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, 2021 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, 2021. 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, 2021, our internal control over financial reporting is effective. 80 Table of Contents Deloitte & Touche LLP, the independent registered public accounting firm that audited our 2021 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. 81 Table of Contents Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 82 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, 2021. 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. 1,761,393 (1) Equity compensation plans not approved by securityholders None. None. None. Total None. None. 1,761,393 (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. 83 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 (PCAOB ID No. 34 ) F- 1 Report of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID No. 42 ) F-2 Consolidated Balance Sheets as of December 31, 202 1 and 20 20 F-4 Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended December 31, 20 21 F-5 Consolidated Statements of Shareholders' Equity for each of the three years in the period ended December 31, 20 21 F-7 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 20 21 F-9 Notes to Consolidated Financial Statements F-11 Schedule III - Real Estate and Accumulated Depreciation as of December 31, 20 21 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 27.5% of our real estate properties, at cost, as of December 31, 2021. 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. 84 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 23, 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.) 85 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 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.) 4.20 Supplemental Indenture, dated as of January 29, 2021, among the Company, SVC Gatehall Drive TRS 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 March 31, 2021.) 4.21 Supplemental Indenture, dated as of July 8, 2021, among the Company, SVCN 1 LLC, SVCN 4 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, 2021.) 4.22 Supplemental Indenture, dated as of October 28, 2021, among the Company, SVC Minneapolis TRS 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, 2021.) 4.23 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. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.) 4.24 Supplemental Indenture, dated as of January 29, 2021, among the Company, SVC Gatehall Drive TRS LLC and U.S. Bank National Association, relating to the Company’s 5.50% Senior Notes due 2027. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.) 4.25 Supplemental Indenture, dated as of July 8, 2021, among the Company, SVCN 1 LLC, SVCN 4 LLC and U.S. Bank National Association, relating to the Company’s 5.50% Senior Notes due 2027. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.) 4.26 Supplemental Indenture, dated as of October 28, 2021, among the Company, SVC Minneapolis TRS LLC and U.S. Bank National Association, relating to the Company’s 5.50% Senior Notes due 2027. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.) 4.27 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.) 4.28 Description of Securities. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.) 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 First Amendment to Second Amended and Restated Business Management Agreement, effective as of August 1, 2021, between the Company and The RMR Group LLC. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.) 10.3 Third Amended and Restated Property Management Agreement, dated as of June 22, 2021, between the Company and the RMR Group LLC. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.) 10.4 Summary of Trustee Compensation. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 17, 2021.) 10.5 2012 Equity Compensation Plan. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 14, 2012.) 10.6 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.) 10.7 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.) 10.8 Form of Share Award Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.) 10.9 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.) 10.10 Form of Indemnification Agreement. (+) (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) 86 Table of Contents 10.11 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 15, 2018.) 10.12 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.) 10.13 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.) 10.14 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.) 10.15 Fourth Amendment to Second Amended and Restated Credit Agreement, dated as of June 11, 2021, 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 June 30, 2021.) 10.16 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.) 10.17 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.) 10.18 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.) 10.19 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.) 10.20 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.) 10.21 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.) 10.22 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.) 10.23 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.) 10.24 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.) 10.25 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.) 10.26 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.) 10.27 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.) 10.28 Representative Form of Amended and Restated Management Agreement among Sonesta International Hotels Corporation, Cambridge TRS, Inc., HPT CY TRS, Inc., HPT TRS IHG-2, Inc. and HRP TRS MRP, Inc. (Sale Hotels) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 10, 2022). (Schedules thereto filed herewith.) (Schedule of applicable agreements filed herewith.) 87 Table of Contents 10.29 Amended, Restated and Consolidated Pooling Agreement for Sale Hotels, dated as of January 1, 2022, 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. (Sale Hotels) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 10, 2022) . ( Schedules thereto f iled herewith.) 10.30 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.) 10.31 Representative Form of Amended and Restated Management Agreement among Sonesta International Hotels Corporation, Cambridge TRS, Inc., HPT CY TRS, Inc., HPT TRS IHG-2, Inc. and HRP TRS MRP, Inc. (Retained Hotels) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 10, 2022 ) . (Schedules thereto filed herewith.) (Schedule of applicable agreements filed herewith.) 10.32 Amended, Restated and Consolidated Pooling Agreement, dated as of January 1, 2022, 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. (Retained Hotels) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 10, 2022). (Schedules thereto filed herewith.) 10.33 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.) 10.34 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. 1). (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. 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.) 10.36 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. 2). (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. 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.) 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. 3). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.) 10.39 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.) 10.40 First Amendment to Second Amended and Restated Lease Agreement No. 4, dated as of March 9, 2021, 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 March 31, 2021 . ) 10.41 Second Amendment to Second Amended and Restated Lease Agreement No. 4, dated as of November 9, 2021, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Filed herewith.) 10.42 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.) 10.43 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.) 10.44 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.) 88 Table of Contents 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.) 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. 89 Table of Contents Item 16. Form 10-K Summary None. 90 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 sheets of Service Properties Trust (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income (loss), shareholders' equity, and cash flows for the years ended December 31, 2021 and 2020, 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, 2021 and 2020, and the results of its operations and its cash flows for the years ended December 31, 2021 and 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, 2021, 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 February 24, 2022, 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 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. 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 13 to the financial statements Critical Audit Matter Description 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. Impairment indicators may include declining tenant or resident occupancy, weak or declining profitability from the property, decreasing tenant cash flows or liquidity, the Company’s decision to dispose of an asset before the end of its estimated useful life, and legislative, market or industry changes that could permanently reduce the value of an asset. If indicators of impairment are identified for any real estate asset, the Company evaluates the recoverability of that real estate asset by comparing undiscounted future cash flows expected to be generated by the real estate asset over the Company’s expected remaining hold period to the respective carrying amount. The Company’s undiscounted future cash flows analysis requires management to make significant estimates and assumptions related to expected remaining hold periods, market rents, and terminal capitalization rates. 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 the significant estimates and assumptions related to expected remaining hold periods, market rents, and terminal capitalization rates within management’s undiscounted future cash flows analysis which are sensitive to future market or industry considerations. 