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 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 Exchange Act. 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 December 31, 2023 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, 2023. 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) . Based on this assessment, we believe that, as of December 31, 2023, our internal control over financial reporting is effective. Deloitte & Touche LLP, the independent registered public accounting firm that audited our 2023 consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting. The report appears elsewhere herein. Item 9B. Other Information During the three months ended December 31, 2023, none of our Trustees or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”, as each term is defined in Item 408(a) of Regulation S-K. 74 Table of Contents Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. PART III Item 10. Directors, Executive Officers and Corporate Governance We have a Code of Conduct that applies to our officers and Trustees. 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, other employees of RMR and officers or employees of Sonesta under our Amended and Restated 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, 2023: 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. 1,084,131 (1) Equity compensation plans not approved by securityholders None. None. None. Total None. None. 1,084,131 (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 our officers, other employees of RMR and officers or employees of Sonesta 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. 75 Table of Contents 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 Accountant Fees and Services The information required by Item 14 is incorporated by reference to our definitive Proxy Statement. PART IV Item 15. Exhibits and Financial Statement Schedules (a) Index to Financial Statements and Financial Statement Schedules The following consolidated financial statements and financial statement schedule and notes of Service Properties Trust are included on the pages indicated: Page Reports of Deloitte & Touche LLP, Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) F- 1 Consolidated Balance Sheets as of December 31, 2023 and 2022 F-4 Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended December 31, 2023 F-5 Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended December 31, 2023 F-6 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2023 F-7 Notes to Consolidated Financial Statements F-9 Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2023 S- 1 Notes to Schedule III S-6 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, which was acquired by BP, a subsidiary of BP p.l.c., or BP Parent, on May 15, 2023, is the lessee of 28.8 % of our real estate properties, at historical cost, as of December 31, 2023. BP Corporation North America Inc. guarantees payment under each of the leases with TA, subject to a cap. Financial information about BP may be found on the SEC’s website by entering BP Parent’s name at http://www.sec.gov/edgar/searchedgar/companysearch.html. Reference to BP Parent’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, BP Parent’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. 76 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 Second Amended and Restated Bylaws of the Company, adopted effective June 13, 2023. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 14, 2023.) 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 U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association, as successor trustee to State Street Bank and Trust Company). (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997.) 4.3 Supplemental Indenture No. 17, dated as of September 12, 2014, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.4 Indenture, dated as of February 3, 2016, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association). (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 4, 2016.) 4.5 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.) 4.6 Third Supplemental Indenture, dated as of January 13, 2017, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.7 Fourth Supplemental Indenture, dated as of October 26, 2017, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.8 Fifth Supplemental Indenture, dated as of February 2, 2018, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.9 Seventh Supplemental Indenture, dated as of September 18, 2019, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.10 Eighth Supplemental Indenture, dated as of September 18, 2019, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.11 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 Trust Company, National Association (as successor in interest to 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.) 4.12 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 Trust Company, National Association (as successor in interest to 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.) 77 Table of Contents 4.13 Supplemental Indenture, dated as of October 9, 2020, among the Company, Banner NewCo LLC, SVCN 3 LLC and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.14 Supplemental Indenture, dated as of November 13, 2020, among the Company, SVC Jersey City TRS LLC, SVC Morris Plains TRS LLC, SVC Nanuet TRS LLC, SVC NJ TRS LLC, SVC Randolph Street TRS LLC, SVC Redondo Beach TRS LLC and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.15 Supplemental Indenture, dated as of January 29, 2021, among the Company, SVC Gatehall Drive TRS LLC and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.16 Supplemental Indenture, dated as of July 8, 2021, among the Company, SVCN 1 LLC, SVCN 4 LLC and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.17 Supplemental Indenture, dated as of October 28, 2021, among the Company, SVC Minneapolis TRS LLC and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.18 Supplemental Indenture, dated as of July 27, 2023, among the Company, HPTWN Properties Trust, Highway Ventures Properties Trust, Highway Ventures Properties LLC, HPT TA Properties LLC and U.S. Bank Trust Company, National Association (as successor in interest to 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, 2023.) 4.19 Tenth Supplemental Indenture, dated as of November 20, 2020, among the Company, certain subsidiaries of the Company named therein as guarantors and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.20 Supplemental Indenture, dated as of January 29, 2021, among the Company, SVC Gatehall Drive TRS LLC and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.21 Supplemental Indenture, dated as of July 8, 2021, among the Company, SVCN 1 LLC, SVCN 4 LLC and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.22 Supplemental Indenture, dated as of October 28, 2021, among the Company, SVC Minneapolis TRS LLC and U.S. Bank Trust Company, National Association (as successor in interest to 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.) 4.23 Supplemental Indenture, dated as of July 27, 2023, among the Company, HPTWN Properties Trust, Highway Ventures Properties Trust, Highway Ventures Properties LLC, HPT TA Properties LLC and U.S. Bank Trust Company, National Association (as successor in interest to 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, 2023.) 4.24 Indenture, dated as of November 16, 2023, between the Company and U.S. Bank Trust Company, National Association, relating to the Company’s 8.625% Senior Secured Notes due 2031, including form thereof. (Filed herewith.) 4.25 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.) 78 Table of Contents 4.26 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 Service Properties Trust Amended and Restated 2012 Equity Compensation Plan. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 16, 2022.) 10.5 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.) 10.6 Form of Share Award Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.) 10.7 Form of Share Award Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.) 10.8 Form of Indemnification Agreement. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.) 10.9 Third Amended and Restated Credit Agreement, dated as of June 29, 2023, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other institutions party thereto. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 6, 2023.) 10.10 Incremental Revolving Commitment Assumption Agreement, dated as of July 5, 2023, among the Company, certain of its subsidiaries party thereto, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other institutions party thereto. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 6, 2023.) 10.11 First Amendment to Third Amended and Restated Credit Agreement, dated as of November 3, 2023, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other institutions party thereto. (Filed herewith.) 10.12 Amended and Restated Pledge Agreement, dated as of June 29, 2023, between the Company, certain of its direct and indirect subsidiaries and Wells Fargo Bank, National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 6, 2023.) 10.13 Release of Certain Guarantors, dated as of October 1, 2020, by U.S. Bank Trust Company, National Association (f/k/a 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.) 10.14 Release of Certain Guarantors, dated as of November 13, 2020, among the Company, certain subsidiaries of the Company named therein and U.S. Bank Trust Company, National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 17, 2020.) 10.15 Release of Certain Guarantors, dated as of September 28, 2023, by U.S. Bank Trust Company, National Association (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.) 10.16 R elease of Certain Guarantors, dated as of September 28, 2023, by U.S. Bank Trust Company, National Assoc iation (In corporated by reference to the Company ’ s Quarterly Report on Form 10-Q for th e quarter ended S eptem ber 30, 2023.) 10.17 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.) 79 Table of Contents 10.18 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.) 10.19 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. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 10, 2022.) (Schedules thereto incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.) (Schedule of applicable agreements incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.) 10.20 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 incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.) 10.21 Third Amended and Restated Lease Agreement No. 1, dated as of May 15, 2023, 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 June 30, 2023.) 10.22 Second Amended and Restated Guaranty Agreement, dated as of May 15, 2023, by BP Corporation North America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Third Amended and Restated Lease Agreement No. 1). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.) 10.23 Third Amended and Restated Lease Agreement No. 2, dated as of May 15, 2023, 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 June 30, 2023.) 10.24 Second Amended and Restated Guaranty Agreement, dated as of May 15, 2023, by BP Corporation North America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Third Amended and Restated Lease Agreement No. 2). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.) 10.25 Third Amended and Restated Lease Agreement No. 3, dated as of May 15, 2023, b etween S VC HYB Lease Pool 3 LLC and TA Operating LLC . (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.) 10.26 Second Amended and Restated Guaranty Agreement, dated as of May 15, 2023, by BP Corporation North America Inc. for the benefit of SVC HYB Lease Pool 3 LLC (relating to Third Amended and Restated Lease Agreement No. 3). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.) 10.27 Third Amended and Restated Lease Agreement No. 4, dated as of May 15, 2023, between SVC HYB Lease Pool 4 LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.) 10.28 Second Amended and Restated Guaranty Agreement, dated as of May 15, 2023, by BP Corporation North America Inc. for the benefit of SVC HYB Lease Pool 4 LLC (relating to Third Amended and Restated Lease Agreement No. 4). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.) 10.29 Second Amended and Restated Lease Agreement No. 5, dated as of May 15, 2023, 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 June 30, 2023.) 10.30 Second Amended and Restated Guaranty Agreement, dated as of May 15, 2023, by BP Corporation North America Inc. for the benefit of Highway Ventures Properties Trust and Highway Ventures Properties LLC (relating to Second Amended and Restated Lease Agreement No. 5). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.) 10.31 Consent and Amendment Agreement, dated as of February 15, 2023, among the Company, HPT TA Properties Trust, HPT TRS Inc., HPT TA Properties LLC, Highway Ventures Properties Trust, Highway Ventures Properties LLC, TravelCenters of America Inc., TA Operating LLC and BP Products North America Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 21, 2023.) 80 Table of Contents 21.1 Subsidiaries of the Company. (Filed herewith.) 22.1 List of Subsidiary Guarantors. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.) 23.1 Consent of Deloitte & Touche LLP. (Filed herewith.) 