What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-06 compared with 2024-05-07 · 235 added, 118 removed, 381 unchanged (48% of the section changed)

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We are a REIT organized under the laws of the State of Maryland.

As of March 31, 2024, we owned 969 properties in 46 states, the District of Columbia, Canada and Puerto Rico.

As of June 30, 2024, we owned 969 properties in 46 states, the District of Columbia, Canada and Puerto Rico.

In response to significant and prolonged increases in inflation, the U.S.

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Although the U.S.

Federal Reserve has indicated that it may lower rates in 2024, we cannot be sure that it will do so, and interest rates may remain at the current high levels or continue to increase.

Federal Reserve has indicated that it may lower rates in 2024, we cannot be sure that it will do so, and interest rates may remain at the current high levels or increase.

These inflationary pressures in the United States, as well as global geopolitical instability and tensions, have given rise to uncertainty regarding economic downturns or a possible recession and potential disruptions in the financial markets.

Consumer confidence, corporate travel and lodging demand will continue to be affected by economic and market conditions, unemployment levels, work from home policies, use of technologies and broader economic trends.

Increased labor costs and other price inflation, including due to supply chain challenges, may continue to negatively impact our hotel operations and the operations of our tenants.

Increased labor costs and other price inflation may continue to negatively impact our hotel operations and the operations of our tenants.

An economic recession or continued or intensified disruptions in the financial markets could adversely affect our financial condition, operations at our hotels, our tenants and their ability or willingness to renew our leases or pay rent to us, may restrict our ability to obtain new or replacement financing, would likely increase our cost of capital, and may cause the values of our properties to decline.

Management Agreements and Leases .

At March 31, 2024, we owned 220 hotels operated under four agreements.

At June 30, 2024, we owned 220 hotels operated under four agreements.

We leased all of these hotels to our wholly owned TRSs that are managed by hotel operating companies as of that date.

At March 31, 2024, we also owned 749 service-focused retail properties leased to 177 tenants subject to “triple net” leases, where the tenants are generally responsible for the payment of operating expenses and capital expenditures.

At June 30, 2024, we also owned 749 service-focused retail properties leased to 178 tenants subject to “triple net” leases, where the tenants are generally responsible for the payment of operating expenses and capital expenditures.

Our condensed consolidated statements of comprehensive income (loss) include hotel operating revenues and hotel operating expenses of our managed hotels and rental income and net lease operating expenses from our net lease properties.

Hotel Portfolio.

As of March 31, 2024, we owned 220 hotels.

During the three months ended March 31, 2024, the U.S.

hotel industry generally realized increases in revenue per available room, or RevPAR, compared to the same period in 2023.

As of June 30, 2024, we owned 220 hotels.

During the three and six months ended June 30, 2024, the U.S.

hotel industry generally realized increases in revenue per available room, or RevPAR, compared to the same periods in 2023.

Our hotels produced year over year declines in RevPAR, which we believe is partially a result of disruption and displacement at certain of our hotels undergoing renovation and decreased business activity in areas where some of our hotels are located.

The following table provides a summary for all of our hotels with these revenue metrics for the periods presented, which we believe are key indicators of performance at our hotels.

Three Months Ended March 31,

2024 2023 Change

Three Months Ended June 30,

Six Months Ended June 30,

2024 2023 Change 2024 2023 Change

of hotels 220 221 (1) 220 221 (1)

of rooms or suites 37,697 37,777 (80) 37,697 37,777 (80)

Occupancy 56.3 % 57.6 % (1.3) pts

Occupancy 68.2 % 67.6 % 0.6 pts 62.2 % 62.7 % (0.5) pts

ADR $ 142.99 $ 144.32 (0.9) % $ 141.56 $ 142.74 (0.8) %

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We define comparable hotels as those that were owned by us and were open and operating for the entirety of the periods being compared.

For the three months ended March 31, 2024 and 2023, our comparable results exclude two hotels.

One of the hotels was not owned for the entirety of the periods and the other suspended operations during part of the periods presented.

For the three and six months ended June 30, 2024 and 2023, our comparable results exclude two hotels.

One of the hotels was not owned for the entirety of the periods and the other hotel suspended operations during part of the periods presented.

The following table provides a summary of these revenue metrics for the periods presented.

Three Months Ended March 31,

2024 2023 Change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 Change 2024 2023 Change

Comparable Hotels

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of rooms or suites 37,349 37,349 — 37,349 37,349 —

Occupancy 56.2 % 57.8 % (1.6) pts

Occupancy 68.3 % 67.7 % 0.6 pts 62.2 % 62.7 % (0.5) pts

ADR $ 141.96 $ 143.52 (1.1) % $ 140.00 $ 141.38 (1.0) %

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Net Lease Portfolio .

As of March 31, 2024, we owned 749 service-focused retail net lease properties with an aggregate of 13,384,219 square feet leased to 177 tenants subject to “triple net” leases (where the tenants are responsible for payments of operating expenses and capital expenditures) requiring annual minimum rents of $374,941.

Our net lease properties were 97.3% occupied as of March 31, 2024 with a weighted (by annual minimum rent) average lease term of 8.7 years, operating under 137 brands in 21 distinct industries.

TA is our largest tenant and as of March 31, 2024, leased 175 of our travel centers under five master leases that expire in 2033 and require annual minimum rents of $254,000.

As of June 30, 2024, we owned 749 service-focused retail net lease properties with an aggregate of 13,384,219 square feet leased to 178 tenants subject to “triple net” leases (where the tenants are responsible for payments of operating expenses and capital expenditures) requiring annual minimum rents of $380,457.

Our net lease properties were 97.3% occupied as of June 30, 2024 with a weighted (by annual minimum rent) average lease term of 8.4 years, operating under 139 brands in 21 distinct industries.

TA is our largest tenant and as of June 30, 2024, leased 175 of our travel centers under five master leases that expire in 2033 and require annual minimum rents of $259,080.

In addition, TA receives an annual credit of $25,000 as a result of prepaid rent.

BP Corporation North America Inc.

guarantees payment under these leases, subject to a cap.

guarantees payment under the TA leases, subject to a cap.

