Service Properties Trust 10-Q for FY2026 Q3
Service Properties Trust (SVC)
10-Q
2026-11-04
For: 2026-09-30
View Original
Added on
November 04, 2026
About this 10-Q
Service Properties Trust filed this 10-Q on November 4, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Service Properties Trust reported a nine-month net loss of $462,956 for 2026 versus $201,539 in 2025 as hotel sales reduced revenue. Financing proceeds were used to redeem $1,550,000 of principal, while comparable-hotel RevPAR rose 7.0%. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $399.52M
- down 16.6% from $478.77M a year earlier
- Net loss
- $87.94M
- compared with a net loss of $46.95M a year earlier
- Diluted EPS
- -$0.68
- compared with -$1.41 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
For the quarterly period ended September 30, 2026
OR
Commission File Number 1-11527
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of Principal Executive Offices) (Zip Code)
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of each Exchange on which Registered | ||||||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of registrant’s common shares of beneficial interest, $.01 par value per share, outstanding as of November 2, 2026: 129,813,906 .
SERVICE PROPERTIES TRUST
FORM 10-Q
September 30, 2026
INDEX
| Page | ||||||||
References in this Quarterly Report on Form 10-Q to the Company, SVC, we, us or our include Service Properties Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.
2
Part I. Financial Information
Item 1. Financial Statements
SERVICE PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited)
| September 30, 2026 | December 31, 2025 | |||||||||||||
| ASSETS | ||||||||||||||
| Real estate properties: | ||||||||||||||
| Land | $ | $ | ||||||||||||
| Buildings, improvements and equipment | ||||||||||||||
| Total real estate properties, gross | ||||||||||||||
| Accumulated depreciation | ( | ( | ||||||||||||
| Total real estate properties, net | ||||||||||||||
| Equity method investment | ||||||||||||||
| Acquired real estate leases and other intangibles, net | ||||||||||||||
Assets of properties held for sale | ||||||||||||||
| Cash and cash equivalents | ||||||||||||||
| Restricted cash | ||||||||||||||
| Due from related persons | ||||||||||||||
| Other assets, net | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
| Secured debt, net | $ | $ | ||||||||||||
| Unsecured debt, net | ||||||||||||||
| Accounts payable and other liabilities | ||||||||||||||
| Due to related persons | ||||||||||||||
Liabilities of properties held for sale | ||||||||||||||
| Total liabilities | ||||||||||||||
| Commitments and contingencies | ||||||||||||||
| Shareholders’ equity: | ||||||||||||||
Common shares of beneficial interest, $ | ||||||||||||||
| Additional paid in capital | ||||||||||||||
| Cumulative other comprehensive income | ||||||||||||||
| Cumulative net income | ||||||||||||||
| Cumulative common distributions | ( | ( | ||||||||||||
| Total shareholders’ equity | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
SERVICE PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands, except per share data)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Rental income | ||||||||||||||||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||||
| Net lease operating expenses | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||||||||||||||
| Transaction related costs | ||||||||||||||||||||||||||||||||||||||
| Loss on asset impairment | ||||||||||||||||||||||||||||||||||||||
| Total expenses | ||||||||||||||||||||||||||||||||||||||
| (Loss) gain on sale of real estate, net | ( | ( | ||||||||||||||||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||||||||||||||
Interest expense (including amortization of debt issuance costs, discounts and premiums of $ | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Loss on early extinguishment of debt, net | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Loss before income tax expense and equity in earnings (losses) of an investee | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Income tax expense | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Equity in earnings (losses) of an investee | ( | ( | ||||||||||||||||||||||||||||||||||||
| Net loss | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||
| Equity interest in investee’s unrealized gains (losses) | ( | |||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | ( | |||||||||||||||||||||||||||||||||||||
| Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||
| Weighted average common shares outstanding (basic and diluted) | ||||||||||||||||||||||||||||||||||||||
| Net loss per common share (basic and diluted) | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
SERVICE PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(dollars in thousands)
(unaudited)
| Number of Shares | Common Shares | Cumulative Common Distributions | Additional Paid in Capital | Cumulative Net Income | Cumulative Other Comprehensive Income | Total | ||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Equity interest in investee’s unrealized gains | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Common share grants | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Common share repurchases | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Distributions | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Issuance of common shares, net | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Equity interest in investee’s unrealized losses | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Common share grants | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Common share repurchases | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Common share forfeitures | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Distributions | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Equity interest in investee’s unrealized gains | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Common share grants | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Common share repurchases | ( | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Common share forfeitures | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Distributions | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
SERVICE PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (CONTINUED)
(dollars in thousands)
(unaudited)
| Number of Shares | Common Shares | Cumulative Common Distributions | Additional Paid in Capital | Cumulative Net Income | Cumulative Other Comprehensive Income | Total | ||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Equity interest in investee’s unrealized gains | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Common share grants | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Common share repurchases | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Common share forfeitures | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Distributions | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Equity interest in investee’s unrealized gains | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Common share grants | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Common share repurchases | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Common share forfeitures | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Distributions | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Equity interest in investee’s unrealized losses | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Common share grants | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Common share repurchases | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Distributions | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
SERVICE PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
| Nine Months Ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Net amortization of debt issuance costs, discounts and premiums as interest | ||||||||||||||||||||
| Straight line rental income | ( | ( | ||||||||||||||||||
| Loss on early extinguishment of debt, net | ||||||||||||||||||||
| Loss on asset impairment | ||||||||||||||||||||
| Equity in losses of an investee | ||||||||||||||||||||
| Loss (gain) on sale of real estate, net | ( | |||||||||||||||||||
| Other non-cash income, net | ( | ( | ||||||||||||||||||
| Changes in assets and liabilities: | ||||||||||||||||||||
| Due from related persons | ( | ( | ||||||||||||||||||
| Other assets | ||||||||||||||||||||
| Accounts payable and other liabilities | ( | |||||||||||||||||||
| Due to related persons | ( | |||||||||||||||||||
| Net cash provided by operating activities | ||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Real estate improvements | ( | ( | ||||||||||||||||||
| Hotel managers’ purchases with restricted cash | ( | ( | ||||||||||||||||||
| Real estate acquisitions and deposits | ( | ( | ||||||||||||||||||
| Net proceeds from sale of real estate | ||||||||||||||||||||
| Net cash (used in) provided by investing activities | ( | |||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Proceeds from mortgage notes payable, net of discounts | ||||||||||||||||||||
| Repayment of mortgage notes payable | ( | ( | ||||||||||||||||||
| Proceeds from senior secured notes, net of discounts | ||||||||||||||||||||
| Repayments of senior unsecured notes | ( | ( | ||||||||||||||||||
| Borrowings under variable funding note | ||||||||||||||||||||
| Repayments of variable funding note | ( | |||||||||||||||||||
| Borrowings under revolving credit facility | ||||||||||||||||||||
| Repayments of revolving credit facility | ( | ( | ||||||||||||||||||
| Payment of debt issuance costs | ( | ( | ||||||||||||||||||
| Repurchase of common shares | ( | ( | ||||||||||||||||||
| Issuance of common shares, net | ||||||||||||||||||||
| Distributions to common shareholders | ( | ( | ||||||||||||||||||
| Net cash (used in) provided by financing activities | ( | |||||||||||||||||||
| (Decrease) increase in cash and cash equivalents and restricted cash | ( | |||||||||||||||||||
| Cash and cash equivalents and restricted cash at beginning of period | ||||||||||||||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | $ | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
SERVICE PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(dollars in thousands)
(unaudited)
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Supplemental cash flow information: | ||||||||||||||||||||||||||
| Cash paid for interest | $ | $ | ||||||||||||||||||||||||
| Cash paid (refunded) for income taxes | $ | $ | ( | |||||||||||||||||||||||
| Non-cash investing activities: | ||||||||||||||||||||||||||
| Real estate improvements accrued, not paid | $ | $ | ||||||||||||||||||||||||
| Supplemental disclosure of cash and cash equivalents and restricted cash: | ||||||||||||||||||||||||||
| The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows: | ||||||||||||||||||||||||||
As of September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||||||||||||||
Restricted cash (1) | ||||||||||||||||||||||||||
| Total cash and cash equivalents and restricted cash | $ | $ | ||||||||||||||||||||||||
(1)Restricted cash consists of amounts escrowed pursuant to the terms of our hotel management agreements to fund capital improvements at our hotels and amounts escrowed as required by certain of our debt agreements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(unaudited)
Note 1. Organization and Basis of Presentation
Service Properties Trust, or we, us or our, is a real estate investment trust, or REIT, organized on February 7, 1995 under the laws of the State of Maryland, which invests in service-focused retail net lease properties and hotels. At September 30, 2026, we owned, directly and through our subsidiaries, 740 service-focused retail net lease properties and 87 hotels.
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025, or our 2025 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair statement of results for the interim period have been included. These condensed consolidated financial statements include our accounts and the accounts of our subsidiaries, all of which are 100 % owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods and those of our tenants and managers are not necessarily indicative of the results that may be expected for the full year.
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Estimates in our condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets, certain fair value measurements and impairment of real estate and related intangibles.
Unless otherwise noted, all impacted amounts and share information included in this Quarterly Report on Form 10-Q have been retroactively adjusted for the 1-for-5 reverse share split, or the Reverse Share Split, described in Note 9, as if it occurred on the first day of the first period presented. Certain adjusted amounts and amounts per share may not agree with previously reported amounts due to the rounding of fractional shares.
Note 2. Recent Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update, or ASU, No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, or ASU No. 2024-03, which requires public entities to disclose specific expense categories such as employee compensation, depreciation and intangible asset amortization. These details must be presented in a tabular format in the notes to financial statements for both interim and annual reporting periods. ASU No. 2024-03 is required to be applied prospectively but can be applied retrospectively, and is effective for the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact ASU No. 2024-03 will have on our condensed consolidated financial statements.
Note 3. Revenue Recognition
We recognize in our condensed consolidated statements of comprehensive income (loss), hotel operating revenues, consisting primarily of room and food and beverage sales, when goods and services are provided.
9
SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
Certain of our lease agreements require additional percentage rent if gross revenues of our properties exceed certain thresholds defined in our lease agreements. We may determine percentage rent due to us under our leases monthly, quarterly or annually, depending on the specific lease terms, and recognize it when all contingencies are met and the rent is earned. We recorded percentage rent of $633 and $959 for the three months ended September 30, 2026 and 2025, respectively, and $2,028 and $2,306 for the nine months ended September 30, 2026 and 2025, respectively.
Note 4. Per Common Share Amounts
We calculate basic earnings per common share using the two class method. We calculate diluted earnings per common share using the more dilutive of the two class method or the treasury stock method. Unvested common share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per common share. For the three and nine months ended September 30, 2026 and 2025, there were no
Note 5. Real Estate Properties
As of September 30, 2026, we owned 740 service-focused retail net lease properties with an aggregate of 13,542,332 square feet that are primarily subject to “triple net” leases, or net leases where the tenant is generally responsible for payment of operating expenses and capital expenditures of the property during the lease term, and 87 hotels with an aggregate of 19,897 rooms or suites. Our properties had an aggregate undepreciated book value of $7,686,326 , including $153,701 related to properties classified as held for sale as of September 30, 2026, and an aggregate undepreciated book value of $8,102,783 , including $153,751 related to properties classified as held for sale, as of December 31, 2025.
We funded capital improvements to certain of our properties of $80,270 and $131,664 during the nine months ended September 30, 2026 and 2025, respectively.
Acquisitions
During the nine months ended September 30, 2026, we acquired five net lease properties with a total of 19,615 square feet for a combined purchase price of $15,105 , excluding closing costs. We accounted for these transactions as acquisitions of assets and allocated the purchase prices based on the estimated fair value of the acquired assets as follows:
| Quarter Acquired | Property Type | Number of Properties | Square Feet | Purchase Price (1) | Land | Buildings, Improvements and Equipment | Acquired Real Estate Leases | |||||||||||||||||||||||||||||||||||||
| Q1 2026 | Net Lease | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Q2 2026 | Net Lease | |||||||||||||||||||||||||||||||||||||||||||
| Q3 2026 | Net Lease | |||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
(1) Purchase price is the gross contract price, plus closing costs of $187 .
10
SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
From October 1, 2026 through November 2, 2026, we acquired a portfolio of four net lease properties with a total of 41,020 square feet for a combined purchase price of $8,314 , excluding closing costs.
Dispositions
During the nine months ended September 30, 2026, we sold 32 properties for a combined sales price of $88,159 The sales of these properties, as presented in the table below, do not represent a strategic shift in our business. As a result, the results of the operations of these properties are included in continuing operations through the date of sale in our condensed consolidated statements of comprehensive income (loss).
| Quarter Sold | Property Type | Number of Properties | Square Feet / Rooms or Suites | Gross Sales Price (1) | Gain (Loss) on Sale of Real Estate, net | |||||||||||||||||||||||||||||||||
| Q1 2026 | Hotel | $ | $ | |||||||||||||||||||||||||||||||||||
| Q1 2026 | Net Lease | |||||||||||||||||||||||||||||||||||||
| Q2 2026 | Net Lease | ( | ||||||||||||||||||||||||||||||||||||
| Q3 2026 | Hotel | ( | ||||||||||||||||||||||||||||||||||||
| Q3 2026 | Net Lease | ( | ||||||||||||||||||||||||||||||||||||
| $ | $ | ( | ||||||||||||||||||||||||||||||||||||
(1)Gross sales price is the gross contract price, excluding closing costs.
As of September 30, 2026, we had nine hotels with a total of 1,809 keys and six net lease properties with a total of 19,022 square feet classified as held for sale. See Note 14 for further information on certain of these properties. During the nine months ended September 30, 2026, one hotel previously classified as held for sale was reclassified to held and used as we are no longer marketing it for sale. Upon reclassification, depreciation was resumed, and the hotel was measured at the lower of its carrying amount adjusted for depreciation that would have been recognized during the held for sale period or its fair value. No impairment was recorded and the amount subject to the reclassification was not material to our condensed consolidated financial statements.
The following table summarizes the major classes of assets and liabilities of our properties held for sale by our net lease investments and hotel investments segments as of September 30, 2026:
As of September 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Net Lease | Hotels | Total | ||||||||||||||||||||||||||||||||||||
| Assets of properties held for sale: | ||||||||||||||||||||||||||||||||||||||
| Real estate properties, net | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Other assets, net (1) | ||||||||||||||||||||||||||||||||||||||
| Total assets of properties held for sale | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Liabilities of properties held for sale: | ||||||||||||||||||||||||||||||||||||||
| Accounts payable and other liabilities | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Total liabilities of properties held for sale | $ | $ | $ | |||||||||||||||||||||||||||||||||||
(1) Other assets, net includes working capital of $2,960 for our hotel investments segment as described in Note 6.
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SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
Note 6. Leases and Management Agreements
As of September 30, 2026, we owned 740 service-focused retail properties net leased to 188 tenants, including 175 travel centers leased to TravelCenters of America Inc., or TA, our largest tenant, and 87 hotels included in four operating agreements managed by subsidiaries of the following companies: Sonesta (62 hotels), Hyatt Hotels Corporation, or Hyatt (17 hotels), Radisson Hospitality, Inc., or Radisson (seven hotels), and InterContinental Hotels Group, PLC, or IHG (one hotel). We sometimes refer to these companies as our managers and/or tenants, or collectively, operators. We do not operate any of our properties.
Net Lease Portfolio
As of September 30, 2026, we owned 740 service-focused retail net lease properties with an aggregate of 13,542,332 square feet with leases requiring annual minimum rents of $395,492 with a weighted (by annual minimum rents) average remaining lease term of 7.0 years. Our net lease properties were 97.6 % occupied and leased by 188 tenants operating under 141 brands in 21 distinct industries.
TA Leases
As of September 30, 2026, TA is our largest tenant, representing 34.2 % of our total historical real estate investments. We lease to TA a total of 175 travel centers under five master leases, or our TA leases, that expire in 2033 subject to TA’s right to extend those leases, and require annual minimum rents of $269,547 as of September 30, 2026. TA receives a monthly rent credit totaling $25,000 per year over the 10-year initial term of the TA leases as a result of rent it prepaid.
Our TA leases are “triple net” leases that require TA to pay all costs incurred in the operation of the leased travel centers, including personnel, utility, inventory, customer service and insurance expenses, real estate and personal property taxes, environmental related expenses, underground storage tank maintenance costs and ground lease payments at those travel centers at which we lease the property and sublease it to TA. Our TA leases generally require TA to indemnify us for certain environmental matters and for liabilities that arise during the terms of the leases from ownership or operation of the leased travel centers. TA is required to maintain the leased travel centers, including structural and non-structural components. BP Corporation North America Inc., a subsidiary of BP p.l.c., guarantees payment under each of the TA leases, limited to an aggregate cap which was $2,782,917 as of September 30, 2026.
We recognized rental income from our TA leases of $67,834 203,502 422 and $1,743 for the three months ended September 30, 2026 and 2025, respectively, and by $3,468 and $7,389 for the nine months ended September 30, 2026 and 2025, respectively, to record the scheduled rent changes on a straight line basis. As of September 30, 2026 and December 31, 2025, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $63,332 and $55,157 , respectively, included in other assets, net in our condensed consolidated balance sheets.
Other Net Lease Properties
Our other net lease agreements generally provide for minimum rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. We recognized rental income from our net lease properties (excluding TA) of $33,307 and $33,360 for the three months ended September 30, 2026 and 2025, respectively, which included $587 and $514 , respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight line basis. We recognized rental income from our net lease properties (excluding TA) of $98,418 and $96,939 for the nine months ended September 30, 2026 and 2025, respectively, which included $850 and $1,429 , respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight line basis.
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SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
We continually review receivables related to rent, straight line rent and property operating expense reimbursements and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes an assessment of whether substantially all of the amounts due under a tenant’s lease are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received. We recognize all changes in the collectability assessment for an operating lease as an adjustment to rental income. We recorded reserves for uncollectable amounts and reduced rental income by $421 and $3,291 for the three and nine months ended September 30, 2026, respectively, based on our assessment of the collectability of rents. We recorded reserves for uncollectable amounts and reduced rental income by $479 and $1,856 for the three and nine months ended September 30, 2025, respectively, based on our assessment of the collectability of rents. We had reserves for uncollectable rents of $3,864 and $3,115 as of September 30, 2026 and December 31, 2025, respectively, included in other assets, net in our condensed consolidated balance sheets.
Hotel Agreements
Sonesta Agreements
As of September 30, 2026, Sonesta managed 36 of our full service hotels, 19 of our extended stay hotels and seven of our select service hotels pursuant to management agreements. The hotels Sonesta managed for us comprised approximately 39.9 % of our total historical real estate investments as of September 30, 2026.
In October 2026, we sold eight Sonesta branded hotels with a total of 1,509 keys and we are currently in the process of marketing for sale one additional Sonesta branded hotel with 300 keys. Following the completion of these hotel sales, we expect to retain 53 hotels managed by Sonesta, or the Sonesta Retained Hotels. As discussed below, in August 2025, we and Sonesta amended and restated our management agreements for the Sonesta Retained Hotels and certain other hotels managed by Sonesta and waived any termination fees under the existing Sonesta management agreement associated with the sale of certain hotels.
Prior to August 1, 2025, all of the hotels managed by Sonesta were managed pursuant to a management agreement that was scheduled to expire on January 31, 2037, or the legacy Sonesta agreement, and provided that we would be paid an annual owner’s priority return if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), were sufficient to do so. The legacy Sonesta agreement further provided that we would be paid an additional return equal to 80 % of the operating profits, as defined therein, after paying the owner’s priority return, reimbursing owner or manager advances, funding reserves established for the regular refurbishment of our hotels, or FF&E reserves, and paying Sonesta’s incentive fee, if any.
Effective August 1, 2025, we entered into new management agreements with Sonesta for most of the Sonesta Retained Hotels and certain other hotels managed by Sonesta, or the Sonesta Retained Hotel agreements. Each Sonesta Retained Hotel agreement expires on July 31, 2040 and includes two 10-year renewal options at Sonesta’s option. Pursuant to the Sonesta Retained Hotel agreements, we will pay Sonesta, after payment of hotel operating expenses, a base management fee equal to 3.0 % of gross revenues for full service hotels and 5.0 20 % of EBITDA, as defined in the Sonesta Retained Hotel agreements, in excess of the incentive threshold of each hotel, subject to caps, commencing with the 2026 calendar year, which has initially been set at $194,248 in the aggregate and increases based on the amount by which each hotel’s capital expenditures exceeds their respective FF&E reserve (the aggregate incentive threshold under our Sonesta Retained Hotel agreements as of September 30, 2026 was $202,788 ); (ii) a brand promotion fee of 3.5 % of gross room revenues; (iii) a loyalty fee of the greater of (x) 1.0 % of gross room revenues or (y) 4.5 % of qualified room revenue, in the case of full service hotels, 2.5 %, in the case of extended stay hotels, and 3.0 %, in the case of select service hotels; (iv) a centralized service fee equal to $1,100 per year for full service hotels and $250 3.0 % of construction and capital expenditures managed by Sonesta. We have the right to terminate the Sonesta Retained Hotel agreements for certain events of default, casualty and condemnation events and if minimum performance thresholds are not met for consecutive calendar years beginning with the measurement period commencing with the 2028 calendar year. The Sonesta Retained Hotel agreements are not subject to any pooling, cross-default or other similar contractual arrangement and the legacy Sonesta agreement will remain subject to a pooling agreement and cross-default provisions until the remainder of the hotels subject to that agreement are sold. Our legacy Sonesta agreement and the Sonesta Retained Hotel agreements are collectively referred to as our Sonesta agreements.
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SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
As part of the disposition of a hotel in September 2026, we would have been required to pay a termination fee of $11,035 to terminate the existing management agreement with Sonesta. In lieu of receiving the termination fee, Sonesta agreed to extend the term of the management agreement for our remaining Sonesta Retained Hotels through June 30, 2043 and waived its right to receive the termination fee for this hotel. We recorded the $11,035 termination fee as a loss on asset impairment in our condensed consolidated statements of comprehensive income (loss) during the three months ended September 30, 2026.
