Management’s Discussion and Analysis of Financial Condition and Results of
Operations is intended to provide the reader with information that will assist
in understanding our financial statements and the reasons for changes in certain
key components of our financial statements from period to period. Management’s
Discussion and Analysis of Financial Condition and Results of Operations also
provides the reader with our perspective on our financial position and
liquidity, as well as certain other factors that may affect our future results.
Our Management’s Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the 2020 Annual Report and
subsequent reports filed under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”).

Business Overview

We are a self-managed, publicly owned, non-traded REIT that invests in, manages
and seeks to enhance the value of, interests in lodging and lodging-related
properties in the United States. We own a diversified lodging portfolio,
including full-service, select-service and resort hotels. Our results of
operations were significantly affected by the COVID-19 pandemic, as discussed
further below. Our results of operations are also significantly impacted by
seasonality and by hotel renovations. Generally, during the renovation period, a
portion of total rooms are unavailable and hotel operations are often disrupted,
negatively impacting our results of operations. As of June 30, 2021, we held
ownership interests in 30 hotels, with a total of 9,234 rooms.

Significant Developments

COVID-19 Pandemic

The COVID-19 pandemic has had a material adverse effect on our business, results
of operations, financial condition and cash flows and will continue to do so for
the reasonably foreseeable future. As of August 11, 2021, all of our hotels are
open but the majority are operating at significantly reduced levels of
occupancy, staffing and expenses. While we have seen improving demand at some of
our properties as government-imposed restrictions and limitations on travel and
large gatherings have loosened and as the vaccine has become more widely
available, we expect the recovery to occur unevenly across our portfolio, with
hotels that cater to business travel recovering more slowly than resort
properties. Given the uncertainty as to the ultimate severity and duration of
the COVID­19 outbreak and its effects, and the emergence of variants of the
virus, we cannot estimate with reasonable certainty the impact on our business,
financial condition or near- or long-term financial or operational results.

Of our $2.2 billion of Consolidated Hotel aggregate principal balance
indebtedness outstanding as of June 30, 2021, approximately $836.5 million is
scheduled to mature during the 12 months after the date of this Report. We have
continued to work with our lenders to address loans with near-term mortgage
maturities and have refinanced or extended the maturity date of six Consolidated
Hotel mortgage loans, aggregating $661.7 million of principal balance
indebtedness, during the six months ended June 30, 2021. If the Company is
unable to repay, refinance or extend maturing mortgage loans, we may choose to
market these assets for sale or the lenders may declare events of default and
seek to foreclose on the underlying hotels or we may also seek to surrender
properties back to the lender.
WLT 6/30/2021 10-Q – 31
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Financial and Operating Highlights

(Dollars in thousands, except average daily rate (“ADR”) and revenue per
available room (“RevPAR”))

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Hotel revenues $ 163,659 $ 20,297 $ 259,932 $ 135,275
Net loss attributable to Common Stockholders (25,651) (15,894) (101,218) (185,899)

Cash distributions paid – – – 20,357

Net cash used in operating activities (35,456) (54,127)
Net cash provided by investing activities 96,496 160,250
Net cash used in financing activities (86,639) (59,153)

Supplemental Financial Measures: (a)
FFO attributable to Common Stockholders (16,940) 5,940 (60,107) (3,950)
MFFO attributable to Common Stockholders (2,707) (47,467) (36,440) (53,339)

Consolidated Hotel Operating Statistics (b)
Occupancy 51.8 % 8.6 % 41.3 % 26.6 %
ADR $ 248.32 $ 190.67 $ 247.07 $ 232.99
RevPAR 128.57 16.44 102.09 61.99

Comparable Consolidated Hotel Operating
Statistics (c)
Occupancy (d) 52.4 % 8.5 % 41.8 % 32.5 %
ADR $ 250.63 $ 191.98 $ 249.82 $ 248.17
RevPAR 131.22 16.25 104.32 80.59

___________
(a)We consider funds from operations (“FFO”) and MFFO, which are supplemental
measures that are not defined by GAAP (“non-GAAP measures”), to be important
measures in the evaluation of our results of operations and capital resources.
We evaluate our results of operations with a primary focus on the ability to
generate cash flow necessary to meet our objective of funding distributions to
stockholders. See Supplemental Financial Measures below for our definitions
of these non-GAAP measures and reconciliations to their most directly comparable
GAAP measures.
(b)Our consolidated hotel operating statistics represent statistical data for
our Consolidated Hotels during our ownership period.
(c)Our comparable hotel operating statistics represent statistical data for
Consolidated Hotels we owned as of the end of the reporting period, but
excluding those hotels that we classified as held for sale. Statistical data
prior to our ownership was included for hotels that were not owned for the
entirety of the comparison periods. Due to the impact of COVID-19 on hotel
operations, including the temporary suspension of operations at certain hotels,
a comparison between the three and six months ended June 30, 2021 to the same
periods in 2020 are not meaningful, therefore we have included the operating
statistics of our Comparable Consolidated Hotel Portfolio for the three and six
months ended June 30, 2019 for comparative purposes. Occupancy, ADR and RevPAR
for our Comparable Consolidated Hotel Portfolio for the three months ended June
30, 2019 were 78.2%, $262.24 and $205.18, respectively, and 75.7%, $263.77 and
$199.67, respectively, for the six months ended June 30, 2019.
(d)Occupancy rates for our Comparable Consolidated Hotel Portfolio for April,
May and June 2021 were 48.0%, 52.1% and 57.0%, respectively, as compared to
occupancy rates for April, May and June 2020 of 4.1%, 6.5% and 14.9%,
respectively.