Additional details of our hotel operating agreements and our net lease agreements are set forth in Note 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Results of Operations (amounts in thousands, except per share data)

Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023

Three Months Ended March 31,

Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

Three Months Ended June 30,

2024 2023 Increase (Decrease) % Increase (Decrease)

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Transaction related costs — 931 (931) n/m

Loss on asset impairment 2,451 — 2,451 n/m

Loss on asset impairment, net 34,887 9,005 25,882 n/m

Total expenses 474,447 430,399 44,048 10.2 %

Loss on sale of real estate, net (32) (62) 30 (48.4) %

Loss on equity securities, net — (593) 593 n/m

Interest income 819 3,468 (2,649) (76.4) %

Interest expense (93,850) (82,503) (11,347) 13.8 %

Loss on early extinguishment of debt, net (16,048) (238) (15,810) n/m

Loss before income tax expense and equity in (losses) earnings of an investee (70,610) (6,548) (64,062) n/m

Income tax expense (524) (5,247) 4,723 (90.0) %

Equity in (losses) earnings of an investee (2,716) 517 (3,233) n/m

Net loss $ (73,850) $ (11,278) $ (62,572) n/m

Weighted average common shares outstanding (basic and diluted) 165,198 164,902 296 0.2 %

Net loss per common share (basic and diluted) $ (0.45) $ (0.07) $ (0.38) n/m

References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Hotel operating revenues.

The increase in hotel operating revenues is primarily a result of a hotel acquisition ($5,899) in the 2023 period and increased occupancy at certain hotels during the 2024 period ($2,801), partially offset by the sale of certain of our hotels since April 1, 2023 ($541).

Additional operating statistics of our hotels are included in the tables beginning on page 33.

Rental income.

The increase in rental income is primarily a result of the amended TA leases that were effective starting in May 2023 ($2,574), partially offset by decreases in our other net lease portfolio as a result of lower rental income recognized and the sale of certain net lease properties since April 1, 2023 ($1,564).

Hotel operating expenses.

The increase in hotel operating expenses is primarily a result of a hotel acquisition ($4,361) in the 2023 period, increases in wages and benefits ($6,903), property insurance ($4,097) and other operating expenses ($4,437) in the 2024 period, partially offset by our sale of certain hotels since April 1, 2023 ($651).

Net lease operating expenses.

The increase in net lease operating expenses is primarily the result of increased property management fees in the 2024 period ($565) and increases in other operating expenses at certain net lease properties ($727), partially offset by our sale of certain net lease properties since April 1, 2023 ($706).

Depreciation and amortization - hotels.

The increase in depreciation and amortization - hotels is primarily a result of depreciation and amortization related to capital expenditures made since April 1, 2023 and our acquisition of a hotel in June 2023 ($4,300), partially offset by certain of our depreciable assets becoming fully depreciated since April 1, 2023 ($2,360).

Depreciation and amortization - net lease properties.

The decrease in depreciation and amortization - net lease properties is primarily a result of our sale of certain net lease properties since April 1, 2023 ($837).

General and administrative.

The decrease in general and administrative costs is primarily due to decreases in other professional fees ($891) and business management fees ($848) in the 2024 period.

Transaction related costs .

Transaction related costs for the 2023 period primarily consisted of costs related to hotel rebranding activity and the demolition of certain vacant properties.

Loss on asset impairment, net.

We recorded a $34,887 net loss on asset impairment during the 2024 period to reduce the carrying value of eight hotels and three net lease properties to their estimated fair value less costs to sell.

We recorded a $9,005 net loss on asset impairment during the 2023 period to reduce the carrying value of 16 net lease properties to their estimated fair value less costs to sell.

Loss on sale of real estate, net.

We recorded a $32 net loss on sale of real estate during the 2024 period in connection with the sale of one hotel.

We recorded a $62 net loss on sale of real estate during the 2023 period in connection with the sale of two net lease properties.

Loss on equity securities, net.

Loss on equity securities, net represents the adjustment to the carrying value of our former investment in shares of TA common stock to its fair value.

Interest income.

The decrease in interest income is due to lower average cash balances invested during the 2024 period compared to the 2023 period.

Interest expense.

The increase in interest expense is primarily due to higher weighted average interest rates during the 2024 period compared to the 2023 period.

Loss on early extinguishment of debt, net.

We recorded a $16,048 loss on early extinguishment of debt, net in the 2024 period as a result of the redemption and purchase of certain senior notes in the 2024 period.

We recorded a $238 loss on early extinguishment of debt, net due to the write off of certain deferred financing costs relating to the amendment of our revolving credit facility in the 2023 period.

Income tax expense.

The decrease in income tax expense is primarily due to decreases in state tax expense ($2,796) and foreign tax expense ($1,927) during the 2024 period compared to the 2023 period.

Equity in (losses) earnin gs of an investee.

Equity in (losses) earnings of an investee represents our proportionate share of the losses and earnings of Sonesta.

Our net loss and net loss per common share (basic and diluted) each increased in the 2024 period compared to the 2023 period primarily due to the revenue and expense changes discussed above.

Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

Six Months Ended June 30,

2024 2023 Increase (Decrease) % Increase (Decrease)

Hotel operating revenues $ 748,722 $ 739,123 $ 9,599 1.3 %

Rental income 200,476 193,865 6,611 3.4 %

Total revenues 949,198 932,988 16,210 1.7 %

Hotel operating expenses 633,333 608,666 24,667 4.1 %

Net lease operating expenses 9,681 8,277 1,404 17.0 %

Depreciation and amortization - hotels 110,475 106,834 3,641 3.4 %

Depreciation and amortization - net lease properties 78,306 87,776 (9,470) (10.8) %

Total depreciation and amortization 188,781 194,610 (5,829) (3.0) %

General and administrative 21,187 23,331 (2,144) (9.2) %

Transaction related costs — 1,818 (1,818) n/m

Loss on asset impairment, net 37,338 9,005 28,333 n/m

Total expenses 890,320 845,707 44,613 5.3 %

(Loss) gain on sale of real estate, net (2,995) 41,836 (44,831) (107.2) %

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Interest expense (185,264) (164,083) (21,181) 12.9 %

Loss on early extinguishment of debt — (44) 44 n/m

(Loss) income before income tax (expense) benefit and equity in losses of an investee (72,038) 26,391 (98,429) n/m

Income tax (expense) benefit (1,007) 3,780 (4,787) (126.6) %

Loss on early extinguishment of debt, net (16,048) (282) (15,766) n/m

(Loss) income before income tax expense and equity in losses of an investee (142,648) 19,843 (162,491) n/m

Income tax expense (1,531) (1,467) (64) 4.4 %

Equity in losses of an investee (8,054) (3,704) (4,350) 117.4 %

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Net (loss) income per common share (basic and diluted) $ (0.92) $ 0.09 $ (1.01) n/m

References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Hotel operating revenues.

