hotel properties prior to opening.
(3)Represents income and expenses outside of the normal course of operations.
Liquidity and Capital Resources
Our liquidity requirements consist primarily of the funds necessary to pay for operating expenses and other expenditures directly associated with our hotel properties, including:
•funds necessary to pay for the costs of acquiring hotel properties;
•redevelopments, conversions, renovations and other capital expenditures that need to be made periodically to our hotel properties;
•recurring maintenance and capital expenditures necessary to maintain our hotel properties in accordance with brand standards;
•interest expense and scheduled principal payments on outstanding indebtedness;
•distributions on common and preferred shares;
•share repurchases under our share repurchase programs; and
•corporate and other general and administrative expenses.
As of September 30, 2025, we had $404.1 million of cash, cash equivalents, and restricted cash reserves as compared to $433.3 million at December 31, 2024.
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Sources and Uses of Cash
Cash flows from Operating Activities
The net cash flow provided by operating activities totaled $180.9 million and $214.4 million for the nine months ended September 30, 2025 and 2024, respectively. Our cash flows provided by operating activities generally consist of the net cash generated by our hotel operations, the cash paid for corporate expenses and other working capital changes. Refer to the "Results of Operations" section for further discussion of our operating results for the nine months ended September 30, 2025 and 2024.
Cash flows from Investing Activities
The net cash flow used in investing activities totaled $88.1 million for the nine months ended September 30, 2025 primarily due to $111.7 million in capital improvements and additions to our hotel properties and other assets. The net cash flow used in investing activities was partially offset by $23.6 million in proceeds from the sale of a hotel property.
The net cash flow used in investing activities totaled $246.3 million for the nine months ended September 30, 2024
primarily due to a $122.8 million acquisition of a fee simple interest in our Wyndham Boston Beacon Hill hotel property, a
$35.9 million acquisition of a hotel property, and $107.0 million in capital improvements and additions to our hotel properties
and other assets. The net cash flow used in investing activities was partially offset by $19.5 million in proceeds from the sales
of two hotel properties.
Cash flows from Financing Activities
The net cash flow used in financing activities totaled $122.1 million for the nine months ended September 30, 2025 primarily due to $100.0 million in repayment of our Revolver, $28.6 million paid to repurchase common shares under our share repurchase programs, $87.9 million in distributions to shareholders and unitholders, $3.6 million paid to repurchase common shares to satisfy employee tax withholding requirements, and $2.1 million in deferred financing cost payments. The net cash flow used in financing activities was partially offset by $100.0 million in borrowings on a term loan.
The net cash flow used in financing activities totaled $99.1 million for the nine months ended September 30, 2024. The
sources of cash included $500.0 million in borrowings on a term loan and $200.0 million in borrowings on our Revolver. The
uses of cash included $400.0 million in repayment of a term loan, $200.0 million in repayment of a maturing mortgage loan,
$100.0 million in repayment of our Revolver, $19.0 million paid to repurchase common shares under our share repurchase
programs, $65.8 million in distributions to shareholders and unitholders, $9.0 million paid to repurchase common shares to
satisfy employee tax withholding requirements, and $5.3 million in deferred financing cost payments.
Capital Expenditures and Reserve Funds
We maintain each of our hotel properties in good repair and condition and in conformity with applicable laws and regulations, franchise agreements and management agreements. The cost of routine improvements and alterations are paid out of FF&E reserves, which are funded by a portion of each hotel property’s gross revenues. Routine capital expenditures may be administered by the property management companies. However, we have approval rights over the capital expenditures as part of the annual budget process for each of our hotel properties.
From time to time, certain of our hotel properties may undergo renovations as a result of our decision to upgrade portions of the hotels, such as guestrooms, public space, meeting space, and/or restaurants, in order to better compete with other hotels and alternative lodging options in our markets. In addition, upon acquisition of a hotel property we often are required to complete a property improvement plan in order to bring the hotel up to the respective franchisor’s standards. If permitted by the terms of the management agreement, funding for a renovation will first come from the FF&E reserves. To the extent that the FF&E reserves are not available or sufficient to cover the cost of the renovation, we will fund all or the remaining portion of the renovation with cash and cash equivalents on hand, our Revolver and/or other sources of available liquidity.