WLT 6/30/2021 10-Q – 32

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Portfolio Overview

The following table sets forth certain information for each of our Consolidated
Hotels and our Unconsolidated Hotel as of June 30, 2021:

Number
Hotels State of Rooms % Owned Hotel Type
Consolidated Hotels
Charlotte Marriott City Center NC 446 100% Full-Service
Courtyard Nashville Downtown TN 192 100% Select-Service
Courtyard Pittsburgh Shadyside PA 132 100% Select-service
Courtyard Times Square West NY 224 100% Select-service

Embassy Suites by Hilton Denver-Downtown/Convention
Center

CO 403 100% Full-Service
Equinox Golf Resort & Spa VT 199 100% Resort
Fairmont Sonoma Mission Inn & Spa CA 226 100% Resort
Hawks Cay Resort (a) FL 406 100% Resort
Hilton Garden Inn/Homewood Suites Atlanta Midtown GA 228 100% Select-service
Holiday Inn Manhattan 6th Avenue Chelsea NY 226 100% Full-service
Hyatt Centric French Quarter New Orleans (b) LA 254 100% Full-service
Hyatt Place Austin Downtown TX 296 100% Select-service
Le Méridien Arlington VA 154 100% Full-Service
Le Méridien Dallas, The Stoneleigh TX 176 100% Full-service
Marriott Kansas City Country Club Plaza MO 295 100% Full-service
Marriott Raleigh City Center NC 401 100% Full-service
Marriott Sawgrass Golf Resort & Spa FL 514 100% Resort
Renaissance Atlanta Midtown Hotel GA 304 100% Full-Service
Renaissance Chicago Downtown IL 560 100% Full-service
Ritz-Carlton Bacara, Santa Barbara CA 358 100% Resort
Ritz-Carlton Fort Lauderdale (c) FL 198 70% Resort
Ritz-Carlton Key Biscayne (d) FL 443 66.7% Resort
Ritz-Carlton San Francisco CA 336 100% Full-Service
Sanderling Resort NC 128 100% Resort
San Diego Marriott La Jolla CA 376 100% Full-Service
San Jose Marriott CA 510 100% Full-Service
Seattle Marriott Bellevue WA 384 100% Full-Service
Westin Minneapolis MN 214 100% Full-Service
Westin Pasadena CA 350 100% Full-Service
8,933
Unconsolidated Hotel
Ritz-Carlton Philadelphia PA 301 60% Full-service
9,234

_________
(a)Includes 229 privately owned villas that participate in the villa/condo
rental program as of June 30, 2021.
(b)On April 6, 2021, we acquired the remaining 20% interest in the Hyatt Centric
French Quarter Venture from an unaffiliated third party, bringing our ownership
interest to 100% ( Note 4 ).
(c)Includes 32 condo-hotel units that participate in the villa/condo rental
program as of June 30, 2021.
(d)Includes 141 condo-hotel units that participate in the resort rental program
as of June 30, 2021.

Results of Operations

We evaluate our results of operations with a primary focus on our ability to
generate cash flow necessary to meet our objectives of funding distributions to
stockholders and increasing the value in our real estate investments. As a
result, our assessment of operating results gives less emphasis to the effect of
unrealized gains and losses, which may cause fluctuations in net (loss) income
for comparable periods but have no impact on cash flows, and to other non-cash
charges, such as depreciation.
WLT 6/30/2021 10-Q – 33
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In addition, we use other information that may not be financial in nature,
including statistical information, to evaluate the operating performance of our
business, including occupancy rate, ADR and RevPAR. Occupancy rate, ADR and
RevPAR are commonly used measures within the hotel industry to evaluate
operating performance. RevPAR, which is calculated as the product of ADR and
occupancy rate, is an important statistic for monitoring operating performance
at our hotels. Our occupancy rate, ADR and RevPAR performance may be impacted by
macroeconomic factors such as U.S. economic conditions, regional and local
employment growth, personal income and corporate earnings, business relocation
decisions, business and leisure travel, new hotel construction and the pricing
strategies of competitors.

The results of operations for the three and six months ended June 30, 2021 will
not be comparable to the same periods in 2020 as a result of the impact of the
COVID-19 pandemic, the Merger and hotel dispositions. Beginning in March 2020,
we experienced a significant decline in occupancy and RevPAR. The economic
downturn and restrictions on travel resulting from the COVID-19 pandemic has
significantly impacted our business and the overall lodging industry.
Additionally, as a result of the Merger, the historical financial information
included herein as of any date, or for any periods, prior to April 13, 2020,
represents the pre-merger financial information of CWI 1 on a stand-alone basis,
therefore comparisons of the period to period financial information of WLT as
set forth herein may not be meaningful.

The following table presents our comparative results of operations (in
thousands):
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 Change 2021 2020 Change
Hotel Revenues $ 163,659 $ 20,297 $ 143,362 $ 259,932 $ 135,275 $ 124,657

Hotel Operating Expenses 156,083 83,531 72,552 282,270 204,240 78,030
Corporate general and administrative
expenses 8,344 5,596 2,748 15,601 9,185 6,416
Gain on property-related insurance
claims (1,361) – (1,361) (2,527) – (2,527)
Transaction costs – 16,539 (16,539) – 18,349 (18,349)
Asset management fees to affiliate – 474 (474) – 3,932 (3,932)
Impairment charges – – – – 120,220 (120,220)
Total Expenses 163,066 106,140 56,926 295,344 355,926 (60,582)
Operating Income (Loss) before net loss
on sale of real estate 593 (85,843) 86,436 (35,412) (220,651) 185,239
Gain (loss) on sale of real estate 18,075 (489) 18,564 18,075 (489) 18,564
Operating Income (Loss) 18,668 (86,332) 105,000 (17,337) (221,140) 203,803
Interest expense (43,104) (30,301) (12,803) (85,487) (44,730) (40,757)
Net gain on change in control of
interests 8,612 22,250 (13,638) 8,612 22,250 (13,638)
Loss on extinguishment of debt (5,519) – (5,519) (5,519) – (5,519)
Equity in losses of equity method
investments in
real estate, net (1,666) (4,545) 2,879 (5,586) (27,938) 22,352
Other income and (expense) (234) 73 (307) (156) 194 (350)
Bargain purchase gain – 78,696 (78,696) – 78,696 (78,696)
Loss Before Income Taxes (23,243) (20,159) (3,084) (105,473) (192,668) 87,195
(Provision for) benefit from income
taxes (1,097) 2,612 (3,709) (1,222) 5,976 (7,198)
Net Loss (24,340) (17,547) (6,793) (106,695) (186,692) 79,997
(Income) loss attributable to
noncontrolling interests (1,311) 2,994 (4,305) 5,477 2,134 3,343
Net Loss Attributable to the Company (25,651) (14,553) (11,098) (101,218) (184,558) 83,340
Preferred dividends – (1,341) 1,341 – (1,341) 1,341
Net Loss Attributable to Common
Stockholders $ (25,651) $ (15,894)

