Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide the reader with information that will assist in understanding our financial statements and the reasons for changes in certain key components of our financial statements from period to period. The MD&A also provides the reader with our perspective on our financial position and liquidity, as well as certain other factors that may affect our future results.

As used herein, the terms "we," "our" and "us" refer to Procaccianti Hotel REIT, Inc., a Maryland corporation and, as required by context, Procaccianti Hotel REIT, L.P., a Delaware limited partnership, which we refer to as our "Operating Partnership," and to their respective subsidiaries.

The following discussions and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q ("Quarterly Report"). The following discussion should also be read in conjunction with our audited consolidated financial statements, the notes thereto, and the MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the U.S. Securities and Exchange Commission ("SEC") on March 23, 2026 ("Annual Report").

Forward-Looking Statements

Certain statements included in this Quarterly Report that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as "may," "should," "expect," "could," "intend," "plan," "anticipate," "estimate," "believe," "continue," "predict," "potential" or the negative of such terms and other comparable terminology.

The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements.

Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to:

Other risks include those described under the section entitled Item 1A. "Risk Factors" of Part I of our Annual Report and subsequent quarterly reports. Any of the assumptions underlying forward-looking statements could be inaccurate. You are cautioned not to place undue reliance on any forward-looking statements included in this Quarterly Report. All forward-looking statements are made as of the date of this Quarterly Report and the risk that actual results will differ materially from the expectations expressed in this Quarterly Report will increase with the passage of time. These risks and uncertainties may be amplified by macroeconomic events, including but not limited to the conflict between Russia and Ukraine, Iran and Israel, the Hamas-Israel war, international trade relations and trade policy, including those related to tariffs, rising interest rates and inflation. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this Quarterly Report, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Quarterly Report will be achieved.

Overview

Procaccianti Hotel REIT, Inc. was formed on August 24, 2016, under the laws of Maryland to acquire and own a diverse portfolio of hospitality properties consisting primarily of select-service, extended-stay and compact full-service hotel properties throughout the United States. As of September 30, 2026, we owned an interest in five select-service hotel properties. We elected to be taxed as, and currently operate as, a REIT under the Code, commencing with our taxable year ended December 31, 2018.

Substantially all of our business is conducted through the Operating Partnership. We are the sole general partner of the Operating Partnership. We are externally managed by PHA pursuant to the Advisory Agreement. PHA is an affiliate of our Sponsor.

Subscription proceeds from Class K common stock ("K Shares"), Class K-I common stock ("K-I Shares"), and Class K-T common stock ("K-T Shares") in our Private Offering and our Public Offering, which terminated in August 2021, as discussed below, have been applied to investments in hotel properties or real estate-related investments relating to hotel properties.

We intend to make reserve allocations as necessary to aid our objective of preserving capital for investors by supporting the maintenance and viability of properties we acquire in the future. If reserves and any other available income become insufficient to cover our operating expenses and liabilities, it may be necessary to obtain additional

funds by borrowing, refinancing properties or liquidating our investment in one or more properties. There is no assurance that such funds will be available or, if available, that the terms will be acceptable to us.

We raised the equity capital for our real estate investments through the Offerings from September 2016 through August 2021, and we have offered shares through our DRIP pursuant to the DRIP Offering since August 2021.

The Company terminated the Private Offering prior to the commencement of the Public Offering, and, as of such termination, received approximately $15,582,755 in gross proceeds from the sale of shares of K Shares, and Class A common stock ("A Shares"), including Units (which were comprised of one K Share and one A Share), in the Private Offering. Of the $15,582,755 in gross proceeds received, $2,954,095 was from the sale of A Shares to THR, an affiliate of PHA, to fund organization and offering expenses associated with the K Shares and Units.

Since the commencement of the Public Offering and through September 30, 2026, the Company received approximately $43,482,834 in gross proceeds from the sale of K Shares, K-I Shares, and K-T Shares in the Public Offering, inclusive of proceeds from the sale of $2,684,317 of K Shares, $1,925,794 of K-I Shares and $72,561 of K-T Shares pursuant to the DRIP. Additionally, on October 26, 2018, June 10, 2019 and January 19, 2021, the Company received $1,500,000, $690,000 and $440,000, respectively, from the sale of A Shares to THR in private placements, the proceeds of which were used to pay the selling commissions, dealer manager fees, stockholder servicing fees, and other organizational and offering expenses related to the K Shares, K-I Shares and K-T Shares sold in the primary offering portion of the Public Offering. In addition, the Company allocated proceeds from the sale of A Shares in amounts that represent the difference between (i) the applicable estimated NAV per K-I Share and the applicable offering price of K-I Shares sold in the primary offering and (ii) any discount to the applicable offering price of K Shares, K-I Shares and K-T Shares arising from reduced or waived selling commissions (other than reduced selling commissions for volume discounts) or dealer manager fees.

On February 27, 2020, through a separate private placement and as partial consideration for our acquisition of the Hilton Garden Inn Providence, the Operating Partnership issued 128,124 Class K OP Units at $10.00 per share.

We intend to establish an estimated per share net asset value ("Estimated Per Share NAV") on at least an annual basis. Each Estimated Per Share NAV is determined by our board of directors after consultation with our advisor and an independent third-party valuation firm. The Estimated Per Share NAV is not subject to audit by our independent registered public accounting firm. The following table outlines the established Estimated Per Share NAV as determined by our board of directors for the last five years as of each valuation date presented below (which were the Estimated Per Shares NAVs for the K Shares, K-I Shares and K-T Shares, unless otherwise indicated):

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The Estimated Per Share NAV of each of our classes of capital stock is calculated in accordance with our charter, as amended. Our NAV is, in accordance with our charter, allocated (i) first, to the liquidation preference on each of the K-I Shares, K Shares and K-T Shares equal to $10.00, plus all accumulated, accrued, and unpaid distributions on the K-I Shares, K Shares and K-T Shares, respectively, (ii) second, to the payment of any deferred and unpaid asset management fees, acquisition fees and disposition fees (including interest accrued on all such fees at a non-compounded rate of 6.0% per annum) to our advisor, (iii) third, to the liquidation preference on the A Shares equal to $10.00, plus all accumulated, accrued and unpaid distributions on the A Shares, and (iv) fourth, following the distribution and payment in full of all of the preceding obligations, (a) 50.0% of the remaining NAV is allocated to the holders of the K-I Shares, K Shares and K-T Shares (pro rata based on the number of K-I Shares, K Shares, and K-T Shares outstanding), (b) 12.5% of the remaining NAV is allocated to B Shares, and (c) 37.5% of remaining NAV is allocated to the A Shares.

S2K Financial LLC was the dealer manager for our Public Offering and was responsible for the distribution of our common stock in our Public Offering. PHA is our advisor and is an affiliate of our Sponsor. Subject to certain restrictions and limitations, PHA manages our day-to-day operations and our portfolio of properties and real estate-related assets. PHA sources and presents investment opportunities to our board of directors and provides investment management, marketing, investor relations and other administrative services on our behalf. We have no paid employees and rely on PHA to provide substantially all of our services. Pursuant to our Advisory Agreement with PHA, we will reimburse PHA for costs incurred in providing these administrative services. PHA will be required to allocate the cost of such services to us based on objective factors such as total assets, revenues and/or time allocations. At least annually, our board of directors will review the amount of administrative services expense reimbursable to PHA to determine whether such amounts are reasonable in relation to the services provided. During the three months ended September 30, 2026 and 2025, the Sponsor requested reimbursement for $57,200 and $42,733, respectively, of such administrative service expenses. Of these amounts, $23,581 and $11,681 is included in due to related parties on the condensed consolidated balance sheet as of September 30, 2026 and December 31, 2025, respectively.