With respect to some of our hotels that are operated under franchise agreements with major national hotel brands and for some of our hotels subject to first mortgage liens, we are obligated to maintain FF&E reserve accounts for future capital expenditures at these hotels. The amount funded into each of these reserve accounts is generally determined pursuant to the management agreements, franchise agreements and/or mortgage loan documents for each of the respective hotels, and typically ranges between 3.0% and 5.0% of the respective hotel’s total gross revenue. As of September 30, 2025, approximately $29.2 million was held in FF&E reserve accounts for future capital expenditures.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk includes the risks that arise from changes in interest rates, equity prices and other market changes that affect market sensitive instruments. Our primary market risk exposure is to changes in interest rates on our variable rate debt. As of September 30, 2025, we had approximately $1.2 billion of total variable rate debt outstanding (or 54.1% of total indebtedness) with a weighted-average interest rate of 5.30% per annum. After taking into consideration the effect of interest rate swaps, 67.2% of our total indebtedness was fixed or effectively fixed. As of September 30, 2025, if market interest rates on our variable rate debt not subject to interest rate swaps were to increase by 1.00%, or 100 basis points, interest expense would decrease future earnings and cash flows by approximately $7.3 million annually, taking into account our existing contractual hedging arrangements.
Our interest rate risk objectives are to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we manage our exposure to fluctuations in market interest rates through the use of fixed rate debt instruments to the extent that reasonably favorable rates are obtainable. We have entered into derivative financial instruments such as interest rate swaps to mitigate our interest rate risk or to effectively lock the interest rate on a portion of our variable rate debt. We do not enter into derivative or interest rate transactions for speculative purposes.
The following table provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations outstanding as of September 30, 2025, the following table presents the principal repayments and related weighted-average interest rates by contractual maturity dates (in thousands):
| 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
| Fixed rate debt (1)(2) | $ | — | $ | 500,000 | $ | — | $ | — | $ | 525,000 | $ | — | $ | 1,025,000 | |||||||||||||||||||||||||||
| Weighted-average interest rate | — | % | 3.75 | % | — | % | — | % | 4.05 | % | — | % | 3.90 | % | |||||||||||||||||||||||||||
| Variable rate debt (1) | $ | — | $ | 406,000 | $ | 500,000 | $ | 300,000 | $ | — | $ | — | $ | 1,206,000 | |||||||||||||||||||||||||||
| Weighted-average interest rate (3) | — | % | 5.46 | % | 4.86 | % | 5.83 | % | — | % | — | % | 5.30 | % | |||||||||||||||||||||||||||
| Total | $ | — | $ | 906,000 | $ | 500,000 | $ | 300,000 | $ | 525,000 | $ | — | $ | 2,231,000 | |||||||||||||||||||||||||||
(1)Excludes $5.7 million, $0.2 million and $4.2 million of net deferred financing costs on the Term Loans, mortgage loans and Senior Notes, respectively.
(2)Excludes $1.2 million related to a fair value adjustment on debt.
(3)The weighted-average interest rate gives effect to interest rate swaps, as applicable.
Our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during future periods, prevailing interest rates and our hedging strategies at that time.
Changes in market interest rates on our fixed rate debt impact the fair value of our debt, but such changes have no impact on our consolidated financial statements. As of September 30, 2025, the estimated fair value of our fixed rate debt was $991.9 million, which was based on having the same debt service requirements that could have been borrowed at the date presented, at prevailing current market interest rates. If interest rates were to rise by 1.00%, or 100 basis points, and our fixed rate debt balance remained constant, we expect the fair value of our debt would decrease by approximately $21.8 million.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Rule 13a-15(b) of the Exchange Act, the Company’s management, under the supervision and participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s Chief Executive
Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2025.
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Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15 and 15d-15 of the Exchange Act) during the period ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The nature of the operations of our hotels exposes our hotel properties, the Company and the Operating Partnership to the risk of claims and litigation in the normal course of their business. Other than routine litigation arising out of the ordinary course of business, the Company is not presently subject to any material litigation nor, to the Company's knowledge, is any material litigation threatened against the Company.
Item 1A. Risk Factors
For a discussion of our potential risks and uncertainties, please refer to the "Risk Factors" section in our Annual Report, which is accessible on the SEC’s website at www.sec.gov. There have been no material changes to the risk factors previously disclosed in our Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
The Company did not sell any securities during the quarter ended September 30, 2025 that were not registered under the Securities Act.