We realized returns under our Sonesta agreements of $31,966 and $37,209 during the three months ended September 30, 2026 and 2025, respectively, and $86,046 and $120,896 during the nine months ended September 30, 2026 and 2025, respectively.
We incurred management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing programs or brand promotion fees, and third-party reservation transmission fees or centralized service fees of $15,428 and $31,575 for the three months ended September 30, 2026 and 2025, respectively, and $44,962 and $89,734 during the nine months ended September 30, 2026 and 2025, respectively. We accrued estimated incentive fees of $1,139 during the nine months ended September 30, 2026 based on year-to-date results of certain Sonesta managed hotels in comparison to each hotel’s respective incentive threshold. The actual amount of incentive fees incurred for 2026, if any, will be based upon individual hotels’ cumulative annual results in comparison to their respective incentive thresholds and will be payable in 2027. These fees and costs are included in hotel operating expenses in our condensed consolidated statements of comprehensive income (loss). In addition, we incurred construction management fees payable to Sonesta pursuant to our Sonesta agreements of $283 and $850 for the three months ended September 30, 2026 and 2025, respectively, and $960 and $2,096 during the nine months ended September 30, 2026 and 2025, respectively, which have been capitalized in our condensed consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets.
Our Sonesta agreements require us to fund capital expenditures made at our hotels. We incurred capital expenditures for hotels included in our Sonesta agreements in an aggregate amount of $26,591 and $44,268 during the three months ended September 30, 2026 and 2025, respectively, and $70,491 and $123,075 during the nine months ended September 30, 2026 and 2025, respectively. We owed Sonesta $4,196 and $39,509 for capital expenditures and other reimbursements at September 30, 2026 and December 31, 2025, respectively. Sonesta owed us $12,191 and $241 in returns under our Sonesta agreements as of September 30, 2026 and December 31, 2025, respectively. Amounts due from Sonesta are included in due from related persons and amounts owed to Sonesta are included in due to related persons in our condensed consolidated balance sheets. Our legacy Sonesta agreement requires that 5 % of the hotel gross revenues be escrowed for future capital expenditures as FF&E reserves, subject to available cash flows after payment of the owner’s priority returns due to us. No
We are required to maintain minimum working capital for each of our hotels managed by Sonesta and have advanced a fixed amount based on the number of rooms in each hotel to meet the cash needs for hotel operations. As of September 30, 2026 and December 31, 2025, we had advanced $29,898 and $31,835 , respectively, of initial working capital to Sonesta net of any working capital returned to us on termination of the applicable management agreements in connection with hotels we have sold. These amounts are included in other assets, net and assets of properties held for sale, as applicable, in our condensed consolidated balance sheets. Any remaining working capital would be returned to us upon termination in accordance with the terms of our Sonesta agreements.
See Notes 7 and 11 for further information regarding our relationships, agreements and transactions with Sonesta.
Hyatt Agreement
As of September 30, 2026, Hyatt managed 17 of our select service hotels pursuant to a portfolio management agreement that expires on March 31, 2031, or our Hyatt agreement, and provides that, as of September 30, 2026, we are to be paid an annual owner’s priority return of $17,400 . Any returns we receive from Hyatt are currently limited to the hotels’ available cash flows, if any, after payment of operating expenses. Hyatt has provided us with a $30,000 limited guarantee for 75 % of the aggregate annual owner’s priority returns due to us. We realized returns under our Hyatt agreement of $3,263 and $3,262 during the three months ended September 30, 2026 and 2025, respectively, and $9,788 and $9,652 during the nine months ended September 30, 2026 and 2025, respectively. During the nine months ended September 30, 2026 and 2025, the hotels under this agreement generated cash flows that were less than the guaranteed owner’s priority level due to us for these periods, and we decreased hotel operating expenses by $1,023 and $1,869 , respectively, to record the guaranteed amount due from Hyatt. The available balance of the guaranty was $25,469 as of September 30, 2026. We did not incur any capital expenditures
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SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
during the three months ended September 30, 2026, and we incurred capital expenditures of $55 during the nine months ended September 30, 2026 for certain hotels included in our Hyatt agreement. During the three and nine months ended September 30, 2025, we incurred capital expenditures of $420 and $2,388 , respectively, for certain hotels included in our Hyatt agreement.
Radisson Agreement
As of September 30, 2026, Radisson managed seven of our full service hotels pursuant to a portfolio management agreement that expires on July 31, 2031, or our Radisson agreement, and provides that we are to be paid an annual owner’s priority return of $11,035 . Radisson has provided us with a $22,000 limited guarantee for 75 % of the aggregate annual owner’s priority returns due to us. We realized returns under our Radisson agreement of $2,528 and $2,046 during the three months ended September 30, 2026 and 2025, respectively, and $7,005 and $5,487 during the nine months ended September 30, 2026 and 2025, respectively. During the nine months ended September 30, 2026, the hotels under this agreement generated cash flows in excess of the guaranteed owner’s priority level due to us for the period. During the nine months ended September 30, 2025, the hotels under this agreement generated cash flows that were less than the guaranteed owner’s priority level due to us for the period, and we decreased hotel operating expenses by $3,084 to record the guaranteed amount due from Radisson. The available balance of the guaranty was $16,585 as of September 30, 2026. During the three and nine months ended September 30, 2026, we incurred capital expenditures of $1,000 and $2,062 , respectively, for the hotels included in our Radisson agreement, which resulted in increases in our contractual owner’s priority returns of $60 and $124 , respectively. We did not
IHG Agreement
Our management agreement with IHG, or our IHG agreement, for one hotel expires on January 31, 2027. We realized returns under our IHG agreement of $775 and $1,819 during the three months ended September 30, 2026 and 2025, respectively, and $3,581 and $4,838 during the nine months ended September 30, 2026 and 2025, respectively. Any returns we receive from IHG are limited to the hotel’s available cash flows, if any, after payment of operating expenses. We incurred capital expenditures for the one hotel included in our IHG agreement in an aggregate amount of $250 and $887 during the three and nine months ended September 30, 2026, respectively. We did not incur any capital expenditures during the three months ended September 30, 2025 and we incurred capital expenditures of $1,023 during the nine months ended September 30, 2025. We are currently marketing this hotel for sale.
Note 7. Equity Method Investment
As of both September 30, 2026 and December 31, 2025, we owned 34 34
As of September 30, 2026 and December 31, 2025, our investment in Sonesta had a carrying value of $108,875 and $111,796 , respectively. On the date of acquisition of our initial equity interest in Sonesta (February 27, 2020), the cost basis of our investment in Sonesta exceeded our proportionate share of Sonesta’s total stockholders’ equity book value by an aggregate of $8,000 . As required under GAAP, we are amortizing this difference to equity in earnings of an investee over 31 years, the weighted average remaining useful life of the real estate assets and intangible assets and liabilities owned by Sonesta as of the date of our acquisition. We recorded amortization of the basis difference of $65 195 244 and $1,600 for the three months ended September 30, 2026 and 2025, respectively, and losses of $3,009 and $2,873 for the nine months ended September 30, 2026 and 2025, respectively. These amounts, which include amortization of the basis difference, are included in equity in earnings (losses) of an investee in our condensed consolidated statements of comprehensive income (loss).
We recorded a liability of $42,000 for the fair value of our initial investment in Sonesta, as no cash consideration was exchanged related to the modification of our management agreement with, and investment in, Sonesta. This liability for our investment in Sonesta is included in accounts payable and other liabilities in our condensed consolidated balance sheets and is being amortized on a straight-line basis through the initial term of the legacy Sonesta agreement, January 31, 2037, as a reduction to hotel operating expenses in our condensed consolidated statements of comprehensive income (loss). We reduced hotel operating expenses by $621 1,863 25,648 and $27,511 , respectively.
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SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
See Notes 6 and 11 for further information regarding our relationships, agreements and transactions with Sonesta.
Note 8. Indebtedness
Our principal debt obligations at September 30, 2026 were: (1) $1,725,000 aggregate outstanding principal amount of senior unsecured notes; (2) $1,580,155 aggregate outstanding principal amount of senior secured notes; and (3) $1,347,167 aggregate outstanding principal amount of net lease mortgage notes. We had no amounts outstanding under our revolving credit facility as of September 30, 2026.
Revolving Credit Facility
Our $650,000 two additional six-month periods.
Interest payable on drawings under our revolving credit facility is based on the secured overnight financing rate, or SOFR, plus a margin ranging from 1.50 % to 3.00 % based on our leverage ratio, as defined in our credit agreement, which was 2.50 % as of September 30, 2026. We also pay unused commitment fees of 20 to 30 basis points per annum on the total amount of lending commitments under our revolving credit facility based on amounts outstanding. As of September 30, 2026 and 2025, the annual interest rate payable on borrowings under our revolving credit facility was 6.50 % and 6.74 %, respectively. The weighted average annual interest rate for borrowings under our revolving credit facility was 6.44 % and 6.47 % for the three and nine months ended September 30, 2026, respectively, and 6.96 % and 6.95 % for the three and nine months ended September 30, 2025, respectively. As of both September 30, 2026 and November 2, 2026, we had no 650,000
As collateral for all loans and other obligations under our revolving credit facility, certain of our subsidiaries pledged all of their respective equity interests in certain of our direct and indirect property owning subsidiaries, and our pledged subsidiaries provided first mortgage liens on certain properties. As of September 30, 2026, our revolving credit facility was secured by 55 properties, including 38 net lease properties and 17 hotels, with an aggregate undepreciated book value of $874,751 .
Our debt agreements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes The RMR Group LLC, or RMR, ceasing to act as our business manager. Our debt agreements also contain covenants, including those that restrict our ability to incur debts or to make distributions under certain circumstances and generally require us to maintain certain financial ratios. Borrowings under our revolving credit facility are subject to meeting ongoing minimum performance and market values of the collateral properties, satisfying certain financial covenants and other credit facility conditions. We believe we were in compliance with the terms and conditions of our debt agreements as of September 30, 2026.
Redemption of Senior Unsecured Notes
In January 2026 and May 2026, we redeemed all $400,000 4.95 1,785 2,539 during the nine months ended September 30, 2026, which represented the make whole premiums and the write-off of unamortized discounts and issuance costs related to these notes.
In March 2026, we redeemed all $700,000 of our outstanding 8.375 % senior guaranteed unsecured notes due 2029 for a redemption price equal to the principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption and a make whole premium of $37,128 . As a result of the redemption, we recorded a loss on early extinguishment of debt of $49,697 during the nine months ended September 30, 2026, which represented the make whole premium and the write-off of unamortized discounts and issuance costs related to these notes.
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SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
In April 2026, we redeemed all $450,000 of our outstanding 5.50 % senior guaranteed unsecured notes due 2027 for a redemption price equal to the principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption and a make whole premium of $7,191 . As a result of the redemption, we recorded a loss on early extinguishment of debt of $9,018 during the nine months ended September 30, 2026, which represented the make whole premium and the write-off of unamortized discounts and issuance costs related to these notes.
Net Lease Mortgage Notes
SVC ABS LLC, or the Initial Issuer, issued $610,200 in aggregate principal amount of net lease mortgage notes, or the Series 2023-1 Notes, on February 10, 2023. On March 6, 2026, the Initial Issuer, SVC 2026 ABS LLC and SVC 2026 TA ABS LLC, or collectively, the Issuers, issued $745,000 in aggregate principal amount of net lease mortgage notes in three classes, or the Series 2026-1 Notes. In connection with the Series 2026-1 Notes, we contributed to the Issuers 158 properties with an undepreciated book value of $757,616 and required minimum rents of $85,379 as of September 30, 2026. The Issuers are wholly owned special purpose bankruptcy remote, indirect subsidiaries that are separate legal entities and are the sole owners of their respective assets and liabilities. The assets of the Issuers are not available to pay or otherwise satisfy obligations to the creditors of any owners or affiliates of the Issuers. Our net lease mortgage notes are summarized below:
| Series | Note Class | Principal Outstanding as of September 30, 2026 | Coupon Rate | Initial Term (in years) | Maturity | |||||||||||||||||||||||||||
| 2023-1 | Class A | $ | February 2028 | |||||||||||||||||||||||||||||
| 2023-1 | Class B | February 2028 | ||||||||||||||||||||||||||||||
| 2023-1 | Class C | February 2028 | ||||||||||||||||||||||||||||||
| 2023-1 Total / weighted average | ||||||||||||||||||||||||||||||||
| 2026-1 | Class A | $ | March 2031 | |||||||||||||||||||||||||||||
| 2026-1 | Class B | March 2031 | ||||||||||||||||||||||||||||||
| 2026-1 | Class M | March 2031 | ||||||||||||||||||||||||||||||
| 2026-1 Total / weighted average | ||||||||||||||||||||||||||||||||
| Total / weighted average | $ | |||||||||||||||||||||||||||||||
The Series 2023-1 Class A notes and the Series 2023-1 Class B notes require monthly principal repayments at an annualized rate of 0.50 % and 0.25 % of the balance outstanding, respectively, and the Series 2023-1 Class C notes require interest payments only, with balloon payments due at maturity. The Series 2023-1 Notes mature in February 2028 and may be redeemed without penalty 24 months prior to the scheduled maturity date beginning in February 2026.
The Series 2026-1 Class A notes and the Series 2026-1 Class B notes require monthly principal repayments at an annualized rate of 0.50 % and 0.25 % of the balance outstanding, respectively, and the Series 2026-1 Class M notes require interest payments only, with balloon payments due at maturity. The Series 2026-1 Notes mature in March 2031 and may be redeemed without penalty 24 months prior to the scheduled maturity date beginning in March 2029.
Our Series 2023-1 Notes and Series 2026-1 Notes are non-recourse and, as of September 30, 2026, were secured by 471 retail net lease properties owned by the Issuers, including 158 properties that were contributed by us in connection with the issuance of the Series 2026-1 Notes. During the nine months ended September 30, 2026, the Issuers sold one retail net lease property that served as collateral under the Series 2026-1 Notes. In connection with this sale, the property was released from the collateral pool in exchange for cash proceeds in accordance with the terms of the Series 2026-1 Notes. As of September 30, 2026, the current leases relating to the 471 properties required annual minimum rents of $153,013 and had an aggregate undepreciated book value of $1,506,624 .
In September 2026, we repaid and terminated the $45,000 variable funding note, or VFN. Prior to its termination, the VFN was secured by the 471 net lease properties that secure our existing $1,347,167 of net lease mortgage notes. Borrowings under the VFN accrued interest at SOFR plus a margin of 1.75 %, and the Issuer was required to pay an unused commitment fee of 50 basis points per annum on undrawn amounts. The weighted average annual interest rate for borrowings under the VFN was 5.49 % and 5.44 % for the three and nine months ended September 30, 2026, respectively, and 6.00 % and 6.03 % for the three and nine months ended September 30, 2025, respectively. As a result of the repayment and termination, we recorded a loss on early extinguishment of debt of $335 during the nine months ended September 30, 2026, which represented the write-off of unamortized issuance costs related to this note.
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SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
Note 9. Shareholders’ Equity
Reverse Share Split
After the close of trading on July 6, 2026, we effected the Reverse Share Split, and following such effective time of the Reverse Share Split, we changed the par value of our common shares from $.05 per share back to $.01 per share. No fractional shares were issued in connection with the Reverse Share Split. Instead, each shareholder who would have been entitled to receive a fractional share as a result of the Reverse Share Split received cash in lieu of such fractional share, in an amount equal to their fractional interest multiplied by the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the effective date of the Reverse Share Split, adjusted to give effect to the Reverse Share Split, without interest.
Equity Offering
On March 30, 2026, we amended our amended and restated declaration of trust, as amended and supplemented, to increase our authorized common shares from 200,000,000 to 900,000,000 shares.
On April 2, 2026, we issued and sold 95,833,333 common shares (479,166,667 common shares prior to giving effect to the Reverse Share Split), including 12,500,000 common shares (62,500,000 common shares prior to giving effect to the Reverse Share Split) pursuant to the exercise of the underwriters’ option to purchase additional shares, at $6.00 per share ($1.20 per share prior to giving effect to the Reverse Share Split) in an underwritten public offering. Our net proceeds from this offering were approximately $541,798 , after deducting the underwriters’ discount and other offering expenses.
Share Awards
On June 11, 2026, in accordance with our Trustee compensation arrangements, we awarded 13,414 of our common shares, valued at $8.20 per common share, the closing price of our common shares on Nasdaq on that day, to each of our then seven Trustees as part of their annual compensation.
On September 10, 2026, we awarded under our equity compensation plan an aggregate of 376,595 of our common shares, valued at $6.87 per common share, the closing price of our common shares on Nasdaq on that day, to our officers and certain other employees of RMR and certain employees of Sonesta.
On September 15, 2026, in accordance with our Trustee compensation agreements, we awarded 16,541 of our common shares, valued at $6.65 per common share, the closing price of our common shares on Nasdaq on that day, in connection with the appointment of a new Independent Trustee as part of her annual compensation.
Share Purchases
During the nine months ended September 30, 2026, we purchased an aggregate of 101,772 of our common shares, valued at a weighted average price of $7.00 per common share, from current officers and certain current and former employees of RMR and Sonesta, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on Nasdaq on the applicable purchase dates.
Distributions
During the nine months ended September 30, 2026, we declared and paid regular quarterly distributions to common shareholders as follows:
| Declaration Date | Record Date | Paid Date | Dividend Per Common Share | Total Distributions | ||||||||||||||||||||||
| January 15, 2026 | January 26, 2026 | February 19, 2026 | $ | $ | ||||||||||||||||||||||
| April 9, 2026 | April 21, 2026 | May 14, 2026 | ||||||||||||||||||||||||
| July 9, 2026 | July 20, 2026 | August 13, 2026 | ||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
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SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
On October 8, 2026, we declared a regular quarterly distribution to common shareholders of record as of October 19, 2026 of $0.05 per common share, or approximately $6,491 . We expect to pay this distribution on or about November 12, 2026.
Cumulative Other Comprehensive Income (Loss)
Cumulative other comprehensive income (loss) represents our share of Sonesta’s other comprehensive income (loss) related to its interest rate cap through our equity method investment. See Notes 7 and 11 for further information regarding this investment.
Note 10. Business and Property Management Agreements with RMR
We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations of our net lease portfolio, the office building component of one of our hotels and major renovation or repositioning activities at our hotels that we may request RMR to manage from time to time.
We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our net lease properties and the office building component of one of our hotels, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function and as otherwise agreed. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR.
For the three and nine months ended September 30, 2026 and 2025, the business management fees, property management fees and construction supervision fees and expense reimbursements recognized in our condensed consolidated financial statements were as follows:
| Financial Statement | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
| Line Item | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Pursuant to business management agreement: | ||||||||||||||||||||||||||||||||
Net business management fees (1) | General and administrative | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Pursuant to property management agreement: | ||||||||||||||||||||||||||||||||
| Property management fees | Net lease operating expenses | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Construction supervision fees | Buildings, improvements and equipment (2) | |||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Expense reimbursement | Net lease operating expenses, general and administrative, and buildings, improvements and equipment (2) | $ | $ | $ | $ | |||||||||||||||||||||||||||
(1)The net business management fees we recognized for each of the three and nine months ended September 30, 2026 and 2025, reflect a reduction of $896 2,689
(2)Amounts capitalized as buildings, improvements and equipment are depreciated over the estimated useful lives of the related assets.
Based on our common share total return, as defined in our business management agreement, as of September 30, 2026, no three-year period ending December 31, 2026, and will be payable in January 2027. We did not incur an incentive fee payable to RMR for the year ended December 31, 2025.
19
SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
Note 11. Related Person Transactions
We have relationships and historical and continuing transactions with Sonesta, RMR, RMR Inc., a holding company which conducts substantially all of its business through RMR, and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees, or our Board, and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Christopher J. Bilotto, our other Managing Trustee and our President and Chief Executive Officer, also serves as an executive officer of RMR Inc. and is an officer and employee of RMR. John G. Murray, our former Managing Trustee and our former President and Chief Executive Officer until March 9, 2025, also served as an officer and employee of RMR until March 31, 2026, and served as a director and president and chief executive officer of Sonesta until March 31, 2026, and was an employee of Sonesta until his retirement on September 30, 2026. Jeffrey C. Leer, an executive vice president of RMR, became a co-chief executive officer of Sonesta, effective April 1, 2026. In addition, each of our other officers serves as an officer of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Mr. Portnoy serves as a trustee of these public companies and as chair of the boards of certain of these public companies. Other officers of RMR, including certain of our officers, serve as managing trustees or officers of certain of these companies.
Our Manager, RMR
We have two agreements with RMR to provide management services to us. See Note 10 for further information regarding our management agreements with RMR.
Sonesta
Sonesta is a private company of which Mr. Portnoy, one of our Managing Trustees, is a director and the controlling stockholder. Mr. Murray, our other Managing Trustee until March 9, 2025, was a director and president and chief executive officer of Sonesta until March 31, 2026, and was an employee of Sonesta until his retirement on September 30, 2026. Mr. Leer, an executive vice president of RMR, became a co-chief executive officer of Sonesta, effective April 1, 2026. Sonesta’s other director served as one of RMR Inc.’s managing directors, as RMR’s and RMR Inc.’s executive vice president, general counsel and secretary and as our Secretary until her resignation from these positions, effective December 31, 2025, in connection with her retirement. Certain other officers and employees of Sonesta are former officers and employees of RMR. RMR also provides certain services to Sonesta. As of September 30, 2026, we owned 34 62 of our hotels. See Notes 6 and 7 for further information regarding our relationships, agreements and transactions with Sonesta.
Equity Offering
On April 2, 2026, RMR, our manager, purchased 8,333,333 common shares (41,666,666 common shares prior to giving effect to the Reverse Share Split) in the equity offering at a price equal to the public offering price of $6.00 per share ($1.20 per share prior to giving effect to the Reverse Share Split). In addition, Mr. Bilotto, one of our Managing Trustees and our President and Chief Executive Officer, and Brian E. Donley, our Chief Financial Officer and Treasurer, as well as certain of our Trustees, purchased an aggregate of approximately 49,666 common shares (248,333 common shares prior to giving effect to the Reverse Share Split) at the public offering price. As of September 30, 2026, RMR beneficially owned approximately 6.4 % of our outstanding common shares and Mr. Portnoy, including through ABP Trust, beneficially owned approximately 6.8 % of our outstanding common shares.