In addition, pursuant to provisions contained in our charter and in the Advisory Agreement, our board of directors has the ongoing responsibility of limiting our total operating expenses (as defined in our charter) for the trailing four consecutive quarters to amounts that do not exceed the greater of 2% of our average invested assets (as defined in our charter) or 25% of our net income (as defined in our charter), calculated in the manner set forth in our charter, unless a majority of the directors (including a majority of the independent directors) has made a finding that, based on unusual and non-recurring factors that they deem sufficient, a higher level of expenses is justified. In the event that a majority of the directors (including a majority of the independent directors) does not determine that such excess expenses are justified, PHA must reimburse to us the amount of the excess expenses paid or incurred (the "Excess Amount").

During the twelve months ended September 30, 2026, our total operating expenses were less than 2% of our average invested assets and 25% of our net income. During each of the twelve months ended June 30, 2026 and March 31, 2026, our total operating expenses were less than 2% of our average invested assets but exceeded 25% of our net income. During each of the twelve months ended December 31, 2025, September 30, 2025, June 30, 2025, and March 31, 2025, our total operating expenses were less than 2% of our average invested assets and 25% of our net income. We incurred operating expenses of approximately $1,370,725 and incurred an Excess Amount of approximately $218,113 during the twelve months ended June 30, 2026. We incurred operating expenses of approximately $1,385,531 and incurred an Excess Amount of approximately $122,157 during the twelve months ended March 31, 2026. Our board of directors (including a majority of our independent directors) determined that the Excess Amount for the twelve months ended June 30, 2026 and March 31, 2026 was justified as unusual and non-recurring.

Because we are prohibited from operating hotel properties pursuant to certain tax laws relating to our qualification as a REIT, the entities through which we own hotel properties will lease the hotel properties to one or more taxable REIT subsidiaries ("TRSs"). A TRS is a corporate subsidiary of a REIT that jointly elects, with the REIT, to be treated as a TRS of the REIT, and that pays federal income tax at regular corporate rates on its taxable income. The TRSs will enter into any franchise agreements to brand our hotels and will generally enter into property management agreements with one or more affiliated property management companies. These may include TPG Hotels & Resorts, Inc., an affiliate of our Sponsor and PHA, or TPG Hotels & Resorts, Inc.'s wholly owned subsidiaries, which we collectively refer to as TPG, or other affiliates or designees of TPG. We expect our property manager will operate and manage all or substantially all of our hotel properties.

We anticipate that we will acquire properties with property management agreements that can be terminated with little or no cost. In such cases, our TRSs will enter into property management agreements with one or more property management companies affiliated with our Sponsor. We expect our property manager will operate and manage all or substantially all of our hotel properties. We collectively refer to TPG and other property management companies affiliated with our Sponsor as our property manager.

PHA and affiliated property managers will be entitled to receive fees during the acquisition and operational stages of the Company, and PHA may be eligible to receive fees during the liquidation stage of the Company. S2K Financial LLC will receive fees for distribution and servicing of the DRIP Offering.

We elected to be taxed as, and currently qualify as, a REIT under the Code commencing with our taxable year ended December 31, 2018. As a REIT, we generally will not be subject to U.S. federal income tax to the extent that we distribute qualifying dividends to our stockholders. If we fail to qualify as a REIT in any taxable year following the year we initially elect to be taxed as a REIT, we will be subject to U.S. federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year in which qualification is lost, unless the Internal Revenue Service grants us relief under certain statutory provisions. Failing to qualify as a REIT could materially and adversely affect our net income and results of operations.

Recent Developments

Our operations have been and are expected to continue to be impacted by economic and market conditions. Persisting market and economic challenges, such as increases in interest rates, labor shortages, supply chain disruptions and high inflation, could affect (i) the value and performance of our investments, (ii) our ability to pay future distributions, (iii) the availability or terms of financings, (iv) our ability to make scheduled principal and interest payments, and (v) our ability to refinance any outstanding debt when contractually due.

Market Outlook

While destination and leisure travel remain resilient, business travel has shown a more meaningful recovery during 2026, particularly in corporate and convention-related segments. Nevertheless, demand remains uneven across markets, and elevated interest rates, inflation, insurance premiums, labor costs, energy-price volatility and geopolitical uncertainty continue to pressure hotel operating margins and corporate travel budgets.

The U.S. lodging industry has historically exhibited a strong correlation with U.S. economic growth. According to the U.S. Bureau of Economic Analysis, real GDP increased at an annualized rate of 2.5% in the first quarter of 2026 and 2.2% in the second quarter, based on the latest estimates available as of October 1, 2026. These revised results indicate continued economic expansion, although inflation, labor-market conditions and uncertainty surrounding consumer spending remain important considerations.

The hospitality outlook has improved relative to the beginning of the year. CBRE forecasts U.S. hotel revenue per available room (RevPAR) growth of 2.5% in 2026, while CoStar and Tourism Economics project 4.4% growth, reflecting stronger demand and pricing performance. Business transient and convention-related travel have emerged as important growth drivers, complementing resilient leisure demand. However, higher operating expenses-including

wages, insurance, utilities and other property-level costs-may limit the extent to which revenue growth translates into improved profitability. Performance is also expected to vary by segment, with luxury and resort properties generally better positioned than economy and midscale hotels.

Transportation Security Administration ("TSA") checkpoint data indicate that air travel remains substantial but has moderated from the prior year. Average daily passenger throughput increased from approximately 2.12 million in January to 2.53 million in March, peaked at approximately 2.69 million in June, and declined to 2.35 million in September. Although summer and early-fall volumes remained above comparable pre-pandemic levels, year-over-year throughput declined by approximately 1.3% in June, 2.1% in July, 4.4% in August and 2.0% in September. This pattern suggests that travel demand remains significant, but that growth is normalizing and consumers may be increasingly sensitive to travel costs.

Geopolitical uncertainty remains a risk to international visitation. The conflict involving Iran and disruptions to Middle Eastern airspace affected international aviation and travel through major Gulf connecting hubs. Although airline operations subsequently recovered substantially, elevated long-haul travel costs and geopolitical concerns have weighed on some international travel demand. These conditions may disproportionately affect gateway and destination markets that rely on overseas visitors. Major events, including the FIFA World Cup and America's 250th anniversary, provide opportunities for incremental domestic and international demand, although actual hotel performance will depend on market-level booking patterns and event-related spending.

Overall, the outlook for the U.S. lodging industry remains cautiously constructive for the balance of 2026. Revised GDP data indicate continued economic growth, business and group travel have strengthened, and hotel industry forecasts have improved. However, softer year-over-year TSA throughput, elevated operating expenses, uneven international visitation and geopolitical uncertainty remain potential constraints.