$ (9,757) $ (101,218) $ (185,899) $ 84,681
Supplemental Financial Measure:(a)
MFFO Attributable to Common Stockholders $ (2,707) $ (47,467)

$ 44,760 $ (36,440) $ (53,339) $ 16,899

___________
WLT 6/30/2021 10-Q – 34

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(a)We consider MFFO, a non-GAAP measure, to be an important metric in the
evaluation of our results of operations and capital resources. We evaluate our
results of operations with a primary focus on the ability to generate cash flow
necessary to meet our objective of funding distributions to stockholders. See

Supplemental Financial Measures below for our definition of non-GAAP
measures and reconciliations to their most directly comparable GAAP measures.

Hotel Revenues

For the three and six months ended June 30, 2021 as compared to the same periods
in 2020, hotel revenues increased by $143.4 million and $124.7 million,
respectively. Our results for both the three and six months ended June 30, 2020
were significantly impacted by the COVID-19 pandemic. Of the 30 Consolidated
Hotels we held ownership interests in as of June 30, 2020, operations were
suspended for either all or a portion of the second quarter of 2020 at 16
Consolidated Hotels (with six hotel closures beginning during March 2020) and
were significantly reduced at the remaining 14 Consolidated Hotels.
Additionally, as a result of the Merger, the historical financial information
included for the period prior to April 13, 2020, represents the pre-Merger
financial information of CWI 1 on a stand-alone basis, therefore comparisons of
the period to period financial information of WLT as set forth herein may not be
meaningful.

Hotel Operating Expenses

Room expense, food and beverage expense and other operating department costs
fluctuate based on various factors, including occupancy, labor costs, utilities
and insurance costs.

For the three and six months ended June 30, 2021 as compared to the same periods
in 2020, aggregate hotel operating expenses increased by $72.6 million and $78.0
million, respectively. As discussed above, our results for the three and six
months ended June 30, 2020 were significantly impacted by the COVID-19 pandemic.
Additionally, as a result of the Merger, the historical financial information
included for the period prior to April 13, 2020, represents the pre-Merger
financial information of CWI 1 on a stand-alone basis, therefore comparisons of
the period to period financial information of WLT as set forth herein may not be
meaningful.

Corporate General and Administrative Expenses

For the three and six months ended June 30, 2021 as compared to the same periods
in 2020, corporate general and administrative expenses increased by $2.7 million
and $6.4 million, respectively, primarily as a result of the impact of the
Merger, with periods post-Merger reflecting the impact of the Company being
self-managed and including the compensation of our employees for the periods
following the internalization.

Transaction Costs

For the three and six months ended June 30, 2021, as compared to the same
periods in 2020, transactions costs decreased by $16.5 million and $18.3
million, respectively. Transaction costs recognized during the three and six
months ended June 30, 2020 represented legal, accounting, investor relations and
other transaction costs related to the Merger and related transactions.

Asset Management Fees to Affiliate

For the three and six months ended June 30, 2021, as compared to the same
periods in 2020, asset management fees to affiliates decreased by $0.5 million
and $3.9 million, respectively. Upon completion of the Merger on April 13, 2020,
the Advisory Agreement was terminated and these fees ceased being incurred

Impairment Charges

During the six months ended June 30, 2020 we recognized impairment charges
totaling $120.2 million on six Consolidated Hotels in order to reduce the
carrying value of the properties to their estimated fair values, resulting from
the adverse effect of the COVID-19 pandemic on our hotel operations. No
impairments were recognized during the three months ended June 30, 2021 and 2020
or the three months ended June 30, 2020.

Our impairment charges are more fully described in Note 4 .

WLT 6/30/2021 10-Q – 35
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Gain (Loss) on Sale of Real Estate

During the three and six months ended June 30, 2021, we recognized a gain on
sale on real estate of $18.1 million from
the sale of the Sheraton Austin Hotel at the Capitol to an unaffiliated
third-party by the Sheraton Austin Hotel at the Capitol venture. We owned an 80%
controlling interest in the venture ( N ote 4 ).

During the three and six months ended June 30, 2020, we recognized a loss on
sale on real estate of $0.5 million from the sale of our 100% ownership interest
in the Hutton Hotel Nashville to an unaffiliated third party.

Interest Expense

For the three and six months ended June 30, 2021, as compared to the same
periods in 2020, interest expense increased by $12.8 million and $40.8 million,
respectively, primarily due to an increase in the dividends recorded in
connection with our Series A Preferred Stock and Series B Preferred Stock
totaling $7.3 million and $14.5 million, respectively, and an increase in the
aggregate amortization of the debt discount related to the mortgage loans
assumed in the Merger and the fair value discount related to the Series A
Preferred Stock and Series B Preferred Stock totaling $3.2 million and $13.4
million, respectively. In addition, for the six months ended June 30, 2021 as
compared to the same period in 2020, interest expense increased by $11.4 million
resulting from the assumption of the mortgage loans of the hotels acquired in
the Merger.

Net Gain on Change in Control of Interests

During the three and six months ended June 30, 2021, we recognized a gain on
change in control of interests of $8.6 million in connection with our
acquisition of the remaining 20% interest in the Hyatt Centric French Quarter
Venture from an unaffiliated third party on April 6, 2021 ( Not e 4 ). We
previously accounted for our jointly-owned interest in this venture under the
equity method of accounting. Due to the change in control of this jointly owned
investment, we recorded a net gain on change in control of interest reflecting
the difference between our carrying value and the preliminary estimated fair
value of our previously held equity investment on April 6, 2021. Subsequent to
the acquisition, we own 100% of this hotel and consolidate our real estate
interest in the hotel.