Issuer Purchases of Equity Securities
The following table summarizes all of the share repurchases during the three months ended September 30, 2025:
| Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs (1) | |||||||||||||||||||||||||
| July 1, 2025 through July 31, 2025 | 64,014 | $ | 7.41 | 64,014 | 33,331,548 | ||||||||||||||||||||||||
| August 1, 2025 through August 31, 2025 | 127,698 | $ | 7.24 | 127,698 | 31,912,842 | ||||||||||||||||||||||||
| September 1, 2025 through September 30, 2025 | — | $ | — | — | 34,129,011 | ||||||||||||||||||||||||
| Total | 191,712 | 191,712 | |||||||||||||||||||||||||||
(1)The 2025 Share Repurchase Program to acquire up to an aggregate of $250.0 million of common and preferred shares was approved in April 2025 and is set to expire on May 8, 2026. The maximum number of shares that may yet be repurchased under a share repurchase program is calculated by dividing the total dollar amount available to repurchase shares by the closing price of our common shares on the last business day of the respective month.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Other Information
Rule 10b5-1 Trading Plans
During the three months ended September 30, 2025, none
Item 6. Exhibits
The exhibits required to be filed by Item 601 of Regulation S-K are noted below:
Exhibit Index
| Exhibit Number | Description of Exhibit | |||||||||||||
| 3.1 | Articles of Amendment and Restatement of Declaration of Trust of RLJ Lodging Trust (incorporated by reference to Exhibit 3.1 to Amendment No. 4 to the Registrant's Registration Statement on Form S-11 (File. No. 333-172011) filed on May 5, 2011) | |||||||||||||
| 3.2 | Articles of Amendment to Articles of Amendment and Restatement of Declaration of Trust of RLJ Lodging Trust (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on May 7, 2015) | |||||||||||||
| 3.3 | Articles of Amendment to Articles of Amendment and Restatement of Declaration of Trust of RLJ Lodging Trust (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on May 5, 2016) | |||||||||||||
| 3.4 | Articles Supplementary to Articles of Amendment and Restatement of Declaration of Trust (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on February 26, 2015) | |||||||||||||
| 3.5 | Articles Supplementary designating RLJ Lodging Trust’s $1.95 Series A Cumulative Convertible Preferred Shares, par value $0.01 per share (incorporated by reference to Exhibit 3.5 to the Registrant’s Form 8-A filed on August 30, 2017) | |||||||||||||
| 3.6 | Third Amended and Restated Bylaws of RLJ Lodging Trust (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed on May 5, 2016) | |||||||||||||
| 10.1* | Employment Agreement, dated as of September 15, 2025, by and among RLJ Lodging Trust, RLJ Lodging Trust, L.P. and Nikhil Bhalla (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on September 18, 2025) | |||||||||||||
| 31.1** | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||||||
| 31.2** | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||||||
| 32.1** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||||||
| 101.INS | Inline XBRL Instance Document | Submitted electronically with this report | ||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Submitted electronically with this report | ||||||||||||
| 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | Submitted electronically with this report | ||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Submitted electronically with this report | ||||||||||||
| 101.LAB | Inline XBRL Taxonomy Label Linkbase Document | Submitted electronically with this report | ||||||||||||
| 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | Submitted electronically with this report | ||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101) | Submitted electronically with this report | ||||||||||||
*This exhibit is a management contract or compensatory plan contract or arrangement.
**Filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| RLJ LODGING TRUST | |||||
| Dated: November 6, 2025 | /s/ LESLIE D. HALE | ||||
| Leslie D. Hale | |||||
| President and Chief Executive Officer | |||||
| Dated: November 6, 2025 | /s/ NIKHIL BHALLA | ||||
| Nikhil Bhalla | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
| (Principal Financial Officer) | |||||
| Dated: November 6, 2025 | /s/ CHRISTOPHER A. GORMSEN | ||||
| Christopher A. Gormsen | |||||
| Senior Vice President and Chief Accounting Officer | |||||
| (Principal Accounting Officer) | |||||
41
FAQ
How did RLJ (RLJ) perform in Q3 2025?
Total revenue was $330.0 million versus $345.7 million in Q3 2024, and EPS to common was $(0.07) versus $0.09.
What were RLJ’s year-to-date 2025 results?
For the nine months, revenue was $1,021.3 million versus $1,039.5 million, and EPS to common was $0.06 versus $0.28.
What is RLJ’s liquidity and debt position?
Cash was $374.8 million, with $600.0 million Revolver availability and $2,222.1 million of debt, net, at September 30, 2025.
Did RLJ repurchase shares in 2025?
Yes. RLJ repurchased ~3.3 million shares for about $28.6 million and has a $250.0 million 2025 program with $245.7 million remaining.
Were there asset sales or acquisitions in 2025?
RLJ sold the 181‑room Courtyard Atlanta Buckhead for $24.3 million. No acquisitions were completed in the nine months ended September 30, 2025.
What dividends did RLJ pay in 2025?
Common dividends were $0.15 per share in each of Q1–Q3 2025. Series A preferred dividends were $0.4875 per share each quarter.
How large is RLJ’s hotel portfolio?
As of September 30, 2025, RLJ owned 95 hotels with approximately 21,200 rooms across 23 states and Washington, D.C.
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