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 for each real estate asset or group of assets with impairment indicators 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 assumptions utilized in estimating the undiscounted future cash flows. • We evaluated the undiscounted cash flow analysis including estimates of expected remaining hold period, market rents, and terminal capitalization rates for each real estate asset or group of assets with impairment indicators by (1) evaluating the source information and assumptions used by management and (2) comparing management’s projections to external market sources and evidence obtained in other areas of our audit. • We evaluated the reasonableness of management’s undiscounted future cash flows analysis by developing an independent expectation of future undiscounted cash flows based on third party market data and compared that independent estimate to the carrying amount of the real estate asset or group of assets with indicators of impairment. We compared our analysis of the recoverability of the real estate asset or group of assets to the Company's analysis. • We made inquiries of management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the expected remaining hold period and other cash flow assumptions for the properties. /s/ Deloitte & Touche LLP Boston, Massachusetts February 24, 2022 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, 2021, 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, 2021, 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, 2021, of the Company and our report dated February 24, 2022, 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 February 24, 2022 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 statements of comprehensive income, shareholders' equity and cash flows of Service Properties Trust (the “Company”) for the year 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 results of its operations and its cash flows for the year 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 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. /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, 2021 2020 ASSETS Real estate properties: Land $ 1,918,385 $ 2,030,440 Buildings, improvements and equipment 8,307,248 9,131,832 Total real estate properties, gross 10,225,633 11,162,272 Accumulated depreciation ( 3,281,659 ) ( 3,280,110 ) Total real estate properties, net 6,943,974 7,882,162 Acquired real estate leases and other intangibles, net 283,241 325,845 Assets held for sale 515,518 13,543 Cash and cash equivalents 944,043 73,332 Restricted cash 3,375 18,124 Due from related persons 48,168 55,530 Other assets, net 414,996 318,783 Total assets $ 9,153,315 $ 8,687,319 LIABILITIES AND SHAREHOLDERS’ EQUITY Revolving credit facility $ 1,000,000 $ 78,424 Senior unsecured notes, net 6,143,022 6,130,166 Accounts payable and other liabilities 433,448 345,373 Due to related persons 21,539 30,566 Total liabilities 7,598,009 6,584,529 Commitments and contingencies Shareholders’ equity: Common shares of beneficial interest, $ .01 par value; 200,000,000 shares authorized; 165,092,333 and 164,823,833 shares issued and outstanding, respectively 1,651 1,648 Additional paid in capital 4,552,558 4,550,385 Cumulative other comprehensive income (loss) 779 ( 760 ) Cumulative net income available for common shareholders 2,635,660 3,180,263 Cumulative common distributions ( 5,635,342 ) ( 5,628,746 ) Total shareholders’ equity 1,555,306 2,102,790 Total liabilities and shareholders’ equity $ 9,153,315 $ 8,687,319 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, 2021 2020 2019 Revenues: Hotel operating revenues $ 1,104,678 $ 875,098 $ 1,989,173 Rental income 390,902 390,156 326,975 Total revenues 1,495,580 1,265,254 2,316,148 Expenses: Hotel operating expenses 1,010,737 682,804 1,410,927 Other operating expenses 15,658 15,208 8,357 Depreciation and amortization 485,965 498,908 428,448 General and administrative 53,439 50,668 54,639 Transaction related costs 64,764 15,100 1,795 Loss on asset impairment 78,620 55,756 39,296 Total expenses 1,709,183 1,318,444 1,943,462 Gain on sale of real estate, net 11,522 2,261 159,535 Dividend income — — 1,752 Gain on insurance settlement — 62,386 — Unrealized gains (losses) on equity securities, net 22,535 19,882 ( 40,461 ) Interest income 664 284 2,215 Interest expense (including amortization of debt issuance costs and debt discounts and premiums of $ 21,036 , $ 14,870 and $ 11,117 , respectively) ( 365,721 ) ( 306,490 ) ( 225,126 ) Loss on early extinguishment of debt — ( 9,394 ) ( 8,451 ) Income (loss) before income taxes and equity in earnings (losses) of an investee ( 544,603 ) ( 284,261 ) 262,150 Income tax benefit (expense) 941 ( 17,211 ) ( 2,793 ) Equity in earnings (losses) of an investee ( 941 ) ( 9,910 ) 393 Net income (loss) ( 544,603 ) ( 311,382 ) 259,750 Other comprehensive income (loss): Equity interest in investee’s unrealized gains (losses) 1,539 ( 760 ) 91 Other comprehensive income (loss) 1,539 ( 760 ) 91 Comprehensive income (loss) $ ( 543,064 ) $ ( 312,142 ) $ 259,841 Weighted average common shares outstanding (basic) 164,566 164,422 164,312 Weighted average common shares outstanding (diluted) 164,566 164,422 164,340 Net income (loss) available for common shareholders per common share (basic and diluted) $ ( 3.31 ) $ ( 1.89 ) $ 1.58 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) 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, 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 Net loss — — — — ( 544,603 ) — ( 544,603 ) Equity in unrealized gains of investees — — — — — 1,539 1,539 Common share grants 340,700 3 — 2,964 — — 2,967 Common share repurchases and forfeitures ( 72,200 ) — — ( 791 ) — — ( 791 ) Distributions — — ( 6,596 ) — — — ( 6,596 ) Balance at December 31, 2021 165,092,333 $ 1,651 $ ( 5,635,342 ) $ 4,552,558 $ 2,635,660 $ 779 $ 1,555,306 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, 2021 2020 2019 Cash flows from operating activities: Net income (loss) $ ( 544,603 ) $ ( 311,382 ) $ 259,750 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 485,965 498,908 428,448 Amortization of debt issuance costs and debt discounts and premiums as interest 21,036 14,870 11,117 Straight line rental income 2,621 714 10,719 Security deposits utilized or replenished — ( 109,162 ) ( 23,549 ) Loss on early extinguishment of debt — 9,394 8,451 Loss on asset impairment 78,620 55,756 39,296 Unrealized (gains) losses on equity securities, net ( 22,535 ) ( 19,882 ) 40,461 Equity in (earnings) losses of an investee 941 9,910 ( 393 ) Distribution of earnings from Affiliates Insurance Company — — 2,423 Gain on sale of real estate, net ( 11,522 ) ( 2,261 ) ( 159,535 ) Gain on insurance settlement — ( 62,386 ) — Deferred income taxes ( 1,688 ) 13,850 ( 127 ) Other non-cash income expense, net ( 2,625 ) ( 2,558 ) ( 614 ) Changes in assets and liabilities: Due from related persons ( 5,875 ) ( 33 ) 3,272 Other assets 60,182 ( 78,340 ) ( 11,385 ) Accounts payable and other liabilities ( 5,061 ) 2,296 60,484 Due to related persons ( 5,552 ) 17,910 ( 51,096 ) Net cash provided by operating activities 49,904 37,604 617,722 Cash flows from investing activities: Real estate acquisitions and deposits ( 7,709 ) ( 7,090 ) ( 2,713,191 ) Real estate improvements ( 95,017 ) ( 69,082 ) ( 150,531 ) Hotel managers’ purchases with restricted cash ( 24,565 ) ( 153,626 ) ( 208,241 ) Hotel manager’s deposit of insurance proceeds into restricted cash — 22,488 25,000 Net proceeds from sale of real estate 51,412 167,542 816,450 Net proceeds from sale of equity securities — — 93,892 Investment in Sonesta ( 25,443 ) ( 5,314 ) — Investment in TA — ( 7,011 ) — Distributions in excess of earnings from Affiliates Insurance Company 12 286 6,577 Net cash used in investing activities ( 101,310 ) ( 51,807 ) ( 2,130,044 ) Cash flows from financing activities: Proceeds from issuance of senior unsecured notes, net of discounts and premiums — 1,250,000 1,693,879 Repayment of senior unsecured notes — ( 405,971 ) — Repayment of term loan — ( 400,000 ) — Borrowings under revolving credit facility 984,027 1,189,094 1,124,000 Repayments of revolving credit facility ( 62,451 ) ( 1,487,670 ) ( 924,000 ) Debt issuance costs ( 6,822 ) ( 26,903 ) ( 21,882 ) Repurchase of common shares ( 790 ) ( 346 ) ( 800 ) Distributions to common shareholders ( 6,596 ) ( 93,804 ) ( 353,619 ) Net cash provided by financing activities 907,368 24,400 1,517,578 Increase in cash and cash equivalents and restricted cash 855,962 10,197 5,256 Cash and cash equivalents and restricted cash at beginning of year 91,456 81,259 76,003 Cash and cash equivalents and restricted cash at end of year $ 947,418 $ 91,456 $ 81,259 F-8 Table of Contents Year Ended December 31, 2021 2020 2019 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 $ 944,043 $ 73,332 $ 27,633 Restricted cash 3,375 18,124 53,626 Total cash and cash equivalents and restricted cash $ 947,418 $ 91,456 $ 81,259 Supplemental cash flow information: Cash paid for interest $ 344,043 $ 281,097 $ 191,155 Cash paid for income taxes 3,412 2,117 2,927 Non-cash investing activities: Real estate improvements accrued, not paid $ 7,777 $ 5,684 $ 13,595 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, 2021 (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, 2021, we owned, directly and through subsidiaries, 303 hotels and 788 net lease properties. At December 31, 2021, our 303 hotels were managed by subsidiaries of the following companies: Sonesta Holdco Corporation, or Sonesta, ( 261 hotels), Hyatt Hotels Corporation, or Hyatt ( 17 hotels), Radisson Hospitality, Inc., or Radisson ( eight hotels), Marriott International, Inc., or Marriott ( 16 hotels) and InterContinental Hotels Group, plc, or IHG ( one hotel). At December 31, 2021, we owned 788 net lease properties with 174 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. Impact of COVID-19 Since March 2020, the lodging industry and certain other industries in which our managers and certain tenants operate have been adversely impacted by the COVID-19 global pandemic, along with federal, state and local government mandates intended to contain and mitigate the spread of COVID-19 and market reactions to the pandemic. The effects of COVID-19 continue to have a significant negative impact on our results of operations, financial position and cash flow. Although lodging demand improved during the year ended December 31, 2021 when compared to 2020 levels, we do not know when or if lodging business levels will return to historical pre-pandemic levels. To mitigate the effects of the pandemic and the increased variability in operating cashflows from our hotels, we continue to work with our hotel managers to contain costs where possible. We are prioritizing, deferring, or strategically planning capital improvements to mitigate potential disruptions to hotel results. We also continue to pay only a nominal quarterly dividend of $ 0.01 per common share to preserve our liquidity. As of February 22, 2022, we have $ 959,467 of cash or cash equivalents. We also have entered agreements to sell 45 properties for an aggregate sales price of $ 402,365 and have letters of intent or are in the process of marketing 43 additional properties with an aggregate carrying value of $ 150,962 . Our $ 1,000,000 revolving credit facility matures on July 15, 2022 and we have $ 500,000 of unsecured senior notes due on August 15, 2022. We currently expect we will be able to either repay or extend the maturity of our debt coming due in 2022. We believe that our current financial resources, actions we have taken and are in the process of taking and our expectations as to the future performance of the lodging industry and the industries in which our net lease retail tenants operate and our fully collateralized revolving credit facility will provide us sufficient liquidity and enable us to withstand the COVID-19 pandemic and its aftermath. See Notes 4 and 6 for additional information regarding our asset sales and debt. 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. 