The increase in hotel operating revenues is primarily a result of our hotel acquisition ($9,886), partially offset by the sale of certain of our hotels since January 1, 2023 ($7,829) and the displacement and disruption at certain of our hotels undergoing renovation and decreased business activity in areas where some of our hotels are located ($617).

The increase in hotel operating revenues is primarily a result of a hotel acquisition in the 2023 period ($15,785) and increases in food and beverage and other ancillary revenue in the 2024 period ($2,184), partially offset by our sale of certain hotels since January 1, 2023 ($8,370).

Additional operating statistics of our hotels are included in the tables beginning on page 33.

Rental income.

The increase in rental income is primarily a result of the amended TA leases that were effective starting in May 2023.

The increase in rental income is primarily a result of the amended TA leases that were effective starting in May 2023 ($8,267), partially offset by decreases in our other net lease portfolio as a result of lower rental income recognized and the sale of certain net lease properties since January 1, 2023 ($1,656).

Hotel operating expenses.

The increase in hotel operating expenses is primarily a result of our hotel acquisition ($6,575), increases in wages and benefits ($5,470) and property insurance and other operating expenses ($3,843), partially offset by our sale of certain hotels since January 1, 2023 ($10,368).

The increase in hotel operating expenses is primarily a result of a hotel acquisition ($10,936) in the 2023 period and increases in wages and benefits ($12,373), property insurance ($8,460) and other operating expenses ($4,360) in the 2024 period, partially offset by our sale of certain hotels since January 1, 2023 ($11,462).

Net lease operating expenses.

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Depreciation and amortization - net lease properties.

The decrease in depreciation and amortization - net lease properties is primarily a result of our sale of certain net lease properties since January 1, 2023 ($5,543) and certain of our depreciable assets becoming fully depreciated ($3,090).

The decrease in depreciation and amortization -net lease properties is primarily a result of our sale of certain net lease properties since January 1, 2023 ($6,718) and certain of our depreciable assets becoming fully depreciated since January 1, 2023 ($2,752).

General and administrative.

The decrease in general and administrative costs is primarily due to a decrease in business management fees in the 2024 period ($628), partially offset by an increase in other professional fees ($223).

Transaction related costs .

Transaction related costs for the 2023 period primarily consisted of costs related to potential acquisitions.

Loss on asset impairment.

We recorded a $2,451 loss on asset impairment during the 2024 period to reduce the carrying value of five net lease properties to their estimated fair value less costs to sell.

The decrease in general and administrative costs in the 2024 period is primarily due to decreases in business management fees ($1,476) and other professional fees ($668).

Transaction related cos ts.

Transaction related costs for the 2023 period primarily consisted of costs related to hotel rebranding activity, the demolition of certain vacant properties and potential acquisitions.

Loss on asset impairment, net.

We recorded a $37,338 net loss on asset impairment during the 2024 period to reduce the carrying value of eight hotels and six net lease properties to their estimated fair value less costs to sell.

We recorded a $9,005 net loss on asset impairment during the 2023 period to reduce the carrying value of 16 net lease properties to their estimated fair value less costs to sell.

(Loss) gain on sale of real estate, net.

We recorded a $2,963 net loss on sale of real estate during the 2024 period in connection with the sales of three net lease properties and one hotel.

We recorded a $41,898 net gain on sale of real estate during the 2023 period in connection with the sale of 18 hotels.

We recorded a $2,995 net loss on sale of real estate during the 2024 period in connection with the sale of one hotel and three net lease properties.

We recorded a $41,836 net gain on sale of real estate during the 2023 period in connection with the sale of 18 hotels and two net lease properties.

Gain on equity securities, net.

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Interest income.

The decrease in interest income is due to lower average cash balances invested during the 2024 period.

The decrease in interest income is due to lower average cash balances invested during the 2024 period compared to the 2023 period.

Interest expense.

The increase in interest expense is primarily due to higher weighted average interest rates during the 2024 period.

Loss on early extinguishment of debt.

We recorded a $44 loss on early extinguishment of debt in the 2023 period in connection with our redemption of certain senior unsecured notes.

Income tax (expense) benefit.

The change in income tax (expense) benefit is primarily a result of recording state and foreign tax expense during the 2024 period compared to state and foreign tax benefits in the 2023 period.

The increase in interest expense is primarily due to higher weighted average interest rates during the 2024 period compared to the 2023 period.

Loss on early extinguishment of debt, net.

We recorded a $16,048 loss on early extinguishment of debt, net in the 2024 period as a result of the redemption and purchase of certain senior notes in the 2024 period.

We recorded a $282 loss on early extinguishment of debt, net in connection with our redemption of certain senior unsecured notes and the write off of certain deferred financing costs relating to the amendment of our revolving credit facility in the 2023 period.

Income tax expense.

The increase in income tax expense is primarily due to an increase in our state income tax expense ($122) during the 2024 period, partially offset by a decrease in our foreign sourced income tax expense ($58) during the 2024 period.

Equity in losses of an investee.

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Our Managers and Tenants

As of March 31, 2024, all 220 of our hotels were managed by four hotel operating companies.

Our 749 service-focused retail net lease properties were leased to 177 tenants as of March 31, 2024.

As of June 30, 2024, all 220 of our hotels were managed by four hotel operating companies.

Our 749 service-focused retail net lease properties were leased to 178 tenants as of June 30, 2024.

The costs of operating and maintaining our properties are generally paid by the hotel managers as agents for us or by our tenants for their own account.

Our hotel managers and tenants derive their funding for property operating expenses and for returns and rents due to us generally from property operating revenues and, to the extent these parties themselves fund our owner’s priority returns and rents, from their separate resources.

