Service Properties Trust 10-K

Item 9A. Controls and Procedures As of the end of the period covered by this Annual Report on Form 10-K, 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 Exchange Act. 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 December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management Report on Assessment of Internal Control Over Financial Reporting We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013 Framework). Based on this assessment, we believe that, as of December 31, 2020, our internal control over financial reporting is effective. Deloitte & Touche LLP, the independent registered public accounting firm that audited our 2020 consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting. The report appears elsewhere herein. Item 9B. Other Information None. 92 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance We have a Code of Conduct that applies to our officers and Trustees, RMR Inc. and RMR LLC, senior level officers of RMR LLC, senior level officers and directors of RMR Inc. and certain other officers and employees of RMR LLC. Our Code of Conduct is posted on our website, www.svcreit.com. A printed copy of our Code of Conduct is also available free of charge to any person who requests a copy by writing to: Secretary, Service Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of our Code of Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website. The remainder of the information required by Item 10 is incorporated by reference to our definitive Proxy Statement. Item 11. Executive Compensation The information required by Item 11 is incorporated by reference to our definitive Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Equity Compensation Plan Information. We may grant common shares to our officers and other employees of RMR LLC under our 2012 Equity Compensation Plan, or the 2012 Plan. In addition, each of our Trustees receives common shares as part of his or her annual compensation for serving as a Trustee and such shares are awarded under the 2012 Plan. The terms of awards made under the 2012 Plan are determined by the Compensation Committee of our Board of Trustees at the time of the award. The following table is as of December 31, 2020. Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by securityholders—2012 Plan None. None. 2,029,893 (1) Equity compensation plans not approved by securityholders None. None. None. Total None. None. 2,029,893 (1) (1) Consists of common shares available for issuance pursuant to the terms of the 2012 Plan. Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2012 Plan. Payments by us to RMR LLC employees are described in Notes 7 and 9 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K. The remainder of the information required by Item 12 is incorporated by reference to our definitive Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by Item 13 is incorporated by reference to our definitive Proxy Statement. Item 14. Principal Accounting Fees and Services The information required by Item 14 is incorporated by reference to our definitive Proxy Statement. 93 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules (a) Index to Financial Statements and Financial Statement Schedules Page Reports of Deloitte & Touche LLP, Independent Registered Public Accounting Firm F- 1 Report of Ernst & Young LLP, Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 20 20 and 201 9 F-4 Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended December 31, 20 20 F-5 Consolidated Statements of Shareholders' Equity for each of the three years in the period ended December 31, 20 20 F-7 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 20 20 F-9 Notes to Consolidated Financial Statements F-11 Schedule III - Real Estate and Accumulated Depreciation as of December 31, 20 20 S- 1 Notes to Schedule III S-10 All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable, and therefore have been omitted. Significant Tenant TA is our former subsidiary and is the lessee of 27.2% of our real estate properties, at cost, as of December 31, 2020. Financial information about TA may be found on the SEC’s website by entering TA’s name at http://www.sec.gov/edgar/searchedgar/companysearch.html. Reference to TA’s financial information on this external website is presented to comply with applicable accounting regulations of the SEC. Except for such financial information contained therein as is required to be included herein under such regulations, TA’s public filings and other information located in external websites are not incorporated by reference into these financial statements. See Notes 4, 5 and 9 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for further information relating to our leases with TA. 94 Table of Contents (b) Exhibits Exhibit Number Description 3.1 Composite Copy of Amended and Restated Declaration of Trust, dated as of August 21, 1995, as amended to date. (Incorporated by reference to the Company’s Post-Effective Amendment No. 2 to Registration Statement on Form S-3, filed on July 15, 2020, File No. 333-226944.) 3.2 Articles Supplementary to the Declaration of Trust of the Company , dated June 10, 2020 . (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 10, 2020 .) 3.3 Amended and Restated Bylaws of the Company, adopted effective September 23, 2019. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 2 3 , 2019.) 4.1 Form of Common Share Certificate. ( Incorporated by reference to the Company ’ s Annual Report on Form 10-K for the year ended December 31, 2019 .) 4.2 Indenture, dated as of February 25, 1998, between the Company and State Street Bank and Trust Company. (Incorporated by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997.) 4.3 Supplemental Indenture No. 14, dated as of August 16, 2012, between the Company and U.S. Bank National Association, relating to the Company’s 5.000% Senior Notes due 2022, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.) 4.4 Supplemental Indenture No. 15, dated as of June 6, 2013, between the Company and U.S. Bank National Association, relating to the Company’s 4.500% Senior Notes due 2023, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.) 4.5 Authentication Order, dated January 13, 2017, from the Company to U.S. Bank National Association, relating to the Company’s 4.500% Senior Notes due 2023. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.) 4.6 Supplemental Indenture No. 16, dated as of March 12, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 4.650% Senior Notes due 2024, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.) 4.7 Supplemental Indenture No. 17, dated as of September 12, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 4.50% Senior Notes due 2025, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.) 4.8 Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 4 , 2016.) 4.9 Second Supplemental Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association, relating to the Company’s 5.25% Senior Notes due 2026, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 4 , 2016.) 4.10 Third Supplemental Indenture, dated as of January 13, 2017, between the Company and U.S. Bank National Association, relating to the Company’s 4.950% Senior Notes due 2027, including form thereof. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.) 4.11 Fourth Supplemental Indenture, dated as of October 26, 2017, between the Company and U.S. Bank National Association, relating to the Company’s 3.950% Senior Notes due 2028, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.) 4.12 Fifth Supplemental Indenture, dated as of February 2, 2018, between the Company and U.S. Bank National Association, relating to the Company’s 4.375% Senior Notes due 2030, including form thereof. (Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2017.) 4.13 Sixth Supplemental Indenture, dated as of September 18, 2019, between the Company and U.S. Bank National Association, relating to the Company’s 4.350% Senior Notes due 2024, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 18, 2019.) 4.14 Seventh Supplemental Indenture, dated as of September 18, 2019, between the Company and U.S. Bank National Association, relating to the Company’s 4.750% Senior Notes due 2026, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 18, 2019.) 4.15 Eighth Supplemental Indenture, dated as of September 18, 2019, between the Company and U.S. Bank National Association, relating to the Company’s 4.950% Senior Notes due 2029, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 18, 2019.) 4.16 Ninth Supplemental Indenture, dated as of June 17, 2020, among the Company, certain subsidiaries of the Company named therein as guarantors and U.S. Bank National Association, relating to the Company’s 7.50% Senior Notes due 2025, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 18, 2020.) 4.17 Supplemental Indenture, dated as of July 15, 2020, among the Company, Highway Ventures Properties Trust, HPTWN Properties Trust, HPT Suite Properties Trust, SVCN 2 LLC and U.S. Bank National Association, relating to the Company’s 7.50% Senior Notes due 2025. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.) 95 Table of Contents 4.18 Supplemental Indenture, dated as of October 9, 2020, among the Company, Banner NewCo LLC, SVCN 3 LLC and U.S. Bank National Association, relating to the Company’s 7.50% Senior Notes due 2025. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.) 4.19 Tenth Supplemental Indenture, dated as of November 20, 2020, among the Company, certain subsidiaries of the Company named therein as guarantors and U.S. Bank National Association, relating to the Company’s 5.50% Senior Notes due 2027, including form thereof. (Filed herewith.) 4.20 Supplemental Indenture, dated as of November 13, 2020, among the Company, certain subsidiaries of the Company named therein as guarantors and U.S. Bank National Association, relating to the Company’s 7.50% Senior Notes due 2025. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 17, 2020.) 4.21 Registration Rights and Lock-Up Agreement, dated as of June 5, 2015, among the Company, ABP Trust (f/k/a Reit Management & Research Trust) and Adam D. Portnoy. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 8 , 2015.) 4.22 Description of Securities. (Filed herewith.) 8.1 Opinion of Sullivan & Worcester LLP as to certain tax matters. (Filed herewith.) 10.1 Second Amended and Restated Business Management Agreement, dated as of June 5, 2015, between the Company and The RMR Group LLC. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 8 , 2015.) 10.2 Second Amended and Restated Property Management Agreement, dated as of June 5, 2015, between the Company and The RMR Group LLC. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 8 , 2015.) 10.3 Summary of Trustee Compensation. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 10 , 20 20 .) 10.4 2012 Equity Compensation Plan. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 14 , 2012.) 10.5 First Amendment to 2012 Equity Compensation Plan. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.) 10.6 Form of Restricted Share Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.) 10.7 Form of Share Award Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.) 10.8 Form of Share Award Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.) 10.9 Form of Indemnification Agreement. (+) (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) 10.10 Second Amended and Restated Credit Agreement, dated as of May 10, 2018, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other financial institutions initially a signatory thereto. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 1 5 , 2018.) 10.11 First Amendment to Second Amended and Restated Credit Agreement, dated as of September 17, 2019, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other financial institutions signatory thereto. ( Incorporated by reference to the Company ’ s Annual Report on Form 10-K for the year ended December 31 , 2019 .) 10.12 Second Amendment to Second Amended and Restated Credit Agreement, dated as of May 8, 2020, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other financial institutions signatory thereto. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) 10.13 Pledge Agreement, dated as of May 8, 2020, between the Company, certain of its direct and indirect Subsidiaries and Wells Fargo Bank, National Association. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) 10.14 Pledge Amendment, dated as of May 22, 2020, among the Company, Banner NewCo LLC, Highway Ventures Borrower LLC and Highway Ventures Properties Trust. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.) 10.15 Pledge Amendment, dated as of June 15, 2020, by Banner NewCo LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.) 10.16 Pledge Supplement No. 1, dated as of June 15, 2020, between HPT TA Properties Trust and Wells Fargo Bank, National Association. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.) 10.17 Pledged Interest Release Letter, dated as of June 17, 2020, between the Company and Wells Fargo Bank, National Association. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.) 96 Table of Contents 10.18 Pledge Amendment, dated as of September 14, 2020, by Banner NewCo LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.) 10.19 Pledged Interest Release Request Letter, dated as of September 14, 2020, between the Company and Wells Fargo Bank, National Association. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.) 10.20 Release of Certain Guarantors, dated as of October 1, 2020, by U.S. Bank National Association. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.) 10.21 Third Amendment to Second Amended and Restated Credit Agreement, dated as of November 5, 2020, between the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other financial institutions signatory thereto. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.) 10.22 Pledge Supplement No. 2, dated as of November 5, 2020, between the Company, Highway Ventures Borrower LLC, HPT SN Holding, Inc. and Wells Fargo Bank, National Association. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.) 10.23 Release of Certain Guarantors, dated as of November 13, 2020, among the Company, certain subsidiaries of the Company named therein and U.S. Bank National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 17, 2020.) 10.24 Transaction Agreement, dated as of February 27, 2020, between Sonesta Holdco Corporation and the Company. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.) 10.25 Representative Form of Amended and Restated Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc. (Non-Sale Properties). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) (Schedule of applicable agreements incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) 10.26 Representative Form of Amended and Restated Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc. (Sale Properties). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) (Schedule of applicable agreements incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) 10.27 Amended and Restated Pooling Agreement, dated February 27, 2020, among Sonesta International Hotels Corporation, Sonesta Clift LLC, Sonesta Chicago LLC, Cambridge TRS, Inc., HPT Clift TRS LLC and HPT Wacker Drive TRS LLC. (Legacy Hotels) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) 10.28 Stockholders Agreement, dated as of February 27, 2020, by and among Sonesta Holdco Corporation, the Company, SVC Holdings LLC, Adam D. Portnoy and Diane Portnoy, as trustee of the Diane Portnoy 2019 Revocable Trust under agreement dated May 28, 2019. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) 10.29 Representative Form of Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc. (Conversion Hotels) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.) (Schedule of applicable agreements filed herewith.) 10.30 Pooling Agreement, dated as of December 15, 2020, among Sonesta International Hotels Corporation, certain subsidiaries of the Company named therein as owners and certain subsidiaries of Sonesta International Hotels Corporation named therein as managers. (Conversion Hotels) (Filed herewith.) 10.31 Second Amended and Restated Lease Agreement No. 1, dated as of October 14, 2019, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 10.32 Amended and Restated Guaranty Agreement, dated as of October 14, 2019, by TravelCenters of America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Second Amended and Restated Lease Agreement No. 1). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 10.33 Second Amended and Restated Lease Agreement No. 2, dated as of October 14, 2019, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 10.34 Amended and Restated Guaranty Agreement, dated as of October 14, 2019, by TravelCenters of America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Second Amended and Restated Lease Agreement No. 2). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 10.35 Second Amended and Restated Lease Agreement No. 3, dated as of October 14, 2019, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 97 Table of Contents 10.36 Amended and Restated Guaranty Agreement, dated as of October 14, 2019, by TravelCenters of America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Second Amended and Restated Lease Agreement No. 3). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 10.37 Second Amended and Restated Lease Agreement No. 4, dated as of October 14, 2019, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 10.38 Amended and Restated Guaranty Agreement, dated as of October 14, 2019, by TravelCenters of America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Second Amended and Restated Lease Agreement No. 4). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 10.39 Amended and Restated Lease Agreement No. 5, dated as of October 14, 2019, among Highway Ventures Properties Trust, Highway Ventures Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 10.40 Amended and Restated Guaranty Agreement, dated as of October 14, 2019, by TravelCenters of America Inc. for the benefit of Highway Ventures Properties Trust and Highway Ventures Properties LLC (relating to Amended and Restated Lease Agreement No. 5). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 21.1 Subsidiaries of the Company. (Filed herewith.) 22.1 List of Subsidiary Guarantors. (Filed herewith.) 23.1 Consent of Deloitte & Touche LLP. (Filed herewith.) 23.2 Consent of Ernst & Young LLP. (Filed herewith.) 23.3 Consent of Sullivan & Worcester LLP. (Contained in Exhibit 8.1.) 31.1 Rule 13a-14(a) Certification. (Filed herewith.) 31.2 Rule 13a-14(a) Certification. (Filed herewith.) 32.1 Section 1350 Certification. (Furnished herewith.) 99.1 Registration Rights Agreement, dated as of February 27, 2020, among Sonesta Holdco Corporation, the Company and SVC Holdings LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) 99.2 Purchase Agreement, dated as of June 28, 2020, between the Company and TravelCenters of America Inc. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.) 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH XBRL Taxonomy Extension Schema Document. (Filed herewith.) 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.) 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.) 101.LAB XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.) 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.) 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). (+) Management contract or compensatory plan or arrangement. 98 Table of Contents Item 16. Form 10-K Summary None. 99 Table of Contents Report of Independent Registered Public Accounting Firm To the Trustees and Shareholders of Service Properties Trust Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Service Properties Trust (the "Company") as of December 31, 2020, the related consolidated statements of comprehensive income (loss), shareholders' equity, and cash flows for the year then ended, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Impairment of Real Estate Properties — Refer to Notes 2 and 4 to the financial statements The Company’s investments in real estate assets are evaluated for impairment periodically or when events or changes in circumstances indicate that the carrying amount of a real estate asset may not be recoverable. The Company’s evaluation of the recoverability of real estate assets involves the comparison of undiscounted future cash flows expected to be generated by each real estate asset over the Company’s estimated holding period to the respective carrying amount. The Company’s undiscounted future cash flows analysis and the assessment of expected remaining holding period requires management to make significant estimates and assumptions related to future occupancy levels, rental rates, estimated sale proceeds, and capitalization rates. In the event that a real estate asset is not recoverable, the Company will adjust the real estate asset to its fair value based on third-party appraisals, broker selling estimates, sale agreements under negotiation, and/or final selling prices, when available, and recognize an impairment loss for the carrying amount in excess of fair value. We identified the impairment of real estate assets as a critical audit matter because of the significant estimates and assumptions management makes to evaluate the recoverability of real estate assets. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s undiscounted future cash flows analysis and assessment of expected remaining holding period. F-1 Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the undiscounted cash flows analysis and the assessment of the expected remaining hold period included the following, among others: • We tested the effectiveness of controls over management’s evaluation of the recoverability of real estate property assets, including the key inputs utilized in estimating the undiscounted future cash flows. • We evaluated the undiscounted cash flow analysis including estimates of future occupancy levels, rental rates, estimated sale proceeds, and capitalization rates for each real estate asset or group of assets with possible impairment indicators by (1) evaluating the source information and assumptions used by management and (2) testing the mathematical accuracy of the undiscounted future cash flows analysis. • We evaluated the reasonableness of management’s undiscounted future cash flows analysis by comparing management’s projections to external market sources and evidence obtained in other areas of our audit. • We made inquiries of management regarding the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the hold period and other cash flow assumptions for the properties. /s/ Deloitte & Touche LLP Boston, Massachusetts March 1, 2021 We have served as the Company’s auditor since 2020. F-2 Table of Contents Report of Independent Registered Public Accounting Firm To the Trustees and Shareholders of Service Properties Trust Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Service Properties Trust (the “Company”) as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated March 1, 2021, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Boston, Massachusetts March 1, 2021 F-3 Table of Contents Report of Independent Registered Public Accounting Firm To the Trustees and Shareholders of Service Properties Trust Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Service Properties Trust (the “Company”) as of December 31, 2019, the related consolidated statements of comprehensive income, shareholders' equity and cash flows for each of the two years in the period ended December 31, 2019, and the related notes and the financial statement schedule listed in the Index at item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2020 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We served as the Company’s auditor from 2002 to 2020. Boston, Massachusetts February 28, 2020 F-4 Table of Contents SERVICE PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share data) As of December 31, 2020 2019 ASSETS Real estate properties: Land $ 2,030,440 $ 2,066,602 Buildings, improvements and equipment 9,131,832 9,318,434 Total real estate properties, gross 11,162,272 11,385,036 Accumulated depreciation ( 3,280,110 ) ( 3,120,761 ) Total real estate properties, net 7,882,162 8,264,275 Acquired real estate leases and other intangibles, net 325,845 378,218 Assets held for sale 13,543 87,493 Cash and cash equivalents 73,332 27,633 Restricted cash 18,124 53,626 Due from related persons 55,530 68,653 Other assets, net 318,783 154,069 Total assets $ 8,687,319 $ 9,033,967 LIABILITIES AND SHAREHOLDERS’ EQUITY Revolving credit facility $ 78,424 $ 377,000 Term loan, net — 397,889 Senior unsecured notes, net 6,130,166 5,287,658 Security deposits 294 109,403 Accounts payable and other liabilities 345,079 335,696 Due to related persons 30,566 20,443 Total liabilities 6,584,529 6,528,089 Commitments and contingencies Shareholders’ equity: Common shares of beneficial interest, $ .01 par value; 200,000,000 shares authorized; 164,823,833 and 164,563,034 shares issued and outstanding, respectively 1,648 1,646 Additional paid in capital 4,550,385 4,547,529 Cumulative other comprehensive loss ( 760 ) — Cumulative net income available for common shareholders 3,180,263 3,491,645 Cumulative common distributions ( 5,628,746 ) ( 5,534,942 ) Total shareholders’ equity 2,102,790 2,505,878 Total liabilities and shareholders’ equity $ 8,687,319 $ 9,033,967 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents SERVICE PROPERTIES TRUST CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands, except per share data) Year Ended December 31, 2020 2019 2018 Revenues: Hotel operating revenues $ 875,098 $ 1,989,173 $ 1,958,598 Rental income 389,955 322,236 330,806 FF&E reserve income 201 4,739 5,132 Total revenues 1,265,254 2,316,148 2,294,536 Expenses: Hotel operating expenses 697,904 1,410,927 1,387,065 Other operating expenses 15,208 8,357 5,290 Depreciation and amortization 498,908 428,448 403,077 General and administrative 50,668 54,639 104,862 Transaction related costs — 1,795 — Loss on asset impairment 55,756 39,296 — Total expenses 1,318,444 1,943,462 1,900,294 Gain on sale of real estate, net 2,261 159,535 — Dividend income — 1,752 2,754 Gain on insurance settlement 62,386 — — Unrealized gains (losses) on equity securities, net 19,882 ( 40,461 ) ( 16,737 ) Interest income 284 2,215 1,528 Interest expense (including amortization of debt issuance costs and debt discounts and premiums of $ 14,870 , $ 11,117 and $ 10,177 , respectively) ( 306,490 ) ( 225,126 ) ( 195,213 ) Loss on early extinguishment of debt ( 9,394 ) ( 8,451 ) ( 160 ) Income (loss) before income taxes and equity in earnings (losses) of an investee ( 284,261 ) 262,150 186,414 Income tax expense ( 17,211 ) ( 2,793 ) ( 1,195 ) Equity in earnings (losses) of an investee ( 9,910 ) 393 515 Net income (loss) ( 311,382 ) 259,750 185,734 Other comprehensive income (loss): Equity interest in investee’s unrealized gains (losses) ( 760 ) 91 ( 68 ) Other comprehensive income (loss) ( 760 ) 91 ( 68 ) Comprehensive income (loss) $ ( 312,142 ) $ 259,841 $ 185,666 Weighted average common shares outstanding (basic) 164,422 164,312 164,229 Weighted average common shares outstanding (diluted) 164,422 164,340 164,258 Net income (loss) available for common shareholders per common share (basic and diluted) $ ( 1.89 ) $ 1.58 $ 1.13 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents SERVICE PROPERTIES TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in thousands, except share data) Common Shares Additional Paid in Capital Cumulative Net Income Cumulative Other Comprehensive Income (Loss) Number of Shares Common Shares Cumulative Common Distributions Total Balance at December 31, 2017 164,349,141 $ 1,643 $ ( 4,834,491 ) $ 4,542,307 $ 2,966,605 $ 79,358 $ 2,755,422 ASU 2016-01 cumulative effect adjustment — — — — 79,556 ( 79,556 ) — Net income — — — — 185,734 — 185,734 Equity in unrealized losses of investees — — — — — ( 68 ) ( 68 ) Common share grants 115,000 1 — 3,780 — — 3,781 Common share repurchases ( 22,432 ) — — ( 606 ) — — ( 606 ) Distributions — — ( 346,832 ) — — — ( 346,832 ) Balance at December 31, 2018 164,441,709 1,644 ( 5,181,323 ) 4,545,481 3,231,895 ( 266 ) 2,597,431 Net income — — — — 259,750 — 259,750 Amounts reclassified from cumulative other comprehensive income to net income — — — — — 175 175 Equity in unrealized gains of investees — — — — — 91 91 Common share grants 155,100 2 — 2,855 — — 2,857 Common share repurchases ( 33,775 ) — — ( 807 ) — — ( 807 ) Distributions — — ( 353,619 ) — — — ( 353,619 ) Balance at December 31, 2019 164,563,034 1,646 ( 5,534,942 ) 4,547,529 3,491,645 — 2,505,878 Net loss — — — — ( 311,382 ) — ( 311,382 ) Equity in unrealized losses of investees — — — — — ( 760 ) ( 760 ) Common share grants 305,400 2 — 3,209 — — 3,211 Common share repurchases and forfeitures ( 44,601 ) — — ( 353 ) — — ( 353 ) Distributions — — ( 93,804 ) — — — ( 93,804 ) Balance at December 31, 2020 164,823,833 $ 1,648 $ ( 5,628,746 ) $ 4,550,385 $ 3,180,263 $ ( 760 ) $ 2,102,790 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents SERVICE PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2020 2019 2018 Cash flows from operating activities: Net income (loss) $ ( 311,382 ) $ 259,750 $ 185,734 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 498,908 428,448 403,077 Amortization of debt issuance costs and debt discounts and premiums as interest 14,870 11,117 10,177 Straight line rental income 714 10,719 ( 12,509 ) Security deposits utilized or replenished ( 109,162 ) ( 23,549 ) 6,740 Loss on early extinguishment of debt 9,394 8,451 160 Loss on asset impairment 55,756 39,296 — Unrealized (gains) losses on equity securities, net ( 19,882 ) 40,461 16,737 Equity in losses (earnings) of an investee 9,910 ( 393 ) ( 515 ) Distribution of earnings from Affiliates Insurance Company — 2,423 — Gain on sale of real estate, net ( 2,261 ) ( 159,535 ) — Gain on insurance settlement ( 62,386 ) — — Deferred income taxes 13,850 ( 127 ) ( 1,047 ) Other non-cash (income) expense, net ( 2,558 ) ( 614 ) ( 2,713 ) Changes in assets and liabilities: Due from related persons ( 33 ) 3,272 ( 572 ) Other assets ( 78,340 ) ( 11,385 ) 6,200 Accounts payable and other liabilities 2,296 60,484 5,824 Due to related persons 17,910 ( 51,096 ) ( 20,340 ) Net cash provided by operating activities 37,604 617,722 596,953 Cash flows from investing activities: Real estate acquisitions and deposits ( 7,090 ) ( 2,713,191 ) ( 127,703 ) Real estate improvements ( 69,082 ) ( 150,531 ) ( 182,862 ) Hotel managers’ purchases with restricted cash ( 153,626 ) ( 208,241 ) ( 135,177 ) Hotel manager’s deposit of insurance proceeds into restricted cash 22,488 25,000 18,000 Net proceeds from sale of real estate 167,542 816,450 — Net proceeds from sale of equity securities — 93,892 — Investment in Sonesta ( 5,314 ) — — Investment in TA ( 7,011 ) — — Distributions in excess of earnings from Affiliates Insurance Company 286 6,577 — Net cash used in investing activities ( 51,807 ) ( 2,130,044 ) ( 427,742 ) Cash flows from financing activities: Proceeds from issuance of senior unsecured notes, net of discounts and premiums 1,250,000 1,693,879 389,976 Repayment of senior unsecured notes ( 405,971 ) — — Repayment of term loan ( 400,000 ) — — Borrowings under revolving credit facility 1,189,094 1,124,000 517,000 Repayments of revolving credit facility ( 1,487,670 ) ( 924,000 ) ( 738,000 ) Debt issuance costs ( 26,903 ) ( 21,882 ) ( 12,242 ) Repurchase of common shares ( 346 ) ( 800 ) ( 606 ) Distributions to common shareholders ( 93,804 ) ( 353,619 ) ( 346,832 ) Net cash provided by (used in) financing activities 24,400 1,517,578 ( 190,704 ) Increase (decrease) in cash and cash equivalents and restricted cash 10,197 5,256 ( 21,493 ) Cash and cash equivalents and restricted cash at beginning of year 81,259 76,003 97,496 Cash and cash equivalents and restricted cash at end of year $ 91,456 $ 81,259 $ 76,003 F-8 Table of Contents Year Ended December 31, 2020 2019 2018 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 consolidated balance sheets to the amounts shown in the consolidated statements of cash flows: Cash and cash equivalents $ 73,332 $ 27,633 $ 25,966 Restricted cash 18,124 53,626 50,037 Total cash and cash equivalents and restricted cash $ 91,456 $ 81,259 $ 76,003 Supplemental cash flow information: Cash paid for interest $ 281,097 $ 191,155 $ 174,158 Cash paid for income taxes 2,117 2,927 3,218 Non-cash investing activities: Real estate improvements accrued, not paid $ 5,684 $ 13,595 $ 5,549 Investment in Sonesta 42,000 — — The accompanying notes are an integral part of these consolidated financial statements. F-9 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020 (dollars in thousands, except share data) Note 1. Organization 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 hotels and net lease service-oriented retail properties. At December 31, 2020, we owned, directly and through subsidiaries, 310 hotels and 799 net lease properties. At December 31, 2020, 305 of our 310 hotels were managed or operated by subsidiaries of the following companies: Sonesta Holdco Corporation, or Sonesta, ( 168 hotels), Marriott International, Inc., or Marriott ( 105 hotels), Hyatt Hotels Corporation, or Hyatt ( 22 hotels), Radisson Hospitality, Inc., or Radisson ( nine hotels) and InterContinental Hotels Group, plc, or IHG ( one hotel). We have entered into an agreement to sell five hotels and we have entered into a short term lease with the buyer in anticipation of the sale. At December 31, 2020, we owned 799 net lease properties with 170 tenants, including 179 travel centers leased to TravelCenters of America Inc., or TA, our largest tenant. Hereinafter, these companies are sometimes referred to as managers and/or tenants, or collectively, operators. Recent Events The novel coronavirus, or COVID-19, global pandemic, along with federal, state and local government mandates have disrupted and are expected to continue to have a significant negative impact on our results of operations, financial position and cash flow. In the United States, individuals are being encouraged to practice social distancing, are restricted from gathering in large groups, and in some areas, either have been or are subject to mandatory stay-at-home restrictions, which have restricted or prohibited large social gatherings, travel and non-essential activities outside of their homes. As a result, the lodging industry and other industries in which our managers and tenants operate have been adversely impacted. Our results of operations and cash flows from our hotels are heavily dependent on our operators’ ability to generate returns to us and their willingness to fund shortfalls in our minimum returns from their own resources. IHG defaulted on its agreement with us and Marriott did not fund shortfalls in the payment of our minimum returns in accordance with its agreement with us. We have terminated our agreements with both IHG and Marriott and have transitioned the branding and managem ent of 193 hotels previously managed by IHG, Marriott and Wyndham to Sonesta between September 2020 and February 2021. As a result of the disruption caused by the COVID-19 pandemic, we have taken steps to preserve liquidity by reducing our quarterly distribution to our shareholders beginning in the second quarter of 2020 to $ 0.01 per share and we expect our quarterly distribution to continue at that rate for the foreseeable future, subject to applicable REIT tax requirements, by reducing expected capital expenditures, and by working with our hotel operators to reduce hotel operating expenses, raising $ 1,229,950 of debt proceeds, repaying $ 800,000 of debt, selling assets for an aggregate sales price of $ 174,172 , excluding closing costs, and entering into an agreement to sell additional properties for an aggregate sales price of $ 24,313 , excluding sales costs. We and our lenders amended our credit agreement governing our $ 1,000,000 revolving credit facility and $ 400,000 term loan on May 8, 2020. Among other things, the amendment waived certain existing financial covenants through the end of the first quarter of 2021. Based on the prolonged effect of the pandemic and our expectations of not being able to meet the financial covenants under our amended credit agreement, we entered into an additional amendment on November 5, 2020. Among other things, the amendment waives all of the existing financial covenants through the end of the agreement term, or July 15, 2022, or the New Waiver Period. On January 19, 2021, we borrowed $ 972,793 under our revolving credit facility as a precautionary measure to preserve financial flexibility. As of February 26, 2021, we are fully drawn under our revolving credit facility. Based on these actions, the cash flows we receive from our net lease portfolio, the financing activities we have completed, and asset dispositions we have completed or expect to complete, we believe we will have sufficient liquidity to meet our obligations for at least the next twelve months. See Notes 5 and 6 for additional information regarding the transactions and other actions described above. Note 2. Summary of Significant Accounting Policies Basis of Presentation. These 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. F-10 Table of Contents We have determined that each of our wholly owned taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification ™ , or the Codification. We have concluded that we must consolidate each of our wholly owned TRSs because we are the entity with the power to direct the activities that most significantly impact such VIEs’ performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE and are, therefore, the primary beneficiary of each VIE. The assets of our TRSs were $ 118,862 and $ 31,920 as of December 31, 2020 and 2019, respectively, and consist primarily of amounts due from and working capital advances to certain of our hotel managers. The liabilities of our TRSs were $ 70,240 and $ 138,708 as of December 31, 2020 and 2019, respectively, and consist primarily of amounts payable to certain of our hotel managers. The assets of our TRSs are available to satisfy our TRSs’ obligations and we have guaranteed certain obligations of our TRSs. Real Estate Properties. We record real estate properties at cost less impairments, if any. We record the cost of real estate acquired at the relative fair value of building, land, furniture, fixtures and equipment, and, if applicable, acquired in place leases, above or below market leases and customer relationships. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill. We depreciate real estate properties on a straight line basis over estimated useful lives of up to 40 years for buildings and improvements and up to 12 years for personal property and we amortize finite lived intangible assets over the shorter of their useful lives or the term of the associated lease. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determination of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives. We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of our real estate properties. These indicators may include weak or declining operating profitability, cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life or market or industry changes that could permanently reduce the value of our investments. If there is an indication that the carrying value of a property is not recoverable, we estimate the projected undiscounted cash flows of the asset to determine if an impairment loss should be recognized. We determine the amount of an impairment loss by comparing the historical carrying value of the property to its estimated fair value. We estimate fair value by evaluating recent financial performance and projecting discounted cash flows of properties using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our real estate properties. If we change estimated lives, we depreciate or amortize the carrying values of affected assets over the revised remaining lives. During the years ended December 31, 2020 and 2019, we recorded $ 55,756 and $ 39,296 , respectively, of losses on asset impairment to reduce the carrying value of certain of our properties to their estimated fair values less costs to sell. Intangible Assets and Liabilities. Intangible assets consist primarily of trademarks and tradenames, acquired above market operating leases where we are the lessor and below market ground leases for which we are the tenant or lessee. Intangible liabilities consist of acquired below market operating leases where we are the lessor and acquired above market ground leases for which we are the tenant or lessee. We include intangible assets in acquired real estate leases and other intangibles and intangible liabilities in accounts payable and other liabilities in our consolidated balance sheets. At December 31, 2020 and 2019, our intangible assets and liabilities were as follows: As of December 31, 2020 2019 Assets: Tradenames and trademarks $ 89,375 $ 89,375 Above market operating leases, net of accumulated amortization of $ 55,220 and $ 15,748 , respectively 224,510 275,814 Below market ground leases, net of accumulated amortization of $ 16,226 and $ 21,125 , respectively 8,934 10,034 Other, net of accumulated amortization of $ 1,188 and $ 1,803 , respectively 3,026 3,323 $ 325,845 $ 378,546 Liabilities: Below market operating leases, net of accumulated amortization of $ 559 and $ 367 , respectively $ 1,691 $ 3,653 Above market ground leases, net of accumulated amortization of $ 6,180 and $ 5,886 , respectively 416 856 $ 2,107 $ 4,509 F-11 Table of Contents We amortize above and below market leases on a straight line basis over the term of the associated lease ( three and six years on a weighted average basis for intangible liabilities and assets, respectively). For the years ended December 31, 2020, 2019 and 2018, amortization relating to intangible assets was $ 52,264 , $ 1,757 and $ 2,542 , respectively, and amortization relating to intangible liabilities was $ 2,403 , $ 441 and $ 455 for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, the weighted average amortization period for capitalized above market leases and below market lease values were 7.0 years and 5.1 years, respectively. As of December 31, 2020, we estimate future amortization relating to intangible assets and liabilities as follows: Above Market Operating Leases Below Market Ground Leases & Other Below Market Operating Leases Above Market Ground Leases & Other 2021 $ 41,196 $ 1,375 $ ( 458 ) $ ( 369 ) 2022 30,272 1,367 ( 309 ) ( 21 ) 2023 27,120 1,355 ( 193 ) ( 18 ) 2024 24,637 1,137 ( 186 ) ( 8 ) 2025 21,311 983 ( 130 ) — Thereafter 79,974 5,743 ( 415 ) — $ 224,510 $ 11,960 $ ( 1,691 ) $ ( 416 ) We do not amortize our indefinite lived trademarks and tradenames, but we review the assets at least annually for impairment and reassess their classification as indefinite lived assets. In addition, we regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in value. We determine the amount of an impairment loss, if any, by comparing the carrying value of the intangible asset to its estimated fair value. Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents. Restricted Cash. Restricted cash, or FF&E reserve escrows, consists of amounts escrowed pursuant to the terms of our management agreements and leases to fund periodic renovations and improvements at our hotels. Debt Issuance Costs . Debt issuance costs consist of capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective debt. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets, net in our consolidated balance sheets. As of December 31, 2020 and 2019, debt issuance costs for our revolving credit facility were $ 8,163 and $ 4,212 , respectively, and accumulated amortization of debt issuance costs for our revolving credit facility were $ 722 and $ 2,610 , respectively. Debt issuance costs, net of accumulated amortization, for our senior notes, and our historical term loan, are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2020 and 2019, debt issuance costs, net of accumulated amortization, for our senior notes were $ 41,974 and $ 31,065 , respectively. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility and senior notes as of December 31, 2020, are as follows: Future Amortization of Debt Issuance Costs 2021 $ 12,933 2022 11,106 2023 7,692 2024 6,854 2025 4,774 Thereafter 6,056 $ 49,415 F-12 Table of Contents Equity Method Investments. We account for our 34 % non-controlling interest in Sonesta under the equity method of accounting. Sonesta is a private company and Adam D. Portnoy, one of our Managing Trustees who also serves as one of Sonesta’s directors, is the controlling shareholder. One of Sonesta’s other directors is our other Managing Trustee, President and Chief Executive Officer and Sonesta’s other director serves as The RMR Group LLC, or RMR LLC’s, and The RMR Group Inc., or RMR Inc.’s, executive vice president, general counsel and secretary and as our Secretary. Sonesta’s chief executive officer and chief financial officer are officers of RMR LLC. Certain other officers and employees of Sonesta are former employees of RMR LLC. RMR LLC also provides certain services to Sonesta. See Notes 5 and 9 for a further discussion of our investment in and relationships with Sonesta. Equity Securities. We record our equity securities at fair value based on their quoted market price at the end of each reporting period. Changes in the fair value of our equity securities are recorded through earnings in accordance with FASB Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities . As of December 31, 2020, we owned 1,184,797 common shares of TA. On July 1, 2019, we sold all the shares of class A common stock of RMR Inc. that we previously owned. See Notes 9 and 13 for further information on these investments. Revenue Recognition. We report hotel operating revenues for managed hotels in our consolidated statements of comprehensive income (loss). We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when goods and services are provided. We report rental income for leased properties in our consolidated statements of comprehensive income (loss). We recognize rental income from operating leases on a straight line basis over the term of the lease agreements. We reduced rental income by $ 714 and $ 10,719 during the years ended December 31, 2020 and 2019, respectively, and increased rental income by $ 12,509 during the year ended December 31, 2018, to record scheduled rent changes under certain of our leases, the deferred rent obligations payable to us under our leases with TA and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks at our travel centers on a straight line basis. See Notes 4, 5 and 9 for further information regarding our TA leases. Due from related persons includes $ 33,902 and $ 47,057 and other assets, net, includes $ 16,264 and $ 1,897 of straight line rent receivables at December 31, 2020 and 2019, respectively. 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 earned percentage rental income of $ 3,277 , $ 4,238 and $ 3,695 during the years ended December 31, 2020, 2019 and 2018, respectively. We own all the FF&E reserve escrows for our hotels. We report deposits by our third party tenants into the escrow accounts as FF&E reserve income. We do not report the amounts which are escrowed as reserves established for the regular refurbishment of our hotels, or FF&E reserves, for our managed hotels as FF&E reserve income. Per Common Share Amounts. We calculate basic earnings per common share by dividing allocable net income available for common shareholders by the weighted average number of common shares outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares and the related impact on earnings are considered when calculating diluted earnings per share. Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of real estate and impairment of long lived assets. Segment Information. As of December 31, 2020, we had two reportable segments: hotel investments and net lease investments. F-13 Table of Contents Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, 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. The Income Taxes Topic of the Codification prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Tax benefits are recognized to the extent that it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized upon settlement. Our tax returns filed for the 2017 through 2020 tax years are subject to examination by taxing authorities. We classify interest and penalties related to uncertain tax positions, if any, in our consolidated statements of comprehensive income (loss) as a component of general and administrative expense. New Accounting Pronouncements. On January 1, 2020, we adopted FASB ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Lease related receivables are governed by the lease accounting under GAAP and are not subject to ASU No. 2016-13. We adopted this standard using the modified retrospective approach. The implementation of this standard did not have a material impact in our consolidated financial statements. Note 3. Weighted Average Common Shares The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share: For the Year Ended December 31, 2020 2019 2018 (in thousands) Weighted average common shares for basic earnings per share 164,422 164,312 164,229 Effect of dilutive securities: Unvested share awards — 28 29 Weighted average common shares for diluted earnings per share 164,422 164,340 164,258 Note 4. Real Estate Properties As of December 31, 2020, we owned 310 hotels with 49,014 rooms or suites and 799 service-oriented retail properties with 13,455,405 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. Our properties had an aggregate undepreciated carrying value of $ 11,175,815 , including $ 13,543 classified as held for sale as of December 31, 2020. Our real estate properties, at cost after impairments, consisted of land of $ 2,030,440 , buildings and improvements of $ 8,600,239 and furniture, fixtures and equipment of $ 531,593 , as of December 31, 2020; and land of $ 2,066,602 , buildings and improvements of $ 8,731,002 and furniture, fixtures and equipment of $ 587,432 , as of December 31, 2019. During 2020, 2019 and 2018, we funded $ 136,155 , $ 242,571 and $ 200,044 , respectively, for improvements to certain of our properties. During 2020, we completed a comprehensive rebuilding project of our San Juan, PR hotel as a result of damage sustained during Hurricane Maria in 2017. We recorded a $ 62,386 gain on insurance settlement during the year ended December 31, 2020 for insurance proceeds received for this damage. Under GAAP, we were required to increase the building basis of our San Juan hotel for the amount of the insurance proceeds. F-14 Table of Contents At December 31, 2020, 14 of our hotels were on land we leased partially or entirely from unrelated third parties. The average remaining term of the ground leases (including renewal options) is approximately 36 years (range of 14 to 67 years). Ground rent payable under nine of the ground leases is generally calculated as a percentage of hotel revenues. Twelve ( 12 ) of the 14 ground leases require annual minimum rents averaging $ 260 per year; future rents under two ground leases have been prepaid. Seventeen ( 17 ) of our net lease properties are on land we leased partially or entirely from unrelated third parties. The remaining terms on the leases range from one year to 30 years with rents averaging $ 485 per year. Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant does not perform obligations under a ground lease or does not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property. Any pledge, sale or transfer of our interests in a ground lease may require the consent of the applicable ground lessor and its lenders. Acquisitions Our allocation of the purchase price of each of our acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below. We accounted for these transactions as acquisitions of assets. Acquisition Date Location Type Rooms or Square feet Purchase Price (1) Land Land Improvements Building and Improvements Furniture, Fixtures and Equipment Held For Sale Intangible Assets Properties acquired during the year ended December 31, 2020 3/12/2020 Two states Net Lease 6,696 $ 7,071 $ 880 $ — $ 5,363 $ — $ — $ 828 Properties acquired during the year ended December 31, 2019 2/22/2019 Washington, D.C. Hotel 335 $ 143,742 $ 44,972 $ 151 $ 93,412 $ 5,207 $ — $ — 5/7/2019 Milwaukee, WI Hotel 198 30,235 3,442 1,053 25,132 608 — — 8/1/2019 Southington, CT Land N.A. 66 66 — — — — — 9/20/2019 Various (2) Net Lease 12,372,762 2,482,382 388,057 — 1,201,922 — 604,989 287,414 10/9/2019 Chicago, IL Hotel 261 55,560 7,723 — 45,059 2,778 — — $ 2,711,985 $ 444,260 $ 1,204 $ 1,365,525 $ 8,593 $ 604,989 $ 287,414 Properties acquired during the year ended December 31, 2018 6/15/2018 Minneapolis, MN Hotel 360 $ 75,576 $ 2,196 $ — $ 68,388 $ 4,992 $ — $ — 6/15/2018 Baton Rouge, LA Hotel 117 16,022 2,242 173 12,842 765 — — 10/30/2018 Scottsdale, AZ Hotel 164 35,999 6,450 833 25,898 2,818 — — $ 127,597 $ 10,888 $ 1,006 $ 107,128 $ 8,575 $ — $ — (1) Includes acquisition related costs. (2) On September 20, 2019, we acquired a 767 property net lease portfolio with 12.4 million rentable square feet from Spirit MTA REIT, a Maryland REIT, (NYSE: SMTA), or SMTA, located in 45 states, or the SMTA Transaction. The aggregate transaction value of the SMTA Transaction was $ 2,482,382 , including $ 2,384,577 in cash consideration, $ 82,069 of prepayment penalties related to SMTA’s extinguishment of the mortgage debt on the portfolio and $ 15,736 of other capitalized acquisition costs. The properties included in the portfolio were net leased to 279 tenants operating in 23 distinct industries and 163 brands that include quick service and casual dining restaurants, movie theaters, health and fitness, grocery, automotive parts and services and other service-oriented and necessity-based industries across 45 states. We financed the SMTA Transaction with borrowings under our revolving credit facility and with cash on hand, including net proceeds from our public offerings of senior unsecured notes, as described further in Note 6. As of December 31, 2020, we had $ 4,399 of unspent leasing related obligations assumed as a part of the SMTA Transaction. In January 2021, we entered into an agreement to acquire a property adjacent to one of our travel centers in Nashville, TN for $ 7,600 , excluding closing costs. We expect to complete this transaction in the first quarter of 2021. F-15 Table of Contents Dispositions During the years ended December 31, 2020 and 2019, we sold 39 and 150 properties, respectively, for an aggregate sales price of $ 174,172 and $ 821,212 , respectively, excluding closing costs, as presented in the table below. The sales of these properties do not represent significant dispositions individually or in the aggregate nor do they represent a strategic shift. As a result, the results of the operations of these properties are included in continuing operations through the date of sale in our consolidated statements of comprehensive income (loss). Date of Sale Number of Properties Location Tenant/Operator Rooms or Suites/Square Feet Gross Sales Price Gain/ (Loss) on Sale Properties sold during the year ended December 31, 2020 01/28/2020 1 Gothenburg, NE Vacant 31,978 $ 585 $ 7 02/06/2020 1 Rochester, MN Vacant 90,503 2,600 ( 68 ) 02/13/2020 1 Ainsworth, NE Vacant 32,901 775 7 02/14/2020 1 Dekalb, IL Vacant 5,052 1,050 21 03/02/2020 1 Eau Claire, MI HOM Furniture, Inc. 98,824 2,600 ( 6,947 ) 03/28/2020 1 Stillwater, OK Vacant 33,018 400 70 05/26/2020 1 Pawtucket, RI Vacant 22,027 1,610 ( 1,751 ) 05/28/2020 1 Canton, MA Destination XL Group, Inc. 755,992 51,000 ( 1,049 ) 05/28/2020 1 Phoenix, AZ Vacant 29,434 2,900 ( 81 ) 06/25/2020 1 Bellefontaine, OH Vacant 2,267 440 20 07/17/2020 1 Clinton, MD ADF Midatlantic LLC 2,935 700 ( 5 ) 08/20/2020 1 Lancaster, PA Chaac Pizza Northeast, LLC 3,014 775 74 08/26/2020 1 Baton Rouge, LA Vacant 2,334 750 39 08/26/2020 1 Winston-Salem, NC Vacant 32,816 1,300 23 09/17/2020 1 Hillard, OH Vacant 5,316 2,350 5 10/6/2020 1 Cabot, AR Vacant 18,165 550 25 10/8/2020 1 Lander, WY The Forge Bar and Grill 8,900 350 2 11/2/2020 1 Raleigh, NC Vacant 55,558 3,900 41 11/18/2020 8 8 states Marriott 834 44,800 8,375 12/15/2020 1 Fredrick, MD Chaac Pizza 3,000 800 18 12/22/2020 1 O'Neill, NE Vacant 31,374 850 ( 136 ) 12/29/2020 10 10 states Wyndham 1,212 40,987 9,175 12/30/2020 1 Morrisville, PA Vacant 110,075 12,100 ( 5,604 ) 39 2,046 / 1,375,483 $ 174,172 $ 2,261 Properties sold during the year ended December 31, 2019 01/16/2019 20 15 states (1) TravelCenters of America, Inc. 541,483 $ 308,200 $ 159,535 10/22/2019 1 Hermantown, MN (2) HOM Furniture, Inc. 103,631 6,250 — 10/29/2019 1 Las Vegas, NV (2) Station Casino 138,558 57,000 — 11/14/2019 1 Colby, KS (2) Vacant 6,900 590 — 11/25/2019 123 Various (2) Various 2,429,333 435,104 — 12/16/2019 1 Naples, FL (2) Rick Johnson Auto & Tire 4,480 1,112 — 12/16/2019 1 Naples, FL (2) Rick Johnson Auto & Tire 4,500 706 — 12/30/2019 2 Dallas, TX (2) Pine Creek Medical Center 85,839 12,250 — 150 3,314,724 $ 821,212 $ 159,535 (1) See Note 5 to these consolidated financial statements for further information on this transaction. (2) In the fourth quarter of 2019, we sold 130 net lease properties with an aggregate of approximately $ 2.8 million square feet in 28 states for an aggregate sales price of $ 513,012 , excluding closing costs. We have entered into an agreement to sell five hotels with 430 rooms in four states with an aggregate carrying value of $ 10,699 for an aggregate sales price of $ 22,263 , excluding closing costs. We currently expect the sales of these hotels to be completed in the first quarter of 2021. We have also entered into agreements to sell three net lease properties with approximately 38,942 square feet with a carrying value of $ 1,746 for an aggregate sales price of $ 2,050 , excluding closing costs. We currently expect the sale of these net lease properties to be completed by the end of the second quarter of 2021.The sales of these properties are subject to conditions and may be delayed, may not occur, or their terms may change. In January 2021, the landlord for a hotel subject to a ground lease exercised its purchase option to acquire our leasehold interest for our net book value, which was $ 9,753 as of December 31, 2020. We expect this transaction to close in April 2021. F-16 Table of Contents As of December 31, 2020, we had five hotels with 430 rooms with an aggregate carrying value of $ 10,699 classified as held for sale and six net lease properties with 46,799 square feet with leases requiring aggregate annual minimum rent of $ 121 and an aggregate carrying value of $ 2,844 classified as held for sale. See Notes 5 and 13 for further information on these properties. Note 5. Management Agreements and Leases As of December 31, 2020, we owned 310 hotels included in seven operating agreements and 799 service-oriented retail properties net leased to 170 tenants. We do not operate any of our properties. Hotel agreements As of December 31, 2020, 305 of our hotels were leased to our TRSs and managed by independent hotel operating companies. As of December 31, 2020, our hotel properties were managed by separate subsidiaries of Sonesta, Marriott, Hyatt, Radisson and IHG under six agreements. We have entered into an agreement to sell five hotels and we have entered a short term lease of these properties with the buyer in anticipation of the sale. These hotel agreements had initial terms expiring between 2021 and 2037. Each of these agreements is for between one and 168 of our hotels. In general, the agreements contain renewal options for all, but not less than all, of the affected properties included in each agreement, and the renewal terms range between one to 60 years. Most of these agreements require the third party manager or tenant to: (1) make payments to us of minimum returns or minimum rents; (2) deposit a percentage of total hotel sales into FF&E reserves; and (3) for our managed hotels, make payments to our TRSs of additional returns to the extent of available cash flows after payment of operating expenses, payment of certain management fees, funding of our FF&E reserves, payment of our minimum returns, reimbursement of certain advances and replenishment of security deposits or guarantees. In the past, some of our managers or tenants or their affiliates provided deposits or guarantees to secure their obligations to pay us. Sonesta agreement. As of December 31, 2020, Sonesta managed 38 of our full-service hotels, 121 extended stay hotels, and nine select service hotels pursuant to management agreements for each of the hotels. We are also party to pooling agreements that combine certain of our management agreements with Sonesta for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us. See Notes 4 and 9 for further information regarding our relationship, agreements and transactions with Sonesta. On February 27, 2020, we entered into a transaction agreement with Sonesta pursuant to which we and Sonesta restructured our business arrangements with respect to our hotels then managed by Sonesta as follows: • we and Sonesta had agreed to sell, rebrand or repurpose our 39 extended stay hotels then managed by Sonesta. We have since decided not to pursue the sale of these 39 hotels based on market conditions and the improved performance of these hotels during the pandemic; • the annual minimum returns due for the 14 full-service hotels that Sonesta then managed, and which it continues to manage, were reduced from $ 99,013 to $ 69,013 as of that date; • Sonesta issued to us a number of its shares of common stock representing approximately (but not more than) 34 % of its outstanding shares of common stock (post-issuance) and we entered into a stockholders agreement with Sonesta, Adam Portnoy and the other stockholder of Sonesta, and a registration rights agreement with Sonesta; • we and Sonesta modified our then existing management agreements and pooling agreement so that up to 5 % of the hotel gross revenues of each of our 14 full-service hotels then managed, and which it continues to manage, by Sonesta will be escrowed for future capital expenditures as FF&E reserves, subject to available cash flows after payment of the annual minimum returns due to us under the management agreements; • we and Sonesta modified the termination provisions of our then existing management agreements and pooling agreement and removed the provisions in our pooling agreement that allowed either us or Sonesta to require the marketing for sale of non-economic hotels; and • we and Sonesta extended the initial expiration date of the then existing management agreements for our full-service hotels managed by Sonesta located in Chicago, IL and Irvine, CA to January 2037 to align with the initial expiration date for our other full-service hotels then managed by Sonesta. F-17 Table of Contents We refer to the amended and restated management agreements in effect as of February 27, 2020, as the legacy management agreements and we refer to the amended and restated pooling agreement that includes those legacy management agreements as the legacy pooling agreement. We previously leased 48 vacation units to Wyndham Destinations, Inc. (NYSE: WYND) at our full service hotel located in Chicago, IL, which Sonesta began managing in November 2019 and which had previously been managed by Wyndham. Effective March 1, 2020, Sonesta commenced managing those units and those units were added to our legacy management agreement with respect to that Chicago hotel. Between September 18, 2020 and December 15, 2020, we transferred the branding and management of 115 hotels previously managed by IHG, Marriott and Wyndham to Sonesta. In February 2021, we transferred the branding and management of 78 Marriott branded hotels to Sonesta and we expect to transition the branding and management of 10 additional Marriott hotels to Sonesta in March 2021. In addition, if our discussions with Hyatt do not result in a mutually acceptable agreement, we expect to transition management of the 22 hotels currently managed by Hyatt to Sonesta in April 2021. We entered into management agreements with Sonesta with respect to these hotels on terms substantially consistent with our legacy management agreements, except that the management agreements for these transitioned hotels expire on December 31, 2021 and automatically renew for successive one-year terms unless terminated earlier. We refer to these management agreements as the conversion hotel management agreements and we refer to the conversion hotel management agreements and the legacy management agreements collectively as our Sonesta agreements. We also entered into a separate pooling agreement with Sonesta with respect to the conversion hotel management agreements on substantially the same terms as the existing Sonesta pooling agreement. Our Sonesta agreements provide that we are paid a fixed annual minimum return equal to 8 % of our invested capital, as defined therein, 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), are sufficient to do so. Our fixed annual minimum return under our Sonesta agreements was $ 349,456 as of December 31, 2020. Our Sonesta agreements further provide that we are paid an additional return equal to 80 % of the operating profits, as defined therein, after reimbursement of owner or manager advances, FF&E reserve escrows and Sonesta’s incentive fee, if applicable. Our Sonesta hotels generated net operating losses of $ 65,277 during the year ended December 31, 2020. Our funding of these losses is considered an owner advance, as defined, and is reimbursable to us from a share of future cash flows from the hotel operations in excess of the minimum returns due to us, if any, pursuant to the terms of our Sonesta agreements. We realized returns of $ 67,592 and $ 78,076 during the years ended December 31, 2019 and 2018, respectively, under our Sonesta agreements. We do not have any security deposits or guarantees for our Sonesta hotels. Accordingly, the returns we receive from our Sonesta hotels are limited to the hotels’ available cash flows, if any, after payment of operating expenses, including management and related fees. Our Sonesta agreements provide that Sonesta is entitled to receive, after payment of hotel operating expenses, a base management fee equal to 3.0 % of gross revenues for our full-service hotels and 5.0 % of gross revenues for our extended stay and select service hotels. Additionally, Sonesta is entitled to a reservation fee equal to 1.5 % of gross room revenues, as defined in our Sonesta agreements, a system fee for centralized services of 1.5 % of gross revenues, a procurement and construction supervision fee equal to 3.0 % of third party costs of capital expenditures and an incentive management fee equal to 20.0 % of operating profits remaining after reimbursement to us and to Sonesta of certain advances and payment of our minimum returns. Sonesta’s incentive management fee, but not its other fees, is earned only after our minimum returns are paid. Our Sonesta agreements also provide that the costs incurred by Sonesta for advertising, marketing, promotional and public relations programs and campaigns, including “frequent stay” rewards programs, for the benefit of our Sonesta hotels are subject to reimbursement by us or are otherwise treated as hotel operating expenses, subject to our approval. Pursuant to our Sonesta agreements, we incurred management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing program and third-party reservation transmission fees of $ 17,734 , $ 36,169 and $ 34,821 for the years ended December 31, 2020, 2019 and 2018, respectively, under our Sonesta agreements. These fees and costs are included in hotel operating expenses in our consolidated statements of comprehensive income (loss). In addition, we recognized procurement and construction supervision fees of $ 1,571 , $ 3,320 and $ 2,374 for the years ended December 31, 2020, 2019 and 2018, respectively, under our Sonesta agreements. These amounts have been capitalized in our consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets. F-18 Table of Contents Our Sonesta agreements require us to fund capital expenditures that we approve or approved at our Sonesta hotels. Commencing February 27, 2020, each of our 14 full-service hotels operated under the legacy management agreements and all the hotels operated under the conversion hotel management agreements managed by Sonesta require 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 annual minimum returns due to us. Our legacy management agreements do not require FF&E escrow deposits for 39 extended stay hotels. No FF&E escrow deposits were required during the year ended December 31, 2020 under our Sonesta agreements. We funded $ 62,963 , $ 114,082 and $ 82,329 for renovations and other capital improvements to certain hotels included in our Sonesta agreements during the years ended December 31, 2020, 2019 and 2018, respectively. We owed Sonesta $ 26,096 , $ 15,537 and $ 5,703 for 2020 operating losses generated by our Sonesta hotels, capital expenditure and other reimbursements or for previous overpayments of estimated minimum returns advanced at December 31, 2020, 2019 and 2018, 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 consolidated balance sheets, respectively. Our legacy management agreements with Sonesta expire in January 2037, and will be extended automatically for up to two successive 15 years renewal terms unless Sonesta elects not to renew any such agreement. Under the legacy pooling agreement, if Sonesta elects not to renew a legacy management agreement, that will be deemed to be a notice of non-renewal for all our legacy management agreements with Sonesta. The legacy pooling agreement includes only legacy management agreements with Sonesta. In general, we may terminate any legacy management agreement with respect to a full-service hotel or an extended stay hotel for cause, casualty and condemnation events. We may terminate any legacy management agreement with respect to an extended stay hotel without cause upon 60 days’ notice. We also have the right to terminate a legacy management agreement with respect to a full-service hotel if our minimum return is less than 6 % of our invested capital during any three of four applicable consecutive years; however, under the legacy pooling agreement, this termination right is subject to a portfolio wide performance test such that we may only terminate the legacy management agreement with respect to a full-service hotel if our aggregate minimum returns for all of our full-service hotels in the portfolio covered by the legacy pooling agreement are less than 6 % of our aggregate invested capital during the applicable testing period. A termination fee may be payable under certain circumstances if a legacy management agreement with respect to a full-service hotel is terminated. The termination fee would be an amount equal to the present value of the payments that would have been made to Sonesta as a base management fee, reservation fee, system fee and incentive management fee between the date of termination of the applicable legacy management agreement and the scheduled expiration date of the term that was remaining prior to such termination, which present value is calculated based upon the average of each of such fees earned in each of the three years ended prior to the date of termination, discounted at an annual rate equal to 8 %. No termination fee is payable if a legacy management agreement with respect to an extended stay hotel is terminated. We or Sonesta may terminate any conversion hotel management agreement upon 30 days’ notice (if by us) or 60 days’ notice (if by Sonesta) or as otherwise provided in such agreement. No termination fee is payable if a conversion hotel management agreement is terminated. Accounting for Investment in Sonesta: We account for our 34 % non-controlling interest in Sonesta under the equity method of accounting. As of December 31, 2020, our investment in Sonesta had a carrying value of $ 36,646 . This amount is included in other assets in our consolidated balance sheets. The cost basis of our investment in Sonesta exceeded our proportionate share of Sonesta’s total shareholders’ equity book value on the date of acquisition, February 27, 2020, 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 $ 216 in the year ended December 31, 2020. We recognized losses of $ 9,910 related to our investment in Sonesta for the year ended December 31, 2020. These amounts are included in equity in earnings (losses) of an investee in our 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 consolidated balance sheet and is being amortized on a straight-line basis through January 31, 2037, as a reduction to hotel operating expenses in our consolidated statements of comprehensive income (loss). We reduced hotel operating expenses by $ 2,070 for the year ended December 31, 2020 for amortization of this liability. As of December 31, 2020, the unamortized balance of this liability was $ 39,931 . See Note 9 for further information regarding our relationship, agreements and transactions with Sonesta. F-19 Table of Contents IHG agreement. Our historical management for 102 hotels and lease agreement for one hotel with IHG, or the IHG agreement, had provided that we were to be paid annual minimum returns and rents of $ 216,551 . Pursuant to the IHG agreement, IHG had provided us with a security deposit to cover minimum payment shortfalls, if any. Under this agreement, IHG was required to maintain a minimum security deposit of $ 37,000 and this security deposit could be replenished and increased up to $ 100,000 from a share of cash flows from the hotels in excess of our minimum returns and rents, working capital advances and certain management fees, if any. During the year ended December 31, 2020, we had fully utilized the $ 75,717 security deposit we held to cover shortfalls in hotel cash flows available to pay the minimum returns due to us for the period. We terminated our agreement with IHG for failure to pay minimum returns and rents due to us during 2020 upon exhausting the security deposit. We transferred the branding and management of 102 of our 103 IHG hotels to Sonesta in December 2020 as described above. On December 1, 2020 we entered into an agreement with IHG for one hotel located in Ravinia, GA. This agreement expires on January 31, 2026 and IHG has an option to acquire the hotel for the greater of $ 128,500 , our historical investment in the property, and an amount based on the operating results of the hotel for the 24 months period prior to the option notice date, divided by 8 %. IHG is paid a base management fee of 3 % of gross revenues to operate this property. We realized returns and rents of $ 107,888 , $ 205,941 and $ 189,981 during the years ended December 31, 2020, 2019 and 2018 respectively, under our IHG agreement and the December 2020 agreement with IHG. The IHG agreement required 5 % of gross revenues from hotel operations be placed in an FF&E reserve. As a result of market conditions, we and IHG agreed to suspend contributions to the FF&E reserve under the IHG agreement beginning in March 2020 through the end of 2020. In April 2020, we funded $ 37,000 of working capital advances under the IHG agreement to cover projected operating losses at our hotels managed by IHG. Marriott agreement . Our management agreement with Marriott for 105 hotels, or the Marriott agreement, provides that, as of December 31, 2020, we were to be paid annual minimum returns of $ 176,416 . Pursuant to the Marriott agreement, Marriott had provided us with a security deposit to cover minimum return payment shortfalls, if any. Under this agreement, this security deposit, if utilized, would be replenished and increased up to $ 64,700 