For further information about these and certain other such relationships and certain other related person transactions, refer to our 2025 Annual Report.
20
SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
Note 12. Income Taxes
We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, as such, are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements. We are subject to income tax in Canada, Puerto Rico and certain states despite our qualification for taxation as a REIT. Further, we lease our managed hotels to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated tax return and are subject to federal, state and foreign income taxes. Our consolidated income tax provision (or benefit) includes the income tax provision (or benefit) related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our qualification for taxation as a REIT.
During the three months ended September 30, 2026, we recognized income tax expense of $875 , which includes $287 of state tax expense and $588 of foreign tax expense. During the three months ended September 30, 2025, we recognized income tax expense of $253 , which includes $1 of state tax expense and $252 of foreign tax expense.
21
SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
Note 13. Segment Information
Our operating segments are based on our internal reporting structure and property type and are aligned with how our Chief Operating Decision Maker, or CODM, reviews the operating results to allocate resources and assess segment performance. The CODM is our President and Chief Executive Officer. Our two
The significant expense categories and amounts presented below align with the segment-level information that is regularly provided to our CODM. Our CODM reviews operating and financial results, including net income (loss) and its components, to allocate resources and assess segment performance. The accounting policies of our reportable segments are the same as those described in Note 2 to our consolidated financial statements included in our 2025 Annual Report. The tables below present information about our segments.
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
| Net Lease | Hotels | Total | Net Lease | Hotels | Total | |||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||
| Hotel operating revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Rental income | ||||||||||||||||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||||||||||||||||
| Less (plus): | ||||||||||||||||||||||||||||||||||||||
| Room expenses | ||||||||||||||||||||||||||||||||||||||
| Food and beverage expenses | ||||||||||||||||||||||||||||||||||||||
| Management fees | ||||||||||||||||||||||||||||||||||||||
| Real estate taxes and insurance | ||||||||||||||||||||||||||||||||||||||
Other operating expenses (1) | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||||||||||||||||
Other segment items (2) | ||||||||||||||||||||||||||||||||||||||
| Segment profit (loss) | ( | ( | ||||||||||||||||||||||||||||||||||||
| Reconciliation of segment profit or loss: | ||||||||||||||||||||||||||||||||||||||
General and administrative | ( | ( | ||||||||||||||||||||||||||||||||||||
Transaction related costs | ( | ( | ||||||||||||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ||||||||||||||||||||||||||||||||||||
| Loss on early extinguishment of debt, net | ( | ( | ||||||||||||||||||||||||||||||||||||
| Income tax expense | ( | ( | ||||||||||||||||||||||||||||||||||||
| Equity in earnings of an investee | ||||||||||||||||||||||||||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
22
SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
| Net Lease | Hotels | Total | Net Lease | Hotels | Total | |||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||
| Hotel operating revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Rental income | ||||||||||||||||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||||||||||||||||
| Less (plus): | ||||||||||||||||||||||||||||||||||||||
| Room expenses | ||||||||||||||||||||||||||||||||||||||
| Food and beverage expenses | ||||||||||||||||||||||||||||||||||||||
| Management fees | ||||||||||||||||||||||||||||||||||||||
| Real estate taxes and insurance | ||||||||||||||||||||||||||||||||||||||
Other operating expenses (1) | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||||||||||||||||
Other segment items (2) | ||||||||||||||||||||||||||||||||||||||
| Segment profit (loss) | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Reconciliation of segment profit or loss: | ||||||||||||||||||||||||||||||||||||||
General and administrative | ( | ( | ||||||||||||||||||||||||||||||||||||
| Transaction related costs | ( | |||||||||||||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ||||||||||||||||||||||||||||||||||||
| Loss on early extinguishment of debt, net | ( | ( | ||||||||||||||||||||||||||||||||||||
| Income tax expense | ( | ( | ||||||||||||||||||||||||||||||||||||
| Equity in losses of an investee | ( | ( | ||||||||||||||||||||||||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
(1) Other operating expenses for each reportable segment include expenses such as repairs and maintenance, utilities and other costs, including property level expense reimbursements for our net lease investments segment as discussed in Note 10, incurred in connection with the operation of our properties.
(2) Other segment items for each reportable segment include transaction related costs, gains and losses on asset impairment and sale of real estate and interest income, as applicable.
As of September 30, 2026 | As of December 31, 2025 | |||||||||||||
| Assets: | ||||||||||||||
| Net Lease | $ | $ | ||||||||||||
| Hotels | ||||||||||||||
| Corporate | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Capital expenditures: | ||||||||||||||||||||||||||
| Net Lease | $ | $ | $ | $ | ||||||||||||||||||||||
| Hotels | ||||||||||||||||||||||||||
| Total capital expenditures | $ | $ | $ | $ | ||||||||||||||||||||||
23
SERVICE PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
(unaudited)
Note 14. Fair Value of Assets and Liabilities
The table below presents certain of our assets carried at fair value at September 30, 2026, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.
| Fair Value at Reporting Date Using | ||||||||||||||||||||||||||
| Description | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
Non-recurring Fair Value Measurement Assets: | ||||||||||||||||||||||||||
Assets of properties held for sale (1) (2) | $ | $ | $ | $ | ||||||||||||||||||||||
(1)The Level 2 fair value measurements presented in the table included nine hotels and five net lease properties classified as held for sale as of September 30, 2026, and were based on negotiated sales prices with third-party buyers. During the nine months ended September 30, 2026, we recognized impairment charges of $180,175 to reduce the carrying value of these properties to their estimated fair value less costs to sell. Estimated costs to sell totaled $2,444 .
(2)The Level 3 fair value measurements presented in the table included one net lease property classified as held for sale as of September 30, 2026, and was based on brokers’ opinions of values. During the nine months ended September 30, 2026, we recognized impairment charges of $166 to reduce the carrying value of this property to its estimated fair value less costs to sell. Estimated costs to sell was $50 .
In addition to the assets included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, net lease mortgage notes, senior notes and security deposits. At September 30, 2026 and December 31, 2025, the fair values of these financial instruments approximated their carrying values in our condensed consolidated balance sheets due to their short-term nature or floating interest rates, except as follows:
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
Carrying Value (1) | Fair Value | Carrying Value (1) | Fair Value | |||||||||||||||||||||||
Senior Unsecured Notes, due 2027 at | $ | $ | $ | $ | ||||||||||||||||||||||
Senior Guaranteed Unsecured Notes, due 2027 at | ||||||||||||||||||||||||||
| Senior Secured Notes, due 2027 at zero coupon | ||||||||||||||||||||||||||
Net Lease Mortgage Notes, due 2028 at | ||||||||||||||||||||||||||
Senior Unsecured Notes, due 2028 at | ||||||||||||||||||||||||||
Senior Guaranteed Unsecured Notes, due 2029 at | ||||||||||||||||||||||||||
Senior Unsecured Notes, due 2029 at | ||||||||||||||||||||||||||
Senior Unsecured Notes, due 2030 at | ||||||||||||||||||||||||||
Net Lease Mortgage Notes, due 2031 at | ||||||||||||||||||||||||||
Senior Secured Notes, due 2031 at | ||||||||||||||||||||||||||
Senior Guaranteed Unsecured Notes, due 2032 at | ||||||||||||||||||||||||||
| Total financial liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
(1)Carrying value includes unamortized discounts, premiums and certain debt issuance costs.
At September 30, 2026 and December 31, 2025, we estimated the fair values of our senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 2 inputs). At September 30, 2026 and December 31, 2025, we estimated the fair value of our net lease mortgage notes using discounted cash flow analyses and current prevailing market rates as of the measurement dates (Level 3 inputs). As Level 3 inputs are unobservable, our estimated value may differ materially from the actual fair value.
24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our 2025 Annual Report.
Overview (dollars in thousands, except per share amounts and per room hotel data)
We are a REIT organized under the laws of the State of Maryland. As of September 30, 2026, we owned 827 properties in 46 states, the District of Columbia, Canada and Puerto Rico. Our strategy continues to focus on reducing debt, transitioning to a company with the majority of our properties being service-focused retail net lease properties through the growth of our net lease portfolio and improving the performance of the hotels we expect to retain.
Leases and Management Agreements. At September 30, 2026, we owned 740 service-focused retail properties with an aggregate of 13,542,332 square feet leased to 188 tenants subject to “triple net” leases, where the tenants are generally responsible for the payment of operating expenses and capital expenditures. At September 30, 2026, we also owned 87 hotels managed by four operators. We leased all of these hotels to our wholly owned TRSs that are managed by hotel operating companies as of that date. Our condensed consolidated statements of comprehensive income (loss) include rental income and net lease operating expenses from our net lease properties and hotel operating revenues and hotel operating expenses of our managed hotels.
Market Outlook. Consumer confidence, corporate travel and lodging demand will continue to be affected by economic and market conditions, inflationary pressures and potential impacts from tariffs, uncertainties surrounding interest rates, unemployment levels, work from home policies, use of technologies, geopolitical events and broader economic trends. Increased labor costs and other price inflation may continue to negatively impact our hotel operations and the operations of our tenants. An economic recession or continued or intensified disruptions in the financial markets could adversely affect our financial condition, operations at our hotels, our tenants and their ability or willingness to renew our leases or pay rent to us, may restrict our ability to obtain new or replacement financing, would likely increase our cost of capital, and may cause the values of our properties to decline.
Significant Events. During 2025, we sold 112 hotels containing a total of 14,631 keys for a combined sales price of $858,752, excluding closing costs. During the nine months ended September 30, 2026, we sold seven hotels containing a total of 1,346 keys for a combined sales price of $73,200, excluding closing costs. We also sold eight additional hotels containing a total of 1,509 keys for a combined sales price of $50,600 in October 2026. As of November 2, 2026, we are at various stages of marketing for sale two hotels containing a total of 795 keys.
In March 2026, we issued $745,000 of net lease mortgage notes. In April 2026, we raised net proceeds of $541,798 in an underwritten public offering of common shares. The proceeds from these transactions along with cash on hand were used to redeem an aggregate of $1,550,000 principal amount of outstanding indebtedness. See below for further details on these transactions.
Net Lease Portfolio. Our net lease properties were 97.6% occupied as of September 30, 2026 with a weighted (by annual minimum rent) average lease term of 7.0 years, operating under 141 brands in 21 distinct industries. TA is our largest tenant and as of September 30, 2026, leased 175 of our travel centers under five master leases that expire in 2033 and require annual minimum rents of $269,547. In addition, TA receives an annual credit of $25,000 as a result of prepaid rent. BP Corporation North America Inc. guarantees payment under the TA leases, subject to a cap. We use a variety of operating and other information to evaluate the financial condition and operating performance of our net lease portfolio, including the lease structure, credit evaluations, tenants’ payment history and net lease rent coverage metrics as defined below. Our net lease portfolio is diverse geographically in service-focused and necessity-based industries, by brand concepts and tenants. We believe this diversification may help mitigate the impact of macroeconomic factors.
Hotel Portfolio. Lodging industry fundamentals have been generally favorable in 2026, supported by strengthening leisure travel and group demand and improving business transient demand. During the nine months ended September 30, 2026, the U.S. hotel industry generally realized increases in average daily rate, or ADR, and in revenue per available room, or RevPAR, compared to the corresponding 2025 period. Our comparable hotels produced increases in ADR and RevPAR, which we believe are partially a result of renovation disruption in the 2025 period. In addition to the macroeconomic factors noted above, ADR, occupancy and RevPAR performance are dependent on the continued success of our hotels' brands and our hotel operators. While we do not operate our hotel properties, our asset management team and our executive management team monitor and work with our hotel managers by conducting regular revenue, sales, and financial performance reviews and also perform in-depth on-site reviews focused on ongoing operating margin improvement initiatives.
25
The following table provides a summary for all of our hotels with these revenue metrics for the periods presented, which we believe are key indicators of performance at our hotels.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||
All Hotels (1) | ||||||||||||||||||||||||||||||||||||||
| No. of hotels | 87 | 160 | (73) | 87 | 160 | (73) | ||||||||||||||||||||||||||||||||
| No. of rooms or suites | 19,897 | 29,536 | (9,639) | 19,897 | 29,536 | (9,639) | ||||||||||||||||||||||||||||||||
| Occupancy | 71.8 | % | 68.9 | % | 2.9 | pts | 68.4 | % | 65.9 | % | 2.5 | pts | ||||||||||||||||||||||||||
| ADR | $ | 171.03 | $ | 145.50 | 17.5 | % | $ | 174.99 | $ | 149.11 | 17.4 | % | ||||||||||||||||||||||||||
| RevPAR | $ | 122.81 | $ | 100.25 | 22.5 | % | $ | 119.67 | $ | 98.22 | 21.8 | % | ||||||||||||||||||||||||||
(1) Includes the results of hotels owned as of the end of the periods presented.
Comparable Hotels Data. We present occupancy, ADR and RevPAR for the periods presented on a comparable basis to facilitate comparisons between periods. We define comparable hotels as those that were owned by us and were open and operating for the entirety of the periods being compared.
The following table provides a summary of these revenue metrics for the periods presented.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||
| Retained Hotels | ||||||||||||||||||||||||||||||||||||||
| No. of hotels | 77 | 77 | — | 77 | 77 | — | ||||||||||||||||||||||||||||||||
| No. of rooms or suites | 17,593 | 17,593 | — | 17,593 | 17,593 | — | ||||||||||||||||||||||||||||||||
| Occupancy | 72.6 | % | 69.3 | % | 3.3 | pts | 69.4 | % | 66.0 | % | 3.4 | pts | ||||||||||||||||||||||||||
| ADR | $ | 176.95 | $ | 171.08 | 3.4 | % | $ | 181.28 | $ | 177.25 | 2.3 | % | ||||||||||||||||||||||||||
| RevPAR | $ | 128.38 | $ | 118.53 | 8.3 | % | $ | 125.75 | $ | 116.94 | 7.5 | % | ||||||||||||||||||||||||||
Exit Hotels (1) | ||||||||||||||||||||||||||||||||||||||
| No. of hotels | 10 | 10 | — | 10 | 10 | — | ||||||||||||||||||||||||||||||||
| No. of rooms or suites | 2,304 | 2,304 | — | 2,304 | 2,304 | — | ||||||||||||||||||||||||||||||||
| Occupancy | 66.1 | % | 63.2 | % | 2.9 | pts | 60.9 | % | 60.3 | % | 0.6 | pts | ||||||||||||||||||||||||||
| ADR | $ | 121.42 | $ | 124.55 | (2.5) | % | $ | 120.21 | $ | 120.64 | (0.4) | % | ||||||||||||||||||||||||||
| RevPAR | $ | 80.25 | $ | 78.76 | 1.9 | % | $ | 73.21 | $ | 72.72 | 0.7 | % | ||||||||||||||||||||||||||
| Comparable Hotels | ||||||||||||||||||||||||||||||||||||||
| No. of hotels | 87 | 87 | — | 87 | 87 | — | ||||||||||||||||||||||||||||||||
| No. of rooms or suites | 19,897 | 19,897 | — | 19,897 | 19,897 | — | ||||||||||||||||||||||||||||||||
| Occupancy | 71.8 | % | 68.6 | % | 3.2 | pts | 68.4 | % | 65.3 | % | 3.1 | pts | ||||||||||||||||||||||||||
| ADR | $ | 171.03 | $ | 166.11 | 3.0 | % | $ | 174.99 | $ | 171.20 | 2.2 | % | ||||||||||||||||||||||||||
| RevPAR | $ | 122.81 | $ | 113.93 | 7.8 | % | $ | 119.67 | $ | 111.82 | 7.0 | % | ||||||||||||||||||||||||||
(1) Exit Hotels represents eight hotels sold in October 2026, as well as one hotel managed by Sonesta and one hotel managed by IHG that are currently in various stages of being sold.
Additional details of our net lease agreements and our hotel operating agreements are set forth in Note 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
26
Results of Operations (amounts in thousands, except per share data)
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Hotel operating revenues | $ | 298,379 | $ | 377,576 | $ | (79,197) | (21.0) | % | ||||||||||||||||||
| Rental income | 101,141 | 101,194 | (53) | (0.1) | % | |||||||||||||||||||||
| Total revenues | 399,520 | 478,770 | (79,250) | (16.6) | % | |||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||
| Hotel operating expenses | 255,780 | 328,358 | (72,578) | (22.1) | % | |||||||||||||||||||||
| Net lease operating expenses | 6,389 | 5,236 | 1,153 | 22.0 | % | |||||||||||||||||||||
| Depreciation and amortization - hotels | 40,450 | 40,298 | 152 | 0.4 | % | |||||||||||||||||||||
| Depreciation and amortization - net lease properties | 31,702 | 34,155 | (2,453) | (7.2) | % | |||||||||||||||||||||
| Total depreciation and amortization | 72,152 | 74,453 | (2,301) | (3.1) | % | |||||||||||||||||||||
| General and administrative | 9,965 | 11,057 | (1,092) | (9.9) | % | |||||||||||||||||||||
| Transaction related costs | 1,857 | 2,683 | (826) | (30.8) | % | |||||||||||||||||||||
| Loss on asset impairment | 53,691 | 27,067 | 26,624 | 98.4 | % | |||||||||||||||||||||
| Total expenses | 399,834 | 448,854 | (49,020) | (10.9) | % | |||||||||||||||||||||
| (Loss) gain on sale of real estate, net | (1,103) | 25,256 | (26,359) | (104.4) | % | |||||||||||||||||||||
| Interest income | 375 | 4,841 | (4,466) | (92.3) | % | |||||||||||||||||||||
| Interest expense | (85,932) | (107,776) | 21,844 | (20.3) | % | |||||||||||||||||||||
| Loss on early extinguishment of debt, net | (335) | (529) | 194 | (36.7) | % | |||||||||||||||||||||
| Loss before income tax expense and equity in earnings of an investee | (87,309) | (48,292) | (39,017) | 80.8 | % | |||||||||||||||||||||
| Income tax expense | (875) | (253) | (622) | n/m | ||||||||||||||||||||||
| Equity in earnings of an investee | 244 | 1,600 | (1,356) | (84.8) | % | |||||||||||||||||||||
| Net loss | $ | (87,940) | $ | (46,945) | $ | (40,995) | 87.3 | % | ||||||||||||||||||
| Weighted average common shares outstanding (basic and diluted) | 129,262 | 33,217 | 96,045 | n/m | ||||||||||||||||||||||
| Net loss per common share (basic and diluted) | $ | (0.68) | $ | (1.41) | $ | 0.73 | (51.8) | % | ||||||||||||||||||
References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
Hotel operating revenues. The decrease in hotel operating revenues is primarily a result of our sales of certain hotels since July 1, 2025 ($94,624), partially offset by increases in occupancy and average rates at certain hotels during the 2026 period ($15,427). Additional operating statistics of our hotels are included in the tables beginning on page 37.
Rental income. The decrease in rental income is primarily a result of our sales of certain properties since July 1, 2025 ($667) and decreases from our net leasing activity ($495), partially offset by our acquisitions of certain net lease properties since July 1, 2025 ($1,109).
Hotel operating expenses. The decrease in hotel operating expenses is primarily a result of our sales of certain hotels since July 1, 2025 ($83,369), as well as decreases in room expenses ($782) and food and beverage expenses ($584), partially offset by increases in marketing and sales expense ($4,907), utilities expense ($3,737), insurance expense ($425) and other operating expenses ($3,088) in the 2026 period.
Net lease operating expenses. The increase in net lease operating expenses is primarily the result of increases of property management fees ($626), other operating expenses ($517) and our acquisition activity ($124) in the 2026 period, partially offset by decreases resulting from the sale of certain net lease properties since July 1, 2025 ($114).
27
Depreciation and amortization - hotels. The increase in depreciation and amortization - hotels is primarily a result of depreciation and amortization related to capital expenditures made since July 1, 2025 ($3,818), partially offset by certain of our depreciable assets becoming fully depreciated or classified as held for sale since July 1, 2025 ($3,054) and our sales of certain hotels since July 1, 2025 ($612).
Depreciation and amortization - net lease properties. The decrease in depreciation and amortization - net lease properties is primarily a result of certain of our depreciable assets becoming fully depreciated since July 1, 2025 ($1,933) and our sale of certain net lease properties since July 1, 2025 ($520).
General and administrative. The decrease in general and administrative costs is primarily due to a decrease in business management fees ($1,144) and decreases in legal and other professional fees ($372), partially offset by increases in other general and administrative expenses ($424) since July 1, 2025.
Transaction related costs. Transaction related costs for the 2026 and 2025 periods primarily consisted of costs related to the sale and renovation of certain hotels.
Loss on asset impairment. We recorded a $53,691 loss on asset impairment during the 2026 period to reduce the carrying value of six hotels and six net lease properties to their estimated fair value less costs to sell. We recorded a $27,067 loss on asset impairment during the 2025 period to reduce the carrying value of 25 hotels and one net lease property to their estimated fair value less costs to sell.
(Loss) gain on sale of real estate, net. We recorded a $1,103 net loss on sale of real estate during the 2026 period in connection with the sales of six net lease properties and six hotels. We recorded a $25,256 net gain on sale of real estate during the 2025 period in connection with the sales of three net lease properties and 40 hotels.
Interest income. The decrease in interest income is due to lower average cash balances invested during the 2026 period compared to the 2025 period.
Interest expense. The decrease in interest expense is primarily due to lower debt outstanding and lower weighted average interest rates during the 2026 period compared to the 2025 period.
Loss on early extinguishment of debt, net. We recorded a $335 loss on early extinguishment of debt, net in the 2026 period as a result of the repayment and termination of the VFN. We recorded a $529 loss on early extinguishment of debt, net in the 2025 period as a result of the redemption of certain senior unsecured notes.