As of March 31, 2024, our hotel managers included Sonesta (195 hotels), Hyatt (17 hotels), Radisson (seven hotels), and IHG (one hotel).

As of June 30, 2024, our hotel managers included Sonesta (195 hotels), Hyatt (17 hotels), Radisson (seven hotels) and IHG (one hotel).

TA is our largest tenant (175 travel centers).

We recorded reserves for uncollectable amounts and reduced rental income by $665 and $3,540 for the three months ended March 31, 2024 and 2023, respectively, based on our assessment of the collectability of rents.

We had reserves for uncollectable rents of $4,101 and $3,436 as of March 31, 2024 and December 31, 2023, respectively, included in other assets, net in our condensed consolidated balance sheets.

We recorded reserves for uncollectable amounts and reduced rental income by $377 and $1,042 for the three and six months ended June 30, 2024, respectively, based on our assessment of the collectability of rents.

We recorded reserves for uncollectible amounts and reduced rental income by $1,813 and $5,353 for the three and six months ended June 30, 2023, respectively, based on our assessment of the collectability of rents.

We had reserves for uncollectable rents of $4,366 and $3,436 as of June 30, 2024 and December 31, 2023, respectively, included in other assets, net in our condensed consolidated balance sheets.

We define net lease coverage as earnings before interest, taxes, depreciation, amortization and rent, or EBITDAR, divided by the annual minimum rent due to us weighted by the minimum rent of the property to total minimum rents of the net lease portfolio.

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As a result, we believe using this implied coverage metric provides a more reasonable estimated representation of recent operating results and the financial condition for those tenants.

Our net lease properties generated coverage of 2.37x and 2.98x as of March 31, 2024 and 2023, respectively.

Our net lease properties generated coverage of 2.25x and 2.94x as of June 30, 2024 and 2023, respectively.

Our Operating Liquidity and Capital Resources

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The following is a summary of our sources and uses of cash flows for the periods presented:

Three Months Ended March 31,

Six Months Ended June 30,

Cash and cash equivalents and restricted cash at the beginning of the period $ 197,830 $ 45,420

Net cash (used in) provided by:

Net cash provided by (used in):

Operating activities 42,893 328,503

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Cash and cash equivalents and restricted cash at the end of the period $ 29,456 $ 450,625

The change from cash flow provided by operating activities in the 2023 period to cash flow used in operating activities in the 2024 period is primarily due to higher interest expense and lower hotel returns in the 2024 period.

The change from cash flow provided by investing activities in the 2023 period to cash flow used in investing activities in the 2024 period is primarily due to lower proceeds from the sale of real estate and increased real estate improvements during the 2024 period.

The change from cash flow provided by financing activities in the 2023 period to cash flow used in financing activities in the 2024 period is primarily due to lower net borrowings in the 2024 period.

The decrease in cash flow provided by operating activities in the 2024 period is primarily due to $188,000 of prepaid rent received from TA in the 2023 period, higher interest expense and lower hotel returns in the 2024 period.

The change from cash flow provided by investing activities in the 2023 period to cash flow used in investing activities in the 2024 period is primarily due to proceeds from the sale of TA common shares and higher proceeds from the sale of real estate in the 2023 period and increased real estate improvements during the 2024 period.

The increase in cash flow used in financing activities in the 2024 period is primarily due to higher net borrowings in the 2023 period.

We maintain our qualification for taxation as a REIT under the IRC by meeting certain requirements.

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Our hotel operating agreements generally provide that, if necessary, we may provide our managers with funding for capital improvements to our hotels in excess of amounts otherwise available in escrowed FF&E reserves or when no FF&E reserves are available.

During the three months ended March 31, 2024, we funded $67,656 for capital improvements in excess of FF&E reserves available to our hotels.

We currently expect to fund $232,000 for capital improvements to certain hotels during the last nine months of 2024 using cash on hand and borrowings under our revolving credit facility.

During the six months ended June 30, 2024, we funded $130,519 for capital improvements in excess of FF&E reserves available to our hotels.

We currently expect to fund $195,000 for capital improvements to certain hotels during the last six months of 2024 using cash on hand and borrowings under our revolving credit facility.

Various percentages of total sales at some of our hotels are escrowed as FF&E reserves to fund future capital improvements.

We own all the FF&E escrows for our hotels.

During the three months ended March 31, 2024, certain of our hotel managers deposited $871 to these accounts and spent $1,002 from the FF&E reserve escrow accounts to renovate and refurbish our hotels.

As of March 31, 2024, there was $5,551 on deposit in these escrow accounts, which was held directly by us and is reflected in our condensed consolidated balance sheets as restricted cash.

During the six months ended June 30, 2024, certain of our hotel managers deposited $2,597 to these accounts and spent $2,869 from the FF&E reserve escrow accounts to renovate and refurbish our hotels.

As of June 30, 2024, there was $5,411 on deposit in these escrow accounts, which was held directly by us and is reflected in our condensed consolidated balance sheets as restricted cash.

Our net lease portfolio leases do not require FF&E escrow deposits and tenants under these leases are generally required to maintain the leased properties, including structural and non-structural components.

We may provide tenant improvement allowances to tenants in certain cases or may develop sites with the intent to lease them.

During the three months ended March 31, 2024, we funded $511 for capital improvements to our net lease properties.

As of March 31, 2024, we had $2,696 of unspent leasing-related obligations related to certain net lease tenants.

During the three months ended March 31, 2024, we sold three net lease properties with an aggregate of 34,849 square feet for an aggregate sales price of $2,932, excluding closing costs, and one hotel with 84 rooms for a sales price of $3,315, excluding closing costs.

As of May 3, 2024, we have entered into an agreement to sell one net lease property with 3,381 square feet for a sale price of $1,250, excluding closing costs.

This pending sale is subject to conditions;

accordingly, we cannot be sure that we will complete this sale, that this sale will not be delayed or that the terms will not change.

We continue to market 12 net lease properties with an aggregate of 138,948 square feet for sale.

We believe it is more likely than not that the sales of these properties will be completed within one year.

In addition, we are also marketing 22 Sonesta hotels with an aggregate of 2,832 rooms for sale, including nine Sonesta ES Suites®, seven Sonesta Select®, five Sonesta Simply Suites® and one Sonesta Hotels & Resorts®.

