What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-26 compared with 2024-02-28 · 166 added, 170 removed, 440 unchanged (43% of the section changed)

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As of December 31, 2024, we owned 948 properties in 46 states, the District of Columbia, Canada and Puerto Rico.

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

Federal Reserve raised interest rates multiple times since the beginning of 2022.

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.

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.

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

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.

In October 2024, we announced our plan to sell 114 extended stay and select service hotels managed by Sonesta with an aggregate of 14,925 keys and an aggregate net carrying value of $850,000.

We expect to sell these hotels in 2025 and use the net sales proceeds from these sales to repay debt.

To further improve our liquidity beginning with the fourth quarter of 2024, we reduced our regular quarterly cash distribution rate on our common shares from $0.20 per common share to $0.01 per common share, which we expect to result in $127,000 of annual savings.

Management Agreements and Leases.

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In 2024, the U.S.

hotel industry generally realized increases in average daily rate, or ADR, revenue per available room, or RevPAR, and occupancy compared to the corresponding 2022 periods.

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.

hotel industry generally realized increases in average daily rate, or ADR, and revenue per available room, or RevPAR, compared to the corresponding 2023 periods.

Our comparable hotels produced year over year declines in ADR and 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.

Comparable Hotels Data.

We present RevPAR, ADR and occupancy for the periods presented on a comparable basis to facilitate comparisons between periods.

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 years ended December 31, 2024 and 2023, our comparable results exclude one hotel that was not owned for the entirety of the periods presented and one other hotel that suspended operations during the periods presented.

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

Year Ended December 31,

2024 2023 Change

Comparable Hotels

of hotels 204 204 —

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RevPAR $ 89.32 $ 89.44 (0.1) %

Comparable Hotels Data.

We present RevPAR, ADR and occupancy for the periods presented on a comparable basis to facilitate comparisons between periods.

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

For the years ended December 31, 2023 and 2022, 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.

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

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.

Year Ended December 31,

2024 2023 Change

Comparable Hotels

of hotels 206 221 (15)

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Our net lease properties were 97.6% occupied as of December 31, 2024 with a weighted (by annual minimum rent) average lease term of 8.0 years, operating under 136 brands in 21 distinct industries.

TA is our largest tenant.

On May 15, 2023, BP completed the TA Merger and we amended our leases with TA.

We received $379,292 in cash as part of the transaction, including $188,000 of prepaid rent, $101,892 for the TA common shares we owned and $89,400 for certain tradenames and trademarks associated with TA’s businesses that we owned.

As of December 31, 2023, we leased 176 of our travel centers to TA under five master leases that expire in 2033 and require annual minimum rents of $254,000, and BP Corporation North America Inc.

guarantees payment under these leases, subject to a cap.

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

Additional details of our hotel operating agreements, our net lease agreements and the TA Merger are set forth in Notes 4 and 9 to our consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K.

TA is our largest tenant and as of December 31, 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 the TA leases, subject to a cap.

Additional details of our hotel operating agreements and our net lease agreements are set forth in Note 4 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

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

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Year Ended December 31,

2023 2022 Increase

(Decrease) % Increase

2024 2023 $ Change % Change

Hotel operating revenues $ 1,496,705 $ 1,478,034 $ 18,671 1.3 %

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General and administrative 40,239 45,397 (5,158) (11.4) %

Transaction related costs (1,623) 1,920 (3,543) (184.5) %

Loss on asset impairment, net 9,544 10,989 (1,445) (13.1) %

Transaction related costs 6,894 (1,623) 8,517 n/m

Loss on asset impairment, net 56,212 9,544 46,668 n/m

Total expenses 1,769,101 1,678,947 90,154 5.4 %

Gain on sale of real estate, net 6,269 43,239 (36,970) (85.5) %

Gain (loss) on equity securities, net 48,837 (8,104) 56,941 n/m

Interest income 20,979 3,379 17,600 n/m

Gain on equity securities, net — 48,837 (48,837) n/m

Interest income 4,052 20,979 (16,927) (80.7) %

Interest expense (383,792) (336,342) (47,450) 14.1 %

Loss on early extinguishment of debt (1,524) (791) (733) 92.7 %

Loss before income tax benefit and equity in (losses) earnings of an investee

(29,895) (135,436) 105,541 (77.9) %

Income tax benefit

1,498 199 1,299 n/m

Equity in (losses) earnings of an investee (4,382) 2,856 (7,238) n/m

Net loss $ (32,779) $ (132,381) $ 99,602 (75.2) %

Loss on early extinguishment of debt, net (16,181) (1,524) (14,657) n/m

Loss before income tax (expense) benefit and equity in losses of an investee (261,825) (29,895) (231,930) n/m

Income tax (expense) benefit (1,402) 1,498 (2,900) (193.6) %

Equity in losses of an investee (12,299) (4,382) (7,917) 180.7 %

Net loss $ (275,526) $ (32,779) $ (242,747) n/m

Weighted average shares outstanding (basic and diluted) 165,338 164,988 350 0.2 %

Net loss per common share (basic and diluted) $ (0.20) $ (0.80) $ 0.60 (75.0) %

Net loss per common share (basic and diluted) $ (1.67) $ (0.20) $ (1.47) n/m

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

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Hotel operating revenues.