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 $ 113,705 and $ 118,862 as of December 31, 2021 and 2020, respectively, and consist primarily of amounts due from and working capital advances to certain of our hotel managers. The liabilities of our TRSs were $ 42,432 and $ 70,240 as of December 31, 2021 and 2020, 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 F-10 Table of Contents 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, 2021 and 2020, we recorded $ 78,620 and $ 55,756 , 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, 2021 and 2020, our intangible assets and liabilities were as follows: As of December 31, 2021 2020 Assets: Tradenames and trademarks $ 89,375 $ 89,375 Above market operating leases, net of accumulated amortization of $ 64,471 and $ 55,220 , respectively 184,943 224,510 Below market ground leases, net of accumulated amortization of $ 17,367 and $ 16,226 , respectively 7,746 8,934 Other, net of accumulated amortization of $ 382 and $ 1,188 , respectively 1,177 3,026 $ 283,241 $ 325,845 Liabilities: Below market operating leases, net of accumulated amortization of $ 473 and $ 559 , respectively $ 1,147 $ 1,691 Above market ground leases, net of accumulated amortization of $ 317 and $ 6,180 , respectively 46 416 $ 1,193 $ 2,107 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, 2021, 2020 and 2019, amortization relating to intangible assets was $ 41,648 , $ 52,264 and $ 1,757 , respectively, and amortization relating to intangible liabilities was $ 433 , $ 2,403 and $ 441 for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, the weighted average amortization period for capitalized above market leases and below market lease values were 7.2 years and 4.5 years, respectively. As of December 31, 2021, 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 2022 $ 28,478 $ 1,256 $ ( 216 ) $ 53 2023 25,695 1,234 ( 189 ) 57 2024 22,151 812 ( 189 ) 78 2025 20,032 798 ( 129 ) 78 2026 14,246 796 ( 125 ) 78 Thereafter 74,341 2,850 ( 299 ) 787 $ 184,943 $ 7,746 $ ( 1,147 ) $ 1,131 F-11 Table of Contents 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 consists of amounts escrowed pursuant to the terms of our hotel management agreements to fund capital improvements at our hotels and proceeds from the sale of certain of our assets to be used for general business purposes pursuant to our credit agreement. 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, 2021 and 2020, debt issuance costs for our revolving credit facility were $ 14,879 and $ 8,163 , respectively, and accumulated amortization of debt issuance costs for our revolving credit facility were $ 8,796 and $ 722 , 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, 2021 and 2020, debt issuance costs, net of accumulated amortization, for our senior notes were $ 33,736 and $ 41,974 , respectively. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility and senior notes as of December 31, 2021, are as follows: Future Amortization of Debt Issuance Costs 2022 $ 14,280 2023 7,667 2024 6,828 2025 4,957 2026 2,842 Thereafter 3,245 $ 39,819 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. Certain of Sonesta’s officers 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, 2021, we owned 1,184,797 common shares of TA. 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 $ 2,621 , $ 714 and $ 10,719 during the years ended December 31, 2021, 2020 and 2019, respectively, 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 $ 20,655 and $ 33,902 and other assets, net, includes $ 26,881 and $ 16,264 of straight line rent receivables at December 31, 2021 and 2020, respectively. F-12 Table of Contents 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 $ 7,085 , $ 3,277 and $ 4,238 during the years ended December 31, 2021, 2020 and 2019, 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, 2021, we had two reportable segments: hotel investments and net lease investments. Reclassifications. Reclassifications have been made to the prior years’ consolidated financial statements to conform to the current year’s presentation. 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 2018 through 2021 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. 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, 2021 2020 2019 (in thousands) Weighted average common shares for basic earnings per share 164,566 164,422 164,312 Effect of dilutive securities: Unvested share awards — — 28 Weighted average common shares for diluted earnings per share 164,566 164,422 164,340 F-13 Table of Contents Note 4. Real Estate Properties As of December 31, 2021, we owned 303 hotels with 48,346 rooms or suites and 788 service-oriented retail properties with 13,522,060 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 $ 10,741,151 , including $ 515,518 classified as held for sale as of December 31, 2021. Our real estate properties, at cost after impairments, consisted of land of $ 1,918,385 , buildings and improvements of $ 7,871,626 and furniture, fixtures and equipment of $ 435,622 , as of December 31, 2021; and 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. We funded capital improvements to certain of our properties of $ 103,630 , $ 136,155 and $ 242,571 , during 2021, 2020 and 2019, respectively. 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. At December 31, 2021, 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 34 years (range of 13 to 66 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 $ 319 per year; future rents under two ground leases have been prepaid. Sixteen ( 16 ) 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 29 years with rents averaging $ 424 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. F-14 Table of Contents 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 Property 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, 2021 3/9/2021 Nashville, TN Net Lease — $ 7,709 $ 7,709 $ — $ — $ — $ — $ — 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 (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, 2021, we had $ 4,310 of unspent leasing related obligations assumed as a part of the SMTA Transaction. Dispositions During the years ended December 31, 2021, 2020 and 2019 we sold 18 , 39 and 150 properties, respectively, for an aggregate sales price of $ 52,332 , $ 174,172 , and $ 821,212 respectively, excluding closing costs, as presented in the table below. The sales of these properties in the table below 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). Year of Sale Property Type Number of Properties Rooms or Suites/Square Feet Gross Sales Price Gain/ (Loss) on Sale Properties sold during the year ended December 31, 2021 2021 Hotels 7 669 $ 40,552 $ 9,590 2021 Net Lease 11 97,276 11,780 1,932 18 669 / 97,276 $ 52,332 $ 11,522 Properties sold during the year ended December 31, 2020 2020 Hotels 18 2,046 $ 85,787 $ 17,550 2020 Net Lease 21 1,375,483 88,385 ( 15,289 ) 39 2,046 / 1,375,483 $ 174,172 $ 2,261 Properties sold during the year ended December 31, 2019 2019 Net Lease 150 3,314,724 $ 821,212 $ 159,535 In January 2022, we sold one hotel with 295 rooms and a carrying value of $ 12,016 for a sales price of $ 19,000 , excluding closing costs. We have also entered into agreements to sell 45 hotels with 5,680 rooms and an aggregate carrying value of $ 352,540 for an aggregate sales price of $ 402,365 , excluding closing costs and have letters of intent or are in the process of marketing 43 additional properties with an aggregate carrying value of $ 150,962 . We currently expect the sale of these properties to be completed by the end of the second quarter of 2022. F-15 Table of Contents As of December 31, 2021, we had 67 hotels with 8,667 rooms with an aggregate carrying value of $ 503,078 classified as held for sale and 22 net lease properties with 154,206 square feet with an aggregate carrying value of $ 12,440 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, 2021, we owned 303 hotels included in six operating agreements and 788 service-oriented retail properties net leased to 174 tenants. We do not operate any of our properties. Hotel agreements Sonesta agreement. As of December 31, 2021, Sonesta operated 261 of the 303 hotels we then owned, which comprised approximately 50.9 % of our total historical real estate investments, including 42 of our full-service hotels, 156 extended stay hotels, and 63 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 owner's priority 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 agreed to sell, rebrand or repurpose our 39 extended stay hotels then managed by Sonesta. We subsequently decided to suspend pursuing the sale of these 39 hotels based on market conditions; however, as noted below, we and Sonesta decided to sell 68 of our hotels managed by Sonesta, which includes many of these 39 hotels we had previously targeted for sale, rebranding or repurposing; we subsequently sold one of the 68 hotels in December 2021; see Note 4 for further information regarding that sale; • The annual owner’s priority returns due for the 14 full-service hotels that Sonesta then managed and 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 5 % of the hotel gross revenues of each of our 14 full-service hotels then managed by Sonesta will be escrowed for future capital expenditures as FF&E reserves, subject to available cash flows after payment of the annual owner’s priority 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. 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), or Destinations, 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 and March 2021, we transitioned the branding and management of 88 hotels to Sonesta from Marriott. 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 were scheduled to 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 and pooling agreements and together with the legacy management agreements and legacy pooling agreements, as applicable, the Sonesta agreements. In June 2021, we transitioned the branding and management of five hotels to Sonesta from Hyatt and on F-16 Table of Contents November 1, 2021, we transitioned the branding and management of one additional hotel to Sonesta from Radisson. We added these hotels to our conversion hotel management and pooling agreements with Sonesta. Our Sonesta agreements provided that we be paid a fixed annual owner’s priority 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 Sonesta agreements further provide that we are paid an additional return equal to 80 % of the remaining operating profits, as defined therein, after reimbursement of owner or manager advances, FF&E reserve escrows and Sonesta’s incentive fee, if applicable. We realized returns from our Sonesta hotels of $ 53,853 during the year ended December 31, 2021. Our Sonesta hotels generated net operating losses of $ 65,277 during the year ended December 31, 2020. We realized returns from our Sonesta hotels of $ 67,592 during the year ended December 31, 2019. 