We believe the most likely scenario is continued, measured growth in lodging demand rather than a rapid acceleration. Markets with diversified demand generators-including leisure, corporate, group and event-related travel-should be best positioned to outperform, while markets more dependent on international visitation or traditional corporate travel may experience greater volatility. Property-level operating performance, expense management and the ability to sustain pricing power will remain critical determinants of investment performance.

Critical Accounting Policies

Our accounting policies have been established to conform with GAAP. The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments, assumptions and estimates was included in our Annual Report.

Income Taxes

We elected to be taxed as, and currently qualify as, a REIT under the Code and have operated as such commencing with our taxable year ended December 31, 2018. To qualify as a REIT for tax purposes, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to our stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). We must also meet certain asset and income tests, as well as other requirements. As a REIT, we will not be subject to U.S. federal income tax to the extent we make distributions to our stockholders equal to or in excess of our taxable income. We will monitor the business and transactions that may potentially impact our REIT status. If we fail to qualify as a REIT in any taxable year following 2018, we would be subject to U.S. federal income tax (including any applicable alternative

minimum tax) on our taxable income at regular corporate income tax rates and generally would not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders. However, we are, and intend to continue to be, organized and operated in such a manner as to qualify for treatment as a REIT.

We lease our hotel properties to our wholly owned TRSs that are subject to federal, state and local income taxes.

We account for income taxes of our TRSs using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We record a valuation allowance for net deferred tax assets that are not expected to be realized.

We have reviewed tax positions under GAAP guidance that clarify the relevant criteria and approach for the recognition and measurement of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the financial statements if it is more likely than not that the tax position will be sustained upon examination. We had no material uncertain tax positions at September 30, 2026.

The preparation of our various tax returns requires the use of estimates for federal and state income tax purposes. These estimates may be subjected to review by the respective taxing authorities. A revision to an estimate may result in an assessment of additional taxes, penalties and interest. At this time, a range in which our estimates may change is not expected to be material. We will account for interest and penalties relating to uncertain tax provisions in the current period's results of operations, if necessary. We have not been assessed interest or penalties by any major tax jurisdictions. We have tax years 2022 through 2025 remaining subject to examination by various federal and state tax jurisdictions.

Distributions

Our board of directors may authorize distributions in excess of those required for us to maintain REIT status as it deems appropriate. Our board of directors may reconsider our current distribution policy and may take further action with respect to distributions for our common stock, and could consider eliminating, suspending, or significantly reducing distributions in the future. The timing and amount of distributions will be determined by our board of directors, in its sole discretion, and may vary from time to time. Our board of directors' discretion will be influenced in substantial part by its obligation to cause us to comply with the REIT requirements of the Code. We can provide no assurance that we will be able to pay distributions on our K Shares or K-I Shares. However, distributions will continue to accumulate pursuant to our charter.

Our board of directors has adopted a policy to refrain from funding distributions with offering proceeds; instead, we plan to fund distributions from cash flows from operations and capital transactions (other than the Public Offering or other securities offerings but which may include the sale of one or more assets). However, our charter does not restrict us from paying distributions from any particular source, including proceeds from securities offerings, and our board of directors has the ability to change our policy regarding the source of distributions. However, in accordance with Maryland law, we may not make distributions that would: (1) cause us to be unable to pay our debts as they become due in the usual course of business; or (2) cause our total assets to be less than the sum of our total liabilities plus, unless our charter provides otherwise, senior liquidation preferences. Our charter currently provides that amounts that would be needed, if we were to dissolve at the time of such distributions, to satisfy the preferential rights upon dissolution of holders of K Shares, K-I Shares and K-T Shares shall not be added to our total liabilities for these purposes. Subject to the preceding, our board of directors will determine the amount of distributions we will pay to our stockholders. We have not established a minimum distribution level.

For information on distributions paid during the three months ended September 30, 2026, refer to Note 6 - "Stockholders' Equity" to our unaudited interim condensed consolidated financial statements included in this Quarterly Report.

We have funded distributions with operating cash flows from our hotel properties and from the issuance of common stock pursuant to the DRIP. To the extent we do not have sufficient earnings and profits, distributions paid will be considered a return of capital to stockholders.

The following table shows K Share, K-I Share, and Class K OP Unit distributions paid during the nine months ended September 30, 2026 and 2025:

Although a portion of the tax composition of such distributions may be a return of capital, distributions for the nine months ended September 30, 2026 and 2025 were paid for with gross cash flow from operations. To the extent we do not have taxable income, distributions paid will be considered a return of capital to stockholders.

On March 3, 2020, our stockholders approved amending our charter (1) to increase the rate at which cash distributions on K Shares, K-I Shares and K-T Shares automatically accumulate under our charter from 6% to 7% per annum of the K Share Distribution Base of such K Share, K-I Share Distribution Base of such K-I Share and K-T Share Distribution Base of such K-T Share, respectively, and (2) to increase the maximum rate at which distributions on A Shares may be authorized by our board of directors and declared by us from 6% to 7% of the stated value of an A Share ($10.00) from income and cash flow from ordinary operations on a cumulative basis. The changes pursuant to the Articles of Amendment to our charter became effective beginning with distributions that accumulated on March 31, 2020.

We paid quarterly K Share, K-I Share, and Class K OP Unit distributions with respect to all quarters of 2025 and the first three quarters of 2026, funded from the operations of our hotel properties and proceeds received pursuant to the DRIP, consistent with prior distributions. Unpaid distributions will continue to accumulate pursuant to our charter. Our board of directors will make determinations as to the payment of future distributions on a quarter by quarter basis; however, distributions will continue to accumulate pursuant to our charter.

On July 31, 2025, we paid $2,388,072 of distributions that had accrued from inception through June 30, 2024, to A Share stockholders, sourced from additional proceeds from the refinance of the Hilton Garden Inn Providence Note. Unpaid distributions will continue to accumulate pursuant to our charter.

Results of Operations

The discussion that follows is based on our consolidated results of operations for the three and nine months ended September 30, 2026 and 2025.

Factors That May Influence Results of Operations

We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate generally and those risks listed in Part I, Item 1A "Risk Factors" of our Annual Report and in Part II, Item 1A. "Risk

Factors" of this Quarterly Report that may be reasonably expected to have a material impact, favorable or unfavorable, on revenues or income from the acquisition, management and operation of our properties.

Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Rooms revenues

We expect the majority of our revenues to be derived from the operation of our hotel properties. Rooms revenues are the product of the number of rooms sold and the average daily room rate. Rooms revenues increased to $10,185,799 for the three months ended September 30, 2026, from $10,136,523 for the three months ended September 30, 2025. The net increase of $49,276, or 0.49%, was largely due to increases in ADR.

The following presents the hotel operating results for the three months ended September 30, 2026:

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The following presents the hotel operating results for the three months ended September 30, 2025:

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A comparison of hotel rooms revenues for the three months ended September 30, 2026 and 2025 is as follows:

The increase in rooms revenues of $49,555, or 3.55%, at the Springhill Suites Wilmington is driven by increases in both ADR and occupancy. The ADR at the Springhill Suites Wilmington increased from $164.79 for the three months ended September 30, 2025, to $168.07 for the three months ended September 30, 2026, an increase of 1.99%. Occupancy at the Springhill Suites Wilmington increased from 76.62% for the three months ended September 30, 2025, to 77.80% for the three months ended September 30, 2026.

