ARI

New in FY2025

• So-called "anti-ESG" sentiment has also gained momentum across the U.S., with several states having enacted or proposed “anti-ESG” policies, legislation, or issued executive orders and legal opinions.
• For example, anti-boycott legislation in certain states target financial institutions that are perceived as "boycotting" or "discriminating against" companies in certain industries (e.g., energy and mining) and prohibit government entities from doing business with such institutions and/or investing the government's assets through such institutions.
• Similar policies have been implemented or are being proposed at the federal level.
• In addition, certain jurisdictions now require that relevant government entities or managers/administrators of government investments make investments based solely on pecuniary factors without consideration of non-pecuniary environmental, social and governance factors.
• As of December 31, 2025, we had secured debt arrangements in place, with an aggregate borrowing capacity of approximately $7.8 billion.
• As of December 31, 2025, $3.8 billion, or 43.3%, of our assets (by carrying value) were comprised of such loans.
• We currently intend to continue to satisfy these tests and maintain our qualification as a REIT following the Asset Sale and after adopting any new asset strategy we decide to pursue.
• However, the composition of our assets and sources of income will change significantly following the Asset Sale and as a result of any such new asset strategy, and no assurance can be provided that we will satisfy the requirements for qualification as a REIT under all circumstances.
• Refer to "Note 20 - Subsequent Events" to the accompanying consolidated financial statements for further detail.
• In addition, in general, no more than 5% of the value of our assets (other than government securities and securities that are qualifying real estate assets) can consist of the securities of any one issuer, not more than 25% of the value of our assets can consist of debt instruments issued by publicly offered REITs that are not secured by real property, and, for taxable years beginning on or after January 1, 2026, no more than 25% (20% for prior taxable years) of the value of our total assets can be represented by securities of one or more taxable REIT subsidiaries ("TRSs").
• Following the Asset Sale, we will continue to hold certain of our assets through one or more TRSs.
• We believe that our interests in TRSs will satisfy the 25% TRS test, but no assurance can be provided that we will satisfy this test under all circumstances.
• In addition, the TRS test and other REIT requirements could impact our ability to pursue certain investments or asset strategies.
• For example, our ability to dispose of assets may be limited if the disposition of such assets would cause us to fail to satisfy the 25% TRS test, and our ability to invest in certain assets will be limited to the extent that such assets do not qualify for purposes of the REIT income and asset tests.
• The failure of a loan, including a mezzanine loan or modified loan, to qualify as a real estate asset, or the failure of certain arrangements relating to our hotels to satisfy the REIT requirements, could adversely affect our ability to qualify as a REIT.
• Furthermore, for a period immediately following the Asset Sale, a substantial portion of our gross income will be rent pursuant to leases of hotels between us and our TRS.
• For rent paid pursuant to such leases to qualify for purposes of the REIT gross income tests, the lease must be respected as a true lease for U.S. federal income tax purposes and must not be treated as a service contract, joint venture or some other type of arrangement.
• Similarly, the hotel must be operated by a third party manager meeting certain requirements.
• We believe each of our leases will be respected as a true lease for U.S. federal income tax purposes, and we believe our arrangements with our managers meet the applicable requirements for REIT qualification.
• There can be no assurances, however, that the IRS will agree with this characterization.
• If the leases were not respected as true leases for U.S. federal income tax purposes, or our hotels are otherwise not treated as satisfying the REIT requirements, our ability to satisfy the REIT gross income and other requirements could be adversely affected.
• Overall, for taxable years beginning on or after January 1, 2026, no more than 25% (20% for prior taxable years) of the value of a REIT ' s assets may consist of stock or securities of one or more TRSs.
• While we will be monitoring the aggregate value of the securities of our TRSs and intend to conduct our affairs so that such securities will represent less than 25% of the value of our total assets, there can be no assurance that we will be able to comply with the TRS limitation in all market conditions.
• RISKS RELATED TO THE ASSET SALE While the Asset Sale is pending, we are subject to uncertainty and contractual restrictions that could disrupt our business.
• On January 27, 2026, we entered into the Purchase Agreement.
• Whether or not the Asset Sale is consummated, the Asset Sale may disrupt our current plans and operations, which could have an adverse effect on our business, financial condition and results of operations.
• We may incur unexpected costs, charges, or expenses resulting from the Asset Sale.
• Furthermore, we cannot predict how our existing or future relationships will view or react to the Asset Sale during the pendency or upon consummation of the Asset Sale.
• If we are unable to continue our relationships or affiliations, our revenues, financial condition, and results of operations may be adversely affected.
• Our management could experience uncertainty or face significant burdens from their commitment of substantial amounts of time and attention toward the completion of the Asset Sale.
• In addition, whether or not the Asset Sale is consummated, while it is pending, we will continue to incur costs, fees, expenses, and charges related to the Asset Sale, including legal, accounting, financial advisor, filing, printing, and mailing fees, which may materially and adversely affect our financial condition and results of operations.
• In addition, the Purchase Agreement generally requires the Company to conduct its business in the ordinary course of business and in a manner consistent with past practice and also restricts us from taking certain actions with respect to our business and financial affairs without the consent of Athene.
• Such restrictions will be in place until the Asset Sale is either consummated or terminated.
• Such restrictions could adversely affect our business and results of operations prior to completion of the Asset Sale.
• The Purchase Agreement contains a termination fee and may discourage competing offers.
• The Purchase Agreement contains termination rights for both us and Athene under certain circumstances, including the right of the Company to terminate the Purchase Agreement to accept a Superior Proposal (as defined in the Purchase Agreement), subject to and in accordance with the terms and conditions of the Purchase Agreement, and provides that, in connection with the termination of the Purchase Agreement by us to enter into an alternative acquisition agreement providing for a Superior Proposal, we will pay Athene a Termination Fee (as defined in the Purchase Agreement).
• These provisions could discourage a third party that may have an interest in acquiring all or a significant part of our business from considering or proposing that acquisition, even if such third party were prepared to pay consideration with a higher value than the value of the consideration that will be paid by Athene pursuant to the Purchase Agreement.
• The Purchase Agreement contains provisions that, after expiration of the go-shop period, could discourage a potential competing acquiror or could result in any competing proposal being at a lower price than it might otherwise be.
• The Purchase Agreement contains "no shop" provisions that, subject to limited exceptions and the expiration of the 25-day "go-shop" period (which "go-shop" period will expire at 11:59 p.m.
• (Eastern time) on February 21, 2026), will restrict our ability to solicit, encourage, facilitate or discuss competing third-party acquisition proposals.

