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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended September 30, 2025

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

For the transition period from to

Commission File Number 000-56272

PROCACCIANTI HOTEL REIT, INC.

(Exact name of registrant as specified in its charter)

Maryland		81-3661609
(State or Other jurisdiction of incorporation or organization)		(I.R.S Employer Identification Number)

1140 Reservoir Avenue, Cranston, RI		02920-6320
(Address of Principal Executive Offices)		(Zip Code)

(401) 946-4600

(Registrant’s telephone number, including area code)

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


Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
NA	NA	NA

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	◻	Accelerated filer	◻
Non-accelerated filer	⌧	Smaller reporting company	⌧
Emerging growth company	◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻ No ⌧

As of November 12, 2025, there were 3,871,568 shares of the Registrant’s Class K common stock issued and outstanding, 1,436,854 shares of the Registrant’s Class K-I common stock issued and outstanding, 581,410 shares of the Registrant’s Class A common stock issued and outstanding and 125,000 shares of the Registrant’s Class B common stock issued and outstanding.

Table of Contents

PROCACCIANTI HOTEL REIT, INC.

INDEX



PART I - FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024	4
	Condensed Consolidated Statements of Stockholders’ Equity and Noncontrolling Interest for the Three and Nine Months Ended September 30, 2025 and 2024	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	50

PART II - OTHER INFORMATION		51

Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	57

	Signatures	59

Table of Contents

PROCACCIANTI HOTEL REIT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


	September 30, 2025		December 31, 2024
ASSETS
Property and equipment, net	$	93,096,371	$	95,093,997
Cash		9,267,311		7,959,051
Restricted cash		3,809,171		3,102,506
Accounts receivable, net		315,547		147,788
Prepaid expenses and other assets, net		1,266,117		1,282,262
Total Assets	$	107,754,517	$	107,585,604
LIABILITIES AND EQUITY
Liabilities
Mortgage notes payable, net	$	66,694,643	$	64,113,333
Accounts payable, accrued expenses and other, net		3,624,617		3,182,808
Due to related parties		2,179,766		2,103,107
Total Liabilities		72,499,026		69,399,248
Commitments and Contingencies
Noncontrolling interest of the Operating Partnership		1,437,557		1,380,214
Stockholders’ Equity
Class K common stock, $0.01 par value per share; 55,500,000 shares authorized, 3,859,667 and 3,883,025 shares issued and outstanding, respectively		38,597		38,831
Class K-I common stock, $0.01 par value per share; 55,500,000 shares authorized, 1,427,448 and 1,399,796 shares issued and outstanding, respectively		14,274		13,998
Class K-T common stock, $0.01 par value per share; 116,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively		—		—
Class A common stock, $0.01 par value per share; 21,000,000 shares authorized, 581,410 shares issued and outstanding		5,814		5,814
Class B common stock, $0.01 par value per share; 125,000 shares authorized, issued and outstanding		1,250		1,250
Additional paid-in capital		47,367,573		47,363,988
Cumulative income		6,389,465		3,706,881
Cumulative distributions		(24,066,904)		(18,845,484)
Total Stockholders’ Equity		29,750,069		32,285,278
Noncontrolling interest		4,067,865		4,520,864
Total Equity		33,817,934		36,806,142
Total Liabilities and Stockholders’ Equity	$	107,754,517	$	107,585,604

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PROCACCIANTI HOTEL REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Revenues
Rooms	$	10,136,523	$	9,759,659	$	23,440,021	$	22,140,044
Food and beverage		1,188,443		990,011		2,252,681		1,906,741
Other operating		516,640		450,203		1,168,598		1,052,004
Total revenues		11,841,606		11,199,873		26,861,300		25,098,789
Expenses
Rooms		1,686,009		1,730,483		4,599,279		4,532,635
Food and beverage		640,005		564,890		1,414,383		1,263,720
Other property expenses		3,198,274		3,152,258		8,693,247		8,447,895
Property management fees to affiliates		355,250		335,856		806,223		753,031
Corporate general and administrative		327,566		280,148		963,191		925,361
Other fees to affiliates		227,691		230,795		693,905		683,613
Depreciation and amortization		968,312		1,079,125		3,043,136		3,190,502
Total expenses		7,403,107		7,373,555		20,213,364		19,796,757
Operating income		4,438,499		3,826,318		6,647,936		5,302,032
Interest expense, net		(1,102,268)		(986,900)		(3,056,763)		(2,756,032)
Gain on interest rate swap		—		—		—		7,237
Net income before income taxes		3,336,231		2,839,418		3,591,173		2,553,237
Income tax expense		(539,064)		(261,801)		(314,445)		(16,064)
Net income		2,797,167		2,577,617		3,276,728		2,537,173
Net income attributable to noncontrolling interest		121,856		80,429		594,144		460,108
Net income attributable to common stockholders	$	2,675,311	$	2,497,188	$	2,682,584	$	2,077,065
Net income attributable to Class K common stockholders – basic and diluted	$	1,739,329	$	1,638,937	$	1,775,591	$	1,396,033
Net income per Class K common share – basic and diluted	$	0.45	$	0.42	$	0.46	$	0.36
Weighted average number of Class K common shares outstanding – basic and diluted		3,867,763		3,897,256		3,874,788		3,902,563
Net income attributable to Class K-I common stockholders – basic and diluted	$	640,386	$	583,171	$	648,752	$	493,240
Net income per Class K-I common share – basic and diluted	$	0.45	$	0.42	$	0.46	$	0.36
Weighted average number of Class K-I common shares outstanding – basic and diluted		1,424,116		1,386,677		1,415,823		1,378,771
Net income attributable to Class K-T common stockholders – basic and diluted	$	—	$	2	$	—	$	597
Net income per Class K-T common share – basic and diluted	$	—	$	0.42	$	—	$	0.36
Weighted average number of Class K-T common shares outstanding – basic and diluted		—		3		—		1,670
Net income attributable to Class A common stockholders – basic and diluted	$	261,442	$	244,506	$	266,410	$	207,985
Net income per Class A common share – basic and diluted	$	0.45	$	0.42	$	0.46	$	0.36
Weighted average number of Class A common shares outstanding – basic and diluted		581,410		581,410		581,410		581,410
Net income (loss) attributable to Class B common stockholders – basic and diluted	$	34,154	$	30,573	$	(8,169)	$	(20,790)
Net income (loss) per Class B common share – basic and diluted	$	0.27	$	0.24	$	(0.07)	$	(0.17)
Weighted average number of Class B common shares outstanding – basic and diluted		125,000		125,000		125,000		125,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PROCACCIANTI HOTEL REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND NONCONTROLLING INTEREST

(unaudited)


	Common Stock															Additional						Total Procaccianti
	Class K			Class K-I			Class K-T			Class A			Class B			Paid-in		Cumulative		Cumulative		Hotel REIT, Inc.		Noncontrolling		Total
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Income (Loss)		Distributions		Stockholders' Equity		Interest		Equity
BALANCE, December 31, 2024	3,883,025	$	38,831	1,399,796	$	13,998	—	$	—	581,410	$	5,814	125,000	$	1,250	$	47,363,988	$	3,706,881	$	(18,845,484)	$	32,285,278	$	4,520,864	$	36,806,142
Issuance of common stock pursuant to distribution reinvestment plan	12,348		123	9,607		96	—		—	—		—	—		—		204,621		—		—		204,840		—		204,840
Repurchase of common stock	(20,144)		(201)	—		—	—		—	—		—	—		—		(204,662)		—		—		(204,863)		—		(204,863)
Net loss	—		—	—		—	—		—	—		—	—		—		—		(1,186,320)		—		(1,186,320)		278,050		(908,270)
Distributions paid	—		—	—		—	—		—	—		—	—		—		—		—		(952,609)		(952,609)		(294,000)		(1,246,609)
BALANCE, March 31, 2025	3,875,229	$	38,753	1,409,403	$	14,094	—	$	—	581,410	$	5,814	125,000	$	1,250	$	47,363,947	$	2,520,561	$	(19,798,093)	$	30,146,326	$	4,504,914	$	34,651,240
Issuance of common stock pursuant to distribution reinvestment plan	11,433		114	9,513		95	—		—	—		—	—		—		202,121		—		—		202,330		—		202,330
Repurchase of common stock	(19,478)		(195)	(672)		(7)	—		—	—		—	—		—		(204,638)		—		—		(204,840)		—		(204,840)
Net income	—		—	—		—	—		—	—		—	—		—		—		1,193,593		—		1,193,593		194,086		1,387,679
Distributions paid	—		—	—		—	—		—	—		—	—		—		—		—		(935,238)		(935,238)		(392,000)		(1,327,238)
BALANCE, June 30, 2025	3,867,184	$	38,672	1,418,244	$	14,182	—	$	—	581,410	$	5,814	125,000	$	1,250	$	47,361,430	$	3,714,154	$	(20,733,331)	$	30,402,171	$	4,307,000	$	34,709,171
Issuance of common stock pursuant to distribution reinvestment plan	11,754		118	9,828		98	—		—	—		—	—		—		208,274		—		—		208,490		—		208,490
Repurchase of common stock	(19,271)		(193)	(624)		(6)	—		—	—		—	—		—		(202,131)		—		—		(202,330)		—		(202,330)
Net income	—		—	—		—	—		—	—		—	—		—		—		2,675,311		—		2,675,311		64,665		2,739,976
Distributions paid	—		—	—		—	—		—	—		—	—		—		—		—		(3,333,573)		(3,333,573)		(303,800)		(3,637,373)
BALANCE, September 30, 2025	3,859,667	$	38,597	1,427,448	$	14,274	—	$	—	581,410	$	5,814	125,000	$	1,250	$	47,367,573	$	6,389,465	$	(24,066,904)	$	29,750,069	$	4,067,865	$	33,817,934