from 60 % of the cash flows realized from operations of the 122 hotels after payment of the aggregate annual minimum returns, Marriott’s base management fees and working capital advances, if any. Marriott had also provided us with a $ 30,000 limited guaranty to cover payment shortfalls up to 85 % of our minimum returns after the available security deposit balance has been depleted. During the year ended December 31, 2020, we fully utilized the $ 33,445 security deposit we then held and exhausted the $ 30,000 limited guaranty to cover shortfalls in hotel cash flows available to pay the minimum returns due to us for the period. The Marriott agreement required 5.5 % to 6.5 % of gross revenues from hotel operations be placed in an FF&E reserve. As a result of current market conditions, we and Marriott agreed to suspend contributions to the FF&E reserve under the Marriott agreement from March through December 2020. We sent notices to Marriott terminating our agreement in October 2020 for its failure to cover the cumulative shortfall between the payments we had received to date and 80 % of the cumulative priority returns due to us. We and Marriott identified 33 of the 105 hotels covered by the Marriott agreement that will be sold or rebranded. On November 18, 2020, we sold eight of these hotels and on December 15, 2020, we transferred the branding and management of nine of these hotels to Sonesta. We had entered an agreement to sell the remaining 16 hotels, which were to be sold by December 15, 2020 under the terms we agreed to with Marriott but we did not reach acceptable terms with the buyer and terminated the agreement to sell these hotels. See Note 4 for further information on our disposition activity. We are in dispute with Marriott and have submitted various claims for arbitration regarding the timing and characterization of certain payments made to us, including Marriott’s assertion we are required to refund $ 19,120 of minimum return advances made to us in 2020, and the validity of the timing of the termination of the Marriott agreements. We are also seeking repayment of certain working capital advances we made to Marriott during 2020. Despite the arbitration claims, we and Marriott agreed to an orderly transition and we transferred the branding and management of 78 Marriott hotels to Sonesta in February 2021 and expect to transfer the branding and management of 10 additional Marriott hotels to Sonesta in March 2021. We have also entered an agreement with Marriott regarding 16 hotels we previously agreed to sell, pursuant to which we agreed to have these hotels remain Marriott branded hotels until the arbitration is resolved. We realized returns of $ 93,593 , $ 190,492 and $ 186,822 during the years ended December 31, 2020, 2019 and 2018, respectively, under our Marriott agreement. F-20 Table of Contents In April 2020, we funded $ 30,000 of working capital advances under the Marriott agreement to cover projected operating losses at our hotels managed by Marriott. We expect Marriott to disburse to us any remaining working capital and FF&E upon resolution of the arbitration described above. Hyatt agreement. Our management agreement with Hyatt for 22 hotels, or our Hyatt agreement, which expires in 2030, provides that, as of December 31, 2020 we are to be paid an annual minimum return of $ 22,037 . We realized minimum returns of $ 22,037 during each of the years ended December 31, 2020, 2019 and 2018, respectively, under this agreement. Pursuant to our Hyatt agreement, Hyatt has provided us with a guaranty, which is limited to $ 50,000 . During the year ended December 31, 2020, the hotels under this agreement generated cash flows that were less than the minimum rents due to us for the period and we exhausted the remaining $ 19,120 limited guaranty available to us to cover the shortfall. In January 2021, we received a notice of termination from Hyatt with respect to our management agreement with it for 22 hotels as a result of Hyatt’s guaranty being exhausted. We and Hyatt are currently in discussions regarding possible changes to the management agreement that may enable some or all of the hotels to continue to be managed by Hyatt. However, if such discussions do not result in a mutually acceptable agreement, we expect to transition management of the 22 hotels to Sonesta in April 2021. During the year ended December 31, 2020, we funded $ 3,700 of working capital advances under our Hyatt agreement to cover projected operating losses at our hotels managed by Hyatt. Working capital advances are reimbursable to us from a share of future cash flows from the hotel operations in excess of the minimum returns due to us, if any, pursuant to the terms of the Hyatt agreement. Our Hyatt agreement requires 5 % of gross revenues from hotel operations be placed in an FF&E reserve, subject to available cash flow. Radisson agreement . Our management agreement with Radisson for nine hotels, or our Radisson agreement, which expires in 2035, provides that, as of December 31, 2020, we are to be paid an annual minimum return of $ 20,601 . We realized minimum returns of $ 20,456 , $ 20,056 and $ 16,183 during the years ended December 31, 2020, 2019 and 2018, respectively, under this agreement. Pursuant to our Radisson agreement, Radisson has provided us with a guaranty, which is limited to $ 47,523 . During the year ended December 31, 2020, the hotels under this agreement generated cash flows that were less than the minimum returns due to us for the period and Radisson made $ 27,978 of guaranty payments to cover the shortfall. The available balance of the guaranty was $ 13,238 as of December 31, 2020. In addition to our minimum returns, our Radisson agreement provides for payment to us of 50 % of the hotels’ available cash flows after payment of operating expenses, funding the required FF&E reserve, payment of our minimum returns, our working capital advances and reimbursement to Radisson of working capital and guaranty advances, if any. Our Radisson agreement requires 5 % of gross revenues from hotel operations be placed in an FF&E reserve. As a result of market conditions, we and Radisson agreed to suspend contributions to the FF&E reserve under our Radisson agreement for the period of April 2020 through December 2020. Wyndham agreements . Our Wyndham hotels generated net operating losses of $ 9,295 during the year ended December 31, 2020. We realized returns of $ 20,023 and $ 23,562 during the years ended December 31, 2019 and 2018, respectively. In September and October 2020, we rebranded four hotels previously managed by Wyndham to Sonesta. In September 2020, we amended our management agreement with Wyndham with respect to 15 hotels so that it would remain as the manager for a limited period. Under the amended terms of this agreement, we paid Wyndham a management fee of 7 % of hotel revenues, subject to certain minimums. On December 29, 2020, we sold ten Wyndham branded hotels and entered a short-term lease and revised purchase agreement for our five remaining Hawthorn Suites branded hotels with the same buyer. See Note 4 for further information regarding these sales. One Wyndham branded hotel we previously were marketing for sale ceased operations as a hotel on September 30, 2020. We are reviewing alternatives regarding this hotel including possibly remarketing it for sale or repurposing it. As of December 31, 2020, we no longer have any relationships with Wyndham. Certain managers of our hotels are required to fund the shortfalls of minimum returns under the terms of our management agreements or their guarantees. We reflect such fundings (including security deposit applications) in our consolidated statements of comprehensive income (loss) as a reduction of hotel operating expenses. The net reduction to hotel operating expenses was $ 235,521 , $ 29,162 and $ 5,569 for the years ended December 31, 2020, 2019 and 2018, respectively. Net lease portfolio As of December 31, 2020, we owned 799 net lease service-oriented retail properties with 13,455,405 square feet with annual minimum rent of $ 369,593 with a weighted (by annual minimum rents) average lease term of 10.9 years. The portfolio was 98.7 % leased by 170 tenants operating under 127 brands in 22 distinct industries. F-21 Table of Contents TA Leases TA is our largest tenant, leasing 26.7 % of our gross carrying value of real estate properties as of December 31, 2020. The number of travel centers, the terms, the annual minimum rent and the deferred rent balances owed to us by TA under our TA leases as of December 31, 2020, were as follows: Number of Travel Centers Initial Term End (1) Annual Minimum Rent Deferred Rent (2) (3) TA No. 1 Lease 36 December 31, 2032 $ 49,707 $ 10,487 TA No. 2 Lease 36 December 31, 2031 44,077 9,740 TA No. 3 Lease 35 December 31, 2029 42,409 9,602 TA No. 4 Lease 37 December 31, 2033 48,263 9,803 TA No. 5 Lease 35 June 30, 2035 61,654 — 179 $ 246,110 $ 39,632 (1) TA has two renewal options of 15 years each under each of our TA leases. (2) Commencing April 1, 2019, TA is required to pay us $ 70,458 in 16 quarterly installments of $ 4,404 for deferred rent TA owes us. (3) Represents the balance as of December 31, 2020. 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 removal 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. In addition, TA is obligated to pay us at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks on the leased properties. Our TA leases do not require FF&E escrow deposits. However, TA is required to maintain the leased travel centers, including structural and non-structural components. Under our TA leases, TA generally cannot own, franchise, finance, operate, lease or manage any travel center or similar property that is not owned by us within 75 miles in either direction along the primary interstate on which a travel center owned by us is located without our consent. We recognized rental income from TA of $ 250,573 , $ 262,038 and $ 302,309 for the years ended December 31, 2020, 2019 and 2018, respectively. Rental income for the years ended December 31, 2020, 2019 and 2018 includes $ 13,156 , $ 11,894 and $ 12,127 , respectively, of adjustments to record the deferred rent obligations under our TA leases and the estimated future payments to us by TA for the cost of removing underground storage tanks on a straight line basis. As of December 31, 2020 and 2019, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $ 55,530 and $ 68,653 , respectively. These amounts are included in due from related persons in our consolidated balance sheets. For the year ended December 31, 2018, we recognized the deferred rent obligations under our TA leases as rental income on a straight line basis over the then in-place lease terms. Beginning in January 2019, our recognition of the amended deferred rent obligations are recorded on a straight line basis over the new lease terms of our TA leases. Commencing on April 1, 2019, TA paid us the first of the 16 quarterly installments of approximately $ 4,404 each (an aggregate of $ 70,458 ) to fully satisfy and discharge its $ 150,000 deferred rent obligation to us that otherwise would have become due in five installments between 2024 and 2030. TA paid to us $ 17,616 and $ 13,200 in respect of such obligation for the years ended December 31, 2020 and 2019, respectively. On January 16, 2019, we sold to TA 20 travel center properties that TA previously leased from us for a total purchase price of $ 308,200 . We recorded a gain of $ 159,535 as a result of these sales. Upon completing these sales, these travel center properties were removed from the TA leases and TA’s annual minimum rent payable to us decreased by $ 43,148 In addition to the payment of annual minimum rent, our TA Nos. 1, 2, 3 and 4 leases provide for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels ( 3 % of non-fuel revenues above 2015 non-fuel revenues, and, beginning with the year ending December 31, 2020, an additional half percent ( 0.5 %) of non-fuel revenues above 2019 non-fuel revenues) and our TA No. 5 lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels ( 3 % of non-fuel revenues above 2012 non-fuel revenues, and, beginning with the year ending December 31, 2020, an additional 0.5 % of non-fuel revenues above 2019 non-fuel revenues). The total amount of percentage rent from TA that we recognized was $ 2,764 , $ 4,075 and $ 3,548 during the years ended December 31, 2020, 2019 and 2018, respectively. F-22 Table of Contents Under our TA leases, TA may request that we fund capital improvements in return for increases in TA’s annual minimum rent according to the following formula: the annual minimum rent is increased by an amount equal to the amount funded by us multiplied by the greater of 8.5 % or a benchmark U.S. Treasury interest rate plus 3.5 %. TA is not obligated to request and we are not obligated to fund any such improvements. We funded $ 56,346 during the year ended December 31, 2018 for capital improvements to our travel center properties and, as a result, TA’s annual minimum rent payable to us increased by $ 4,789 . We did not fund any improvements under these leases during the years ended December 31, 2020 or 2019. See Notes 4 and 9 for further information regarding our relationship with TA. Our 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 other net lease properties (excluding TA) of $ 137,111 and $ 46,861 for the years ended December 31, 2020 and 2019, respectively, which included $ 14,345 and $ 2,160 , respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight-line basis. As a result of the COVID-19 pandemic, some of our tenants have requested rent assistance. During the year ended December 31, 2020, we collected 94.0 % of rents due to us from our net lease tenants. In January 2021, we collected 89.3 % of rents due to us from our net lease tenants. We have entered into rent deferral agreements with 46 net lease retail tenants with leases requiring an aggregate of $ 46,370 of annual minimum rents. These amounts do not include tenants that have withdrawn previously approved deferral requests. Generally, these rent deferrals are for one to four months of rent and were payable by the tenants over a 12 to 24 month period beginning in September 2020. We have deferred an aggregate of $ 12,115 of rent related to the 46 tenants as of February 26, 2021. We have elected to use the FASB relief package regarding the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. The FASB relief package provides entities with the option to account for lease concessions resulting from the COVID-19 pandemic outside of the existing lease modification guidance if the resulting cash flows from the modified lease are substantially the same as the original lease. Because the deferred rents referenced above will be repaid over a 12 to 24 month period, the cash flows from the respective leases are substantially the same as before the rent deferrals. 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 or not 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 and do not record an allowance for uncollectable accounts. We recorded reserves for uncollectable amounts against rental income of $ 9,892 and $ 5,981 for the years ended December 31, 2020 and 2019, respectively. We had reserves for uncollectable rents of $ 15,873 and $ 5,981 as of December 31, 2020 and 2019, respectively, included in other assets on our consolidated balance sheets. Additional lease information (as lessor) . As of December 31, 2020, our leases with parties other than our TRSs provide for contractual minimum rents to be paid to us during the remaining current terms as follows: 2021 $ 391,108 2022 386,145 2023 367,587 2024 359,875 2025 351,209 Thereafter 2,442,524 Total $ 4,298,448 F-23 Table of Contents Additional lease information (as lessee) . As of December 31, 2020, 14 of our hotels were subject to ground leases where we are the lessee. In addition, our hotel operators enter various leases on our behalf in the normal course of business at our hotels, or our hotel operating leases. We calculated right of use assets and lease liabilities as the present value of the remaining lease payment obligations for our operating leases, which include the ground leases and hotel operating leases, over the remaining lease term using our estimated incremental borrowing rate. The right of use assets and related lease liabilities are included within other assets, net and accounts payable and other liabilities, respectively, in our consolidated balance sheets. At December 31, 2020 and 2019, our right of use assets and related lease liabilities each totaled $ 84,924 and $ 75,040 , respectively, which represented our future obligations under our operating leases and are included in other assets and other liabilities , respectively, in our consolidated balance sheets. Our operating leases require minimum fixed rent payments, percentage rent payments based on a percentage of hotel revenues in excess of certain thresholds, or rent payments equal to the greater of a minimum fixed rent or percentage rent. Rental expense related to our operating leases of $ 13,396 for the year ended December 31, 2020 is included in hotel operating expenses within our consolidated statements of comprehensive income (loss). As of December 31, 2020, our operating leases provide for contractual minimum rent payments to third parties during the remaining lease terms, as follows: 2021 $ 7,334 2022 6,691 2023 6,384 2024 6,282 2025 5,949 Thereafter 163,045 Total lease payments 195,685 Less: imputed interest ( 110,761 ) Present value of lease liabilities (1) $ 84,924 (1) The weighted average discount rate used to calculate the lease liability and the weighted average remaining term for our ground leases (assuming all extension options) and our hotel operating leases are approximately 5.49 % and 30 years (range of 11 years to 66 years) and 5.96 % and 36 years (range of 1 month to 46 years), respectively. As of December 31, 2020, 17 of our net lease properties are on land we leased partially or entirely from unrelated third parties. We are not required to record right of use assets and lease liabilities for these properties as we are not the primary obligor under the leases. The average remaining term of these 17 ground leases was 11 years (range of one to 30 years) with rents averaging $ 485 per year. Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant did not perform obligations under a ground lease or did not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property. Note 6. Indebtedness Our principal debt obligations at December 31, 2020 were: (1) $ 78,424 of outstanding borrowings under our $ 1,000,000 revolving credit facility; and (2) $ 6,200,000 aggregate outstanding principal amount of senior unsecured notes. Our revolving credit facility is governed by a credit agreement with a syndicate of institutional lenders. Our $ 1,000,000 revolving credit facility is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is July 15, 2022, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to extend the maturity date of the facility by two additional six-month periods. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. We are required to pay interest on borrowings under our revolving credit facility at the rate of LIBOR plus a premium, which was 235 basis points per annum, subject to a LIBOR floor of 0.50 %, as of December 31, 2020. We also pay a facility fee, which was 30 basis points per annum at December 31, 2020, on the total amount of lending commitments under our revolving credit facility. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. F-24 Table of Contents As of December 31, 2020 and 2019, the annual interest rate payable on borrowings under our revolving credit facility was 2.85 % and 2.80 %, respectively. The weighted average annual interest rate for borrowings under our revolving credit facility was 2.36 %, 3.21 % and 3.06 % for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, we had $ 78,424 outstanding and $ 921,576 available under our revolving credit facility. On January 19, 2021, we borrowed $ 972,793 under our revolving credit facility as a precautionary measure to preserve financial flexibility. As of February 26, 2021, we had fully drawn our $ 1,000,000 revolving credit facility. We repaid our $ 400,000 term loan, which was scheduled to mature on July 15, 2023, without penalty on November 5, 2020. The weighted average annual interest rate for borrowings under our term loan was 2.74 %, 3.43 % and 3.12 % during the years ended December 31, 2020, 2019 and 2018, respectively. As a result of the repayment, we recorded a loss on early extinguishment of debt of $ 2,391 , which represents unamortized debt issuance costs of the term loan. We may not, during the New Waiver Period and until we demonstrate compliance with certain covenants, utilize the feature in our credit agreement pursuant to which maximum aggregate borrowings may be increased to up to $ 2,300,000 on a combined basis in certain circumstances. Our credit agreement and our unsecured senior 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 LLC ceasing to act as our business manager. Our credit agreement and our unsecured senior notes indentures and their supplements 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. We believe we were in compliance with the terms and conditions of our credit agreement and our unsecured senior notes indentures and their supplements at December 31, 2020. The November 2020 amendment to our credit agreement waives all of the then existing financial covenants through the New Waiver Period. We and our lenders amended our credit agreement governing our $ 1,000,000 revolving credit facility and $ 400,000 term loan on May 8, 2020 and we amended our credit agreement governing our $ 1,000,000 revolving credit facility again on November 5, 2020. The May 2020 amendment provided a waiver of certain of the financial covenants under our credit agreement through March 31, 2021, or the Waiver Period, during which, subject to certain conditions, we continued to have access to undrawn amounts under the credit facility. During the Waiver Period, and continuing thereafter until such time as we had demonstrated compliance with certain of our financial covenants as of June 30, 2021: • we were required to maintain unrestricted liquidity (unrestricted cash or undrawn availability under our $ 1,000,000 revolving credit facility) of not less than $ 125,000 ; • our interest rate premium over LIBOR under our revolving credit facility and term loan was increased by 50 basis points; • our ability to pay distributions on our common shares was limited to amounts required to maintain our qualification for taxation as a REIT and to avoid the payment of certain income and excise taxes, and to pay a cash dividend of $ 0.01 per common share per quarter; • we were subject to certain additional covenants, including additional restrictions on our ability to incur indebtedness (with exceptions for borrowings under our revolving credit facility and certain other categories of secured and unsecured indebtedness), and to acquire real property or make other investments (with exceptions for, among other things, certain categories of capital expenditures and costs, and certain share purchases); • we were generally required to apply the net cash proceeds from the disposition of assets, capital markets transactions, and any debt refinancing or a COVID-19 government stimulus program to reduce the principal balance under the revolving credit facility; and • we pledged equity interests in certain of our property owning subsidiaries to secure our obligations under the credit agreement. These subsidiaries owned properties with $ 1,027,334 of undepreciated book value as of December 31, 2020. As a result of the November 5, 2020 amendment: • all existing financial covenants have been waived through the New Waiver Period; • we repaid our $ 400,000 term loan on November 5, 2020 using undrawn amounts under our revolving credit facility; F-25 Table of Contents • we pledged certain additional equity interests of subsidiaries owning properties and we are providing first mortgage liens on 74 properties owned by the pledging subsidiaries with an undepreciated book value of $ 1,834,748 as of December 31, 2020 to secure our obligations under the credit agreement; • we have the ability to fund up to $ 250,000 of capital expenditures per year and up to $ 50,000 of certain other investments per year as defined in the credit agreement; • the interest rate premium over LIBOR under our revolving credit facility increased by 30 basis points; • certain covenants and restrictions on distributions to common shareholders, share repurchases, incurring indebtedness, and acquiring real property (in each case subject to various exceptions), and the minimum liquidity requirement of $ 125,000 will remain in place during the New Waiver Period; and • we are generally required to apply the net cash proceeds from the disposition of assets, capital markets transactions and debt refinancings to repay outstanding amounts under the credit agreement, and then to other debt maturities. On February 2, 2018, we issued $ 400,000 principal amount of 4.375 % senior notes due 2030 in a public offering. Net proceeds from this offering were $ 386,400 after discounts and expenses. On September 18, 2019, we issued $ 825,000 aggregate principal amount of our 4.35 % unsecured senior notes due 2024, $ 450,000 aggregate principal amount of our 4.75 % unsecured senior notes due 2026 and $ 425,000 aggregate principal amount of our 4.95 % unsecured senior notes due 2029. The aggregate net proceeds from these offerings were $ 1,680,461 , after underwriting discounts and other offering expenses. In connection with the SMTA Transaction, a syndicate of lenders committed to provide us with a one year unsecured term loan facility, under which we would be able to borrow up to $ 2,000,000 . We terminated these commitments in September 2019 and recorded a loss on early extinguishment of debt of $ 8,451 during the year ended December 31, 2019 to write off unamortized debt issuance costs. See Note 4 for further information about the SMTA Transaction. On June 17, 2020, we issued $ 800,000 principal amount of our 7.50 % unsecured senior notes due 2025, or the 2025 Notes. The aggregate net proceeds from this offering were $ 787,718 , after underwriting discounts and other offering expenses. These notes are fully and unconditionally guaranteed by certain of our subsidiaries. On June 17, 2020, we repurchased $ 350,000 principal amount of our $ 400,000 of 4.25 % senior notes due 2021 at a total cost of $ 355,971 , excluding accrued interest pursuant to a cash tender offer. We recorded a loss of $ 6,970 , net of discount and debt issuance costs, on early extinguishment of debt during the year ended December 31, 2020. On November 20, 2020, we issued $ 450,000 principal amount of our 5.5 % senior notes due in 2027, or the 2027 Notes. The aggregate net proceeds from this offering were $ 442,232 , after underwriting discounts and other offering expenses. These notes are fully and unconditionally guaranteed by certain of our subsidiaries. The subsidiaries in the guarantee pool for the 2025 Notes and the 2027 Notes may change from time to time as subsidiaries are allocated to or from the pledge pool for our credit agreement or for certain other reasons. Each subsidiary guarantor’s guarantee will automatically terminate and each subsidiary guarantor will automatically be released from all of its obligations under its guarantee and the 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 Investors Service, or Moody’s, or BBB (or the equivalent) by Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, 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 governing the notes. On December 18, 2020, we redeemed the remaining $ 50,000 of the 4.25 % senior notes due 2021 for a redemption price equal to the principal amount, plus accrued and unpaid interest. We recorded a loss of $ 33 , net of discounts and debt issuance costs, on extinguishment of this debt during the year ended December 31, 2020. All of our senior notes are prepayable at any time prior to their maturity date at par plus accrued interest plus a premium equal to a make whole amount, as defined, generally designed to preserve a stated yield to the noteholder. Interest on all of our senior notes is payable semi-annually in arrears. None of our debt obligations require sinking fund payments prior to their maturity dates. F-26 Table of Contents The required principal payments due during the next five years and thereafter under all our outstanding debt at December 31, 2020 are as follows: 2021 $ — 2022 578,424 2023 500,000 2024 1,175,000 2025 1,150,000 Thereafter 2,875,000 $ 6,278,424 Note 7. Shareholders' Equity Common Share Awards We have common shares available for issuance under the terms of our 2012 Equity Compensation Plan, or our Share Award Plan. During the years ended December 31, 2020, 2019 and 2018, we awarded 264,400 of our common shares with an aggregate market value of $ 2,232 , 140,100 of our common shares with an aggregate market value of $ 3,507 and 97,000 of our common shares with an aggregate market value of $ 2,810 , respectively, to our officers and certain other employees of our manager, RMR LLC, pursuant to the Share Award Plan. The value of the share awards was based upon the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the date of the award. See Note 9 for a further discussion of the awards we made to our officers and certain other employees of RMR LLC. On February 27, 2020, we awarded 3,000 of our common shares each to two new Trustees who were elected to our Board of Trustees with an aggregate market value of $ 112 . In addition, we awarded each of our Trustees 5,000 of our common shares with an aggregate market value of $ 378 ($ 54 per trustee) during the year ended December 31, 2020. On April 12, 2018, we awarded 3,000 of our common shares with an aggregate market value of $ 75 to one of our Managing Trustees who was elected as a Managing Trustee that day. In addition, we awarded each of our then Trustees 3,000 of our common shares in each of 2019 and 2018 with an aggregate market value of $ 370 ($ 74 per trustee) and $ 427 ($ 85 per trustee), respectively, as part of their annual compensation. The values of the share awards were based upon the closing price of our common shares on Nasdaq on the dates of the awards. The shares awarded to our Trustees vest immediately. The shares awarded to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of award. Shares forfeited are recognized as they occur. Share awards are expensed ratably over the vesting period and the value of such share awards are included in general and administrative expense in our consolidated statements of comprehensive income (loss). A summary of shares awarded, vested, forfeited and unvested under the terms of the Share Award Plan for the years ended December 31, 2020, 2019 and 2018 is as follows: 2020 2019 2018 Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Unvested shares, beginning of year 194,540 $ 26.59 164,000 $ 28.39 146,605 $ 27.93 Shares granted 305,400 8.91 155,100 25.00 115,000 28.80 Shares vested ( 173,190 ) 17.76 ( 122,010 ) 25.09 ( 96,375 ) 28.73 Shares forfeited ( 850 ) 26.93 ( 2,550 ) 27.49 ( 1,230 ) — Unvested shares, end of year 325,900 $ 14.71 194,540 $ 26.59 164,000 $ 28.39 The 325,900 unvested shares as of December 31, 2020 are scheduled to vest as follows: 131,660 shares in 2021, 79,760 shares in 2022, 67,600 shares in 2023 and 46,880 shares in 2024. As of December 31, 2020, the estimated future compensation expense for the unvested shares was $ 3,664 . The weighted average period over which the compensation expense will be recorded is approximately 22 months. During the years ended December 31, 2020, 2019 and 2018, we recorded $ 3,206 , $ 2,849 and $ 3,187 , respectively, of compensation expense related to the Share Award Plan. At December 31, 2020, 2,029,893 of our common shares remain reserved for issuance under our current Share Award Plan. F-27 Table of Contents Share Repurchases During the years ended December 31, 2020, 2019 and 2018, we repurchased our common shares from certain of our officers and certain current or former employees of RMR LLC, in satisfaction of tax withholding and payment obligations in connection with the vesting of our common shares as follows: Year Aggregate Number of Shares Repurchased Weighted Average Repurchase Price Value 2020 43,751 $ 7.90 $ 346 2019 31,225 $ 25.61 $ 800 2018 21,202 $ 28.59 $ 606 Distributions During the years ended December 31, 2020, 2019 and 2018, we paid distributions on our common shares as follows: Annual Per Share Distribution Total Distribution Characterization of Distribution Year Ordinary Income Capital Gain Return of Capital Qualified Dividend 2020 $ 0.57 $ 93,804 — % — 100.00 % — % 2019 $ 2.15 $ 353,620 44.50 % 37.93 % 17.57 % 0.50 % 2018 $ 2.11 $ 346,832 100.00 % — — — On January 14, 2021, we declared a distribution of $ 0.01 per common share, or $ 1,648 , which we paid on February 18, 2021, to shareholders of record on January 25, 2021. Cumulative Other Comprehensive Income (Loss) Cumulative other comprehensive income (loss) represents our share of the comprehensive loss of Sonesta and AIC. See Notes 5 and 9 for further information regarding these investments. The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the year ended December 31, 2020: Equity in Unrealized Gain (Loss) of Investees Total Balance at December 31, 2018 $ ( 266 ) $ ( 266 ) Amounts reclassified from cumulative other comprehensive income to retained earnings 91 91 Amounts reclassified from cumulative other comprehensive income to net income 175 175 Balance at December 31, 2019 — — Current year other comprehensive loss ( 760 ) ( 760 ) Amounts reclassified from cumulative other comprehensive income to net income — — Balance at December 31, 2020 $ ( 760 ) $ ( 760 ) Note 8. Business and Property Management Agreements with RMR LLC We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC 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, excluding properties leased to TA, and the office building component of one of our hotels. See Note 9 for further information regarding our relationship, agreements and transactions with RMR LLC. F-28 Table of Contents Management Agreements with RMR LLC. Our management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms: • Base Management Fee . The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of: ◦ the sum of (a) 0.7 % of the average aggregate historical cost of our real estate investments up to $ 250,000 , plus (b) 0.5 % of the average aggregate historical cost of our real estate investments exceeding $ 250,000 ; and ◦ the sum of (a) 0.7 % of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded, during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $ 250,000 , plus (b) 0.5 % of our Average Market Capitalization exceeding $ 250,000 . The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves. • Incentive Management Fee . The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows: ◦ An amount, subject to a cap based on the value of our common shares outstanding, equal to 12 % of the product of: - our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and - the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the SNL U.S. REIT Hotel Index, or the benchmark return per share, for the relevant measurement period. For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period. ◦ The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if we issue or repurchase our common shares, or if our common shares are forfeited, during the measurement period. ◦ No incentive management fee is payable by us unless our total return per share during the measurement period is positive. ◦ The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated. ◦ If our total return per share exceeds 12 % per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the SNL U.S. REIT Hotel Index for such measurement period and 12 % per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the SNL U.S. REIT Hotel Index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the SNL U.S. REIT Hotel Index. F-29 Table of Contents ◦ The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5 % of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period. ◦ Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements. Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $ 36,830 , $ 41,607 and $ 39,942 for the years ended December 31, 2020, 2019 and 2018, respectively. The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income (loss) for these periods. The net business management fees we recognized for each of the years ended December 31, 2020, 2019 and 2018 reflect a reduction of $ 3,585 for each of those years for the amortization of the liability we recorded in connection with our former investment in RMR Inc. Pursuant to our business management agreement, in January 2019, we paid RMR LLC an incentive management fee of $ 53,635 for the year ended December 31, 2018. We did no t incur an incentive management fee payable to RMR LLC for the years ended December 31, 2020 or 2019. In calculating the incentive management fee payable by us, our total shareholder return per share was adjusted in accordance with the business management agreement to reflect aggregate net increases in the number of our common shares outstanding as a result of certain share issuances and repurchases by us during the three year measurement period. In addition, the calculation of our benchmark return per share was also adjusted for these issuances and repurchases in accordance with the business management agreement. We include business management fee amounts in general and administrative expenses in our consolidated statements of comprehensive income (loss). • Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0 % of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0 % of construction costs for our net lease portfolio, excluding properties leased to TA, and the office building component of one of our hotels that are subject to our property management agreement with RMR LLC. Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $ 3,575 , $ 1,399 and $ 64 for the years ended December 31, 2020, 2019 and 2018, respectively. These amounts are included in other operating expenses or have been capitalized as appropriate in our consolidated financial statements. • Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC employees assigned to work exclusively or partly at our net lease properties (excluding properties leased to TA) and the office building component of one of our hotels, our share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function, and as otherwise agreed. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $ 425 , $ 620 and $ 399 for these expenses and costs for the years ended December 31, 2020, 2019 and 2018, respectively. We included these amounts in other operating expenses and general and administrative expense, as applicable, for these periods. • Term. Our management agreements with RMR LLC have terms that end on December 31, 2040, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension. F-30 Table of Contents • Termination Rights . We have the right to terminate one or both of our management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein. • Termination Fee . If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC. • Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable. • Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC or its subsidiaries provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers. • Investment Opportunities . Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC. Note 9. Related Person Transactions We have relationships and historical and continuing transactions with TA, Sonesta, RMR LLC, RMR Inc., and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR LLC is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees 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., a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, also serves as an officer and employee of RMR LLC. In addition, each of our other officers serves as an officer of RMR LLC, including, until his resignation on December 31, 2020, Ethan S. Bornstein, our former Senior Vice President. Some of our Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these public companies. Other officers of RMR LLC, including Mr. Murray and certain of our other officers, serve as managing trustees, managing directors or officers of certain of these companies. Our Manager, RMR LLC . We have two agreements with RMR LLC 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 certain net lease properties and the office building component of one of our hotels. See Note 8 for further information regarding our management agreements with RMR LLC. F-31 Table of Contents Share Awards to RMR LLC Employees . As described in Note 7, we award shares to our officers and other employees of RMR LLC annually. Generally, one fifth of these awards vest on the award date and one fifth vests on each of the next four anniversaries of the award dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR LLC. These awards to RMR LLC employees are in addition to the share awards to our Managing Trustees, as Trustee compensation, and the fees we paid to RMR LLC. See Note 7 for information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligations on the vesting of share awards. RMR Inc. On July 1, 2019, we sold all the 2,503,777 shares of class A common stock of RMR Inc. we owned in an underwritten public offering at a price to the public of $ 40.00 per share pursuant to an underwriting agreement among us, RMR Inc., certain other REITs managed by RMR LLC that also sold their class A common stock of RMR Inc. in the offering, and the underwriters named therein. We received net proceeds of $ 93,568 from this sale, after deducting the underwriting discounts and commissions and before other offering expenses. TA . We lease 179 of our travel centers to TA under the TA leases. As of December 31, 2020, we owned 1,184,797 shares of common stock, representing approximately 8.1 % of TA’s outstanding shares of common stock, which amount includes 500,797 shares of TA common stock that we purchased in an underwritten public equity offering in July 2020 at the public offering price of $ 14.00 per share. RMR LLC provides management services to both us and TA, and Adam D. Portnoy also serves as the chair of the board of directors and as a managing director of TA and, as of December 31, 2020, beneficially owned 655,505 shares of TA common stock (including through RMR LLC), representing approximately 4.5 % of TA’s outstanding shares of common stock. Spin-Off of TA . In connection with TA’s spin-off, we entered a transaction agreement with TA and RMR LLC, pursuant to which TA granted us a right of first refusal to purchase, lease, mortgage or otherwise finance any interest TA owns in a travel center before it sells, leases, mortgages or otherwise finances that travel center to or with another party, and TA also granted us and any other company managed by RMR LLC a right of first refusal to acquire or finance any real estate of the types in which we or they invest before TA does. TA also agreed that for so long as TA is a tenant of ours it will not permit: the acquisition by any person or group of beneficial ownership of 9.8 % or more of the voting shares or the power to direct the management and policies of TA or any of its subsidiary tenants or guarantors under its leases with us; the sale of a material part of the assets of TA or any such tenant or guarantor; or the cessation of certain continuing directors constituting a majority of the board of directors of TA or any such tenant or guarantor. TA also agreed not to take any action that might reasonably be expected to have a material adverse impact on our ability to qualify as a REIT and to indemnify us for any liabilities we may incur relating to TA’s assets and business. See Notes 4 and 5 for further information regarding our relationships, agreements and transactions with TA. Sonesta . Sonesta is a private company that is controlled by one of our Managing Trustees, Adam D. Portnoy. Mr. Portnoy is the largest owner and a director of Sonesta. One of Sonesta’s other directors is our other Managing Trustee, President and Chief Executive Officer and Sonesta’s other director serves as RMR LLC’s and RMR Inc.’s executive vice president, general counsel and secretary and as our Secretary. Sonesta’s chief executive officer and chief financial officer are officers of RMR LLC. Certain other officers and employees of Sonesta are former employees of RMR LLC. RMR LLC also provides certain services to Sonesta. As of December 31, 2020, we owned approximately 34 % of Sonesta which managed 168 of our hotels. See Notes 4 and 5 for further information regarding our relationships, agreements and transactions with Sonesta. AIC . Until its dissolution on February 13, 2020, we, ABP Trust, TA and four other companies to which RMR LLC provides management services owned AIC, an Indiana insurance company, in equal portions. We and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC until June 30, 2019. We paid aggregate annual premiums, including taxes and fees, of $ 5,738 and $ 6,387 in connection with this insurance program for the policy years ending June 30, 2019 and 2018, respectively. In connection with AIC’s dissolution, we and each other AIC shareholder received an initial liquidating distribution of $ 9,000 from AIC in December 2019 and an additional liquidating distribution of approximately $ 286 in June 2020. F-32 Table of Contents As of December 31, 2020 and 2019, our investment in AIC had a carrying value of $ 12 and $ 298 , respectively. These amounts are included in other assets in our consolidated balance sheets. We did not recognize any income in the year ended December 31, 2020 and recognized income of $ 393 and $ 515 related to our investment in AIC for the years ended December 31, 2019 and 2018, respectively. These amounts are presented as equity in earnings of an investee in our consolidated statements of comprehensive income (loss). Our other comprehensive income (loss) includes our proportionate part of unrealized gains (losses) on securities which were owned and held for sale by AIC of $( 175 ) and $( 68 ) related to our investment in AIC for the years ended December 31, 2019 and 2018, respectively. Note 10. Income Taxes Our provision (benefit) for income taxes consists of the following: For the Year Ended December 31, 2020 2019 2018 Current: Federal $ — $ — $ — State 3,361 2,327 1,575 Foreign — 593 667 3,361 2,920 2,242 Deferred: Foreign 13,850 ( 127 ) ( 1,047 ) 13,850 ( 127 ) ( 1,047 ) $ 17,211 $ 2,793 $ 1,195 A reconciliation of our effective tax rate and the current U.S. Federal statutory income tax rate is as follows: For the Year Ended December 31, 2020 2019 2018 Taxes at statutory U.S. federal income tax rate 21.0 % 21.0 % 21.0 % Nontaxable income of SVC ( 21.0 ) % ( 21.0 ) % ( 21.0 ) % State and local income taxes, net of federal tax benefit ( 1.1 ) % 0.7 % 0.8 % Foreign taxes ( 4.4 ) % 0.1 % ( 0.2 ) % Effective tax rate ( 5.5 ) % 0.8 % 0.6 % Deferred income tax balances generally reflect the net tax effects of temporary differences between the carrying amounts of certain of our assets and liabilities in our consolidated balance sheets and the amounts used for income tax purposes and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. Significant components of our deferred tax assets and liabilities are as follows: As of December 31, 2020 2019 Deferred tax assets: Tax loss carryforwards $ 42,940 $ 44,285 Other 3,175 3,612 46,115 47,897 Valuation allowance ( 46,115 ) ( 47,897 ) — — Deferred tax liabilities: Property basis difference ( 6,682 ) ( 6,996 ) Puerto Rico deferred tax gain $ ( 13,850 ) $ — Net deferred tax liabilities $ ( 20,532 ) $ ( 6,996 ) Net deferred tax liabilities are included in accounts payable and other liabilities in our consolidated balance sheets. F-33 Table of Contents The following table provides a reconciliation of the beginning and ending balances of gross unrecognized tax benefits from uncertain tax positions in accordance with ASC 740-10-50: Gross Unrecognized Tax Benefits As of December 31, 2019 Current Period Increase As of December 31, 2020 $ — $ 2,531 $ 2,531 At December 31, 2020 and 2019, our consolidated TRS had a net deferred tax asset, prior to any valuation allowance, of $ 40,879 and $ 42,434 , respectively, which consists primarily of the tax benefit of net operating loss carryforwards and tax credits. Because of the uncertainty surrounding our ability to realize the future benefit of these assets, we have provided a 100 % valuation allowance as of December 31, 2020 and 2019. As of December 31, 2020, our consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $ 161,702 which do not expire. We recorded a $ 13,850 deferred tax liability as a result of the book value to tax basis difference related to the accounting of an insurance settlement in 2020. See Note 4 for further information regarding this insurance settlement. Note 11. Concentration Geographic Concentration At December 31, 2020, our 1,109 properties were located in 47 states in the United States, plus Washington, DC, Ontario, Canada and Puerto Rico. Between 6 % and 12 % of our properties, by investment, were located in each of California, Texas, Georgia and Illinois. Our two hotels in Ontario, Canada and our hotel in Puerto Rico represent 2 % of our hotels, by investment, in the aggregate at December 31, 2020. Credit Concentration As of December 31, 2020, Sonesta operated 168 of our hotels and TA leased 179 of our net lease properties, representing 28.3 % and 26.8 %, respectively, of our gross real estate assets at cost. Marriott operated 105 of our hotels as of December 31, 2020, representing 8.9 % of our gross real estate assets, at cost, as of December 31, 2020. We transitioned the branding and management of 78 Marriott hotels to Sonesta in February 2021 and expect to transition the branding and management of 10 additional Marriott hotels to Sonesta in March 2021. See Notes 5 and 9 for a discussion of our Sonesta, TA and Marriott agreements. F-34 Table of Contents Note 12. Segment Information We aggregate our hotels and net lease portfolio into two reportable segments, hotel investments and net lease investments (previously named travel centers), based on their similar operating and economic characteristics. For the Year Ended December 31, 2020 Hotels Net Lease Corporate Consolidated Revenues: Hotel operating revenues $ 875,098 $ — $ — $ 875,098 Rental income 2,271 387,684 — 389,955 FF&E reserve income 201 — — 201 Total revenues 877,570 387,684 — 1,265,254 Expenses: Hotel operating expenses 697,904 — — 697,904 Other operating expenses — 15,208 — 15,208 Depreciation and amortization 263,673 235,235 — 498,908 General and administrative — — 50,668 50,668 Loss on asset impairment 17,131 38,625 — 55,756 Total expenses 978,708 289,068 50,668 1,318,444 Gain (loss) on sale of real estate, net 14,927 ( 12,666 ) — 2,261 Gain on insurance settlement 62,386 — — 62,386 Unrealized gains on equity securities — — 19,882 19,882 Interest income 6 — 278 284 Interest expense — — ( 306,490 ) ( 306,490 ) Loss on early extinguishment of debt — — ( 9,394 ) ( 9,394 ) Income (loss) before income taxes and equity in losses of an investee ( 23,819 ) 85,950 ( 346,392 ) ( 284,261 ) Income tax expense — — ( 17,211 ) ( 17,211 ) Equity in losses of an investee — — ( 9,910 ) ( 9,910 ) Net income (loss) $ ( 23,819 ) $ 85,950 $ ( 373,513 ) $ ( 311,382 ) As of December 31, 2020 Hotels Net Lease Corporate Consolidated Total assets $ 4,846,410 $ 3,721,418 $ 119,491 $ 8,687,319 F-35 Table of Contents For the Year Ended December 31, 2019 Hotels Net Lease Corporate Consolidated Revenues: Hotel operating revenues $ 1,989,173 $ — $ — $ 1,989,173 Rental income 20,985 301,251 — 322,236 FF&E reserve income 4,739 — — 4,739 Total revenues 2,014,897 301,251 — 2,316,148 Expenses: Hotel operating expenses 1,410,927 — — 1,410,927 Other operating expenses — 8,357 — 8,357 Depreciation and amortization 268,088 160,360 — 428,448 General and administrative — — 54,639 54,639 Transaction related costs — — 1,795 1,795 Loss on asset impairment 28,371 10,925 — 39,296 Total expenses 1,707,386 179,642 56,434 1,943,462 Gain on sale of real estate, net — 159,535 — 159,535 Dividend income — — 1,752 1,752 Unrealized losses on equity securities, net — — ( 40,461 ) ( 40,461 ) Interest income 795 — 1,420 2,215 Interest expense — — ( 225,126 ) ( 225,126 ) Loss on early extinguishment of debt — — ( 8,451 ) ( 8,451 ) Income (loss) before income taxes and equity in earnings of an investee 308,306 281,144 ( 327,300 ) 262,150 Income tax expense — — ( 2,793 ) ( 2,793 ) Equity in earnings of an investee — — 393 393 Net income (loss) $ 308,306 $ 281,144 $ ( 329,700 ) $ 259,750 As of December 31, 2019 Hotels Net Lease Corporate Consolidated Total assets $ 4,866,549 $ 4,042,831 $ 124,587 $ 9,033,967 F-36 Table of Contents For the Year Ended December 31, 2018 Hotels Net Lease Corporate Consolidated Revenues: Hotel operating revenues $ 1,958,598 $ — $ — $ 1,958,598 Rental income 28,644 302,162 — 330,806 FF&E reserve income 5,132 — — 5,132 Total revenues 1,992,374 302,162 — 2,294,536 Expenses: Hotel operating expenses 1,387,065 — — 1,387,065 Other operating expenses — 5,290 — 5,290 Depreciation and amortization 255,759 147,318 — 403,077 General and administrative — — 104,862 104,862 Total expenses 1,642,824 152,608 104,862 1,900,294 Dividend income — — 2,754 2,754 Unrealized losses on equity securities, net — — ( 16,737 ) ( 16,737 ) Interest income 990 — 538 1,528 Interest expense — — ( 195,213 ) ( 195,213 ) Loss on early extinguishment of debt — — ( 160 ) ( 160 ) Income (loss) before income taxes and equity in earnings of an investee 350,540 149,554 ( 313,680 ) 186,414 Income tax expense — — ( 1,195 ) ( 1,195 ) Equity in earnings of an investee — — 515 515 Net income (loss) $ 350,540 $ 149,554 $ ( 314,360 ) $ 185,734 As of December 31, 2018 Hotels Net Lease Corporate Consolidated Total assets $ 4,586,709 $ 2,398,118 $ 192,252 $ 7,177,079 Note 13. Fair Value of Assets and Liabilities The table below presents certain of our assets carried at fair value at December 31, 2020, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset. As of December 31, 2020 As of December 31, 2019 Carrying Value Fair Value Carrying Value Fair Value Investment in TA (Level 1) (1) $ 38,624 $ 38,624 $ 11,731 $ 11,731 Assets of properties held for sale (Level 3) (2) $ 13,543 $ 13,543 $ 87,493 $ 90,122 Assets of properties held and used (Level 3) (3) $ — $ — $ 38,000 $ 38,000 (1) As of December 31, 2020, and 2019, we owned 1,184,797 and 684,000 common shares of TA, respectively, which are included in other assets in our consolidated balance sheets and reported at fair value based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares was $ 24,418 and $ 17,407 , as of December 31, 2020 and 2019, respectively. During the year ended December 31, 2020 and 2019, we recorded unrealized gains of $ 19,883 and unrealized losses of $ 1,129 , respectively, to adjust the carrying value of our investment in TA shares to their fair values. F-37 Table of Contents (2) As of December 31, 2020, we owned five hotels in four states with a carrying value of $ 10,699 and six net lease properties located in six states with a carrying value of $ 2,844 classified as held for sale. These properties are recorded at their estimated fair value less costs to sell based on information derived from third party appraisals (Level 3 inputs as defined in the fair value hierarchy under GAAP). We recorded a $ 55,756 loss on asset impairment in 2020 to reduce the carrying value of certain of these properties to their estimated fair value less costs to sell. As of December 31, 2019 we owned 19 net lease properties located in 12 states with a carrying value of $ 87,493 classified as held for sale. These properties were recorded at their estimated fair value less costs to sell based on information derived from third party appraisals (Level 3 inputs as defined in the fair value hierarchy under GAAP). We recorded a $ 10,925 loss on asset impairment in 2019 to reduce the carrying value of these properties to their estimated fair value less costs to sell. (3) As of December 31, 2019, we recorded a $ 28,371 loss on asset impairment to reduce the carrying value of two hotels to their estimated fair value of $ 38,000 based on discounted cash flow analyses (Level 3 inputs). 