We cannot be sure we will sell any of these hotels or sell them for prices in excess of their carrying values.

We expect to use the proceeds from these asset sales for general business purposes, which may include the repayment of debt.

During the three months ended March 31, 2024, we made a $3,392 pro rata capital contribution to Sonesta to support its growth initiatives, including its franchising efforts, and maintain our ownership percentage of Sonesta, using cash on hand.

During the three months ended March 31, 2024, we declared and paid regular quarterly distributions to our common shareholders using cash on hand as follows:

During the six months ended June 30, 2024, we funded $1,696 for capital improvements to our net lease properties.

As of June 30, 2024, we had $2,192 of unspent leasing-related obligations related to certain of our net lease tenants.

During the six months ended June 30, 2024, we sold one hotel with 84 rooms for a sale price of $3,315, excluding closing costs, and three net lease properties with an aggregate of 34,849 square feet for an aggregate sales price of $2,932, excluding closing costs.

From July 1, 2024 through August 2, 2024, we sold two hotels with an aggregate of 346 keys for an aggregate sales price of $10,800, excluding closing costs, and three vacant net lease properties with an aggregate of 9,388 square feet for an aggregate sales price of $1,800, excluding closing costs.

As of August 2, 2024, we have entered into agreements to sell 16 hotels with an aggregate of 1,930 keys for an aggregate sales price of $113,200, excluding closing costs, and one net lease property with 3,381 square feet for a sales price of $1,250, excluding closing costs.

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 continue to market three hotels with an aggregate of 407 keys and nine net lease properties with an aggregate of 129,560 square feet for sale.

We believe it is probable that the sales of these properties will be completed within one year.

In March 2024, we made a $3,392 pro rata capital contribution to Sonesta to support its growth initiatives, including its franchising efforts, using cash on hand.

We continue to maintain our 34% ownership in Sonesta after giving effect to this contribution.

During the six months ended June 30, 2024, we declared and paid regular quarterly distributions to our common shareholders using cash on hand as follows:

Declaration Date Record Date Paid Date Dividend Per Common Share Total Distributions

January 11, 2024 January 22, 2024 February 15, 2024 $ 0.20 $ 33,154

On April 11, 2024, we declared a regular quarterly distribution to common shareholders of record as of April 22, 2024 of $0.20 per common share, or approximately $33,152.

We expect to pay this amount on or about May 16, 2024 using cash on hand.

April 11, 2024 April 22, 2024 May 16, 2024 0.20 33,152

$ 0.40 $ 66,306

On July 11, 2024, we declared a regular quarterly distribution to common shareholders of record as of July 22, 2024 of $0.20 per common share, or approximately $33,178.

We expect to pay this distribution on or about August 15, 2024 using cash on hand.

In order to meet cash needs that may result from our desire or need to make distributions or pay operating or capital expenses, we maintain a $650,000 secured revolving credit facility which is governed by a credit agreement.

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The maturity date of our revolving credit facility is June 29, 2027, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date by two additional six-month periods.

Interest payable on drawings under our revolving credit facility is based on SOFR plus a margin ranging from 1.50% to 3.00% based on our leverage ratio, as defined in our credit agreement, which was 2.50% as of March 31, 2024.

As collateral for all loans and other obligations under the 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 aggregate undepreciated carrying value of $1,612,216 as of March 31, 2024.

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 aggregate undepreciated carrying value of $115,039 as of March 31, 2024 as collateral under the agreement.

As collateral for all loans and other obligations under the 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 72 properties, including 69 hotels and three net lease properties, with an aggregate undepreciated carrying value of $1,738,959 as of June 30, 2024.

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 March 31, 2024 and 2023, the annual interest rate payable on borrowings under our revolving credit facility was 7.84% and 7.36%, respectively.

We had no borrowings outstanding under our revolving credit facility as of March 31, 2024.

Our debt maturities (other than our revolving credit facility) as of March 31, 2024 were as follows:

As of June 30, 2024 and 2023, the annual interest rate payable on borrowings under our revolving credit facility was 7.83% and 7.64%, respectively.

We had no borrowings outstanding under our revolving credit facility as of June 30, 2024.

In June 2024 , we issued $700,000 aggregate principal amount of the 2029 Notes and $500,000 aggregate principal amount of the 2032 Notes in underwritten public offerings.

The aggregate net proceeds from these notes were $1,162,284, after underwriting discounts and other estimated offering expenses.

These notes are fully and unconditionally guaranteed, on a joint and several basis and on a senior unsecured basis, by all of our subsidiaries, except for our foreign subsidiaries and certain other excluded subsidiaries.

Such other excluded subsidiaries include, but are not limited to, subsidiaries whose equity has been pledged to secure borrowings under our credit agreement and our 8.625% senior secured notes due 2031 and subsidiaries whose assets secure our net lease mortgage notes.

We used the net proceeds from these notes and cash on hand to redeem all of our outstanding 7.50% senior unsecured notes due 2025 and purchase and satisfy and discharge all of our outstanding 4.50% senior unsecured notes due 2025.

Our debt maturities (other than our revolving credit facility) as of June 30, 2024 were as follows:

Year Maturity

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When significant amounts are outstanding for an extended period of time under our revolving credit facility, or the maturities of our indebtedness approach, we currently expect to explore refinancing alternatives.

Such alternatives may include incurring additional debt, issuing new equity securities and the sale of properties.

Such alternatives may include

incurring additional debt, issuing new equity securities and the sale of properties.

We have an effective shelf registration statement that allows us to issue public securities on an expedited basis, but it does not assure that there will be buyers for such securities.

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Debt Covenants

Our debt obligations at March 31, 2024 consisted of $5,025,000 aggregate principal amounts of senior notes and $608,079 aggregate principal amounts of mortgage notes secured by 308 net lease retail properties.

Our debt obligations at June 30, 2024 consisted of $5,075,000 aggregate principal amounts of senior notes and $607,590 aggregate principal amounts of mortgage notes secured by 308 net lease retail properties.

For further information regarding our indebtedness, see Note 8 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Our credit agreement, net lease mortgage notes, secured senior notes and unsecured senior notes, indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR ceasing to act as our business manager.