and 28 more.

Gone since FY2024

• So-called “anti-ESG” sentiment has also gained momentum across the U.S., with several states having enacted or proposed “anti-ESG” policies, legislation, or issued related legal opinions.
• For example, boycott bills in certain states target financial institutions that are perceived as “boycotting” or “discriminating against” companies in certain industries (e.g., energy and mining) and prohibit state entities from doing business with such institutions and/or investing the state’s assets through such institutions.
• In addition, certain states now require that relevant state entities or managers/administrators of state investments make investments based solely on pecuniary factors without consideration of environmental, social and governance factors.
• As of December 31, 2024, we had secured debt arrangements in place, with an aggregate borrowing capacity of approximately $6.9 billion.
• As of December 31, 2024, $3.7 billion, or 51.8%, of our assets (by carrying value) were comprised of such loans.
• In addition, in general, no more than 5% of the value of our assets (other than government securities and securities that are qualifying real estate assets) can consist of the securities of any one issuer, no more than 20% of the value of our total securities can be represented by securities of one or more taxable REIT subsidiaries ("TRSs") and not more than 25% of the value of our assets can consist of debt instruments issued by publicly offered REITs that are not secured by real property.
• The failure of a loan, including a mezzanine loan or modified loan, to qualify as a real estate asset could adversely affect our ability to qualify as a REIT.
• Overall, no more than 20% of the value of a REIT ' s assets may consist of stock or securities of one or more TRSs.
• While we will be monitoring the aggregate value of the securities of our TRSs and intend to conduct our affairs so that such securities will represent less than 20% of the value of our total assets, there can be no assurance that we will be able to comply with the TRS limitation in all market conditions.