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, term loan, senior notes and security deposits. At December 31, 2020 and 2019, the fair values of these additional financial instruments approximated their carrying values in our consolidated balance sheets due to their short term nature or floating interest rates, except as follows: December 31, 2020 December 31, 2019 Carrying Fair Carrying Fair Amount (1) Value Amount (1) Value Senior Unsecured Notes, due 2021 at 4.25 % $ — $ — $ 398,379 $ 406,838 Senior Unsecured Notes, due 2022 at 5.00 % 498,032 510,285 496,821 526,500 Senior Unsecured Notes, due 2023 at 4.50 % 499,596 505,280 499,432 520,478 Senior Unsecured Notes, due 2024 at 4.65 % 348,700 347,893 348,295 364,277 Senior Unsecured Notes, due 2024 at 4.35 % 819,546 819,328 818,075 848,847 Senior Unsecured Notes, due 2025 at 4.50 % 347,118 346,462 346,431 361,783 Senior Unsecured Notes, due 2025 at 7.50 % 789,006 926,404 — — Senior Unsecured Notes, due 2026 at 5.25 % 344,212 354,996 343,083 369,185 Senior Unsecured Notes, due 2026 at 4.75 % 446,515 448,506 445,905 464,315 Senior Unsecured Notes, due 2027 at 4.95 % 395,405 404,328 394,649 414,012 Senior Unsecured Notes, due 2027 at 5.25 % 442,370 491,918 — — Senior Unsecured Notes, due 2028 at 3.95 % 391,908 388,146 390,759 393,940 Senior Unsecured Notes, due 2029 at 4.95 % 418,102 430,064 417,307 434,248 Senior Unsecured Notes, due 2030 at 4.375 % 389,656 388,292 388,522 394,788 Total financial liabilities $ 6,130,166 $ 6,361,902 $ 5,287,658 $ 5,499,211 (1) Carrying value includes unamortized discounts and premiums and certain debt issuance costs. At December 31, 2020 and 2019, 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). F-38 Table of Contents Service Properties Trust SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2020 (dollars in millions) Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount at which Carried at Close of Period Land Building & Improvements Improvements Impairment Cost Basis Adjustment (1) Land Building & Improvements Total (2) Hotel Properties 15 Royal Sonesta $ 218 $ 1,307 $ 35 $ ( 16 ) $ ( 9 ) $ 218 $ 1,317 $ 1,535 23 Sonesta 138 292 582 ( 56 ) ( 5 ) 138 813 951 62 Courtyard 108 599 216 ( 14 ) ( 97 ) 108 704 812 60 Sonesta ES Suites 135 523 242 ( 38 ) ( 27 ) 135 700 835 35 Residence 68 326 160 ( 6 ) ( 22 ) 68 458 526 61 Simply Suites 71 383 59 — — 71 442 513 22 Hyatt Place 24 185 17 — — 24 202 226 6 Radisson Hotel 10 165 44 — — 10 209 219 2 Marriott Hotel 10 69 55 — — 10 124 134 1 Crowne Plaza 16 32 67 — — 16 99 115 9 Sonesta Select 17 44 36 — — 17 80 97 3 Country Inn and Suites by Radisson 3 35 5 — — 3 40 43 2 SpringHill Suites 3 15 11 — — 3 26 29 4 TownePlace Suites 6 24 33 ( 3 ) ( 18 ) 6 36 42 Net Lease Properties 134 TravelCenters of America 568 939 480 — — 568 1,419 1,987 45 Petro Stopping Centers 260 522 210 — — 260 732 992 11 AMC Theatres 30 55 — — — 30 55 85 14 The Great Escape 19 64 — — — 19 64 83 3 Life Time Fitness 17 56 — — — 17 56 73 5 Buehler's Fresh Foods 10 49 — — — 10 49 59 53 Pizza Hut 14 33 — — — 14 33 47 59 Heartland Dental 11 37 — — — 11 37 48 10 Norms 23 24 — — — 23 24 47 23 Express Oil Change 6 37 — — — 6 37 43 6 America's Auto Auction 7 23 4 — — 7 27 34 3 Flying J Travel Plaza 6 32 — — — 6 32 38 6 Regal Cinemas 9 25 — — — 9 25 34 4 Courthouse Athletic Club 5 28 — — — 5 28 33 45 Church's Chicken 7 25 — — — 7 25 32 2 Big Al's 3 28 — — — 3 28 31 21 Burger King 9 22 — — — 9 22 31 1 Fleet Farm 3 27 — — — 3 27 30 19 Hardee's 4 24 — — — 4 24 28 4 B&B Theatres 12 15 — — — 12 15 27 16 Martin's 7 20 — — — 7 20 27 19 Arby's 7 19 — — — 7 19 26 4 Creme de la Creme 7 18 — — — 7 18 25 20 Popeye's Chicken & Biscuits 8 17 — — — 8 17 25 6 Golden Corral 6 16 — — — 6 16 22 5 Mister Car Wash 2 19 — — — 2 19 21 6 United Supermarkets 4 17 — — — 4 17 21 16 Vacant 1 27 7 — — 1 34 35 2 Mesa Fitness 3 17 — — — 3 17 20 13 Taco Bell 4 15 — — — 4 15 19 1 CarMax 5 13 — — — 5 13 18 28 Uncle Ed's Oil Shoppe 6 12 — — — 6 12 18 4 Bonfire and Axels 2 12 — — — 2 12 14 1 Dave & Buster's 3 11 — — — 3 11 14 S-1 Table of Contents Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount at which Carried at Close of Period Land Building & Improvements Improvements Impairment Cost Basis Adjustment (1) Land Building & Improvements Total (2) 5 Pike Nursery 8 6 — — — 8 6 14 2 HHI-Formtech 3 10 — — — 3 10 13 2 Mealey's Furniture 3 10 — — — 3 10 13 5 Rite Aid 3 9 — — — 3 9 12 2 Sanford's Grub & Pub 1 10 — — — 1 10 11 1 Baptist Emergency Hospital 2 8 — — — 2 8 10 2 Eddie Merlot's 2 8 — — — 2 8 10 5 Fuddruckers 4 6 — — — 4 6 10 2 YouFit 3 7 — — — 3 7 10 1 Cermak Fresh Market 2 7 — — — 2 7 9 1 Columbus Preparatory Academy 1 8 — — — 1 8 9 12 Core & Main 4 5 — — — 4 5 9 5 Lerner and Rowe 1 8 — — — 1 8 9 4 Meineke Car Care Center 3 6 — — — 3 6 9 3 Walgreens 1 8 — — — 1 8 9 1 Austin's Park n' Pizza — 8 — — — — 8 8 1 Kohl's 2 6 — — — 2 6 8 1 LA Fitness 1 7 — — — 1 7 8 1 Marcus Theaters 3 5 — — — 3 5 8 1 Academy Sports + Outdoors 1 6 — — — 1 6 7 2 Blue Rhino 3 4 — — — 3 4 7 1 Columbus Arts & Tech Academy 1 6 — — — 1 6 7 2 Diagnostic Health 1 6 — — — 1 6 7 3 Krispy Kreme 2 5 — — — 2 5 7 2 Max & Erma's 1 6 — — — 1 6 7 3 Oregano's Pizza Bistro 1 6 — — — 1 6 7 9 Sonic Drive-In 3 4 — — — 3 4 7 2 Texas Roadhouse 3 4 — — — 3 4 7 5 Brookshire Brothers 1 5 — — — 1 5 6 2 Flying Star Cafe 1 5 — — — 1 5 6 2 Heytex USA 1 5 — — — 1 5 6 7 Hughes Supply 2 4 — — — 2 4 6 1 Jack Stack Barbeque 1 5 — — — 1 5 6 3 Jack's Family Restaurant 2 4 — — — 2 4 6 3 Wendy's 1 5 — — — 1 5 6 2 10 Box 2 3 — — — 2 3 5 1 Adult & Pediatric Orthopedics 1 4 — — — 1 4 5 2 Bricktown Brewery 1 4 — — — 1 4 5 1 ConForm Automotive 2 3 — — — 2 3 5 2 Gerber Collision & Glass 1 4 — — — 1 4 5 2 HD Supply White Cap 2 3 — — — 2 3 5 1 Multi-Tenant 1 4 — — — 1 4 5 1 Planet Fitness 1 4 — — — 1 4 5 1 RGB Eye Associates 1 4 — — — 1 4 5 1 Ashley Furniture 1 3 — — — 1 3 4 1 Boozman-Hof 2 2 — — — 2 2 4 1 Caldwell Country Chevrolet — 4 — — — — 4 4 2 Famous Dave's 1 3 — — — 1 3 4 3 Focus Child Development Center 1 3 — — — 1 3 4 1 Joe's Crab Shack 1 3 — — — 1 3 4 1 Metaldyne BSM — 4 — — — — 4 4 2 Primanti Bros. 1 3 — — — 1 3 4 1 Rainbow Kids Clinic 1 3 — — — 1 3 4 1 Renn Kirby Chevrolet Buick 1 3 — — — 1 3 4 1 Sportsman's Warehouse 1 3 — — — 1 3 4 S-2 Table of Contents Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount at which Carried at Close of Period Land Building & Improvements Improvements Impairment Cost Basis Adjustment (1) Land Building & Improvements Total (2) 2 Anixter 1 2 — — — 1 2 3 1 Applebee's 1 2 — — — 1 2 3 1 Black Angus Steakhouse 1 2 — — — 1 2 3 1 Buffalo Wild Wings 1 2 — — — 1 2 3 1 Kerry's Car Care 1 2 — — — 1 2 3 2 Long John Silver's 1 2 — — — 1 2 3 2 Monterey's Tex Mex 1 2 — — — 1 2 3 1 Ojos Locos Sports Cantina 1 2 — — — 1 2 3 2 Orscheln Farm and Home 1 2 — — — 1 2 3 2 Rick Johnson Auto & Tire 1 2 — — — 1 2 3 1 Slim Chickens 1 2 — — — 1 2 3 1 Southwest Stainless, LP — 3 — — — — 3 3 1 Spoons Place 1 2 — — — 1 2 3 1 Tractor Supply — 3 — — — — 3 3 1 What the Buck — 3 — — — — 3 3 2 Affordable Care, Inc. 1 1 — — — 1 1 2 1 Bridgestone Tire 1 1 — — — 1 1 2 2 Dollar General — 2 — — — — 2 2 2 Hooters 1 1 — — — 1 1 2 2 KFC — 2 — — — — 2 2 3 Rally's 1 1 — — — 1 1 2 1 Red Robin Gourmet Burgers 1 1 — — — 1 1 2 2 Taco Bueno 1 1 — — — 1 1 2 1 Bru Burger Bar — 1 — — — — 1 1 1 Haus Energy — 1 — — — — 1 1 1 Howlin Concrete 1 — — — — 1 — 1 1 Jack in the Box — 1 — — — — 1 1 1 Little Caesars — 1 — — — — 1 1 1 NAPA Auto Parts — 1 — — — — 1 1 1 Old Mexico Cantina — 1 — — — — 1 1 1 O'Reilly Auto Parts — 1 — — — — 1 1 1 SRS Distribution — 1 — — — — 1 1 1 The Atlanta Center for Foot & Ankle Surgery — 1 — — — — 1 1 1 Touchstone Imaging — 1 — — — — 1 1 1 Consolidated Pipe — — — — — — — — 1 Del Taco — — — — — — — — 1 Family Dollar Stores — — — — — — — — 1 Fazoli's — — — — — — — — 1 Off the Hook Seafood & More — — — — — — — — 1 Bigham Cable — — — — — — — — Other 2 8 2 — — 2 10 12 2,030 6,647 2,265 ( 133 ) ( 178 ) 2,030 8,601 10,631 Assets Held for Sale 5 Hotels (3) 3 13 2 ( 9 ) — 3 6 9 6 Net lease properties 3 5 — ( 4 ) — 3 1 4 Total ( 1,109 properties) $ 2,036 $ 6,665 $ 2,267 $ ( 146 ) $ ( 178 ) $ 2,036 $ 8,608 $ 10,644 (1) Represents reclassifications between accumulated depreciation and building & improvements made to record certain properties at fair value in accordance with GAAP. (2) Excludes $ 531 of personal property classified in our consolidated balance sheets as furniture, fixtures and equipment. (3) We have entered into an agreement to sell five hotels and we have entered into a short term lease with the buyer in anticipation of the sale. S-3 Table of Contents Service Properties Trust SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) December 31, 2020 (dollars in millions) Accumulated Depreciation (1) Date of Construction Date Acquired Life on which Depreciation in Latest Income Statement is Computed Hotel Properties 15 Royal Sonesta $ ( 256 ) 1913 through 1987 2005 through 2017 10 - 40 Years 23 Sonesta ( 191 ) 1924 through 1999 2005 through 2018 10 - 40 Years 62 Courtyard ( 346 ) 1987 through 2000 1995 through 2003 10 - 40 Years 60 Sonesta ES Suites ( 227 ) 1984 through 2000 1996 through 2017 10 - 40 Years 35 Residence ( 224 ) 1989 through 2002 1996 through 2005 10 - 40 Years 61 Simply Suites ( 219 ) 1996 through 2000 1997 through 2003 10 - 40 Years 22 Hyatt Place ( 111 ) 1992 through 2000 1997 through 2002 10 - 40 Years 6 Radisson Hotel ( 65 ) 1987 through 1990 1996 through 2018 10 - 40 Years 2 Marriott Hotel ( 67 ) 1972 through 1995 1998 through 2001 10 - 40 Years 1 Crowne Plaza ( 8 ) 1971 through 1988 2006 and 2017 10 - 40 Years 9 Sonesta Select ( 42 ) 1987 through 2000 1995 through 2003 10 - 40 Years 3 Country Inn and Suites by Radisson ( 19 ) 1987 through 1997 1996 and 2005 10 - 40 Years 2 SpringHill Suites ( 10 ) 1997 through 2000 2000 through 2001 10 - 40 Years 4 TownePlace Suites ( 15 ) 1997 through 2000 1998 through 2001 10 - 40 Years Net Lease Properties 134 TravelCenters of America ( 779 ) 1962 through 2017 2007 through 2017 10 - 40 Years 45 Petro Stopping Centers ( 391 ) 1975 through 2017 2007 through 2017 10 - 40 Years 11 AMC Theatres ( 4 ) 1993 through 2008 2019 10 - 40 Years 14 The Great Escape ( 3 ) 1986 through 2007 2019 10 - 40 Years 3 Life Time Fitness ( 3 ) 1987 through 2012 2019 10 - 40 Years 5 Buehler's Fresh Foods ( 4 ) 1985 through 2000 2019 10 - 40 Years 57 Pizza Hut ( 5 ) 1972 through 2006 2019 10 - 40 Years 59 Heartland Dental ( 2 ) 1920 through 2005 2019 10 - 40 Years 10 Norms ( 2 ) 1957 through 2014 2019 10 - 40 Years 23 Express Oil Change ( 2 ) 1970 through 2001 2019 10 - 40 Years 6 America's Auto Auction ( 2 ) 1965 through 2005 2019 10 - 40 Years 3 Flying J Travel Plaza ( 2 ) 2001 2019 10 - 40 Years 6 Regal Cinemas ( 2 ) 2005 through 2010 2019 10 - 40 Years 4 Courthouse Athletic Club ( 2 ) 1997 through 2001 2019 10 - 40 Years 45 Church's Chicken ( 2 ) 1968 through 1985 2019 10 - 40 Years 2 Big Al's ( 1 ) 2006 through 2010 2019 10 - 40 Years 21 Burger King ( 2 ) 1998 through 2004 2019 10 - 40 Years 1 Fleet Farm ( 2 ) 1979 2019 10 - 40 Years 19 Hardee's ( 2 ) 1969 through 1994 2019 10 - 40 Years 4 B&B Theatres ( 2 ) 1998 through 2004 2019 10 - 40 Years 16 Martin's ( 2 ) 1962 through 2003 2019 10 - 40 Years 19 Arby's ( 2 ) 1969 through 2005 2019 10 - 40 Years 4 Creme de la Creme ( 1 ) 1999 through 2008 2019 10 - 40 Years 20 Popeye's Chicken & Biscuits ( 2 ) 1968 through 2004 2019 10 - 40 Years 6 Golden Corral ( 2 ) 1993 through 2000 2019 10 - 40 Years 5 Mister Car Wash ( 1 ) 1960 through 2002 2019 10 - 40 Years S-4 Table of Contents Accumulated Depreciation (1) Date of Construction Date Acquired Life on which Depreciation in Latest Income Statement is Computed 6 United Supermarkets ( 2 ) 1979 through 1997 2019 10 - 40 Years 18 Vacant ( 2 ) 1962 through 2007 2019 10 - 40 Years 2 Mesa Fitness ( 1 ) 1983 through 2007 2019 10 - 40 Years 13 Taco Bell ( 1 ) 1982 through 2010 2019 10 - 40 Years 1 CarMax ( 1 ) 2005 2019 10 - 40 Years 28 Uncle Ed's Oil Shoppe ( 2 ) 1959 through 1999 2019 10 - 40 Years 4 Bonfire and Axels ( 2 ) 1995 through 1996 2019 10 - 40 Years 1 Dave & Buster's ( 1 ) 1992 2019 10 - 40 Years 5 Pike Nursery ( 1 ) 1970 through 1996 2019 10 - 40 Years 2 HHI-Formtech ( 2 ) 1952 2019 10 - 40 Years 2 Mealey's Furniture ( 1 ) 1997 through 2004 2019 10 - 40 Years 5 Rite Aid ( 1 ) 1901 through 2000 2019 10 - 40 Years 2 Sanford's Grub & Pub ( 1 ) 1928 through 2003 2019 10 - 40 Years 1 Baptist Emergency Hospital ( 1 ) 2013 2019 10 - 40 Years 2 Eddie Merlot's ( 1 ) 1997 through 2003 2019 10 - 40 Years 5 Fuddruckers ( 1 ) 1994 through 1995 2019 10 - 40 Years 2 YouFit ( 1 ) 2007 through 2008 2019 10 - 40 Years 1 Cermak Fresh Market ( 1 ) 1989 2019 10 - 40 Years 1 Columbus Preparatory Academy — 2004 2019 10 - 40 Years 12 Core & Main — 1972 through 2001 2019 10 - 40 Years 5 Lerner and Rowe — 1973 through 2007 2019 10 - 40 Years 4 Meineke Car Care Center — 1999 through 2000 2019 10 - 40 Years 3 Walgreens — 1999 through 2000 2019 10 - 40 Years 1 Austin's Park n' Pizza — 2003 2019 10 - 40 Years 1 Kohl's — 1986 2019 10 - 40 Years 1 LA Fitness — 2012 2019 10 - 40 Years 1 Marcus Theaters — 1999 2019 10 - 40 Years 1 Academy Sports + Outdoors — 2016 2019 10 - 40 Years 2 Blue Rhino — 2004 2019 10 - 40 Years 1 Columbus Arts & Tech Academy — 1980 2019 10 - 40 Years 2 Diagnostic Health — 1985 through 1997 2019 10 - 40 Years 3 Krispy Kreme — 2000 through 2004 2019 10 - 40 Years 2 Max & Erma's — 1990 through 2007 2019 10 - 40 Years 3 Oregano's Pizza Bistro — 1964 through 2006 2019 10 - 40 Years 9 Sonic Drive-In — 1987 through 2010 2019 10 - 40 Years 2 Texas Roadhouse — 2003 through 2005 2019 10 - 40 Years 5 Brookshire Brothers — 1990 through 1999 2019 10 - 40 Years 2 Flying Star Cafe — 1994 through 1999 2019 10 - 40 Years 2 Heytex USA — 2008 through 2016 2019 10 - 40 Years 7 Hughes Supply — 1993 2019 10 - 40 Years 1 Jack Stack Barbeque — 1983 2019 10 - 40 Years 3 Jack's Family Restaurant — 2008 through 2016 2019 10 - 40 Years 3 Wendy's — 1984 through 1989 2019 10 - 40 Years 2 10 Box — 1994 2019 10 - 40 Years 1 Adult & Pediatric Orthopedics — 1991 2019 10 - 40 Years 2 Bricktown Brewery — 1904 through 1984 2019 10 - 40 Years S-5 Table of Contents Accumulated Depreciation (1) Date of Construction Date Acquired Life on which Depreciation in Latest Income Statement is Computed 1 ConForm Automotive — 1987 2019 10 - 40 Years 2 Gerber Collision & Glass — 2001 through 2002 2019 10 - 40 Years 2 HD Supply White Cap — 1990 through 2001 2019 10 - 40 Years 1 Multi-Tenant — 2001 2019 10 - 40 Years 1 Planet Fitness — 2007 2019 10 - 40 Years 1 RGB Eye Associates — 2013 2019 10 - 40 Years 1 Ashley Furniture — 1973 2019 10 - 40 Years 1 Boozman-Hof — 1988 2019 10 - 40 Years 1 Caldwell Country Chevrolet — 2000 2019 10 - 40 Years 2 Famous Dave's — 1997 through 1999 2019 10 - 40 Years 3 Focus Child Development Center — 1965 through 1998 2019 10 - 40 Years 1 Joe's Crab Shack — 1997 2019 10 - 40 Years 1 Metaldyne BSM — 1960 2019 10 - 40 Years 2 Primanti Bros. — 2014 2019 10 - 40 Years 1 Rainbow Kids Clinic — 2011 2019 10 - 40 Years 1 Renn Kirby Chevrolet Buick — 2005 2019 10 - 40 Years 1 Sportsman's Warehouse — 1983 2019 10 - 40 Years 2 Anixter — 1984 through 1999 2019 10 - 40 Years 1 Applebee's — 1996 2019 10 - 40 Years 1 Black Angus Steakhouse — 1996 2019 10 - 40 Years 1 Buffalo Wild Wings — 2014 2019 10 - 40 Years 1 Kerry's Car Care — 2015 2019 10 - 40 Years 2 Long John Silver's — 1972 through 1987 2019 10 - 40 Years 2 Monterey's Tex Mex — 1979 through 1997 2019 10 - 40 Years 1 Ojos Locos Sports Cantina — 1993 2019 10 - 40 Years 2 Orscheln Farm and Home — 1977 through 1986 2019 10 - 40 Years 2 Rick Johnson Auto & Tire — 1993 2019 10 - 40 Years 1 Slim Chickens — 2013 2019 10 - 40 Years 1 Southwest Stainless, LP — 1977 through1994 2019 10 - 40 Years 1 Spoons Place — 1998 2019 10 - 40 Years 1 Tractor Supply — 2007 2019 10 - 40 Years 1 What the Buck — 1958 2019 10 - 40 Years 2 Affordable Care, Inc. — 2008 through 2010 2019 10 - 40 Years 1 Bridgestone Tire — 1998 2019 10 - 40 Years 2 Dollar General — 2012 through 2015 2019 10 - 40 Years 2 Hooters — 1997 through 1994 2019 10 - 40 Years 2 KFC — 1977 through 2006 2019 10 - 40 Years 3 Rally's — 1990 through 1992 2019 10 - 40 Years 1 Red Robin Gourmet Burgers — 1995 2019 10 - 40 Years 2 Taco Bueno — 1991 through 2003 2019 10 - 40 Years 1 Bru Burger Bar — 1996 2019 10 - 40 Years 1 Haus Energy — 1996 2019 10 - 40 Years 1 Howlin Concrete — 1975 2019 10 - 40 Years 1 Jack in the Box — 1992 2019 10 - 40 Years 1 Little Caesars — 1996 2019 10 - 40 Years 1 NAPA Auto Parts — 2001 2019 10 - 40 Years S-6 Table of Contents Accumulated Depreciation (1) Date of Construction Date Acquired Life on which Depreciation in Latest Income Statement is Computed 1 Old Mexico Cantina — 2007 2019 10 - 40 Years 1 O'Reilly Auto Parts — 2006 2019 10 - 40 Years 1 SRS Distribution — 1975 2019 10 - 40 Years 1 The Atlanta Center for Foot & Ankle Surgery — 1963 2019 10 - 40 Years 1 Touchstone Imaging — 1992 2019 10 - 40 Years 1 Consolidated Pipe — 1987 2019 10 - 40 Years 1 Del Taco — 1992 2019 10 - 40 Years 1 Family Dollar Stores — 1988 2019 10 - 40 Years 1 Fazoli's — 1982 2019 10 - 40 Years 1 Off the Hook Seafood & More — 2007 2019 10 - 40 Years 1 Bigham Cable — 1982 2019 10 - 40 Years Total ( 1,109 properties) ( 3,047 ) (1) Excludes accumulated depreciation of $ 232 related to personal property classified in our consolidated balance sheets as furniture, fixtures and equipment. S-7 Table of Contents SERVICE PROPERTIES TRUST NOTES TO SCHEDULE III December 31, 2020 (dollars in thousands) (A) The change in total cost of properties for the period from January 1, 2018 to December 31, 2020 is as follows: 2020 2019 2018 Balance at beginning of year $ 10,716,233 $ 8,820,346 $ 8,778,907 Additions: acquisitions and capital expenditures 99,141 1,983,380 324,227 Dispositions ( 145,836 ) — ( 62,923 ) Reclassification of properties held for sale ( 38,978 ) ( 87,493 ) ( 219,865 ) Balance at close of year $ 10,630,560 $ 10,716,233 $ 8,820,346 (B) The change in accumulated depreciation for the period from January 1, 2018 to December 31, 2020 is as follows: 2020 2019 2018 Balance at beginning of year $ 2,851,121 $ 2,574,297 $ 2,409,416 Additions: depreciation expense 364,636 305,441 304,224 Dispositions ( 143,814 ) ( 28,617 ) ( 62,923 ) Reclassification of properties held for sale ( 24,927 ) — ( 76,420 ) Balance at close of year $ 3,047,016 $ 2,851,121 $ 2,574,297 (C) The aggregate cost tax basis for federal income tax purposes of our real estate properties was $ 8,316,892 on December 31, 2020. S-8 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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/ John G. Murray John G. Murray President and Chief Executive Officer Dated: March 1, 2021 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ John G. Murray Managing Trustee, President and Chief Executive Officer March 1, 2021 John G. Murray /s/ Brian E. Donley Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) March 1, 2021 Brian E. Donley /s/ Laurie B. Burns Independent Trustee March 1, 2021 Laurie B. Burns /s/ Robert E. Cramer Independent Trustee March 1, 2021 Robert E. Cramer /s/ Donna D. Fraiche Independent Trustee March 1, 2021 Donna D. Fraiche /s/ John L. Harrington Independent Trustee March 1, 2021 John L. Harrington /s/ William A. Lamkin Independent Trustee March 1, 2021 William A. Lamkin /s/ Adam D. Portnoy Managing Trustee March 1, 2021 Adam D. Portnoy