23.2 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.) 31.3 Rule 13a-14(a) Certification. (Filed herewith.) 31.4 Rule 13a-14(a) Certification. (Filed herewith.) 32.1 Section 1350 Certification. (Furnished herewith.) 97.1 Clawback Policy. (Filed herewith.) 99.1 Registration Rights Agreement, dated as of February 27, 2020, among Sonesta Holdco Corporation, the Company and SVC Holdings LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.) 99.2 Letter Agreement, dated as of February 10, 2023, among the Company and The RMR Group LLC. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.) 99.3 Letter Agreement, dated as of May 1, 2023, 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, 2023.) 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. As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has not filed with this Annual Report on Form 10-K certain instruments defining the rights of holders of long-term debt of the Company and its subsidiaries because the total amount of securities authorized under any of such instruments does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. Item 16. Form 10-K Summary None. 81 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of 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, 2023 and 2022, the related consolidated statements of comprehensive income (loss), shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, 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, 2023, 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 28, 2024, 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 properties were $6.6 billion, net of accumulated depreciation of $3.2 billion as of December 31, 2023 . 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 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 F-1 Table of Contents 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. 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 28, 2024 We have served as the Company’s auditor since 2020. F-2 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of 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 , 2023 , 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 , 2023 , 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 , 2023 , of the Company and our report dated February 28, 2024, 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 28, 2024 F-3 Table of Contents SERVICE PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) December 31, 2023 2022 ASSETS Real estate properties: Land $ 1,972,145 $ 1,902,587 Buildings, improvements and equipment 7,814,192 7,658,282 Total real estate properties, gross 9,786,337 9,560,869 Accumulated depreciation ( 3,181,797 ) ( 2,970,133 ) Total real estate properties, net 6,604,540 6,590,736 Acquired real estate leases and other intangibles, net 130,622 252,357 Assets held for sale 10,500 121,905 Cash and cash equivalents 180,119 38,369 Restricted cash 17,711 7,051 Equity method investment 113,304 112,617 Investment in equity securities — 53,055 Due from related persons 6,376 35,033 Other assets, net 292,944 277,068 Total assets $ 7,356,116 $ 7,488,191 LIABILITIES AND SHAREHOLDERS’ EQUITY Revolving credit facility $ — $ — Senior secured notes, net 968,017 — Senior unsecured notes, net 3,993,327 5,655,530 Mortgage notes payable, net 558,876 — Accounts payable and other liabilities 587,005 425,960 Due to related persons 22,758 17,909 Total liabilities 6,129,983 6,099,399 Commitments and contingencies Shareholders’ equity: Common shares of beneficial interest, $ .01 par value; 200,000,000 shares authorized; 165,769,595 and 165,452,566 shares issued and outstanding, respectively 1,658 1,655 Additional paid in capital 4,557,473 4,554,861 Cumulative other comprehensive income 2,318 2,383 Cumulative net income 2,470,500 2,503,279 Cumulative common distributions ( 5,805,816 ) ( 5,673,386 ) Total shareholders’ equity 1,226,133 1,388,792 Total liabilities and shareholders’ equity $ 7,356,116 $ 7,488,191 The accompanying notes are an integral part of these consolidated financial statements. F-4 T able of Contents SERVICE PROPERTIES TRUST CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (amounts in thousands, except per share data) Year Ended December 31, 2023 2022 2021 Revenues: Hotel operating revenues $ 1,478,034 $ 1,467,344 $ 1,104,678 Rental income 395,829 395,667 390,902 Total revenues 1,873,863 1,863,011 1,495,580 Expenses: Hotel operating expenses 1,223,906 1,227,357 1,010,737 Net lease operating expenses 17,663 13,176 15,658 Depreciation and amortization 384,060 401,108 485,965 General and administrative 45,397 44,404 53,439 Transaction related costs ( 1,623 ) 1,920 64,764 Loss on asset impairment, net 9,544 10,989 78,620 Total expenses 1,678,947 1,698,954 1,709,183 Gain on sale of real estate, net 43,239 47,818 11,522 Gain (loss) on equity securities, net 48,837 ( 8,104 ) 22,535 Interest income 20,979 3,379 664 Interest expense (including amortization of debt issuance costs, discounts and premiums of $ 25,710 , $ 19,375 and $ 21,036 , respectively) ( 336,342 ) ( 341,795 ) ( 365,721 ) Loss on early extinguishment of debt ( 1,524 ) ( 791 ) — Loss before income tax benefit and equity in (losses) earnings of an investee ( 29,895 ) ( 135,436 ) ( 544,603 ) Income tax benefit 1,498 199 941 Equity in (losses) earnings of an investee ( 4,382 ) 2,856 ( 941 ) Net loss ( 32,779 ) ( 132,381 ) ( 544,603 ) Other comprehensive (loss) income: Equity interest in investee’s unrealized (losses) gains ( 65 ) 1,604 1,539 Other comprehensive (loss) income ( 65 ) 1,604 1,539 Comprehensive loss $ ( 32,844 ) $ ( 130,777 ) $ ( 543,064 ) Weighted average common shares outstanding (basic and diluted) 164,988 164,738 164,566 Net loss per common share (basic and diluted) $ ( 0.20 ) $ ( 0.80 ) $ ( 3.31 ) The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents SERVICE PROPERTIES TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (dollars in thousands) 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, 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 interest in investee’s unrealized gains — — — — — 1,539 1,539 Common share grants 340,700 3 — 2,964 — — 2,967 Common share repurchases ( 71,100 ) — — ( 790 ) — — ( 790 ) Common share forfeitures ( 1,100 ) — — ( 1 ) — — ( 1 ) 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 Net loss — — — — ( 132,381 ) — ( 132,381 ) Equity interest in investee’s unrealized gains — — — — — 1,604 1,604 Common share grants 433,500 4 — 2,784 — — 2,788 Common share repurchases ( 69,867 ) — — ( 470 ) — — ( 470 ) Common share forfeitures ( 3,400 ) — — ( 11 ) — — ( 11 ) Distributions — — ( 38,044 ) — — — ( 38,044 ) Balance at December 31, 2022 165,452,566 1,655 ( 5,673,386 ) 4,554,861 2,503,279 2,383 1,388,792 Net loss — — — — ( 32,779 ) — ( 32,779 ) Equity interest in investee’s unrealized losses — — — — — ( 65 ) ( 65 ) Common share grants 438,000 4 — 3,478 — — 3,482 Common share repurchases ( 98,571 ) ( 1 ) — ( 801 ) — — ( 802 ) Common share forfeitures ( 22,400 ) — — ( 65 ) — — ( 65 ) Distributions — — ( 132,430 ) — — — ( 132,430 ) Balance at December 31, 2023 165,769,595 $ 1,658 $ ( 5,805,816 ) $ 4,557,473 $ 2,470,500 $ 2,318 $ 1,226,133 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents SERVICE PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net loss $ ( 32,779 ) $ ( 132,381 ) $ ( 544,603 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 384,060 401,108 485,965 Net amortization of debt issuance costs, discounts and premiums as interest 25,710 19,375 21,036 Straight line rental income ( 13,165 ) 7,767 2,621 Loss on early extinguishment of debt 1,524 791 — Loss on asset impairment, net 9,544 10,989 78,620 (Gains) losses on equity securities, net ( 48,837 ) 8,104 ( 22,535 ) Equity in losses (earnings) of an investee 4,382 ( 2,856 ) 941 Gain on sale of real estate, net ( 43,239 ) ( 47,818 ) ( 11,522 ) Deferred income taxes ( 1,291 ) ( 1,091 ) ( 1,688 ) Other non-cash income expense, net ( 1,706 ) ( 2,427 ) ( 2,625 ) Changes in assets and liabilities: Due from related persons 21,135 ( 8 ) ( 5,875 ) Other assets 35,693 3,841 60,182 Accounts payable and other liabilities 144,079 ( 11,512 ) ( 5,061 ) Due to related persons 439 ( 10,755 ) ( 5,552 ) Net cash provided by operating activities 485,549 243,127 49,904 Cash flows from investing activities: Acquisition of real estate properties ( 165,866 ) ( 2,766 ) ( 7,709 ) Proceeds from sale of TravelCenters of America Inc. common shares 101,892 — — Proceeds from sale of tradenames and trademarks 89,400 — — Real estate improvements ( 200,894 ) ( 103,646 ) ( 95,017 ) Hotel managers’ purchases with restricted cash ( 5,407 ) ( 4,952 ) ( 24,565 ) Net proceeds from sale of real estate 156,432 554,087 51,412 Investment in Sonesta ( 5,134 ) ( 45,470 ) ( 25,443 ) Distributions in excess of earnings from Affiliates Insurance Company — — 12 Net cash (used in) provided by investing activities ( 29,577 ) 397,253 ( 101,310 ) Cash flows from financing activities: Proceeds from mortgage notes payable, net of discounts 576,946 — — Repayment of mortgage notes payable ( 1,631 ) — — Proceeds from senior secured notes, net of discounts 985,900 — — Repayment of senior unsecured notes ( 1,675,000 ) ( 500,000 ) — Borrowings under revolving credit facility — 20,000 984,027 Repayments of revolving credit facility — ( 1,020,000 ) ( 62,451 ) Payment of debt issuance costs ( 56,545 ) ( 3,864 ) ( 6,822 ) Repurchase of common shares ( 802 ) ( 470 ) ( 790 ) Distributions to common shareholders ( 132,430 ) ( 38,044 ) ( 6,596 ) Net cash (used in) provided by financing activities ( 303,562 ) ( 1,542,378 ) 907,368 Increase (decrease) in cash and cash equivalents and restricted cash 152,410 ( 901,998 ) 855,962 Cash and cash equivalents and restricted cash at beginning of year 45,420 947,418 91,456 Cash and cash equivalents and restricted cash at end of year $ 197,830 $ 45,420 $ 947,418 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 (Continued) (dollars in thousands) Year Ended December 31, 2023 2022 2021 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 $ 180,119 $ 38,369 $ 944,043 Restricted cash 17,711 7,051 3,375 Total cash and cash equivalents and restricted cash $ 197,830 $ 45,420 $ 947,418 Supplemental cash flow information: Cash paid for interest $ 314,323 $ 334,264 $ 344,043 Cash paid for income taxes 1,365 1,643 3,412 Non-cash investing activities: Real estate improvements accrued, not paid $ 47,868 $ 18,704 $ 7,777 The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) 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 service-focused retail net lease properties. At December 31, 2023, we owned, directly and through our subsidiaries, 221 hotels and 752 service-focused retail net lease properties. At December 31, 2023, all 221 of our hotels were managed by subsidiaries of the following companies: Sonesta Holdco Corporation, or Sonesta, ( 195 hotels), Hyatt Hotels Corporation, or Hyatt ( 17 hotels), Radisson Hospitality, Inc., or Radisson ( eight hotels), and InterContinental Hotels Group, plc, or IHG ( one hotel). At December 31, 2023, we owned 752 service-focused retail net lease properties with 175 tenants, including 176 travel centers leased to TravelCenters of America Inc., or TA, our largest tenant. Hereinafter, these companies are sometimes referred to as our managers and/or tenants, or collectively, operators. 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 $ 142,789 and $ 142,542 as of December 31, 2023 and 2022, respectively, and consist primarily of our TRS’s investment in Sonesta’s common stock and amounts due from and working capital advances to certain of our hotel managers. The liabilities of our TRSs were $ 81,262 and $ 82,454 as of December 31, 2023 and 2022, 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. 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 credit losses, purchase price allocations, useful lives of fixed assets and impairment of real estate and related intangibles. 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 net assets acquired to goodwill. We depreciate real estate properties on a straight line basis over estimated useful lives of up to 40 years for buildings and improvements and up to 12 years for personal property and we amortize finite lived intangible assets over the shorter of their useful lives or the term of the associated lease. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determination of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives. We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of our real estate properties. These indicators may include weak or declining operating profitability, cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life or market or industry changes that could permanently reduce the value of our investments. If there is an indication that the carrying value of a property is not recoverable, we estimate the projected undiscounted cash flows of the asset to determine if an impairment loss should be recognized. We determine the amount of an impairment loss by comparing the historical carrying value of the property to its estimated fair value. We estimate fair value by evaluating recent financial performance and projecting discounted cash flows of properties using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our real estate properties. If we change F-9 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) estimated lives, we depreciate or amortize the carrying values of affected assets over the revised remaining lives. During the years ended December 31, 2023, 2022 and 2021, we recorded $ 9,544 , $ 10,989 and $ 78,620 , 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, net and intangible liabilities in accounts payable and other liabilities in our consolidated balance sheets. At December 31, 2023 and 2022, our intangible assets and liabilities were as follows: December 31, 2023 2022 Assets: Tradenames and trademarks $ — $ 89,375 Above market operating leases, net of accumulated amortization of $ 95,275 and $ 82,515 , respectively 126,890 155,320 Below market ground leases, net of accumulated amortization of $ 13,557 and $ 18,542 , respectively 2,712 6,564 Other, net of accumulated amortization of $ 538 and $ 460 , respectively 1,020 1,098 $ 130,622 $ 252,357 Liabilities: Below market operating leases, net of accumulated amortization of $ 784 and $ 597 , respectively $ 746 $ 933 Above market ground leases, net of accumulated amortization of $ 293 and $ 296 , respectively 7 25 $ 753 $ 958 See Note 4 for further information related to the tradenames and trademarks we sold to TA on May 15, 2023. We amortize above and below market leases on a straight line basis over the terms of the associated leases. For the years ended December 31, 2023, 2022 and 2021, amortization relating to intangible assets was $ 32,223 , $ 30,775 and $ 41,648 , respectively, and amortization relating to intangible liabilities was $ 205 , $ 235 and $ 433 , respectively. As of December 31, 2023, the weighted average amortization period for capitalized above market leases and below market lease values were 9.3 and 6.9 , respectively. As of December 31, 2023, we estimate future amortization relating to intangible assets and liabilities as follows: Year Above Market Operating Leases Below Market Ground Leases Below Market Operating Leases Above Market Ground Leases & Other, Net 2024 $ 22,127 $ 735 $ ( 186 ) $ 71 2025 19,008 660 ( 127 ) 78 2026 14,645 658 ( 121 ) 78 2027 12,526 658 ( 89 ) 78 2028 9,723 1 ( 76 ) 78 Thereafter 48,861 — ( 147 ) 630 Total $ 126,890 $ 2,712 $ ( 746 ) $ 1,013 Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the 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 amounts escrowed at certain of our mortgaged net lease properties. F-10 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) 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, 2023 and 2022, debt issuance costs for our revolving credit facility were $ 12,379 and $ 6,214 , respectively, and accumulated amortization of debt issuance costs for our revolving credit facility were $ 1,502 and $ 3,925 , respectively. Debt issuance costs, net of accumulated amortization, for our senior notes and our net lease mortgage notes, are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2023 and 2022, debt issuance costs, net of accumulated amortization, were $ 35,016 and $ 25,545 , respectively, for our senior notes, and $ 22,332 and zero , respectively, for our net lease mortgage notes. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, our senior notes and our net lease mortgage notes as of December 31, 2023, are as follows: Year Amount 2024 $ 16,628 2025 15,718 2026 13,607 2027 11,207 2028 3,850 Thereafter 7,215 Total $ 68,225 Equity Method Investment. 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, and Sonesta’s other director serves as The RMR Group LLC, or RMR’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. Certain other officers and employees of Sonesta are former employees of RMR. RMR also provides certain services to Sonesta. See Notes 4, 5 and 9 for a further discussion of our investment in and relationships with Sonesta. Equity Securities. We record 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 . 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 terms of the lease agreements. We increased rental income by $ 13,165 during the year ended December 31, 2023, and reduced rental income by $ 7,767 and $ 2,621 during the years ended December 31, 2022 and 2021, respectively, to record scheduled rent changes under certain of our leases on a straight line basis. Due from related persons included $ 7,522 of straight line rent receivables related to our TA leases at December 31, 2022. TA was no longer a related person as of May 15, 2023. Other assets, net, includes $ 56,833 and $ 32,247 of straight line rent receivables at December 31, 2023 and 2022, respectively. See Notes 4 and 9 for further information regarding our TA leases. Certain of our lease agreements require additional percentage rent if gross revenues of our properties exceed certain thresholds defined in our lease agreements. We may determine percentage rent due to us under our leases monthly, quarterly or annually, depending on the specific lease terms, and recognize it when all contingencies are met and the rent is earned. We recorded percentage rent of $ 6,600 , $ 10,578 and $ 7,085 during the years ended December 31, 2023, 2022 and 2021, respectively. We own all the escrowed reserves established for the regular refurbishment of our hotels, or FF&E reserves. We do not report the FF&E reserves for our managed hotels as FF&E reserve income. F-11 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Per Common Share Amounts. We calculate basic earnings per common share using the two class method. 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, together with the related impact on earnings, are considered when calculating diluted earnings per share. For the years ended December 31, 2023, 2022, and 2021, there were no dilutive common shares and certain unvested common shares were not included in the calculation of diluted earnings per share because to do so would have been antidilutive. Segment Information. As of December 31, 2023, we had two reportable segments: hotel investments and net lease investments. 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 2020 through 2023 tax years are subject to examination by taxing authorities. We classify interest and penalties related to uncertain tax positions, if any, in our consolidated statements of comprehensive income (loss) as a component of general and administrative expense. New Accounting Pronouncements. On November 27, 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , or ASU No. 2023-07, which requires public entities to: (i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the Chief Operating Decision Maker, or the CODM, and included in each reported measure of segment profit or loss; (ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by ASC 280, Segment Reporting , or ASC 280, in interim periods; and (iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures. The amendments in ASU No. 2023-07 are incremental to the requirements in ASC 280 and do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. ASU No. 2023-07 should be applied retrospectively to all prior periods presented in the financial statements and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact ASU No. 2023-07 will have on our consolidated financial statements and disclosures. On December 14, 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , or ASU No. 2023-09, which requires public entities to enhance its annual income tax disclosures by requiring: (i) consistent categories and greater disaggregation of information in the rate reconciliation, and (ii) income taxes paid disaggregated by jurisdiction. ASU No. 2023-09 should be applied prospectively but entities have the option to apply it retrospectively to all prior periods presented in the financial statements. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact ASU No. 2023-09 will have on our consolidated financial statements and disclosures. F-12 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Note 3. Real Estate Properties As of December 31, 2023, we owned 221 hotels with an aggregate of 37,777 rooms or suites and 752 service-focused retail net lease properties with an aggregate of 13,341,172 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 $ 9,799,642 , including $ 13,305 related to properties classified as held for sale as of December 31, 2023. Our real estate properties, at cost after impairments, consisted of land of $ 1,972,145 , buildings and improvements of $ 7,443,750 and furniture, fixtures and equipment of $ 370,442 , as of December 31, 2023; and land of $ 1,902,587 , buildings and improvements of $ 7,271,864 and furniture, fixtures and equipment of $ 386,418 , as of December 31, 2022. We funded capital improvements to certain of our properties of $ 235,530 , $ 115,927 and $ 103,630 during 2023, 2022 and 2021, respectively. At December 31, 2023, eight of our hotels were on land we leased partially or entirely from unrelated third parties. The average remaining term of these ground leases (including renewal options) is approximately 39 years (range of 11 years to 64 years). Ground rent payable under three of these ground leases is generally calculated as a percentage of hotel revenues. Seven of the eight ground leases require annual minimum rents averaging $ 337 per year; future rent under one ground lease has been prepaid. 14 of our net lease properties are also on land we leased partially or entirely from unrelated third parties. The remaining terms on these leases range from three months to 41 years with rents averaging $ 420 per year. Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant does not perform obligations under a ground lease or does not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property. Any pledge, sale or transfer of our interests in a ground lease may require the consent of the applicable ground lessor and its lenders. Acquisitions Our allocation of the purchase price for each of our acquisitions in 2023, 2022 and 2021, 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 Suites / Square Feet Purchase Price (1) Land Buildings and Improvements Furniture, Fixtures and Equipment Properties acquired during the year ended December 31, 2023: June 1, 2023 Miami Beach, FL Hotel 250 $ 165,866 $ 83,200 $ 77,987 $ 4,679 Properties acquired during the year ended December 31, 2022: September 12, 2022 Stoughton, MA Land — $ 2,766 $ 2,766 $ — $ — Properties acquired during the year ended December 31, 2021: March 9, 2021 Nashville, TN Land — $ 7,709 $ 7,709 $ — $ — (1) Includes acquisition related costs of $ 466 , $ 51 and $ 109 for the years ended December 31, 2023, 2022 and 2021, respectively. Dispositions During the years ended December 31, 2023, 2022 and 2021, we sold 31 , 86 and 18 properties, respectively, for an aggregate sales price of $ 170,325 , $ 559,848 and $ 52,332 , respectively, excluding closing costs. The sales of these properties as presented in the table below do not represent significant dispositions, individually or in the aggregate, nor do they represent a strategic shift in our business. As a result, the results of the operations of these properties are included in continuing operations through the date of sale in our consolidated statements of comprehensive income (loss). F-13 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Property Type Number of Properties Rooms or Suites / Square Feet Gross Sales Price Gain / (Loss) on Sale of Real Estate, net Properties sold during the year ended December 31, 2023: Hotels 18 2,526 $ 157,230 $ 41,861 Net Lease 13 160,310 13,095 1,378 31 2,526 / 160,310 $ 170,325 $ 43,239 Properties sold during the year ended December 31, 2022: Hotels 65 8,296 $ 543,413 $ 48,202 Net Lease 21 138,638 16,435 ( 384 ) 86 8,296 / 138,638 $ 559,848 $ 47,818 Properties sold during the year ended December 31, 2021: Hotels 7 669 $ 40,552 $ 9,590 Net Lease 11 97,276 11,780 1,932 18 669 / 97,276 $ 52,332 $ 11,522 As of December 31, 2023, we had one hotel with 84 rooms and a carrying value of $ 4,060 , and nine net lease properties with 128,159 square feet and an aggregate carrying value of $ 6,386 classified as held for sale. See Note 13 for further information on these properties. From January 1, 2024 through February 22, 2024, we sold one net lease property with 4,100 square feet for a sale price of $ 257 , excluding closing costs. We have also entered into agreements to sell one hotel with 84 keys for a sales price of $ 3,315 and four net lease properties with an aggregate of 55,276 square feet for an aggregate sales price of $ 3,121 . These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales, that these sales will not be delayed or that the terms will not change. We believe it is more likely than not that the sales of these properties will be completed by year end 2024. We continue to market five net lease properties with an aggregate of 98,422 square feet for sale. Note 4. Management Agreements and Leases As of December 31, 2023, we owned 221 hotels included in four operating agreements and 752 service-focused retail properties net leased to 175 tenants. We do not operate any of our properties. As of December 31, 2023, all 221 of our hotels were managed by subsidiaries of the following companies: Sonesta ( 195 hotels), Hyatt ( 17 hotels), Radisson ( eight hotels) and IHG ( one hotel). As of