Income tax expense. The increase in income tax expense is due to increases in foreign tax expense ($336) and state tax expense ($286) during the 2026 period.
Equity in earnings of an investee. Equity in earnings of an investee represents our proportionate share of the earnings of Sonesta.
Net loss. Our net loss increased in the 2026 period compared to the 2025 period primarily due to the revenue and expense changes discussed above.
Weighted average common shares outstanding (basic and diluted). The increase in weighted average shares outstanding is primarily driven by our issuance of 95,833,333 common shares on April 2, 2026.
Net loss per common share (basic and diluted). Our net loss per common share decreased in the 2026 period compared to the 2025 period primarily driven by an increase in the number of common shares outstanding following the closing of our equity offering on April 2, 2026, partially offset by an increase in net loss in the 2026 period compared to the 2025 period.
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Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Hotel operating revenues | $ | 883,025 | $ | 1,116,944 | $ | (233,919) | (20.9) | % | ||||||||||||||||||
| Rental income | 301,920 | 300,441 | 1,479 | 0.5 | % | |||||||||||||||||||||
| Total revenues | 1,184,945 | 1,417,385 | (232,440) | (16.4) | % | |||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||
| Hotel operating expenses | 763,078 | 963,111 | (200,033) | (20.8) | % | |||||||||||||||||||||
| Net lease operating expenses | 19,875 | 16,303 | 3,572 | 21.9 | % | |||||||||||||||||||||
| Depreciation and amortization - hotels | 127,074 | 132,495 | (5,421) | (4.1) | % | |||||||||||||||||||||
| Depreciation and amortization - net lease properties | 98,004 | 106,088 | (8,084) | (7.6) | % | |||||||||||||||||||||
| Total depreciation and amortization | 225,078 | 238,583 | (13,505) | (5.7) | % | |||||||||||||||||||||
| General and administrative | 29,854 | 30,831 | (977) | (3.2) | % | |||||||||||||||||||||
| Transaction related costs | 4,829 | 4,139 | 690 | 16.7 | % | |||||||||||||||||||||
| Loss on asset impairment | 270,883 | 81,788 | 189,095 | n/m | ||||||||||||||||||||||
| Total expenses | 1,313,597 | 1,334,755 | (21,158) | (1.6) | % | |||||||||||||||||||||
| (Loss) gain on sale of real estate, net | (131) | 25,846 | (25,977) | (100.5) | % | |||||||||||||||||||||
| Interest income | 2,483 | 6,912 | (4,429) | (64.1) | % | |||||||||||||||||||||
| Interest expense | (270,134) | (311,972) | 41,838 | (13.4) | % | |||||||||||||||||||||
| Loss on early extinguishment of debt, net | (61,589) | (529) | (61,060) | n/m | ||||||||||||||||||||||
| Loss before income tax expense and equity in losses of an investee | (458,023) | (197,113) | (260,910) | 132.4 | % | |||||||||||||||||||||
| Income tax expense | (1,924) | (1,553) | (371) | 23.9 | % | |||||||||||||||||||||
| Equity in losses of an investee | (3,009) | (2,873) | (136) | 4.7 | % | |||||||||||||||||||||
| Net loss | $ | (462,956) | $ | (201,539) | $ | (261,417) | 129.7 | % | ||||||||||||||||||
| Weighted average common shares outstanding (basic and diluted) | 97,227 | 33,163 | 64,064 | 193.2 | % | |||||||||||||||||||||
| Net loss per common share (basic and diluted) | $ | (4.76) | $ | (6.08) | $ | 1.32 | (21.7) | % | ||||||||||||||||||
References to changes in the income and expense categories below relate to the comparison of consolidated results for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
Hotel operating revenues. The decrease in hotel operating revenues is primarily a result of our sales of certain hotels since January 1, 2025 ($276,652), partially offset by increases in occupancy and average rates at certain hotels during the 2026 period ($42,733). Additional operating statistics of our hotels are included in the tables beginning on page 37.
Rental income. The increase in rental income is primarily a result of acquisitions of certain net lease properties since January 1, 2025 ($3,098) and increases from our net leasing activity ($1,517), partially offset by our sales of certain properties since January 1, 2025 ($1,701), and credit losses recognized at certain of our net lease properties in the 2026 period ($1,435).
Hotel operating expenses. The decrease in hotel operating expenses is primarily a result of our sales of certain hotels since January 1, 2025 ($244,390), partially offset by increases in marketing and sales expense ($12,010), utilities expense ($11,135) insurance expense ($5,913), room expenses ($1,980), food and beverage expenses ($733) and other operating expenses ($12,586) in the 2026 period.
Net lease operating expenses. The increase in net lease operating expenses is primarily the result of increases in real estate taxes ($2,132), property management fees ($1,948), our acquisition activity ($261) and other operating expenses ($191) in the 2026 period, partially offset by decreases resulting from the sale of certain net lease properties since January 1, 2025 ($960).
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Depreciation and amortization - hotels. The decrease in depreciation and amortization - hotels is primarily a result of our sales of certain hotels in the 2026 period ($15,073) and certain of our depreciable assets becoming fully depreciated or classified as held for sale since January 1, 2025 ($9,163), partially offset by depreciation and amortization related to capital expenditures made in the 2026 period ($18,815).
Depreciation and amortization - net lease properties. The decrease in depreciation and amortization - net lease properties is primarily a result of certain of our depreciable assets becoming fully depreciated since January 1, 2025 ($6,613) and our sale of certain net lease properties since January 1, 2025 ($1,625), partially offset by depreciation and amortization related to capital expenditures and our acquisition of certain net lease properties since January 1, 2025 ($154).
General and administrative. The decrease in general and administrative costs is primarily due to a decrease in business management fees ($2,275), partially offset by increases in legal fees and other professional fees ($675) and other general and administrative expenses ($623) since January 1, 2025.
Transaction related costs. Transaction related costs for the 2026 period primarily consisted of costs related to the sales of certain hotels, partially offset by the recovery of deposits associated with certain previously terminated hotel sales. Transaction related costs for the 2025 period primarily consisted of costs related to the sale and renovation of certain hotels, partially offset by the recovery of a working capital reserve related to our former agreement with Marriott International, Inc. previously deemed uncollectable and expensed in 2021.
Loss on asset impairment. We recorded a $270,883 loss on asset impairment during the 2026 period to reduce the carrying value of 27 net lease properties and 12 hotels to their estimated fair value less costs to sell. We recorded a $81,788 loss on asset impairment during the 2025 period to reduce the carrying value of three net lease properties and 28 hotels to their estimated fair value less costs to sell.
(Loss) gain on sale of real estate, net. We recorded a $131 net loss on sale of real estate during the 2026 period in connection with the sales of 25 net lease properties and seven hotels. We recorded a $25,846 net gain on sale of real estate during the 2025 period in connection with the sales of 10 net lease properties and 46 hotels.
Interest income. The decrease in interest income is due to lower average cash balances during the 2026 period compared to the 2025 period.
Interest expense. The decrease in interest expense is primarily due to lower debt outstanding and lower weighted average interest rates during the 2026 period compared to the 2025 period.
Loss on early extinguishment of debt, net. We recorded a $61,589 loss on early extinguishment of debt, net in the 2026 period as a result of the redemption of certain senior notes and the repayment and termination of the VFN. We recorded a $529 loss on early extinguishment of debt, net in the 2025 period as a result of the redemption of certain senior unsecured notes.
Income tax expense. The increase in income tax expense is primarily due to an increase in our foreign tax expense ($160) and state income tax expense ($211) during the 2026 period.
Equity in losses of an investee. Equity in losses of an investee represents our proportionate share of the losses of Sonesta.
Net loss. Our net loss increased in the 2026 period compared to the 2025 period primarily due to the revenue and expense changes discussed above.
Weighted average common shares outstanding (basic and diluted). The increase in weighted average shares outstanding is primarily driven by our issuance of 95,833,333 common shares on April 2, 2026.
Net loss per common share (basic and diluted). Our net loss per common share decreased in the 2026 period compared to the 2025 period primarily driven by an increase in the number of common shares outstanding following the closing of our equity offering on April 2, 2026, partially offset by an increase in net loss in the 2026 period compared to the 2025 period.
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Liquidity and Capital Resources (dollars in thousands, except per share amounts)
Our Managers and Tenants
As of September 30, 2026, our 740 service-focused retail net lease properties were leased to 188 tenants and our 87 hotels were managed and operated by four hotel operating companies. The costs of operating and maintaining our properties are generally paid by our tenants for their own account or by the hotel managers as agents for us. Our tenants and hotel managers derive their funding for property operating expenses and for rents and returns due to us generally from property operating revenues and, to the extent these parties themselves fund rents and our owner’s priority returns, from their separate resources. As of September 30, 2026, TA is our largest tenant (175 travel centers) and Sonesta (62 hotels) is our largest hotel manager.
We recorded reserves for uncollectable amounts and reduced rental income by $421 and $3,291 for the three and nine months ended September 30, 2026, respectively, based on our assessment of the collectability of rents. We recorded reserves for uncollectable amounts and reduced rental income by $479 and $1,856 for the three and nine months ended September 30, 2025, respectively, based on our assessment of the collectability of rents. We had reserves for uncollectable rents of $3,864 and $3,115 as of September 30, 2026 and December 31, 2025, respectively, included in other assets, net in our condensed consolidated balance sheets.
We define net lease rent coverage as earnings before interest, taxes, depreciation, amortization and rent, or EBITDAR, divided by the annual minimum rent due to us weighted by the minimum rent of the property to total minimum rents of the net lease portfolio. Tenants with no minimum rent required under the lease are excluded. EBITDAR amounts used to determine rent coverage are generally for the latest twelve-month period, based on the most recent operating information, if any, furnished by our tenants. Operating statements furnished by our tenants often are unaudited and, in certain cases, may not have been prepared in accordance with GAAP and are not independently verified by us. In instances where we do not have tenant financial information, we calculate an implied coverage ratio for the period based on other tenants with available financial statements operating the same brand or within the same industry. As a result, we believe using this implied coverage metric provides a more reasonable estimated representation of recent operating results and the financial condition for those tenants. Our net lease properties generated rent coverage of 2.17x and 2.04x as of September 30, 2026 and 2025, respectively.
Our Operating Liquidity and Capital Resources
Our principal sources of funds to meet operating and capital expenses, debt service obligations and distributions to our shareholders are rents from our net lease portfolio, returns generated from our hotels and borrowings under our revolving credit facility. We receive rents and hotel returns from our tenants and managers monthly. We may receive additional returns, percentage rents and our share of the operating profits of our managed hotels after payment of management fees and other deductions, if any, either monthly or quarterly, and these amounts are usually subject to annual reconciliations. We believe these sources of funds will be sufficient to meet our operating expenses and capital expenditures, pay debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter. However, as a result of economic conditions, including if the U.S. enters an economic recession, or otherwise, our tenants and managers may become unable or unwilling to pay returns and rents to us when due, and, as a result, our cash flows and net income would decline.
The following is a summary of our sources and uses of cash flows for the periods presented:
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Cash and cash equivalents and restricted cash at the beginning of the period | $ | 372,088 | $ | 157,386 | ||||||||||
| Net cash provided by (used in): | ||||||||||||||
| Operating activities | 132,226 | 136,305 | ||||||||||||
| Investing activities | (46,219) | 123,218 | ||||||||||||
| Financing activities | (395,603) | 24,323 | ||||||||||||
| Cash and cash equivalents and restricted cash at the end of the period | $ | 62,492 | $ | 441,232 | ||||||||||
31
The decrease in cash flow provided by operating activities in the 2026 period is primarily due to decreases in net operating cash flows from hotel sales between the periods, partially offset by decreases in interest paid in the 2026 period resulting from our repayment of debt. The change from cash flow provided by investing activities in the 2025 period to cash flow used in investing activities in the 2026 period is primarily due to a decrease in the net proceeds from the sale of real estate in the 2026 period. The change from cash flow provided by financing activities in the 2025 period to cash flow used in financing activities in the 2026 period is primarily due to higher net debt repayments in the 2026 period, partially offset by debt and equity issuances during 2026.
We maintain our qualification for taxation as a REIT under the IRC by meeting certain requirements. We lease 87 hotels to our wholly owned TRSs that are managed by hotel operating companies. As a REIT, we do not expect to pay federal income taxes on the majority of our income; however, the income realized by our TRSs in excess of the rent they pay to us is subject to U.S. federal income tax at corporate income tax rates. In addition, the income we receive from our hotels in Canada and Puerto Rico is subject to taxes in those jurisdictions and we are subject to taxes in certain states where we have properties despite our qualification for taxation as a REIT.
Our Investment and Financing Liquidity and Capital Resources
Tenants in our net lease portfolio are generally required to maintain the leased properties, including structural and non-structural components under their respective leases. We may provide tenant improvement allowances to tenants in certain cases or may develop sites with the intent to lease them. During the nine months ended September 30, 2026, we funded $2,014 for capital improvements to our net lease properties. As of September 30, 2026, we had $10,264 of unspent leasing-related obligations related to certain of our net lease tenants.
Our hotel operating agreements generally provide that, if necessary, we may provide our managers with funding for capital improvements to our hotels in excess of amounts otherwise available in escrowed FF&E reserves or when no FF&E reserves are available. During the nine months ended September 30, 2026, we funded $73,498 for capital improvements in excess of FF&E reserves available to our hotels. We currently expect to fund between approximately $25,000 and $40,000 during the last three months of 2026 for capital improvements to certain properties using cash on hand.
Various percentages of total sales at some of our hotels are escrowed as FF&E reserves to fund future capital improvements. We own all the FF&E escrows for our hotels. During the nine months ended September 30, 2026, certain of our hotel managers deposited $4,478 to these accounts and spent $5,399 from the FF&E reserve escrow accounts to renovate and refurbish our hotels. As of September 30, 2026, there was $5,797 on deposit in these escrow accounts, which was held directly by us and is reflected in our condensed consolidated balance sheets as restricted cash.
During the nine months ended September 30, 2026, we sold 32 properties for a combined sales price of $88,159, excluding closing costs. From October 1, 2026 through November 2, 2026, we sold one net lease property with 1,333 square feet for a sales price of $295, excluding closing costs, and eight hotels with a total of 1,509 keys for a combined sales price of $50,600, excluding closing costs. We have also entered into an agreement to sell one net lease property with 6,800 square feet for a sales price of $655, excluding closing costs. This pending sale is subject to conditions; accordingly, we cannot be sure that we will complete this sale, that this sale will not be delayed or that the terms will not change. We are at various stages of marketing for sale 16 net lease properties with a total of 34,224 square feet and two hotels containing a total of 795 keys. We expect to use the net sales proceeds from these sales for general business purposes, including to repay debt.
During the nine months ended September 30, 2026, we acquired five net lease properties with a total of 19,615 square feet for a combined purchase price of $15,105, excluding closing costs, using cash on hand. From October 1, 2026 through November 2, 2026, we acquired a portfolio of four net lease properties with a total of 41,020 square feet for a combined purchase price of $8,314, excluding closing costs, using cash on hand.
During the nine months ended September 30, 2026, we declared and paid regular quarterly distributions to common shareholders using cash on hand as follows:
| Declaration Date | Record Date | Paid Date | Dividend Per Common Share | Total Distributions | ||||||||||||||||||||||
| January 15, 2026 | January 26, 2026 | February 19, 2026 | $ | 0.05 | $ | 1,681 | ||||||||||||||||||||
| April 9, 2026 | April 21, 2026 | May 14, 2026 | 0.05 | 6,471 | ||||||||||||||||||||||
| July 9, 2026 | July 20, 2026 | August 13, 2026 | 0.05 | 6,475 | ||||||||||||||||||||||
| $ | 0.15 | $ | 14,627 | |||||||||||||||||||||||
32
On October 8, 2026, we declared a regular quarterly distribution to common shareholders of record as of October 19, 2026 of $0.05 per common share, or approximately $6,491. We expect to pay this distribution on or about November 12, 2026 using cash on hand.
In order to meet cash needs that may result from our desire or need to make distributions or pay operating or capital expenses, we maintain a $650,000 secured revolving credit facility which is governed by a credit agreement. We can borrow, subject to meeting certain financial covenants, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayments are due until maturity. Availability of borrowings under our credit agreement is subject to ongoing minimum performance and market values of the collateral properties, satisfying certain financial covenants and other credit facility conditions. The maturity date of our revolving credit facility is June 29, 2027, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date of the facility by two additional six-month periods.
Interest payable on drawings under our revolving credit facility is based on SOFR plus a margin ranging from 1.50% to 3.00% based on our leverage ratio, as defined in our credit agreement, which was 2.50% as of September 30, 2026. We also pay unused commitment fees of 20 to 30 basis points per annum on the total amount of lending commitments under our revolving credit facility based on amounts outstanding. As of September 30, 2026 and 2025, the annual interest rate payable on borrowings under our revolving credit facility was 6.50% and 6.74%, respectively. As of September 30, 2026 and November 2, 2026, we had no amounts outstanding under our revolving credit facility and $650,000 available for borrowing.
As collateral for all loans and other obligations under our revolving credit facility, certain of our subsidiaries pledged all of their respective equity interests in certain of our direct and indirect property owning subsidiaries, and our pledged subsidiaries provided first mortgage liens on certain properties. As of September 30, 2026, our revolving credit facility was secured by 55 properties, including 38 net lease properties and 17 hotels, with an aggregate undepreciated book value of $874,751.
We are currently exploring our options to extend or refinance our secured revolving credit facility. There can be no assurance that we will be able to do so or the timing, size, or terms of any such replacement facility. We believe we have adequate sources of liquidity to meet our near term operating requirements while these discussions continue.
Equity Offering
On April 2, 2026, we issued and sold 95,833,333 common shares (479,166,667 common shares prior to giving effect to the Reverse Share Split), including 12,500,000 common shares (62,500,000 common shares prior to giving effect to the Reverse Share Split) pursuant to the exercise of the underwriters’ option to purchase additional shares, at $6.00 per share ($1.20 per share prior to giving effect to the Reverse Share Split) in an underwritten public offering. Our net proceeds from this offering were approximately $541,798, after deducting the underwriters’ discount and other offering expenses, to redeem outstanding debt as described below.
Redemption of Senior Unsecured Notes
In January 2026 and May 2026, we redeemed all $400,000 of our outstanding 4.95% senior unsecured notes due 2027 for redemption prices equal to the principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption and a combined make whole premium of $1,785 using cash on hand and net proceeds from our equity offering.
In March 2026, we redeemed all $700,000 of our outstanding 8.375% senior guaranteed unsecured notes due 2029 for a redemption price equal to the principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption and a make whole premium of $37,128, using net proceeds from the issuance of $745,000 of net lease mortgage notes and cash on hand.
In April 2026, we redeemed all $450,000 of our outstanding 5.50% senior guaranteed unsecured notes due 2027 for a redemption price equal to the principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption and a make whole premium of $7,191, using net proceeds from our equity offering.
Termination of Secured Variable Funding Note
In September 2026, we repaid and terminated the $45,000 VFN which had a maturity date of January 2027, using existing cash balances.
33
Net Lease Mortgage Notes
On March 6, 2026, the Issuers issued $745,000 in aggregate principal amount of net lease mortgage notes in three classes. The weighted average coupon rate of the three classes is 5.96%. The Series 2026-1 Class A notes and the Series 2026-1 Class B notes require monthly principal repayments at an annualized rate of 0.50% and 0.25% of the balances outstanding, respectively, and the Series 2026-1 Class M notes require interest payments only, with balloon payments due at maturity. The Series 2026-1 Notes mature in March 2031 and may be redeemed without penalty 24 months prior to the scheduled maturity date beginning in March 2029. The Series 2026-1 Notes are non-recourse and, as of September 30, 2026, were secured by cash and 471 retail net lease properties, including 158 properties that we contributed in connection with this transaction. As of September 30, 2026, the current leases relating to the 471 properties required annual minimum rents of $153,013 and had an aggregate undepreciated book value of $1,506,624. As discussed above, we used the net proceeds from this transaction and cash on hand to redeem all $700,000 of our outstanding 8.375% senior guaranteed unsecured notes due 2029.
Our debt maturities as of September 30, 2026 were as follows:
| Year | Fixed Rate Debt | |||||||||||||
| 2026 | $ | 999 | ||||||||||||
| 2027 | 584,150 | |||||||||||||
| 2028 | 1,002,775 | |||||||||||||
| 2029 | 427,038 | |||||||||||||
| 2030 | 402,038 | |||||||||||||
| Thereafter | 2,235,322 | |||||||||||||
| $ | 4,652,322 | |||||||||||||
None of our senior note debt obligations require principal or sinking fund payments prior to their maturity dates. Our mortgage notes require monthly principal payments as described in Part I, Item 3 of this Quarterly Report on Form 10-Q.
We currently expect to use cash on hand, the cash flows from our operations, borrowings available under our revolving credit facility, net proceeds from any asset sales, net proceeds of offerings of equity or the incurrence of debt to fund our operations, capital expenditures, investments, future debt maturities, distributions to our shareholders and other general business purposes.
When significant amounts are outstanding for an extended period of time under our revolving credit facility, or the maturities of our indebtedness approach, we currently expect to explore refinancing alternatives. Such alternatives may include incurring additional debt, issuing new equity securities and the sale of properties. We have an effective shelf registration statement that allows us to issue public securities on an expedited basis, but it does not assure that there will be buyers for such securities. We may also seek to participate in joint ventures or other arrangements that may provide us additional sources of financing. We may also assume mortgage debt on properties we may acquire or obtain mortgage financing on our existing properties.
While we believe we will generally have access to various types of financings, including debt or equity, to fund our future acquisitions and to pay our debts and other obligations, we cannot be sure that we will be able to complete any debt or equity offerings or other types of financings or that our cost of any future public or private financings will not increase.