The increase in hotel operating revenues is primarily a result of higher occupancies and average rates at certain of our hotels in the 2023 period ($123,238), partially offset by the sale of certain of our hotels since January 1, 2022 ($112,548).

Additional operating statistics of our hotels are included in the tables on page 66.

The increase in hotel operating revenues is primarily a result of higher occupancies and average rates at certain of our hotels in 2024 ($21,096) and a hotel acquisition in June 2023 ($16,396), partially offset by the sale of certain hotels since January 1, 2023 ($18,821).

Additional operating statistics of our hotels are included in the tables beginning on page 66.

Rental income.

The increase in rental income is primarily the result of the amended TA leases in the 2023 period ($7,170), partially offset by our sale of certain net lease properties ($5,815) and lease expirations at certain net lease properties ($1,193) since January 1, 2022.

The increase in rental income is primarily a result of the TA leases that were amended in May 2023 ($5,071) and higher rental income recognized at certain net lease properties in 2024 ($302), partially offset by the sale of certain net lease properties since January 1, 2023 ($979).

Hotel operating expenses.

The decrease in hotel operating expenses is primarily the result of our sale of certain hotels since January 1, 2022 ($109,031), partially offset by an increase in occupancy at certain managed hotels resulting in increases in wages ($62,969), increases in rooms related expenses ($31,558), and increases in utilities ($3,800) and other operating expenses ($7,253).

The increase in hotel operating expenses is primarily a result of a hotel acquisition in June 2023 ($10,971) and increases in labor and benefits ($27,782), real estate taxes and insurance ($12,904) and other operating expenses ($18,012) in 2024, partially offset by our sale of certain hotels since January 1, 2023 ($19,422).

Net lease operating expenses.

The increase in net lease operating expenses is the result of higher operating expenses at certain net lease properties primarily as a result of vacancies ($1,490) and increases in other operating expenses ($2,997).

The increase in net lease operating expenses is primarily the result of increased property management fees ($2,335) and other operating expenses ($2,019) in 2024, partially offset by our sale of certain net lease properties since January 1, 2023 ($2,200).

Depreciation and amortization - hotels.

The decrease in depreciation and amortization - hotels is primarily the result of certain of our depreciable assets becoming fully depreciated since January 1, 2022 ($8,523) and our sale of certain hotels since January 1, 2022 ($6,342), partially offset by depreciation and amortization related to capital expenditures made since January 1, 2022 ($7,484) and our acquisition of a hotel in the 2023 period ($2,200).

The increase in depreciation and amortization - hotels is primarily a result of depreciation and amortization related to capital expenditures made since January 1, 2023 and our acquisition of a hotel in June 2023 ($14,207), partially offset by certain of our depreciable assets becoming fully depreciated since January 1, 2023 ($5,283) and the sale of certain hotels since January 1, 2023 ($3,860).

Depreciation and amortization - net lease properties.

The decrease in depreciation and amortization - net lease properties is primarily a result of certain of our depreciable assets becoming fully depreciated since January 1, 2022 and our sale of certain net lease properties since January 1, 2022 ($15,396), partially offset by depreciation and amortization related to capital expenditures since January 1, 2022 ($3,529).

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 ($7,727) and certain of our depreciable assets becoming fully depreciated since January 1, 2023 ($9,611).

General and administrative.

The increase in general and administrative costs is primarily due to increases in other professional fees ($2,259), share award expenses ($642) and accounting related fees ($235), partially offset by a decrease in business management fees in the 2023 period ($2,143).

The decrease in general and administrative costs in 2024 is primarily due to decreases in business management fees ($3,699) and other professional fees ($1,459).

Transaction related costs.

Transaction related costs for the 2023 period primarily consist of the partial recovery of a working capital reserve related to the IHG portfolio previously deemed uncollectable and expensed during 2021 ($5,797), partially offset by costs related to hotel rebranding activity, demolition of certain vacant properties and potential acquisitions ($4,174).

Transaction related costs for the 2022 period primarily consist of costs related to our exploration of possible financing transactions ($1,920).

Transaction related costs in 2024 primarily consist of costs related to various labor litigation matters, re-opening costs and other professional fees related to major renovation projects at certain of our hotels.