December 31, 2023, we owned 752 service-focused retail net lease properties with 175 tenants, including 176 travel centers leased to TA, our largest tenant. Hereinafter, these companies are sometimes referred to as our managers and/or tenants, or collectively, operators. Hotel Agreements Sonesta Agreement. As of December 31, 2023, Sonesta managed 40 of our full-service hotels, 111 of our extended stay hotels and 44 of our select service hotels pursuant to management agreements for all of the hotels, which we collectively refer to as our Sonesta agreement. The hotels Sonesta managed for us comprised approximately 49.8 % of our total historical real estate investments. We acquired one hotel in June 2023, and we and Sonesta added this hotel to our Sonesta agreement. We sold two Sonesta branded hotels and 65 Sonesta branded hotels during the years ended December 31, 2023 and 2022, respectively. See Note 3 for further information regarding our acquisition and disposition activities. Our Sonesta agreement, which expires on January 31, 2037 and includes two 15 -year renewal options, provides that we are paid an annual owner’s priority return if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so. The Sonesta agreement further provides that we are paid an additional return equal to 80 % of the operating profits, as defined therein, after paying the owner’s priority return, reimbursing owner or manager advances, funding FF&E reserves and paying Sonesta’s incentive fee, if applicable. We do not have any security deposits or guarantees for our Sonesta hotels. We realized returns under our Sonesta agreement of $ 226,181 , $ 196,721 and $ 53,853 during the years ended December 31, 2023, 2022 and 2021, respectively. F-14 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Our Sonesta agreement requires us to fund capital expenditures that we approve at the hotels. We incurred capital expenditures for hotels included in our Sonesta agreement in an aggregate amount of $ 172,028 and $ 94,479 during the years ended December 31, 2023 and 2022, respectively, which resulted in increases in our contractual annual owner’s priority returns of $ 10,321 and $ 5,416 , respectively. Our annual priority return under our Sonesta agreement as of December 31, 2023 was $ 353,953 . We owed Sonesta $ 13,300 and $ 8,889 for capital expenditures and other reimbursements as of December 31, 2023 and 2022, respectively. Sonesta owed us $ 6,376 and $ 2,975 in owner’s priority returns and other amounts as of December 31, 2023 and 2022, respectively. Amounts due from Sonesta are included in due from related persons and amounts owed to Sonesta are included in due to related persons in our consolidated balance sheets. Our Sonesta agreement requires that 5 % of the hotel gross revenues be escrowed for future capital expenditures as FF&E reserves, subject to available cash flows after payment of the owner’s priority returns due to us. No FF&E escrow deposits were required during any of the years ended December 31, 2023, 2022 or 2021. Pursuant to our Sonesta agreement, we incurred management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing programs and third-party reservation transmission fees of $ 118,146 , $ 114,563 and $ 84,926 for the years ended December 31, 2023, 2022 and 2021, respectively. These fees and costs are included in hotel operating expenses in our consolidated statements of comprehensive income (loss). In addition, we incurred procurement and construction supervision fees payable to Sonesta of $ 1,791 and $ 1,331 for the years ended December 31, 2023 and 2022, respectively, which amounts have been capitalized in our consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets. 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. As of December 31, 2023 and 2022, we had advanced $ 48,490 and $ 48,580 , respectively, of initial working capital to Sonesta net of any working capital returned to us on termination of the applicable management agreements in connection with hotels we have sold. These amounts are included in other assets 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. In general, we and Sonesta may terminate the management agreement 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 the management agreement if minimum performance thresholds are not met for any three of four applicable consecutive years starting in 2024. Pursuant to our Sonesta 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. See Notes 5 and 9 for further information regarding our relationship, agreements and transactions with Sonesta. Hyatt Agreement. As of December 31, 2023, Hyatt managed 17 of our select service hotels pursuant to a portfolio management agreement that expires on March 31, 2031, or our Hyatt agreement, and provides that, as of December 31, 2023, we are to be paid an annual owner’s priority return of $ 15,555 . Any returns we receive from Hyatt are currently limited to the hotels’ available cash flows, if any, after payment of operating expenses. Hyatt has provided us with a $ 30,000 limited guarantee for 75 % of the aggregate annual owner’s priority returns due to us that will become effective upon substantial completion of planned renovations of the hotels, which we currently expect to occur in 2024. We realized returns under our Hyatt agreement of $ 9,371 , $ 12,281 and $ 9,388 during the years ended December 31, 2023, 2022 and 2021, respectively. During the year ended December 31, 2021, we expensed $ 3,700 of working capital we previously funded under our Hyatt agreement because the amount was no longer expected to be recoverable. This amount is included in transaction related costs in our consolidated statements of comprehensive income (loss). In February 2024, we funded $ 2,300 of additional working capital to Hyatt. We may recover this amount in the future, if cash flows are sufficient to pay our owner’s priority return and other amounts in accordance with our Hyatt agreement. During the years ended December 31, 2023 and 2022, we incurred capital expenditures for certain hotels included in our Hyatt agreement of $ 46,679 and $ 11,845 , respectively, which resulted in an aggregate increase in our contractual annual owner’s priority returns of $ 2,801 and $ 754 , respectively. F-15 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Radisson Agreement . As of December 31, 2023, Radisson managed eight of our full service hotels pursuant to a portfolio management agreement that expires on July 31, 2031, or our Radisson agreement, and provides that we are to be paid an annual owner’s priority return of $ 10,866 . Radisson has provided us with a $ 22,000 limited guarantee for 75 % of the aggregate annual owner’s priority returns due to us that became effective on January 1, 2023, subject to adjustment for planned renovations of certain hotels, which we currently expect to be completed by the end of the second quarter of 2024. We realized returns under our Radisson agreement of $ 6,266 , $ 6,387 and $ 11,364 for the years ended December 31, 2023, 2022 and 2021, respectively. During the year ended December 31, 2023, the hotels under this agreement generated cash flows that were less than the guaranteed owner’s priority level due to us for the period, and Radisson made $ 650 of guaranty payments to cover the shortfall. The available balance of the guaranty was $ 21,350 as of December 31, 2023. Radisson had previously provided us with a guaranty, which was limited to $ 47,253 . During the year ended December 31, 2021, the hotels under this agreement generated cash flows that were less than the minimum returns due to us and Radisson made $ 13,238 of guaranty payments to cover the shortfall and the previous Radisson guaranty was exhausted. During the years ended December 31, 2023 and 2022, we incurred capital expenditures of $ 7,660 and $ 3,433 , respectively, for the hotels included in our Radisson agreement, which resulted in an aggregate increase in our contractual owner’s priority returns of $ 460 and $ 206 , respectively. Marriott Agreement . As of December 31, 2023, we sold all 16 hotels previously managed by Marriott International, Inc., or Marriott. We realized a net operating loss under our management agreement with Marriott of $ 2,762 during the year ended December 31, 2023 and returns of $ 8,942 and $ 2,830 during the years ended December 31, 2022 and 2021, respectively. We did not incur capital expenditures for any of the hotels included in our management agreement with Marriott during either of the years ended December 31, 2023 or 2022. IHG Agreement. Our management agreement with IHG for one hotel expires on January 31, 2026. We realized returns under our management agreement with IHG of $ 4,800 , $ 3,561 and $ 337 for the years ended December 31, 2023, 2022 and 2021, respectively. Any returns we receive from IHG are limited to the hotel’s available cash flows, if any, after payment of operating expenses. During the year ended December 31, 2021, we expensed $ 16,711 of working capital we previously funded under our IHG agreement because the amount was no longer, at that time, expected to be recoverable. During the year ended December 31, 2023, we recovered $ 5,797 of the working capital that was previously expensed. Both amounts are included in transaction related costs in our consolidated statements of comprehensive income (loss). During the years ended December 31, 2023 and 2022, we incurred capital expenditures for our hotel in our IHG agreement of $ 542 and $ 451 , respectively. Net Lease Portfolio As of December 31, 2023, we owned 752 service-focused retail net lease properties with an aggregate of 13,341,172 square feet with leases requiring annual minimum rents of $ 372,319 with a weighted (by annual minimum rents) average remaining lease term of 8.8 years. Our net lease properties were 97.1 % occupied and leased by 175 tenants operating under 137 brands in 21 distinct industries. TA Leases. As of December 31, 2023, TA is our largest tenant, representing 28.8 % of our total historical real estate investments. Pursuant to the A&R Leases, as defined and described below, we lease to TA a total of 176 travel centers under five master leases that expire in 2033, or our TA leases, subject to TA’s right to extend those leases, and require annual minimum rents of $ 254,000 as of December 31, 2023. As of December 31, 2023, the number of travel centers, the terms and the annual minimum rents owed to us by TA under our TA leases was as follows: Number of Travel Centers Initial Term End (1) Annualized Minimum Rent TA No. 1 Lease 35 May 14, 2033 $ 52,001 TA No. 2 Lease 36 May 14, 2033 46,111 TA No. 3 Lease 34 May 14, 2033 44,366 TA No. 4 Lease 36 May 14, 2033 47,023 TA No. 5 Lease 35 May 14, 2033 64,499 176 $ 254,000 (1) TA has five renewal options of 10 years each under each of our TA leases. F-16 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Our TA leases are “triple net” leases that require TA to pay all costs incurred in the operation of the leased travel centers, including personnel, utility, inventory, customer service and insurance expenses, real estate and personal property taxes, environmental related expenses, underground storage tank maintenance costs and ground lease payments at those travel centers at which we lease the property and sublease it to TA. Our TA leases generally require TA to indemnify us for certain environmental matters and for liabilities that arise during the terms of the leases from ownership or operation of the leased travel centers. 