During the three and six months ended June 30, 2020, we recognized a net gain on
change in control of interests of $22.3 million in connection with our
acquisition of the remaining 50% interests in the Marriott Sawgrass Golf Resort
and Spa and the Ritz-Carlton Bacara, Santa Barbara in the Merger ( Note 3 ).
We previously accounted for our jointly-owned interest in these ventures under
the equity method of accounting. Due to the change in control of this jointly
owned investment, we recorded a net gain on change in control of interest
reflecting the difference between our carrying values and the preliminary
estimated fair values of our previously held equity investments on April 13,
2020, the date of the Merger. Subsequent to the Merger, we own 100% of these
hotels and consolidate our real estate interests in the hotels.

Loss on Extinguishment of Debt

During the three and six months ended June 30, 2021 we recognized a loss on
extinguishment of debt of $5.5 million, comprised of a $4.8 million loss
resulting from the refinancing of the Seattle Marriott Bellevue non-recourse
mortgage loan, a $0.7 million loss in connection with the disposition of the
Sheraton Austin Hotel at the Capitol and a $0.1 million loss resulting from the
refinancing of the Ritz-Carlton Fort Lauderdale senior mortgage and mezzanine
loans.

WLT 6/30/2021 10-Q – 36

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Equity in Losses of Equity Method Investments in Real Estate, Net

Equity in losses of equity method investments in real estate, net represents
losses from our equity investments in Unconsolidated Hotels recognized in
accordance with each investment agreement and based upon the allocation of the
investment’s net assets at book value as if the investment were hypothetically
liquidated at the end of each reporting period ( Note 5 ). We are required to
periodically compare an investment’s carrying value to its estimated fair value
and recognize an impairment charge to the extent that the carrying value exceeds
the estimated fair value and is determined to be other than temporary. We
recognized $17.8 million of other-than-temporary impairment charges on our
equity method investments in real estate during the six months ended June 30,
2020. No such charges were recognized during the three and six months ended June
30, 2021 or the three months ended June 30, 2020.

The following table sets forth our share of equity in losses from our
Unconsolidated Hotels, which are based on the HLBV model, as well as certain
amortization adjustments related to basis differentials from acquisitions of
investments (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
Venture 2021 2020 2021 2020
Ritz-Carlton Philadelphia Venture
(a) $ (1,666) $ (3,842) $ (4,729) $ (6,901)
Ritz-Carlton Bacara, Santa Barbara
Venture (b) (c) – (512) – (20,967)
Marriott Sawgrass Golf Resort &
Spa Venture (b) – (185) – (58)
Hyatt Centric French Quarter
Venture (d) – (6) (857) (12)
Total equity in losses of equity
method investments in real estate,
net $ (1,666) $ (4,545) $ (5,586) $ (27,938)

___________
(a)The results for the three and six months ended June 30, 2021 reflect an
improvement in the performance of the hotel during 2021 as compared to
comparable periods in 2020.
(b)Upon closing of the Merger on April 13, 2020, the Company owns 100% of this
hotel and consolidates its real estate interest in this hotel therefore the
amounts for the three and six months ended June 30, 2020 represent the equity in
losses prior to the Merger.
(c)Includes an other-than-temporary impairment charge of $17.8 million
recognized on this investment during the three months ended March 31, 2020 to
reduce the carrying value of our equity investment in the venture to its
estimated fair value.
(d)On April 6, 2021, we acquired the remaining 20% interest in the Hyatt Centric
French Quarter Venture from an unaffiliated third party, bringing our ownership
interest to 100% ( Note 4 ).

Bargain Purchase Gain

During the three and six months ended June 30, 2020, we recognized a bargain
purchase gain of $78.7 million in connection with the Merger resulting from the
estimated fair values of the assets acquired net of liabilities assumed
exceeding the consideration paid. See Note 3 for additional disclosure
regarding the Merger.

(Provision for) Benefit from Income Taxes

For the three months ended June 30, 2021, we recognized a provision for income
taxes of $1.1 million compared to a benefit from income taxes of $2.6 million
for the three months ended June 30, 2020 and for the six months ended June 30,
2021, we recognized a provision for income taxes of $1.2 million compared to a
benefit from income taxes of $6.0 million for the six months ended June 30,
2020. Benefit from income taxes during the three and six months ended June 30,
2020 included a $4.4 million and $8.0 million current tax benefit, respectively,
resulting from carrying back certain net operating losses allowable under the
CARES Act, partially offset by a deferred expense due to the establishment of a
valuation allowance of $2.5 million during the three months ended June 30, 2020.

WLT 6/30/2021 10-Q – 37
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(Income) Loss Attributable to Noncontrolling Interests

The following table sets forth our (income) loss attributable to noncontrolling
interests (in thousands):

Three Months Ended June 30, Six Months Ended June 30,
Venture 2021 2020 2021 2020
Sheraton Austin Hotel at the Capitol Venture
(a) $ (3,383) $ 397 $ (2,867) $ 446
Ritz-Carlton Fort Lauderdale Venture (b) (60) 1,208 (146) $ 1,453
Ritz-Carlton Key Biscayne Venture (b) (21) 221 (29) (933)
Operating Partnership – Noncontrolling
interest (c) 2,153 1,168 8,519 1,168
Total (income) loss attributable to
noncontrolling interests $ (1,311) $ 2,994 $ 5,477 $ 2,134

___________
(a)On May 5, 2021, the Sheraton Austin Hotel at the Capitol venture sold the
Sheraton Austin Hotel at the Capitol to an unaffiliated third-party. The venture
received net proceeds of approximately $36.4 million from the sale after the
repayment of the related mortgage loan. We owned an 80% controlling interest in
the venture.
(b)The results for the three and six months ended June 30, 2021 reflect an
improvement in the performance of the hotel during 2021 as compared to
comparable periods in 2020.
(c)Reflects the OP Units’ and Warrant Units’ proportionate share of net loss.

