Stirling Hotels' Losses Mount Amid REIT Qualification Push

TL;DR

**Stirling's mounting losses are a red flag, but their $1B capital raise and REIT ambitions could be a long-term play for the patient investor.**

AI Summary

Stirling Hotels & Resorts, Inc. reported a significant increase in net loss for the three and six months ended June 30, 2025, primarily driven by its equity in losses from Stirling REIT OP, LP. For the three months ended June 30, 2025, the net loss attributable to common stockholders was -$5,107, a substantial increase from -$592 in the same period of 2024. The six-month net loss also widened to -$10,139 in 2025 from -$760 in 2024. Total assets grew to $165,153 as of June 30, 2025, up from $123,886 at December 31, 2024, largely due to an increased investment in Stirling REIT OP, LP, which rose from $123,367 to $164,416. The company is undertaking a continuous private offering to accredited investors, aiming to sell up to $1,000,000,000 in common stock, with $52,500 in proceeds from common stock issuance in the first six months of 2025. Accumulated deficit expanded to -$20,899 by June 30, 2025, from -$6,564 at December 31, 2024, reflecting the increased losses. The company intends to qualify as a REIT for U.S. federal income tax purposes beginning with the taxable year ending December 31, 2025.

Why It Matters

Stirling Hotels & Resorts' widening net losses, driven by its investment in Stirling REIT OP, LP, signal potential challenges for investors, despite the company's growth in total assets. The aggressive private offering of up to $1 billion in common stock suggests a strong capital raise strategy, but the increasing accumulated deficit could concern potential investors. For employees and customers, the focus on acquiring and managing a diverse portfolio of hotels under recognized brands could imply stability and growth in the long term, assuming the REIT qualification is successful. In the competitive hospitality market, the company's external management by an affiliate of Ashford Inc. and its strategy to invest in stabilized income-producing hotels positions it against established players, but its current financial performance indicates it's still in an early, high-investment phase.

Risk Assessment

Risk Level: high — The company reported a net loss of -$10,139 for the six months ended June 30, 2025, a significant increase from -$760 in the prior year, and an accumulated deficit of -$20,899. This substantial increase in losses and deficit, coupled with zero revenue, indicates a high-risk profile for investors.

Analyst Insight

Investors should exercise extreme caution and conduct thorough due diligence before considering an investment in Stirling Hotels & Resorts. Given the significant and increasing net losses and accumulated deficit, this is a highly speculative investment, suitable only for those with a high-risk tolerance and a long-term horizon, betting on the successful REIT qualification and future profitability.

Financial Highlights

debt To Equity

N/A

revenue

$—

operating Margin

N/A

total Assets

$165,153

total Debt

$737

net Income

$ (10,139)

eps

$ (1.52)

gross Margin

N/A

cash Position

$—

revenue Growth

N/A

Key Numbers

• -$10,139 — Net Loss (Six Months) (Increased significantly from -$760 in 2024, indicating worsening financial performance.)
• $165,153 — Total Assets (Increased from $123,886 at December 31, 2024, primarily due to investment in Stirling REIT OP, LP.)
• $1,000,000,000 — Maximum Offering Amount (Target for continuous private offering to accredited investors, showing significant capital raising ambition.)
• -$20,899 — Accumulated Deficit (Expanded from -$6,564 at December 31, 2024, reflecting ongoing losses.)
• $52,500 — Proceeds from Common Stock Issuance (For the six months ended June 30, 2025, indicating capital inflow from investors.)
• 7,016 — Class I Shares Outstanding (Increased from 4,930 shares at December 31, 2024, reflecting new issuances.)

Key Players & Entities

• Stirling Hotels & Resorts, Inc. (company) — registrant
• Stirling REIT OP, LP (company) — primary business vehicle
• Ashford Inc. (company) — company's sponsor
• Ashford Hospitality Trust, Inc. (company) — consolidates Stirling OP
• $1,000,000,000 (dollar_amount) — maximum offering amount in private offering
• $165,153 (dollar_amount) — total assets as of June 30, 2025
• $123,886 (dollar_amount) — total assets as of December 31, 2024
• -$10,139 (dollar_amount) — net loss for six months ended June 30, 2025
• -$760 (dollar_amount) — net loss for six months ended June 30, 2024
• -$20,899 (dollar_amount) — accumulated deficit as of June 30, 2025

FAQ

Risk Factors

• Significant Increase in Net Loss [high — financial]: The company reported a substantial increase in net loss for the three and six months ended June 30, 2025. The net loss attributable to common stockholders was -$5,107 for the three months and -$10,139 for the six months, a significant widening from -$592 and -$760 in the prior year periods, respectively. This deterioration is primarily driven by equity in losses from Stirling REIT OP, LP.
• Expanding Accumulated Deficit [high — financial]: The accumulated deficit has grown significantly to -$20,899 as of June 30, 2025, from -$6,564 at December 31, 2024. This expansion reflects the ongoing operational losses and the company's inability to generate profits to offset its expenses.
• Dependence on Stirling REIT OP, LP [high — financial]: The company's financial performance is heavily reliant on its investment in Stirling REIT OP, LP, which accounts for the vast majority of its total assets ($164,416 out of $165,153). The equity in losses from this entity is the primary driver of the company's net loss.
• Continuous Private Offering and Capital Raising [medium — financial]: Stirling Hotels & Resorts, Inc. is undertaking a continuous private offering to raise up to $1,000,000,000 in common stock. While $52,500 in proceeds were raised in the first six months of 2025, the significant capital raising target indicates a substantial need for funding to support operations or future investments.
• REIT Qualification Uncertainty [medium — regulatory]: The company intends to qualify as a REIT for U.S. federal income tax purposes beginning with the taxable year ending December 31, 2025. Failure to meet the strict requirements for REIT qualification could result in significant tax liabilities and impact the company's business strategy and financial structure.
• Limited Operating History and Revenue [medium — operational]: The company was formed on September 1, 2023, and has no reported revenue or operating expenses for the periods presented. Its entire financial activity is centered around its investment in Stirling OP and capital raising efforts, indicating a lack of established operational revenue streams.

Industry Context

The hotel and resort industry is capital-intensive and sensitive to economic cycles. Companies like Stirling Hotels & Resorts, Inc. often operate through complex structures, such as REITs and limited partnerships, to manage real estate assets and optimize tax implications. The industry is characterized by brand recognition, operational efficiency, and strategic property acquisition and management.

Regulatory Implications

The company's intention to qualify as a REIT subjects it to stringent IRS regulations regarding income sources, asset ownership, and distribution requirements. Failure to comply can lead to loss of REIT status and significant tax penalties. Additionally, ongoing private offerings must adhere to securities regulations for accredited investors.

What Investors Should Do

1. Monitor REIT Qualification Progress
2. Analyze Performance of Stirling REIT OP, LP
3. Evaluate Capital Raising Strategy
4. Assess Operational Viability Beyond Investment

Key Dates

• 2025-06-30: Six Months Ended June 30, 2025 — Reported a net loss of -$10,139 and total assets of $165,153, with significant investment in Stirling REIT OP, LP.
• 2025-12-31: Intended REIT Qualification Start Date — Marks the target date for the company to qualify as a Real Estate Investment Trust for U.S. federal income tax purposes.
• 2024-12-31: December 31, 2024 — Reported total assets of $123,886 and an accumulated deficit of -$6,564 prior to the significant increase in losses in 2025.

Glossary

Stirling REIT OP, LP

A limited partnership through which Stirling Hotels & Resorts, Inc. conducts substantially all of its business, and in which the company has a significant investment. (The equity in losses from this entity is the primary driver of Stirling Inc.'s net loss.)

REIT

Real Estate Investment Trust, a company that owns, operates, or finances income-producing real estate. REITs are required to distribute at least 90% of their taxable income to shareholders annually. (Stirling Inc. intends to qualify as a REIT, which will impact its tax obligations and business operations.)

Accumulated Deficit

The cumulative net losses of a company that have not been offset by net income. (Indicates the company's ongoing unprofitability, which has significantly worsened in the current reporting period.)

Continuous Private Offering

An ongoing offering of securities to a select group of investors, typically accredited investors, without a public registration statement. (The company is using this method to raise substantial capital, aiming for up to $1,000,000,000.)

Taxable REIT Subsidiary (TRS)

A subsidiary of a REIT that can generate income that does not qualify as 'rents from real property' but is subject to corporate income tax. (Stirling Inc. intends to use a TRS to hold hotel properties and lease them to Stirling OP to meet REIT income requirements.)

Year-Over-Year Comparison

Compared to the prior year periods, Stirling Hotels & Resorts, Inc. has experienced a dramatic increase in net losses, with the six-month net loss widening from -$760 in 2024 to -$10,139 in 2025. This is primarily due to increased equity in losses from Stirling REIT OP, LP. Total assets have grown significantly from $123,886 to $165,153, driven by a larger investment in Stirling REIT OP, LP. The accumulated deficit has also expanded substantially from -$6,564 to -$20,899, reflecting the worsening financial performance and lack of profitability.

Filing Documents

• shr-20250630.htm (10-Q) — 1858KB
• shr2025q210-qxex311.htm (EX-31.1) — 9KB
• shr2025q210-qxex312.htm (EX-31.2) — 9KB
• shr2025q210-qxex321.htm (EX-32.1) — 5KB
• shr2025q210-qxex322.htm (EX-32.2) — 5KB
• 0002003881-25-000064.txt ( ) — 5158KB
• shr-20250630.xsd (EX-101.SCH) — 29KB
• shr-20250630_cal.xml (EX-101.CAL) — 30KB
• shr-20250630_def.xml (EX-101.DEF) — 125KB
• shr-20250630_lab.xml (EX-101.LAB) — 348KB
• shr-20250630_pre.xml (EX-101.PRE) — 239KB
• shr-20250630_htm.xml (XML) — 525KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS (unaudited)

ITEM 1. FINANCIAL STATEMENTS (unaudited) Consolidated Balance Sheets as of June 30 , 2025 and December 31, 2024 2 Consolidated Statements of Operations for the Three and Six Months Ended June 30 , 2025 and 2024 3 Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30 , 2025 and 2024 4 Consolidated Statements of Equity for the Three and Six Months Ended June 30 , 2025 and 2024 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2025 and 2024 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 15

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 27

CONTROLS AND PROCEDURES

ITEM 4. CONTROLS AND PROCEDURES 27

OTHER INFORMATION

PART II. OTHER INFORMATION

LEGAL PROCEEDINGS

ITEM 1. LEGAL PROCEEDINGS 28

RISK FACTORS

ITEM 1A. RISK FACTORS 28

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 28

DEFAULTS UPON SENIOR SECURITIES

ITEM 3. DEFAULTS UPON SENIOR SECURITIES 28

MINE SAFETY DISCLOSURES

ITEM 4. MINE SAFETY DISCLOSURES 29

OTHER INFORMATION

ITEM 5. OTHER INFORMATION 29

EXHIBITS

ITEM 6. EXHIBITS 43

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS (unaudited)

ITEM 1. FINANCIAL STATEMENTS (unaudited) STIRLING HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) June 30, 2025 December 31, 2024 ASSETS Cash and cash equivalents $ — $ — Distributions receivable 737 519 Investment in Stirling REIT OP, LP 164,416 123,367 Total assets $ 165,153 $ 123,886 LIABILITIES AND EQUITY Dividends payable $ 737 $ 519 Total liabilities 737 519 Commitments and contingencies (note 7 ) Common stock - Class E shares, $ 0.01 par value per share, 100,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2025 and December 31, 2024 — — Equity: Preferred stock, $ 0.01 par value per share, 100,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2025 and December 31, 2024 — — Common stock - Class D shares, $ 0.01 par value per share, 300,000,000 shares authorized, 20 shares issued and outstanding at June 30, 2025 and December 31, 2024 — — Common stock - Class I shares, $ 0.01 par value per share, 300,000,000 shares authorized, 7,016 and 4,930 share issued and outstanding at June 30, 2025 and December 31, 2024, respectively 70 49 Common stock - Class S shares, $ 0.01 par value per share, 300,000,000 shares authorized, 20 shares issued and outstanding at June 30, 2025 and December 31, 2024 — — Common stock - Class T shares, $ 0.01 par value per share, 300,000,000 shares authorized, 20 shares issued and outstanding at June 30, 2025 and December 31, 2024 — — Additional paid-in-capital 185,245 129,882 Accumulated deficit ( 20,899 ) ( 6,564 ) Total equity 164,416 123,367 Total liabilities and equity $ 165,153 $ 123,886 See accompanying notes to consolidated financial statements. 2 STIRLING HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 REVENUE Total revenue $ — — $ — $ — EXPENSES Total operating expenses — — — — Operating income