Our ability to complete, and the costs associated with, future debt transactions depend primarily upon credit market conditions and our then perceived creditworthiness. We have no control over market conditions. Our credit ratings depend upon evaluations by credit rating agencies of our business practices and plans, including our ability to maintain our earnings, to stagger our debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes. Similarly, our ability to raise equity capital in the future will depend primarily upon equity capital market conditions and our ability to conduct our business to maintain and grow our operating cash flows. We intend to conduct our business activities in a manner which will afford us reasonable access to capital for investment and financing activities. However, as discussed elsewhere in this Quarterly Report on Form 10-Q, the impacts of the current, and possibly future, inflationary conditions, uncertainties surrounding interest rates and a possible economic recession are uncertain and may have various negative consequences on us and our operations, including a decline in financing availability and increased costs for financing. Further, such conditions could also disrupt the capital markets generally and limit our access to financing from public sources or on favorable terms, particularly if the global financial markets experience significant disruptions.
34
Debt Covenants
Our debt obligations at September 30, 2026 consisted of $3,305,155 aggregate principal amount of senior notes and $1,347,167 aggregate principal amount of net lease mortgage notes. For further information regarding our indebtedness, see Note 8 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Our publicly and privately issued senior notes are governed by our indentures and related supplements. These indentures, and related supplements, and our credit agreement contain covenants that generally restrict our ability to incur debt, including debt secured by mortgages on our properties, in excess of calculated amounts, and require us to maintain various financial ratios. Our credit agreement, net lease mortgage notes, senior secured notes and senior unsecured notes, indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR ceasing to act as our business manager. As of September 30, 2026, we believe we were in compliance with all of the covenants under our indentures and their supplements, net lease mortgage notes and our credit agreement.
Senior Notes Indenture Covenants
The following table summarizes the results of the financial tests required by the indentures and related supplements for our senior secured and unsecured notes as of September 30, 2026:
| Actual Results | Covenant Requirement | |||||||||||||
| Total debt / adjusted total assets | 53.9% | Maximum of 60% | ||||||||||||
| Secured debt / adjusted total assets | 33.9% | Maximum of 40% | ||||||||||||
| Consolidated income available for debt service / debt service | 1.83x | Minimum of 1.50x | ||||||||||||
| Total unencumbered assets / unsecured debt | 273.2% | Minimum of 150% | ||||||||||||
Total unencumbered assets in guarantor subsidiaries / senior guaranteed unsecured debt | 8.79x | Minimum of 2.20x | ||||||||||||
As of September 30, 2026, adjusted total assets for covenant purposes as defined in our senior notes indentures were $8,631,686 and assets encumbered under our revolving credit facility, serving as collateral for our net lease mortgage notes or senior secured notes represented $3,918,944 of adjusted total assets, as defined in our senior notes indentures. Our unencumbered hotels, other net lease properties and other corporate assets represent $4,093,665, $456,711 and $162,366 of adjusted total assets, respectively.
The following table presents the calculation of adjusted total assets to total assets in accordance with GAAP:
| As of September 30, 2026 | |||||
| Total assets | $ | 5,720,456 | |||
Plus: accumulated depreciation (1) | 2,553,628 | ||||
| Plus: impairment and other adjustments to reflect original cost of real estate assets | 573,798 | ||||
| Less: accounts receivable and intangibles | (216,196) | ||||
| Adjusted total assets | $ | 8,631,686 | |||
(1)Includes $95,177 of accumulated depreciation on assets of properties held for sale.
Our ability to incur additional debt is subject to meeting the required covenant levels and subject to the provisions of our debt agreements.
Acceleration and Cross-Default
Our indentures and their supplements contain cross default provisions to any other debt of $50,000 or more. Similarly, our credit agreement has cross default provisions to other indebtedness that is recourse of $25,000 or more and indebtedness that is non-recourse of $75,000 or more. Neither our indentures and their supplements nor our credit agreement contain provisions for acceleration which could be triggered by a change in our debt ratings.
35
Supplemental Guarantor Information
Our 8.875% Senior Guaranteed Unsecured Notes due 2032, or the 2032 Notes, are fully and unconditionally guaranteed, on a joint and several basis and on a senior unsecured basis, by all of our subsidiaries, except for certain excluded subsidiaries, including our foreign subsidiaries and our subsidiaries pledged under our credit agreement and our net lease mortgage notes. The notes and the guarantees will be effectively subordinated to all of our and the subsidiary guarantors’ secured indebtedness, respectively, to the extent of the value of the collateral securing such secured indebtedness, and will be structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes. Our $1,225,000 of senior unsecured notes do not have the benefit of any guarantees.
A subsidiary guarantor’s guarantee of the 2032 Notes and all other obligations of such subsidiary guarantor under the indentures governing the notes will automatically terminate and such subsidiary guarantor will automatically be released from all of its obligations under such subsidiary guarantee and such indenture under certain circumstances, including on or after the date on which (a) the notes have received a rating equal to or higher than Baa2 (or the equivalent) by Moody’s Investor Services, or Moody’s, and BBB (or the equivalent) by Standard & Poor’s Rating Services, or S&P, or if Moody’s or S&P ceases to rate the notes for reasons outside of our control, the equivalent investment grade rating from any other rating agency and (b) no default or event of default has occurred and is continuing under the indenture. Our non-guarantor subsidiaries are separate and distinct legal entities and will have no obligation, contingent or otherwise, to pay any amounts due on these notes or the guarantees, or to make any funds available therefor, whether by dividend, distribution, loan or other payments. The rights of holders of these notes to benefit from any of the assets of our non-guarantor subsidiaries are subject to the prior satisfaction of claims of those subsidiaries’ creditors and any preferred equity holders. As a result, these notes and the related guarantees will be effectively subordinated to all of our and the subsidiary guarantors’ secured indebtedness, respectively, to the extent of the value of the collateral securing such secured indebtedness, and will be structurally subordinated to all indebtedness and other liabilities of our subsidiaries that do not guarantee these notes, including guarantees of or pledges under other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity.
The following table presents summarized financial information for us and the subsidiary guarantors, on a combined basis, after elimination of (i) intercompany transactions and balances among us and the subsidiary guarantors, and (ii) equity in earnings from, and any investments in, any of our non-guarantor subsidiaries:
| As of September 30, 2026 | As of December 31, 2025 | |||||||||||||
Real estate properties, net (1) | $ | 2,585,266 | $ | 3,514,819 | ||||||||||
| Other assets, net | 301,500 | 679,235 | ||||||||||||
| Indebtedness, net | $ | 3,216,989 | $ | 4,711,060 | ||||||||||
Intercompany balances (2) | 2,236,517 | 1,630,868 | ||||||||||||
| Other liabilities | 234,083 | 255,069 | ||||||||||||
| Nine Months Ended September 30, 2026 | ||||||||||||||
| Revenues | $ | 832,656 | ||||||||||||
| Expenses | 1,089,887 | |||||||||||||
| Net loss | $ | (257,231) | ||||||||||||
(1)Real estate properties, net as of September 30, 2026 includes $16,153 of properties owned directly by us and not included in the assets of the subsidiary guarantors.
(2)Intercompany balances represent payables to non-guarantor subsidiaries.
Related Person Transactions
We have relationships and historical and continuing transactions with RMR, RMR Inc. and Sonesta and others related to them. For further information about these and other such relationships and related person transactions, see Notes 6, 10 and 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2025 Annual Report, our definitive Proxy Statement for our 2026 Annual Meeting of Shareholders and our other filings with the Securities and Exchange Commission, or SEC. In addition, see the section captioned “Risk Factors” in our 2025 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services.
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Critical Accounting Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Estimates in the condensed consolidated financial statements include consolidation of VIEs, purchase price allocations, the determination of useful lives of fixed assets, classification of leases and the assessment of the book values and impairment of real estate intangible assets and equity investments.
A discussion of our critical accounting estimates is included in our 2025 Annual Report. There have been no significant changes in our critical accounting estimates since the year ended December 31, 2025.
Property and Operating Statistics (dollars in thousands, except hotel statistics)
As of September 30, 2026, we owned and managed a diverse portfolio of net lease and hotel properties across the United States and in Puerto Rico and Canada with 150 distinct brands across 22 industries.
Net Lease Portfolio
As of September 30, 2026, our net lease properties were 97.6% occupied and we had 18 properties available for lease. During the nine months ended September 30, 2026, we entered into lease renewals for 1,005,733 rentable square feet (80 properties) at weighted (by rentable square feet) average rents that were 2.8% above the prior rents for the same space. The weighted (by rentable square feet) average lease term for these leases was 8.8 years. We also entered into new leases for 60,569 rentable square feet (seven properties) at rent that was 16.4% above the prior rent for the same space. The weighted (by rentable square feet) average lease term for these leases was 10.6 years.
Generally, lease agreements with our net lease tenants require payment of minimum rent to us. Certain of these minimum rent payment amounts are secured by full or limited guarantees. Annualized minimum rent represents cash amounts and excludes adjustments, if any, necessary to record scheduled rent changes on a straight line basis or any expense reimbursement. Annualized minimum rent excludes the impact of rents prepaid by TA.
As of September 30, 2026, our net lease tenants operated across 141 brands. The following table identifies the top 10 brands based on annualized minimum rent:
| Brand | No. of Properties | Investment (1) | Percent of Total Investment | Annualized Minimum Rent | Percent of Total Annualized Minimum Rent | Rent Coverage (2) | |||||||||||||||||||||||||||||||||||||||||
| 1. | TravelCenters of America / Petro Stopping Centers | 175 | $ | 3,270,106 | 64.5 | % | $ | 269,547 | 68.2 | % | 1.44 | x | (3) | ||||||||||||||||||||||||||||||||||
| 2. | The Great Escape | 14 | 98,242 | 1.9 | % | 7,711 | 1.9 | % | 4.00 | x | |||||||||||||||||||||||||||||||||||||
| 3. | Life Time Fitness | 3 | 92,617 | 1.8 | % | 6,347 | 1.6 | % | 3.28 | x | |||||||||||||||||||||||||||||||||||||
| 4. | Buehler's Fresh Foods | 5 | 76,469 | 1.5 | % | 6,223 | 1.6 | % | 2.67 | x | |||||||||||||||||||||||||||||||||||||
| 5. | Express Oil Change | 23 | 49,724 | 1.0 | % | 4,088 | 1.0 | % | 5.24 | x | |||||||||||||||||||||||||||||||||||||
| 6. | Pizza Hut | 43 | 51,106 | 1.0 | % | 4,068 | 1.0 | % | 2.18 | x | |||||||||||||||||||||||||||||||||||||
| 7. | Norms | 10 | 53,673 | 1.1 | % | 3,498 | 0.9 | % | 3.55 | x | |||||||||||||||||||||||||||||||||||||
| 8. | America's Auto Auction | 6 | 38,314 | 0.8 | % | 3,457 | 0.9 | % | 10.11 | x | |||||||||||||||||||||||||||||||||||||
| 9. | Flying J Travel Plaza | 3 | 41,681 | 0.8 | % | 3,345 | 0.8 | % | 3.11 | x | |||||||||||||||||||||||||||||||||||||
| 10. | AMC Theatres | 5 | 57,457 | 1.1 | % | 3,143 | 0.8 | % | 2.45 | x | |||||||||||||||||||||||||||||||||||||
| Subtotal, top 10 | 287 | 3,829,389 | 75.5 | % | 311,427 | 78.7 | % | 1.77 | x | ||||||||||||||||||||||||||||||||||||||
| 11. | Other (4) | 435 | 1,185,011 | 23.4 | % | 84,065 | 21.3 | % | 3.65 | x | |||||||||||||||||||||||||||||||||||||
| 12. | Vacant | 18 | 56,705 | 1.1 | % | — | — | % | — | x | |||||||||||||||||||||||||||||||||||||
| Total | 740 | $ | 5,071,105 | 100.0 | % | $ | 395,492 | 100.0 | % | 2.17 | x | ||||||||||||||||||||||||||||||||||||
(1)Represents the historical cost of our net lease properties plus capital improvements funded by us less impairment write-downs, if any.
(2)See page 31 for our definition of rent coverage.
(3)Rent coverage information provided by tenant is for all 175 sites on a consolidated basis and is as of September 30, 2026.
(4)Consists of 131 distinct brands with an average investment of $2,724 per property and average annual minimum rent of $193 per property.
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As of September 30, 2026, our top 10 net lease tenants based on our annualized minimum rent are listed below:
| Tenant | Brand Affiliation | No. of Properties | Investment (1) | Percent of Total Investment | Annualized Minimum Rent | Percent of Total Annualized Minimum Rent | Rent Coverage (2) | ||||||||||||||||||||||||||||||||||||||||
| 1. | TravelCenters of America Inc. (3) | TravelCenters of America / Petro Stopping Centers | 175 | $ | 3,270,106 | 64.5 | % | $ | 269,547 | 68.2 | % | 1.44x | |||||||||||||||||||||||||||||||||||
| 2. | Universal Pool Co., Inc. | The Great Escape | 14 | 98,242 | 1.9 | % | 7,711 | 1.9 | % | 4.00x | |||||||||||||||||||||||||||||||||||||
| 3. | Healthy Way of Life II, LLC | Life Time Fitness | 3 | 92,617 | 1.8 | % | 6,347 | 1.6 | % | 3.28x | |||||||||||||||||||||||||||||||||||||
| 4. | Styx Acquisition, LLC | Buehler's Fresh Foods | 5 | 76,469 | 1.5 | % | 6,223 | 1.6 | % | 2.67x | |||||||||||||||||||||||||||||||||||||
| 5. | Express Oil Change, L.L.C. | Express Oil Change | 23 | 49,724 | 1.0 | % | 4,088 | 1.0 | % | 5.24x | |||||||||||||||||||||||||||||||||||||
| 6. | Norms Restaurants, LLC | Norms | 10 | 53,673 | 1.1 | % | 3,498 | 0.9 | % | 3.55x | |||||||||||||||||||||||||||||||||||||
| 7. | Automotive Remarketing Group, Inc. | America's Auto Auction | 6 | 38,314 | 0.8 | % | 3,457 | 0.9 | % | 10.11x | |||||||||||||||||||||||||||||||||||||
| 8. | Pilot Travel Centers LLC | Flying J Travel Plaza | 3 | 41,681 | 0.8 | % | 3,345 | 0.8 | % | 3.11x | |||||||||||||||||||||||||||||||||||||
| 9. | Fleet Farm Group LLC | Fleet Farm | 1 | 37,802 | 0.7 | % | 2,952 | 0.7 | % | 2.38x | |||||||||||||||||||||||||||||||||||||
| 10. | Heartland Dental, LLC | Heartland Dental | 35 | 31,045 | 0.6 | % | 2,686 | 0.7 | % | 5.33x | |||||||||||||||||||||||||||||||||||||
| Subtotal, top 10 | 275 | 3,789,673 | 74.7 | % | 309,854 | 78.3 | % | 1.80x | |||||||||||||||||||||||||||||||||||||||
| 11. | Other (4) | Various | 447 | 1,224,727 | 24.2 | % | 85,638 | 21.7 | % | 3.52x | |||||||||||||||||||||||||||||||||||||
| 12. | Vacant | Vacant | 18 | 56,705 | 1.1 | % | — | — | % | —x | |||||||||||||||||||||||||||||||||||||
| Total | 740 | $ | 5,071,105 | 100.0 | % | $ | 395,492 | 100.0 | % | 2.17x | |||||||||||||||||||||||||||||||||||||
(1)Represents the historical cost of our net lease properties plus capital improvements funded by us less impairment write-downs, if any.
(2)See page 31 for our definition of rent coverage.
(3)TA is our largest tenant. As of September 30, 2026, we leased 175 travel centers (131 under the TravelCenters of America brand and 44 under the Petro Stopping Centers brand) to a subsidiary of TA under five master leases that expire in 2033. TA has five renewal options for 10 years each for all of the travel centers under each lease. BP Corporation North America Inc. guarantees payment under each of the five master leases. The aggregate guaranty as of September 30, 2026 was $2,782,917. Annualized minimum rent amounts and the rent used to calculate rent coverage are based on the stated rent amounts in the lease and exclude the impact of rents prepaid by TA. Rent coverage was 1.35x, 1.43x, 1.53x, 1.61x and 1.32x for our TA leases no. 1, no. 2, no. 3, no. 4 and no. 5, respectively. Rent coverage is as of September 30, 2026.
(4)Consists of 178 tenants with an average investment of $2,740 per property and an average annual minimum rent of $192 per property.
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As of September 30, 2026, our net lease tenants operated across 21 distinct industries within the service-focused retail sector of the U.S. economy. Our top 10 industries are shown below:
| Industry | No. of Properties | Investment (1) | Percent of Total Investment | Annualized Minimum Rent | Percent of Total Annualized Minimum Rent | Rent Coverage (2) | |||||||||||||||||||||||||||||||||||||||||
| 1. | Travel Centers | 178 | $ | 3,311,787 | 65.3% | $ | 272,892 | 69.1 | % | 1.46 x | (3) | ||||||||||||||||||||||||||||||||||||
| 2. | Restaurants - Quick Service | 211 | 296,723 | 5.9% | 21,000 | 5.3 | % | 2.97 | x | ||||||||||||||||||||||||||||||||||||||
| 3. | Restaurants - Casual Dining | 59 | 213,490 | 4.2% | 13,728 | 3.5 | % | 2.90 | x | ||||||||||||||||||||||||||||||||||||||
| 4. | Health and Fitness | 15 | 204,048 | 4.0% | 13,362 | 3.4 | % | 2.43 | x | ||||||||||||||||||||||||||||||||||||||
| 5. | Grocery Stores | 19 | 129,152 | 2.5% | 9,895 | 2.5 | % | 3.16 | x | ||||||||||||||||||||||||||||||||||||||
| 6. | Automotive Equipment and Services | 65 | 109,145 | 2.2% | 8,426 | 2.1 | % | 4.84 | x | ||||||||||||||||||||||||||||||||||||||
| 7. | Home Goods and Leisure | 14 | 98,242 | 1.9% | 7,711 | 1.9 | % | 4.00 | x | ||||||||||||||||||||||||||||||||||||||
| 8. | Movie Theaters | 14 | 134,490 | 2.7% | 7,061 | 1.8 | % | 2.41 | x | ||||||||||||||||||||||||||||||||||||||
| 9. | Medical, Dental Office | 48 | 75,606 | 1.5% | 6,110 | 1.5 | % | 3.76 | x | ||||||||||||||||||||||||||||||||||||||
| 10. | Automotive Dealers | 8 | 62,656 | 1.2% | 5,345 | 1.4 | % | 8.05 | x | ||||||||||||||||||||||||||||||||||||||
| Subtotal, top 10 | 631 | 4,635,339 | 91.4% | 365,530 | 92.5 | % | 1.97 | x | |||||||||||||||||||||||||||||||||||||||
| 11. | Other (4) | 91 | 379,061 | 7.5% | 29,962 | 7.5 | % | 4.66 | x | ||||||||||||||||||||||||||||||||||||||
| 12. | Vacant | 18 | 56,705 | 1.1% | — | — | % | — | x | ||||||||||||||||||||||||||||||||||||||
| Total | 740 | $ | 5,071,105 | 100.0% | $ | 395,492 | 100.0% | 2.17 | x | ||||||||||||||||||||||||||||||||||||||
(1)Represents the historical cost of our net lease properties plus capital improvements funded by us less impairment write-downs, if any.
(2)See page 31 for our definition of rent coverage.
(3)Rent coverage for TA is as of September 30, 2026. Annualized minimum rent amounts and the rent used to calculate rent coverage are based on the stated rent amounts in the lease and exclude the impact of rents prepaid by TA.
(4)Primarily consists of miscellaneous businesses with an average investment of $4,166 per property.
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As of September 30, 2026, lease expirations at our net lease properties by year are as follows:
Year (1) | Number of Properties | Square Feet | Annualized Minimum Rent Expiring | Percent of Total Annualized Minimum Rent Expiring | Cumulative Percent of Total Annualized Minimum Rent Expiring | ||||||||||||||||||||||||||||||
| 2026 | 14 | 76,170 | $ | 1,575 | 0.4% | 0.4% | |||||||||||||||||||||||||||||
| 2027 | 31 | 919,786 | 10,968 | 2.8% | 3.2% | ||||||||||||||||||||||||||||||
| 2028 | 20 | 586,419 | 9,529 | 2.4% | 5.6% | ||||||||||||||||||||||||||||||
| 2029 | 78 | 622,283 | 10,708 | 2.7% | 8.3% | ||||||||||||||||||||||||||||||
| 2030 | 24 | 269,526 | 5,874 | 1.5% | 9.8% | ||||||||||||||||||||||||||||||
| 2031 | 69 | 719,312 | 9,636 | 2.4% | 12.2% | ||||||||||||||||||||||||||||||
| 2032 | 26 | 299,670 | 4,703 | 1.2% | 13.4% | ||||||||||||||||||||||||||||||
| 2033 | 203 | 5,338,721 | 274,609 | 69.4% | 82.8% | ||||||||||||||||||||||||||||||
| 2034 | 23 | 293,210 | 5,924 | 1.5% | 84.3% | ||||||||||||||||||||||||||||||
| 2035 | 48 | 1,188,024 | 22,211 | 5.6% | 89.9% | ||||||||||||||||||||||||||||||
| 2036 | 49 | 509,395 | 9,979 | 2.5% | 92.4% | ||||||||||||||||||||||||||||||
| 2037 | 15 | 494,359 | 4,039 | 1.0% | 93.4% | ||||||||||||||||||||||||||||||
| 2038 | 7 | 47,654 | 1,284 | 0.3% | 93.7% | ||||||||||||||||||||||||||||||
| 2039 | 14 | 241,746 | 4,891 | 1.2% | 94.9% | ||||||||||||||||||||||||||||||
| 2040 | 33 | 223,031 | 6,043 | 1.5% | 96.4% | ||||||||||||||||||||||||||||||
| 2041 | 11 | 222,691 | 3,222 | 0.8% | 97.2% | ||||||||||||||||||||||||||||||
| 2042 | 15 | 288,309 | 2,385 | 0.6% | 97.8% | ||||||||||||||||||||||||||||||
| 2043 | 7 | 127,440 | 2,233 | 0.6% | 98.4% | ||||||||||||||||||||||||||||||
| 2044 | 2 | 93,010 | 278 | 0.1% | 98.5% | ||||||||||||||||||||||||||||||
| 2045 | 22 | 188,018 | 4,912 | 1.2% | 99.7% | ||||||||||||||||||||||||||||||
| 2046 | 1 | 6,500 | 216 | 0.1% | 99.8% | ||||||||||||||||||||||||||||||
| Thereafter | 3 | 219,237 | 273 | 0.2% | 100.0% | ||||||||||||||||||||||||||||||
| Total | 715 | 12,974,511 | $ | 395,492 | 100.0% | ||||||||||||||||||||||||||||||
(1)The year of lease expiration is pursuant to contract terms.