The increase in rooms revenues of $122,020, or 10.87%, at the Staybridge Suites St. Petersburg is driven by increases in both ADR and occupancy. The ADR at the Staybridge Suites St. Petersburg increased from $131.87 for the three months ended September 30, 2025, to $138.99 for the three months ended September 30, 2026, an increase of 5.40%. Occupancy at the Staybridge Suites St. Petersburg increased from 77.74% for the three months ended September 30, 2025, to 81.78% for the three months ended September 30, 2026.

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The increase in rooms revenues of $216,587, or 6.57%, at the Hotel Indigo Traverse City is driven by increases in both ADR and occupancy. The ADR at the Hotel Indigo Traverse City increased from $374.53 for the three months ended September 30, 2025, to $396.03 for the three months ended September 30, 2026, an increase of 5.74%. Occupancy at the Hotel Indigo Traverse City increased from 89.41% for the three months ended September 30, 2025, to 90.12% for the three months ended September 30, 2026.

The decrease in rooms revenues of $214,404, or 9.41%, at the Hilton Garden Inn Providence is driven by a decrease in occupancy. Occupancy at the Hilton Garden Inn Providence decreased from 83.26% for the three months ended September 30, 2025, to 74.10% for the three months ended September 30, 2026. The decrease in occupancy for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 is primarily driven by high occupancy in the three months ended September 2025, which is attributed to a strike formed by unionized hospital employees within close proximity to the Hilton Garden Inn Providence. The ADR at the Hilton Garden Inn Providence increased from $217.09 for the three months ended September 30, 2025, to $220.98 for the three months ended September 30, 2026, an increase of 1.79%.

The decrease in rooms revenues of $124,482, or 6.09%, at the Cherry Tree Inn is driven by decreases in both ADR and occupancy. The ADR at the Cherry Tree Inn decreased from $358.79 for the three months ended September 30, 2025, to $351.12 for the three months ended September 30, 2026, a decrease of 2.14%. Occupancy at the Cherry Tree Inn decreased from 81.54% for the three months ended September 30, 2025, to 78.25% for the three months ended September 30, 2026.

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Food and beverage revenues

Food and beverage revenues decreased to $1,176,327 for the three months ended September 30, 2026, from $1,188,443 for the three months ended September 30, 2025. These amounts are comprised of revenues realized in hotel food and beverage outlets as well as catering events. The decrease of $12,116 is primarily driven by a decrease in catering and beverage revenues at the Hotel Indigo Traverse City.

Other operating revenues

Other operating revenues increased to $600,921 for the three months ended September 30, 2026, from $516,640 for the three months ended September 30, 2025. These amounts include ancillary hotel revenues and other items primarily driven by occupancy such as telephone/internet, parking, gift shops, and other guest services. The increase of $84,281 is primarily driven by the implementation of credit card fees for the guests of the Cherry Tree Inn.

Rooms expenses

Rooms expenses increased to $1,772,415 for the three months ended September 30, 2026, from $1,686,009 for the three months ended September 30, 2025. Rooms expenses are typically primarily driven by the corresponding revenue account and occupancy. Rooms expenses of $1,772,415 and $1,686,009 represent 17.4% and 16.6% of rooms revenues for the three-month period ended September 30, 2026 and 2025, respectively.

Food and beverage expenses

Food and beverage expenses were $576,891 and $640,005 for the three months ended September 30, 2026 and 2025, respectively. The $63,114 decrease in food and beverage expenses is primarily due to a decrease in food revenues. Food and beverage expenses are historically primarily driven by the corresponding revenue account and occupancy.

Food and beverage expenses represent 49.0% and 53.9% of food and beverage revenues for the three-month period ended September 30, 2026 and 2025, respectively.

Other property expenses

Other property expenses were $3,440,009 and $3,198,274, for the three months ended September 30, 2026, and 2025, respectively. These amounts include maintenance, utilities, sales and marketing, and general and administrative expenses of the hotel properties, as well as net franchise fees, property taxes and other taxes. The $241,735 increase in other property expenses is due to increases in credit card commission, management expense, and property tax at the Hilton Garden Inn Providence.

Property management fees to affiliates

Property management fees to affiliates were $357,761 and $355,250 for the three months ended September 30, 2026 and 2025, respectively. Property management fees are property level expenses equal to 3% of the hotel properties' gross revenues and we expect them to fluctuate accordingly.

Corporate general and administrative

Corporate general and administrative expenses were $353,821 and $327,566 for the three months ended September 30, 2026 and 2025, respectively. Corporate general and administrative expenses consist primarily of transfer agent fees, fees paid to the board of directors, audit and tax fees, and other professional services fees.

Other fees to affiliates

Other fees to affiliates were $244,173 and $227,691 for the three months ended September 30, 2026 and 2025, respectively. Other fees to affiliates include asset management fees due to PHA that are paid quarterly in arrears equal to one-fourth of 0.75% of the adjusted cost of our assets. Asset management fees increased to $187,294 for the three months ended September 30, 2026, from $184,958 for the three months ended September 30, 2025. Other fees to affiliates also includes certain administrative fees charged to us by our Sponsor. Such administrative fees were $57,200 and $42,733 during the three months ended September 30, 2026 and 2025, respectively.

Depreciation and amortization

Depreciation and amortization expenses were $964,588 and $968,312 for the three months ended September 30, 2026 and 2025, respectively. These amounts include depreciation on our hotel buildings, improvements, furniture, fixtures and equipment, along with amortization of our franchise fees and certain intangibles.

Interest expense, net

Interest expense, net, was $1,061,149 and $1,102,268 for the three months ended September 30, 2026 and 2025, respectively. The decrease of $41,119 is attributable to the loan modification of the TCI Note at a decreased interest rate. Interest expense includes monthly fixed rate and variable rate payments on the outstanding mortgage notes payable balance, accrued interest on the outstanding asset management fees, acquisition fees and promissory notes from PHA and our Sponsor, and the amortization of deferred financing costs and debt discounts or premiums. For the three months ended September 30, 2026, we recognized $64,364 of interest expense relating to the amortization of deferred financing costs. For the three months ended September 30, 2025, we recognized $64,363 of interest expense relating to the amortization of deferred financing costs.

Interest income on interest-bearing cash accounts was $33,677 and $55,250 for the three months ended September 30, 2026 and 2025, respectively. Interest income is presented as a reduction of the total interest expense on the consolidated statement of operations.

Income tax expense

For the three months ended September 30, 2026 and 2025, we incurred income tax expense of $0 and of $539,064, respectively. The $539,064 difference is primarily due to a valuation adjustment placed into effect during the nine months ended September 30, 2025, eliminating the deferred tax asset recorded on the balance sheet.

Net income

For the three months ended September 30, 2026 and 2025, we recorded net income of $3,192,240 and $2,797,167, respectively. The increase in net income of $395,073 is the result of the revenue and expense changes discussed above.

Net income attributable to noncontrolling interests

For the three months ended September 30, 2026 and 2025, we recorded net income relating to noncontrolling interests of $212,596 and $121,856, respectively. This amount includes net income or losses attributable to a third party's 49% ownership interest in PCF and will fluctuate accordingly with any increases or decreases to net income of PCF. This amount also includes net income or losses attributable to the noncontrolling Class K OP Units issued as part of the Hilton Garden Inn Providence acquisition. The noncontrolling Class K OP Units are allocated net income or loss attributable to the Operating Partnership based on the total outstanding Class K OP Units as a percentage of all our outstanding common stock.