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 managed by Sonesta and an incentive management fee equal to 20.0 % of operating profits remaining after reimbursement to us and to Sonesta of certain advances, payment of our owner's priority returns and funding of FF&E reserve escrows. Sonesta’s incentive management fee, but not its other fees, is earned only after our owner's priority 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 $ 84,926 , $ 17,734 and $ 36,169 for the years ended December 31, 2021, 2020 and 2019, respectively. 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 $ 2,196 , $ 1,571 and $ 3,320 for the years ended December 31, 2021, 2020 and 2019, 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. Our Sonesta agreements require us to fund capital expenditures that we approve 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 owner's priority 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 years ended December 31, 2021, 2020 and 2019 under our Sonesta agreements. We incurred capital expenditures for certain hotels included in our Sonesta agreements of $ 93,472 , $ 62,963 and $ 114,081 during the years ended December 31, 2021, 2020 and 2019, respectively. We owed Sonesta $ 17,248 , $ 26,096 and $ 15,537 for 2021 capital expenditure and reimbursements or for a previous overpayment of estimated owner's priority returns advanced at December 31, 2021, 2020 and 2019, respectively. Sonesta owed us $ 4,592 for 2021 owner’s priority returns as of December 31, 2021. 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. We are required to maintain working capital for each of our hotels managed by Sonesta and have advanced a fixed amount based on the number of rooms in each hotel to meet the cash needs for hotel operations. We had advanced $ 56,697 and $ 41,514 of initial working capital to Sonesta as of December 31, 2021 and 2020, respectively. These amounts are included in other assets in our consolidated balance sheets. Any remaining working capital would be returned to us upon termination in accordance with the terms of our Sonesta agreement. Amended and Restated Management and Pooling Agreements with Sonesta On January 7, 2022, we and Sonesta amended and restated our management agreements effective January 1, 2022. As of that date, we owned 261 hotels managed by Sonesta and 67 of these hotels are expected to be sold, or the sale hotels. Among other things, the amendments to the agreements between us and Sonesta for 194 hotels, or the retained hotels, are as follows: • The term for the retained hotels expires on January 31, 2037 and includes two 15 -year renewal options. F-17 Table of Contents • All retained hotels are subject to a pooling agreement that combines the management agreements for the retained hotels for purposes of calculating gross revenues, hotel operating expenses, fees and distributions and the owner’s priority return due to us. • The owner’s priority return for the retained hotels is initially set at $ 325,200 annually. We have the right to terminate Sonesta’s management of specific hotels that we own if minimum performance thresholds are not met starting in 2023. • We will renovate the retained hotels to comply with agreed upon brand standards. As we advance such funding or fund other capital expenditures, the aggregate annual owner’s priority return due to us will increase by 6 % of the amounts funded. • Trade area restrictions by hotel brand have been added to define boundaries to protect our owned hotels in response to Sonesta increasing its franchising and third-party management activities. In general, we and Sonesta may terminate a management agreement for a retained hotel for events of default, casualty and condemnation events, although Sonesta may not terminate for certain events of default. We also have the right to terminate a management agreement for a retained hotel if minimum performance thresholds are not met starting in 2023 for any three of four applicable consecutive years. We and Sonesta can terminate a management agreement due to an event of default of the other party, although Sonesta may not terminate for certain events of default. Pursuant to the management agreement, we or Sonesta may be obligated to pay the other party damages if the terminating party terminates a management agreement due to the other party’s event of default. For the sale hotels, the term was extended to the earlier of December 31, 2022 (or until the applicable hotel has been sold) and the FF&E reserve funding requirement was removed. We can terminate a management agreement due to a Sonesta event of default. Pursuant to the management agreement, Sonesta may be obligated to pay us damages if we terminate a management agreement for a sale hotel due to Sonesta’s event of default. Our owner’s priority return will be reduced by the current owner’s priority return for a sale hotel once sold. The total owner’s priority for all the sale hotels is $ 84,653 . The sale hotels are subject to a pooling agreement that combines the management agreements for the sale hotels for purposes of calculating gross revenues, hotel operating expenses, fees and distributions and the owner’s priority return due to us. Accounting for Investment in Sonesta: We account for our 34.0 % non-controlling interest in Sonesta under the equity method of accounting. Our investment in Sonesta had a carrying value of $ 62,687 and $ 36,646 as of December 31, 2021 and 2020, respectively. 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 $ 260 and $ 217 in the years ended December 31, 2021 and 2020, respectively. In March 2021, we funded a $ 25,443 capital contribution to Sonesta related to its acquisition of Red Lion Hotels Corporation to maintain our pro rata ownership. We recognized losses of $ 941 and $ 9,910 related to our investment in Sonesta for the years ended December 31, 2021 and 2020, respectively. These amounts are included in equity in earnings (losses) of an investee in our consolidated statements of comprehensive income. 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 $ 2,484 and $ 2,070 for the year ended December 31, 2021 and 2020, respectively, for amortization of this liability. As of December 31, 2021 and 2020, the unamortized balance of this liability was $ 37,447 and $ 39,930 , respectively. See Note 9 for further information regarding our relationship, agreements and transactions with Sonesta. Hyatt agreement. On June 7, 2021, we and Hyatt amended our Hyatt agreement. Under our Hyatt agreement, as amended, Hyatt will continue to manage 17 of the hotels we own for a 10 year term effective April 1, 2021. Our amended Hyatt agreement sets our annual owner's priority return at $ 12,000 and Hyatt provided us with a new $ 30,000 limited guarantee for 75 % of the aggregate annual owner's priority returns due to us beginning in 2023. Under our amended Hyatt agreement, a management fee of 5 % of gross room revenues payable to Hyatt will be an operating cost paid senior to our owner's priority return. Hyatt may also earn a 20 % incentive management fee after payment of our annual owner's priority returns and reimbursement of certain advances, if any. We also agreed to fund approximately $ 50,000 of renovations that are expected to be completed by the end of 2022. As described above, we transitioned the branding and management of the remaining five hotels that Hyatt previously managed to Sonesta in June 2021. F-18 Table of Contents We realized returns of $ 9,388 during the year ended December 31, 2021 and $ 22,037 for each of the years ended December 31, 2020 and 2019, respectively, under this agreement. Hyatt had previously provided us with a guaranty, which was limited to $ 50,000 under the previous agreement. 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. Any returns we receive from Hyatt are currently limited to the hotels’ available cash flows, if any, after payment of operating expenses. During the year ended December 31, 2021, we expensed $ 3,700 of working capital we previously funded under our Hyatt agreement because the amount is no longer expected to be recoverable. This amount is included in transaction related costs in our consolidated statement of income (loss). Radisson agreement . On November 1, 2021, we amended our Radisson agreement. Under our Radisson agreement, as amended, Radisson will continue to manage eight of the hotels we own for a 10 year term effective August 1, 2021. Our amended Radisson agreement sets our annual owner's priority returns at $ 10,200 and Radisson provided us with a new $ 22,000 limited guarantee for 75 % of the aggregate annual owner's priority returns due to us beginning in 2023. Under our amended Radisson agreement, a management fee of 5 % of gross room revenues for each hotel operated under the Country Inn & Suites brand and a management fee of 3 % of gross room revenues for each hotel managed under the Radisson Hotel brand payable to Radisson will be an operating cost paid senior to our owner's priority returns. Radisson may also earn a 20 % incentive management fee after payment of our annual owner's priority returns and reimbursement of certain advances, if any. We also agreed to fund approximately $ 12,000 of renovations that are expected to be completed by the end of 2022. As described above, we transitioned the management and branding of the ninth hotel that Radisson previously managed to Sonesta on November 1, 2021. We realized returns of $ 11,364 , $ 20,456 and $ 20,056 during the years ended December 31, 2021, 2020 and 2019, respectively, under this agreement. Radisson had previously provided us with a guaranty, which was limited to $ 47,523 . During the year ended December 31, 2021, the hotels under our Radisson agreement generated cash flows that were less than the minimum returns due to us and Radisson made $ 13,238 of guaranty payments to cover part of the shortfall and the Radisson guaranty was exhausted. Marriott agreement . As of January 1, 2021, Marriott managed 105 of our hotels under agreements we had terminated in 2020 for Marriott’s failure to pay the cumulative shortfall between the payments we had received and 80 % of the cumulative priority returns due to us in accordance with the agreement. We transitioned the branding and management of 88 Marriott managed hotels to Sonesta in February and March 2021. We sold one hotel that Marriott managed in April 2021 (see Note 4 for further information regarding this sale). As of December 31, 2021, Marriott managed 16 of our hotels. We were previously in arbitration proceedings with Marriott regarding, among other things, the timing and characterization of certain payments made to us, and the validity of the timing of the termination of the Marriott agreements, including an exit hotel agreement which, if not terminated, would require us to sell the 16 hotels encumbered with a Marriott brand. We were also seeking repayment of certain working capital advances we made to Marriott during 2020. We entered an agreement with Marriott regarding the 16 hotels noted above, pursuant to which we agreed to have these hotels remain Marriott branded hotels until the arbitration was resolved. On January 18, 2022, the arbitration panel declined to award us the $ 19,920 we had sought relating to certain working capital advances we made to Marriott under the applicable management agreements, but awarded us approximately $ 1,084 