As of September 30, 2026, shown below is the list of our top 10 states where our net lease properties are located. No other state represents more than 3% of our net lease annualized minimum rents.
| State | Number of Properties | Square Feet | Annualized Minimum Rent | Percent of Total Annualized Minimum Rent | ||||||||||||||||||||||
| Texas | 56 | 1,182,445 | $ | 35,430 | 9.0% | |||||||||||||||||||||
| Ohio | 35 | 1,268,678 | 28,146 | 7.1% | ||||||||||||||||||||||
| Illinois | 50 | 970,421 | 27,808 | 7.0% | ||||||||||||||||||||||
| California | 22 | 399,045 | 26,494 | 6.7% | ||||||||||||||||||||||
| Georgia | 69 | 573,419 | 20,835 | 5.3% | ||||||||||||||||||||||
| Florida | 44 | 576,815 | 18,325 | 4.6% | ||||||||||||||||||||||
| Arizona | 23 | 514,480 | 17,994 | 4.5% | ||||||||||||||||||||||
| Pennsylvania | 27 | 506,563 | 16,045 | 4.1% | ||||||||||||||||||||||
| Indiana | 36 | 562,721 | 15,781 | 4.0% | ||||||||||||||||||||||
| New Mexico | 18 | 251,172 | 12,564 | 3.2% | ||||||||||||||||||||||
| Other | 360 | 6,736,573 | 176,070 | 44.5% | ||||||||||||||||||||||
| Total | 740 | 13,542,332 | $ | 395,492 | 100.0% | |||||||||||||||||||||
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Hotel Portfolio
The following tables summarize the operating statistics, including occupancy, ADR and RevPAR reported to us by our hotel managers by hotel brand for the periods indicated. All operating data presented are based upon the operating results provided by our hotel managers for the indicated periods. We have not independently verified our managers’ operating data.
| Retained & Exit Hotels* | No. of Rooms or Suites | Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Service Level | No. of Hotels | Occupancy | ADR | RevPAR | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brand | 2026 | 2025 | Change | 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retained Hotels: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Royal Sonesta Hotels® | Full Service | 14 | 4,821 | 70.7 | % | 68.4 | % | 2.3 pts | $242.47 | $231.59 | 4.7 | % | $ | 171.32 | $ | 158.30 | 8.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta Hotels & Resorts® | Full Service | 18 | 6,040 | 69.3 | % | 67.7 | % | 1.6 pts | 169.72 | 163.30 | 3.9 | % | 117.67 | 110.52 | 6.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Radisson® Hotels & Resorts | Full Service | 5 | 1,149 | 68.3 | % | 61.6 | % | 6.7 pts | 152.98 | 153.93 | (0.6) | % | 104.42 | 94.78 | 10.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Country Inn & Suites® by Radisson | Full Service | 2 | 346 | 82.8 | % | 80.3 | % | 2.5 pts | 163.79 | 158.34 | 3.4 | % | 135.58 | 127.10 | 6.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Full Service Total/Average | 39 | 12,356 | 70.1 | % | 67.7 | % | 2.4 pts | 196.60 | 189.22 | 3.9 | % | 137.86 | 128.15 | 7.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta ES Suites® | Extended Stay | 7 | 958 | 87.2 | % | 81.0 | % | 6.2 pts | 153.62 | 151.09 | 1.7 | % | 133.95 | 122.45 | 9.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta Select® | Select Service | 7 | 1,028 | 77.3 | % | 68.9 | % | 8.4 pts | 145.96 | 142.76 | 2.2 | % | 112.84 | 98.41 | 14.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta Simply Suites® | Extended Stay | 7 | 1,144 | 73.6 | % | 73.1 | % | 0.5 pts | 132.26 | 125.04 | 5.8 | % | 97.36 | 91.35 | 6.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Hyatt Place® | Select Service | 17 | 2,107 | 77.3 | % | 71.2 | % | 6.1 pts | 122.61 | 119.27 | 2.8 | % | 94.72 | 84.95 | 11.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Focused Service Total/Average | 38 | 5,237 | 78.3 | % | 73.0 | % | 5.3 pts | 135.43 | 131.35 | 3.1 | % | 106.03 | 95.85 | 10.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Retained Hotels Total/Average | 77 | 17,593 | 72.6 | % | 69.3 | % | 3.3 pts | $176.95 | $171.08 | 3.4 | % | $ | 128.38 | $ | 118.53 | 8.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Exit Hotels: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Royal Sonesta Hotels® | Full Service | 2 | 581 | 62.9 | % | 55.9 | % | 7.0 pts | $141.26 | $144.08 | (2.0) | % | $88.90 | $80.50 | 10.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta Hotels & Resorts® | Full Service | 2 | 600 | 50.2 | % | 52.1 | % | (1.9) pts | 108.61 | 107.32 | 1.2 | % | 54.49 | 55.87 | (2.5) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Crowne Plaza® | Full Service | 1 | 495 | 68.3 | % | 65.6 | % | 2.7 pts | 139.29 | 150.00 | (7.1) | % | 95.09 | 98.36 | (3.3) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Full Service Total/Average | 5 | 1,676 | 59.9 | % | 57.4 | % | 2.5 pts | 130.82 | 134.14 | (2.5) | % | 78.41 | 76.96 | 1.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta ES Suites® | Extended Stay | 3 | 384 | 82.5 | % | 79.4 | % | 3.1 pts | 117.45 | 120.55 | (2.6) | % | 96.89 | 95.66 | 1.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta Simply Suites® | Extended Stay | 2 | 244 | 82.5 | % | 78.1 | % | 4.4 pts | 80.82 | 82.58 | (2.1) | % | 66.71 | 64.54 | 3.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Focused Service Total/Average | 5 | 628 | 82.5 | % | 78.9 | % | 3.6 pts | 103.21 | 105.94 | (2.6) | % | 85.17 | 83.57 | 1.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Exit Hotels Total/Average | 10 | 2,304 | 66.1 | % | 63.2 | % | 2.9 | pts | 121.42 | 124.55 | (2.5) | % | 80.25 | 78.76 | 1.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Retained & Exit Hotels Total/Average | 87 | 19,897 | 71.8 | % | 68.6 | % | 3.2 pts | $171.03 | $166.11 | 3.0 | % | $ | 122.81 | $ | 113.93 | 7.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
*Includes results of all hotels owned as of September 30, 2026. Excludes the results of hotels sold during the periods presented. Retained Hotels represents 53 hotels managed by Sonesta, 17 hotels managed by Hyatt and seven hotels managed by Radisson that we will continue to own after the Exit Hotels are sold. Exit Hotels represents eight hotels sold in October 2026, as well as one hotel managed by Sonesta and one hotel managed by IHG that are currently at various stages of being sold.
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| Retained & Exit Hotels* | No. of Rooms or Suites | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Service Level | No. of Hotels | Occupancy | ADR | RevPAR | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brand | 2026 | 2025 | Change | 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retained Hotels: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Royal Sonesta Hotels® | Full Service | 14 | 4,821 | 67.3 | % | 64.7 | % | 2.6 pts | $251.85 | $244.02 | 3.2 | % | $ | 169.59 | $ | 157.84 | 7.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta Hotels & Resorts® | Full Service | 18 | 6,040 | 66.8 | % | 63.5 | % | 3.3 pts | 177.15 | 173.82 | 1.9 | % | 118.39 | 110.33 | 7.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Radisson® Hotels & Resorts | Full Service | 5 | 1,149 | 68.3 | % | 62.0 | % | 6.3 pts | 157.72 | 153.67 | 2.6 | % | 107.77 | 95.22 | 13.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Country Inn & Suites® by Radisson | Full Service | 2 | 346 | 73.5 | % | 68.7 | % | 4.8 pts | 149.00 | 146.38 | 1.8 | % | 109.52 | 100.61 | 8.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Full Service Total/Average | 39 | 12,356 | 67.4 | % | 64.0 | % | 3.4 pts | 203.58 | 198.87 | 2.4 | % | 137.12 | 127.18 | 7.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta ES Suites® | Extended Stay | 7 | 958 | 81.0 | % | 76.6 | % | 4.4 pts | 154.43 | 151.22 | 2.1 | % | 125.14 | 115.77 | 8.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta Select® | Select Service | 7 | 1,028 | 71.6 | % | 67.5 | % | 4.1 pts | 136.91 | 136.30 | 0.4 | % | 98.08 | 91.94 | 6.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta Simply Suites® | Extended Stay | 7 | 1,144 | 71.1 | % | 71.3 | % | (0.2) pts | 126.61 | 123.54 | 2.5 | % | 90.07 | 88.09 | 2.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Hyatt Place® | Select Service | 17 | 2,107 | 73.8 | % | 69.4 | % | 4.4 pts | 125.02 | 122.90 | 1.7 | % | 92.25 | 85.29 | 8.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Focused Service Total/Average | 38 | 5,237 | 74.1 | % | 70.7 | % | 3.4 pts | 133.49 | 131.16 | 1.8 | % | 98.93 | 92.78 | 6.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Retained Hotels Total/Average | 77 | 17,593 | 69.4 | % | 66.0 | % | 3.4 pts | $181.28 | $177.25 | 2.3 | % | $ | 125.75 | $ | 116.94 | 7.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Exit Hotels: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Royal Sonesta Hotels® | Full Service | 2 | 581 | 48.8 | % | 42.9 | % | 5.9 pts | $136.62 | $137.98 | (1.0) | % | $66.63 | $59.23 | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta Hotels & Resorts® | Full Service | 2 | 600 | 49.4 | % | 53.2 | % | (3.8) pts | 107.60 | 106.72 | 0.8 | % | 53.15 | 56.81 | (6.4) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Crowne Plaza® | Full Service | 1 | 495 | 71.4 | % | 68.9 | % | 2.5 pts | 140.38 | 144.53 | (2.9) | % | 100.29 | 99.55 | 0.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Full Service Total/Average | 5 | 1,676 | 55.7 | % | 54.3 | % | 1.4 pts | 128.83 | 129.46 | (0.5) | % | 71.75 | 70.27 | 2.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta ES Suites® | Extended Stay | 3 | 384 | 75.1 | % | 75.6 | % | (0.5) pts | 116.79 | 118.92 | (1.8) | % | 87.74 | 89.86 | (2.4) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sonesta Simply Suites® | Extended Stay | 2 | 244 | 74.3 | % | 77.4 | % | (3.1) pts | 81.29 | 80.82 | 0.6 | % | 60.37 | 62.58 | (3.5) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Focused Service Total/Average | 5 | 628 | 74.8 | % | 76.3 | % | (1.5) pts | 103.09 | 103.90 | (0.8) | % | 77.10 | 79.26 | (2.7) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Exit Hotels Total/Average | 10 | 2,304 | 60.9 | % | 60.3 | % | 0.6 | pts | 120.21 | 120.64 | (0.4) | % | 73.21 | 72.72 | 0.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Retained & Exit Hotels Total/Average | 87 | 19,897 | 68.4 | % | 65.3 | % | 3.1 pts | $174.99 | $171.20 | 2.2 | % | $ | 119.67 | $ | 111.82 | 7.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
*Includes results of all hotels owned as of September 30, 2026. Excludes the results of hotels sold during the periods presented. Retained Hotels represents 53 hotels managed by Sonesta, 17 hotels managed by Hyatt and seven hotels managed by Radisson that we will continue to own after the Exit Hotels are sold. Exit Hotels represents eight hotels sold in October 2026, as well as one hotel managed by Sonesta and one hotel managed by IHG that are currently at various stages of being sold.
Non-GAAP Financial Measures
We present certain “non-GAAP financial measures” within the meaning of the applicable SEC rules, including funds from operations, or FFO, and normalized funds from operations, or Normalized FFO. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss) as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income (loss) as presented in our condensed consolidated statements of comprehensive income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss). We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of our operating performance between periods and with other REITs.
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Funds From Operations and Normalized Funds From Operations
We calculate FFO and Normalized FFO as shown below. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, which is net income (loss), calculated in accordance with GAAP, plus real estate depreciation and amortization, excluding any gain or loss on sale of real estate and any loss on impairment of real estate assets, as well as adjustments to reflect our share of FFO attributable to an investee and certain other adjustments currently not applicable to us. In calculating Normalized FFO, we adjust for the items shown below. FFO and Normalized FFO are among the factors considered by our Board when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to satisfy our REIT distribution requirements, limitations in our debt agreements, the availability to us of debt and equity capital, our distribution rate as a percentage of the trading price of our common shares, or dividend yield, and our dividend yield compared to the dividend yields of other REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.
Our calculations of FFO and Normalized FFO for the three and nine months ended September 30, 2026 and 2025 and reconciliations of net loss, the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to those amounts appear in the following table (amounts in thousands, except per share amounts):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Net loss | $ | (87,940) | $ | (46,945) | $ | (462,956) | $ | (201,539) | |||||||||||||||||||||
| Add (less): | Depreciation and amortization | 72,152 | 74,453 | 225,078 | 238,583 | ||||||||||||||||||||||||
| Loss (gain) on sale of real estate, net | 1,103 | (25,256) | 131 | (25,846) | |||||||||||||||||||||||||
| Loss on asset impairment | 53,691 | 27,067 | 270,883 | 81,788 | |||||||||||||||||||||||||
| Adjustments to reflect our share of FFO attributable to an investee | 1,184 | 1,113 | 3,669 | 3,495 | |||||||||||||||||||||||||
| FFO | 40,190 | 30,432 | 36,805 | 96,481 | |||||||||||||||||||||||||
| Add (less): | Loss on early extinguishment of debt, net | 335 | 529 | 61,589 | 529 | ||||||||||||||||||||||||
| Transaction related costs | 1,857 | 2,683 | 4,829 | 4,139 | |||||||||||||||||||||||||
| Adjustments to reflect our share of Normalized FFO attributable to an investee | 1,457 | 266 | 3,085 | 1,200 | |||||||||||||||||||||||||
| Normalized FFO | $ | 43,839 | $ | 33,910 | $ | 106,308 | $ | 102,349 | |||||||||||||||||||||
| Weighted average common shares outstanding (basic and diluted) | 129,262 | 33,217 | 97,227 | 33,163 | |||||||||||||||||||||||||
| Basic and diluted per common share amounts: | |||||||||||||||||||||||||||||
| Net loss | $ | (0.68) | $ | (1.41) | $ | (4.76) | $ | (6.08) | |||||||||||||||||||||
| FFO | $ | 0.31 | $ | 0.92 | $ | 0.38 | $ | 2.91 | |||||||||||||||||||||
| Normalized FFO | $ | 0.34 | $ | 1.02 | $ | 1.09 | $ | 3.09 | |||||||||||||||||||||
| Distributions declared per share | $ | 0.05 | $ | 0.05 | $ | 0.15 | $ | 0.15 | |||||||||||||||||||||
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Item 3. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands, except per share amounts)
We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategy to manage exposure to changes in interest rates has not materially changed since December 31, 2025. Other than as described below, we do not currently foresee any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.
Fixed Rate Debt
At September 30, 2026, our outstanding fixed rate debt consisted of the following:
| Debt | Principal Balance | Annual Interest Rate | Annual Interest Expense | Maturity | Interest Payments Due | |||||||||||||||||||||||||||
| Senior secured notes | $ | 580,155 | — | % | $ | — | 2027 | At Maturity | ||||||||||||||||||||||||
| Senior unsecured notes | 400,000 | 3.950 | % | 15,800 | 2028 | Semi-Annually | ||||||||||||||||||||||||||
| Net lease mortgage notes | 603,186 | 5.600 | % | 33,778 | 2028 | Monthly | ||||||||||||||||||||||||||
| Senior unsecured notes | 425,000 | 4.950 | % | 21,038 | 2029 | Semi-Annually | ||||||||||||||||||||||||||
| Senior unsecured notes | 400,000 | 4.375 | % | 17,500 | 2030 | Semi-Annually | ||||||||||||||||||||||||||
| Net lease mortgage notes | 743,981 | 5.960 | % | 44,341 | 2031 | Monthly | ||||||||||||||||||||||||||
| Senior secured notes | 1,000,000 | 8.625 | % | 86,250 | 2031 | Semi-Annually | ||||||||||||||||||||||||||
Senior guaranteed unsecured notes | 500,000 | 8.875 | % | 44,375 | 2032 | Semi-Annually | ||||||||||||||||||||||||||
| $ | 4,652,322 | $ | 263,082 | |||||||||||||||||||||||||||||
No principal repayments are due under our senior unsecured or secured notes until maturity. Our net lease mortgage notes require principal and interest payments through maturity pursuant to amortization schedules. Our $580,155 senior secured notes due 2027 require no cash interest to accrue prior to maturity and will accrete at a rate of 7.50% per annum compounded semi-annually on March 30 and September 30 of each year, such that the accreted value will equal the principal amount at maturity. Because certain notes require interest at fixed rates, changes in market interest rates during the term of these debts will not affect our interest obligations. If these notes were refinanced at interest rates which are one percentage point higher than the rates shown above, our per annum interest cost would increase by approximately $40,722, which amount excludes $580,155 of our senior secured notes due 2027 as no interest is due until maturity. Changes in market interest rates would affect the fair value of our fixed rate debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at September 30, 2026 and discounted cash flows analyses through the respective maturity dates, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligations, a hypothetical immediate one percentage point change in interest rates would change the fair value of those debt obligations by approximately $122,416, which amount excludes $580,155 of our senior secured notes due 2027 as no interest is due until maturity.
Our fixed rate debt arrangements may allow us to make repayments earlier than the stated maturity date. In some cases, we are not allowed to make early repayment prior to a cutoff date and we are generally allowed to make prepayments only at a premium equal to a make whole amount, as defined, which is generally designed to preserve a stated yield to the noteholder. Also, we have in the past repurchased and retired some of our outstanding debts and we may do so again in the future. These prepayment rights and our ability to repurchase and retire outstanding debt may afford us opportunities to mitigate the risks of refinancing our debts at their maturities at higher rates by refinancing prior to maturity.
Floating Rate Debt
As of September 30, 2026, we had no amounts outstanding under our revolving credit facility. The maturity date of our revolving credit facility is June 29, 2027, and, subject to our meeting certain conditions, including our payment of an extension fee, we have an option to extend the stated maturity date of the facility by two six-month periods. No principal repayments are required under our revolving credit facility prior to maturity and repayments may be made and redrawn subject to conditions at any time without penalty.
Borrowings under our revolving credit facility are in U.S. dollars and require interest to be paid at a rate of SOFR plus premiums. Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates, specifically SOFR. In addition, upon renewal or refinancing of our revolving credit facility, we are vulnerable to increases in interest rate premiums due to market conditions or our perceived credit characteristics. Generally, a change in interest rates would not affect the value of this floating rate debt but would affect our operating results.
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The following table presents the impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at September 30, 2026 if we were fully drawn on our revolving credit facility:
| Impact of Increase in Interest Rates | |||||||||||||||||||||||
Interest Rate Per Year (1) | Outstanding Debt (2) | Total Interest Expense Per Year | Annual Per Share Impact (3) | ||||||||||||||||||||
| At September 30, 2026 | 6.50 | % | $ | 650,000 | $ | 42,250 | $ | 0.43 | |||||||||||||||
| One percentage point increase | 7.50 | % | $ | 650,000 | $ | 48,750 | $ | 0.50 | |||||||||||||||
(1)Based on SOFR plus a premium, which was 250 basis points per annum for our revolving credit facility, as of September 30, 2026.
(2)Represents the maximum amount available under our revolving credit facility.
(3)Based on diluted weighted average common shares outstanding for the nine months ended September 30, 2026.
The foregoing table shows the impact of an immediate change in floating interest rates as of September 30, 2026. If interest rates were to change gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amounts under our revolving credit facility or other floating rate debt, if any. Although we have no present plans to do so, we may in the future enter into hedge arrangements from time to time to mitigate our exposure to changes in interest rates.
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Item 4. Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.
There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Warning Concerning Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws that are subject to risks and uncertainties. These statements may include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will,” “may” and negatives or derivatives of these or similar expressions. These forward-looking statements include, among others, statements about: economic and market conditions and their potential impacts on us, our tenants and our hotel managers; expectations regarding demand for corporate travel and lodging; the sufficiency of our liquidity; our liquidity needs, sources and expected uses; our capital expenditure plans and commitments; our ability to incur additional debt; our expectations concerning the extension, amendment, replacement or refinancing of our revolving credit facility; our continued focus on reducing debt; our transition to a company with the majority of our properties being service-focused retail net lease properties through the growth of our net lease portfolio and improving the performance of the Retained Hotels; our pending or potential property dispositions; and the amount and timing of future distributions.