Modified Funds from Operations

MFFO is a non-GAAP measure that we use to evaluate our business. For a
definition of MFFO and a reconciliation to net income or loss attributable to
Common Stockholders, see Supplemental Financial Measures below.

For the three and six months ended June 30, 2021 as compared to the same period
in 2020, MFFO increased by $44.8 million and $16.9 million, respectively. MFFO
for the three and six months ended June 30, 2020 reflects the impact of the
COVID-19 pandemic on our hotel operations, beginning in March 2020.
Additionally, as a result of the Merger, the historical financial information
included for the period prior to April 13, 2020, represents the pre-Merger
financial information of CWI 1 on a stand-alone basis, therefore comparisons of
the period to period financial information of WLT as set forth herein may not be
meaningful.

Liquidity and Capital Resources

Our primary cash uses over the next 12 months are expected to be payment of debt
service, costs associated with the refinancing or restructuring of indebtedness,
funding corporate and hotel level operations, payment of real estate taxes and
insurance and payment of preferred stock dividends. Our primary capital sources
to meet such uses are expected to be funds generated by hotel operations, cash
on hand, any additional issuances of Series B Preferred Stock and proceeds from
additional asset sales.

Due to the COVID-19 pandemic and as a result of numerous government mandates,
health official mandates and significantly reduced demand, as of the date of
this Report, the Company has limited operations at a number of hotel properties.
Significant events affecting travel, including the COVID-19 pandemic, typically
have an impact on booking patterns, with the full extent of the impact generally
determined by the duration of the event and its impact on travel decisions. We
believe the ongoing effects of the COVID-19 pandemic on our operations have had,
and will continue to have, a material adverse impact on our financial results
and liquidity, and such adverse impact may continue well beyond the containment
of such outbreak.

WLT 6/30/2021 10-Q – 38

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As of June 30, 2021, we had cash and cash equivalents of $111.1 million.
Additionally, under the terms of our agreements with the investors in the July
Capital Raise, as defined and described in Note 13 , we have the option to
require the investors to purchase up to $150.0 million aggregate liquidation
preference of additional shares of Series B Preferred Stock during the 18 months
after the closing of the July Capital Raise for additional working capital
needs, including the repayment, refinancing or restructuring of indebtedness,
subject to our satisfaction of customary conditions. As of June 30, 2021, the
mortgage loans for our Consolidated Hotels had an aggregate principal balance
totaling $2.2 billion outstanding, all of which is mortgage indebtedness and is
generally non-recourse, subject to customary non-recourse carve-outs, except
that we have provided certain lenders with limited corporate guaranties
aggregating $22.1 million for items such as taxes, deferred debt service and
amounts drawn from furniture, fixtures and equipment reserves to pay expenses,
in connection with loan modification agreements. We have continued to work with
our lenders to address loans with near-term mortgage maturities and have
refinanced or extended the maturity date of six Consolidated Hotel mortgage
loans, aggregating $661.7 million of indebtedness, during the six months ended
June 30, 2021. Of the $2.2 billion aggregate principal balance indebtedness
outstanding as of June 30, 2021, approximately $836.5 million is scheduled to
mature during the 12 months after the date of this Report. If the Company is
unable to repay, refinance or extend maturing mortgage loans, we may choose to
market these assets for sale or the lenders may declare events of default and
seek to foreclose on the underlying hotels or we may also seek to surrender
properties back to the lender.

In addition to raising capital in the July Capital Raise and through asset
sales, we have taken various actions to help mitigate the effects of the
COVID-19 pandemic on our operational results and to preserve our liquidity at
both the operational and corporate level, including among others: reducing
capital expenditures and reducing operating expenses, suspending distributions
on and redemption of our common stock and temporarily suspending required
contributions to the furniture, fixture and equipment replacement reserve at
certain of our hotels.

Sources and Uses of Cash During the Period

Operating Activities – For the six months ended June 30, 2021, net cash used in
operating activities was $35.5 million as compared to $54.1 million for the six
months ended June 30, 2020. Net cash used in operating activities during 2020
reflects the impact of the COVID-19 pandemic on our hotel operations, beginning
in March 2020.

Investing Activities – During the six months ended June 30, 2021, net cash
provided by investing activities was $96.5 million primarily as a result of
$106.8 million in proceeds from sale of Sheraton Austin Hotel at the Capitol,
partially offset by funding $13.2 million for capital expenditures at our
Consolidated Hotels.

Financing Activities – Net cash used in financing activities for the six months
ended June 30, 2021 was $86.6 million primarily as a result of payments of
mortgage financing totaling $258.2 million, $7.1 million of distributions to
noncontrolling interests, and $4.7 million of deferred financing costs,
partially offset by $185.1 million of proceeds from mortgage financing.

Distributions and Redemptions

On March 18, 2020, in light of the impact that the COVID-19 pandemic has had on
our business, we announced that we were suspending future distributions on our
common stock. We also announced that redemptions would be suspended including,
as of December 2, 2020, special circumstances redemptions. Requests for special
circumstances redemptions may continue to be submitted, however, the Company
will not take any action with regard to those requests until the Board of
Directors has elected to lift the suspension and provided the terms and
conditions for any continuation of the program. Distributions and redemptions in
respect of future periods will be evaluated by the Board of Directors based on
circumstances and expectations existing at the time of consideration, and are
also subject to the terms of the Series A and Series B Preferred Stock.

Among other terms of the Series A and Series B Preferred Stock, the Series A and
Series B Preferred Stock generally prohibits the Company from paying
distributions on common stock or redeeming common stock unless all accrued
dividends on the Series A and Series B Preferred Stock are paid in cash for all
past dividend periods and the dividend for the current dividend period is also
paid in cash. There are certain exceptions for the payment of dividends on
common stock required for the Company to maintain its REIT qualification,
special circumstances redemptions of common stock and redemptions of common
stock that are funded with proceeds from issuances of common stock under the
Company’s DRIP.