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Rooms revenues

We expect the majority of our revenues to be derived from the operation of our hotel properties. Rooms revenues are the product of the number of rooms sold and the average daily room rate. Rooms revenues decreased to $22,289,348 for the nine months ended September 30, 2026 from $23,440,021 for the nine months ended September 30, 2025. The net decrease of $1,150,673, or 4.9%, was largely due to decreases in ADR and occupancy.

The following presents the hotel operating results for the nine months ended September 30, 2026:

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The following presents the hotel operating results for the nine months ended September 30, 2025:

A comparison of hotel rooms revenues for the nine months ended September 30, 2026 and 2025 is as follows:

The decrease in rooms revenues of $11,993 or 0.32%, at the Springhill Suites Wilmington is primarily driven by a decrease in occupancy. Occupancy at the Springhill Suites Wilmington decreased from 76.90% for the nine months ended September 30, 2025, to 74.92% for the nine months ended September 30, 2026. The ADR at the Springhill Suites Wilmington increased from $147.38 for the nine months ended September 30, 2025 to $150.77 for the nine months ended September 30, 2026, an increase of 2.30%.

The decrease in rooms revenues of $233,598, or 5.09%, at the Staybridge Suites St. Petersburg is driven by a decrease in both ADR and occupancy. The ADR at the Staybridge Suites St. Petersburg decreased from $169.30 for the nine months ended September 30, 2025, to $166.13 for the nine months ended September 30, 2026, a decrease of 1.87%. Occupancy at the Staybridge Suites St. Petersburg decreased from 83.43% for the nine months ended September 30, 2025, to 80.69% for the nine months ended September 30, 2026. The decrease in occupancy for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 was primarily driven by high occupancy in the nine months ended September 2025, due to extended stay guests displaced by the 2024 hurricanes as well as restoration contractors assisting with post-hurricane efforts.

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The decrease in rooms revenues of $27,115, or 0.45%, at the Hotel Indigo Traverse City is driven by a decrease in occupancy. Occupancy at the Hotel Indigo Traverse City decreased from 74.88% for the nine months ended September 30, 2025, to 72.84% for the nine months ended September 30, 2026. The ADR at the Hotel Indigo Traverse City increased from $272.45 for the nine months ended September 30, 2025 to $278.80 for the nine months ended September 30, 2026, an increase of 2.33%.

The decrease in rooms revenues of $623,701, or 10.85%, at the Hilton Garden Inn Providence is driven by a decrease in ADR and occupancy. The ADR at the Hilton Garden Inn Providence decreased from $210.54 for the nine months ended September 30, 2025, to $207.67 for the nine months ended September 30, 2026, a decrease of 1.36%. Occupancy at the Hilton Garden Inn Providence decreased from 73.01% for the nine months ended September 30, 2025, to 65.98% for the nine months ended September 30, 2026. The decrease in occupancy for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 was primarily driven by high occupancy in the nine months ended September 2025, which is attributed to a strike formed by unionized hospital employees within close proximity to the Hilton Garden Inn Providence.

The decrease in rooms revenues of $254,266, or 7.41%, at the Cherry Tree Inn is primarily driven by a decrease in both ADR and occupancy. The ADR at the Cherry Tree Inn decreased from $266.79 for the nine months ended September 30, 2025, to $258.05 for the nine months ended September 30, 2026, a decrease of 3.28%. The decrease in ADR for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 was driven by market softening and shorter booking windows in the nine months ended September 2026. Occupancy at the Cherry Tree Inn decreased from 61.98% for the nine months ended September 30, 2025, to 59.33% for the nine months ended September 30, 2026.

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Food and beverage revenues

Food and beverage revenues increased to $2,348,119 for the nine months ended September 30, 2026, from $2,252,681 for the nine months ended September 30, 2025. The $95,438 increase of food and beverage revenues is

primarily due to an increase in beverage revenues. These amounts are comprised of revenues realized in hotel food and beverage outlets as well as catering events.

Other operating revenues

Other operating revenues increased to $1,376,874 for the nine months ended September 30, 2026, from $1,168,598 for the nine months ended September 30, 2025. The $208,276 increase of other operating revenues is primarily due to the reclassification of antenna lease income. These amounts include ancillary hotel revenues and other items primarily driven by occupancy such as telephone/internet, parking, gift shops, and other guest services.

Rooms expenses

Rooms expenses decreased to $4,554,856 for the nine months ended September 30, 2026, from $4,599,279 for the nine months ended September 30, 2025. The $44,423 net decrease in rooms expenses is primarily due to a decrease in rooms revenue. Rooms expenses are typically primarily driven by the corresponding revenue account and occupancy. Rooms expenses of $4,554,856 and $4,599,279 represent 20.44% and 19.62% of rooms revenues for the three-month period ended September 30, 2026 and 2025, respectively.

Food and beverage expenses

Food and beverage expenses were $1,461,780 and $1,414,383 for the nine months ended September 30, 2026 and 2025, respectively. Food and beverage expenses are historically primarily driven by the corresponding revenue account and occupancy. Food and beverage expenses represent 62.25% and 62.79% of food and beverage revenues for the three-month period ended September 30, 2026 and 2025, respectively.

Other property expenses

Other property expenses were $9,028,120 and $8,693,247, for the nine months ended September 30, 2026, and 2025, respectively. The $334,873 increase in other property expenses is primarily due to an increase in management expenses, credit card commissions, and the reclassification of antenna lease income. These amounts include maintenance, utilities, sales and marketing, and general and administrative expenses of the hotel properties, as well as net franchise fees, property taxes and other taxes.

Property management fees to affiliates

Property management fees to affiliates were $777,060 and $806,223 for the nine months ended September 30, 2026 and 2025, respectively. Property management fees are property level expenses equal to 3% of the hotel properties' gross revenues and we expect them to fluctuate accordingly.

Corporate general and administrative

Corporate general and administrative expenses were $1,000,307 and $963,191 for the nine months ended September 30, 2026 and 2025, respectively. Corporate general and administrative expenses consist primarily of transfer agent fees, fees paid to the board of directors, audit and tax fees, and other professional services fees.

Other fees to affiliates

Other fees to affiliates were $727,114 and $693,905 for the nine months ended September 30, 2026 and 2025, respectively. Other fees to affiliates include asset management fees due to PHA that are paid quarterly in arrears equal to one-fourth of 0.75% of the adjusted cost of our assets. Asset management fees increased to $559,761 for the nine months ended September 30, 2026, from $553,177 for the nine months ended September 30 2025. Other fees to affiliates also includes certain administrative fees charged to us by our Sponsor. Such administrative fees were $167,674 and $140,728 during the nine months ended September 30, 2026 and 2025, respectively.

Depreciation and amortization

Depreciation and amortization expenses were $2,873,488 and $3,043,136 for the nine months ended September 30, 2026 and 2025, respectively. These amounts include depreciation on our hotel buildings, improvements, furniture, fixtures and equipment, along with amortization of our franchise fees and certain intangibles.

