Lodging Fund REIT III, Inc.

As of December 31, 2025, we consolidated fourteen hotel properties, consisting of thirteen hotel properties owned by us and an equity and profits interest in the parent of the entity which holds as leasehold interest in one hotel property. The following table provides summary information regarding the hotel properties owned by us as of December 31, 2025:

Number

Date · of Guest · Purchase · Transaction · Total

Hotel · Property Type · Location · Purchased · Rooms · Price · Costs · Purchase Price · Interest

Holiday Inn Express(the “Cedar Rapids Property) · Limited-Service · Cedar Rapids, IA · November 30, 2018 · 83 · 7,700,000 · 158,333 · 7,858,333 · 100

Hampton Inn(the “Eagan Property”) · Limited-Service · Eagan, MN · June 19, 2019 · 122 · 13,950,000 · 278,333 · 14,228,333 · 100

Home2 Suites(the “Lubbock Home2 Property”) · Extended-Stay · Lubbock, TX · December 30, 2019 · 100 · 14,150,000 · 284,776 · 14,434,776 · 100

Fairfield Inn & Suites (the "Lubbock Property") · Limited-Service · Lubbock, TX · January 8, 2020 · 101 · 15,150,000 · 496,431 · 15,646,431 · 100

Homewood Suites(the "Southaven Property") · Extended-Stay · Southaven, MS · February 21, 2020 · 99 · 20,500,000 · 445,090 · 20,945,090 · 100

Courtyard by Marriott (the "Aurora Property") · Select-Service · Aurora, CO · February 4, 2021 · 141 · 23,610,000 · 458,129 · 24,068,129 · 100

Holiday Inn (the "El Paso HI Property") · Select-Service · El Paso, TX · May 12, 2021 · 175 · 10,300,000 · 361,019 · 10,661,019 · 100

Hilton Garden Inn (the "Houston Property") · Select-Service · Houston, TX · August 3, 2021 · 182 · 19,910,000 · 918,353 · 20,828,353 · 100

Sheraton Hotel (the "Northbrook Property") · Full-Service · Northbrook, IL · December 3, 2021 · 160 · 11,400,000 · 340,005 · 11,740,005 · 100

Courtyard by Marriott (the "El Paso Airport Property") · Select-Service · El Paso, TX · February 8, 2022 · 90 · 15,120,000 · 333,234 · 15,453,234 · 100

Fairfield Inn & Suites (the "Lakewood Property") · Limited-Service · Lakewood, CO · March 29, 2022 · 142 · 18,800,000 · 862,117 · 19,662,117 · 100

Residence Inn(the "Fort Collins Property") · Extended-Stay · Fort Collins, CO · August 3, 2022 · 113 · 15,800,000 · 546,009 · 16,346,009 · 100

Holiday Inn Express(the "Wichita Property") · Limited-Service · Wichita, KS · December 22, 2022 · 84 · 7,400,000 · 234,310 · 7,634,310 · 100

1,592 · 193,790,000 · 5,716,139 · 199,506,139

On August 10, 2022, we acquired a 24.9% equity and profits interest in High Desert Garden Holdings, LLC, which is the parent of the entity which holds a leasehold interest in the Hilton Garden Inn, located in El Paso, Texas (the “El Paso University Property”) in exchange for a capital contribution of $3.2 million. The El Paso University Property is a select-service hotel with 153 guest rooms. See Note 3 “Investment In Hotel Properties” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for additional information regarding this transaction.

For a description of the debt associated with each of these hotel properties, see Part II. Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt.”

Management Agreements

Hotel Equities Agreement

As of December 31, 2025, eight of our hotel properties were subject to management agreements with Hotel Equities with an initial term expiring on December 31 of the fifth full calendar year following the effective date of the agreement. The agreement will automatically renew for successive five-year periods unless terminated earlier in accordance with its terms. These properties were previously managed by NHS. On February 10, 2025, we terminated the management agreements with NHS and entered into new agreements with Hotel Equities Group, LLC (“Hotel Equities”). See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Subsequent Events”.

Vista Host Agreement

As of December 31, 2025, our Southaven Property was subject to a management agreement with Vista Host Inc. (“Vista”) with an initial term expiring on February 21, 2025 and automatically renewed for additional successive terms of five years each unless terminated earlier in accordance with its terms.