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. We recognized rental income from our TA leases of $ 266,263 , $ 259,093 and $ 248,291 for the years ended December 31, 2023, 2022 and 2021, respectively. Rental income was increased by $ 7,932 for the year ended December 31, 2023 and decreased by $ 13,143 and $ 13,237 for the years ended December 31, 2022 and 2021, respectively, to record the scheduled rent changes on a straight line basis. TA was required to pay us previously deferred rent obligations in quarterly installments of $ 4,404 through January 31, 2023. TA paid us the final quarterly installment owed to us in January 2023. As of December 31, 2023 and 2022, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $ 19,816 and $ 30,764 , respectively, included in other assets, net and due from related persons, respectively, in our consolidated balance sheets. Until May 15, 2023, our TA leases required TA to pay us percentage rent based upon increases in certain sales. We recognized percentage rent due under our TA leases as rental income when all contingencies were met. We recognized percentage rent of $ 3,507 , $ 10,578 and $ 7,085 during the years ended December 31, 2023, 2022 and 2021, respectively, under our TA leases. We did not fund any improvements under these leases during either of the years ended December 31, 2023 or 2022. TA Merger On May 15, 2023, BP Products North America Inc. acquired TA pursuant to a merger, or the TA Merger, for $ 86.00 per common share in cash. At the effective time of the TA Merger, we entered into amended and restated lease agreements, or the A&R Leases, for 176 of our travel center properties. Under the A&R Leases, the aggregate annual minimum rent due to our applicable subsidiaries is $ 254,000 , with annual 2 % increases throughout the initial term of 10 years and any of the five 10 -year extension options that may be exercised, and there is no percentage rent requirement. TA prepaid $ 188,000 of rent under the A&R Leases at the effective time of the TA Merger and TA will receive monthly rent credits totaling $ 25,000 per year over the 10-year initial term of the A&R Leases. In addition, we received $ 89,400 for certain tradenames and trademarks associated with TA’s business that we sold to TA in connection with the TA Merger, which amount equaled our net book value for those tradenames and trademarks. TA is required to maintain the leased travel centers, including structural and non-structural components. In addition, TA has a right of first offer with respect to certain potential sales of travel center properties included in the A&R Leases. Pursuant to the amended and restated guaranty amendments entered into at the effective time of the TA Merger, or the A&R Guarantees, BP Corporation North America Inc. guaranteed payment under each of the A&R Leases. BP Corporation North America Inc.’s obligations under the A&R Guarantees are limited by an aggregate cap which was approximately $ 3,037,475 as of December 31, 2023. Following the TA Merger, TA ceased being a related party. On February 2, 2024, TA acquired the leasehold interest of one of our travel centers from a third party landlord. The aggregate minimum rent due to us under our leases with TA for the remaining 175 travel centers is unchanged as a result of TA’s acquisition of this leasehold interest. For more information regarding our relationship with TA, including the TA Merger and related transactions, see Notes 5 and 9. F-17 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Our other net lease agreements generally provide for minimum rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight-line basis over the lease term when we have determined the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. We recognized rental income from our net lease properties (excluding TA) of $ 129,566 , $ 135,522 and $ 140,803 for the years ended December 31, 2023, 2022 and 2021, respectively, which included $ 5,233 , $ 5,367 and $ 10,616 , respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight line basis. We continually review receivables related to rent, straight-line rent and property operating expense reimbursements and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes an assessment of whether substantially all of the amounts due under a tenant’s lease are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received. We recognize all changes in the collectability assessment for an operating lease as an adjustment to rental income. We recorded reserves for uncollectable amounts and reduced rental income by $ 4,927 during the year ended December 31, 2023 and reduced our reserves for uncollectable amounts and increased rental income by $ 320 and $ 9 during the years ended December 31, 2022 and 2021, respectively, based on our assessment of the collectability of rents. We had reserves for uncollectable rents of $ 3,436 and $ 7,697 as of December 31, 2023 and 2022, respectively, included in other assets in our consolidated balance sheets. Additional lease information (as lessor). As of December 31, 2023, 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: Year Amount 2024 $ 377,775 2025 377,571 2026 371,649 2027 367,491 2028 362,288 Thereafter 1,799,925 Total $ 3,656,699 Additional lease information (as lessee). As of December 31, 2023, eight 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. F-18 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) At December 31, 2023 and 2022, our right of use assets and related lease liabilities each totaled $ 157,127 and $ 177,264 , respectively, which represented our future obligations under our operating leases and are included in other assets, net and accounts payable 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 and rent payments equal to the greater of a minimum fixed rent or percentage rent. Rental expense related to our hotel operating leases of $ 9,618 , $ 11,148 and $ 12,182 for the years ended December 31, 2023, 2022 and 2021, respectively, is included in hotel operating expenses within our consolidated statements of comprehensive income (loss). For operating leases related to our net lease properties, our tenants are required to pay the rental expense. As of December 31, 2023, our operating leases provide for contractual minimum rent payments to third parties during the remaining lease terms, as follows: Year Amount 2024 $ 14,003 2025 14,076 2026 14,198 2027 14,087 2028 13,891 Thereafter 216,217 Total lease payments 286,472 Less: imputed interest ( 129,345 ) Present value of lease liabilities (1) $ 157,127 (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 5.4 % and 20 years (range of three months to 64 years) and 6.7 % and 33 years (range of four months to 50 years), respectively. 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 5. Other Investments Equity Method Investment As of both December 31, 2023 and 2022, we owned 34 % of Sonesta’s outstanding common stock. We account for our 34 % non-controlling interest in Sonesta under the equity method of accounting. As of December 31, 2023 and 2022, our investment in Sonesta had a carrying value of $ 113,304 and $ 112,617 , respectively. O n the date of acquisition of our initial equity interest in Sonesta ( February 27, 2020), t he cost basis of our investment in Sonesta exceeded our proportionate share of Sonesta’s total stockholders’ equity book value by an aggregate of $ 8,000 . As required under GAAP, we are amortizing this difference to equity in earnings of an investee over 31 years, the weighted average remaining useful life of the real estate assets and intangible assets and liabilities owned by Sonesta as of the date of our acquisition. We recorded amortization of the basis difference of $ 260 in each of the years ended December 31, 2023, 2022 and 2021. We recognized (losses) earnings of ($ 4,382 ), $ 2,856 , and ($ 941 ) related to our investment in Sonesta for the years ended December 31, 2023, 2022 and 2021, respectively. These amounts are included in equity in (losses) earnings of an investee in our consolidated statements of comprehensive income (loss). We recorded a liability of $ 42,000 for the fair value of our initial investment in Sonesta, as no cash consideration was exchanged related to the modification of our management agreement with, and investment in, Sonesta. This liability for our investment in Sonesta is included in accounts payable and other liabilities in our consolidated balance sheets 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 for each of the years ended December 31, 2023, 2022 and 2021, for amortization of this liability. As of December 31, 2023 and 2022, the unamortized balance of this liability was $ 32,479 and $ 34,963 , respectively. F-19 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) In 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. In 2022, we funded an aggregate of $ 45,470 of capital contributions to Sonesta related to Sonesta’s acquisition of a portfolio of four hotels located in New York, New York. In 2023, we funded a $ 5,134 capital contribution to Sonesta to support their growth initiatives, including their franchising efforts. We continue to maintain our 34 % ownership in Sonesta after giving effect to these fundings. Summarized financial information for Sonesta as of December 31, 2023 and 2022, and for the years ended December 31, 2023, 2022 and 2021 is as follows: December 31, 2023 2022 Total current assets $ 171,265 $ 156,321 Total noncurrent assets $ 694,828 $ 580,856 Total current liabilities $ 155,935 $ 141,345 Total noncurrent liabilities $ 342,839 $ 232,357 Non-controlling interest $ 54,963 $ 54,657 Year Ended December 31, 2023 2022 2021 Total revenues $ 765,011 $ 681,434 $ 478,097 Operating income (loss) $ 5,013 $ 21,929 $ ( 1,526 ) Net (loss) income $ ( 10,823 ) $ 10,056 $ ( 2,009 ) Net (loss) income attributable to shareholders $ ( 11,404 ) $ 9,184 $ ( 2,009 ) See Notes 4 and 9 for further information regarding our relationship, agreements and transactions with Sonesta. Investment in Equity Securities As discussed in Note 4, the TA Merger occurred on May 15, 2023. We received $ 86.00 in cash for each share of TA common stock that we owned, or a total of $ 101,892 , as a result of the TA Merger. As of May 15, 2023 and December 31, 2022, we owned 1,184,797 shares of TA common stock, representing approximately 7.8 % of TA’s outstanding shares of common stock, and reported them at fair value based on quoted market prices (Level 1 inputs as defined in the fair value hierarchy under GAAP). Our TA shares had a carrying value of $ 101,893 and $ 53,055 as of May 15, 2023 and December 31, 2022, respectively. Our historical cost basis for these shares was $ 24,418 as of both May 15, 2023 and December 31, 2022. We recorded gains and losses of $ 48,837 , ($ 8,104 ) and $ 22,535 for the years ended December 31, 2023, 2022 and 2021, respectively, to adjust the carrying value of our investment in shares of TA common stock to its fair value. See Notes 4 and 9 for further information regarding our relationship, agreements and transactions with TA. Note 6. Indebtedness Our principal debt obligations at December 31, 2023 were: (1) $ 4,025,000 aggregate outstanding principal amount of senior unsecured notes; (2) $ 1,000,000 aggregate outstanding principal amount of senior secured notes; and (3) $ 608,569 aggregate outstanding principal amount of net lease mortgage notes. We had no amounts outstanding under our revolving credit facility as of December 31, 2023. On June 29, 2023, we entered into an amended and restated credit agreement, or our credit agreement, governing our $ 650,000 secured revolving credit facility. This new facility replaced our prior $ 800,000 secured revolving credit facility, which had a maturity date of July 15, 2023, and is available for general business purposes, including acquisitions. We can borrow, repay and reborrow funds available under the new facility until maturity and no principal repayments are due until maturity. The maturity date of the new facility is June 29, 2027, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date of the new facility by two additional six-month periods. F-20 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Interest payable on drawings under the new facility is based on the secured overnight financing rate plus a margin ranging from 1.50 % to 3.00 % based on our leverage ratio, as defined in our credit agreement, which was 2.50 % as of December 31, 2023. As collateral for all loans and other obligations under the new facility, certain of our subsidiaries pledged all of their respective equity interests in certain of our direct and indirect property owning subsidiaries, and our pledged subsidiaries provided first mortgage liens on 69 properties, including 66 hotels and three net lease properties, with an undepreciated carrying value of $ 1,594,253 as of December 31, 2023. In addition, in order to maintain compliance with the minimum collateral property availability covenant as defined in the credit agreement, in February 2024, we added three hotels with an undepreciated carrying value of $ 114,635 as of December 31, 2023, as collateral under the agreement. We also pay unused commitment fees of 20 to 30 basis points per annum on the total amount of lending commitments under our revolving credit facility based on amounts outstanding. As of December 31, 2023 and 2022, the annual interest rate payable on borrowings under the new or prior revolving credit facility was 7.88 % and 6.79 %, respectively. We had no borrowings outstanding under either the new or prior revolving credit facility during the year ended December 31, 2023. The weighted average annual interest rate for borrowings under the prior revolving credit facility was 3.85 % and 2.85 % for the years ended December 31, 2022 and 2021, respectively. As a result of the amendment, we recorded a loss on early extinguishment of debt of $ 238 during the year ended December 31, 2023, which represented the write-off of certain unamortized issuance costs. Our debt agreements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR ceasing to act as our business manager. Our debt agreements also contain covenants, including those that restrict our ability to incur debts or to make distributions under certain circumstances and generally require us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of our debt agreements as of December 31, 2023. Senior Secured Notes Issuance On November 16, 2023, we issued $ 1,000,000 principal amount of 8.625 % senior secured notes due 2031. The aggregate net proceeds from this offering were $ 967,525 , after initial purchaser discounts and other offering expenses. These notes are fully and unconditionally guaranteed on a joint and several basis by (i) newly formed wholly owned subsidiaries, or the TA Landlord Subsidiaries, that are the landlords with respect to a portion of our properties leased to TA and the immediate parent entity of the TA Landlord Subsidiaries, or the Pledgor, and (ii) all of our subsidiaries that guarantee our existing senior unsecured notes. The subsidiary guarantee provided by the Pledgor is secured by first-priority liens on the equity interests of the TA Landlord Subsidiaries. The Pledgor and the TA Landlord Subsidiaries have agreed not to guarantee any of our or our subsidiaries other indebtedness. These notes are secured by first-priority liens on the equity interests of subsidiaries that own and lease 70 of our travel center properties with an undepreciated carrying value of $ 785,876 as of December 31, 2023. Senior Unsecured Notes Redemptions On March 8, 2023, we redeemed at par all of our outstanding 4.50 % senior notes due in 2023 for a redemption price equal to the principal amount of $ 500,000 , plus accrued and unpaid interest. As a result of the redemption, we recorded a loss on early extinguishment of debt of $ 44 during the year ended December 31, 2023, which represented the unamortized discounts and issuance costs related to these notes. On December 9, 2023, we redeemed at par all of our outstanding 4.65 % and 4.35 % senior unsecured notes due in 2024 for redemption prices equal to the principal amounts of $ 350,000 and $ 825,000 , respectively, plus accrued and unpaid interest. As a result of these redemptions, we recorded an aggregate loss on early extinguishment of debt of $ 1,242 during the year ended December 31, 2023, which represented the unamortized discounts and issuance costs related to these notes. 