Interest expense, net

Interest expense, net, was $3,215,969 and $3,056,763 for the nine months ended September 30, 2026 and 2025, respectively. The increase of $159,206 is attributable to the refinance of the HGI Note at an increased interest rate. Interest expense includes monthly fixed rate and variable rate payments on the outstanding mortgage notes payable balance, accrued interest on the outstanding asset management fees, acquisition fees and promissory notes from PHA and our Sponsor, and the amortization of deferred financing costs and debt discounts or premiums. For the nine months ended September 30, 2026, we recognized $193,093 of interest expense relating to the amortization of deferred financing costs. For the nine months ended September 30, 2025, we recognized $192,276 of interest expense relating to the amortization of deferred financing costs, offset by $22,052 relating to the amortization of the fair value of debt premium.

Interest income on interest-bearing cash accounts was $104,834 and $160,114 for the nine months ended September 30, 2026 and 2025, respectively. Interest income is presented as a reduction of the total interest expense on the consolidated statement of operations.

Income tax expense

For the nine months ended September 30, 2026 and 2025, we incurred income tax expense of $6,600 and $314,445, respectively. The $307,845 difference is primarily due to a valuation adjustment placed into effect during the nine months ended September 30, 2025, eliminating the deferred tax asset recorded on the balance sheet.

Net income

For the nine months ended September 30, 2026 and 2025, we recorded net income of $2,369,047 and net income of $3,276,728, respectively. The decrease in net income of $907,681 is the result of the revenue and expense changes discussed above.

Net income attributable to noncontrolling interests

For the nine months ended September 30, 2026 and 2025, we recorded net income relating to noncontrolling interests of $514,006 and $594,144, respectively. This amount includes net income or losses attributable to a third party's 49% ownership interest in PCF and will fluctuate accordingly with any increases or decreases to net income of PCF. This amount also includes net income or losses attributable to the noncontrolling Class K OP Units issued as part of the Hilton Garden Inn Providence acquisition. The noncontrolling Class K OP Units are allocated net income or loss attributable to the Operating Partnership based on the total outstanding Class K OP Units as a percentage of all our outstanding common stock.

Liquidity and Capital Resources

We paid quarterly K Share, K-I Share, and Class K OP Unit distributions with respect to all four quarters of 2025 and the first three quarters of 2026, with operating cash flow, consistent with prior distributions. Our board of directors will make determinations as to the payment of future distributions on a quarter-by-quarter basis; however, distributions will continue to accumulate pursuant to our charter.

On July 31, 2025, we paid $2,388,072 of distributions that had accrued from inception through September 30, 2024, to A Share stockholders, sourced from additional proceeds from the refinance of the Hilton Garden Inn Providence Note. Unpaid distributions will continue to accumulate pursuant to our charter.

Our sources of funds are primarily funds equal to amounts reinvested in the DRIP, operating cash flows and borrowings. Our principal demands for funds will be for improvement costs, the payment of our operating and administrative expenses, continuing debt service obligations and distributions to and repurchases from our stockholders. Should we acquire additional assets, we intend to use cash and mortgage or other debt. PHA and its affiliates have agreed to purchase A Shares in a private placement in order to provide us with funds sufficient to pay the selling commissions, dealer manager fees, stockholder servicing fees, and other organizational and offering expenses related to the K Shares, K-I Shares and K-T Shares sold in the primary offering portion of our Public Offering. In addition, we will allocate proceeds from the sale of A Shares in amounts that represent the difference between (i) the applicable Estimated Per Share NAV per K-I Share and the applicable offering price of K-I Shares sold in our primary offering and (ii) any discount to the applicable offering price of K Shares, K-I Shares and K-T Shares arising from reduced or waived selling commissions (other than reduced selling commissions for volume discounts) or dealer manager fees.

In addition, in a normal operating environment, we expect to use debt financing as a source of capital. Our charter provides that the maximum amount of our total indebtedness shall not exceed 300% of our total "net assets" (as defined in accordance with Statement of Policy Regarding Real Estate Investment Trusts revised and adopted by the North American Securities Administrators Association on May 7, 2007) as of the date of any borrowing, which is generally expected to be approximately 75% of the cost of our investments; however, we may exceed that limit if approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for exceeding such limit. This charter limitation, however, does not apply to individual real estate assets or investments. In addition, it is currently our intention to limit our aggregate borrowings to 50% of the aggregate fair market value of our assets, unless borrowing a greater amount is approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for borrowing such a greater amount. This limitation, however, will not apply to individual real estate assets or investments. At the date of acquisition of each asset, we anticipate that the cost of investment for such asset will be substantially similar to its fair market value. However, subsequent events, including changes in the fair market value of our assets, could result in our exceeding these limits.

Potential future sources of capital include secured or unsecured financings from banks or other lenders, establishing additional lines of credit and undistributed cash flow. Note that, currently, we have not identified any additional sources of financing and there is no assurance that such sources of financings will be available on favorable terms or at all.

We believe that cash and restricted cash on hand, cash from operations and borrowings from other sources, including advances from PHA and our Sponsor, if necessary, will be sufficient to fund our operating and administrative expenses and continuing debt service obligations over the next twelve months.

Sources and Uses of Cash

Proceeds from the sale of common stock in the Private Offering and Public Offering were partially used to fund our investments in hotel properties and the related costs associated with the transactions. The remaining proceeds are held in liquid cash accounts.

Cash Flows Provided by Operating Activities

During the nine months ended September 30, 2026 and 2025, we owned an interest in five hotel properties. During the nine months ended September 30, 2026, net cash provided by operating activities was $5,443,013 compared to the net cash provided by operating activities of $6,845,335 for the nine months ended September 30, 2025. Our operating cash flows during the nine months ended September 30, 2026, were the result of our net income, adjustments for non-cash expenses, including depreciation and amortization, adjustments for receivables, other assets, amounts due to and from related parties, and accounts payable and accrued liabilities. Our operating cash flows during the nine months ended September 30, 2025, were the result of our net income, adjustments for non-cash expenses, including depreciation and amortization, adjustments for receivables, other assets, amounts due to and from related parties, and accounts payable and accrued liabilities.

Cash Flow Used in Investing Activities

Cash used in investing activities will vary based on the funds raised by the issuance of shares of common stock pursuant to the DRIP and how quickly we invest those funds towards acquisitions or improvements of real estate and real-estate related investments. During the nine months ended September 30, 2026, net cash used in investing activities was $925,804 and was the result of capital improvements at our hotel properties. During the nine months ended September 30, 2025, net cash used in investing activities was $1,033,902 and was the result of capital improvements at our hotel properties.

Cash Flows Used in Financing Activities

During the nine months ended September 30, 2026, net cash used in financing activities was $3,599,499. We made principal payments on the CTI Note, the Wilmington Note, and the St. Petersburg Note totaling $399,388. During the nine months ended September 30, 2026, we paid cash distributions of $2,258,258 to stockholders with proceeds from operations. During the nine months ended September 30, 2026, we repurchased $598,853 of outstanding shares of common stock. Cash flow from financing activities for the nine months ended September 30, 2026, also includes $343,000 of distributions to noncontrolling interests. For information on repurchases of common stock made during the nine months ended September 30, 2026, refer to Note 6 - "Stockholders' Equity" to our unaudited interim condensed consolidated financial statements included in this Quarterly Report.