As of March 31, 2024, we believe we were in compliance with all of the covenants under our indentures and their supplements, net lease mortgage notes and our credit agreement.

As of June 30, 2024, we believe we were in compliance with all of the covenants under our indentures and their supplements, net lease mortgage notes and our credit agreement.

Senior Notes Indenture Covenants

The following table summarizes the results of the financial tests required by the indentures and related supplements for our senior secured and unsecured notes as of March 31, 2024:

The following table summarizes the results of the financial tests required by the indentures and related supplements for our senior secured and unsecured notes as of June 30, 2024:

Actual Results Covenant Requirement

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Total unencumbered assets / unsecured debt 173.6% Minimum 150%

As of March 31, 2024, adjusted total assets for covenant purposes as defined in our senior notes indentures were $10,650,576 and assets encumbered under our revolving credit facility, serving as collateral for our net lease mortgage notes or secured senior notes represented $3,508,130 of adjusted total assets, as defined in our senior notes indentures.

Total unencumbered assets in guarantor subsidiaries / senior guaranteed unsecured debt

4.10x Minimum of 2.20x

As of June 30, 2024, adjusted total assets for covenant purposes as defined in our senior notes indentures were $10,618,426 and assets encumbered under our revolving credit facility, serving as collateral for our net lease mortgage notes or secured senior notes represented $3,543,066 of adjusted total assets, as defined in our senior notes indentures.

Our unencumbered hotels, travel centers, other net lease properties and other corporate assets represent $4,470,481, $1,605,020, $858,664 and $141,195 of adjusted total assets, respectively.

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Acceleration and Cross-Default

Our indentures and their supplements contain cross default provisions to any other debt of $20,000 or more ($50,000 or more in the case of our indenture entered into in February 2016 and its supplements, and our indenture entered into in November 2023 and its supplement).

Our indentures and their supplements contain cross default provisions to any other debt of $50,000 or more.

Similarly, our credit agreement has cross default provisions to other indebtedness that is recourse of $25,000 or more and indebtedness that is non-recourse of $75,000 or more.

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Supplemental Guarantor Information

Our 7.50% senior notes due 2025, or the 2025 Notes, and our 5.50% senior notes due 2027, or the 2027 Notes, are fully and unconditionally guaranteed, on a joint and several basis and on a senior unsecured basis, by all of our subsidiaries, except for certain excluded subsidiaries, including our foreign subsidiaries and our subsidiaries pledged under our credit agreement and our net lease mortgage notes.

Our 5.50% senior notes due 2027, or the 2027 Notes, the 2029 Notes and the 2032 Notes are fully and unconditionally guaranteed, on a joint and several basis and on a senior unsecured basis, by all of our subsidiaries, except for certain excluded subsidiaries, including our foreign subsidiaries and our subsidiaries pledged under our credit agreement and our net lease mortgage notes.

The notes and the guarantees will be effectively subordinated to all of our and the subsidiary guarantors’ secured indebtedness, respectively, to the extent of the value of the collateral securing such secured indebtedness, and will be structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes.

Our remaining $2,425,000 of senior unsecured notes do not have the benefit of any guarantees.

A subsidiary guarantor’s guarantee of the 2025 Notes and 2027 Notes and all other obligations of such subsidiary guarantor under the indentures governing the notes will automatically terminate and such subsidiary guarantor will automatically be released from all of its obligations under such subsidiary guarantee and such indenture under certain circumstances, including on or after the date on which (a) the notes have received a rating equal to or higher than Baa2 (or the equivalent) by Moody’s Investor Services, or Moody’s, or BBB (or the equivalent) by Standard & Poor’s Ratings Services, or S&P, or if Moody’s or S&P ceases to rate the notes for reasons outside of our control, the equivalent investment grade rating from any other rating agency and (b) no default or event of default has occurred and is continuing under the indenture.

A subsidiary guarantor’s guarantee of the 2027 Notes, the 2029 Notes and the 2032 Notes and all other obligations of such subsidiary guarantor under the indentures governing the notes will automatically terminate and such subsidiary guarantor will automatically be released from all of its obligations under such subsidiary guarantee and such indenture under certain circumstances, including on or after the date on which (a) the notes have received a rating equal to or higher than Baa2 (or the equivalent) by Moody’s Investor Services, or Moody’s, or BBB (or the equivalent) by Standard & Poor’s Ratings Services, or S&P, or if Moody’s or S&P ceases to rate the notes for reasons outside of our control, the equivalent investment grade rating from any other rating agency and (b) no default or event of default has occurred and is continuing under the indenture.

Our non-guarantor subsidiaries are separate and distinct legal entities and will have no obligation, contingent or otherwise, to pay any amounts due on these notes or the guarantees, or to make any funds available therefor, whether by dividend, distribution, loan or other payments.

The rights of holders of these notes to benefit from any of the assets of our non-guarantor subsidiaries are subject to the prior satisfaction of claims of those subsidiaries’ creditors and any preferred equity holders.

As a result, these notes and the related guarantees will be structurally subordinated to all indebtedness, guarantees and other liabilities of our subsidiaries that do not guarantee these notes, including guarantees of or pledges under other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity.

As a result, these notes and the related guarantees will be effectively subordinated to all of our and the subsidiary guarantors’ secured indebtedness, respectively, to the extent of the value of the collateral securing such secured indebtedness, and will be structurally subordinated to all indebtedness and other liabilities of our subsidiaries that do not guarantee these notes, including guarantees of or pledges under other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity.

The following table presents summarized financial information for us and the subsidiary guarantors, on a combined basis, after elimination of (i) intercompany transactions and balances among us and the subsidiary guarantors, and (ii) equity in earnings from, and any investments in, any of our non-guarantor subsidiaries:

As of March 31, 2024 As of December 31, 2023

As of June 30, 2024 As of December 31, 2023

Real estate properties, net (1)

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Other liabilities 368,590 395,433

Three Months Ended March 31, 2024

(1) Real estate properties, net as of March 31, 2024 includes $168,727 of properties owned directly by us and not included in the assets of the subsidiary guarantors.

Six Months Ended June 30, 2024

(1) Real estate properties, net as of June 30, 2024 includes $163,130 of properties owned directly by us and not included in the assets of the subsidiary guarantors.

(2) Intercompany balances represent payables to non-guarantor subsidiaries.