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PROCACCIANTI HOTEL REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND NONCONTROLLING INTEREST

(unaudited)


	Common Stock															Additional						Total Procaccianti
	Class K			Class K-I			Class K-T			Class A			Class B			Paid-in		Cumulative		Cumulative		Hotel REIT, Inc.		Noncontrolling		Total
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Income (Loss)		Distributions		Stockholders' Equity		Interest		Equity
BALANCE, December 31, 2023	3,908,712	$	39,087	1,366,446	$	13,664	2,964	$	30	581,410	$	5,814	125,000	$	1,250	$	47,356,635	$	2,110,753	$	(15,055,010)	$	34,472,223	$	4,847,835	$	39,320,058
Issuance of common stock pursuant to distribution reinvestment plan	10,503		105	7,972		80	46		—	—		—	—		—		202,637		—		—		202,822		—		202,822
Stockholder servicing fees	—		—	—		—	—		—	—		—	—		—		(76)		—		—		(76)		—		(76)
Repurchase of common stock	(16,555)		(166)	(614)		(6)	—		—	—		—	—		—		(197,163)		—		—		(197,335)		—		(197,335)
Noncontrolling interest valuation adjustment			—	—		—	—		—	—		—	—		—		—		(21,946)		—		(21,946)		—		(21,946)
Net loss	—		—	—		—	—		—	—		—	—		—		—		(1,026,115)		—		(1,026,115)		217,376		(808,739)
Distributions paid	—		—	—		—	—		—	—		—	—		—		—		—		(954,807)		(954,807)		—		(954,807)
BALANCE March 31, 2024	3,902,660	$	39,026	1,373,804	$	13,738	3,010	$	30	581,410	$	5,814	125,000	$	1,250	$	47,362,033	$	1,062,692	$	(16,009,817)	$	32,474,766	$	5,065,211	$	37,539,977
Issuance of common stock	3,159		32	—		—	(3,045)		(30)	—		—	—		—		(2)		—		—		—		—		—
Issuance of common stock pursuant to distribution reinvestment plan	10,276		103	7,896		79	45		1	—		—	—		—		199,307		—		—		199,490		—		199,490
Stockholder servicing fees	—		—	—		—	—		—	—		—	—		—		(51)		—		—		(51)		—		(51)
Repurchase of common stock	(17,108)		(171)	(498)		(5)	—		—	—		—	—		—		(202,646)		—		—		(202,822)		—		(202,822)
Noncontrolling interest valuation adjustment	—		—	—		—	—		—	—		—	—		—		—		77,671		—		77,671		—		77,671
Net Income	—		—	—		—	—		—	—		—	—		—		—		605,992		—		605,992		171,281		777,273
Distributions paid	—		—	—		—	—		—	—		—	—		—		—		—		(941,979)		(941,979)		(318,500)		(1,260,479)
BALANCE June 30, 2024	3,898,987	$	38,990	1,381,202	$	13,812	10	$	1	581,410	$	5,814	125,000	$	1,250	$	47,358,641	$	1,746,355	$	(16,951,796)	$	32,213,067	$	4,917,992	$	37,131,059
Conversion of common stock	12		—	—		—	(10)		—	—		—	—		—		—		—		—		—		—		—
Issuance of common stock pursuant to distribution reinvestment plan	11,357		114	9,159		92	—		(1)	—		—	—		—		197,986		—		—		198,191		—		198,191
Repurchase of common stock	(19,616)		(196)	—		—	—		—	—		—	—		—		(199,294)		—		—		(199,490)		—		(199,490)
Net Income	—		—	—		—	—		—	—		—	—		—		—		2,497,188		—		2,497,188		26,993		2,524,181
Distributions paid	—		—	—		—	—		—	—		—	—		—		—		—		(941,401)		(941,401)		(330,750)		(1,272,151)
BALANCE September 30, 2024	3,890,740	$	38,908	1,390,361	$	13,904	—	$	—	581,410	$	5,814	125,000	$	1,250	$	47,357,333	$	4,243,543	$	(17,893,197)	$	33,767,555	$	4,614,235	$	38,381,790

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PROCACCIANTI HOTEL REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Nine Months Ended September 30,
	2025		2024
Cash Flows from Operating Activities:
Net income	$	3,276,728	$	2,537,173
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,043,136		3,190,502
Amortization of deferred financing costs and debt discount as interest		170,224		31,755
Amortization of key money loans		(40,125)		(40,125)
Gain on interest rate swap		—		(7,237)
Changes in operating assets and liabilities:
Accounts receivable		(167,759)		(63,092)
Prepaid expenses and other assets		11,300		(352,554)
Accounts payable, accrued expenses and other		475,172		693,661
Due to related parties		76,659		(89,645)
Net cash provided by operating activities		6,845,335		5,900,438
Cash Flow from Investing Activities:
Capital improvements		(1,033,902)		(963,037)
Cash used in investing activities		(1,033,902)		(963,037)
Cash Flows from Financing Activities:
Payment of stockholder servicing fees		—		(127)
Proceeds from mortgage note		19,200,000		39,270,000
Payments of mortgage notes principal		(16,589,805)		(38,683,150)
Payment of deferred financing costs		(199,111)		(728,132)
Distributions to stockholders		(4,605,759)		(2,237,684)
Distributions to noncontrolling interest		(989,800)		(649,250)
Repurchase of common stock		(612,033)		(599,647)
Net cash used in financing activities		(3,796,508)		(3,627,990)
Increase in cash and cash equivalents and restricted cash		2,014,925		1,309,411
Cash and cash equivalents and restricted cash, beginning of period		11,061,557		10,704,385
Cash and cash equivalents and restricted cash, end of period	$	13,076,482	$	12,013,796

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Supplemental Disclosure of Cash Flow Information

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the amount shown in the condensed consolidated statements of cash flows:


	Nine Months Ended September 30,
	2025		2024
Cash	$	9,267,311	$	8,545,826
Restricted cash		3,809,171		3,467,970
Total cash and restricted cash shown on the condensed consolidated statements of cash flows	$	13,076,482	$	12,013,796

The Company paid the following amounts for interest and income taxes:


	Nine Months Ended September 30,
	2025		2024
Cash paid for interest	$	2,987,277	$	2,721,652
Cash paid for income taxes	$	8,400	$	8,200

Supplemental Disclosure of Noncash Transactions

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Note 1 - Organization and Description of Business

Procaccianti Hotel REIT, Inc. (the “Company”) was incorporated under the general corporation laws of the State of Maryland on August 24, 2016. The Company acquired a diverse portfolio of hospitality properties consisting primarily of select-service, extended-stay, and compact full-service hotel properties throughout the United States (the “U.S.”). The Company elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2018. Substantially all of the Company’s business is conducted through Procaccianti Hotel REIT, L.P., a Delaware limited partnership (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership. The Company is externally managed by Procaccianti Hotel Advisors, LLC (“PHA”) pursuant to an Advisory Agreement by and among the Company, its Operating Partnership and PHA. PHA is an affiliate of Procaccianti Companies, Inc., the Company’s sponsor (the “Sponsor”).

As of September 30, 2025, the Company owned interests in five select-service hotels located in four states with a total of 559 rooms. For more information on the Company’s real estate portfolio, see Note 3 – “Investments in Hotels.”

The Company raised the equity capital for its real estate investments through a private offering (the “Private Offering”) and a public offering (the “Public Offering”, together with the Private Offering, the “Offerings”) from September 2016 through August 2021, and has offered shares through its distribution reinvestment plan (“DRIP”) pursuant to a Registration Statement on Form S-3 (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 Class K common stock (“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 TPG Hotel REIT Investor, LLC (“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, 2025, the Company received approximately $42,695,781 in gross proceeds from the sale of K Shares, shares of Class K-I common stock (“K-I Shares”) and shares of Class K-T common shares (“K-T Shares”) in the Public Offering, inclusive of proceeds from the sale of $2,239,831 of K Shares, $1,583,226 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 net asset value (“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 the Company’s acquisition of the Hilton Garden Inn hotel property located in Providence, Rhode Island (“Hilton Garden Inn Providence”), the Operating Partnership issued 128,124 Class K units of limited partnership interests in the Operating Partnership (“Class K OP Units”) at $10.00 per Class K OP Unit.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The accompanying condensed consolidated financial statements of the Company are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to make the information presented not misleading. However,

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the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In the opinion of management, all adjustments, which include only normal recurring adjustments considered necessary for a fair and consistent presentation, have been included in these condensed consolidated financial statements. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year.

