RLJ Lodging Trust (RLJ) risk factors, FY2025 10-K

Risks Related to Our Business and Hotel Properties

1. 01Economic volatility and high rates of inflation could significantly impact and disrupt our business, financial performance and condition, operating results and cash flows
2. 02We require a significant amount of cash to service our debt and sustain our operations. Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate cash required to service our debt
3. 03We will continue to be significantly influenced by the economies and other conditions in the specific markets in which we operate, particularly in the metropolitan areas where we have high concentrations of hotels39% rewritten
4. 04We retain independent third-party hotel managers to operate our hotel properties pursuant to management agreements. As of December 31, 2025, all of our hotel properties had individual management agreements, 26 of which were with Aimbridge Hospitality ("Aimbridge") and 21 of which were with Hilton70% rewritten
5. 05satisfactory results through discussions and negotiations, we may choose to terminate our management agreement, litigate the dispute or submit the matter to third-party dispute resolution, the outcome of which may be unfavorable to usNew
6. 06Costs associated with, or failure to maintain, franchisor operating standards may materially and adversely affect us
7. 07We bear the costs and other risks of employment of the independent managers' hotel personnel pursuant to our hotel management agreements
8. 08Labor shortages could slow our growth or harm our business39% rewritten
9. 09Restrictive covenants in certain of our management and franchise agreements contain provisions limiting or restricting the sale or financing of our hotels, which could have a material and adverse effect on us
10. 10Our ownership of hotel properties with ground leases exposes us to the risks that we may be forced to sell such hotel properties for a lower price, we may have difficulties financing such hotel properties, we may be unable to renew a ground lease or we may lose such hotel properties upon breach of a ground lease
11. 11Most of our hotel properties operate under either Marriott, Hilton or Hyatt brands; therefore, we are subject to the risks associated with concentrating our portfolio in just three brand families
12. 12The failure to make and integrate acquisitions of additional hotels could materially and adversely impede our growth
13. 13Any difficulties in obtaining the capital necessary to make required periodic capital expenditures and to renovate our hotel properties could materially and adversely affect our financial condition and results of operations21% rewritten
14. 14Competition from other lodging industry participants in the markets in which we operate could adversely affect Occupancy levels and/or ADRs, which could have a material and adverse effect on us
15. 15At December 31, 2025, we had approximately $2.2 billion of debt outstanding, which could materially and adversely affect our operating performance and put us at a competitive disadvantage
16. 16Because we anticipate that our operating cash flow will be adequate to repay only a portion of our debt at maturity, we expect that we will be required to repay debt through debt refinancings and/or offerings of our securities. The amount of our outstanding debt may adversely affect our ability to refinance our debt
17. 17Our existing indebtedness contains covenants and our failure to comply with all covenants in our debt agreements could materially and adversely affect us
18. 18U.S. federal income tax provisions applicable to REITs may restrict our business decisions regarding the potential sale of a hotel property
19. 19Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on joint venture partners' financial condition and liquidity and disputes between us and our joint venture partners
20. 20The future outbreak of highly infectious or contagious diseases could significantly impact and disrupt our business, financial performance and condition, operating results and cash flows

Risks Related to the Lodging Industry

1. 21Our ability to make distributions to our shareholders may be adversely affected by various operating risks common to the lodging industry, including competition, over-building and dependence on business travel and tourism
2. 22The cyclical nature of the lodging industry may cause fluctuations in our operating performance, which could have a material and adverse effect on us
3. 23Technology, potentially including artificial intelligence, is used in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm the business79% rewritten
4. 24in interpretation of laws, could increase our cost of compliance and operation, limit our ability to grow our business or otherwise harm the CompanyNew
5. 25Future terrorist attacks or changes in terror alert levels could materially and adversely affect us
6. 26We face possible risks associated with natural disasters, weather events, wildfires, and the physical effects of climate change

Risks Related to Our Organization and Structure

1. 27The share ownership limits imposed by the Code for REITs and our declaration of trust may restrict share transfers and/or business combination opportunities
2. 28It may be difficult or impractical to effect a change in control under circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then-prevailing market price of our common shares
3. 29Our rights and the rights of our shareholders to take action against our trustees and officers are limited, which could limit our shareholders' recourse in the event of actions not in our shareholders' best interests
4. 30If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results

Risks Related to the Real Estate Industry

1. 31The illiquid nature of real estate investments could significantly impede our ability to respond to changing economic, financial, and investment conditions or changes in the operating performance of our hotel properties, which could materially and adversely affect our cash flows and results of operations
2. 32Uninsured and underinsured losses at our hotel properties could materially and adversely affect us31% rewritten
3. 33We could incur significant costs related to government regulation and litigation with respect to environmental matters, which could have a material and adverse effect on us
4. 34We may from time to time be subject to litigation that could expose us to uncertain or uninsured costs

Risks Related to Our Status as a REIT

1. 35If we do not qualify as a REIT, or if we fail to remain qualified as a REIT, we will be subject to U.S. federal income tax and potentially state and local taxes, which would reduce our earnings and the amount of cash available for distribution to our shareholders
2. 36REIT distribution requirements could adversely affect our ability to execute our business plan or require us to make distributions of our shares or other securities
3. 37If our leases are not respected as true leases for U.S. federal income tax purposes, we would likely fail to qualify as a REIT
4. 38To comply with the restrictions imposed on REITs, we may have to conduct certain activities and own certain assets through TRSs, which will be subject to normal corporate income tax, and we could be subject to a 100% penalty tax on certain income if those transactions are not conducted on arm's-length terms
5. 39If our TRSs fail to qualify as "taxable REIT subsidiaries" under the Code, we would likely fail to qualify as a REIT
6. 40If any management companies that we engage do not qualify as "eligible independent contractors," or if our hotel properties are not "qualified lodging facilities," we would likely fail to qualify as a REIT
7. 41Complying with REIT requirements may force us to forgo and/or liquidate otherwise attractive investment opportunities
8. 42In the event that we recognize a significant gain from cash settlement of a forward sale agreement under our at-the-market equity offering program, the U.S. federal income tax treatment of the cash that we receive in such instance is unclear and could impact our ability to meet the REIT qualification requirements
9. 43There is a risk of changes in the tax laws which may adversely affect our taxation as a REIT and taxation of our shareholders32% rewritten

Risks Related to Our Common Shares

1. 44of the price of our common shares and could diminish our cash reserves