in connection with a related claim and determined we would own the remaining 16 hotels unencumbered by Marriott contracts. As a result, during the year ended December 31, 2021, we expensed $ 18,035 of working capital we previously funded under our Marriott agreement because the amount is no longer expected to be recoverable. This amount is included in transaction related costs in our consolidated statement of income (loss). We expect to sell or transition the branding and management of the remaining 16 Marriott branded hotels to Sonesta in the second quarter of 2022. We realized returns of $ 2,830 during the year ended December 31, 2021 under our Marriott agreement. Any returns we receive from Marriott are limited to the hotels’ available cash flows, if any, after payment of operating expenses. Marriott managed 122 of our hotels during years ended December 31, 2020 and 2019. We realized returns of $ 93,593 and $ 190,492 during the years ended December 31, 2020 and 2019, respectively, under our agreement with Marriott. Marriott had previously provided a limited guaranty and security deposit, which were both exhausted in 2020 to cover shortfalls between cash flows from our hotels and our minimum returns. We incurred capital expenditures for certain hotels included in our Marriott agreement of $ 7,394 , $ 65,840 and $ 51,056 during the years ended December 31, 2021, 2020 and 2019, respectively. F-19 Table of Contents Other. Our management agreement with IHG for one hotel expires on January 31, 2026. Our IHG hotel generated net operating cash flow of $ 337 during the year ended December 31, 2021. Any returns we receive from IHG are limited to the hotels’ available cash flows, if any, after payment of operating expenses. IHG managed or leased 103 of our hotels during most of 2020. 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 held to cover shortfalls between cash flow from our hotels and our minimum returns. We transferred the branding and management of 102 of our 103 IHG hotels to Sonesta in December 2020. We realized returns and rents of $ 107,888 and $ 205,941 during the years ended December 31, 2020 and 2019, respectively, under our then agreement with IHG. During the year ended December 31, 2021, we expensed $ 16,711 of working capital we previously funded under our IHG agreement because the amount is no longer expected to be recoverable. This amount is included in transaction related costs in our consolidated statement of income (loss). Net lease portfolio As of December 31, 2021, we owned 788 net lease service-oriented retail properties with 13,522,060 square feet with annual minimum rent of $ 369,733 with a weighted (by annual minimum rents) average lease term of 10.2 years. The portfolio was 98.1 % leased by 174 tenants operating under 134 brands in 21 distinct industries. As a result of the COVID-19 pandemic, some of our tenants requested rent assistance. During the year ended December 31, 2021, we entered into a rent deferral agreement for $ 2,792 of rent with four net lease tenants. As of December 31, 2021, we had $ 7,554 of deferred rents outstanding related to seven tenants we granted rent relief to pursuant to such requests who represented approximately 2.0 % of our annualized rental income of our net lease retail portfolio as of December 31, 2021. These deferred rents are included in other assets, net in our consolidated balance sheets. These tenants are obligated to pay, in most cases, the deferred rent over a 24 month period. 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 and account for lease concessions resulting from the COVID-19 pandemic outside of the existing lease modification guidance as the resulting cash flows from the modified lease are substantially the same as or less than the original lease. The deferred amounts did not impact our operating results for the year ended December 31, 2021. We continually review receivables related to rent, straight-line rent and property operating expense reimbursements and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes an assessment of whether substantially all of the amounts due under a tenant’s lease are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received. We recognize all changes in the collectability assessment for an operating lease as an adjustment to rental income. We reduced reserves for uncollectible amounts by $ 9 during the year ended December 31, 2021 and recorded reserves for uncollectible amounts of $ 9,892 during the year ended December 31, 2020, We had reserves for uncollectible rents of $ 15,519 and $ 18,230 as of December 31, 2021 and 2020, respectively, included in other assets in our consolidated balance sheets. TA Leases TA is our largest tenant, leasing 27.5 % of our gross carrying value of real estate properties as of December 31, 2021. 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, 2021, 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 $ 5,826 TA No. 2 Lease 36 December 31, 2031 44,077 5,411 TA No. 3 Lease 35 December 31, 2029 42,409 5,335 TA No. 4 Lease 37 December 31, 2033 48,263 5,446 TA No. 5 Lease 35 June 30, 2035 61,654 — 179 $ 246,110 $ 22,018 (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, 2021. F-20 Table of Contents 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 $ 248,291 , $ 250,573 and $ 262,038 for the years ended December 31, 2021, 2020 and 2019, respectively. Rental income for the years ended December 31, 2021, 2020 and 2019 includes $ 13,237 , $ 13,156 and $ 11,894 , 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, 2021 and 2020, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $ 48,168 and $ 55,530 , respectively. These amounts are included in due from related persons in our consolidated balance sheets. Beginning in January 2019, our recognition of the 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 in respect of such obligation for each of the years ended December 31, 2021 and 2020, respectively and $ 13,200 for the year ended December 31, 2019. 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, 2021, 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 $ 7,085 , $ 2,764 and $ 4,075 during the years ended December 31, 2021, 2020 and 2019, respectively. 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 did not fund any improvements under these leases during the years ended December 31, 2021, 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 $ 140,803 , $ 137,111 and $ 46,861 for the years ended December 31, 2021, 2020 and 2019 respectively, which included $ 10,616 , $ 14,345 and $ 2,160 respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight-line basis. F-21 Table of Contents Additional lease information (as lessor) . As of December 31, 2021, 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: 2022 $ 390,580 2023 376,064 2024 365,787 2025 356,248 2026 344,503 Thereafter 2,114,800 Total $ 3,947,982 Additional lease information (as lessee). As of December 31, 2021, 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, 2021 and 2020, our right of use assets and related lease liabilities each totaled $ 177,346 and $ 84,924 , 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 $ 12,182 for the year ended December 31, 2021 is included in hotel operating expenses within our consolidated statements of comprehensive income (loss). As of December 31, 2021, our operating leases provide for contractual minimum rent payments to third parties during the remaining lease terms, as follows: 2022 $ 15,024 2023 14,575 2024 14,794 2025 14,831 2026 14,948 Thereafter 263,314 Total lease payments 337,486 Less: imputed interest ( 160,140 ) Present value of lease liabilities (1) $ 177,346 (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 5.27 % and 22 years (range of 8 months to 66 years) and 5.67 % and 42 years (range of 1 month to 52 years), respectively. As of December 31, 2021, 16 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 16 ground leases was 10 years (range of one to 20 years) with rents averaging $ 424 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, 2021 were: (1) $ 1,000,000 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. 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 noted below, we have an option to extend the maturity date of the facility for 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 F-22 Table of Contents 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, 2021. We also pay a facility fee, which was 30 basis points per annum at December 31, 2021, 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. As of December 31, 2021, the annual interest rate payable on borrowings under our revolving credit facility was 2.85 %. The weighted average annual interest rate for borrowings under our revolving credit facility was 2.85 %, 2.36 % and 3.21 % for the years ended December 31, 2021, 2020 and 2019, respectively. On January 19, 2021, we borrowed $ 972,793 under our revolving credit facility as a precautionary measure to preserve financial flexibility. As of each of December 31, 2021 and February 22, 2022, our $ 1,000,000 revolving credit facility was fully drawn. We and our lenders amended our credit agreement governing our $ 1,000,000 revolving credit facility in 2020. Among other things, the amendments waived all of the then existing financial covenants through the end of the current agreement term, or July 15, 2022. As a result of the amendments, among other things: • we pledged certain equity interests of subsidiaries owning properties and provided first mortgage liens on 74 properties owned by the pledged subsidiaries with an undepreciated book value of $ 1,834,420 as of December 31, 2021 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; • we agreed to certain covenants and restrictions on distributions to common shareholders, share repurchases, incurring indebtedness, and acquiring real property (in each case subject to various exceptions); • we agreed to maintain minimum liquidity of $ 125,000 ; • 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; • in order to exercise the first six month extension option under the credit agreement, we would need to be in compliance with the financial covenants under the agreement calculated using pro forma projections as defined in the agreement for the quarter ending June 30, 2022, annualized, and have repaid or refinanced our $ 500,000 of 5.00 % senior notes due in August 2022; • we may not 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 until we demonstrate compliance with certain covenants; and As noted above, our revolving credit facility matures on July 15, 2022 and we may be unable to meet the conditions required to exercise the extension option provided for in our credit agreement. We are in discussions with our lenders regarding a potential extension of the existing waivers or additional covenant waivers, but we cannot assure that we will be granted any such relief. We currently expect we will have enough cash to repay the amounts outstanding on our revolving credit facility using existing cash balances and proceeds we expect to receive from asset sales or other capital transactions we may complete prior to its maturity. 