Forward-looking statements reflect our current expectations, are based on judgments and assumptions, are inherently uncertain and are subject to risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from expected future results, performance or achievements expressed or implied in those forward-looking statements. Some of the risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:
• Our ability and the ability of our tenants and managers to operate under unfavorable market and commercial real estate industry conditions due to, among other things, uncertainties surrounding interest rates and inflation, supply chain disruptions, emerging technologies, volatility in the public equity and debt markets, changing tariffs and trade policies and related uncertainty, geopolitical instability and tensions, pandemics, any U.S. government shutdown, economic downturns or a possible recession, labor market conditions or changes in real estate utilization,
• The ability of Sonesta to successfully operate the hotels it manages for us,
• Our ability to repay or refinance our debts as they mature or otherwise become due,
• Our ability to sell properties at prices we target, and the timing of such sales,
• Our ability to raise or appropriately balance the use of debt or equity capital,
• Our ability to extend, amend, replace or refinance our revolving credit facility,
• Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions,
• Our ability to maintain sufficient liquidity, including the availability of borrowings under our revolving credit facility,
• Our ability to pay interest on and principal of our debt,
• Whether and the extent to which our tenants and managers will pay the contractual amounts of returns, rents or other obligations due to us,
• The impact of changes in U.S. and foreign government administrative policies, including the imposition of or increases in tariffs and changes to existing trade agreements, on macroeconomic conditions, supply chains and the cost of products our operators use, and on the results of operations of our operators and us,
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• Competition within the commercial real estate, hotel, transportation and travel center and other industries in which our tenants and managers operate, particularly in those markets in which our properties are located,
• Potential defaults under our leases and management agreements by our tenants and managers,
• Our ability to make cost-effective improvements to our properties that enhance their appeal to net lease tenants and hotel guests,
• Our ability to pay distributions to our shareholders and to increase or sustain the amount of such distributions,
• Our ability to acquire properties that realize our targeted returns,
• Our ability to identify properties that we want to acquire or to negotiate acceptable purchase prices, acquisition financing terms, management agreements or lease terms for new properties, or ability to complete acquisitions,
• Our ability to increase rents at our net leased properties as our leases expire and hotel room rates in excess of our operating expenses and to grow our business,
• Our ability to increase and maintain net lease property and hotel room occupancy at our properties,
• Our ability to engage and retain qualified tenants and managers for our net lease properties and hotels on satisfactory terms,
• Our ability to diversify our sources of rents and returns that improve the security of our cash flows,
• Our credit ratings,
• The ability of our manager, RMR, to successfully manage us,
• Actual and potential conflicts of interest with our related parties, including our Managing Trustees, Sonesta, RMR and others affiliated with them,
• Our ability to realize benefits from the scale, geographic diversity, strategic locations and variety of service levels of our hotels,
• Limitations imposed by and our ability to satisfy complex rules to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes,
• Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,
• Acts of terrorism, war or other hostilities, outbreaks of pandemics or other public health safety events or conditions, global climate change or other man-made or natural disasters beyond our control, and
• Other matters.
These risks, uncertainties and other factors are not exhaustive and should be read in conjunction with other cautionary statements that are included in our periodic filings. The information contained elsewhere in this Quarterly Report on Form 10-Q or in our other filings with the SEC, including under the caption “Risk Factors”, or incorporated herein or therein, identifies other important factors that could cause differences from our forward-looking statements. Our filings with the SEC are available on the SEC’s website at www.sec.gov.
You should not place undue reliance upon our forward-looking statements.
Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
47
Statement Concerning Limited Liability
The Amended and Restated Declaration of Trust establishing Service Properties Trust dated August 21, 1995, as amended and supplemented, as filed with the State Department of Assessments and Taxation of Maryland, provides that no trustee, officer, shareholder, employee or agent of Service Properties Trust shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, Service Properties Trust. All persons dealing with Service Properties Trust in any way shall look only to the assets of Service Properties Trust for the payment of any sum or the performance of any obligation.
Part II. Other Information
Item 1A. Risk Factors
Our business is subject to risks and uncertainties, a number of which are described under the caption “Risk Factors” in our 2025 Annual Report. The risks described in our 2025 Annual Report and below may not be the only risks we face but are risks we believe may be material at this time. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our 2025 Annual Report or included below occurs, our business, financial condition, liquidity, results of operations or ability to pay distributions to our shareholders could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in our 2025 Annual Report and below and the information contained under the caption “Warning Concerning Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.
Risks Related to Our Taxation
If we were to experience an ownership change under Section 382 of the IRC, the resulting limitations on tax losses and tax depreciation will strain our ability to meet applicable REIT distribution requirements and adversely impact our cash flows and financial position.
The scale and composition of our April 2026 equity offering brought us closer to (but did not cause us to exceed) the threshold for an “ownership change” as defined under Section 382 of the IRC. If we were to experience such an ownership change (for example, through secondary market trading of our shares), then we would be (1) severely limited in our ability to use our net operating losses incurred prior to the ownership change, (2) required to reduce severely our tax depreciation deductions for the five-year period following the ownership change and (3) generally unable to use recognized asset sale losses as offsets to taxable gains during the five-year period following the ownership change (for example, with respect to applicable taxable gains from our anticipated asset dispositions). In turn, these limitations could result in significantly higher taxable income than projected, potentially impairing our ability to satisfy REIT distribution requirements and adversely impacting our cash flows and financial position. Although we have enforced and intend to continue to enforce the ownership limitations and transfer restrictions contained in our bylaws to mitigate the risk of an ownership change, such measures may not be successful.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer purchases of equity securities. The following table provides information about our purchases of our equity securities during the quarter ended September 30, 2026:
| Calendar Month | Number of Common Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| July 1, 2026 - July 31, 2026 | 11,416 | $ | 8.41 | — | $ | — | ||||||||||||||||||||
| September 1, 2026 - September 30, 2026 | 81,169 | 6.61 | — | — | ||||||||||||||||||||||
| Total | 92,585 | $ | 6.82 | — | $ | — | ||||||||||||||||||||
(1)These common share withholdings and purchases were made to satisfy tax withholding and payment obligations from certain officers and certain current and former employees of RMR and Sonesta in connection with the vesting of awards of our common shares. We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on Nasdaq on the applicable purchase dates.
48
Item 6. Exhibits
| Exhibit Number | Description | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 3.3 | ||||||||
| 4.1 | ||||||||
| 4.2 | ||||||||
| 4.3 | ||||||||
| 4.4 | ||||||||
| 4.5 | ||||||||
| 4.6 | ||||||||
| 4.7 | ||||||||
| 4.8 | ||||||||
| 4.9 | ||||||||
| 4.10 | ||||||||
| 4.11 | ||||||||
| 4.12 | ||||||||
49
50
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SERVICE PROPERTIES TRUST | ||||||||
| By: | /s/ Christopher J. Bilotto | |||||||
Christopher J. Bilotto | ||||||||
President and Chief Executive Officer | ||||||||
| Dated: November 4, 2026 | ||||||||
| By: | /s/ Brian E. Donley | |||||||
| Brian E. Donley | ||||||||
| Chief Financial Officer and Treasurer | ||||||||
| (Principal Financial and Accounting Officer) | ||||||||
| Dated: November 4, 2026 | ||||||||
51
Exhibit 10.1
SCHEDULE A
MANAGERS
Sonesta International Hotels Corporation, a Maryland corporation
SCHEDULE B
OWNERS
HPT CY TRS, Inc., a Maryland corporation
SCHEDULE C
HOTELS
| Trade Name and Street Address | Landlord | Owner | Manager | |||||||||||
1. | Sonesta Select Phoenix Camelback 2101 East Camelback Road Phoenix, AZ | Service Properties Trust | HPT CY TRS, Inc. | Sonesta International Hotels Corporation | ||||||||||
SCHEDULE D
MANAGEMENT AGREEMENTS
1.Second Amended, Restated and Consolidated Master Management Agreement for Retained Hotels, dated as of August 1, 2025, by and among Sonesta International Hotels Corporation, as manager, and Cambridge TRS, Inc., HPT CY TRS, Inc., HPT TRS IHG-2, Inc. and HPT TRS MRP, Inc., as owners, as amended and assigned. [1 Hotel]
Exhibit 10.2
We have entered into one management agreement with Sonesta International Hotels Corporation or its subsidiaries for the one remaining non-Retained Hotel.
Trade Name and Street Address | Landlord | Owner | Manager | Service Level | |||||||||||||
1. | Sonesta Select Phoenix Camelback 2101 East Camelback Road Phoenix, AZ | Service Properties Trust | HPT CY TRS, Inc. | Sonesta International Hotels Corporation | Select | ||||||||||||
Exhibit 10.3
OMNIBUS AMENDMENT OF
HOTEL MANAGEMENT AGREEMENTS
HOTEL MANAGEMENT AGREEMENTS
THIS OMNIBUS AMENDMENT OF HOTEL MANAGEMENT AGREEMENTS (this “Amendment”) is made and entered into as of September 25, 2026 (the “Effective Date”), by and among the parties listed on the signature page attached hereto as Operators (collectively, “Operators”) and the parties listed on the signature page attached hereto as Owners (collectively, “Owners”).
WITNESSETH:
WHEREAS, each applicable Operator and each applicable Owner is a party to one or more Hotel Management Agreements as further set forth on Schedule 1 attached hereto and made a part hereof (collectively, the “Hotel Management Agreements”); and
WHEREAS, each applicable Operator and each applicable Owner desires to extend the term of each applicable Hotel Management Agreement as set forth in this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, Operators and Owners, intending to be legally bound, hereby agree as follows:
1.Capitalized Terms. Capitalized terms used and not otherwise defined in this Amendment shall have the meanings given such terms in the Hotel Management Agreements.
2.Term. The text of Section 3.1(a) of each Hotel Management Agreement is hereby deleted in its entirety and replaced with the following:
The Term of this Agreement shall commence on the Commencement Date and expire on June 30, 2043, as extended pursuant to Section 3.1(b), unless sooner terminated pursuant to the terms hereof (the “Term”).
3.Counterparts. This Amendment may be executed in one (1) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.
4.Ratification. Each Hotel Management Agreement (as amended by this Amendment) is hereby ratified and confirmed, and all other terms thereof remain in full force and effect. For the avoidance of doubt, all references in each Hotel Management Agreement to the Agreement shall mean and refer to such Hotel Management Agreement as amended by this Amendment.
IN WITNESS WHEREOF, Operators and Owners have each executed this Amendment as of the Effective Date.
OPERATORS:
SONESTA CANADA ULC
SONESTA CLIFT LLC
SONESTA HIGGINS ROAD LLC
SONESTA INTERNATIONAL HOTELS CORPORATION
SONESTA JERSEY CITY LLC
SONESTA MINNEAPOLIS LLC
SONESTA RANDOLPH STREET LLC
SONESTA REDONDO BEACH LLC
SONESTA SAN JUAN LLC
SONESTA STATE STREET LLC
SONESTA TORONTO ULC
SONESTA WHITE PLAINS LLC
By: /s/ Jeffrey C. Leer
Jeffrey C. Leer
Co-President and Co-Chief Executive Officer
of each of the foregoing entities
OWNERS:
CAMBRIDGE TRS, INC.
HPT CLIFT TRS LLC
HPT CY TRS, INC.
HPT STATE STREET TRS LLC
HPT TRS IHG-2, INC.
HPT TRS MRP, INC.
SVC HIGGINS ROAD TRS LLC
SVC JERSEY CITY TRS LLC
SVC MINNEAPOLIS TRS LLC
SVC RANDOLPH STREET TRS LLC
SVC REDONDO BEACH TRS LLC
SVC SAN JUAN TRS LLC
By: /s/ Christopher J. Bilotto
Christopher J. Bilotto
President and Chief Executive Officer
of each of the foregoing entities
[Signature Page to Omnibus Amendment of Hotel Management Agreements]
SCHEDULE 1
HOTEL MANAGEMENT AGREEMENTS
HOTEL MANAGEMENT AGREEMENTS
1.Hotel Management Agreement for Sonesta Suites Scottsdale, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Sonesta Suites Scottsdale, 7300 East Gainey Suites Drive, Scottsdale, Arizona]
2.Hotel Management Agreement for Sonesta Simply Suites Scottsdale North, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS MRP, Inc., as owner. [Sonesta Simply Suites Scottsdale North, 10740 North 90th Street, Scottsdale, Arizona]
3.Hotel Management Agreement for Sonesta ES Suites Anaheim, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta ES Suites Anaheim, 1855 S. Manchester Avenue, Anaheim, California]
4.Hotel Management Agreement for Sonesta Anaheim, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta Anaheim, 1915 S. Manchester Avenue, Anaheim, California]
5.Hotel Management Agreement for Sonesta Select Camarillo, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT CY TRS, Inc., as owner. [Sonesta Select Camarillo, 4994 Verdugo Way, Camarillo, California]
6.Hotel Management Agreement for Sonesta Select Los Angeles LAX, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT CY TRS, Inc., as owner. [Sonesta Select Los Angeles LAX, 2000 East Mariposa Avenue, El Segundo, California]
7.Hotel Management Agreement for Sonesta Emeryville, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS MRP, Inc., as owner. [Sonesta Emeryville, 5555 Shellmound Street, Emeryville, California]
8.Hotel Management Agreement for Sonesta Simply Suites Irvine Spectrum, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta Simply Suites Irvine Spectrum, 16150 Sand Canyon Avenue, Irvine, California]
9.Hotel Management Agreement for Sonesta Irvine Orange County Airport, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Sonesta Irvine Orange County Airport, 17941 Von Karman Avenue, Irvine, California]
Schedule 1
10.Hotel Management Agreement for Sonesta Select Laguna Hills, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT CY TRS, Inc., as owner. [Sonesta Select Laguna Hills, 23175 Avenida de la Carlota, Laguna Hills, California]
11.Hotel Management Agreement for Sonesta Los Angeles Airport, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta Los Angeles Airport, 5985 W. Century Boulevard, Los Angeles, California]
12.Hotel Management Agreement for Sonesta Silicon Valley, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Sonesta Silicon Valley, 1820 Barber Lane, Milpitas, California]
13.Hotel Management Agreement for Sonesta San Jose, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta San Jose, 777 Bellew Drive, Milpitas, California]
14.Hotel Management Agreement for Sonesta Redondo Beach and Marina, dated as of August 1, 2025, between Sonesta Redondo Beach LLC, as operator, and SVC Redondo Beach TRS LLC, as owner. [Sonesta Redondo Beach and Marina, 300 North Harbor Drive, Redondo Beach, California]
15.Hotel Management Agreement for Sonesta ES Suites Carmel Mountain, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS MRP, Inc., as owner. [Sonesta ES Suites Carmel Mountain, 11002 Rancho Carmel Drive, San Diego, California]
16.Hotel Management Agreement for The Clift Royal Sonesta Hotel, dated as of August 1, 2025, between Sonesta Clift LLC, as operator, and HPT Clift TRS LLC, as owner. [The Clift Royal Sonesta Hotel, 495 Geary Street, San Francisco, California]
17.Hotel Management Agreement for Sonesta ES Suites San Diego - Sorrento Mesa, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta ES Suites San Diego - Sorrento Mesa, 6639 Mira Mesa Boulevard, Sorrento Mesa, California]
18.Hotel Management Agreement for Sonesta ES Suites Torrance Redondo Beach, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta ES Suites Torrance Redondo Beach, 19901 Prairie Avenue, Torrance, California]
19.Hotel Management Agreement for Sonesta Select Los Angeles Torrance South Bay, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT CY TRS, Inc., as owner. [Sonesta Select Los Angeles Torrance South Bay, 1925 West 190th Street, Torrance, California]
Schedule 1
20.Hotel Management Agreement for Sonesta Denver, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta Denver, 1450 Glenarm Place, Denver, Colorado]
21.Hotel Management Agreement for Royal Sonesta Washington DC, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Royal Sonesta Washington DC, 2121 P Street NW, Washington, District of Columbia]
22.Hotel Management Agreement for Sonesta Ft. Lauderdale, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Sonesta Ft. Lauderdale, 999 North Fort Lauderdale Beach Boulevard, Fort Lauderdale, Florida]
23.Hotel Management Agreement for Nautilus Sonesta Miami Beach, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Nautilus Sonesta Miami Beach, 1825 Collins Avenue, Miami, Florida]
24.Hotel Management Agreement for Sonesta Miami Airport, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta Miami Airport, 950 N.W. LeJeune Road, Miami, Florida]
25.Hotel Management Agreement for Sonesta Simply Suites Miami Airport, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta Simply Suites Miami Airport, 8855 NW 27th Street, Miami, Florida]
26.Hotel Management Agreement for Sonesta ES Suites Orlando, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Sonesta ES Suites Orlando, 8480 International Drive, Orlando, Florida]
27.Hotel Management Agreement for Sonesta ES Suites Lake Buena Vista, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta ES Suites Lake Buena Vista, 8751 Suiteside Drive, Orlando, Florida]
28.Hotel Management Agreement for Sonesta Kaua‘i Resort, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS MRP, Inc., as owner. [Sonesta Kaua‘i Resort, 3610 Rice Street, Lihue, Hawaii]
29.Hotel Management Agreement for Royal Sonesta Chicago Riverfront, dated as of August 1, 2025, between Sonesta Chicago LLC, as operator, and HPT Wacker Drive TRS LLC, as owner. [Royal Sonesta Chicago Riverfront (Royal Sonesta Chicago Downtown), 71 East Wacker Drive, Chicago, Illinois]
30.Hotel Management Agreement for The Allegro Royal Sonesta Hotel, dated as of August 1, 2025, between Sonesta Randolph Street LLC, as operator, and SVC
Schedule 1
Randolph Street TRS LLC, as owner. [The Allegro Royal Sonesta Hotel, 171 West Randolph Street, Chicago, Illinois]
31.Hotel Management Agreement for Sonesta Chicago O’Hare Airport, dated as of August 1, 2025, between Sonesta Higgins Road LLC, as operator, and SVC Higgins Road TRS LLC, as owner. [Sonesta Chicago O’Hare Airport, 10233 West Higgins Road, Rosemont, Illinois]
32.Hotel Management Agreement for Royal Sonesta Hotel New Orleans, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Royal Sonesta Hotel New Orleans, 300 Bourbon Street, New Orleans, Louisiana]
33.Hotel Management Agreement for Royal Sonesta Hotel Baltimore, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Royal Sonesta Hotel Baltimore, 550 Light Street, Baltimore, Maryland]
34.Hotel Management Agreement for Sonesta Simply Suites Boston Burlington, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta Simply Suites Boston Burlington, 130 Middlesex Turnpike, Burlington, Massachusetts]
35.Hotel Management Agreement for Royal Sonesta Hotel Boston, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Royal Sonesta Hotel Boston, 40 Edwin H. Land Boulevard, Cambridge, Massachusetts]
36.Hotel Management Agreement for Royal Sonesta Chase Park Plaza, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Royal Sonesta Chase Park Plaza, 212 N. Kingshighway, St. Louis, Missouri]
37.Hotel Management Agreement for Sonesta Simply Suites Las Vegas, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta Simply Suites Las Vegas, 4034 South Paradise Road, Las Vegas, Nevada]
38.Hotel Management Agreement for Sonesta Simply Suites Jersey City, dated as of August 1, 2025, between Sonesta Jersey City LLC, as operator, and SVC Jersey City TRS LLC, as owner. [Sonesta Simply Suites Jersey City, 21 2nd Street, Jersey City, New Jersey]
39.Hotel Management Agreement for Sonesta White Plains, dated as of August 1, 2025, between Sonesta White Plains LLC, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta White Plains, 66 Hale Avenue, White Plains, New York]
40.Hotel Management Agreement for Sonesta Columbus, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta Columbus, 33 East Nationwide Boulevard, Columbus, Ohio]
Schedule 1
41.Hotel Management Agreement for The Yorkville Royal Sonesta, dated as of August 1, 2025, between Sonesta Toronto ULC, as operator, and HPT TRS IHG-2, Inc., as owner. [The Yorkville Royal Sonesta, 220 Bloor Street West, Toronto, Ontario]
42.Hotel Management Agreement for Sonesta ES Suites Toronto Thornhill, dated as of August 1, 2025, between Sonesta Canada ULC, as operator, and HPT TRS IHG-2, Inc., as owner. [Sonesta ES Suites Toronto Thornhill, 355 South Park Road, Toronto, Ontario]
43.Hotel Management Agreement for Sonesta Hotel Philadelphia, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Sonesta Hotel Philadelphia, 1800 Market Street, Philadelphia, Pennsylvania]
44.Hotel Management Agreement for Royal Sonesta San Juan, dated as of August 1, 2025, between Sonesta San Juan LLC, as operator, and SVC San Juan TRS LLC, as owner. [Royal Sonesta San Juan, 5961 Isla Verde Avenue, San Juan, Puerto Rico]
45.Hotel Management Agreement for Sonesta Select Middletown, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT CY TRS, Inc., as owner. [Sonesta Select Middletown, 9 Commerce Drive, Middletown, Rhode Island]
46.Hotel Management Agreement for Sonesta Resort Hilton Head Island, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Sonesta Resort Hilton Head Island, 130 Shipyard Drive, Hilton Head Island, South Carolina]
47.Hotel Management Agreement for Sonesta Nashville Airport, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS MRP, Inc., as owner. [Sonesta Nashville Airport, 600 Marriott Drive, Nashville, Tennessee]
48.Hotel Management Agreement for The Stephen F. Austin Royal Sonesta Hotel, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [The Stephen F. Austin Royal Sonesta Hotel, 701 Congress Avenue, Austin, Texas]
49.Hotel Management Agreement for Royal Sonesta Hotel Houston, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and Cambridge TRS, Inc., as owner. [Royal Sonesta Hotel Houston, 2222 West Loop South, Houston, Texas]
50.Hotel Management Agreement for Sonesta Select Arlington Rosslyn, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT CY TRS, Inc., as owner. [Sonesta Select Arlington Rosslyn, 1533 Clarendon Boulevard, Arlington, Virginia]
Schedule 1
51.Hotel Management Agreement for Sonesta Simply Suites Falls Church, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS MRP, Inc., as owner. [Sonesta Simply Suites Falls Church, 205 Hillwood Avenue, Falls Church, Virginia]
52.Hotel Management Agreement for The Alexis Royal Sonesta Hotel, dated as of August 1, 2025, between Sonesta International Hotels Corporation, as operator, and HPT TRS IHG-2, Inc., as owner. [The Alexis Royal Sonesta Hotel, 1007 First Avenue, Seattle, Washington]
Schedule 1
Exhibit 10.4
SERVICE PROPERTIES TRUST
FORM OF [AMENDED AND RESTATED]1 INDEMNIFICATION AGREEMENT
FORM OF [AMENDED AND RESTATED]1 INDEMNIFICATION AGREEMENT
THIS [AMENDED AND RESTATED] INDEMNIFICATION AGREEMENT (this “Agreement”), effective as of [DATE] (the “Effective Date”), by and between Service Properties Trust, a Maryland real estate investment trust (the “Company”), and [TRUSTEE/OFFICER] (“Indemnitee”).