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 unsecured debt obligations require sinking fund payments prior to their maturity dates. F-21 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Net Lease Mortgage Notes Issuance On February 10, 2023, our wholly owned, special purpose bankruptcy remote, indirect subsidiary, SVC ABS LLC, or the Issuer, issued $ 610,200 in aggregate principal amount of net lease mortgage notes. Net proceeds from this issuance were $ 550,564 after initial purchaser discounts and offering costs. The Issuer is a separate legal entity and is the sole owner of its assets and liabilities. The assets of the Issuer are not available to pay or otherwise satisfy obligations to the creditors of any owners or affiliates of the Issuer. The Class A notes and the Class B notes noted in the table below require monthly principal repayments at an annualized rate of 0.50 % and 0.25 % of the balance outstanding, respectively, and the Class C notes noted in the table below require interest payments only, with balloon payments due at maturity. The notes mature in February 2028 and may be redeemed without penalty 24 months prior to the scheduled maturity date beginning in February 2026. The notes are non-recourse and are secured by 308 net lease retail properties owned by the Issuer. The current leases relating to those properties require annual minimum rents of $ 63,283 and the properties had an undepreciated carrying value of $ 755,116 as of December 31, 2023. Our net lease mortgage notes are summarized below: Note Class Principal Outstanding as of December 31, 2023 Coupon Rate Term (in years) Maturity Class A $ 303,729 5.15 % 5 February 2028 Class B 172,640 5.55 % 5 February 2028 Class C 132,200 6.70 % 5 February 2028 Total / weighted average $ 608,569 5.60 % The required principal payments due during the next five years and thereafter under all our outstanding debt at December 31, 2023 were as follows: Year Amount 2024 $ 1,958 2025 1,151,958 2026 801,958 2027 851,958 2028 1,000,737 Thereafter 1,825,000 Total $ 5,633,569 Note 7. Shareholders’ Equity Share Awards We have common shares available for issuance under the terms of our Amended and Restated 2012 Equity Compensation Plan, or our Share Award Plan. During the years ended December 31, 2023, 2022 and 2021, we awarded shares to our Trustees, officers and other employees of RMR as follows: Year Number of Shares Weighted Average Grant Date Fair Value Weighted Average Value of Grants 2023 438,000 $ 7.88 $ 3,451 2022 433,500 $ 6.63 $ 2,874 2021 340,700 $ 11.26 $ 3,839 F-22 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) The value of the share awards were based upon the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the date of the awards. The common shares awarded to our Trustees vest immediately. The common shares awarded to our officers and certain other employees of RMR (in those capacities) vest in five equal annual installments beginning on the date of the 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). See Note 9 for a further discussion of the awards we made to our officers and certain other employees of RMR. A summary of shares awarded, vested, forfeited and unvested under the terms of the Share Award Plan for the years ended December 31, 2023, 2022 and 2021 is as follows: 2023 2022 2021 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 588,830 $ 8.81 425,030 $ 11.93 325,900 $ 14.71 Shares awarded 438,000 $ 7.88 433,500 $ 6.63 340,700 $ 11.26 Shares vested ( 394,470 ) $ 9.21 ( 266,300 ) $ 10.20 ( 240,470 ) $ 14.78 Shares forfeited ( 22,400 ) $ 8.91 ( 3,400 ) $ 12.08 ( 1,100 ) $ 12.96 Unvested shares, end of year 609,960 $ 7.88 588,830 $ 8.81 425,030 $ 11.93 The 609,960 unvested shares as of December 31, 2023 are scheduled to vest as follows: 212,820 shares in 2024, 181,340 shares in 2025, 139,800 shares in 2026 and 76,000 shares in 2027. As of December 31, 2023, the estimated future compensation expense for the unvested shares was $ 4,294 . The weighted average period over which the compensation expense will be recorded is approximately 23 months. During the years ended December 31, 2023, 2022 and 2021, we recorded $ 3,417 , $ 2,775 and $ 2,964 , respectively, of compensation expense related to the Share Award Plan. At December 31, 2023, 1,084,131 of our common shares remain reserved for issuance under our Share Award Plan. Share Purchases During the years ended December 31, 2023, 2022 and 2021, we purchased our common shares from our officers and certain other current and former officers and employees of RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of our common shares as follows: Year Aggregate Number of Shares Purchased Weighted Average Purchase Price Value 2023 98,571 $ 8.14 $ 802 2022 69,867 $ 6.72 $ 470 2021 71,100 $ 11.11 $ 790 Distributions During the years ended December 31, 2023, 2022 and 2021, we paid distributions on our common shares as follows: Annual Per Share Distribution Total Distributions Characterization of Distributions Year Ordinary Income Capital Gain Return of Capital Qualified Dividend (1) 2023 $ 0.80 $ 132,430 9.30 % 86.15 % 4.55 % 6.25 % 2022 $ 0.23 $ 38,044 — % — % 100.00 % — % 2021 $ 0.04 $ 6,596 — % — % 100.00 % — % (1) Qualified Dividends are a subset of, and included in, the Ordinary Income amount. F-23 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) On January 11, 2024, we declared a regular quarterly distribution of $ 0.20 per common share, or $ 33,154 . This distribution was paid on February 15, 2024 to shareholders of record on January 22, 2024. Cumulative Other Comprehensive Income (Loss) Cumulative other comprehensive income (loss) represents our share of the comprehensive income (loss) of Sonesta. See Notes 4, 5 and 9 for further information regarding this investment. Note 8. Business and Property Management Agreements with RMR We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations of our net lease portfolio, the office building component of one of our hotels and major renovation or repositioning activities at our hotels that we may request RMR to manage from time to time. Effective as of the completion of the TA Merger, we and RMR agreed to include the properties we lease to TA in our property management agreement. See Note 9 for further information regarding our relationship, agreements and transactions with RMR. Management Agreements with RMR. Our management agreements with RMR 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 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 for an annual period is calculated as follows: ◦ An amount, subject to a cap based on the value of our common shares outstanding, equal to 12 % of the product of: • our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and • the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable market index, or the benchmark return per share, for the relevant measurement period. The MSCI U.S. REIT/Hotel & Resort REIT Index is the benchmark index for periods on and after August 1, 2021, and the SNL U.S. REIT Hotel Index is the benchmark index for periods prior to August 1, 2021. F-24 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) 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 points 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 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 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, we recognized net business management fees of $ 33,352 , $ 35,495 and $ 42,137 for the years ended December 31, 2023, 2022 and 2021, respectively. The net business management fees we recognized are included in general and administrative expense in our consolidated statements of comprehensive income (loss) for these periods. The net business management fees we recognized reflect a reduction of $ 3,585 , $ 3,585 and $ 3,584 for the years ended December 31, 2023, 2022 and 2021, respectively, for the amortization of the liability we recorded in connection with our former investment in RMR Inc. • Property Management and Construction Supervision Fees. The property management fees payable to RMR by us for each applicable period are equal to 3.0 % of gross collected rents and the construction supervision fees payable to RMR by us for each applicable period are equal to 5.0 % of construction costs for our net lease portfolio, and the office building component of one of our hotels that are subject to our property management agreement with RMR. Effective as of the completion of the TA Merger, we and RMR agreed to include the properties we lease to TA in our property management agreement. The property management fees payable to RMR by us for the properties we lease to TA begin in 2024 and are equal to 1.0 % of gross collected rents for the 2024 calendar year, 2.0 % of gross collected rents for the 2025 calendar year and 3.0 % of gross collected rents for the 2026 calendar year and thereafter. On June 22, 2021, we and RMR amended our property management agreement to, among other things, provide for RMR’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 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. F-25 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $ 8,368 , $ 6,128 and $ 4,489 for the years ended December 31, 2023, 2022 and 2021, respectively. These amounts are included in net lease operating expenses or have been capitalized as appropriate in our consolidated financial statements. For the years ended December 31, 2023, 2022 and 2021, $ 3,702 , $ 3,998 and $ 3,674 , respectively, of property management fees were recognized as net lease operating expenses in our consolidated statements of comprehensive income (loss) and $ 4,666 , $ 2,130 and $ 815 , 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 on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR employees assigned to work exclusively or partly at our net lease properties and the office building component of one of our hotels, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function, and as otherwise agreed. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR. We reimbursed RMR $ 4,648 , $ 3,258 and $ 2,971 for these expenses and costs for the years ended December 31, 2023, 2022 and 2021, respectively. We included these amounts in net lease operating expenses and general and administrative expense, as applicable, for these periods. • Term. Our management agreements with RMR have terms that end on December 31, 2043, 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: (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, as defined therein. RMR 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 for convenience, or if RMR terminates one or both of our management agreements for good reason, we have agreed to pay RMR 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 for a performance reason, we have agreed to pay RMR 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 for cause or as a result of a change of control of RMR. • Transition Services. RMR has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR, 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, RMR 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 and other companies to which RMR or its subsidiaries provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers. • Investment Opportunities . Under our business management agreement with RMR, we acknowledge that RMR 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. F-26 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Note 9. Related Person Transactions We have relationships and historical and continuing transactions with TA, Sonesta, RMR, RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. As of the effective time of the TA Merger on May 15, 2023, TA is no longer a related person to us. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., and is chair of the board of directors and a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR. John G. Murray, our other Managing Trustee and our former President and Chief Executive Officer, also serves as an officer and employee of RMR and as president and chief executive officer of Sonesta. In addition, each of our other officers serves as an officer of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Adam Portnoy serves as chair of the boards and as a managing trustee of these public companies. Other officers of RMR, including Mr. Murray and certain of our officers, serve as managing trustees or officers of certain of these companies. Our Manager, RMR . We have two agreements with RMR to provide management services to us. See Note 8 for further information regarding our management agreements with RMR. Share Awards to RMR Employees . As described in Note 7, we award shares to our officers and other employees of RMR 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. These awards to RMR employees are in addition to the share awards to our Managing Trustees, as Trustee compensation, and the fees we paid to RMR. See Note 7 for information regarding our share awards 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. TA . We lease 176 of our travel centers to TA under the TA leases. RMR provides management services to us and, until the TA Merger, provided services to TA, and Mr. Portnoy, until the TA Merger, also served as the chair of the board of directors and as a managing director of TA and, as of immediately prior to the TA Merger, beneficially owned 661,506 shares of TA common stock (including through RMR), representing approximately 4.4 % of TA’s outstanding shares of common stock. See Notes 4 and 5 for further information regarding our relationships, agreements and transactions with TA. 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 and president and chief executive officer is our other Managing Trustee and former President and Chief Executive Officer, and Sonesta’s other director serves as one of RMR Inc.’s managing directors, as RMR’s and RMR Inc.’s executive vice president, general counsel and secretary and as our Secretary. Certain other officers and employees of Sonesta are former officers and employees of RMR. RMR also provides certain services to Sonesta. As of December 31, 2023, we owned 34 % of Sonesta’s outstanding shares of common stock and Sonesta managed 195 of our hotels. See Notes 4 and 5 for further information regarding our relationships, agreements and transactions with Sonesta. F-27 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Note 10. Income Taxes Our provision (benefit) for income taxes consists of the following: Year Ended December 31, 2023 2022 2021 Current: Federal $ — $ — $ — State ( 106 ) 385 680 Foreign 503 233 350 397 618 1,030 Deferred: Foreign ( 1,895 ) ( 817 ) ( 1,971 ) ( 1,895 ) ( 817 ) ( 1,971 ) $ ( 1,498 ) $ ( 199 ) $ ( 941 ) A reconciliation of our effective tax rate and the current U.S. Federal statutory income tax rate is as follows: Year Ended December 31, 2023 2022 2021 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 0.3 % ( 0.3 ) % ( 0.1 ) % Foreign taxes ( 6.9 ) % 0.4 % 0.3 % Foreign tax rate change 11.0 % 0.0 % 0.0 % Effective tax rate 4.4 % 0.1 % 0.2 % 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. In December 2023, our subsidiary which operates in Puerto Rico elected to be taxed as a corporation for purposes of Puerto Rico tax law. This election increased the entity’s tax rate in Puerto Rico from 29.0 % to 37.5 %. The result of this change is primarily offset by available tax concessions in Puerto Rico. Significant components of our deferred tax assets and liabilities are as follows: As of December 31, 2023 2022 Deferred tax assets: Tax loss carryforwards $ 112,532 $ 109,650 Other 7,973 7,134 Deferred tax assets 120,505 116,784 Valuation allowance ( 120,505 ) ( 116,784 ) Net deferred tax assets $ — $ — Deferred tax liabilities: Property basis difference $ ( 7,970 ) $ ( 5,947 ) Puerto Rico deferred tax gain ( 8,162 ) ( 12,079 ) Net deferred tax liabilities $ ( 16,132 ) $ ( 18,026 ) Net deferred tax liabilities are included in accounts payable and other liabilities in our consolidated balance sheets. F-28 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) At December 31, 2023 and 2022, our consolidated TRS had a net deferred tax asset, prior to any valuation allowance, of $ 114,145 and $ 111,148 , 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, 2023 and 2022. As of December 31, 2023 and 2022, our consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $ 442,560 and $ 437,606 , respectively, which partially expire starting in 2026. At December 31, 2023 and 2022, we recorded a deferred tax liability of $ 8,162 and $ 13,658 , respectively, as a result of the book value to tax basis difference related to the accounting of an insurance settlement in 2020. At December 31, 2023 and 2022, we, excluding our subsidiaries, had net operating loss carryforwards for federal income tax purposes of approximately $ 514,568 and $ 545,828 , respectively, of which certain losses incurred prior to 2018 partially expire starting in 2027. Note 11. Concentration Geographic Concentration At December 31, 2023, our 973 properties were located in 46 states in the United States, plus the District of Columbia, Ontario, Canada and Puerto Rico. Between 6 % and 13 % of our properties, by investment, were located in each of California, Texas, Illinois, Florida and Georgia. Our two hotels in Ontario, Canada and our hotel in Puerto Rico represent 3.1 % of our hotels, by investment, in the aggregate at December 31, 2023. Credit Concentration As of December 31, 2023, Sonesta operated 195 of our hotels and TA leased 176 of our net lease properties, representing 49.8 % and 28.8 %, respectively, of our investment. See Notes 4 and 9 for a discussion of our Sonesta and TA agreements. F-29 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Note 12. Segment Information We aggregate our hotels and net lease portfolio into two reportable segments, hotel investments and net lease investments, based on their similar operating and economic characteristics. Year Ended December 31, 2023 Hotels Net Lease Corporate Consolidated Revenues: Hotel operating revenues $ 1,478,034 $ — $ — $ 1,478,034 Rental income — 395,829 — 395,829 Total revenues 1,478,034 395,829 — 1,873,863 Expenses: Hotel operating expenses 1,223,906 — — 1,223,906 Net lease operating expenses — 17,663 — 17,663 Depreciation and amortization 216,235 167,825 — 384,060 General and administrative — — 45,397 45,397 Transaction related costs — — ( 1,623 ) ( 1,623 ) Loss on asset impairment, net 27 9,517 — 9,544 Total expenses 1,440,168 195,005 43,774 1,678,947 Gain on sale of real estate, net 41,861 1,378 — 43,239 Gain on equity securities, net — — 48,837 48,837 Interest income 169 118 20,692 20,979 Interest expense — ( 40,920 ) ( 295,422 ) ( 336,342 ) Loss on early extinguishment of debt — — ( 1,524 ) ( 1,524 ) Income (loss) before income tax benefit and equity in losses of an investee 79,896 161,400 ( 271,191 ) ( 29,895 ) Income tax benefit — — 1,498 1,498 Equity in losses of an investee — — ( 4,382 ) ( 4,382 ) Net income (loss) $ 79,896 $ 161,400 $ ( 274,075 ) $ ( 32,779 ) As of December 31, 2023 Hotels Net Lease Corporate Consolidated Total assets $ 3,943,213 $ 3,084,686 $ 328,217 $ 7,356,116 F-30 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Year Ended December 31, 2022 Hotels Net Lease Corporate Consolidated Revenues: Hotel operating revenues $ 1,467,344 $ — $ — $ 1,467,344 Rental income — 395,667 — 395,667 Total revenues 1,467,344 395,667 — 1,863,011 Expenses: Hotel operating expenses 1,227,357 — — 1,227,357 Net lease operating expenses — 13,176 — 13,176 Depreciation and amortization 221,416 179,692 — 401,108 General and administrative — — 44,404 44,404 Transaction related costs — — 1,920 1,920 Loss on asset impairment 10,537 452 — 10,989 Total expenses 1,459,310 193,320 46,324 1,698,954 Gain (loss) on sale of real estate, net 48,202 ( 384 ) — 47,818 Loss on equity securities, net — — ( 8,104 ) ( 8,104 ) Interest income 24 29 3,326 3,379 Interest expense — — ( 341,795 ) ( 341,795 ) Loss on early extinguishment of debt — — ( 791 ) ( 791 ) Income (loss) before income tax benefit and equity in earnings of an investee 56,260 201,992 ( 393,688 ) ( 135,436 ) Income tax benefit — — 199 199 Equity in earnings of an investee — — 2,856 2,856 Net income (loss) $ 56,260 $ 201,992 $ ( 390,633 ) $ ( 132,381 ) As of December 31, 2022 Hotels Net Lease Corporate Consolidated Total assets $ 3,882,701 $ 3,376,295 $ 229,195 $ 7,488,191 F-31 Table of Contents SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) 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 Net lease 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 Gain on equity securities, net — — 22,535 22,535 Interest income 1 — 663 664 Interest expense — — ( 365,721 ) ( 365,721 ) (Loss) income before income tax benefit 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 (loss) income $ ( 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 SERVICE PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share amounts) Note 13. Fair Value of Assets and Liabilities The table below presents certain of our assets carried at fair value at December 31, 2023, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset. Fair Value at Reporting Date Using Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Non-recurring Fair Value Measurements Assets: Assets of properties held for sale (1) $ 10,446 $ — $ — $ 10,446 (1) We recorded a loss on asset impairment, net of $ 3,206 during the year ended December 31, 2023, to reduce the carrying value of one hotel and nine net lease properties in our consolidated balance sheets to their estimated fair value less costs to sell based on brokers’ opinion of values (Level 3 inputs as defined in the fair value hierarchy under GAAP). In addition to the assets included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, net lease mortgage notes, senior notes and security deposits. At December 31, 2023 and 2022, the fair values of these 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, 2023 December 31, 2022 Carrying Fair Carrying Fair Value (1) Value Value (1) Value Senior Unsecured Notes, due 2023 at 4.50 % $ — $ — $ 499,925 $ 491,345 Senior Unsecured Notes, due 2024 at 4.65 % — — 349,510 334,292 Senior Unsecured Notes, due 2024 at 4.35 % — — 822,487 749,983 Senior Unsecured Notes, due 2025 at 4.50 % 349,181 341,688 348,493 301,893 Senior Unsecured Notes, due 2025 at 7.50 % 796,007 808,888 793,673 762,344 Senior Unsecured Notes, due 2026 at 5.25 % 347,601 339,780 346,472 292,282 Senior Unsecured Notes, due 2026 at 4.75 % 448,347 419,909 447,736 354,128 Senior Unsecured Notes, due 2027 at 4.95 % 397,672 362,108 396,916 315,040 Senior Unsecured Notes, due 2027 at 5.50 % 445,631 412,002 444,505 387,522 Net Lease Mortgage Notes, due 2028 at 5.60 % 558,876 585,784 — — Senior Unsecured Notes, due 2028 at 3.95 % 395,355 327,708 394,206 283,996 Senior Unsecured Notes, due 2029 at 4.95 % 420,477 351,726 419,684 293,718 Senior Unsecured Notes, due 2030 at 4.375 % 393,056 310,524 391,923 264,280 Senior Secured Notes, due 2031 at 8.625 % 968,017 1,047,430 — — Total financial liabilities $ 5,520,220 $ 5,307,547 $ 5,655,530 $ 4,830,823 (1) Carrying value includes unamortized discounts, premiums and certain debt issuance costs. At December 31, 2023 and 2022, we estimated the fair values of our senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 2 inputs). At December 31, 2023, we estimated the fair value of our net lease mortgage notes using discounted cash flow analyses and current prevailing market rates as of the measurement date (Level 3 inputs). As Level 3 inputs are unobservable, our estimated value may differ materially from the actual fair value. F-33 Table of Contents SERVICE PROPERTIES TRUST SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2023 (dollars in millions) Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount at which Carried at Close of Period Property Count Brand Encumbrances (1) Land Building & Improvements Improvements Impairment Cost Basis Adjustment (2) Land Building & Improvements Total (3) Accumulated Depreciation (4) Date of Construction Date Acquired Hotel Properties 17 Royal Sonesta Hotels® (5) $ — $ 229 $ 1,118 $ 433 $ ( 9 ) $ ( 12 ) $ 229 $ 1,530 $ 1,759 $ ( 433 ) 1913 through 1987 2005 through 2017 23 Sonesta Hotels & Resorts® (5) — 219 666 378 ( 51 ) ( 14 ) 219 979 1,198 ( 310 ) 1924 through 1999 2005 through 2023 60 Sonesta ES Suites® (5) — 132 557 385 ( 35 ) ( 67 ) 132 840 972 ( 432 ) 1984 through 2000 1996 through 2017 44 Sonesta Select® (5) — 84 395 271 ( 8 ) ( 86 ) 84 572 656 ( 343 ) 1987 through 2000 1995 through 2003 51 Sonesta Simply Suites® (5) — 68 341 129 ( 17 ) ( 27 ) 68 426 494 ( 220 ) 1996 through 2000 1997 through 2003 17 Hyatt Place® (5) — 20 137 84 — ( 5 ) 20 216 236 ( 94 ) 1992 through 2000 1997 through 2002 5 Radisson® Hotels & Resorts — 9 93 56 — ( 1 ) 9 148 157 ( 77 ) 1987 through 1990 1996 through 2018 1 Crowne Plaza® — 17 69 30 — — 17 99 116 ( 18 ) 1971 through 1988 2006 and 2017 2 Country Inn & Suites® by Radisson — 3 24 10 — ( 5 ) 3 29 32 ( 17 ) 1989 through 1997 1996 and 2005 Net Lease Service