WLT 6/30/2021 10-Q – 39

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Summary of Financing

The table below summarizes our non-recourse debt, net (dollars in thousands):

June 30, 2021 December 31, 2020
Carrying Value
Fixed rate (a) $ 1,290,309 $ 1,286,839
Variable rate (a):
Amount subject to interest rate caps 553,868 362,193
Amount subject to interest rate swaps 180,127 175,158
Amount subject to floating interest rate 121,535 345,712
855,530 883,063
$ 2,145,839 $ 2,169,902
Percent of Total Debt
Fixed rate 60 % 59 %
Variable rate 40 % 41 %
100 % 100 %
Weighted-Average Interest Rate at End of Period
Fixed rate 4.3 % 4.3 %
Variable rate (b) 4.0 % 4.1 %

_________
(a)Aggregate debt balance includes unamortized debt discount of $25.8 million
and $46.5 million as of June 30, 2021 and December 31, 2020, respectively, and
unamortized deferred financing costs totaling $8.6 million and $6.9 million as
of June 30, 2021 and December 31, 2020, respectively.
(b)The impact of our derivative instruments is reflected in the weighted-average
interest rates.

Covenants

Pursuant to our mortgage loan agreements, our consolidated subsidiaries are
subject to various operational and financial covenants, including minimum debt
service coverage and debt yield ratios. Most of our mortgage loan agreements
contain “lock-box” provisions, which permit the lender to access or sweep a
hotel’s excess cash flow and could be triggered by the lender under limited
circumstances, including the failure to maintain minimum debt service coverage
ratios. If a lender requires that we enter into a cash management agreement, we
would generally be permitted to spend an amount equal to our budgeted hotel
operating expenses, taxes, insurance and capital expenditure reserves for the
relevant hotel. The lender would then hold all excess cash flow after the
payment of debt service in an escrow account until certain performance hurdles
are met. As of June 30, 2021, we have effectively entered into cash management
agreements with the lenders on 28 of our 29 Consolidated Hotel mortgage loans
either because the minimum debt service coverage ratio was not met or as a
result of a loan modification agreement. The cash management agreements
generally permit cash generated from the operations of each hotel to fund the
hotel’s operating expenses, debt service, taxes and insurance but restrict
distributions of excess cash flow, if any, to the Company to fund corporate
expenses.

Courtyard Times Square West

The $57.0 million outstanding mortgage loan on Courtyard Times Square West
matured on June 1, 2021 and we have not paid off the outstanding principal
balance. The loan does not have any cross-default provisions with our other
mortgage obligations. We are currently in the process of exploring various
options as it relates to this asset, including but not limited to, surrendering
the property back to the lender.

WLT 6/30/2021 10-Q – 40
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Renaissance Atlanta Midtown Hotel

The $49.0 million outstanding mortgage loan on Renaissance Atlanta Midtown Hotel
matured on August 8, 2021; we have not paid off the outstanding principal
balance, although all required debt service through the date of this Report has
continued to be paid on time. We are currently in discussions with the lender to
amend the terms of the loan agreement, including, but not limited to, extending
the maturity date, although there can be no assurance that we will be able to do
so on favorable terms, if at all.

Cash Resources

At June 30, 2021, our cash resources consisted of cash and cash equivalents
totaling $111.1 million, of which $42.6 million was designated as hotel
operating cash and was held at our hotel operating properties.

Cash Requirements

Our primary cash uses through June 30, 2022 are expected to be payments of debt
service, real estate taxes and insurance, payment of preferred stock dividends,
costs associated with the refinancing or restructuring of indebtedness and
funding corporate and hotel level operations. Our primary capital sources to
meet such uses are expected to be cash on hand, funds generated by hotel
operations, any additional issuances of Series B Preferred Stock and proceeds
from additional asset sales. We may satisfy certain debt maturities during this
period by turning the properties back to the lenders.

Capital Expenditures and Reserve Funds

With respect to our hotels that are operated under management or franchise
agreements with major international hotel brands and for most of our hotels
subject to mortgage loans, we are obligated to maintain furniture, fixtures and
equipment reserve accounts for future capital expenditures sufficient to cover
the cost of routine improvements and alterations at these hotels. The amount
funded into each of these reserve accounts is generally determined pursuant to
the management agreements, franchise agreements and/or mortgage loan documents
for each of the respective hotels and typically ranges between 3.0% and 5.0% of
the respective hotel’s total gross revenue. As of June 30, 2021 and December 31,
2020, $54.3 million and $51.0 million, respectively, was held in furniture,
fixtures and equipment reserve accounts for future capital expenditures and is
included in Restricted cash in the consolidated financial statements. In
addition, due to the effects of the COVID-19 pandemic on our operations, we have
been working with the brands, management companies and lenders and have used a
portion of the available restricted cash reserves to cover operating costs at
our properties, of which $2.3 million is subject to replenishment

Supplemental Financial Measures

In the real estate industry, analysts and investors employ certain non-GAAP
supplemental financial measures in order to facilitate meaningful comparisons
between periods and among peer companies. Additionally, in the formulation of
our goals and in the evaluation of the effectiveness of our strategies, we use
FFO and MFFO, which are non-GAAP measures defined by our management. We believe
that these measures are useful to investors to consider because they may assist
them to better understand and measure the performance of our business over time
and against similar companies. A description of FFO and MFFO, and
reconciliations of these non-GAAP measures to the most directly comparable GAAP
measures, are provided below.

FFO and MFFO

Due to certain unique operating characteristics of real estate companies, as
discussed below, the National Association of Real Estate Investment Trusts
(“NAREIT”), an industry trade group, has promulgated a non-GAAP measure known as
FFO, which we believe to be an appropriate supplemental measure, when used in
addition to and in conjunction with results presented in accordance with GAAP,
to reflect the operating performance of a REIT. The use of FFO is recommended by
the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to,
nor a substitute for, net income or loss as determined under GAAP.