During the nine months ended September 30, 2025, net cash used in financing activities was $3,796,508. We refinanced the HGI note, paying the old note of $16,232,333, and borrowing $19,200,000. We made principal payments on the HGI Note and the CTI Note totaling $357,472. During the nine months ended September 30, 2025, we paid cash distributions of $4,605,759 to stockholders with proceeds from operations. During the nine months ended September 30, 2025, we repurchased $612,033 of outstanding shares of common stock. Cash flow from financing activities for the nine months ended September 30, 2025, also includes $989,800 of distributions to noncontrolling interests. For the nine months ended September 30, 2025 we paid $199,111 of deferred financing costs.

Debt

We intend to maintain amounts outstanding under long-term debt arrangements or lines of credit so that we will have more funds available for investment in properties. However, the percentage of debt financing we utilize at any given time will be dependent upon various factors to be considered in the sole discretion of our board of directors, including, but not limited to, our ability to pay distributions, the availability of properties meeting our investment criteria, the availability of debt financing, and changes in the cost of debt financing. To help finance our initial acquisitions, we may utilize short-term borrowings. However, after our initial property acquisitions, as a general principle, we anticipate that the term of any debt financing we utilize will correspond to the anticipated holding period for the respective property.

We may repay borrowings under any future credit facility or under any future long-term mortgage debt with proceeds from the sale of properties, operating cash flow, long-term mortgage debt, proceeds from the DRIP, proceeds from any future offerings, or proceeds from any other future securities offerings.

The terms of the TCI Note were modified on May 6, 2026 and further revised on October 21, 2026. Under the terms of the amended and restated promissory note, the maximum principal amount of the TCI Note was increased by $1,750,000, from $15,600,000 to $17,350,000. The additional $1,750,000 will be advanced to PHR TCI, LLC, subject to the satisfaction of certain conditions, to fund a portion of capital expenditures and renovations at the Hotel Indigo Traverse City. The Modification Agreement extends the initial maturity date of the TCI Note from June 6, 2027 to June 6, 2028, with two one-year extensions. The TCI Note bears interest at a fixed rate of 6.50% per annum through June 6, 2027 and, for the remainder of the initial term, at a fixed rate equal to 2.50% above the yield on U.S. Treasury securities adjusted to a constant maturity of one year. During each extension term, the TCI Note will bear interest at a fixed rate equal to 2.50% above such one-year Treasury yield, determined as of the first day of the applicable extension term and rounded to the nearest one-eighth of one percent. The TCI Note requires monthly payments of interest only through June 6, 2028, and thereafter monthly payments of principal and interest based on a 30-year amortization

schedule. As of September 30, 2026, the Operating Partnership and its subsidiary for the Hotel Indigo Traverse City were compliant with the loan obligations under the TCI Note, including applicable covenants, and all required payments have been made as agreed.

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The HGI Note was refinanced as of July 10, 2025. The HGI Note bears interest at a fixed rate of 6.10% through July 10, 2030, the maturity date. The HGI Note requires interest only payments for the first two years of the five-year term, payments subsequent to July 10, 2027 will consist of principal and interest based on a 25-year amortization schedule. The HGI Note is collateralized by the Hilton Garden Inn Providence, including equipment, and has been guaranteed by the Company (pursuant to a customary carveout/bad acts guaranty). Out of the entire refinance amount of $19,200,000, $1,975,241 was allocated to fund a portion of the A Shares distribution, and $743,386 was allocated for renovation funding. As of September 30, 2026, we believe the Operating Partnership and its subsidiary for the Hilton Garden Inn Providence were in compliance with the loan requirements, including applicable covenants, and all required payments have been made as agreed.

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The St. Petersburg Note bears interest at the Secured Overnight Financing Rate ("SOFR") plus a SOFR rate margin of 2.50%. The St. Petersburg Note requires monthly interest payments for the first two years, and monthly principal and interest payments based on a 25-year amortization schedule thereafter to maturity on April 25, 2029. The St. Petersburg Note is collateralized by the Staybridge Suites St. Petersburg, including equipment. The St. Petersburg Note is also guaranteed by the Company (pursuant to a customary carveout/bad acts guaranty) and cross-collateralized by the Wilmington Note. As of September 30, 2026, we believe the Operating Partnership and its subsidiary for the Staybridge Suites St. Petersburg were in compliance with the loan requirements, including applicable covenants, and all required payments have been made as agreed.

The Wilmington Note bears interest at SOFR plus a SOFR rate margin of 2.50%. The Wilmington Note requires monthly interest payments for the first two years, and monthly principal and interest payments based on a 25-year amortization schedule thereafter to maturity on April 25, 2029. The Wilmington Note is collateralized by the Springhill Suites Wilmington, including equipment. The Wilmington Note is also guaranteed by the Company (pursuant to a customary carveout/bad acts guaranty), and is cross collateralized by the St. Petersburg Note. As of September 30, 2026, the Operating Partnership and its subsidiary for the Springhill Suites Wilmington were in compliance with the loan requirements, including applicable covenants, and all required payments have been made as agreed.

The CTI Note requires monthly interest payments at a fixed rate of 3.91% through November 23, 2023 and subsequent to November 23, 2023, monthly principal and interest payments of $52,601 through November 23, 2026, the maturity date. Efforts to secure a new note for Cherry Tree Inn are in process in 2026, however, there is no guarantee that a new note will be secured prior to the maturity date. As of September 30, 2026, the Operating Partnership and its subsidiary for the Cherry Tree Inn were in compliance with the loan requirements, including applicable covenants, and all required payments have been made as agreed. On October 20, 2026, the Cherry Tree Inn secured a term sheet and joint intent and disclosures agreement with Centreville Bank to refinance the CTI Note. A 30-day extension has been requested from Bank Newport, the current lender under the CTI Note.

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Share Repurchase Program

Our A&R SRP is intended to provide limited interim liquidity to stockholders. Repurchases are limited to net proceeds received pursuant to the DRIP and may not exceed 5% of the weighted average shares outstanding during the trailing 12 months. Our board of directors is not required to repurchase any shares.

As of September 30, 2026, there were 132 outstanding and unfulfilled repurchase requests covering 440,712 K Shares and 87,610 K-I Shares (approximately 528,322 total shares). During each quarter of the nine months ended September 30, 2026, our board of directors determined that the net DRIP proceeds were insufficient to fund all outstanding repurchase requests. Unfulfilled requests carry over automatically to subsequent quarters in accordance with the A&R SRP, subject to stockholder withdrawal.

We can provide no assurance that sufficient DRIP proceeds will be available to satisfy all pending repurchase requests in future quarters, or that a liquidity event will occur that would otherwise provide stockholders with an opportunity to liquidate their investment. Stockholders with pending repurchase requests should refer to Note 6 - "Stockholders' Equity" for additional detail on the program and repurchase requests.

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Contractual Obligations

We enter into contracts that contain a variety of indemnification provisions. Our maximum exposure under these arrangements is unknown; however, we have not had prior claims or losses pursuant to these contracts. Our management has reviewed our existing contracts and expects the risk of loss to us to be remote.

Our contractual obligations as of September 30, 2026 are as follows:

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Funds from Operations and Modified Funds from Operations

One of our objectives is to provide cash distributions to our stockholders from cash generated by our operations. The purchase of real estate assets and real estate-related investments and the corresponding expenses associated with that process are operational features of our business plan in order to generate cash from operations. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts ("Nareit"), an industry trade group, has promulgated a measure known as funds from operations ("FFO"), which we believe is an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to our net income (loss) as determined under GAAP.

We define FFO, consistent with Nareit's definition, as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property and asset impairment write-downs, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

We, along with others in the real estate industry, consider FFO to be an appropriate supplemental measure of a REIT's operating performance because it is based on a net income (loss) analysis of property portfolio performance that excludes non-cash items such as depreciation and amortization and asset impairment write-downs, which we believe provides a more complete understanding of our performance to investors and to our management, and when compared year over year, reflects the impact on our operations from trends in occupancy.

Historical accounting convention (in accordance with GAAP) for real estate assets requires companies to report their investment in real estate at their carrying value, which consists of capitalizing the cost of acquisitions, development, construction, improvements and significant replacements, less depreciation and amortization and asset impairment write-downs, if any, which is not necessarily equivalent to the fair market value of their investment in real estate assets.

The historical accounting convention requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, which could be the case if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or as requested or required by lessees for operational purposes in order to maintain the value disclosed. We believe that, since fair value of real estate assets historically rises and falls with market conditions including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation could be less informative.

In addition, we believe it is appropriate to disregard asset impairment write-downs as they are a non-cash adjustment to recognize losses on prospective sales of real estate assets. Since losses from sales of real estate assets are excluded from FFO, we believe it is appropriate that asset impairment write-downs in advancement of realization of losses should be excluded. Impairment write-downs are based on negative market fluctuations and underlying assessments of general market conditions. When indicators of potential impairment suggest that the carrying value of real estate and related assets may not be recoverable, we assess the recoverability by estimating whether we will recover the carrying value of the asset through undiscounted future cash flows and eventual disposition (including, but not limited to, net rooms revenues, net proceeds on the sale of property and any other ancillary cash flows at a property or group level under GAAP). If based on this analysis, we do not believe that we will be able to recover the carrying value of the real estate asset, we will record an impairment write-down to the extent that the carrying value exceeds the estimated fair value of the real estate asset. Testing for indicators of impairment is a continuous process and is analyzed on a quarterly basis. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rooms revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that due to the fact that impairments are based on estimated future undiscounted cash flows and that we intend to have a relatively limited term of our operations, it could be difficult to recover any impairment charges through the eventual sale of the property. No impairment losses have been recorded to date.

Publicly registered, non-listed REITs, such as us, typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operations. While other start up entities may also experience significant acquisition activity during their initial years, we believe that publicly registered, non-listed REITs are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after the acquisition activity ceases. We used the proceeds from our offerings to acquire real estate assets and real estate-related investments, and we intend to begin the process of achieving a liquidity event (i.e., listing of our shares of common stock on a national securities exchange, a merger or sale, the sale of all or substantially all of our assets, or another similar transaction) within five to seven years after the completion of our offering stage, which is generally comparable to other publicly registered, non-listed REITs. Thus, we do not intend to continuously purchase real estate assets and intend to have a limited life. Due to these factors and other unique features of publicly registered, non-listed REITs, the Institute for Portfolio Alternatives ("IPA"), an industry trade group, has standardized a measure known as modified FFO ("MFFO"), which we believe to be another appropriate supplemental measure to reflect the operating performance of a publicly registered, non-listed REIT. MFFO is a metric used by management to evaluate sustainable performance and distribution policy. MFFO is not equivalent to our net income (loss) as determined under GAAP.

We define MFFO, a non-GAAP measure, consistent with the IPA's Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations ("Practice Guideline"), issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items included in the determination of GAAP net income (loss): acquisition fees and expenses; amounts related to straight-line rental income and amortization of above and below intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income (loss); nonrecurring gains or losses included in net income (loss) from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan; unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting; adjustments related to contingent purchase price obligations where such adjustments have been included in the derivation of GAAP net income (loss); and after adjustments for a consolidated and unconsolidated partnership and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. Our MFFO calculation complies with the IPA's Practice Guideline, described above. In calculating MFFO, we exclude paid and accrued acquisition fees and expenses that are reported in our condensed consolidated statements of operations. Since MFFO excludes acquisition fees and expenses, it should not be construed as a historic performance measure. Acquisition fees and expenses are paid in cash by us. Acquisition fees and expenses include payments to PHA or its affiliates and third parties. Such fees and expenses will not be reimbursed by PHA or its affiliates and third parties, and therefore if there are no further proceeds from the sale of shares of our common stock to fund future acquisition fees and expenses, such fees and expenses will need to be paid from either additional debt, operational earnings or cash flows, net proceeds from the

sale of properties, or from ancillary cash flows. As a result, the amount of proceeds available for investment and operations would be reduced, or we may incur additional interest expense as a result of borrowed funds. Nevertheless, PHA or its affiliates will not accrue any claim on our assets if acquisition fees and expenses are not paid from the proceeds of our offerings. Under GAAP, acquisition fees and expenses related to the acquisition of properties determined to be business combinations are expensed as incurred, including investment transactions that are no longer under consideration, and are included in acquisition related expenses in the accompanying condensed consolidated statements of operations, and acquisition expenses associated with transactions determined to be an asset purchase are capitalized.

All paid and accrued acquisition fees and expenses have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the real estate asset, these fees and expenses and other costs related to such property. In addition, MFFO may not be an indicator of our operating performance, especially during periods in which properties are being acquired.

In addition, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income (loss) in determining cash flows from operations in accordance with GAAP.

We use MFFO and the adjustments used to calculate it in order to evaluate our performance against other publicly registered, non-listed REITs, which intend to have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance if we do not continue to operate in this manner. We believe that our use of MFFO and the adjustments used to calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to publicly registered, non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence the use of such measures may be useful to investors. For example, acquisition fees and expenses are intended to be funded from the proceeds of our offering and other financing sources and not from operations. By excluding acquisition fees and expenses, the use of MFFO provides information consistent with management's analysis of the operating performance of its real estate assets. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as the ADR and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such charges that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.

Presentation of this information is intended to assist management and investors in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO and MFFO the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) as an indication of our performance, as an indication of our liquidity, or indicative of funds available for our cash needs, including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other measurements as an indication of our performance. MFFO may be useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and NAV is disclosed. MFFO is not a useful measure in evaluating NAV since impairment write-downs are taken into account in determining NAV but not in determining MFFO.

FFO and MFFO, as described above, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in its applicability in evaluating our operational performance. The method used to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operation performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO. MFFO has not been scrutinized to the level of other similar non-GAAP performance measures by the SEC or any other regulatory body.

Our calculation of FFO and MFFO is presented in the following table for the three months and nine months ended September 30, 2026 and 2025:

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Related-Party Transactions and Agreements

We have entered into agreements with PHA and its affiliates whereby we pay or paid certain fees to, or reimburse certain expenses of, PHA or its affiliates for acquisition fees and expenses, asset management fees, disposition fees, property management fees, O&O Costs and reimbursement of certain operating costs. Refer to Note 5 - "Related Party Transactions" to our unaudited interim condensed consolidated financial statements included in this Quarterly Report for a discussion of the various related-party transactions, agreements and fees.