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Organization Stirling Hotels & Resorts, Inc. ("Stirling Inc." or the "Company") was formed on September 1, 2023, as a Maryland corporation and intends to qualify as a real estate investment trust ("REIT") for U.S. federal income tax purposes beginning with the taxable year ending December 31, 2025, and will make an election in 2026 upon filing its 2025 tax return. Substantially all of the Company's business is conducted through Stirling REIT OP, LP ("Stirling OP"), a Delaware limited partnership formed on September 26, 2023. The Company is the sole member of the sole general partner of Stirling OP and owns a non-economic general partner interest in Stirling OP. A wholly owned subsidiary of the Company is a limited partner of Stirling OP. Stirling REIT Special Limited Partner LLC (the "Special Limited Partner"), a Delaware limited partnership, owns a special limited partner interest in Stirling OP. In addition, in order for the income from any hotel property investments to constitute "rents from real properties" for purposes of the gross income test required for REIT qualification, the Company will lease each hotel property to a subsidiary of Stirling OP, which we intend to be treated as a taxable REIT subsidiary ("TRS"). The Company was organized to invest primarily in a diverse portfolio of stabilized income-producing hotels and resorts across all chain scales primarily located in the United States and operated under widely recognized brands. The Company and Stirling OP is externally managed by Stirling REIT Advisors LLC (the "Advisor"), an affiliate of Ashford Inc. ("Ashford"), the Company's sponsor. On December 6, 2023, Stirling OP acquired four hotel properties and assumed a mortgage loan secured by the four hotel properties (the "Initial Portfolio") from Ashford Hospitality Limited Partnership ("Ashford Hospitality OP") and Ashford TRS Corporation ("Ashford Hospitality TRS," and together with Ashfo

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) commissions, dealer manager fees, distribution fees, management fees payable to the Advisor or the performance participation allocation to the Special Limited Partner. See note 4 for additional information on fees payable to the Advisor and its affiliates. On December 4, 2023, the Company filed with the Maryland State Department of Assessments and Taxation the ("SDAT") Articles of Amendment and Restatement to provide that the Company has the authority to issue a total of 1,400,000,000 shares of capital stock, of which 1,300,000,000 shares are classified as common stock, of which 300,000,000 of which are classified as Class D common stock, 100,000,000 of which are classified as Class E common stock, 300,000,000 of which are classified as Class I common stock, 300,000,000 of which are classified as Class S common stock, 300,000,000 of which are classified as Class T common stock and 100,000,000 shares are classified as preferred stock with a par value $ 0.01 per share. In addition, the sole share of common stock outstanding was reclassified as a Class I share of common stock. The Charter was effective upon filing. The following tables present sales of all classes of the Company's common stock: Three Months Ended June 30, 2025 Class D Class I Class S Class T Total Shares Proceeds Shares Proceeds Shares Proceeds Shares Proceeds Shares Proceeds Issuance of common stock (1) — $ — — $ — — $ — — $ — — $ — Three Months Ended June 30, 2024 Class D Class I Class S Class T Total Shares Proceeds Shares Proceeds Shares Proceeds Shares Proceeds Shares Proceeds Issuance of common stock (1) 19 $ 500 973 $ 25,000 19 $ 500 19 $ 500 1,030 $ 26,500 Six Months Ended June 30, 2025 Class D Class I Class S Class T Total Shares Proceeds Shares Proceeds Shares Proceeds Shares Proceeds Shares Proceeds Issuance of common stock (1) — $ — 1,980 $ 52,500 — $ — — $ — 1,980 $ 52,500 Six Months Ended June 3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) measured as of the first business day immediately following the prospective repurchase date. Additionally, stockholders who have received shares of our common stock in exchange for their common units in Stirling OP may include the period of time such stockholder held such common units in Stirling OP for purposes of calculating the holding period for such shares of our common stock. The Early Repurchase Deduction may only be waived in the case of repurchase requests arising from the death or qualified disability of the holder and in other limited circumstances. We will begin share repurchases under the plan on the first month of the quarter following our first closing in the private offering. The Early Repurchase Deduction will not apply to shares acquired through our distribution reinvestment plan. The aggregate NAV of total repurchases (based on the price at which the shares are repurchased) of all classes (excluding any Early Repurchase Deduction applicable to the repurchased shares) is limited to no more than 2 % of our aggregate NAV per month (measured using the aggregate NAV attributable to stockholders as of the end of the immediately preceding month) and no more than 5 % of our aggregate NAV per calendar quarter (measured using the aggregate NAV attributable to stockholders as of the end of the immediately preceding quarter). In the event that we determine to repurchase some but not all of the shares submitted for repurchase during any month, shares submitted for repurchase during such month will be repurchased on a pro rata basis after we have repurchased all shares for which repurchase has been requested due to death or disability. All unsatisfied repurchase requests must be resubmitted after the start of the next month or quarter, or upon the recommencement of the share repurchase plan, as applicable. Shares held by our Advisor or the Special Limited Partner acquired as payment of our A

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) 3. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation — The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying consolidated financial statement includes the accounts of the Company and certain subsidiaries. All intercompany balances and transactions are eliminated in consolidation. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2024 Annual Report to Stockholders on Form 10-K filed with the SEC on March 27, 2025. Use of Estimates —The preparation of these consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents —Cash and cash equivalents represent cash he

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