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Property and Operating Statistics (dollars in thousands, except hotel statistics)

As of March 31, 2024, we owned and managed a diverse portfolio of hotels and net lease properties across the United States and in Puerto Rico and Canada with 146 distinct brands across 22 industries.

As of June 30, 2024, we owned and managed a diverse portfolio of hotels and net lease properties across the United States and in Puerto Rico and Canada with 148 distinct brands across 22 industries.

Hotel Portfolio

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of Hotels Three Months Ended

March 31, Three Months Ended

June 30, Three Months Ended

Brand 2024 2023 Change 2024 2023 Change 2024 2023 Change

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Comparable Hotels Total/Average 218 37,349 68.3 % 67.7 % 0.6 pts $ 141.96 $ 143.52 (1.1) % $ 96.91 $ 97.14 (0.2) %

Comparable Hotels* No.

of Rooms or Suites Occupancy ADR RevPAR

Service Level No.

of Hotels Six Months Ended

June 30, Six Months Ended

Brand 2024 2023 Change 2024 2023 Change 2024 2023 Change

Sonesta Hotels & Resorts® Full Service 22 7,153 59.3 % 62.6 % (3.3) pts $ 155.66 $ 154.48 0.8 % $ 92.31 $ 96.74 (4.6) %

Royal Sonesta Hotels® Full Service 17 5,663 59.1 % 55.5 % 3.6 pts 238.28 243.26 (2.0) % 140.90 134.89 4.5 %

Radisson® Hotels & Resorts Full Service 5 1,149 65.9 % 64.8 % 1.1 pts 148.54 149.79 (0.8) % 97.87 97.03 0.9 %

Crowne Plaza® Full Service 1 495 67.0 % 63.9 % 3.1 pts 146.59 140.18 4.6 % 98.21 89.61 9.6 %

Country Inn & Suites® by Radisson Full Service 2 346 67.5 % 66.9 % 0.6 pts 144.66 138.38 4.5 % 97.59 92.59 5.4 %

Full Service Total/Average 47 14,806 60.2 % 60.2 % — pts 185.46 184.77 0.4 % 111.64 111.17 0.4 %

Sonesta Select® Select Service 44 6,427 55.2 % 54.7 % 0.5 pts 115.85 118.57 (2.3) % 63.90 64.82 (1.4) %

Hyatt Place® Select Service 17 2,107 59.2 % 69.1 % (9.9) pts 122.44 125.49 (2.4) % 72.46 86.72 (16.4) %

Select Service Total/Average 61 8,534 56.2 % 58.2 % (2.0) pts 117.57 120.60 (2.5) % 66.02 70.23 (6.0) %

Sonesta ES Suites® Extended Stay 60 7,643 68.4 % 67.5 % 0.9 pts 124.60 129.96 (4.1) % 85.26 87.73 (2.8) %

Sonesta Simply Suites® Extended Stay 50 6,366 67.7 % 69.1 % (1.4) pts 89.65 90.69 (1.1) % 60.68 62.66 (3.2) %

Extended Stay Total/Average 110 14,009 68.1 % 68.2 % (0.1) pts 108.81 112.01 (2.9) % 74.09 76.42 (3.0) %

Comparable Hotels Total/Average 218 37,349 62.2 % 62.7 % (0.5) pts $ 140.00 $ 141.38 (1.0) % $ 87.13 $ 88.71 (1.8) %

* We define comparable hotels as those that were owned by us and were open and operating for the entirety of the periods being compared.

For the three months ended March 31, 2024 and 2023, our comparable results exclude two hotels;

For the three and six months ended June 30, 2024 and 2023, our comparable results exclude two hotels;

one of the hotels was not owned for the entirety of the periods presented and the other hotel suspended operations during part of the periods presented.

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of Hotels Three Months Ended

March 31, Three Months Ended

June 30, Three Months Ended

Brand 2024 2023 Change 2024 2023 Change 2024 2023 Change

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All Hotels Total/Average 220 37,697 68.2 % 67.5 % 0.7 pts $142.99 $144.46 (1.0) % $ 97.50 $ 97.56 (0.1) %

* Includes results of all hotels owned as of March 31, 2024.

All Hotels* No.

of Rooms or Suites Occupancy ADR RevPAR

Service Level No.

of Hotels Six Months Ended

June 30, Six Months Ended

Brand 2024 2023 Change 2024 2023 Change 2024 2023 Change

Sonesta Hotels & Resorts® Full Service 23 7,403 59.9 % 62.7 % (2.8) pts $163.21 $161.73 0.9 % $ 97.79 $ 101.36 (3.5) %

Royal Sonesta Hotels® Full Service 17 5,663 59.1 % 55.5 % 3.6 pts 238.28 243.26 (2.0) % 140.90 134.89 4.5 %

Radisson® Hotels & Resorts Full Service 5 1,149 65.9 % 64.8 % 1.1 pts 148.54 149.79 (0.8) % 97.87 97.03 0.9 %

Crowne Plaza® Full Service 1 495 67.0 % 63.9 % 3.1 pts 146.59 140.18 4.6 % 98.21 89.61 9.6 %

Country Inn & Suites® by Radisson Full Service 2 346 67.5 % 66.9 % 0.6 pts 144.66 138.38 4.5 % 97.59 92.59 5.4 %

Full Service Total/Average 48 15,056 60.5 % 60.2 % 0.3 pts 188.50 187.90 0.3 % 114.01 113.17 0.7 %

Sonesta Select® Select Service 44 6,427 55.2 % 54.7 % 0.5 pts 115.85 118.57 (2.3) % 63.90 64.82 (1.4) %

Hyatt Place® Select Service 17 2,107 59.2 % 69.1 % (9.9) pts 122.44 125.49 (2.4) % 72.46 86.72 (16.4) %

Select Service Total/Average 61 8,534 56.2 % 58.2 % (2.0) pts 117.57 120.60 (2.5) % 66.02 70.23 (6.0) %

Sonesta ES Suites® Extended Stay 60 7,643 68.4 % 67.5 % 0.9 pts 124.60 129.96 (4.1) % 85.26 87.73 (2.8) %

Sonesta Simply Suites® Extended Stay 51 6,464 67.0 % 68.4 % (1.4) pts 89.65 90.69 (1.1) % 60.10 62.05 (3.1) %

Extended Stay Total/Average 111 14,107 67.8 % 67.9 % (0.1) pts 108.81 112.01 (2.9) % 73.77 76.08 (3.0) %

All Hotels Total/Average 220 37,697 62.2 % 62.6 % (0.4) pts $141.56 $142.87 (0.9) % $ 88.10 $ 89.51 (1.6) %

* Includes results of all hotels owned as of June 30, 2024.