Retail Properties 132 TravelCenters of America (6) — 564 936 452 — ( 410 ) 564 978 1,542 ( 529 ) 1962 through 2017 2007 through 2017 44 Petro Stopping Centers (6) — 260 522 195 — ( 229 ) 260 488 748 ( 246 ) 1975 through 2017 2008 through 2017 14 The Great Escape — 19 64 — — — 19 64 83 ( 10 ) 1986 through 2007 2019 3 Life Time Fitness — 17 56 — — — 17 56 73 ( 9 ) 1987 through 2012 2019 5 Buehler's Fresh Foods 52 10 49 — — — 10 49 59 ( 10 ) 1980 through 2000 2019 6 AMC Theatres — 18 38 2 — — 18 40 58 ( 7 ) 1995 through 2008 2019 59 Heartland Dental — 11 37 — — — 11 37 48 ( 6 ) 1920 through 2005 2019 10 Norms — 23 24 — — — 23 24 47 ( 5 ) 1957 through 2014 2019 13 Vacant 3 24 30 4 — — 24 34 58 ( 8 ) 1970 through 2007 2007 23 Express Oil Change 37 6 37 — — — 6 37 43 ( 6 ) 1965 through 2001 2019 40 Pizza Hut 25 12 28 — — — 12 28 40 ( 12 ) 1915 through 2006 2019 3 Flying J Travel Plaza (5) — 6 32 — — — 6 32 38 ( 4 ) 2001 2019 6 America's Auto Auction 28 7 23 6 — — 7 29 36 ( 5 ) 1960 through 2005 2019 4 Courthouse Athletic Club 20 5 28 — — — 5 28 33 ( 5 ) 1980 through 2001 2019 4 B&B Theatres — 12 15 5 — — 12 20 32 ( 4 ) 1998 through 2004 2019 2 Big Al's 18 3 28 — — — 3 28 31 ( 3 ) 2006 through 2010 2019 20 Burger King 16 9 22 — — — 9 22 31 ( 7 ) 1977 through 2004 2019 1 Fleet Farm — 3 27 — — — 3 27 30 ( 4 ) 1979 2019 16 Martin's 21 7 20 — — — 7 20 27 ( 5 ) 1962 through 2003 2019 5 Regal Cinemas — 5 21 — — — 5 21 26 ( 4 ) 2005 through 2010 2019 S-1 Table of Contents SERVICE PROPERTIES TRUST SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) December 31, 2023 (dollars in millions) Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount at which Carried at Close of Period Property Count Brand Encumbrances (1) Land Building & Improvements Improvements Impairment Cost Basis Adjustment (2) Land Building & Improvements Total (3) Accumulated Depreciation (4) Date of Construction Date Acquired 19 Arby's 18 7 19 — — — 7 19 26 ( 7 ) 1967 through 2005 2019 20 Popeye's Chicken & Biscuits 21 8 17 — — — 8 17 25 ( 5 ) 1968 through 2003 2019 4 Crème de la Crème 19 7 18 — — — 7 18 25 ( 2 ) 1999 through 2009 2019 32 Church's Chicken — 5 18 — — — 5 18 23 ( 4 ) 1968 through 1983 2019 15 Hardee's 16 4 18 — — — 4 18 22 ( 5 ) 1969 through 1997 2019 5 Mister Car Wash 20 2 19 — — — 2 19 21 ( 2 ) 1960 through 2005 2019 6 United Supermarkets 17 4 17 — — — 4 17 21 ( 5 ) 1979 through 1997 2019 2 Mesa Fitness 14 3 17 — — — 3 17 20 ( 3 ) 1983 through 2007 2019 13 Taco Bell 14 4 15 — — — 4 15 19 ( 3 ) 1982 through 2019 2019 - 2020 1 CarMax — 5 13 — — — 5 13 18 ( 2 ) 2005 2019 28 Uncle Ed's Oil Shoppe — 6 12 — — — 6 12 18 ( 4 ) 1959 through 1999 2019 2 Fusion Gyms — 3 10 2 — — 3 12 15 ( 2 ) 1987 through 1994 2019 1 Dave & Buster's 12 3 11 — — — 3 11 14 ( 1 ) 1972 2019 5 Pike Nursery 16 8 6 — — — 8 6 14 ( 1 ) 1970 through 1996 2019 2 HHI-Formtech 9 3 10 — — — 3 10 13 ( 4 ) 1952 2019 3 Golden Corral — 4 8 — — — 4 8 12 ( 2 ) 1989 through 2000 2019 2 Sanford's Grub & Pub — 1 10 — — — 1 10 11 ( 2 ) 1928 through 2003 2019 4 Rite Aid — 3 7 — — — 3 7 10 ( 2 ) 1993 through 2000 2019 5 Fuddruckers — 4 6 — — — 4 6 10 ( 2 ) 1994 through 1995 2019 1 Baptist Emergency Hospital 10 2 8 — — — 2 8 10 ( 1 ) 2013 2019 2 Eddie Merlot's 6 2 8 — — — 2 8 10 ( 2 ) 1997 through 2003 2019 1 Cermak Fresh Market 7 2 7 — — — 2 7 9 ( 3 ) 1989 2019 12 Core & Main 3 4 5 — — — 4 5 9 ( 1 ) 1972 through 1998 2019 5 Lerner and Rowe 9 1 8 — — — 1 8 9 ( 1 ) 1970 through 2007 2019 4 Meineke Car Care Center — 3 6 — — — 3 6 9 ( 1 ) 1999 through 2000 2019 1 Columbus Preparatory Academy 6 1 8 — — — 1 8 9 ( 1 ) 2004 2019 1 Kohl's 5 2 6 — — — 2 6 8 ( 1 ) 1986 2019 1 Austin's Park n' Pizza 5 — 8 — — — — 8 8 ( 1 ) 2003 2019 1 LA Fitness — 1 7 — — — 1 7 8 ( 1 ) 2012 2019 1 Marcus Theaters — 2 5 — — — 2 5 7 ( 2 ) 1999 2019 1 Academy Sports + Outdoors 5 1 6 — — — 1 6 7 ( 1 ) 2016 2019 3 Oregano's Pizza Bistro 5 1 6 — — — 1 6 7 ( 2 ) 1964 through 2006 2019 1 Columbus Arts & Tech Academy 6 1 6 — — — 1 6 7 ( 1 ) 1980 2019 2 Blue Rhino 15 3 4 — — — 3 4 7 ( 1 ) 2004 2019 3 Krispy Kreme 7 2 5 — — — 2 5 7 ( 1 ) 2000 through 2004 2019 2 Diagnostic Health — 1 6 — — — 1 6 7 ( 1 ) 1985 through 1997 2019 9 Sonic Drive-In 7 3 4 — — — 3 4 7 ( 1 ) 1987 through 2018 2019 3 Texas Roadhouse 6 3 6 — — ( 3 ) 3 3 6 ( 1 ) 1992 through 2003 2019 S-2 Table of Contents SERVICE PROPERTIES TRUST SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) December 31, 2023 (dollars in millions) Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount at which Carried at Close of Period Property Count Brand Encumbrances (1) Land Building & Improvements Improvements Impairment Cost Basis Adjustment (2) Land Building & Improvements Total (3) Accumulated Depreciation (4) Date of Construction Date Acquired 5 Brookshire Brothers 4 1 5 — — — 1 5 6 ( 2 ) 1992 through 1999 2019 2 Flying Star Cafe 4 1 5 — — — 1 5 6 ( 1 ) 1994 through 1999 2019 3 Jack's Family Restaurant 4 2 4 — — — 2 4 6 ( 1 ) 2008 through 2016 2019 2 Axels — — 6 — — — — 6 6 ( 2 ) 1953 through 1995 2019 3 Wendy's 6 1 5 — — — 1 5 6 ( 1 ) 1984 through 1996 2019 1 Jack Stack Barbeque 4 1 5 — — — 1 5 6 ( 1 ) 1983 2019 7 Hughes Supply 3 2 4 — — — 2 4 6 ( 1 ) 1976 through 1993 2019 1 Multi-Tenant — 2 20 5 ( 9 ) — 2 16 18 ( 4 ) 1991 2019 2 Bricktown Brewery 4 1 4 — — — 1 4 5 ( 2 ) 1904 through 1984 2019 2 Walgreens 3 — 5 — — — — 5 5 ( 1 ) 1993 through 1999 2019 2 10 Box 4 2 3 — — — 2 3 5 ( 1 ) 1994 2019 1 Mak Pack — 1 4 — — — 1 4 5 ( 1 ) 2007 2019 1 Angstrom 5 2 3 — — — 2 3 5 ( 1 ) 1987 2019 2 HD Supply White Cap 1 2 3 — — — 2 3 5 ( 1 ) 1990 through 2001 2019 1 Planet Fitness 4 1 4 — — — 1 4 5 ( 1 ) 2007 2019 1 RGB Eye Associates 5 1 4 — — — 1 4 5 ( 1 ) 2013 2019 2 Gerber Collision & Glass 4 1 4 — — — 1 4 5 ( 1 ) 2001 through 2002 2019 1 Discount Tire — 1 4 — — — 1 4 5 ( 1 ) 2009 2019 2 Famous Dave's 3 1 3 — — — 1 3 4 ( 1 ) 1997 through 1999 2019 1 Miller Waste Mills — — 4 — — — — 4 4 ( 2 ) 1960 2019 2 Focus Child Development Center — 1 3 — — — 1 3 4 — 1965 through 1998 2019 1 Ashley Furniture 2 1 3 — — — 1 3 4 — 2000 2019 1 Boozman-Hof — 2 2 — — — 2 2 4 — 1988 2019 1 Sportsman's Warehouse 3 1 3 — — — 1 3 4 ( 1 ) 1983 2019 1 Eriks Bike Shop — 1 3 — — — 1 3 4 ( 1 ) 1996 2019 1 Rainbow Kids Clinic 3 1 3 — — — 1 3 4 — 2011 2019 1 Applebee's — 1 2 — — — 1 2 3 — 1996 2019 1 Tractor Supply — — 3 — — — — 3 3 — 2007 2019 1 Spoons Place — 1 2 — — — 1 2 3 — 1996 2019 1 Southwest Stainless, LP 2 — 3 — — — — 3 3 — 1984 2019 2 Anixter 2 1 2 — — — 1 2 3 — 1984 through 1999 2019 1 What the Buck — — 3 — — — — 3 3 ( 1 ) 1958 2019 1 Kerry's Car Care 2 1 2 — — — 1 2 3 — 2015 2019 1 Ojos Locos Sports Cantina 2 1 2 — — — 1 2 3 ( 1 ) 1993 2019 1 Black Angus Steakhouse 2 1 2 — — — 1 2 3 — 1996 2019 1 Buffalo Wild Wings 2 1 2 — — — 1 2 3 — 2014 2019 1 Slim Chickens 2 1 2 — — — 1 2 3 — 2014 2019 2 Monterey's Tex Mex 1 1 2 — — — 1 2 3 — 1979 through 1997 2019 S-3 Table of Contents SERVICE PROPERTIES TRUST SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) December 31, 2023 (dollars in millions) Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount at which Carried at Close of Period Property Count Brand Encumbrances (1) Land Building & Improvements Improvements Impairment Cost Basis Adjustment (2) Land Building & Improvements Total (3) Accumulated Depreciation (4) Date of Construction Date Acquired 1 Nacarato Trucks — — 2 — — — — 2 2 ( 1 ) 1985 2019 1 Heytex USA — — 2 — — — — 2 2 ( 1 ) 1967 2019 2 Hooters 5 1 1 — — — 1 1 2 ( 1 ) 1977 through 1994 2019 1 Mind 24-7 — 1 3 2 ( 3 ) — 1 2 3 — 2008 2019 1 Bridgestone Tire 2 1 1 — — — 1 1 2 — 1998 2019 2 Taco Bueno 2 1 1 — — — 1 1 2 ( 1 ) 1991 through 2003 2019 2 Rally's 1 1 1 — — — 1 1 2 — 1990 through 1992 2019 1 Red Robin Gourmet Burgers — 1 1 — — — 1 1 2 — 1995 2019 1 Primanti Bros. 1 1 1 — — — 1 1 2 — 2014 2019 1 Orscheln Farm and Home 2 1 1 — — — 1 1 2 — 1977 2019 1 Cycle Gear 1 1 1 — — — 1 1 2 — 1989 2019 2 Dollar General 1 — 2 — — — — 2 2 — 2012 through 2015 2019 2 Affordable Care, Inc. — 1 1 — — — 1 1 2 — 2008 through 2010 2019 1 Long John Silver's 1 1 1 — — — 1 1 2 — 1987 2019 1 Captain Ds 1 — 1 — — — — 1 1 — 1995 2019 1 Clean Express Auto Wash — — 1 — — — — 1 1 ( 1 ) 1991 2019 1 Chicken Salad Chick 1 — 1 — — — — 1 1 — 1976 2019 1 Wings, Etc. 1 — 1 — — — — 1 1 — 2014 2019 1 SRS Distribution 1 — 1 — — — — 1 1 — 1975 2019 1 Bru Burger Bar 1 — 1 — — — — 1 1 — 1996 2019 1 ERA Capital — — 1 — — — — 1 1 — 1999 2019 1 Old Mexico Cantina 1 — 1 — — — — 1 1 — 2007 2019 1 KFC 1 — 1 — — — — 1 1 — 2002 2019 1 The Atlanta Center for Foot & Ankle Surgery 2 — 1 — — — — 1 1 — 1963 2019 1 O'Reilly Auto Parts 1 — 1 — — — — 1 1 — 2006 2019 1 Touchstone Imaging 1 — 1 — — — — 1 1 — 1992 2019 1 Howlin Concrete 1 1 — — — — 1 — 1 — 1922 2019 1 El Forastero 1 — 1 — — — — 1 1 — 1985 2019 1 Bechheit — — 1 — — — — 1 1 — 1986 2019 1 Little Caesars — — 1 — — — — 1 1 — 1996 2019 1 NAPA Auto Parts — — 1 — — — — 1 1 — 2001 2019 1 Robata — — 1 — — — — 1 1 — 1980 2019 1 Giliberto's Mexican Taco Shop — — — — — — — — — — N/A 2019 1 Dunkin Donuts — — — — — — — — — — 1977 2019 1 Off the Hook Seafood & More — — — — — — — — — — 2007 2019 1 Consolidated Pipe — — — — — — — — — — 1987 2019 1 Bigham Cable — — — — — — — — — — 1989 2019 S-4 Table of Contents SERVICE PROPERTIES TRUST SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) December 31, 2023 (dollars in millions) Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount at which Carried at Close of Period Property Count Brand Encumbrances (1) Land Building & Improvements Improvements Impairment Cost Basis Adjustment (2) Land Building & Improvements Total (3) Accumulated Depreciation (4) Date of Construction Date Acquired 1 Sharks Fish & Chicken — — — — — — — — — — 1985 2019 1 Kings Wings N Things — — — — — — — — — — 1977 2019 1 Family Dollar Stores — — — — — — — — — — 1988 2019 1 Del Taco — — — — — — — — — — N/A 2019 1 Scooters Coffee 1 — — — — — — — — — 1972 2019 963 Total Held and Used $ 609 $ 1,972 $ 5,986 $ 2,449 $ ( 132 ) $ ( 859 ) $ 1,972 $ 7,444 $ 9,416 $ ( 2,951 ) Assets Held for Sale 1 Country Inn & Suites® by Radisson $ — $ 1 $ 5 $ — $ — $ — $ 1 $ 5 $ 6 $ ( 3 ) 1987 through 1997 1996 and 2005 9 Vacant — 3 8 ( 2 ) ( 3 ) — 3 3 6 — 1970 through 2007 2007 973 Total Including Held for Sale $ 609 $ 1,976 $ 5,999 $ 2,447 $ ( 135 ) $ ( 859 ) $ 1,976 $ 7,452 $ 9,428 $ ( 2,954 ) (1) Represents the principal balance of our net lease mortgage debt, excluding unamortized discounts and debt issuance costs. (2) Represents reclassifications between accumulated depreciation and building & improvements made to record certain properties at fair value in accordance with GAAP. (3) Excludes $ 370 of personal property classified in our consolidated balance sheets as furniture, fixtures and equipment. (4) We depreciate buildings and improvements over periods ranging between 10 to 40 years. (5) 69 properties, including 66 hotels and three net lease properties secure our credit agreement, which has no amounts outstanding as of December 31, 2023. (6) 67 TravelCenters of America and 3 Petro Stopping Centers properties secure our $ 1.0 billion senior secured notes due 2031, excluding unamortized discounts and debt issuance costs. S-5 Table of Contents SERVICE PROPERTIES TRUST NOTES TO SCHEDULE III December 31, 2023 (dollars in thousands) (A) The change in total cost of properties for the period from January 1, 2021 to December 31, 2023 is as follows: 2023 2022 2021 Balance at beginning of year $ 9,174,451 $ 9,790,010 $ 10,630,560 Additions: acquisitions and capital expenditures 363,601 106,588 86,016 Dispositions ( 110,535 ) ( 624,057 ) ( 330,091 ) Reclassification of properties held for sale ( 11,621 ) ( 98,090 ) ( 596,475 ) Balance at close of year $ 9,415,896 $ 9,174,451 $ 9,790,010 (B) The change in accumulated depreciation for the period from January 1, 2021 to December 31, 2023 is as follows: 2023 2022 2021 Balance at beginning of year $ 2,749,862 $ 3,069,348 $ 3,047,016 Additions: depreciation expense 207,641 309,606 298,597 Dispositions ( 4,747 ) ( 618,132 ) ( 153,699 ) Reclassification of properties held for sale ( 2,071 ) ( 10,960 ) ( 122,566 ) Balance at close of year $ 2,950,685 $ 2,749,862 $ 3,069,348 (C) The aggregate cost tax basis for federal income tax purposes of our real estate properties was $ 6,838,701 on December 31, 2023. S-6 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/ Todd W. Hargreaves Todd W. Hargreaves President and Chief Investment Officer Dated: February 28, 2024 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/ Todd W. Hargreaves President and Chief Investment Officer February 28, 2024 Todd W. Hargreaves /s/ Brian E. Donley Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) February 28, 2024 Brian E. Donley /s/ Laurie B. Burns Independent Trustee February 28, 2024 Laurie B. Burns /s/ Robert E. Cramer Independent Trustee February 28, 2024 Robert E. Cramer /s/ Donna D. Fraiche Independent Trustee February 28, 2024 Donna D. Fraiche /s/ John L. Harrington Independent Trustee February 28, 2024 John L. Harrington /s/ William A. Lamkin Independent Trustee February 28, 2024 William A. Lamkin /s/ John G. Murray Managing Trustee February 28, 2024 John G. Murray /s/ Rajan C. Penkar Independent Trustee February 28, 2024 Rajan C. Penkar /s/ Adam D. Portnoy Managing Trustee February 28, 2024 Adam D. Portnoy