The Company consolidates variable interest entities (“VIEs”) as defined under the Consolidation Topic (“Topic 810”) of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) when it has the power to direct the activities that most significantly impact the VIE’s performance and the obligation to absorb losses or the right to receive benefits from the VIE that could be significant. At September 30, 2025, the assets of the Company’s VIEs were $61,486,672, and consisted primarily of land, building, furniture, fixtures, and equipment and were available to satisfy our VIEs’ obligations. At September 30, 2025, the liabilities of the Company’s VIEs were $45,228,156, and consisted primarily of long-term debt. The Company has guaranteed certain obligations of its VIEs.

The Company has no foreign operations or assets, and its operating structure includes only one segment.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assumptions and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Under GAAP, the Company is required to disclose the fair value of certain financial instruments on a recurring basis. The accompanying condensed consolidated balance sheets include the following financial instruments: cash, restricted cash, accounts receivable, accounts payable and mortgage notes payable.

The Company considers the carrying value of cash, restricted cash, accounts receivable and accounts payable to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization.

A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value is as follows:

●

Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

●

Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

●

Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

As of September 30, 2025, the estimated fair value of the mortgage notes payable was $66,868,165 compared to the carrying value of $67,384,570. These financial instruments are valued using Level 3 inputs through a discounted cash flow analysis of the contractual cash flows of the notes payable discounted at a market rate.

Revenue Recognition

Revenue is generally recognized as services are performed. Revenue primarily represents room rental fees, food and beverage sales, and other fees. The Company collects sales tax from all nonexempt customers and remits the entire

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amount to the appropriate states upon collection from the customer. The Company’s accounting policy is to exclude the tax collected and remitted to the state from revenue and expenses.

Cash and Cash Equivalents

Cash and cash equivalents represent cash on hand or held in banks and highly liquid investments with original maturities of three months or less.

Restricted Cash

The Company maintains reserves for property taxes, capital improvements and insurance as required by its debt agreements. At September 30, 2025 and 2024, reserves for property taxes were $639,441 and $554,369, respectively, reserves for capital improvements were $3,018,016 and $2,617,125, respectively, and reserves for insurance were $41,514 and $120,316, respectively. The Company also included $110,200 and $176,160 of guest advance deposits as restricted cash at September 30, 2025 and 2024, respectively.

Income Taxes

The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and has operated as a REIT, commencing with the taxable year ended December 31, 2018. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its 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). As a REIT, the Company generally will not be subject to U.S. federal income tax to the extent it distributes qualifying dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year following the year it initially elects to be taxed as a REIT, it will be subject to U.S. federal income tax on its taxable income at regular corporate income tax rates and generally will 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 the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to its stockholders.

Because the Company is prohibited from operating hotel properties pursuant to certain tax laws relating to its qualification as a REIT, the entities through which the Company owns 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 U.S. federal income tax at regular corporate rates on its taxable income.

The Company accounts for income taxes of its 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. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period prior to when the new rates become effective. The Company records a valuation allowance for net deferred tax assets that are not expected to be realized.

The Company has 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. At September 30, 2025, the Company had no material uncertain tax positions.

The preparation of the Company’s 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 the Company’s

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estimates may change is not expected to be material. The Company will account for interest and penalties relating to uncertain tax positions in the current period results of operations, if necessary. The Company has tax years 2021 through 2024 remaining subject to examination by federal and various state tax jurisdictions.

Noncontrolling Interest

Noncontrolling interest represents the portion of equity of Procaccianti Convertible Fund, LLC (“PCF”) held by owners other than the Company. Noncontrolling interest is reported in the condensed consolidated balance sheets within equity, separately from stockholders’ equity. Revenue, expenses, and net income attributable to both the Company and the noncontrolling interest are reported in the condensed consolidated statement of operations.

Noncontrolling Interest of the Operating Partnership

Noncontrolling interest of the Operating Partnership represents the value of the 128,124 Class K OP Units that were issued to a group of sellers in connection with the acquisition of the Hilton Garden Inn Providence. Noncontrolling interest of the Operating Partnership is reported in the mezzanine section of the condensed consolidated balance sheet, as the units are redeemable at the request of the holder for cash equal to the fair market value of a K Share as defined in the Amended and Restated Agreement of Limited Partnership of Procaccianti Hotel REIT, L.P. (the “Amended and Restated Operating Partnership Agreement”). The Company may elect to acquire any such unit presented for redemption for K Shares or cash. The carrying amount of the noncontrolling interest of the Operating Partnership is equal to the greater of the initial carrying amount, increased, or decreased for the Class K OP Units’ share of net income or loss and the redemption value. Revenue, expenses, and net income attributable to both the Company and the noncontrolling interest of the Operating Partnership are reported in the condensed consolidated statement of operations.

Per Share Data

The Company calculates its basic and diluted earnings per common share (“EPS”) utilizing the two-class method. Under the two-class method, both basic and diluted EPS are calculated for each class of common stock considering distributions declared and accumulated and the rights of common shares and participating securities in any undistributed earnings. Undistributed earnings are allocated to all outstanding common shares based on the relative percentage of each class of shares to the total number of outstanding shares. As of September 30, 2025, 6,000 restricted K Shares held by the Company’s independent directors are included in the calculation of basic EPS because such shares have been issued and participate in distributions.

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The Company’s calculated EPS for the three months and nine months ended September 30, 2025 and 2024, were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net income attributable to common stockholders	$	2,675,311	$	2,497,188	$	2,682,584	$	$ 2,077,065
Less: Class K Common Stock dividends declared and accumulated		682,533		685,731		2,028,797		2,045,098
Less: Class K-I Common Stock dividends declared and accumulated		251,272		244,012		741,273		722,554
Less: Class K-T Common Stock dividends declared and accumulated		—		1		—		875
Less: Class A Common Stock dividends declared and accumulated		102,583		102,303		304,404		304,684
Undistributed net income (loss)	$	1,638,923	$	1,465,142	$	(391,890)	$	($ 996,146)
Class K Common Stock:
Undistributed net income (loss)	$	1,056,796	$	953,206	$	(253,206)	$	($ 649,065)
Class K Common Stock dividends declared and accumulated		682,533		685,731		2,028,797		2,045,098
Net income	$	1,739,329	$	1,638,937	$	1,775,591	$	$ 1,396,033
Net income per common share, basic and diluted	$	0.45	$	0.42	$	0.46	$	$ 0.36
Weighted average number of common shares outstanding, basic and diluted		3,867,763		3,897,256		3,874,788		3,902,563
Class K-I Common Stock:
Undistributed net income (loss)	$	389,114	$	339,159	$	(92,521)	$	($ 229,314)
Class K-I Common Stock dividends declared and accumulated		251,272		244,012		741,273		722,554
Net income	$	640,386	$	583,171	$	648,752	$	$ 493,240
Net income per common share, basic and diluted	$	0.45	$	0.42	$	0.46	$	$ 0.36
Weighted average number of common shares outstanding, basic and diluted		1,424,116		1,386,677		1,415,823		1,378,771
Class K-T Common Stock:
Undistributed net loss	$	—	$	1	$	—	$	($ 278)
Class K-T Common Stock dividends declared and accumulated		—		1		—		875
Net income	$	—	$	2	$	—	$	$ 597
Net income per common share, basic and diluted	$	—	$	0.42	$	—	$	$ 0.36
Weighted average number of common shares outstanding, basic and diluted		—		3		—		1,670
Class A Common Stock:
Undistributed net income (loss)	$	158,859	$	142,203	$	(37,994)	$	($ 96,699)
Class A Common Stock dividends declared and accumulated		102,583		102,303		304,404		304,684
Net income	$	261,442	$	244,506	$	266,410	$	$ 207,985
Net income per common share, basic and diluted	$	0.45	$	0.42	$	0.46	$	$ 0.36
Weighted average number of common shares outstanding, basic and diluted		581,410		581,410		581,410		581,410
Class B Common Stock:
Undistributed net income (loss)	$	34,154	$	30,573	$	(8,169)	$	($ 20,790)
Net income (loss) per common share, basic and diluted	$	0.27	$	0.24	$	(0.07)	$	($ 0.17)
Weighted average number of common shares outstanding, basic and diluted		125,000		125,000		125,000		125,000

New Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement: Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

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Note 3 – Investments in Hotels

The following table sets forth summary information regarding the Company’s investments in hotel properties as of September 30, 2025:


					Contract			Mortgage
				Ownership	Purchase			Debt
Property Name	Date Acquired		Location	Interest	Price⁽¹⁾⁽²⁾		Rooms	Outstanding
Springhill Suites Wilmington	05/24/2017	⁽¹⁾	Wilmington, NC	51%	$	18,000,000	120	$	10,850,000
Staybridge Suites St. Petersburg	06/29/2017	⁽¹⁾	St. Petersburg, FL	51%	$	20,500,000	119	$	12,820,000
Hotel Indigo Traverse City	08/15/2018		Traverse City, MI	100%	$	26,050,000	107	$	15,600,000
Hilton Garden Inn Providence	02/27/2020		Providence, RI	100%	$	28,500,000	137	$	19,200,000
Cherry Tree Inn	07/30/2021		Traverse City, MI	100%	$	15,000,000	76	$	8,914,570

Represents the date and contract purchase price of PCF’s acquisition of the Springhill Suites Wilmington (the “Springhill Suites Wilmington”) and the Staybridge Suites St. Petersburg (the “Staybridge Suites St. Petersburg”). The Company exercised its option under an option agreement to purchase a 51% membership interest in PCF on March 29, 2018.