Excludes the results of hotels sold during the periods presented and includes data for one hotel for periods prior to when we acquired it.

Net Lease Portfolio

As of March 31, 2024, our net lease properties were 97.3% occupied and we had 20 properties available for lease.

During the three months ended March 31, 2024, we entered into lease renewals for 128,375 rentable square feet (eleven properties) at weighted (by rentable square feet) average rents that were 3.6% above the prior rents for the same space.

As of June 30, 2024, our net lease properties were 97.3% occupied and we had 20 properties available for lease.

During the six months ended June 30, 2024, we entered into lease renewals for 243,505 rentable square feet (26 properties) at weighted (by rentable square feet) average rents that were 12.2% below the prior rents for the same space.

The weighted (by rentable square feet) average lease term for these leases was 4.9 years.

We also entered into new leases for 96,114 rentable square feet (two properties) at weighted (by rentable square feet) average rents that were 3.3% below the prior rents for the same space.

We also entered into new leases for 108,803 rentable square feet (four properties) at weighted (by rentable square feet) average rents that were 13.7% below the prior rents for the same space.

The weighted (by rentable square feet) average lease term for these leases was 18.5 years.

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Annualized minimum rent also excludes the impact of rents prepaid by TA.

As of March 31, 2024, our net lease tenants operated across 137 brands.

As of June 30, 2024, our net lease tenants operated across 139 brands.

The following table identifies the top ten brands based on annualized minimum rent:

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(2) See page 27 for our definition of coverage.

(3) Rent coverage information provided by tenant is for all 175 sites on a consolidated basis and is as of March 31, 2024.

(3) Rent coverage information provided by tenant is for all 175 sites on a consolidated basis and is as of June 30, 2024.

(4) Consists of 129 distinct brands with an average investment of $3,029 and average annual minimum rent of $200 per property.

As of March 31, 2024, our top ten net lease tenants based on our annualized minimum rent are listed below:

As of June 30, 2024, our top ten net lease tenants based on our annualized minimum rent are listed below:

Tenant Brand Affiliation No.

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guarantees payments under each of the five master leases.

The aggregate guaranty as of March 31, 2024 was approximately $3,037,475.

The aggregate guaranty as of June 30, 2024 was approximately $3,037,475.

Annualized minimum rent excludes the impact of rents prepaid by TA.

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5, respectively.

Rent coverage is as of March 31, 2024.

Rent coverage is as of June 30, 2024.

(4) Consists of 168 tenants with an average investment of $2,741 and an average annual minimum rent of $179 per property.

As of March 31, 2024, our net lease tenants operated across 21 distinct industries within the service-focused retail sector of the U.S.

As of June 30, 2024, our net lease tenants operated across 21 distinct industries within the service-focused retail sector of the U.S.

of Properties Investment (1)

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Home Goods and Leisure 20 134,291 2.7% 10,626 2.8 % 5.14 x

Medical, Dental Office 71 116,991 2.3% 9,560 2.5 % 3.54 x

Grocery Stores 19 129,152 2.6% 9,235 2.4 % 3.55 x

Medical, Dental Office 70 104,042 2.1% 8,449 2.2 % 3.42 x

Movie Theaters 15 139,569 2.8% 8,399 2.2 % 2.24 x

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Drug Stores and Pharmacies 6 17,111 0.3% 1,122 0.3 % 1.16 x

Legal Services 5 11,362 0.2% 1,075 0.3 % 5.23 x

Sporting Goods 3 18,234 0.4% 1,099 0.3 % 5.23 x

Legal Services 5 11,362 0.2% 1,075 0.3 % 6.47 x

Dollar Stores 3 2,971 0.1% 190 0.1 % 1.99 x

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(2) See page 27 for our definition of coverage.

(3) Rent coverage for TA is as of March 31, 2024.

(3) Rent coverage for TA is as of June 30, 2024.

(4) Consists of miscellaneous businesses with an average investment of $5,449 per property.

As of March 31, 2024, lease expirations at our net lease properties by year are as follows:

As of June 30, 2024, lease expirations at our net lease properties by year are as follows:

Number of Properties Square Feet Annualized Minimum Rent Expiring Percent of Total Annualized Minimum Rent Expiring Cumulative Percent of Total Annualized Minimum Rent Expiring

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(1) The year of lease expiration is pursuant to contract terms.

As of March 31, 2024, shown below is the list of our top ten states where our net lease properties are located.

As of June 30, 2024, shown below is the list of our top ten states where our net lease properties are located.

No other state represents more than 3% of our net lease annualized minimum rents.

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Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.

Our calculations of FFO and Normalized FFO for the three months ended March 31, 2024 and 2023 and reconciliations of net income (loss), the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to those amounts appear in the following table (amounts in thousands, except per share amounts):

Three Months Ended March 31,

Our calculations of FFO and Normalized FFO for the three and six months ended June 30, 2024 and 2023 and reconciliations of net income (loss), the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to those amounts appear in the following table (amounts in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net (loss) income $ (73,850) $ (11,278) $ (152,233) $ 14,672

Depreciation and amortization 95,674 94,571 188,781 194,610

Loss on asset impairment 2,451 —

Loss on asset impairment, net 34,887 9,005 37,338 9,005

Loss (gain) on sale of real estate, net 32 62 2,995 (41,836)

Gain on equity securities, net — (49,430)

Loss (gain) on equity securities, net — 593 — (48,837)

Adjustments to reflect our share of FFO attributable to an investee 1,021 798 1,987 2,031

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Transaction related costs — 931 — 1,818

Loss on early extinguishment of debt — 44

Loss on early extinguishment of debt, net 16,048 238 16,048 282

Adjustments to reflect our share of Normalized FFO attributable to an investee (2) 207 — 528

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis