RLJ Lodging Trust Cum. Pref. Shrs Series A (RLJ.A) Financials

RLJ Lodging Trust’s second-quarter 2026 results show a meaningful rebound from the first quarter, with stronger revenue, profitability and operating cash flow. However, the balance sheet also reflects a substantial increase in debt and continued pressure from preferred-stock dividends, which limits the benefit to common shareholders and is particularly relevant for holders of the Series A preferred shares.

• Revenue growth improved. Q2 2026 revenue rose to $383.0 million from $363.1 million in Q2 2025, an increase of approximately 5.5%. This was also the company’s strongest second-quarter revenue in the available 2023–2026 data.
• Operating profitability strengthened. Gross profit increased to $356.2 million from $336.6 million year over year, while operating income grew approximately 5.4% to $55.4 million. The operating margin improved modestly despite higher selling, general and administrative expenses.
• Net income recovered sharply. Consolidated net income increased to $31.3 million from $28.6 million in Q2 2025, while Q1 2026 had produced a $349,000 loss. Net income attributable to common shareholders improved to $24.8 million from $22.2 million year over year, and diluted EPS rose to $0.16 from $0.15.
• Operating cash flow remained strong. Cash flow from operations reached $114.6 million in Q2 2026, up from $101.3 million a year earlier and more than four times Q1 2026’s $26.2 million. The quarterly result was also above the $113.5 million generated in Q2 2024.
• Capital spending declined. Property and equipment purchases fell to $20.7 million from $35.2 million in Q2 2025. Lower capital expenditures allowed more operating cash flow to remain available for debt service, dividends and liquidity.
• Liquidity increased substantially. Cash and equivalents rose to $937.6 million at June 30, 2026, from $353.1 million at March 31. The increase largely explains the $585.9 million quarterly rise in cash and provides a larger near-term liquidity cushion.
• Hotel cash generation is highly non-cash-adjustment dependent. Depreciation and amortization totaled approximately $50.2 million in Q2 2026, compared with $31.3 million of net income. This is normal for an asset-heavy lodging REIT, but investors should supplement earnings with operating cash flow and property-level operating metrics.
• Preferred dividends continue to absorb a sizable portion of earnings. RLJ declared $6.3 million of preferred dividends in Q2 2026, a recurring quarterly charge visible throughout the available history. This reduces earnings available to common shareholders and supports the income-oriented profile of the Series A preferred shares.
• Leverage increased materially. Long-term debt rose to $2.70 billion from $2.19 billion at the end of Q1 2026 and $2.22 billion a year earlier. Total liabilities reached $3.07 billion, up from $2.58 billion in Q2 2025. Higher debt increases interest-rate and refinancing risk, even though quarterly interest expense remained broadly stable.
• Retained earnings remain deeply negative. Retained earnings were negative $1.21 billion at June 30, 2026. Although total equity increased sequentially, the company’s cumulative earnings deficit highlights the long-term impact of prior losses and distributions.

Overall, the latest quarter was operationally positive: revenue, margins, earnings and operating cash flow all improved, and reduced capital spending helped strengthen liquidity. The main concerns are the sharp increase in debt, the recurring preferred-dividend burden and the company’s negative retained earnings. Investors should also review the underlying financing disclosures because the cash-flow statement reports $479.3 million of net financing cash inflow, while the specifically itemized financing outflows do not fully explain that amount.