Aimbridge Agreement

As of December 31, 2025, each of our Houston Property, El Paso Property, El Paso Airport Property and El Paso University Property was subject to a management agreement with Interstate Management Company, LLC (“Aimbridge”). The Aimbridge agreement for the Houston Property had an initial term expiring on August 3, 2024 and automatically renewed for additional successive terms of one year each unless terminated earlier in accordance with its terms. The Aimbridge agreement for the El Paso Airport Property and the El Paso University Property has an initial term expiring on February 8, 2027 and August 10, 2027, respectively, both of which will automatically renew for one (1) year periods unless terminated earlier in accordance with its terms. The Aimbridge agreement for the El Paso Property has an initial term expiring February 28, 2028, which will automatically renew for one (1) year periods unless terminated earlier in accordance with its terms. The

KAJ Agreement

As of December 31, 2025, the Wichita Property was subject to a management agreement with KAJ Hospitality Inc. (“KAJ”), each with an initial term expiring December 22, 2027, of which automatically renews for successive one-year periods, unless terminated in accordance with its terms.

Franchise Agreements

• Our Advisor, its executive officers and other key personnel, the Sponsor’s employees and certain of our officers and directors will not devote their time and energies exclusively to us.
• There is no assurance that we will satisfy our business objectives, which could limit our ability to make distributions and decrease the value of your investment.
• We own only hotel properties, which will limit the diversification of our investments.
• Our investment policies are subject to revision from time to time at our board of directors’ discretion, which could diminish stockholder returns below expectations.
• If we are unable to successfully manage our growth, our operating results and financial condition could be adversely affected.
• Our future growth and success depends on obtaining financing, and if we cannot secure financing on acceptable terms or at all, our growth may be limited.
• We may be unable to raise substantial funds in our securities offerings or to invest the proceeds of our securities offerings in a timely manner or on acceptable terms.
• We must rely on management companies that are eligible independent contractors to operate the hotel properties in order to qualify as a REIT and, as a result, we have less control than if we were operating the hotel properties directly.
• Our management agreements could adversely affect the sale or financing of the hotel properties and, as a result, our operating results and ability to make distributions to our stockholders could suffer.
• Our franchisors could cause us to expend additional funds on upgraded operating standards, which may reduce cash available for distribution to stockholders.
• Our franchisors may cancel or fail to renew our existing franchise licenses, which could adversely affect our operating results and our ability to make distributions to stockholders.
• Fluctuations in our financial performance, capital expenditure requirements and excess cash flow could adversely affect our ability to make and maintain distributions to our stockholders.
• We have not paid, and may not in the future pay, distributions solely from our cash flow from operations. To the extent we pay distributions from sources other than our cash flow from operations, the overall return to our stockholders may be reduced and subsequent investors will experience dilution.
• We have made, and may from time to time continue to make, distributions to our stockholders in the form of our common stock, which could result in stockholders incurring tax liability without receiving sufficient cash to pay such tax.
• We may be subject to various conflicts of interest due to the relationships among the Advisor, the Operating Partnership, NHS, One Rep Construction, LLC (“One Rep”), Legendary A-1 Bonds, LLC (“A-1 Bonds”) and their respective affiliates.
• Our current hotel properties include, and our future hotel properties will likely include certain amenities for hotel guests that could increase the potential liabilities at the hotel properties.
• Although we have authorized management to pursue an exit strategy and position the Company for a sale or merger, we can give no assurances regarding the consummation of any particular transaction or that we will be successful in executing such strategy or in creating additional stockholder value.
• Risks Related to the Lodging Industry
• The lodging industry has experienced significant declines and failure of the lodging industry to exhibit improvement may adversely affect our ability to execute our business strategy.
• Competition for acquisitions may reduce the number of properties we can acquire.
• Competition for guests may lower our hotels’ revenues and profitability.
• The seasonality of the hotel industry may cause fluctuations in our quarterly revenues which may require us to borrow money to fund distributions to stockholders.
• The cyclical nature of the lodging industry may cause the return on our investments to be substantially less than we expect.
• The ongoing need for capital expenditures at our hotel properties may adversely affect our financial condition and limit our ability to make distributions to our stockholders.
• The increasing use of Internet travel intermediaries by consumers may adversely affect our profitability.
• We and our hotel managers and franchisors rely on information technology in our operations, and any material failure, inadequacy, interruption, cyber-attack or security failure of that technology could harm our business.
• Labor shortages and increased costs for labor could adversely affect our business and financial results.