Contract purchase price excludes acquisition fees and costs.

Investments in hotel properties consisted of the following as of September 30, 2025 and December 31, 2024:


	September 30,		December 31,
	2025		2024
Land	$	14,450,538	$	14,450,538
Building and improvements		89,684,068		89,435,135
Furniture, fixtures, and equipment		13,999,361		13,214,390
Total cost		118,133,967		117,100,063
Accumulated depreciation		(25,037,596)		(22,006,066)
Property and equipment, net	$	93,096,371	$	95,093,997

Depreciation expense for the three months ended September 30, 2025 and 2024 was $964,443 and $1,075,256 respectively. Depreciation expense for the nine months ended September 30, 2025 and 2024 was $3,031,530 and $3,178,896, respectively.

Note 4 – Mortgage Notes Payable

Included in mortgage notes payable at September 30, 2025, is a $12,820,000 mortgage payable secured by the Staybridge Suites St. Petersburg (the “St. Petersburg Note”), a $10,850,000 mortgage payable secured by the Springhill Suites Wilmington (the “Wilmington Note”), a $15,600,000 mortgage payable secured by the Hotel Indigo Traverse City (the “TCI Note”), a $19,200,000 mortgage payable secured by the Hilton Garden Inn Providence (the “HGI Note”) and a $8,914,570 mortgage payable secured by the Cherry Tree Inn (the “CTI Note”). The mortgage notes payable each contain customary affirmative covenants, negative covenants and events of default.

The St. Petersburg Note was refinanced as of April 25, 2024. 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 (pursuant to a customary carveout/bad acts guaranty) by the Company and cross-collateralized by the Wilmington Note. As of September 30, 2025, the Operating Partnership and its subsidiary for the Staybridge Suites St. Petersburg were compliant with the loan obligations under the St. Petersburg Note, including applicable covenants, and all required payments have been made as agreed.

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The Wilmington Note was refinanced as of April 25, 2024. The Wilmington Note bears interest at the 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, 2025, the Operating Partnership and its subsidiary for the Springhill Suites Wilmington were compliant with the loan obligations under the Wilmington Note, including applicable covenants, and all required payments have been made as agreed.

The TCI Note was refinanced as of June 6, 2024. The TCI Note bears interest at a fixed per annum rate equal to 7.025% during the initial three year term. This rate is calculated to 2.50% in excess of the yield on United States Treasury Securities adjusted to a constant maturity of three years as made available by the Federal Reserve Board. The TCI Note provides for interest only monthly payments for the initial three year term. After the interest only period, principal will be amortized over a 30-year amortization schedule at a fixed per annum rate of interest equal to 2.50% in excess of the yield on United States Treasury Securities adjusted to a constant maturity of one year as made available by the Federal Reserve Board thereafter to maturity on June 6, 2028. The loan agreement allows for two one-year extensions. The TCI Note is collateralized by the Hotel Indigo Traverse City, including equipment, and is guaranteed by the Company (pursuant to a customary carveout/bad acts guaranty). As of September 30, 2025, 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.

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 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). Annual compliance testing for the HGI Note will commence as of December 31, 2025.

The CTI Note requires monthly interest payments at a fixed rate of 3.91% through November 23, 2023, and subsequent to November 23, 2023, requires monthly principal and interest payments of $52,601 through November 23, 2026, the maturity date. The CTI Note is collateralized by the Cherry Tree Inn, including equipment. As of September 30, 2025, the Operating Partnership and its subsidiary for the Cherry Tree Inn were compliant with the loan obligations under the CTI Note, including applicable covenants, and all required payments have been made as agreed.

Interest expense on mortgage notes payable for the three months ended September 30, 2025 and 2024 was $1,070,434 and $1,024,428, respectively. Interest expense on mortgage notes payable for the nine months ended September 30, 2025 and 2024 was $2,979,292 and $2,848,181, respectively.

Also included in mortgage notes payable as of September 30, 2025 is $1,066,089 of deferred financing costs. For the three months ended September 30, 2025, the Company amortized $64,363 of net deferred financing costs. For the three months ended September 30, 2024, the Company recognized $53,170 of interest expense relating to the amortization of deferred financing costs and debt discounts, offset by $33,079 relating to the amortization of the fair value of debt premium. For the nine months ended September 30, 2025, the Company amortized $192,276 of net deferred financing costs, offset by $22,052 relating to the amortization of the fair value of debt premium. For the nine months ended September 30, 2024, the Company recognized $130,994 of interest expense relating to the amortization of deferred financing costs and debt discounts, offset by $99,239 relating to the amortization of the fair value of debt premium.

Note 5 – Related Party Transactions

On August 2, 2018, the Company entered into the Amended and Restated Advisory Agreement with PHA and the Operating Partnership (as amended and renewed, the “Advisory Agreement”). The Advisory Agreement has a one-year term, subject to renewals upon mutual consent of PHA and the Company’s independent directors for an unlimited number of successive one-year periods. On November 22, 2019, the Company, the Operating Partnership and PHA entered into the Second Amendment to the Advisory Agreement (the “Advisory Agreement Amendment”) in order to

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revise certain terms regarding the accrual of interest on deferred acquisition, disposition and asset management fees, as well as the deferral of asset management fees paid to PHA. On June 25, 2025, the board of directors of the Company, including all independent directors of the Company, after review of PHA’s performance during the last year, authorized the Company to execute a mutual consent to renew the Advisory Agreement, by and among the Company, the Operating Partnership and PHA for an additional one-year term effective on August 2, 2025.

Pursuant to the Advisory Agreement, PHA oversees the Company’s day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, and other administrative services. PHA also performs, or oversees the performance of, the Company’s corporate operations and required administrative services, which include maintaining required financial records and preparing reports to stockholders and filings with the SEC. In addition, PHA assists an independent valuation firm and the Company’s board of directors in calculating and determining the Company’s NAV, and assists the Company in overseeing the preparation and filing of tax returns, payment of expenses and for the performance of administrative and professional services rendered to the Company by others. The Company reimburses PHA for certain expenses and pays PHA certain fees pertaining to services provided.

Administrative Expenses

PHA is required to allocate the cost of administrative services to the Company based on objective factors such as total assets, revenues and/or time allocations. At least annually, the Company’s 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, 2025 and 2024, the Sponsor requested reimbursement for $42,733 and $48,630, respectively, of such administrative service expenses. During the nine months ended September 30, 2025 and 2024, the Sponsor requested reimbursement for $140,728 and $140,728, respectively, of such administrative service expenses. These amounts are included in other fees to affiliates on the condensed consolidated statement of operations.

Acquisition Fee

The Company will pay PHA acquisition fees as described below:

Acquisition Fee: Fee for providing services including selecting, evaluating and acquiring potential investments (the “acquisition fee”). The total acquisition fee payable to PHA shall equal 1.5% of the Gross Contract Purchase Price of an investment, which as defined in the Advisory Agreement, represents the amount actually paid or allocated in respect of the purchase of an investment, inclusive of acquisition expenses and any indebtedness assumed or incurred. Payment of such fee will be deferred until the occurrence of a (i) liquidation event (i.e., any voluntary or involuntary liquidation or dissolution of the Company, including as a result of the sale of all or substantially all of the Company’s assets for cash or other consideration), (ii) the Company’s sale or merger in a transaction that provides stockholders with cash, securities or a combination of cash and securities, (iii) the listing of the Company’s shares of common stock on a national securities exchange, or (iv) the termination of the Advisory Agreement, other than for cause, or the non-renewal of the Advisory Agreement. The preceding clauses (ii) and (iii) are defined as an “Other Liquidity Event”. Under the Advisory Agreement Amendment, deferred acquisition fees will accrue interest at a cumulative, non-compounded rate of 6.0% per annum until the day immediately following the Fifth Anniversary (as defined herein), at which time such interest will cease to further accrue.

No acquisition fees were incurred during the nine months ended September 30, 2025 and 2024. As of September 30, 2025 and 2024, there were $1,244,139 of deferred acquisition fees included in due to related parties on the condensed consolidated balance sheets. Interest expense on outstanding acquisition fees was $18,815 and $18,764, respectively, for the three months ended September 30, 2025 and 2024 and $55,833 and $55,884, respectively, for the nine months ended September 30, 2025 and 2024. These amounts are included in interest expense on the condensed consolidated statement of operations and in due to related parties on the condensed consolidated balance sheets.