WLT 6/30/2021 10-Q – 41
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We define FFO, a non-GAAP measure, consistent with the standards established by
the White Paper on FFO approved by the Board of Governors of NAREIT, as restated
in December 2018. The White Paper defines FFO as net income or loss computed in
accordance with GAAP, excluding gains or losses from sales of property,
impairment charges on real estate, and depreciation and amortization from real
estate assets; and after adjustments for unconsolidated partnerships and jointly
owned investments. Adjustments for unconsolidated partnerships and jointly owned
investments are calculated to reflect FFO. Our FFO calculation complies with
NAREIT’s policy described above. However, NAREIT’s definition of FFO does not
distinguish between the conventional method of equity accounting and the HLBV
method of accounting for unconsolidated partnerships and jointly owned
investments.

The historical accounting convention used for real estate assets requires
straight-line depreciation of buildings and improvements, which implies that the
value of real estate assets diminishes predictably over time, especially if such
assets are not adequately maintained or repaired and renovated as required by
relevant circumstances in order to maintain the value disclosed. We believe
that, since real estate values historically rise and fall with market
conditions, including inflation, interest rates, the business cycle,
unemployment and consumer spending, presentations of operating results for a
REIT using historical accounting for depreciation may be less informative.
Historical accounting for real estate involves the use of GAAP. Any other method
of accounting for real estate such as the fair value method cannot be construed
to be any more accurate or relevant than the comparable methodologies of real
estate valuation found in GAAP. Nevertheless, we believe that the use of FFO,
which excludes the impact of real estate-related depreciation and amortization,
as well as impairment charges of real estate-related assets, provides a more
complete understanding of our performance to investors and to management; and
when compared year over year, reflects the impact on our operations from trends
in occupancy rates, operating costs, general and administrative expenses, and
interest costs, which may not be immediately apparent from net income or loss.
In particular, we believe it is appropriate to disregard impairment charges, as
this is a fair value adjustment that is largely based on market fluctuations and
assessments regarding general market conditions, which can change over time. An
asset will only be evaluated for impairment if certain impairment indicators
exist. For real estate assets held for investment and related intangible assets
in which an impairment indicator is identified, we follow a two-step process to
determine whether an asset is impaired and to determine the amount of the
charge. First, we compare the carrying value of the property’s asset group to
the estimated future net undiscounted cash flow that we expect the property’s
asset group will generate, including any estimated proceeds from the eventual
sale of the property’s asset group. It should be noted, however, that the
property’s asset group’s estimated fair value is primarily determined using
market information from outside sources such as broker quotes or recent
comparable sales. In cases where the available market information is not deemed
appropriate, we perform a future net cash flow analysis discounted for inherent
risk associated with each asset to determine an estimated fair value. While
impairment charges are excluded from the calculation of FFO described above due
to the fact that impairments are based on estimated future undiscounted cash
flows, it could be difficult to recover any impairment charges. However, FFO and
MFFO, as described below, should not be construed to be more relevant or
accurate than the current GAAP methodology in calculating net income or loss or
in its applicability in evaluating the operating performance of the company. The
method utilized to evaluate the value and performance of real estate under GAAP
should be construed as a more relevant measure of operational performance and
considered more prominently than the non-GAAP measures FFO and MFFO and the
adjustments to GAAP in calculating FFO and MFFO.

Changes in the accounting and reporting promulgations under GAAP (for
acquisition fees and expenses from a capitalization/depreciation model to an
expensed-as-incurred model) were put into effect subsequent to the establishment
of NAREIT’s definition of FFO. Management believes these cash-settled expenses,
such as acquisition fees that are typically accounted for as operating expenses,
do not affect our overall long-term operating performance. Publicly-registered,
non-traded REITs typically have a significant amount of acquisition activity and
are substantially more dynamic during their initial years of investment and
operation. While other start-up entities may also experience significant
acquisition activity during their initial years, we believe that non-traded
REITs are unique in that they have a limited life with targeted exit strategies
within a relatively limited time frame after acquisition activity ceases. Due to
the above factors and other unique features of publicly registered, non-traded
REITs, the Institute for Portfolio Alternatives (formerly known as the
Investment Program Association) (“IPA”), an industry trade group, has
standardized a measure known as MFFO, which the IPA has recommended as a
supplemental measure for publicly registered non-traded REITs and which we
believe to be another appropriate non-GAAP measure to reflect the operating
performance of a non-traded REIT having the characteristics described above.
MFFO is not equivalent to our net income or loss as determined under GAAP, and
MFFO may not be a useful measure of the impact of long-term operating
performance on value if we do not continue to operate with a limited life and
targeted exit strategy, as currently intended. We believe that, because MFFO
excludes costs that we consider more reflective of investing activities and
other non-operating items included in FFO and also excludes acquisition fees and
expenses that affect our operations only in periods in which properties are
acquired, MFFO can provide, on a going forward basis, an indication of the
sustainability (that is, the capacity to continue to be maintained) of our
operating performance after the period in which we are acquiring properties and
once our portfolio is in place. By providing MFFO, we believe we are presenting
useful information that assists investors and analysts to
WLT 6/30/2021 10-Q – 42
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better assess the sustainability of our operating performance now that our
offering has been completed and once essentially all of our properties have been
acquired. We also believe that MFFO is a recognized measure of sustainable
operating performance by the non-traded REIT industry. Further, we believe MFFO
is useful in comparing the sustainability of our operating performance, with the
sustainability of the operating performance of other real estate companies that
are not as involved in acquisition activities. MFFO should only be used to
assess the sustainability of a company’s operating performance after a company’s
offering has been completed and properties have been acquired, as it excludes
acquisition costs that have a negative effect on a company’s operating
performance during the periods in which properties are acquired.