• Future terrorist attacks or changes in terror alert levels could adversely affect travel and hotel demand.
• Competition, including with vacation rental online marketplaces, may reduce our hotels’ revenues and profitability.
• Adverse developments affecting the financial services industry may adversely affect our business, financial condition and results of operations.
• General Risks Related to the Real Estate Industry
• The hotel properties are subject to various risks associated with an investment in real estate.
• Illiquidity of real estate investments could significantly impede our ability to liquidate our portfolio on advantageous terms or within any given period of time.
• Uninsured and underinsured losses could adversely affect our operating results and our ability to make distributions to our stockholders.
• Noncompliance with environmental laws and governmental regulations could adversely affect our operating results and our ability to make distributions to stockholders.
• Compliance with the Americans with Disabilities Act of 1990, as amended, and applicable regulations promulgated thereunder (“ADA”) and other changes in governmental rules and regulations could substantially increase our cost of doing business and adversely affect our operating results and our ability to make distributions to our stockholders.
• The hotel properties are subject to property taxes that may increase in the future, which could adversely affect our ability to make distributions to our stockholders.
• The hotel properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.
• Future changes in laws and regulations may adversely affect the resale value of real estate.
• Certain sellers of hotel properties have made, and future sellers may only make, limited or no representations and warranties regarding the condition of the properties.
• We may acquire hotel properties from affiliates of the Advisor.
• We may not obtain audited results of operations for the hotel properties prior to acquiring the hotel properties.
• We may not obtain independent third-party appraisals or valuations of a hotel property before acquiring it and our valuation may not be accurate.
• If capitalization rates increase, the value of our assets may decrease and we may not be able to sell our assets at anticipated prices.
• Certain of the hotel properties in our current portfolio are, and future hotel properties may be, located in areas with increased risk of tornados, floods and other natural disasters and face risks associated with the direct and indirect physical effects of climate change, and we do not intend to obtain insurance to cover these natural disasters unless required by a lender.
• We may not have control of hotel properties we acquire through joint ventures.
• The presence of construction defects in newly or recently constructed hotel properties could adversely affect the financial performance of a hotel property.
• Construction and rehabilitation at the hotel properties entails risks that are beyond our and any general contractor’s control, and the costs may exceed the funds available to us.
• We will be required to obtain the approval of various governmental authorities when rehabilitating and improving the hotel properties, which may result in delays and increased costs.
• We may not discover defects in the hotel properties prior to acquisition.
• The hotel properties could become subject to condemnation actions.
• We may sustain losses resulting from litigation that is not completely covered by insurance.
• Risks Related to Debt Financing
• We have obtained, and in the future likely will obtain, mortgage indebtedness and other borrowings, which increases our risk of loss due to potential foreclosures.
• Restrictions on the availability of real estate financing, high interest rates and the cost of loans has increased our debt service payments and may make it difficult for us to finance or refinance the hotel properties on terms acceptable to us or at all.
• Some of our financing arrangements involve interest only loans and balloon payment obligations and an inability to prepay until shortly before maturity. These may, in the future, adversely affect our ability to make distributions.
• Elevated interest rates have increased our interest costs, and future increases in interest rates could further increase our interest costs and reduce our cash flows.
• We have incurred, and may in the future incur, recourse debt or be liable for nonrecourse carve-outs and springing recourse events under the loans for the hotel properties, which may permit the lenders to proceed against our assets.
• If we violate any restrictions on transfer imposed by lenders, the lender could have the right to declare the entire amount of the loan to be immediately due and payable.
• If we default on a loan, it could result in foreclosure of the hotel property, which could result the loss of all or a substantial portion of the investment we made in the hotel property.
• The derivative financial instruments we use to hedge against interest rate fluctuations may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on our stockholders’ investment.
• Certain of the hotel properties and our other assets are cross-collateralized.
• Risks Related to Our Organization and Structure
• Our TRS Lessee structure subjects us to the risk of increased hotel operating expenses that could adversely affect our operating results and our ability to make distributions to our stockholders.
• Our TRS structure increases our overall tax liability.
• Our ownership of our TRSs is limited and our transactions with our TRSs will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.
• If our leases with our TRS Lessees are not respected as true leases for federal income tax purposes, we would not qualify as a REIT.
• If our hotel operators do not qualify as “eligible independent contractors,” we would not qualify as a REIT.