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Asset Management Fee

The Company will pay PHA asset management fees as described below:

Asset Management Fee: Quarterly fee equal to one-fourth of 0.75% of the adjusted cost of the Company’s assets and the amounts actually paid or allocated in respect of the acquisition of loans, before reduction for depreciation, amortization, impairment charges, and cumulative acquisition costs charged to expense in accordance with GAAP (the “asset management fee”). The adjusted cost will include the purchase price, acquisition expenses, capital expenditures, and other customary capitalized costs. The Advisory Agreement Amendment clarified the duration of the asset management fee and accrual of interest on deferred asset management fees. The asset management fee will be payable to PHA quarterly in arrears, based on the adjusted cost on the last date of the prior quarter, adjusted for appropriate closing dates for individual investments. Payment of the asset management fee will be deferred on a quarterly basis if at any time all accumulated, accrued, and unpaid 7% distributions have not been paid in full to the holders of the K Shares, K-I Shares, K-T Shares and any parity security. Any such deferred asset management fees will accrue interest at a cumulative, non-compounded rate of 6.0% per annum. If the Company has not completed a liquidation event by the fifth anniversary of the date the Company terminates the Public Offering (including any follow-on offering) (the “Fifth Anniversary”), on the day immediately following the Fifth Anniversary, (i) the asset management fees payable pursuant to the Advisory Agreement will cease to accrue and (ii) interest that accrued at a non-compounded rate of 6.0% per annum on the deferred asset management fees will cease to accrue. For the avoidance of doubt, all accrued and unpaid principal and interest amounts in connection with the asset management fee at the Fifth Anniversary will remain outstanding.

For the three months ended September 30, 2025 and 2024, the Company incurred $184,958 and $184,913, respectively, in asset management fees. For the nine months ended September 30, 2025 and 2024, the Company incurred $553,177 and $566,404, respectively, in asset management fees. Asset management fees are included in other fees to affiliates on the condensed consolidated statements of operations. Interest expense on the outstanding asset management fees was $2,797 and $2,747 for the three months ended September 30, 2025 and 2024, respectively, and is included in interest expense on the condensed consolidated statements of operations. Interest expense on the outstanding asset management fees was $8,275 and $21,624 for the nine months ended September 30, 2025 and 2024, respectively, and is included in interest expense on the condensed consolidated statements of operations. At September 30, 2025 and 2024, asset management fees and interest payable of $187,755 and $184,913, respectively, are included in due to related parties on the condensed consolidated balance sheets.

Disposition Fee

The Company will pay PHA disposition fees as described below:

Disposition Fee: Fee for providing a substantial amount of services in connection with the sale of a property or real estate-related assets, as determined by a majority of the Company’s independent directors (the “disposition fee”). The disposition fee will equal one-half of the brokerage commissions paid on the sale of an investment. In no event will the disposition fee exceed 1.5% of the sales price of each investment. Payment of the disposition fee to PHA will be deferred until the occurrence of (i) a liquidation event, (ii) an Other Liquidity Event, or (iii) the termination of the Advisory Agreement, other than for cause, or the non-renewal of the Advisory Agreement. Under the Advisory Agreement Amendment, deferred disposition fees will accrue interest at a cumulative, non-compounded rate of 6.0% per annum until the day immediately following the Fifth Anniversary, at which time such interest will cease to further accrue.

There were no disposition fees incurred for the nine months ended September 30, 2025 and 2024.

Acquisition Expenses

The Company will reimburse PHA for acquisition expenses actually incurred (excluding personnel costs) related to selecting, evaluating, and making investments on the Company’s behalf. All acquisition expenses as of September 30, 2025 and 2024 were paid directly by the Company and there have been no reimbursements to PHA.

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Organization and Offering Costs

Organization and offering costs (“O&O Costs”) include selling commissions, dealer manager fees, stockholder servicing fees and any other elements of underwriting compensation, as well as legal, accounting, printing, mailing and filing fees and expenses, due diligence expenses of participating broker-dealers supported by detailed and itemized invoices, costs in connection with preparing sales materials, design and website expenses, fees and expenses of the Company’s transfer agent, fees to attend retail seminars sponsored by participating broker-dealers and reimbursements for customary travel, lodging, and meals. For more information regarding selling commissions, dealer manager fees, stockholder servicing fees and any other elements of underwriting compensation, see Note 6 – “Stockholders’ Equity”.

Certain O&O Costs have been incurred by PHA on behalf of the Company. At the termination of the Public Offering on August 13, 2021, the total amount of O&O Costs, exclusive of selling commissions, dealer manager fees and stockholder servicing fees, incurred by PHA and its affiliates related to the Private Offering and the Public Offering was $8,752,347, of which $1,026,564 has been reimbursed through the issuance of A Shares to an affiliate of PHA and through cash payments to PHA of $3,312,833.

The Company recorded O&O Costs as charges against additional paid in capital on the condensed consolidated balance sheets as the Company raised proceeds in its continuous Public Offering for amounts incurred up to 15% of the gross offering proceeds of the Public Offering, the maximum amount allowed in accordance with the rules and regulations established by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Company’s charter. The Company did not recognize any O&O Costs for the three months ended September 30, 2025 and 2024. As of September 30, 2025, the Company had no balances due to or from PHA for the reimbursement of O&O Costs.

Property Management Fee and Reimbursement

Wholly owned subsidiaries of PCF and the Operating Partnership entered into hotel management agreements with affiliates of the Company for the management of each of the Company's hotels. Under the terms of the management agreements, the manager operates and manages each hotel, including making all human resource decisions. The employees of the hotels are employed by the managers, however, pursuant to the management agreements, all compensation of hotel personnel is recorded as a direct operating expense of the hotel. The manager of each hotel is paid a base management fee equal to 3% of the respective hotel’s gross revenues and is also reimbursed for certain expenses and centralized service costs.

The terms of the in-place management agreements for the Staybridge Suites St. Petersburg and the Springhill Suites Wilmington expire on March 28, 2026, each with an automatic one-year extension. The term of the in-place management agreement for the Hotel Indigo Traverse City is five years beginning August 15, 2018 with four automatic one-year extensions. The terms of the in-place management agreements for the Hilton Garden Inn Providence expire on February 26, 2026, with three additional automatic one-year extensions. The terms of the in-place management agreements for the Cherry Tree Inn expire on June 3, 2031, with four additional automatic one-year extensions.

Aggregate property management fees incurred were $355,250 and $335,856 for the three months ended September 30, 2025 and 2024, respectively, and $806,223 and $753,031 for the nine months ended September 30, 2025 and 2024, respectively, and are included in property management fees to affiliates on the condensed consolidated statements of operations. As of September 30, 2025 and 2024, $94,478, and 97,932, respectively, of accrued property management fees payable were included in due to related parties on the condensed consolidated balance sheet. Aggregate net reimbursements for certain expenses were $268,149 and $211,683 for the three months ended September 30, 2025 and 2024, respectively, and $616,605 and $555,150 for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, $46,558 of expense reimbursements were included in due to related parties on the condensed consolidated balance sheet. During the three months ended September 30, 2025 and 2024, the Company paid $105,651 and $279,020, respectively, to TPG Risk Services, LLC (“TPG”), an affiliate of the Sponsor, for the reimbursement of prepaid insurance at the hotel properties. During the nine months ended September 30, 2025 and 2024, the Company paid $622,364 and $601,269, respectively, to TPG for the reimbursement of prepaid insurance at the hotel properties. As of September 30, 2025, the Company had $12,665 due to TPG.

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Construction Management Fee

The Company pays its property managers or third parties selected by PHA, after requesting bids from such parties, a construction management fee (which may include expense reimbursements) based on market rates for such services in the markets in which the hotel properties are located and will take into account the nature of the services to be performed, which generally will constitute the supervision or coordination of any construction, improvements, refurbishments, renovations, or restorations of the Company’s hotel properties. If PHA selects the property manager or another affiliate of the Sponsor to perform such services, any resulting agreement must be approved by a majority of the Company’s board of directors, including a majority of its independent directors. During the three months ended September 30, 2025 and 2024, the Company reimbursed TPG Construction, LLC, an affiliate of the Sponsor (“TPG Construction”), $4,060 and $59,304 respectively, and $7,870 and $124,033, respectively, during the nine months ended September 30, 2025 and 2024, respectively, for capital expenditure costs incurred at the hotel properties.

Additional Service Fees

If the Company requests that PHA or its affiliates perform other services, including but not limited to, renovation evaluations, the compensation terms for those services must be approved by a majority of the Company’s board of directors, including a majority of the independent directors. No such fees for additional services were incurred during the three months ended September 30, 2025 and 2024.

Payment Upon Listing of Shares

If the Company lists any of its shares of capital stock on a national securities exchange (which automatically results in a termination of the Advisory Agreement), the Company will be obligated to pay PHA the amount PHA would be entitled to receive on account of deferred asset management fees, acquisition fees, and disposition fees (and any accrued interest thereon) as if the Company liquidated and received liquidation proceeds equal to the market value of the Company, which is limited to the excess of market value over the liquidation preference on K Shares, K-I Shares and K-T Shares.

Payment Upon a Merger or Acquisition Transaction

If the Company terminates the Advisory Agreement in connection with or in contemplation of a transaction involving a merger or acquisition, the Company would be obligated to pay PHA the amount PHA would be entitled to receive as if the Company liquidated and received net liquidation proceeds equal to the consideration paid to the stockholders in such transaction.

