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New words:
adhere, Baltimore, book, bring, broad, Bryan, building, cancellation, catering, College, Commission, coupled, Courtyard, decelerated, decision, descriptive, disaggregation, disposal, disposed, elevated, ensure, essentially, FASB, faster, fiscal, flat, incorporated, inseparable, Interbank, iv, jurisdiction, LA, life, London, maker, marketplace, MD, minimal, monitor, night, nominal, paydown, Plano, produce, pronouncement, prospectively, recoverable, refurbishment, remodeling, Republic, retired, segment, SpringHill, Station, treated, underperformance, undiscounted, upgrade, USFI, utilization, vi, withholding
Removed:
accrual, adjust, Airport, allocation, approximated, assumption, Authority, benchmark, binomial, blended, breakage, broker, Canopy, caption, classification, classifying, collateralized, collected, collection, commercial, compelling, competing, Conduct, consolidating, coupon, covenant, decline, deducted, deemed, defeasance, defease, defeased, deficit, delinquent, departure, distributed, dollar, drawn, economy, ending, ESG, exercised, expanded, expedient, face, FCA, financed, forfeiture, Francisco, generated, identical, IRS, issuer, lattice, listed, Louisiana, modest, negatively, North, observable, occasion, Oklahoma, Omicron, Outlook, owner, pandemic, personal, political, pool, practical, President, profitability, rapid, recently, recognition, recording, recovery, reimbursement, renewed, reserved, resistant, retained, reviewed, routinely, SEC, selectively, seller, separately, sharp, site, sovereign, steady, stop, STR, supportable, supporting, suspend, transferred, transition, transitioned, user, variant, Vice, wage, wealth
Financial report summary
?Risks
- Our business strategy, future results of operations and growth prospects are dependent on achieving revenue and net income growth from anticipated increases in demand for lodging guestrooms and general economic conditions.
- Our expenses may not decrease if our revenue decreases.
- Actions by organized labor could have a material adverse effect on our business.
- We may be unable to complete acquisitions that would grow our business.
- The sale of certain lodging properties could result in significant tax liabilities unless we are able to defer the taxable gain through like-kind exchanges under Section 1031 of the IRC ("1031 Exchanges").
- We may fail to successfully integrate acquired lodging properties or achieve expected operating performance.
- We may assume liabilities in connection with the acquisition of lodging properties, including unknown liabilities.
- We may not be able to cause our management companies to operate any of our lodging properties in a manner that is satisfactory to us, and termination of our management agreements may be costly and disruptive.
- The management of a large number of lodging properties in our portfolio is currently concentrated with one property management company.
- Our lodging properties may be clustered geographically increasing business risks based on adverse market conditions.
- Restrictive covenants and other provisions in management and franchise agreements could preclude us from taking actions with respect to the sale, refinancing or rebranding of a lodging property that would otherwise be in our best interest.
- We are required to expend funds to maintain franchisor operating standards and we may experience a loss of a franchise license or a decline in the value of a franchise brand.
- We rely on external sources of capital to fund future capital needs, and if we encounter difficulty in obtaining such capital, we may not be able to make future acquisitions necessary to grow our business or meet maturing obligations.
- We have a significant amount of debt, and our organizational documents have no limitation on the amount of additional indebtedness that we may incur in the future.
- The agreements governing our indebtedness place restrictions on us and our subsidiaries, reducing operational flexibility and creating default risks.
- Secured debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in any lodging property subject to mortgage debt or equity pledges.
- An increase in interest rates would increase our interest costs on our variable rate debt and continued high rates of interest on our variable rate debt could have broader effects on the cost of capital for real estate companies and real estate asset values.
- We hedge our interest rate exposure to manage our exposure to interest rate volatility, however, such arrangements may adversely affect us.
- Our success depends on key personnel whose continued service is not guaranteed.
- We could incur uninsured and underinsured losses.
- System security risks, data protection breaches, cyber-attacks and systems integration issues could disrupt our internal operations or services provided to guests at our lodging properties, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price.
- Joint venture investments could be adversely affected by a lack of sole decision-making authority with respect to such investments, disputes with joint venture partners, and the financial condition of joint venture partners.
- Inflation may affect consumer confidence which could reduce consumer demand for lodging, and may increase our operating costs, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows.
- We may provide mezzanine financing to developers or seller financing in connection with the disposition of a lodging property which exposes us to credit financing risk in the case of a borrower default, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows.
- The outbreak of any highly infectious or contagious diseases, could adversely affect the number of guests visiting our lodging properties and disrupt our operations, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows.
- Economic conditions may adversely affect the lodging industry.
- We experience a high level of competition from other hotels and alternative accommodations in the markets in which we operate.
- Our operating results and ability to make distributions to our stockholders may be adversely affected by the risks inherent to the ownership of lodging properties and the markets in which we operate.
- We have significant ongoing needs to make capital expenditures at our lodging properties, which require us to devote funds to these purposes.
- Development of lodging properties is subject to timing, budgeting and other risks.
- Customers may increasingly use Internet travel intermediaries.
- Consumer trends and preferences, particularly with respect to younger generations, could change away from select-service lodging properties.
- Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our lodging properties or to adjust our portfolio in response to changes in economic and other conditions.
- We could incur significant costs related to government regulation and litigation over environmental, health and safety matters.
