Mortgage payable, net consisted of the following:

SOFR as of June 30, 2026 and December 31, 2025 was 3.63% and 3.79%, respectively.

Credit Facility

On October 23, 2023, the Company entered into a nonrecourse loan agreement with a financial institution providing for a credit facility (the “Credit Facility”) with a revolving feature of up to $106.0 million. At closing, the Company received an initial advance of $101.8 million under the Credit Facility and designated all 10 of its majority-owned and consolidated limited-service hotels as collateral. The Company used the initial advance from the Credit Facility to repay in full a maturing revolving loan with the same financial institution, which was also secured by the same 10 hotel properties. The Credit Facility bears interest at SOFR plus 3.45%, subject to a 6.45% floor, with an initial scheduled maturity of September 15, 2026, subject to two, one-year extension options at the sole discretion of the lender, and provides for monthly interest-only payments during its initial term with monthly principal and interest payments pursuant to a 25-year amortization schedule thereafter during any lender approved extended term with the unpaid principal balance due at maturity. The Credit Facility previously provided for borrowings up to 65% of the total loan-to-value ratio of the properties designated as collateral and required the maintenance of certain financial covenants measured at the end of each calendar quarter, including prescribed minimum debt service coverage ratios (“DSCR”) and debt yield ratios (“DYR”) which if not met may also be achieved through principal paydowns on the outstanding balance as discussed below. In connection with entering into the Credit Facility, the Company deposited $4.0 million into a cash collateral reserve account and during the second quarter of 2025, the lender and the Company agreed to use the $4.0 million of funds held in the cash collateral reserve account to make a principal paydown on the Credit Facility reducing its outstanding principal balance to $97.8 million.

As of June 30, 2026, all 10 of the Company’s majority-owned and consolidated limited-service hotel properties remained pledged as collateral and no additional borrowings were available under the Credit Facility.

Pursuant to the terms of the Credit Facility aggregate escrows in the amount of $1.3 million and $1.2 million were held in restricted cash accounts as of June 30, 2026 and December 31, 2025, respectively. Such escrows have been or may be released in accordance with the terms of the Credit Facility for payments of real estate taxes, debt service, insurance and capital improvements.

On July 17, 2026, the Company and the lender entered into a loan modification agreement (the “Loan Modification Agreement”) to the Credit Facility. The Loan Modification Agreement removed the revolving feature under the Credit Facility and also revised the required minimum DSCR and DYR levels as measured for the calendar quarterly periods from June 30, 2026 and thereafter. In connection with the Loan Modification Agreement, the Company deposited $5.0 million into a cash collateral account held by the lender as additional security for the Credit Facility. Additionally, the Loan Modification Agreement requires the Company to either complete the sale of certain hotel properties pledged as collateral prior to August 31, 2026, or deposit an additional $7.5 million into the cash collateral account or provide a letter of credit to the lender in a like amount.

As of June 30, 2026, the Company did not meet the prescribed minimum DYR under the Credit Facility but the lender has provided it with a waiver. 

The Company currently expects the lender to approve the first of the two one-year extension options available under the Credit Facility which would extend its maturity date from September 15, 2026 to September 15, 2027. If the lender does not approve the first one-year extension option, the Company would seek to refinance the Credit Facility on or before its initial maturity date. However, there can be no assurance that the lender will approve the first one-year extension option or the Company will be able to successfully refinance the Credit Facility on or before its initial maturity date.