Payment Upon Other Advisory Agreement Termination

The Company may elect not to renew the Advisory Agreement. The Company has the right to terminate the Advisory Agreement without cause, or other than in connection with a listing of the Company’s shares or a transaction involving a merger or acquisition or other than for cause (“Non-cause Advisory Agreement Termination”). If a Non-cause Advisory Agreement Termination were to occur, the Company would be obligated to make a cash payment to PHA in the amount of any deferred asset management fees, plus any interest accrued thereon, the full acquisition fees previously earned, plus interest accrued thereon, and the full disposition fees previously earned, plus any interest accrued thereon, regardless of the value of the Company’s assets or net assets. The Company would be obligated to repurchase its A Shares for an amount equal to the greater of: (1) any accrued common ordinary distributions on the A Shares plus the stated value of the outstanding A Shares ($10.00 per A Share) or (2) the amount the holders of A Shares would be entitled to receive if the Company liquidated and received net liquidation proceeds equal to the fair market value (determined by appraisals as of the termination date) of the Company’s investments less any loans secured by such investments, limited in the case of non-recourse loans to the value of investments securing such loans. Any shares of Class B common stock, with a par value of $0.01 per share (“B Shares”), then outstanding would remain outstanding. The amounts payable on account of the repurchase of A Shares may be paid, in the discretion of a majority of the Company’s board of directors, including a majority of the Company’s independent directors, in the form of promissory

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notes bearing interest at the then-current rate, as determined in good faith by a majority of the Company’s independent directors.

Payment Upon Advisory Agreement Termination for Cause

If the Company terminates the Advisory Agreement for cause, the Company would not have a current obligation to make any payments to PHA or to S2K Servicing LLC, an affiliate of S2K Financial LLC (the “Dealer Manager”). However, any A Shares and B Shares held by them or their affiliates would remain outstanding. In addition, any deferred asset management fees, plus any interest accrued thereon, the full acquisition fees previously earned, plus any interest accrued thereon, and the full disposition fees previously earned, plus any interest accrued thereon, would remain outstanding obligations, and the deferred fees would continue to accrue interest at a non-compounded annual rate of 6.0%. Such deferred fees and interest thereon would be payable upon a liquidation event.

Amended and Restated Operating Partnership Agreement

In connection with the Hilton Garden Inn Providence acquisition, effective February 27, 2020, the Company, as general partner of the Operating Partnership, Procaccianti Hotel REIT, LP, LLC and certain principals and affiliates of the Sponsor were issued Class K OP Units and entered into an Amended and Restated Operating Partnership Agreement.

Loans from Affiliates

The Company has combined subordinated promissory notes of $94,194 from PHA that bear interest at the current blended long term applicable federal rate (“AFR”). The blended long term AFR was 4.66% and 4.53% for the three months ended September 30, 2025 and 2024, respectively, and 4.61% and 4.53% for the nine months ended September 30, 2025 and 2024. The maturity date of the notes is the date after all outstanding K Shares have received all accumulated, accrued and unpaid distributions due and owing under the terms of the Company’s organization documents and the liquidation preference on the K Shares pursuant to the Company’s organization documents has been paid in full, as well as upon any event of default. These amounts are included in due to related parties on the condensed consolidated balance sheets at September 30, 2025 and December 31, 2024, respectively. Interest expense was $1,106 and $1,074 for the three months ended September 30, 2025 and 2024, respectively, and $3,250 and $3,181 for the nine months ended September 30, 2025 and 2024, respectively, and is included in interest expense on the condensed consolidated statements of operations and in due to related parties on the condensed consolidated balance sheets.

Note 6 - Stockholders’ Equity

Under the Company’s charter, the total number of shares of capital stock authorized for issuance is 248,125,000, consisting of 55,500,000 K Shares, 55,500,000 K-I Shares, 116,000,000 K-T Shares, 21,000,000 A Shares, and 125,000 B Shares.

The Company’s K Shares, K-I Shares and K-T Shares entitle the holders to one vote per share on all matters upon which stockholders are entitled to vote and to receive distributions as authorized by the Company’s board of directors. Holders of K Shares, K-I Shares and K-T Shares will be entitled to receive cumulative cash distributions on each share at the rate of 7.0% per annum of each share's distribution base. Prior to March 31, 2020, distributions accrued at the rate of 6.0% per annum of each share’s distribution base. The distribution base was initially $10.00 per K Share, $10.00 per K-I Share and $10.00 per K-T Share and was reduced for distributions that the board of directors declares and pays out of net sales proceeds from the sale or disposition of assets to the extent such distributions are not used to pay accumulated, accrued, and unpaid dividends on such K Shares, K-I Shares, and K-T Shares.

K Shares, K-I Shares and K-T Shares will rank, on a pro rata basis, senior to all other classes of stock with respect to distribution rights and rights upon the Company’s liquidation. In certain situations (other than upon liquidation), the Company may have excess cash available for distribution and the board of directors may authorize special distributions in which case the holders of K Shares, K-I Shares and K-T Shares would receive 50% of any such excess cash. Holders of K Shares, K-I Shares and K-T Shares would also generally be entitled to receive 50% of any remaining liquidation cash pro rata based on the number of K Shares, K-I Shares and K-T Shares outstanding.

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A Shares entitle the holders to one vote per share on all matters upon which stockholders are entitled to vote and to receive distributions and other distributions of excess cash as authorized by the Company’s board of directors. Following the payment of all accumulated, accrued and unpaid distributions on K Shares, K-I Shares and K-T Shares and payment of any accrued asset management fees (and any interest thereon), each A Share will be entitled to receive distributions at a rate not to exceed 7.0% of the stated value of $10.00 per share from income and cash flow from ordinary operations on a cumulative basis. In certain situations (other than upon liquidation), the Company may have excess cash available for distribution and the board of directors may authorize special distributions in which case the holders of A Shares will receive 37.5% of any such excess cash on a pro rata basis. A Shares would also generally be entitled to receive 37.5% of any remaining liquidation cash pro rata based on the number of A Shares outstanding.

B Shares will have no voting rights, other than the right to vote on and approve any further issuances of or an increase in the authorized number of B Shares. In addition, if the Company were to list any shares of its common stock on a national securities exchange, the Company will repurchase its B Shares in accordance with its charter. Holders of B Shares are not entitled to distributions; however, in certain situations (other than upon liquidation) the Company may have excess cash available for distribution and the board of directors may authorize special distributions in which case the holders of B Shares would receive 12.5% of any such excess cash on a pro rata basis. Holders of B Shares would also generally be entitled to receive 12.5% of any remaining liquidation cash pro rata based on the number of B Shares outstanding. On September 29, 2016, the Company issued 125,000 B Shares to S2K Servicing LLC.

At the termination of the Private Offering on August 13, 2021, the Company had issued 1,253,618 K Shares and 23,000 A Shares to unaffiliated investors, resulting in receipt of gross proceeds of $12,398,660 from K Share issuances and $230,000 from A Share issuances. A Shares sold to unaffiliated investors were issued as part of a Unit in the Private Offering. As of the termination of the Public Offering, the Company had issued 2,787,944 K Shares, 1,287,644 K-I Shares, and 60,008 K-T Shares to unaffiliated investors, resulting in receipt of gross proceeds of $26,939,836 from K Share issuances, $11,274,927 from K-I Share issuances, and $585,400 from K-T Share issuances. As of September 30, 2025, the Company had issued 229,423 K Shares, 161,547 K-I Shares and 7,676 K-T Shares pursuant to the DRIP, resulting in gross proceeds pursuant to the DRIP of $2,239,831, $1,583,226 and $72,561, respectively. As of September 30, 2025, the Company had issued 2,000 restricted K Shares to each of the Company’s three independent directors for a total of 6,000 restricted K Shares in connection with the Company’s long-term incentive plan, as described below.

As of September 30, 2025, the Company had issued 428,410 A Shares to THR, an affiliate of PHA, for aggregate proceeds of $4,284,095, or $10.00 per share. In addition, the Company issued 130,000 additional A Shares to THR in exchange for notes receivable, payable to the Company upon demand. The note receivable from THR was reduced for amounts reimbursed to PHA by the Company for certain costs incurred on the Company’s behalf, with no remaining balance as of September 30, 2025. As of September 30, 2025, the Company had sold 10 K-I Shares for aggregate proceeds of $100, or $10.00 per K-I Share and had sold 10 K-T Shares for aggregate proceeds of $100, or $10.00 per K-T Share, to an affiliate of the Company.

As of September 30, 2025, pursuant to Section 5.2.7 of the Company’s charter, 65,694 K-T Shares converted to 66,225 K Shares.

On February 27, 2020, as partial consideration for the Company’s acquisition of the Hilton Garden Inn Providence, the Operating Partnership issued 128,124 Class K OP Units valued at $10.00 per Class K OP Unit. Such issuance represents a total investment of $1,281,244 in Class K OP Units of the Operating Partnership. Individuals with direct or indirect interests in the sellers of the Hilton Garden Inn Providence who are direct or indirect owners of the Sponsor and PHA received only Class K OP Units and no cash as consideration.

PHA was obligated to purchase sufficient A Shares to fund payment of O&O Costs associated with the Private Offering and was obligated to purchase sufficient A Shares to fund payment of O&O Costs related to the Public Offering and also to account for the difference between the applicable NAV per K-I Share and the applicable offering price per K-I Share and any amount equal to any discount to the applicable offering price of K Shares, K-I Shares and K-T Shares (excluding volume discounts). PHA’s obligation can be fulfilled by its affiliates, including the Sponsor or entities affiliated with the Sponsor.