WHEREAS, Indemnitee currently serves as a trustee and/or officer of the Company and may, in connection therewith, be subjected to claims, suits or proceedings arising from such service; and
WHEREAS, as an inducement to Indemnitee to continue to serve as such, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law as hereinafter provided; and
WHEREAS, the parties [are currently parties to an Indemnification Agreement dated as of [DATE] (the “Prior Indemnification Agreement”) and] desire to [amend and restate the Prior Indemnification Agreement and] set forth their agreement regarding indemnification and advancement of expenses [as reflected herein];
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
Section 1.Definitions. For purposes of this Agreement:
(a)“Board” means the board of trustees of the Company.
(b)“Bylaws” means the bylaws of the Company, as they may be amended from time to time.
(c)“Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date:
(i)any “person” (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of all the Company’s then outstanding securities entitled to vote generally in the election of trustees without the prior approval of at least two-thirds
1 Bracketed text to be included for trustees and officers with existing agreements. Bracketed text would not be included for persons who are first elected as a trustee or appointed as an officer after this form is adopted.
of the members of the Board in office immediately prior to such person attaining such percentage interest;
(ii)there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board then in office, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or
(iii)during any period of two consecutive years, other than as a result of an event described in clause (c)(ii) of this Section 1, individuals who at the beginning of such period constituted the Board (including for this purpose any new trustee whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the trustees then still in office who were trustees at the beginning of such period) cease for any reason to constitute at least a majority of the Board.
(d)“Company Status” means the status of a Person who is or was a trustee, director, manager, officer, partner, employee, agent or fiduciary of the Company or any predecessor of the Company or any of their majority owned subsidiaries and the status of a Person who, while a trustee, director, manager, officer, partner, employee, agent or fiduciary of the Company or any predecessor of the Company or any of their majority owned subsidiaries, is or was serving at the request of the Company or any predecessor of the Company or any of their majority owned subsidiaries as a trustee, director, manager, officer, partner, employee, agent or fiduciary of another real estate investment trust, corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or any other Enterprise.
(e)“control” of an entity, shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities, by contract or otherwise.
(f)“Declaration of Trust” means the declaration of trust (as defined in the Maryland REIT Law) of the Company, as it may be in effect from time to time.
(g)“Disinterested Trustee” means a trustee of the Company who is not and was not a party to the Proceeding in respect of which indemnification or advance of Expenses is sought by Indemnitee.
(h)“Enterprise” shall mean the Company and any other real estate investment trust, corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a trustee, director, manager, officer, partner, employee, agent or fiduciary.
(i)“Expenses” means all expenses, including, but not limited to, all attorneys’ fees and costs, retainers, court or arbitration costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond or other appeal bond or its equivalent.
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(j)“Independent Counsel” means a law firm, or a member of a law firm, selected by the Company and acceptable to Indemnitee, that is experienced in matters of business law. If, within twenty (20) days after submission by Indemnitee of a written demand for indemnification pursuant to Section 7(a) hereof, no Independent Counsel shall have been selected and agreed to by Indemnitee, either the Company or Indemnitee may petition a Chosen Court (as defined in Section 18) for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person so appointed shall act as Independent Counsel hereunder.
(k)“MGCL” means the Maryland General Corporation Law.
(l)“Maryland REIT Law” means Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland.
(m)“Person” means an individual, a corporation, a general or limited partnership, an association, a limited liability company, a governmental entity, a trust, a joint venture, a joint stock company or another entity or organization.
(n)“Proceeding” means any threatened, pending or completed claim, demand, action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal), whether or not by or in the right of the Company, except one initiated by an Indemnitee pursuant to Section 9.
Section 2.Indemnification - General. The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date. The rights of Indemnitee provided in this Section 2 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the MGCL, as applicable to a Maryland real estate investment trust by virtue of Section 8-301(15) of the Maryland REIT Law, the Declaration of Trust or the Bylaws.
Section 3.Proceedings Other Than Derivative Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, other than a derivative Proceeding by or in the right of the Company (or, if applicable, such other Enterprise at which Indemnitee is or was serving at the request of the Company or a predecessor of the Company or any of their majority owned subsidiaries). Pursuant to this Section 3, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with a Proceeding by reason of Indemnitee’s Company Status unless it is finally determined that such indemnification is not permitted by the MGCL, the Declaration of Trust or the Bylaws.
Section 4.Derivative Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be, made a party to any derivative Proceeding brought by or in the right of the Company (or, if applicable, such other Enterprise at which Indemnitee is or was serving at the request of the Company or a predecessor of the Company or any of their majority owned subsidiaries). Pursuant to this Section 4, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in
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settlement and all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding unless it is finally determined that such indemnification is not permitted by the MGCL, the Declaration of Trust or the Bylaws.
Section 5.Indemnification for Expenses of a Party Who is Partly Successful. Without limitation on Section 3 or Section 4, if Indemnitee is not wholly successful in any Proceeding covered by this Agreement, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 5 for all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
Section 6.Advancement of Expenses. The Company, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding in which Indemnitee may be involved, or is threatened to be involved, including as a party, a witness or otherwise, by reason of Indemnitee’s Company Status, within ten (10) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by the MGCL, the Declaration of Trust and the Bylaws has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form of Exhibit A hereto or in such other form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee relating to any claims, issues or matters in the Proceeding as to which it shall be finally determined that the standard of conduct has not been met and which have not been successfully resolved as described in Section 5. For the avoidance of doubt, the Company shall advance Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with such a Proceeding pursuant to this Section 6 until it is finally determined that Indemnitee is not entitled to indemnification under the MGCL, the Declaration of Trust or the Bylaws in respect of such Proceeding. To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis. The undertaking required by this Section 6 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor. At Indemnitee’s request, advancement of any such Expense shall be made by the Company’s direct payment of such Expense instead of reimbursement of Indemnitee’s payment of such Expense.
Section 7.Procedure for Determination of Entitlement to Indemnification.
(a)To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written demand therefor. The Secretary of the Company shall, promptly upon receipt of such a demand for indemnification, provide copies of the demand to the Board.
(b)Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 7(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred or
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if, after a Change in Control, Indemnitee shall so request, (A) by the Board (or a duly authorized committee thereof) by a majority vote of a quorum consisting of Disinterested Trustees, or (B) if a quorum of the Board consisting of Disinterested Trustees is not obtainable or, even if obtainable, such quorum of Disinterested Trustees so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a majority of the members of the Board, by the shareholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Any Independent Counsel, member of the Board or shareholder of the Company shall act reasonably and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement.
(c)The Company shall pay the fees and expenses of Independent Counsel, if one is appointed, and shall agree to fully indemnify such Independent Counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or the Independent Counsel’s engagement as such pursuant hereto.
Section 8.Presumptions and Effect of Certain Proceedings.
(a)In making a determination with respect to entitlement to indemnification hereunder, the Person or Persons making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
(b)It shall be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Without limitation of the foregoing, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge or actions, or failure to act, of any trustee, director, manager, officer, partner, employee, agent or fiduciary of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
(c)Neither the failure to make a determination pursuant to Section 7(b) as to whether indemnification is proper in the circumstances because Indemnitee has met any particular standard of conduct, nor an actual determination by the Company (including by the Board or Independent Counsel) pursuant to Section 7(b) that Indemnitee has not met such standard of conduct, shall be a defense to Indemnitee’s claim that indemnification is proper in the circumstances or create a presumption that Indemnitee has not met any particular standard of conduct.
(d)The termination of any Proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, shall not in and of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not meet the standard of conduct required for indemnification. The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation,
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settlement of such action, claim or proceeding with or without payment of money or other consideration), it shall be presumed that Indemnitee has been successful on the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
Section 9.Remedies of Indemnitee.
(a)If (i) a determination is made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 6, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 7(b) within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall (A) unless the Company demands arbitration as provided by Section 17, be entitled to an adjudication in a Chosen Court or (B) be entitled to seek an award in arbitration as provided by Section 17, in each case of Indemnitee’s entitlement to such indemnification or advance of Expenses.
(b)In any judicial proceeding or arbitration commenced pursuant to this Section 9, the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be. In the event that a determination shall have been made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 9 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 7(b).
(c)If a determination shall have been made pursuant to Section 7(b) that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 9, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the demand for indemnification.
(d)In the event that Indemnitee, pursuant to this Section 9, seeks a judicial adjudication of or an award in arbitration as provided by Section 17 to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement by the Company, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall indemnify Indemnitee against any and all Expenses incurred by Indemnitee in such judicial adjudication or arbitration and, if requested by Indemnitee, the Company shall (within ten (10) days after receipt by the Company of a written demand therefor) advance, to the extent not prohibited by law, the Declaration of Trust or the Bylaws, any and all such Expenses.
(e)The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 9 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such judicial proceeding or arbitration that the Company is bound by all the provisions of this Agreement.
(f)To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or
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other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.
(g)Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth (10th) day after the date on which the Company was requested to advance Expenses in accordance with Section 6 of this Agreement or the thirtieth (30th) day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 7(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.
Section 10.Defense of the Underlying Proceeding.
(a)Indemnitee shall notify the Company promptly upon being served with or receiving any summons, citation, subpoena, complaint, indictment, information, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.
(b)Subject to the provisions of the last sentence of this Section 10(b) and of Section 10(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within fifteen (15) days following receipt of notice of any such Proceeding under Section 10(a) above, and the counsel selected by the Company shall be reasonably satisfactory to Indemnitee. The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee or (iii) has the actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder. This Section 10(b) shall not apply to a Proceeding brought by Indemnitee under Section 9 above or Section 15.
(c)Notwithstanding the provisions of Section 10(b), if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Company Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other Person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice,
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at the expense of the Company (subject to Section 9(d)), to represent Indemnitee in connection with any such matter.
Section 11.Liability Insurance.
(a)To the extent the Company maintains an insurance policy or policies providing liability insurance for any of its trustees or officers, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company trustee or officer during Indemnitee’s tenure as a trustee or officer and, following a termination of Indemnitee’s service in connection with a Change in Control, for a period of six (6) years thereafter.
(b)If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
(c)In the event of any payment by the Company under this Agreement the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee with respect to any insurance policy. Indemnitee shall take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights in accordance with the terms of such insurance policy. The Company shall pay or reimburse all expenses actually and reasonably incurred by Indemnitee in connection with such subrogation.
Section 12.Non-Exclusivity; Survival of Rights.
(a)The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Declaration of Trust or the Bylaws, any agreement or a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by Indemnitee in Indemnitee’s Company Status prior to such amendment, alteration or repeal. To the extent that a change in the Maryland REIT Law or the MGCL permits greater indemnification to Indemnitee than would be afforded currently under the Maryland REIT Law or the MGCL, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change if permitted by the Maryland REIT Law or the MGCL. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b)The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
Section 13.Binding Effect.
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(a)The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a trustee, director, manager, officer, partner, employee, agent or fiduciary of the Company or a trustee, director, manager, officer, partner, employee, agent or fiduciary of another Enterprise which such Person is or was serving at the request of the Company or a predecessor of the Company or any of their majority owned subsidiaries, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
(b)Any successor of the Company (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part of, the business or assets of the Company shall be automatically deemed to have assumed and agreed to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place, provided that no such assumption shall relieve the Company of its obligations hereunder. To the extent required by applicable law to give effect to the foregoing sentence and to the extent requested by Indemnitee, the Company shall require and cause any such successor to expressly assume and agree to perform this Agreement by written agreement in form and substance satisfactory to Indemnitee.
Section 14.Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
Section 15.Limitation and Exception to Right of Indemnification or Advance of Expenses. Notwithstanding any other provision of this Agreement, (a) any indemnification or advance of Expenses to which Indemnitee is otherwise entitled under the terms of this Agreement shall be made only to the extent such indemnification or advance of Expenses does not conflict with applicable Maryland law and (b) Indemnitee shall not be entitled to indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee, unless (i) the Proceeding is brought to enforce rights under this Agreement, the Declaration of Trust, the Bylaws, liability insurance policy or policies, if any, or otherwise or (ii) the Declaration of Trust, the Bylaws, a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board or an agreement approved by the Board to which the Company is a party expressly provides otherwise. Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances: (a) if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or (b) if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standard of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.
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Section 16.Specific Performance, Etc. The parties hereto recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.
Section 17.Arbitration.
(a)Any disputes, claims or controversies regarding Indemnitee’s entitlement to indemnification or advancement of Expenses hereunder or otherwise arising out of or relating to this Agreement, including any disputes, claims or controversies brought by or on behalf of a party hereto or any holder of equity interests (which, for purposes of this Section 17, shall mean any holder of record or any beneficial owner of equity interests or any former holder of record or beneficial owner of equity interests) of a party, either on his, her or its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of equity interests of a party against a party or any of their respective trustees, directors, members, officers, managers, agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this Section 17 or the governing documents of a party (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes, shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 17. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those individuals or entities and a party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 17, the term “equity interest” shall mean (i) in respect of the Company, shares of beneficial interest of the Company, (ii) shares of “membership interests” in an entity that is a limited liability company, (iii) general partnership interests in an entity that is a partnership, (iv) shares of capital stock of an entity that is a corporation and (v) similar equity ownership interests in other entities.
(b)There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration. The arbitrators may be affiliated or interested persons of the parties. If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration. The arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA. If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party)
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within fifteen (15) days of the appointment of the second (2nd) arbitrator. If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.
(c)The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.
(d)There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.
(e)In rendering an award or decision (an “Award”), the arbitrators shall be required to follow the laws of the State of Maryland without regard to principles of conflicts of law. Any arbitration proceedings or award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. An Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based. Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Subject to Section 17(g), each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as the Award may provide.
(f)Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties hereto, each party and each Person acting or seeking to act in a representative capacity (such Person, a “Named Representative”) involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to its attorneys, a Named Representative or any attorney of a Named Representative. Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.
(g)Notwithstanding any language to the contrary in this Agreement, an Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (the “Appellate Rules”). An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 17(f) shall apply to any appeal pursuant to this Section 17 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party or Named Representative or the payment of such costs and expenses, and all costs and expenses of a party or Named Representative shall be its sole responsibility.
(h)Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 17(g), an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties
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relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon an Award may be entered in any court having jurisdiction. To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.
(i)This Section 17 is intended to benefit and be enforceable by the parties hereto and their respective holders of equity interests, trustees, directors, officers, managers, agents or employees, and their respective successors and assigns, and shall be binding upon all such parties and their respective holders of equity interests, and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.
Section 18.Venue. Each party hereto agrees that it shall bring any Proceeding in respect of any claim arising out of or related to this Agreement exclusively in the courts of the State of Maryland and the Federal courts of the United States, in each case, located in the City of Baltimore (the “Chosen Courts”). Solely in connection with claims arising under this Agreement, each party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of the Chosen Courts, (ii) agrees not to commence any such Proceeding except in such courts, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the Chosen Courts, (iv) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such Proceeding, (v) agrees that service of process upon such party in any such Proceeding shall be effective if notice is given in accordance with Section 24and (vi) agrees to request and/or consent to the assignment of any dispute arising out of this Agreement or the transactions contemplated by this Agreement to the Chosen Courts’ Business and Technology Case Management Program, or similar program. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by law. A final judgment in any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS. Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute is made pursuant to Section 17, this Section 18 shall not preempt resolution of the Dispute pursuant to Section 17.
Section 19.Adverse Settlement. The Company shall not seek, nor shall it agree to or support, or agree not to contest any settlement or other resolution of any matter that has the actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder, including without limitation the entry of any bar order or other order, decree or stipulation, pursuant to 15 U.S.C. § 78u-4 (the Private Securities Litigation Reform Act), or any similar foreign, federal or state statute, regulation, rule or law.
Section 20.Period of Limitations. To the fullest extent permitted by law, no legal action shall be brought, and no cause of action shall be asserted, by or on behalf of the Company or any controlled affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its controlled affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.
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Section 21.Counterparts. This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party hereto need not sign the same counterpart.
Section 22.Delivery by Electronic Transmission. This Agreement and any signed agreement or instrument entered into in connection with this Agreement or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of an electronic transmission, including by a facsimile machine or via email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to the other parties. No party hereto or to any such agreement or instrument shall raise the use of electronic transmission by a facsimile machine or via email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through electronic transmission as a defense to the formation of a contract and each such party forever waives any such defense.
Section 23.Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed to, or shall, constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
Section 24.Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is accepted by the party to whom it is given, and shall be given by being delivered at the following addresses to the parties hereto:
(a)If to Indemnitee, to: The address set forth on the signature page hereto.
(b)If to the Company to:
Service Properties Trust
Two Newton Place
255 Washington Street, Suite 300
Newton, Massachusetts 02458-1634
Attn: Secretary
or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
Section 25.Governing Law. The provisions of this Agreement and any Dispute, whether in contract, tort or otherwise, shall be governed by and construed in accordance with the laws of the State of Maryland without regard to its conflicts of laws rules.
Section 26.Interpretation.
(a)Generally. Unless the context otherwise requires, as used in this Agreement: (a) words defined in the singular have the parallel meaning in the plural and vice
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versa; (b) “Articles,” “Sections,” and “Exhibits” refer to Articles, Sections and Exhibits of this Agreement unless otherwise specified; and (c) “hereto” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(b)Additional Interpretive Provisions. The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit to this Agreement, but not otherwise defined therein, shall have the meaning as defined in this Agreement. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder and any successor statute or statutory provision. References to any agreement are to that agreement as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person. Reference to any agreement, document or instrument means the agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof.
(c)[Expansion of Indemnification. This amendment and restatement of the Prior Indemnification Agreement is intended to expand, and not to limit, the scope of indemnification provided to Indemnitee under the Prior Indemnification Agreement, and this Agreement shall be interpreted consistent with such intent.]
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Agreement as of the date first written above.
SERVICE PROPERTIES TRUST | ||||||||
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
[INDEMNITEE] | ||||||||
Indemnitee’s Address: | ||||||||
[ ] | ||||||||
EXHIBIT A
FORM OF AFFIRMATION AND
UNDERTAKING TO REPAY EXPENSES ADVANCED
UNDERTAKING TO REPAY EXPENSES ADVANCED
To the Board of Trustees of Service Properties Trust:
This affirmation and undertaking is being provided pursuant to that certain [Amended and Restated] Indemnification Agreement dated , 20 (the “Indemnification Agreement”), by and between Service Properties Trust, a Maryland real estate investment trust (the “Company”), and the undersigned Indemnitee, pursuant to which Indemnitee is entitled to advancement of expenses in connection with [Description of Claims/Proceeding] (together, the “Claims”). Terms used, and not otherwise defined, herein shall have the meanings specified in the Indemnification Agreement.
Indemnitee is subject to the Claims by reason of Indemnitee’s Company Status or by reason of alleged actions or omissions by Indemnitee in such capacity.
Indemnitee hereby affirms Indemnitee’s good faith belief that the standard of conduct necessary for Indemnitee’s indemnification has been met.
In consideration of the advancement of Expenses by the Company for attorneys’ fees and related expenses incurred by Indemnitee in connection with the Claims (the “Advanced Expenses”), Indemnitee hereby agrees that if, in connection with a proceeding regarding the Claim, it is ultimately determined that Indemnitee is not entitled to indemnification under law, the Declaration of Trust, the Bylaws or the Indemnification Agreement with respect to an act or omission by Indemnitee, then Indemnitee shall promptly reimburse the portion of the Advanced Expenses relating to the Claim(s) as to which the foregoing findings have been established and which have not been successfully resolved as described in Section 5 of the Indemnification Agreement. To the extent that Advanced Expenses do not relate to specific Claims, Indemnitee agrees that such Advanced Expenses may be allocated on a reasonable and proportionate basis.
IN WITNESS WHEREOF, the undersigned Indemnitee has executed this Affirmation and Undertaking to Repay Expenses Advanced on , .
WITNESS: | ||||||||
Print name of witness | Print name of Indemnitee | |||||||
{S2572178; 2}
Schedule to Exhibit 10.4
The following trustees and executive officers of Service Properties Trust, or SVC, are parties to Indemnification Agreements with SVC which are substantially identical in all material respects to the representative Indemnification Agreement filed herewith and are dated as of the respective dates listed below. The other Indemnification Agreements are omitted pursuant to Instruction 2 to Item 601 of Regulation S-K.
Name of Signatory | Date | ||||
Jeanmarie Cooney | September 15, 2026 | ||||
Christopher J. Bilotto | March 10, 2025 | ||||
Rajan C. Penkar | June 13, 2023 | ||||
Laurie B. Burns | February 27, 2020 | ||||
Robert E. Cramer | February 27, 2020 | ||||
Brian E. Donley | January 1, 2019 | ||||
Donna D. Fraiche | June 14, 2018 | ||||
William A. Lamkin | June 14, 2018 | ||||
Adam D. Portnoy | June 14, 2018 | ||||
Exhibit 31.1
CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
I, Christopher J. Bilotto, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Service Properties Trust;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 4, 2026 | /s/ Christopher J. Bilotto | ||||
Christopher J. Bilotto | |||||
| President and Chief Executive Officer | |||||
Exhibit 31.2
CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
I, Brian E. Donley, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Service Properties Trust;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 4, 2026 | /s/ Brian E. Donley | ||||
| Brian E. Donley | |||||
| Chief Financial Officer and Treasurer | |||||
Exhibit 32.1
Certification Pursuant to 18 U.S.C. Sec. 1350
_______________________________________________
In connection with the filing by Service Properties Trust (the “Company”) of the Quarterly Report on Form 10-Q for the period ended September 30, 2026 (the “Report”), each of the undersigned hereby certifies, to the best of his knowledge:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Christopher J. Bilotto | ||||||||
Christopher J. Bilotto | ||||||||
President and Chief Executive Officer | ||||||||
/s/ Brian E. Donley | ||||||||
Brian E. Donley | ||||||||
Chief Financial Officer and Treasurer | ||||||||
Date: November 4, 2026 | ||||||||