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. As of December 31, 2021, we were not in compliance with one of our debt covenants necessary to incur additional debt, and as a result, we will not be able to incur additional debt until we satisfy that covenant. 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. F-23 Table of Contents 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. We repaid our $ 400,000 term loan, which was scheduled to mature on July 15, 2023, without penalty on November 5, 2020. 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. The weighted average annual interest rates for borrowings under our term loan were 2.74 % and 3.43 % during the years ended December 31, 2020 and 2019, 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. On November 20, 2020, we issued $ 450,000 principal amount of our 5.50 % 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. The required principal payments due during the next five years and thereafter under all our outstanding debt at December 31, 2021 are as follows: 2022 $ 1,500,000 2023 500,000 2024 1,175,000 2025 1,150,000 2026 800,000 Thereafter 2,075,000 $ 7,200,000 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, 2021, 2020 and 2019, we awarded 340,700 of our common shares with an aggregate market value of $ 3,839 , 264,400 of our common shares with an aggregate market value of $ 2,232 and 140,100 of our common shares with an aggregate market value of $ 3,507 , respectively, to our officers and certain other employees of our manager, RMR LLC, pursuant to our 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 June 16, 2021, in accordance with our Trustee compensation arrangements, we awarded under our Share Award Plan 7,000 of our common shares to each of our seven Trustees, valued at $ 13.94 per common share, the closing price of our common shares on Nasdaq, on that day. On September 15, 2021, we awarded under our Share Award Plan an aggregate of 291,700 of our common shares, valued at $ 10.82 per common share, the closing price of our common shares on Nasdaq on that day, to our officers and certain other current and former officers and employees of RMR LLC. F-24 Table of Contents On February 27, 2020, in accordance with our Trustee compensation arrangements we awarded under our Share Award Plan 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 June 14, 2019, in accordance with our Trustee compensation arrangements, we awarded under our Share Award Plan each of our then Trustees 3,000 of our common shares in 2019 with an aggregate market value of $ 370 ($ 74 per trustee) as part of their annual compensation. The value of the share awards were based upon the closing price of our common shares on Nasdaq on the date of the awards. The shares awarded to our Trustees vest immediately. The shares awarded to our officers and certain other employees of RMR LLC (in those capacities) 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, 2021, 2020 and 2019 is as follows: 2021 2020 2019 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 325,900 $ 14.71 194,540 $ 26.59 164,000 $ 28.39 Shares granted 340,700 $ 11.26 305,400 $ 8.91 155,100 $ 25.00 Shares vested ( 240,470 ) $ 14.78 ( 173,190 ) $ 17.76 ( 122,010 ) $ 25.09 Shares forfeited ( 1,100 ) $ 12.96 ( 850 ) $ 26.93 ( 2,550 ) $ 27.49 Unvested shares, end of year 425,030 $ 11.93 325,900 $ 14.71 194,540 $ 26.59 The 425,030 unvested shares as of December 31, 2021 are scheduled to vest as follows: 137,030 shares in 2022, 125,040 shares in 2023, 104,620 shares in 2024 and 58,340 shares in 2025. As of December 31, 2021, the estimated future compensation expense for the unvested shares was $ 4,518 . The weighted average period over which the compensation expense will be recorded is approximately 22 months. During the years ended December 31, 2021, 2020 and 2019, we recorded $ 2,964 , $ 3,206 and $ 2,849 , respectively, of compensation expense related to the Share Award Plan. At December 31, 2021, 1,761,393 of our common shares remain reserved for issuance under our current Share Award Plan. Share Repurchases During the years ended December 31, 2021, 2020 and 2019, 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 2021 71,100 $ 11.11 $ 790 2020 43,751 $ 7.90 $ 346 2019 31,225 $ 25.61 $ 800 Distributions During the years ended December 31, 2021, 2020 and 2019, 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 2021 $ 0.04 $ 6,596 — % — 100.00 % — % 2020 $ 0.57 $ 93,804 — % — 100.00 % — % 2019 $ 2.15 $ 353,620 44.50 % 37.93 % 17.57 % 0.50 % F-25 Table of Contents On January 13, 2022, we declared a distribution of $ 0.01 per common share, or $ 1,652 , which we paid on February 17, 2022, to shareholders of record on January 24, 2022. Cumulative Other Comprehensive Income (Loss) Cumulative other comprehensive income (loss) represents our share of the comprehensive loss of Sonesta. 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, 2021: Equity in Unrealized Gain (Loss) of Investees Total Balance at December 31, 2019 $ — $ — Other comprehensive loss ( 760 ) ( 760 ) Amounts reclassified from cumulative other comprehensive income to net income — — Balance at December 31, 2020 ( 760 ) ( 760 ) Other comprehensive income 1,539 1,539 Amounts reclassified from cumulative other comprehensive income to net income — — Balance at December 31, 2021 $ 779 $ 779 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), the office building component of one of our hotels and major renovation or repositioning activities at our hotels that we may request RMR LLC to manage from time to time. See Note 9 for further information regarding our relationship, agreements and transactions with RMR LLC. 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 F-26 Table of Contents – 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 applicable market index, or the benchmark return per share, for the relevant measurement period. Effective August 1, 2021, we and RMR LLC amended our business management agreement to replace the benchmark index used in the calculation of incentive management fees. Pursuant to the amendment, for periods beginning on and after August 1, 2021, the MSCI U.S. REIT/Hotel & Resort REIT Index replaced the discontinued SNL U.S. REIT Hotel Index and will be used to calculate benchmark returns per share for purposes of determining any incentive management fee payable by us to RMR LLC. For periods prior to August 1, 2021, the SNL U.S. REIT Hotel Index will continue to be used. Accordingly, the calculation of incentive management fees for the next two measurement periods will continue to use the SNL U.S. REIT Hotel Index in calculating the benchmark returns for periods through July 31, 2021.This change of index was due to S&P Global, Inc. ceasing to publish the SNL U.S. REIT Hotel Index and we refer to the changed index as the benchmark index. 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 applicable market 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 applicable market index in any year, 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 applicable market index in any year, determined on a cumulative basis (i.e., between 200 basis points and 500 basis point per year multiplied by the number of years in the measurement period and below the applicable market index). ◦ 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 $ 42,137 , $ 36,830 and $ 41,607 for the years ended December 31, 2021, 2020 and 2019, 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, 2021, 2020 and 2019 reflect a reduction of $ 3,584 for each of those years for the amortization of the liability we recorded in connection with our former investment in RMR Inc. F-27 Table of Contents • 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. On June 22, 2021, we and RMR LLC amended our property management agreement to, among other things, provide for RMR LLC’s oversight of any major capital projects and repositioning activities at our hotels, including our hotels that are managed by Sonesta, as we may request from time to time. RMR LLC will receive the same fee previously paid to Sonesta for these services, which is equal to 3 % of the cost of any such major capital project or repositioning activity. Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $ 4,489 , $ 3,575 and $ 1,399 for the years ended December 31, 2021, 2020 and 2019, respectively. These amounts are included in other operating expenses or have been capitalized as appropriate in our consolidated financial statements. For the fiscal years ended December 31, 2021, 2020 and 2019, $ 3,674 , $ 3,283 and $ 1,370 , respectively, of property management fees were recognized as operating expenses in our consolidated statements of comprehensive income (loss) and $ 815 , $ 292 and $ 29 , respectively, were capitalized as building improvements in our consolidated balance sheets and are being depreciated over the estimated useful lives of the related capital assets. • 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 $ 2,971 , $ 2,618 and $ 620 for these expenses and costs for the years ended December 31, 2021, 2020 and 2019, 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, 2041, 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. • 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. F-28 Table of Contents • 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 of ABP Trust, which is the controlling shareholder of RMR Inc., and is 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. 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 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 and major renovation or repositioning activities at our hotels that we may request RMR LLC to manage from time to time. See Note 8 for further information regarding our management agreements with RMR LLC. 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, 2021, we owned 1,184,797 shares of common stock, representing approximately 8.0 % 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, 2021, beneficially owned 658,505 shares of TA common stock (including through RMR LLC), representing approximately 4.4 % 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. F-29 Table of Contents Sonesta . Sonesta is a private company of which Adam Portnoy, one of our Managing Trustees, is a director and the controlling stockholder. One of Sonesta’s other directors is our other Managing Trustee, President and Chief Executive Officer and Sonesta’s other director serves as one of RMR Inc.’s managing directors, as RMR LLC’s and RMR Inc.’s executive vice president, general counsel and secretary and as our Secretary. Certain of Sonesta’s officers 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, 2021, we owned approximately 34 % of Sonesta’s outstanding shares of common stock and Sonesta managed 261 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 Affiliates Insurance Company, an Indiana insurance company, or AIC, 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 in connection with this insurance program for the policy year ended June 30, 2019. 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. We received the final distribution of $ 12 in December 2021. 