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The Company paid the Dealer Manager, as dealer manager of the Private Offering, selling commissions of up to 7% of the gross offering proceeds from the sale of K Shares and Units in the Private Offering. The Dealer Manager re-allowed all selling commissions to participating broker-dealers. The Company also paid the Dealer Manager, through the termination of the Public Offering, a dealer manager fee of up to 3% of the gross offering proceeds from the sale of K Shares, K-I Shares and K-T Shares. The Dealer Manager could re-allow a portion of its dealer manager fees to participating broker-dealers. Selling commissions and dealer manager fees were paid with proceeds from the sale of A Shares to PHA or its affiliates. There were no selling commissions or dealer manager fees payable on account of shares of any class purchased by PHA, S2K Servicing LLC, or their affiliates. The Company recognized $1,058,501 of selling commissions and dealer manager fees in connection with the Private Offering. There have been no additional selling commissions and dealer managers fees in connection with the Public Offering since 2021.

The Company paid the Dealer Manager selling commissions of up to 7% of the gross offering proceeds from the sale of K Shares and selling commissions of up to 3% of the gross offering proceeds from the sale of K-T Shares in the primary portion of the Public Offering. No selling commissions were payable in connection with the sale of K-I Shares. The Dealer Manager was able to re-allow all selling commissions to participating broker-dealers. The Company also paid the Dealer Manager a dealer manager fee of up to 3% of the gross offering proceeds from the sale of K Shares, K-I Shares and K-T Shares sold in the primary portion of the Public Offering. The Dealer Manager allowed a portion of its dealer manager fees to participating broker-dealers. Selling commission and dealer manager fees were generally paid with proceeds from the sale of A Shares to PHA or its affiliates. There were no selling commissions or dealer manager fees payable on account of shares of any class purchased by PHA, S2K Servicing LLC, or any K Shares, K-I Shares and K-T Shares sold pursuant to the DRIP. The selling commissions and dealer manager fees may have been reduced or waived in connection with certain categories of sales. As of September 30, 2025, the Company recognized $2,986,465 of selling commissions and dealer manager fees in connection with the Public Offering. There have been no additional selling commissions and dealer managers fees in connection with the Public Offering since 2021.

The Company also pays the Dealer Manager with respect to each K-T Share sold in the primary portion of the Public Offering, a stockholder servicing fee equal to 1%, annualized, of the amount of the Company’s estimated NAV per K-T Share for each K-T Share purchased in the primary portion of the Public Offering, for providing services to a holder of K-T Shares. The stockholder servicing fee accrues daily and is payable monthly in arrears. The Dealer Manager will reallow all or a portion of the stockholder servicing fee to participating broker-dealers and servicing broker-dealers. The Company will cease paying the stockholder servicing fee with respect to K-T Shares sold in the primary portion of the Public Offering in accordance with the terms set forth in the prospectus portion of the Registration Statement. As of September 30, 2025, the Company recognized $17,632 of stockholder servicing fees in connection with the Public Offering.

If the Company’s board of directors determines, in any year, that the Company has excess cash, the Company’s board of directors will declare a special distribution entitling (a) the holders of K Shares, K-I Shares, K-T Shares to share, pro rata in accordance with the number of K Shares, K-I Shares and K-T Shares, 50% of such excess cash (or 87.5% of such excess cash if the A Shares have been repurchased in connection with a Non-cause Advisory Agreement Termination); (b) the holders of B Shares to share, pro rata in accordance with the number of B Shares, 12.5% of excess cash; and (c) the holders of A Shares (including PHA or its affiliates) to share, pro rata in accordance with the number of A Shares, 37.5% of such excess cash (unless all such A Shares previously have been repurchased in connection with a Non-cause Advisory Agreement Termination, in which case the excess cash otherwise apportioned to the A Shares would be distributed to the holders of the K Shares, K-I Shares and K-T Shares as noted above).

Upon a liquidation event, any remaining liquidation cash will be paid as a special distribution (a) to the holders of K Shares, K-I Shares and K-T Shares, pro rata in accordance with the number of K Shares, K-I Shares and K-T Shares, 50% of such excess cash (or 87.5% of such excess cash if the A Shares have been repurchased in connection with a Non-cause Advisory Agreement Termination); (b) to the holders of B Shares, pro rata in accordance with the number of B Shares, 12.5% of excess cash; and (c) to the holders of A Shares (including PHA or its affiliates), pro rata in accordance with the number of A Shares, 37.5% of such excess cash (unless all such A Shares previously have been repurchased in connection with a Non-cause Advisory Agreement Termination, in which case the excess cash otherwise apportioned to the A Shares would be distributed to the holders of the K Shares, K-I Shares and K-T Shares as noted above).

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The Company established a long-term incentive plan pursuant to which the Company’s board of directors (including independent directors), officers and employees, PHA and its affiliates and their respective employees, employees of entities that provide services to the Company, managers of the Company’s advisor or directors or managers of entities that provide services to the Company and their respective employees, certain of the Company’s consultants and certain consultants to PHA and its affiliates or entities that provide services to the Company and their respective employees may be granted incentive awards in the form of restricted stock, options, and other equity-based awards.

In accordance with the Company’s long-term incentive plan, each new independent director that joins the Company’s board of directors is awarded 250 restricted K Shares in connection to his or her initial election to the board of directors. In addition, in connection with an independent director’s re-election to the Company’s board of directors at each annual meeting of stockholders, he or she will receive an additional 250 restricted K Shares. Restricted K Shares issued to independent directors will vest in equal amounts annually over a four-year period on and following the first anniversary of the date of grant in increments of 25% per annum; provided, however, that the restricted K Shares will become fully vested on the earlier to occur of (1) the termination of the independent director’s service as a director due to his or her death or disability, or (2) a change in control of the Company. On February 11, 2019, the Company issued 500 restricted K Shares to each of the Company’s three independent directors for a total of 1,500 restricted K Shares. These awards were in relation to their initial election to the board of directors and their re-election. An additional 250 restricted K Shares were awarded to each independent director upon his or her re-election at the Company’s annual meetings of stockholders on July 11, 2019, November 17, 2020, November 10, 2021, December 22, 2022, December 22, 2023 and January 17, 2025, respectively.

Share Repurchase Program and Redeemable Common Stock

The Company’s share repurchase program may provide eligible stockholders with limited, interim liquidity by enabling them to sell shares back to the Company, subject to restrictions and applicable law. The Company is not required to repurchase shares. The share repurchase program is only intended to provide interim liquidity to stockholders until a liquidity event occurs, such as the commencement of execution on a plan of liquidation, the listing of the K Shares, K-I Shares or K-T Shares (or successor security) on a national securities exchange, or the Company’s merger with a listed company. The Company cannot guarantee that a liquidity event will occur.

On October 26, 2018, the Company’s board of directors approved and adopted the Amended and Restated Share Repurchase Program (the “A&R SRP”). The A&R SRP provides that the Company will not repurchase in excess of 5.0% of the weighted average number of K Shares, K-I Shares and K-T Shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which repurchases are being paid (provided, however, that while shares subject to a repurchase requested upon the death of a stockholder will be included in calculating the maximum number of shares that may be repurchased, shares subject to a repurchase requested upon the death of a stockholder will not be subject to the percentage cap). The A&R SRP also provides that the Company will limit repurchases to the net proceeds received pursuant to the DRIP. Additionally, in the event that any stockholder fails to maintain a minimum balance of $2,000 of K Shares, K-I Shares or K-T Shares, the Company may repurchase all of the shares held by that stockholder at the per share repurchase price in effect on the date the Company determines that the stockholder has failed to meet the minimum balance, less any applicable repurchase discount. Minimum account repurchases will apply even in the event that the failure to meet the minimum balance is caused solely by a decline in the Company’s estimated NAV per share.

In addition, the Company’s repurchase of any shares will be limited to the extent that the Company does not have, as determined in the Company’s board of directors’ discretion, sufficient funds available to fund any such repurchase. Most of the Company’s assets will consist of properties which cannot be readily liquidated without affecting the Company’s ability to realize full value upon their disposition. Therefore, the Company may not have sufficient liquid resources to satisfy all repurchase requests. In addition, the Company’s board of directors may amend, suspend (in whole or in part) or terminate the A&R SRP at any time upon 30 days’ notice to stockholders. Further, the Company’s board of directors reserves the right, in its sole discretion, to reject any requests for repurchases.

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In the event the Company cannot repurchase all shares presented for repurchase in any fiscal quarter, based upon insufficient cash available and/or the limit on the number of shares it may repurchase, the Company would give first priority to the repurchase of deceased stockholders’ shares. The Company would next give priority to (i) requests of stockholders with “qualifying disabilities” (as defined in the A&R SRP), and in the discretion of the Company’s board of directors, stockholders with another involuntary exigent circumstance, such as bankruptcy, and (ii) next, to requests for full repurchases of accounts with a balance of 100 or less shares at the time the Company receives the request, in order to reduce the expense of maintaining small accounts. Thereafter, the Company will honor the remaining quarterly repurchase requests on a pro-rata basis. Unfulfilled requests will be carried over automatically to subsequent repurchase periods unless a stockholder withdraws a request pursuant to the terms of the A&R SRP.