We define MFFO consistent with the IPA’s Practice Guideline 2010-01,
Supplemental Performance Measure for Publicly Registered, Non-Listed REITs:
Modified Funds from Operations (the “Practice Guideline”), issued by the IPA in
November 2010. This Practice Guideline defines MFFO as FFO further adjusted for
the following items, included in the determination of GAAP net income or loss,
as applicable: acquisition fees and expenses; accretion of discounts and
amortization of premiums on debt investments; where applicable, payments of loan
principal made by our equity investees accounted for under the HLBV model where
such payments reduce our equity in earnings of equity method investments in real
estate, nonrecurring impairments of real estate-related investments (i.e.,
infrequent or unusual, not reasonably likely to recur in the ordinary course of
business); mark-to-market adjustments included in net income or loss;
nonrecurring gains or losses included in net income or loss from the
extinguishment or sale of debt, hedges, derivatives or securities holdings,
where trading of such holdings is not a fundamental attribute of the business
plan, unrealized gains or losses resulting from consolidation from, or
deconsolidation to, equity accounting, and after adjustments for Consolidated
and Unconsolidated Hotels, with such adjustments calculated to reflect MFFO on
the same basis. The accretion of discounts and amortization of premiums on debt
investments, unrealized gains and losses on hedges, derivatives or securities
holdings, unrealized gains and losses resulting from consolidations, as well as
other listed cash flow adjustments are adjustments made to net income or loss in
calculating the cash flows provided by operating activities and, in some cases,
reflect gains or losses that are unrealized and may not ultimately be realized.

Our MFFO calculation complies with the Practice Guideline described above. In
calculating MFFO, we exclude acquisition-related expenses, fair value
adjustments of derivative financial instruments and the adjustments of such
items related to noncontrolling interests. Under GAAP, acquisition fees and
expenses are characterized as operating expenses in determining operating net
income or loss. These expenses are paid in cash by a company. All paid and
accrued acquisition fees and expenses will have negative effects on returns to
investors, the potential for future distributions, and cash flows generated by
the company, unless earnings from operations or net sales proceeds from the
disposition of other properties are generated to cover the purchase price of the
property, these fees and expenses and other costs related to such property.
Further, under GAAP, certain contemplated non-cash fair value and other non-cash
adjustments are considered operating non-cash adjustments to net income or loss
in determining cash flow from operating activities. We account for certain of
our equity investments using the HLBV model which is based on distributable cash
as defined in the operating agreement.

Our management uses MFFO and the adjustments used to calculate it in order to
evaluate our performance against other non-traded REITs, which have limited
lives with short and defined acquisition periods and targeted exit strategies
shortly thereafter. As noted above, MFFO may not be a useful measure of the
impact of long-term operating performance on value if we do not continue to
operate in this manner. We believe that MFFO and the adjustments used to
calculate it allow us to present our performance in a manner that takes into
account certain characteristics unique to non-traded REITs, such as their
limited life, defined acquisition period and targeted exit strategy, and is
therefore a useful measure for investors. For example, acquisition costs are
generally funded from the proceeds of our offering and other financing sources
and not from operations. By excluding expensed acquisition costs, the use of
MFFO provides information consistent with management’s analysis of the operating
performance of the properties. Additionally, fair value adjustments, which are
based on the impact of current market fluctuations and underlying assessments of
general market conditions, but can also result from operational factors such as
occupancy rates, may not be directly related or attributable to our current
operating performance. By excluding such changes that may reflect anticipated
and unrealized gains or losses, we believe MFFO provides useful supplemental
information.

Presentation of this information is intended to provide useful information to
investors as they compare the operating performance of different REITs, although
it should be noted that not all REITs calculate FFO and MFFO the same way, so
comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO
are not necessarily indicative of cash flow available to fund cash needs and
should not be considered as an alternative to net income or loss as an
indication of our performance, as an alternative to cash flows from operations
as an indication of our liquidity, or indicative of funds available to fund our
cash needs including our ability to make distributions to our stockholders. FFO
and MFFO should be reviewed in conjunction with other GAAP measurements as an
indication of our performance.

WLT 6/30/2021 10-Q – 43
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Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the
acceptability of the adjustments that we use to calculate FFO or MFFO. In the
future, the SEC, NAREIT or another regulatory body may decide to standardize the
allowable adjustments across the non-traded REIT industry and we would have to
adjust our calculation and characterization of FFO and MFFO accordingly.

FFO and MFFO were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020

Net loss attributable to Common Stockholders $ (25,651) $ (15,894) $ (101,218)

$ (185,899)

Adjustments:

Depreciation and amortization of real
property 28,891 31,969 60,812 50,826
(Gain) loss on sale of real estate (18,075) 489 (18,075) 489

Net gain on change in control of interests (8,612) (22,250)

(8,612) (22,250)
Impairment charges – – – 120,220
Proportionate share of adjustments for
partially-owned entities – FFO adjustments
(a) 6,507 11,626 6,986 32,664
Total adjustments 8,711 21,834 41,111 181,949
FFO attributable to Common Stockholders (as
defined by NAREIT) (16,940) 5,940 (60,107) (3,950)

Adjustments:

Amortization of fair value adjustments 9,652 6,966 19,375 6,966
Net loss on extinguishment of debt 5,519 – 5,519 –
Straight-line and other rent adjustments 1,727 1,353 3,063 3,288
Gain on property-related insurance claims
(b) (1,361) – (2,527) –
Bargain purchase gain – (78,696) – (78,696)
Transaction costs (b) – 16,539 – 18,349
Proportionate share of adjustments for
partially owned
entities – MFFO adjustments (1,304) 431 (1,763) 704
Total adjustments 14,233 (53,407) 23,667 (49,389)

MFFO attributable to Common Stockholders $ (2,707) $ (47,467) $ (36,440)

$ (53,339)

___________

(a)This adjustment includes an other-than-temporary impairment charge of $17.8
million recognized on our equity investment in the Ritz-Carlton Bacara, Santa
Barbara Venture during the three months ended March 31, 2020 ( Note 5 ).
(b)We have excluded these costs because of their non-recurring nature. By
excluding such costs, management believes MFFO provides useful supplemental
information that is comparable for each type of real estate investment and is
consistent with management’s analysis of the investing and operating performance
of our properties.

WLT 6/30/2021 10-Q – 44

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