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, 2021 and 2020 and recognized income of $ 393 related to our investment in AIC for the year ended December 31, 2019. 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 losses on securities which were owned and held for sale by AIC of $ 175 related to our investment in AIC for the year ended December 31, 2019. Note 10. Income Taxes Our provision (benefit) for income taxes consists of the following: For the Year Ended December 31, 2021 2020 2019 Current: Federal $ — $ — $ — State 680 3,361 2,327 Foreign 350 — 593 1,030 3,361 2,920 Deferred: Foreign ( 1,971 ) 13,850 ( 127 ) ( 1,971 ) 13,850 ( 127 ) $ ( 941 ) $ 17,211 $ 2,793 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, 2021 2020 2019 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 ( 0.1 ) % ( 1.1 ) % 0.7 % Foreign taxes 0.3 % ( 4.4 ) % 0.1 % Effective tax rate 0.2 % ( 5.5 ) % 0.8 % F-30 Table of Contents 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, 2021 2020 Deferred tax assets: Tax loss carryforwards $ 84,551 $ 42,940 Other 4,844 3,175 89,395 46,115 Valuation allowance ( 89,395 ) ( 46,115 ) — — Deferred tax liabilities: Property basis difference ( 6,263 ) ( 6,682 ) Puerto Rico deferred tax gain ( 12,581 ) ( 13,850 ) Net deferred tax liabilities $ ( 18,844 ) $ ( 20,532 ) Net deferred tax liabilities are included in accounts payable and other liabilities in our consolidated balance sheets. 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, 2020 Current Period Increase As of December 31, 2021 $ 2,531 $ — $ 2,531 At December 31, 2021 and 2020, our consolidated TRS had a net deferred tax asset, prior to any valuation allowance, of $ 84,973 and $ 40,879 , 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, 2021 and 2020. As of December 31, 2021 and 2020, our consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $ 334,686 and $ 159,727 , respectively, which partially expire starting in 2025. At December 31, 2021 and 2020, we recorded a deferred tax liability of $ 12,581 and $ 13,843 , respectively, 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. At December 31, 2021 and 2020, we, excluding our subsidiaries, had net operating loss carryforwards for federal income tax purposes of approximately $ 423,852 and $ 333,533 , respectively, of which certain losses incurred prior to 2017 partially expire starting 2027. Note 11. Concentration Geographic Concentration At December 31, 2021, our 1,091 properties were located in 47 states in the United States, plus Washington, DC, Ontario, Canada and Puerto Rico. Between 6 % and 11 % 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 1.6 % of our hotels, by investment, in the aggregate at December 31, 2021. Credit Concentration As of December 31, 2021, Sonesta operated 261 of our hotels and TA leased 179 of our net lease properties, representing 50.9 % and 27.5 %, respectively, of our gross real estate assets at cost. See Notes 5 and 9 for a discussion of our Sonesta and TA agreements. F-31 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, 2021 Hotels Net Lease Corporate Consolidated Revenues: Hotel operating revenues $ 1,104,678 $ — $ — $ 1,104,678 Rental income 1,808 389,094 — 390,902 Total revenues 1,106,486 389,094 — 1,495,580 Expenses: Hotel operating expenses 1,010,737 — — 1,010,737 Other operating expenses — 15,658 15,658 Depreciation and amortization 266,641 219,324 — 485,965 General and administrative — — 53,439 53,439 Transaction related costs 64,764 — — 64,764 Loss on asset impairment 60,980 17,640 — 78,620 Total expenses 1,403,122 252,622 53,439 1,709,183 Gain on sale of real estate, net 9,558 1,964 — 11,522 Unrealized gains on equity securities — — 22,535 22,535 Interest income 1 — 663 664 Interest expense — — ( 365,721 ) ( 365,721 ) Income (loss) before income taxes and equity in losses of an investee ( 287,077 ) 138,436 ( 395,962 ) ( 544,603 ) Income tax benefit — — 941 941 Equity in losses of an investee — — ( 941 ) ( 941 ) Net income (loss) $ ( 287,077 ) $ 138,436 $ ( 395,962 ) $ ( 544,603 ) As of December 31, 2021 Hotels Net Lease Corporate Consolidated Total assets 4,487,101 3,580,095 1,086,119 9,153,315 F-32 Table of Contents For the Year Ended December 31, 2020 Hotels Net Lease Corporate Consolidated Revenues: Hotel operating revenues $ 875,098 $ — $ — $ 875,098 Rental income 2,472 387,684 — 390,156 Total revenues 877,570 387,684 — 1,265,254 Expenses: Hotel operating expenses 682,804 — — 682,804 Other operating expenses — 15,208 — 15,208 Depreciation and amortization 263,673 235,235 — 498,908 General and administrative — — 50,668 50,668 Transaction related costs 15,100 — — 15,100 Loss on asset impairment 17,131 38,625 — 55,756 Total expenses 978,708 289,068 50,668 1,318,444 Gain on sale of real estate, net 14,927 ( 12,666 ) — 2,261 Gain on insurance settlement 62,386 — — 62,386 Unrealized losses on equity securities, net — — 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 earnings of an investee ( 23,819 ) 85,950 ( 346,392 ) ( 284,261 ) Income tax expense — — ( 17,211 ) ( 17,211 ) Equity in earnings 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-33 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 25,724 301,251 — 326,975 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 — 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 Note 13. Fair Value of Assets and Liabilities The table below presents certain of our assets carried at fair value at December 31, 2021, categorized by the level of inputs, as defined in the fair values hierarchy under GAAP, used in the valuation of each asset. As of December 31, 2021 As of December 31, 2020 Carrying Value Fair Value Carrying Value Fair Value Investment in TA (Level 1) (1) $ 61,159 $ 61,159 $ 38,624 $ 38,624 Assets of properties held for sale (Level 3) (2) $ 515,518 $ 515,518 $ 13,543 $ 13,543 (1) As of both December 31, 2021 and 2020, we owned 1,184,797 shares of TA common stock, 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 as of December 31, 2021 and 2020. During the years ended December 31, 2021, 2020 and 2019, we recorded unrealized gains of $ 20,367 and $ 19,883 unrealized losses of $ 1,129 , respectively, to adjust the carrying value of our investment in TA shares to their fair values. F-34 Table of Contents (2) As of December 31, 2021, we owned 67 hotels with 8,667 rooms with an aggregate carrying value of $ 503,078 classified as held for sale and 22 net lease properties lease properties with 154,206 square feet with an aggregate carrying value of $ 12,440 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 $ 78,620 loss on asset impairment in 2021 to reduce the carrying value of certain of these properties to their estimated fair value less costs to sell. 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 these properties to their estimated fair value less costs to sell. 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, 2021 and 2020, 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, 2021 December 31, 2020 Carrying Fair Carrying Fair Amount (1) Value Amount (1) Value Senior Unsecured Notes, due 2022 at 5.00 % $ 499,244 $ 501,033 $ 498,032 $ 510,285 Senior Unsecured Notes, due 2023 at 4.50 % 499,761 505,378 499,596 505,280 Senior Unsecured Notes, due 2024 at 4.65 % 349,105 347,039 348,700 347,893 Senior Unsecured Notes, due 2024 at 4.35 % 821,017 821,184 819,546 819,328 Senior Unsecured Notes, due 2025 at 4.50 % 347,806 342,493 347,118 346,462 Senior Unsecured Notes, due 2025 at 7.50 % 791,340 867,712 789,006 926,404 Senior Unsecured Notes, due 2026 at 5.25 % 345,342 348,537 344,212 354,996 Senior Unsecured Notes, due 2026 at 4.75 % 447,126 439,889 446,515 448,506 Senior Unsecured Notes, due 2027 at 4.95 % 396,160 395,862 395,405 404,328 Senior Unsecured Notes, due 2027 at 5.50 % 443,383 461,522 442,370 491,918 Senior Unsecured Notes, due 2028 at 3.95 % 393,057 370,562 391,908 388,146 Senior Unsecured Notes, due 2029 at 4.95 % 418,895 407,448 418,102 430,064 Senior Unsecured Notes, due 2030 at 4.375 % 390,786 370,836 389,656 388,292 Total financial liabilities $ 6,143,022 $ 6,179,495 $ 6,130,166 $ 6,361,902 (1) Carrying value includes unamortized discounts and premiums and certain debt issuance costs. At December 31, 2021 and 2020, 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-35 Table of Contents SERVICE PROPERTIES TRUST SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 (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 17 Royal Sonesta 227 1,118 405 ( 9 ) ( 9 ) 227 1,496 1,723 22 Sonesta 136 588 321 ( 51 ) ( 5 ) 136 848 984 60 Sonesta ES Suites 132 557 368 ( 35 ) ( 48 ) 132 794 926 44 Sonesta Select 84 395 308 ( 8 ) ( 71 ) 89 548 637 51 Simply Suites 68 341 105 ( 17 ) ( 18 ) 66 395 461 17 Hyatt Place 20 137 21 — — 20 158 178 5 Radisson Hotel 9 93 45 — — 9 138 147 1 Crowne Plaza 17 69 30 — — 17 99 116 13 Courtyard 13 64 63 ( 14 ) ( 23 ) 12 68 80 3 Country Inn and Suites 4 29 10 — — 4 39 43 3 Residence Inn 4 9 12 ( 3 ) ( 1 ) 3 17 20 Net Lease Properties 134 TravelCenters of America 568 939 463 — — 575 1,393 1,968 45 Petro Stopping Centers 260 522 210 — — 259 717 976 11 AMC Theatres 30 55 1 — — 30 56 86 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 59 Heartland Dental 11 37 — — — 11 37 48 10 Norms 23 24 — — — 23 24 47 23 Express Oil Change 6 37 — — — 6 37 43 39 Pizza Hut 12 27 — — — 12 27 39 3 Flying J Travel Plaza 6 32 — — — 6 32 38 6 America's Auto Auction 7 23 4 — — 7 27 34 6 Regal Cinemas 9 25 — — — 9 25 34 4 Courthouse Athletic Club 5 28 — — — 5 28 33 44 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 5 Mister Car Wash 2 19 — — — 2 19 21 6 United Supermarkets 4 17 — — — 4 17 21 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 1 Dave & Buster's 3 11 — — — 3 11 14 2 Fusion Gyms 3 10 1 — — 3 11 14 5 Pike Nursery 8 6 — — — 8 6 14 2 HHI-Formtech 3 10 — — — 3 10 13 3 Golden Corral 4 8 — — — 4 8 12 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 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) 2 Eddie Merlot's 2 8 — — — 2 8 10 5 Fuddruckers 4 6 — — — 4 6 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 Texas Roadhouse 3 6 — — — 3 6 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 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 1 Marcus Theaters 2 5 — — — 2 5 7 3 Oregano's Pizza Bistro 1 6 — — — 1 6 7 9 Sonic Drive-In 3 4 — — — 3 4 7 2 Axels — 6 — — — — 6 6 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 11 — — 3 13 16 1 Planet Fitness 1 4 — — — 1 4 5 1 RGB Eye Associates 1 4 — — — 1 4 5 2 Walgreens — 5 — — — — 5 5 1 Ashley Furniture 1 3 — — — 1 3 4 1 Boozman-Hof 2 2 — — — 2 2 4 1 Caldwell Country Chevrolet — 4 — — — — 4 4 1 Eriks Bike Shop 1 3 — — — 1 3 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 Max & Erma's 1 3 — — — 1 3 4 1 Metaldyne BSM — 4 — — — — 4 4 1 Rainbow Kids Clinic 1 3 — — — 1 3 4 1 Sportsman's Warehouse 1 3 — — — 1 3 4 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 Monterey's Tex Mex 1 2 — — — 1 2 3 1 Ojos Locos Sports Cantina 1 2 — — — 1 2 3 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 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 1 Cycle Gear 1 