Repurchases of K Shares, K-I Shares and K-T Shares will be made quarterly upon written request to the Company at least 15 days prior to the end of the applicable quarter. Valid repurchase requests will be honored approximately 45 days following the end of the applicable quarter (the “Repurchase Date”). Stockholders may withdraw their repurchase request at any time up to five business days prior to the Repurchase Date.

No shares can be repurchased under the Company’s A&R SRP until after the first anniversary of the date of purchase of such shares; provided, however, that this holding period shall not apply to repurchases requested within two years after the death or disability of a stockholder. Additionally, any shares purchased pursuant to the Company’s DRIP will be excluded from the one-year holding requirement. For stockholders that have made more than one purchase of K Shares, K-I Shares or K-T Shares in the Public Offering and/or Private Offering, the one-year holding period will be calculated separately with respect to each such purchase. Repurchases of K Shares, K-I Shares and K-T Shares, when requested, are at the Company’s sole discretion and generally will be made quarterly. Shares repurchased under the A&R SRP program will become unissued shares and will not be resold unless such sales are made pursuant to transactions that are registered or exempt from registration under applicable securities laws. The Company will not pay its Sponsor, board of directors, PHA or their affiliates any fees to complete transactions under the A&R SRP.

The per share repurchase price will depend on the length of time the stockholder has held such shares as follows:


Share Purchase Anniversary		Repurchase Price on Repurchase Date
Less than 1 year		No Repurchase Allowed
1 year		92.5% of most recent Estimated Per Share NAV
2 years		95.0% of most recent Estimated Per Share NAV
3 years		97.5% of most recent Estimated Per Share NAV
4 years		100.0% of most recent Estimated Per Share NAV
In the event of a stockholder’s death or disability		100.0% of most recent Estimated Per Share NAV

Notwithstanding the foregoing, pursuant to securities laws and regulations, at any time the Company is engaged in an offering, the repurchase amount shall never be more than the current offering price of such shares. Shares repurchased in connection with a stockholder’s bankruptcy or other exigent circumstance, in the sole discretion of the Company’s board of directors, within one year from the purchase date will be repurchased at a price per share equal to the price per share the Company would pay had the stockholder held the shares for one year from the purchase date.

The purchase price for repurchased shares will be adjusted for any stock dividends, combinations, splits, recapitalizations, or similar corporate actions with respect to the Company’s common stock. If the Company has sold any properties and have made one or more special distributions to stockholders of all or a portion of the net proceeds from such sales, the per share repurchase price will be reduced by the net sale proceeds per share distributed to stockholders prior to the Repurchase Date to the extent such distributions are not used to pay accumulated, accrued and unpaid distributions on such K Shares, K-I Shares and K-T Shares. The Company’s board of directors will, in its sole discretion, determine which distributions, if any, constitute a special distribution. While the Company’s board of directors does not have specific criteria for determining a special distribution, the Company expects that a special distribution will occur only upon the sale of a property and the subsequent distribution of net sale proceeds.

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The Company generally repurchases shares approximately 45 days following the end of the applicable quarter in which requests were received.

During the three months ended September 30, 2025, we repurchased approximately $195,980 of K Shares and $6,350 of K-I Shares. As of September 30, 2025, there were 84 outstanding and unfulfilled repurchase requests for 307,597 K Shares and 33,242 K-I Shares. The following tables reflect the activity resulting in the repurchase requests outstanding at September 30, 2025.


	Requests
	Received	Number									Repurchase
	During	of Share				$ Amount		Average			Requests
Share	3 Months	Repurchases		Date	Shares	of Shares		$ Amount		Requests	Outstanding at
Class	Ended	Requested		Repurchased	Repurchased	Repurchased		per share		Withdrawn	September 30, 2025
K	6/30/2023	59,587	⁽¹⁾	8/23/2023	16,090	$	184,422	$	11.46	-	-
				12/7/2023	13,110	$	149,824	$	11.43	-	-
				3/7/2024	4,654	$	53,189	$	11.43	-	-
				5/8/2024	2,531	$	29,078	$	11.49	-
				5/21/2025	559	$	5,678	$	10.17	-
				9/2/2025	534	$	5,426	$	10.17	671	21,438
K	9/30/2023	10,274	⁽¹⁾	12/7/2023	3,097	$	35,704	$	11.53	-	-
				3/7/2024	1,099	$	12,675	$	11.53	-	-
				5/8/2024	596	$	6,868	$	11.53	-
				5/21/2025	132	$	1,341	$	10.17	-
				9/2/2025	130	$	1,321	$	10.17	-	5,220
K	12/31/2023	52,823	⁽¹⁾	3/7/2024	10,801	$	124,535	$	11.53	-	-
				5/8/2024	4,118	$	47,486	$	11.53	-
				5/21/2025	912	$	9,276	$	10.17	-
				9/2/2025	900	$	9,062	$	10.07	-	36,092
K	3/31/2024	56,794	⁽¹⁾	5/8/2024	9,864	$	113,731	$	11.53	-
				5/21/2025	1,129	$	11,485	$	10.17	-
				9/2/2025	891	$	9,043	$	10.15	9,183	35,727
K	6/30/2024	142,529	⁽¹⁾	8/22/2024	19,615	$	199,490	$	10.17	-
				11/5/2024	19,258	$	195,853	$	10.17	-
				2/13/2025	19,879	$	202,170	$	10.17	2,457
				5/21/2025	8,921	$	90,730	$	10.17	-
				9/2/2025	1,761	$	17,880	$	10.15	-	70,638
K	9/30/2024	40,088	⁽¹⁾	11/5/2024	230	$	2,338	$	10.17	-
				2/13/2025	265	$	2,694	$	10.17	-
				5/21/2025	1,946	$	19,786	$	10.17	-
				9/2/2025	916	$	9,298	$	10.15		36,731
K	12/31/2024	42,948	⁽¹⁾	5/21/2025	1,037	$	10,511	$	10.17	-
				9/2/2025	1,021	$	10,351	$	10.17	4,896	35,994
K	3/31/2025	20,042	⁽¹⁾	5/21/2025	4,842	$	49,241	$	10.17	-
				9/2/2025	371	$	3,754	$	10.12	-	14,829
K	6/30/2025	32,542	⁽¹⁾	9/2/2025	12,746	$	129,628	$	10.17	9,757	10,039
K	9/30/2025	40,889	⁽¹⁾	TBD	-	$	-	$	-	-	40,889
Total K Share redemption requests outstanding											307,597

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	Received	Number									Repurchase
	During	of Share				$ Amount		Average			Requests
Share	3 Months	Repurchases		Date	Shares	of Shares		$ Amount		Requests	Outstanding at
Class	Ended	Requested		Repurchased	Repurchased	Repurchased		per share		Withdrawn	September 30, 2025
K-I	6/30/2023	5,591	⁽¹⁾	8/23/2023	1,101	$	12,625	$	11.47	1,036	-
				12/7/2023	1,041	$	12,003	$	11.53	-	-
				3/7/2024	370	$	4,261	$	11.52	-	-
				5/8/2024	200	$	2,309	$	11.55	-
				5/21/2025	44	$	451	$	10.17	-	-
				9/2/2025	44	$	445	$	10.17		1,755
K-I	12/31/2023	1,595	⁽¹⁾	3/7/2024	244	$	2,675	$	10.96	-	-
				5/8/2024	140	$	1,526	$	10.90	-	-
				5/21/2025	30	$	296	$	9.92	-	-
				9/2/2025	29	$	292	$	10.06	-	1,152
K-I	3/31/2024	1,613	⁽¹⁾	5/8/2024	158	$	1,823	$	11.53	-	-
				5/21/2025	35	$	356	$	10.17	-	-
				9/2/2025	-	$	-	$	-	1,420	-
K-I	12/31/2024	18,240	⁽¹⁾	5/21/2025	439	$	4,464	$	10.17	-	-
				9/2/2025	432	$	4,396	$	10.17	-	17,369
K-I	3/31/2025	5,000	⁽¹⁾	5/21/2025	123	$	1,224	$	9.92	-	-
				9/2/2025	118	$	1,204	$	10.21	-	4,759
K-I	9/30/2025	8,207	⁽¹⁾	TBD	-	$	-	$	-	-	8,207
Total K-I Share redemption requests outstanding											33,242

(1)

Our board of directors determined that the funding limitation under the A&R SRP was reached in the referenced quarter with respect to share repurchase requests, as there were insufficient net proceeds from the DRIP to fund all share repurchase requests.

Distributions

During the nine months ended September 30, 2025, the Company’s board of directors authorized the payment of K Share distributions as follows:

Shares

Amount

Date

Outstanding

Date

Record

Per Share

Distributions

Paid

Date

Authorized

Date

Per Day

K Share

K-I Share

K-T Share

OP Unit

Total

1/17/2025

12/31/2024

1/14/2025

1/16/2025

$0.001912568

684,394

245,671

—

22,544

952,609

5/1/2025

3/31/2025

4/25/2025

4/30/2025

$0.001917808

670,151

Nine Months Ended September 30,

Common stock issued pursuant to distribution reinvestment plan

PROCACCIANTI HOTEL REIT, INC. 10-Q