Lease Commitments – The Company is the lessee on certain ground leases, hotel equipment leases and office space leases. Leases with durations greater than 12 months are recognized on the balance sheet as ROU assets and lease liabilities. Our leases are classified as operating or finance leases. For leases with terms greater than 12 months, at inception of the lease, we recognize a ROU asset and lease liability at the estimated present value of the minimum lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Many of our leases include rental escalation clauses (including fixed scheduled rent increases) and renewal options that are factored into the determination of lease payments, when appropriate, which adjusts the present value of the remaining lease payments. We determine the present value of the lease payments utilizing interest rates implicit in the lease, if determinable, or, if not, we estimate the incremental borrowing rate from information available at lease commencement, such as estimates of rates we would pay for senior collateralized loans with terms similar to each lease.

Operating Leases – The ROU asset operating leases that are connected to the hotel properties are primarily included in investment in hotel properties, net, with the related lease obligations included in accounts payable and accrued liabilities on the

consolidated Balance Sheets. Other operating leases that are not connected to the hotel properties are reflected in prepaid expenses, inventory, and other assets with the related lease obligations included in accounts payable and accrued liabilities on the consolidated Balance Sheets. Lease expense is recognized on a straight-line basis over the term of the respective lease, and the value of each lease intangible is amortized over the term of the respective lease. Costs related to operating ground leases and hotel equipment leases are included in hotel operating expense and property taxes, insurance and other expense, and costs related to office space leases are included in general and administrative expense in our consolidated statements of operations.

As of June 30, 2025, the Company had the following significant operating leases:

We lease 2,086 square feet of commercial space next to The DeSoto for use as an office, retail or conference space, or for any related or ancillary purposes for the hotel and/or atrium space. In December 2007, we signed an amendment to the lease to include rights to the outdoor esplanade adjacent to the leased commercial space. The areas are leased under a six-year operating lease, which expired October 31, 2006 and has been renewed for the fourth of five optional five-year renewal periods expiring October 31, 2026. Rent expense for this operating lease for the three months ended June 30, 2025 and 2024, totaled $18,771 and $20,983, respectively, and for the six months ended June 30, 2025 and 2024, totaled $37,543 and $41,966, respectively, and is included in indirect expenses.

We lease, as landlord, the entire fourteenth floor of The DeSoto hotel property to The Chatham Club, Inc. under a 99 year lease expiring July 31, 2086. This lease was assumed upon the purchase of the building under the terms and conditions agreed to by the previous owner of the property. No rental income is recognized under the terms of this lease as the original lump sum rent payment of $990 was received by the previous owner and not prorated over the life of the lease.

We lease land adjacent to the Hotel Alba Tampa for use as parking under a five-year renewable agreement with the Florida Department of Transportation that commenced in July 2009. In May 2014, we extended the agreement for an additional five years. We signed a new agreement in April 2019, which commenced in July 2019, goes for five years, and can be renewed for an additional five years. The new agreement expires in July 2029, requires annual payments of $2,432, plus tax, and may be renewed for an additional five years. Rent expense for the three months ended June 30, 2025 and 2024, totaled $629 and $651, respectively, and for the six months ended June 30, 2025 and 2024 totaled $1,259 and $1,301, respectively, and is included in indirect expenses.

We lease approximately 8,500 square feet of commercial office space in Williamsburg, Virginia under an agreement with a ten-year term beginning January 1, 2020. The initial annual rent under the agreement was $218,875, with the rent for each successive annual period increasing by 3.0% over the prior annual period’s rent. In December 2023, we received a rent concession of $257,731 against accrued and unpaid rents as well as a reduction of future lease payments by one-third. Rent expense for the three months ended June 30, 2025 and 2024 totaled $42,974 and $36,566, respectively, and for the six months ended June 30, 2025 and 2024 totaled $85,947 and $73,133, respectively, and is included in general and administrative expenses.

We lease the parking garage and poolside cabanas associated with the Hyde Beach House. The parking and cabana lease requires us to make rental payments of $270,100 per year with increases of 5% every five years and has an initial term that expires in 2034 and which may be extended for four additional renewal periods of 5 years each. Rent expense for the three months ended June 30, 2025 and 2024, totaled $80,871 and $67,750, respectively, and for the six months ended June 30, 2025 and 2024, totaled $161,742 and $135,500, respectively, and is included in indirect expenses.

Finance Leases – We lease the land underlying all of the Hyatt Centric Arlington hotel pursuant to a ground lease. The ground lease requires us to make rental payments of $50,000 per year in base rent and percentage rent equal to 3.5% of gross room revenue in excess of certain thresholds, as defined in the ground lease agreement. The initial term of the ground lease expires July 1, 2025 and may be extended for five additional rental periods of 10 years each. We have elected to exercise the renewal option for the first renewal period. Upon commencement of each renewal period, we will be required to make lease payments each year equal to 8.0% of the appraised value of the land. For the renewal period commencing July 2025, total annual lease payments will be $1,792,000.

Upon the determination of the lease payments commencing during the first renewal period, the lease was reassessed and remeasured as a finance lease as of September 1, 2024, which we record as a finance lease asset within investment in hotel properties, net and finance lease liability on our consolidated balance sheets. As a result of the reassessment and remeasurement, we recognized a finance lease asset of $22,716,081 and a finance lease liability of $22,400,000, as of September 1, 2024. In addition, our finance lease asset balance includes unamortized intangible asset for the below market ground lease assumed in 2018 with the purchase of the hotel. The finance lease asset is amortized over the term of the lease including renewal periods. Costs related to the finance lease asset are included in depreciation and amortization expense and interest expense in the Company’s consolidated statements of operations.


	June 30, 2025
	Operating			Finance
Weighted-average remaining lease term, including reasonably certain extension options (years)		27.19			49.45
Weighted-average discount rate		8.02	%		7.42	%

Right of use assets	$	4,329,653		$	23,068,236
Lease liabilities	$	(4,784,358	)	$	(24,050,974	)

Lease Position as of June 30, 2025 and December 31, 2024 – The following tables set forth the lease-related assets and liabilities included in the Company’s consolidated balance sheets as of June 30, 2025 and December 31, 2024:


Assets	Balance Sheet Classification	June 30, 2025		December 31, 2024

Right of use assets	Prepaid expenses, inventory and other assets	$	651,520	$	723,732
Right of use assets	Investment in hotel properties, net		3,678,133		3,727,805
Finance lease right of use assets	Investment in hotel properties, net		23,068,236		23,021,483

Total lease assets		$	27,397,889	$	27,473,020

Liabilities

Lease obligations under ROU assets	Accounts payable and accrued liabilities	$	4,784,358	$	4,874,919
Finance lease liabilities	Finance lease liabilities		24,050,974		23,201,751
Total lease liabilities		$	28,835,332	$	28,076,670

Lease Costs for the six months ended June 30, 2025 and 2024 – The following table sets forth the lease costs related to the Company’s operating and finance ground leases included in the Company’s consolidated statement of operations for the three months ended June 30, 2025 and 2024, and six months ended June 30, 2025 and 2024:


	Consolidated Statement of Operations	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	Classification	June 30, 2025		June 30, 2024		June 30, 2025		June 30, 2024

Operating lease costs
Fixed	Corporate general and administrative	$	47,194	$	38,626	$	94,387	$	79,413
	Hotel operating expenses - Indirect		103,955		111,419	$	209,918		224,141
Variable	Hotel operating expenses - Indirect		—		204,374		—		329,618

Finance lease costs:
Amortization of lease assets	Depreciation and amortization		129,606		7,378		258,646		15,984
Variable	Hotel operating expenses - Indirect		186,000		—		325,305		—
Interest on lease liabilities	Interest expense		22,528		3,658		44,866		7,437
Total lease costs		$	489,283	$	365,455	$	933,122	$	656,593

Undiscounted Cash Flows –The following table reconciles the undiscounted cash flows for each of the next five years and total of the anticipated remaining periods to the operating lease liabilities and finance lease liabilities included in the Company’s consolidated balance sheet as of June 30, 2025:


	June 30, 2025
	Operating			Financing

For the remaining six months ending December 31, 2025	$	276,103		$	944,843
December 31, 2026		552,233			1,885,418
December 31, 2027		551,196			1,877,352
December 31, 2028		524,984			1,872,197
December 31, 2029		528,701			1,856,509
December 31, 2030 and thereafter		10,240,006			81,563,789
Total undiscounted lease payments		12,673,223			90,000,108
Less imputed interest		(7,888,865	)		(65,949,134	)
Total lease liability	$	4,784,358		$	24,050,974

Lease Revenue – Several of our properties generate revenue from leasing the restaurant space within the hotel and space on the roofs of our hotels for antennas and satellite dishes. Leases for the restaurant space within the hotel are leased under 10-year leases which expire between September 2027 and May 2034 and include two additional 5-year renewal options. The leases require periodic increases in base rent and may require payments of percentage rent as well. Leases for the space on the roofs of our hotels for antennas and satellite dishes are leased under various periods ranging from 1 year to 10 years with renewal options for as many as five additional 5-year periods, with some exceptions. As of June 30, 2025, the leases for space on the roofs of our hotels expire between June 2025 and May 2028. Several leases require periodic increases in base rent. We account for the lease income as revenue from other operating departments within the consolidated statements of operations pursuant to the terms of each lease. Lease revenue was approximately $0.3 million and $0.3 million for the three months ended June 30, 2025 and 2024, respectively, and for the six months ended June 30, 2025 and 2024, totaled approximately $0.6 million and $0.7 million, respectively.

A schedule of minimum future lease payments receivable for the remaining six and twelve month periods is as follows:



For the remaining six months ended December 31, 2025	$	533,033
December 31, 2026		920,073
December 31, 2027		711,615
December 31, 2028		478,410
December 31, 2029		485,283
December 31, 2030 and thereafter		1,397,049
Total	$	4,525,463