1 — — — 1 1 2 2 Dollar General — 2 — — — — 2 2 2 Hooters 1 1 — — — 1 1 2 2 KFC — 2 — — — — 2 2 1 Long John Silver's 1 1 — — — 1 1 2 3 Rally's 1 1 — — — 1 1 2 1 Red Robin Gourmet Burgers 1 1 — — — 1 1 2 1 Schumacher Homes 1 1 — — — 1 1 2 2 Taco Bueno 1 1 — — — 1 1 2 1 Bru Burger Bar — 1 — — — — 1 1 1 Chicken Salad Chick — 1 — — — — 1 1 1 El Forastero — 1 — — — — 1 1 1 ERA Capital — 1 — — — — 1 1 1 Howlin Concrete 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 Wings, Etc — 1 — — — — 1 1 1 Bigham Cable — 1 — — — — — — 1 Consolidated Pipe — — — — — — — — 1 Del Taco — — — — — — — — 1 Dunkin Donuts — — — — — — — — 1 Family Dollar Stores — — — — — — — — 1 Fazoli's — — — — — — — — 1 Kings Wings N Things — — — — — — — — 1 Off the Hook Seafood & More — — — — — — — — 1 Sharks Fish & Chicken — — — — — — — — 8 Vacant 4 15 — — — 4 15 19 Other 2 8 2 — — 2 10 12 $ 1,910 $ 6,006 $ 2,380 $ ( 137 ) $ ( 175 ) $ 1,919 $ 7,871 $ 9,790 Assets Held for Sale 67 Hotels $ 110 $ 541 $ 84 $ ( 64 ) $ ( 3 ) $ 95 $ 506 $ 601 22 Net lease properties 7 23 — ( 18 ) — 7 6 12 Total ( 1091 properties) $ 2,027 $ 6,570 $ 2,464 $ ( 219 ) $ ( 178 ) $ 2,021 $ 8,383 $ 10,403 (1) Represents reclassifications between accumulated depreciation and building & improvements made to record certain properties at fair value in accordance with GAAP. (2) Excludes $ 436 of personal property classified in our consolidated balance sheets as furniture, fixtures and equipment. S-3 Table of Contents SERVICE PROPERTIES TRUST SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) December 31, 2021 (dollars in millions) Accumulated Depreciation (1) Date of Construction Date Acquired Life on which Depreciation in Latest Income Statement is Computed Hotel Properties 60 Sonesta ES Suites ( 391 ) 1984 through 2000 1996 through 2017 10 - 40 Years 17 Royal Sonesta ( 340 ) 1913 through 1987 2005 through 2017 10 - 40 Years 44 Sonesta Select ( 312 ) 1987 through 2000 1995 through 2003 10 - 40 Years 22 Sonesta ( 253 ) 1924 through 1999 2005 through 2018 10 - 40 Years 51 Simply Suites ( 203 ) 1996 through 2000 1997 through 2003 10 - 40 Years 17 Hyatt Place ( 89 ) 1992 through 2000 1997 through 2002 10 - 40 Years 5 Radisson Hotel ( 70 ) 1987 through 1990 1996 through 2018 10 - 40 Years 3 Country Inn and Suites by Radisson ( 20 ) 1987 through 1997 1996 and 2005 10 - 40 Years 1 Crowne Plaza ( 12 ) 1971 through 1988 2006 and 2017 10 - 40 Years 13 Courtyard ( 4 ) 1987 through 2000 1995 through 2003 10 - 40 Years 3 Residence ( 1 ) 1989 through 2002 1996 through 2005 10 - 40 Years Net Lease Properties 134 TravelCenters of America ( 834 ) 1962 through 2017 2007 through 2017 10 - 40 Years 45 Petro Stopping Centers ( 418 ) 1975 through 2017 2007 through 2017 10 - 40 Years 11 AMC Theatres ( 6 ) 1993 through 2008 2019 10 - 40 Years 5 Buehler's Fresh Foods ( 6 ) 1985 through 2000 2019 10 - 40 Years 39 Pizza Hut ( 6 ) 1972 through 2006 2019 10 - 40 Years 3 Life Time Fitness ( 5 ) 1987 through 2012 2019 10 - 40 Years 14 The Great Escape ( 5 ) 1986 through 2007 2019 10 - 40 Years 19 Arby's ( 4 ) 1969 through 2005 2019 10 - 40 Years 21 Burger King ( 4 ) 1968 through 1985 2019 10 - 40 Years 44 Church's Chicken ( 3 ) 1668 to 1985 2019 10 - 40 Years 4 Courthouse Athletic Club ( 3 ) 1997 through 2001 2019 10 - 40 Years 23 Express Oil Change ( 3 ) 1970 through 2001 2019 10 - 40 Years 19 Hardee's ( 3 ) 1969 through 1994 2019 10 - 40 Years 59 Heartland Dental ( 3 ) 1920 through 2005 2019 10 - 40 Years 1 Multi-Tenant ( 3 ) 2001 2019 10 - 40 Years 20 Popeye's Chicken & Biscuits ( 3 ) 1968 through 2004 2019 10 - 40 Years 6 America's Auto Auction ( 2 ) 1965 through 2005 2019 10 - 40 Years 4 B&B Theatres ( 2 ) 1998 through 2004 2019 10 - 40 Years 2 Big Al’s ( 2 ) 2006 through 2010 2019 10 - 40 Years 1 Cermak Fresh Market ( 2 ) 1989 2019 10 - 40 Years 1 Fleet Farm ( 2 ) 1979 2019 10 - 40 Years 3 Flying J Travel Plaza ( 2 ) 2001 2019 10 - 40 Years 2 HHI-Formtech ( 2 ) 1952 2019 10 - 40 Years 16 Martin's ( 2 ) 1962 through 2003 2019 10 - 40 Years 2 Mesa Fitness ( 2 ) 1983 through 2007 2019 10 - 40 Years 10 Norms ( 2 ) 1957 through 2014 2019 10 - 40 Years 6 Regal Cinemas ( 2 ) 2005 through 2010 2019 10 - 40 Years 13 Taco Bell ( 2 ) 1982 through 2010 2019 10 - 40 Years 28 Uncle Ed's Oil Shoppe ( 2 ) 1959 through 1999 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 2 10 Box ( 1 ) 1991 2019 10 - 40 Years 1 Adult & Pediatric Orthopedics ( 1 ) 1991 2019 10 - 40 Years 1 Austin's Park n' Pizza ( 1 ) 2003 2019 10 - 40 Years 2 Axels ( 1 ) 1995 through 1996 2019 10 - 40 Years 2 Bricktown Brewery ( 1 ) 1904 through 1984 2019 10 - 40 Years 5 Brookshire Brothers ( 1 ) 1990 through 1999 2019 10 - 40 Years 1 CarMax ( 1 ) 2005 2019 10 - 40 Years 1 Columbus Preparatory Academy ( 1 ) 2004 2019 10 - 40 Years 1 ConForm Automotive ( 1 ) 1987 2019 10 - 40 Years 12 Core & Main ( 1 ) 1972 through 2001 2019 10 - 40 Years 4 Creme de la Creme ( 1 ) 1999 through 2008 2019 10 - 40 Years 1 Dave & Buster's ( 1 ) 1992 2019 10 - 40 Years 2 Diagnostic Health ( 1 ) 1985 through 1997 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 Fusion Gyms ( 1 ) 1987 through 1984 2019 10 - 40 Years 3 Golden Corral ( 1 ) 1993 through 2000 2019 10 - 40 Years 2 Heytex USA ( 1 ) 2008 through 2016 2019 10 - 40 Years 7 Hughes Supply ( 1 ) 1993 2019 10 - 40 Years 1 Jack Stack Barbeque ( 1 ) 1983 2019 10 - 40 Years 1 Joe's Crab Shack ( 1 ) 1997 2019 10 - 40 Years 1 Kohl's ( 1 ) 1986 2019 10 - 40 Years 3 Krispy Kreme ( 1 ) 2000 through 2004 2019 10 - 40 Years 5 Lerner and Rowe ( 1 ) 1973 through 2007 2019 10 - 40 Years 1 Marcus Theaters ( 1 ) 1999 2019 10 - 40 Years 4 Meineke Car Care Center ( 1 ) 1999 through 2000 2019 10 - 40 Years 1 Metaldyne BSM ( 1 ) 1960 2019 10 - 40 Years 5 Mister Car Wash ( 1 ) 1960 through 2002 2019 10 - 40 Years 3 Oregano's Pizza Bistro ( 1 ) 1964 through 2006 2019 10 - 40 Years 5 Pike Nursery ( 1 ) 1970 through 1996 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 9 Sonic Drive-In ( 1 ) 1987 through 2010 2019 10 - 40 Years 1 Sportsman's Warehouse ( 1 ) 1983 2019 10 - 40 Years 3 Texas Roadhouse ( 1 ) 2003 to 2005 2019 10 - 40 Years 2 Walgreens ( 1 ) 1999 through 2000 2019 10 - 40 Years 3 Wendy's ( 1 ) 1984 through 1989 2019 10 - 40 Years 1 Academy Sports + Outdoors — 2016 2019 10 - 40 Years 2 Affordable Care, Inc. — 2008 through 2010 2019 10 - 40 Years 2 Anixter — 1984 through 1999 2019 10 - 40 Years 1 Applebee's — 1996 2019 10 - 40 Years 1 Ashley Furniture — 1973 2019 10 - 40 Years 1 Baptist Emergency Hospital — 2013 2019 10 - 40 Years 1 Bigham Cable — 1982 2019 10 - 40 Years 1 Black Angus Steakhouse — 1996 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 2 Blue Rhino — 2004 2019 10 - 40 Years 1 Boozman-Hof — 1988 2019 10 - 40 Years 1 Bridgestone Tire — 1998 2019 10 - 40 Years 1 Bru Burger Bar — 1996 2019 10 - 40 Years 1 Buffalo Wild Wings — 2014 2019 10 - 40 Years 1 Caldwell Country Chevrolet — 2000 2019 10 - 40 Years 1 Chicken Salad Chick — 1976 2019 10 - 40 Years 1 Columbus Arts & Tech Academy — 1980 2019 10 - 40 Years 1 Consolidated Pipe — 1987 2019 10 - 40 Years 1 Cycle Gear — 1996 2019 10 - 40 Years 1 Del Taco — 1992 2019 10 - 40 Years 2 Dollar General — 2012 through 2015 2019 10 - 40 Years 1 Dunkin Donuts — 1977 2019 10 - 40 Years 1 El Forastero — 1992 2019 10 - 40 Years 1 ERA Capital — 1999 2019 10 - 40 Years 1 Eriks Bike Shop — 1996 2019 10 - 40 Years 1 Family Dollar Stores — 1988 2019 10 - 40 Years 2 Famous Dave's — 1997 through 1999 2019 10 - 40 Years 1 Fazoli's — 1982 2019 10 - 40 Years 2 Flying Star Cafe — 1994 through 1999 2019 10 - 40 Years 3 Focus Child Development Center — 1965 through 1998 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 2 Hooters — 1997 through 1994 2019 10 - 40 Years 1 Howlin Concrete — 1975 2019 10 - 40 Years 3 Jack's Family Restaurant — 2008 through 2016 2019 10 - 40 Years 1 Kerry's Car Care — 2015 2019 10 - 40 Years 2 KFC — 1977 through 2006 2019 10 - 40 Years 1 Kings Wings N Things — 1997 2019 10 - 40 Years 1 LA Fitness — 2012 2019 10 - 40 Years 1 Little Caesars — 1996 2019 10 - 40 Years 1 Long John Silver's — 1972 through 1987 2019 10 - 40 Years 1 Max & Erma's — 1990 through 2007 2019 10 - 40 Years 2 Monterey's Tex Mex — 1979 through 1997 2019 10 - 40 Years 1 NAPA Auto Parts — 2001 2019 10 - 40 Years 1 Off the Hook Seafood & More — 2007 2019 10 - 40 Years 1 Ojos Locos Sports Cantina — 1993 2019 10 - 40 Years 1 Old Mexico Cantina — 2007 2019 10 - 40 Years 1 O'Reilly Auto Parts — 2006 2019 10 - 40 Years 2 Orscheln Farm and Home — 1977 through 1986 2019 10 - 40 Years 1 Planet Fitness — 2007 2019 10 - 40 Years 1 Rainbow Kids Clinic — 2011 2019 10 - 40 Years 3 Rally's — 1990 through 1992 2019 10 - 40 Years 1 Red Robin Gourmet Burgers — 1995 2019 10 - 40 Years 1 RGB Eye Associates — 2013 2019 10 - 40 Years 2 Rick Johnson Auto & Tire — 1993 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 Schumacher Homes — 2014 2019 10 - 40 Years 1 Sharks Fish & Chicken — 2014 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 SRS Distribution — 1975 2019 10 - 40 Years 2 Taco Bueno — 1991 through 2003 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 Tractor Supply — 2007 2019 10 - 40 Years 1 What the Buck — 1958 2019 10 - 40 Years 1 Wings, Etc — 2014 2019 10 - 40 Years 8 Vacant — 1977 through 2006 2019 10 - 40 Years Other — $ ( 3,069 ) (1) Excludes accumulated depreciation of $ 213 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, 2021 (dollars in thousands) (A) The change in total cost of properties for the period from January 1, 2019 to December 31, 2021 is as follows: 2021 2020 2019 Balance at beginning of year $ 10,630,560 $ 10,716,233 $ 8,820,346 Additions: acquisitions and capital expenditures 86,016 99,141 1,983,380 Dispositions ( 330,091 ) ( 145,836 ) — Reclassification of properties held for sale ( 596,475 ) ( 38,978 ) ( 87,493 ) Balance at close of year $ 9,790,010 $ 10,630,560 $ 10,716,233 (B) The change in accumulated depreciation for the period from January 1, 2019 to December 31, 2021 is as follows: 2021 2020 2019 Balance at beginning of year $ 3,047,016 $ 2,851,121 $ 2,574,297 Additions: depreciation expense 298,597 364,636 305,441 Dispositions ( 153,699 ) ( 143,814 ) ( 28,617 ) Reclassification of properties held for sale ( 122,566 ) ( 24,927 ) — Balance at close of year $ 3,069,348 $ 3,047,016 $ 2,851,121 (C) The aggregate cost tax basis for federal income tax purposes of our real estate properties was $ 8,056,671 on December 31, 2021. 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: February 24, 2022 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 February 24, 2022 John G. Murray /s/ Brian E. Donley Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) February 24, 2022 Brian E. Donley /s/ Laurie B. Burns Independent Trustee February 24, 2022 Laurie B. Burns /s/ Robert E. Cramer Independent Trustee February 24, 2022 Robert E. Cramer /s/ Donna D. Fraiche Independent Trustee February 24, 2022 Donna D. Fraiche /s/ John L. Harrington Independent Trustee February 24, 2022 John L. Harrington /s/ William A. Lamkin Independent Trustee February 24, 2022 William A. Lamkin /s/ Adam D. Portnoy Managing Trustee February 24, 2022 Adam D. Portnoy