- Compliance with the laws, regulations and covenants that apply to our lodging properties, including permit, license and zoning requirements, may adversely affect our ability to make future acquisitions or renovations, result in significant costs or delays and adversely affect our growth strategy.
- We have fixed obligations related to right-of-use assets on which certain of our lodging properties are located.
- The states and localities in which we own material amounts of property or conduct material business operations could raise their income and property tax rates or amend their tax regimes in a manner that increases our state and local tax liabilities.
- Our fiduciary duties as the general partner of our Operating Partnership could create conflicts of interest.
- Provisions of our charter may limit the ability of a third-party to acquire control of us by authorizing our board of directors to issue additional securities.
- Provisions of Maryland law may limit the ability of a third-party to acquire control of us by requiring our board of directors or stockholders to approve proposals to acquire our Company or effect a change in control.
- Our rights and the rights of our stockholders to take action against our directors and officers are limited.
- Our stockholders have limited voting rights and our charter contains provisions that make removal of our directors difficult.
- The ability of our board of directors to change our major policies without the consent of stockholders may not be in our stockholders’ interest.
- Our board of directors has the ability to revoke our REIT qualification without stockholder approval.
- We are a holding company with no direct operations. As a result, we rely on funds received from our Operating Partnership to pay liabilities and dividends, our stockholders’ claims will be structurally subordinated to all liabilities of our Operating Partnership and our stockholders will not have any voting rights with respect to our Operating Partnership activities, including the issuance of additional Common Units or Preferred Units.
- If we are unable to maintain an effective system of internal controls, we may not be able to produce and report accurate financial information on a timely basis or prevent fraud.
- The New York Stock Exchange (“NYSE”) or another nationally-recognized exchange may not continue to list our securities.
- The cash available for distribution may not be sufficient to make distributions at expected levels and we may use borrowed funds or funds from other sources to make distributions.
- The market price of our stock may be volatile due to numerous circumstances beyond our control.
- The number of shares of our common stock and preferred stock available for future sale could adversely affect the market price per share of our common stock and preferred stock, respectively, and future sales by us of shares of our common stock, preferred stock, or issuances by our Operating Partnership of Common Units may be dilutive to existing stockholders.
- We may execute future offerings of debt securities, which would be senior to our common and preferred stock upon liquidation, and issuances of equity securities (including Common Units).
- Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation.
- Even if we continue to qualify as a REIT, we may face other tax liabilities.
- Failure to make required distributions would subject us to federal corporate income tax.
- The REIT distribution requirements may adversely affect our operations.
- The formation of our TRSs increases our overall tax liability.
- Our TRS Lessee structure subjects us to the risk of increased lodging property operating expenses.
- Our current property management companies, or any other property management companies that we may engage in the future may not qualify as “eligible independent contractors,” or our lodging properties may not be considered “qualified lodging facilities.”
- Our ownership of our TRSs is subject to limitations and our transactions with our TRSs could cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.
- If any subsidiary REIT failed to qualify as a REIT, we could be subject to higher taxes and could fail to remain qualified as a REIT.
- We may be subject to adverse legislative or regulatory tax changes.
- Stockholders may be restricted from acquiring or transferring certain amounts of our stock.
- We may pay taxable dividends in our common stock and cash, in which case stockholders may sell shares of our common stock to pay taxes on such dividends.
- The 100% prohibited transactions tax may limit our ability to dispose of our properties, and we could incur a material tax liability if the IRS successfully asserts that the 100% prohibited transaction tax applies to some or all of our past or future dispositions.
- The IRS could determine that certain payments we have received in the nature of liquidated damages may not be ignored for purposes of the gross income tests applicable to REITs.
- Increasing attention to and evolving expectations for environmental, social and governance ("ESG") matters may increase our costs, harm our reputation, or otherwise adversely affect our business.
- Our business is subject to risks that may arise from climate change.
Management Discussion
- The comparisons that follow should be reviewed in conjunction with the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
- The total portfolio information above includes revenues and expenses from the lodging properties that we acquired during the year ended December 31, 2023 (the “2023 Acquired Properties”) from the date of acquisition through December 31, 2023, and operating information (occupancy, ADR, and RevPAR) for the period each lodging property was owned. Accordingly, the information does not reflect a full 12 months of operations for the year ended December 31, 2023 for the 2023 Acquired Properties. The total portfolio information above includes revenues and expenses from the lodging properties that we acquired during the year ended December 31, 2022 (the “2022 Acquired Properties”) from the date of acquisition through December 31, 2022, and operating information (occupancy, ADR, and RevPAR) for the period each lodging property was owned. Accordingly, the information does not reflect a full 12 months of operations for the year ended December 31, 2022 for the 2022 Acquired Properties.
- Operating results for the same-store portfolio of 94 properties for the year ended December 31, 2022 include the 26 hotel properties and two parking garages acquired in the first closing of the NCI Transaction on January 13, 2022 (the "First Closing Hotels") and exclude the acquisition of the Canopy New Orleans (the "Canopy"), which was acquired upon completion of construction in the second closing of the NCI Transaction on March 23, 2022. As such, the same-store operating results for the First Closing Hotels for the year ended December 31, 2022 include the operating results related to the prior owner for the period from January 1, 2022 through the first closing date of the NCI Transaction of January 13, 2022 (the "Pre-Ownership Results"). Operating results for the total portfolio of 100 properties for the year ended December 31, 2022 include actual operating results for the First Closing Hotels and the Canopy only from the closing dates of the NCI Transaction through December 31, 2022.