Service Properties Trust 10-Q

Item 4. Controls and Procedures As of the end of the period covered by this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, our President and Chief Investment Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Managing Trustees, our President and Chief Investment 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 March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Warning Concerning Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws that are subject to risks and uncertainties. These statements may include words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions. These forward-looking statements include, among others, statements about: the pending TA Merger and related transactions, including our expected lease amendments, cash proceeds and credit quality of TA following the TA Merger; economic and market conditions and their potential impacts on us, our hotel managers and our tenants; expectations regarding demand for corporate travel and lodging; the sufficiency of our liquidity; our liquidity needs, sources and expected uses; our capital expenditure plans and commitments; our property dispositions and expected use of proceeds; and the amount and timing of future distributions. Forward-looking statements reflect our current expectations, are based on judgments and assumptions, are inherently uncertain and are subject to risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from expected future results, performance or achievements expressed or implied in those forward-looking statements. Some of the risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following: • Sonesta’s ability to successfully operate the hotels it manages for us, • Our ability and the ability of our managers and tenants to operate under unfavorable market and economic conditions, rising or sustained high interest rates, high inflation, labor market challenges, dislocation and volatility in the public equity and debt markets, geopolitical instability and economic recessions or downturns, • If and when business transient hotel business will return to historical pre-COVID-19 pandemic levels and whether any improved hotel industry conditions will continue, increase or be sustained, • Whether and the extent to which our managers and tenants will pay the contractual amounts of returns, rents or other obligations due to us, • Competition within the commercial real estate, hotel, transportation and travel center and other industries in which our managers and tenants operate, particularly in those markets in which our properties are located, • Our ability to repay or refinance our debts as they mature or otherwise become due, • Our ability to maintain sufficient liquidity, including the availability of borrowings under our revolving credit facility, • Our ability to pay interest on and principal of our debt, • Risks and conditions to the consummation of BP’s acquisition of TA and the amendments of our lease and guaranty arrangements with TA, • Our ability to acquire properties that realize our targeted returns, • Our ability to sell properties at prices we target, • Our ability to raise or appropriately balance the use of debt or equity capital, • Potential defaults under our management agreements and leases by our managers and tenants, 36 Table of Contents • Our ability to increase hotel room rates and rents at our net leased properties as our leases expire in excess of our operating expenses and to grow our business, • Our ability to increase and maintain hotel room and net lease property occupancy at our properties, • Our ability to pay distributions to our shareholders and to increase or sustain the amount of such distributions, • The impact of increasing labor costs and shortages and commodity and other price inflation due to supply chain challenges or other market conditions, • Our ability to make cost-effective improvements to our properties that enhance their appeal to hotel guests and net lease tenants, • Our ability to engage and retain qualified managers and tenants for our hotels and net lease properties on satisfactory terms, • Our ability to diversify our sources of rents and returns that improve the security of our cash flows, • Our credit ratings, • The ability of our manager, RMR, to successfully manage us, • Actual and potential conflicts of interest with our related parties, including our Managing Trustees, TA, Sonesta, RMR and others affiliated with them, • Our qualification for taxation as a REIT under the IRC, • Our ability to realize benefits from the scale, geographic diversity, strategic locations and variety of service levels of our hotels, • Changes in federal or state tax laws, • Limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes, • Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters, • Acts of terrorism, outbreaks or continuation of pandemics or other significant adverse public health safety events or conditions, war or other hostilities, supply chain disruptions, climate change or other man-made or natural disasters beyond our control, and • Other matters. These risks, uncertainties and other factors are not exhaustive and should be read in conjunction with other cautionary statements that are included in our periodic filings. The information contained in our filings with the SEC, including under the caption “Risk Factors” in our periodic reports, or incorporated therein, identifies important factors that could cause differences from the forward-looking statements in this Quarterly Report on Form 10-Q. Our filings with the SEC are available on the SEC’s website and at www.sec.gov. You should not place undue reliance upon our forward-looking statements. Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise. Statement Concerning Limited Liability The Amended and Restated Declaration of Trust establishing Service Properties Trust dated August 21, 1995, as amended and supplemented, as filed with the State Department of Assessments and Taxation of Maryland, provides that no trustee, officer, shareholder, employee or agent of Service Properties Trust shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, Service Properties Trust. All persons dealing with Service Properties Trust in any way shall look only to the assets of Service Properties Trust for the payment of any sum or the performance of any obligation. 37 Table of Contents Part II Other Information Item 1A. Risk Factors There have been no material changes to risk factors from those we previously disclosed in our 2022 Annual Report.