Transaction related costs in 2023 primarily consisted of the partial recovery of a working capital reserve related to the IHG portfolio previously deemed uncollectable and expensed during 2021 ($5,797), partially offset by costs related to hotel rebranding activity, demolition of certain vacant properties and potential acquisitions ($4,174).

Loss on asset impairment, net.

We recorded a $9,544 loss on asset impairment during the 2023 period to reduce the carrying value of one hotel and 16 net lease properties to their estimated fair value less costs to sell.

We recorded a $10,989 loss on asset impairment during the 2022 period to reduce the carrying value of 26 hotels and five net lease properties to their estimated fair value less costs to sell.

We recorded a $56,212 loss on asset impairment, net in 2024 to reduce the carrying value of ten hotels and ten net lease properties to their estimated fair value or estimated fair value less costs to sell.

We recorded a $9,544 loss on asset impairment, net in 2023 to reduce the carrying value of one hotel and 16 net lease properties to their estimated fair value less costs to sell.

Gain on sale of real estate, net.

We recorded a $43,239 net gain on sale of real estate during the 2023 period in connection with the sales of 18 hotels and 13 net lease properties, and a $47,818 net gain on sale of real estate in the 2022 period in connection with the sales of 65 hotels and 21 net lease properties.

Gain (loss) on equity securities, net.

G ain (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.

We recorded a $6,269 net gain on sale of real estate in 2024 in connection with the sales of 15 hotels and ten net lease properties, and a $43,239 net gain on sale of real estate in 2023 in connection with the sales of 18 hotels and 13 net lease properties.

Gain on equity securities, net.

G ain 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 increase in interest income is primarily due to higher interest rates and higher average cash balances invested during the 2023 period.

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

Interest expense.

The decrease in interest expense is due to lower outstanding debt balances, partially offset by higher weighted average interest rates in the 2023 period.

Loss on early extinguishment of debt .

We recorded a $1,524 loss on early extinguishment of debt in the 2023 period related to the write-off of deferred financing costs and unamortized discounts in connection with the repayment of certain senior unsecured notes and the write-off of certain deferred financing costs relating to the amendment of our revolving credit facility.

We recorded a $791 loss on early extinguishment of debt in the 2022 period related to the write-off of deferred financing costs and unamortized discounts relating to the amendment of our revolving credit facility and the repayment of certain unsecured senior notes.

Income tax benefit.

The increase in income tax benefit is primarily related to a change in deferred tax liabilities related to our Puerto Rico hotel.

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

Loss on early extinguishment of debt, net .

We recorded a $16,181 loss on early extinguishment of debt, net in 2024 as a result of the redemption and purchase of certain senior notes.

We recorded a $1,524 loss on early extinguishment of debt in 2023 related to the write-off of deferred financing costs and unamortized discounts in connection with the repayment of certain senior unsecured notes and the write-off of certain deferred financing costs relating to the amendment of our revolving credit facility.

Income tax (expense) benefit.

The change in income tax (expense) benefit is primarily a result of increases in our foreign tax expense ($1,863) and state tax expense ($1,037) in 2024.

See Note 10 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for further information.

Equity in (losses) earnings of an investee.

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

Our net loss and our net loss per common share (basic and diluted) each decreased in the 2023 period compared to the 2022 period primarily due to the revenue and expense changes discussed above.

Liquidity and Capital Resources (dollars in thousands, except share amounts)

Equity in losses of an investee.

Equity in losses of an investee represents our proportionate share of the losses of Sonesta.

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

Liquidity and Capital Resources (dollars in thousands, except per share amounts)

Our Managers and Tenants

As of December 31, 2023, all 221 of our hotels were managed and operated by four hotel operating companies.

Our 752 service-focused retail net lease properties were leased to 175 tenants as of December 31, 2023.

As of December 31, 2024, all 206 of our hotels were managed and operated by four hotel operating companies and our 742 service-focused retail net lease properties were leased to 177 tenants.

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 December 31, 2023, our hotel managers included Sonesta (195 hotels), Hyatt (17 hotels), Radisson (eight hotels), and IHG (one hotel).

As of December 31, 2024, our hotel managers included Sonesta (181 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 $4,927 and reduced our reserves for uncollectable amounts and increased rental income by $320 for the years ended December 31, 2023 and 2022, 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.

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.

We recorded reserves for uncollectable amounts and reduced rental income by $2,158 and $4,927 during the years ended December 31, 2024 and 2023, respectively, based on our assessment of the collectability of rents.

We had reserves for uncollectable rents of $5,058 and $3,436 as of December 31, 2024 and 2023, respectively, included in other assets, net in our consolidated balance sheets.

We define net lease rent 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.

Tenants with no minimum rent required under the lease are excluded.

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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 2.46x and 3.00x as of December 31, 2023 and 2022, respectively.

Our net lease properties generated rent coverage of 2.10x and 2.46x as of December 31, 2024 and 2023, respectively.

Our Operating Liquidity and Capital Resources

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We may receive additional returns, percentage rents and our share of the operating profits of our managed hotels after payment of management fees and other deductions, if any, either monthly or quarterly, and these amounts are usually subject to annual reconciliations.

We believe that these sources of funds will be sufficient to meet our operating expenses and capital expenditures, pay debt service obligations and make distributions to our shareholders for the next twelve months and for the foreseeable future thereafter.

We believe these sources of funds will be sufficient to meet our operating expenses and capital expenditures, pay debt service obligations and make distributions to our shareholders for the next twelve months and for the foreseeable future thereafter.

However, as a result of economic conditions, including if the U.S.

enters an economic recession, or otherwise, our managers and tenants may become unable or unwilling to pay owner’s priority returns and rents to us when due, and, as a result, our cash flows and net income would decline and we may need to reduce the amount of, or even eliminate, our distributions to common shareholders.

The following is a summary of our sources and uses of cash flows for the periods presented (dollars in thousands):

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

Year Ended December 31,

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Cash and cash equivalents and restricted cash at the end of the period $ 157,386 $ 197,830

The increase in cash provided by operating activities for the 2023 period compared to the prior year period is primarily due to $188,000 of prepaid rent received from TA, higher returns earned from our hotel portfolio and lower interest expense in the 2023 period.

The change from cash flow from investing activities in the 2022 period to cash flow used in investing activities in the 2023 period is primarily due to lower proceeds from the sale of real estate, our hotel acquisition and increased real estate improvements during the 2023 period, partially offset by proceeds from the TA Merger.

The decrease in cash flows used in financing activities in the 2023 period compared to the 2022 period is primarily due to proceeds from our senior secured notes and our net lease mortgage notes issued in the 2023 period, partially offset by increased distributions during the 2023 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 increase in 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, partially offset by acquisitions in the 2023 period.

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

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

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During the year ended December 31, 2024, we funded $5,494 for capital improvements to our net lease properties.

As of December 31, 2023, we had $2,546 of unspent leasing-related obligations related to certain net lease tenants.

During the year ended December 31, 2023, we sold 18 hotels with an aggregate of 2,526 rooms for an aggregate sales price of $157,230, excluding closing costs, and 13 net lease properties with an aggregate of 160,310 square feet for an aggregate sales price of $13,095, excluding closing costs.

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 $3,315 and four net lease properties with an aggregate of 55,276 square feet for an aggregate sales price of $3,121.

As of December 31, 2024, we had $1,534 of unspent leasing-related obligations related to certain of our net lease tenants.

During the year ended December 31, 2024, we sold 15 hotels with an aggregate of 1,910 rooms for an aggregate sales price of $97,315, excluding closing costs, and ten net lease properties with an aggregate of 96,929 square feet for an aggregate sales price of $8,547, excluding closing costs.

From January 1, 2025 through February 24, 2025, we sold one hotel with 149 keys for a sales price of $4,000, excluding closing costs, and two net lease properties with an aggregate of 49,081 square feet for an aggregate sales price of $1,300, excluding closing costs.

We have also entered into agreements to sell five hotels with an aggregate of 623 keys for an aggregate sales price of $28,500, excluding closing costs, and two net lease properties with an aggregate of 155,559 square feet for an aggregate sales price of $5,800, 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 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.

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

BP completed the TA Merger on May 15, 2023.

We received $379,292 in cash as part of this transaction, including $188,000 in prepaid rent from TA, $101,892 in merger consideration for the TA common shares we owned, and $89,400 for certain tradenames and trademarks associated with TA’s business we owned.

During the year ended December 31, 2023, we purchased one hotel in Miami Beach, Florida with 250 rooms for a sales price of $165,400, excluding closing costs, using cash on hand.

During the year ended December 31, 2023, we funded $5,134 of capital contributions to Sonesta to support their growth initiatives, including their franchising efforts, using cash on hand.

We continue to market two hotels with an aggregate of 234 keys and six net lease properties with an aggregate of 80,249 square feet for sale.

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

We expect to use the net sales proceeds from these sales for general business purposes.

In February 2025, we entered into an agreement to acquire one net lease property with 5,120 square feet for a purchase price of $5,297, excluding closing costs.

We expect to complete this acquisition in the first quarter of 2025 using cash on hand.

In October 2024, we announced our plan to sell 114 extended stay and select service hotels managed by Sonesta with an aggregate of 14,925 keys and an aggregate net carrying value of $850,000.

We expect to sell these hotels in 2025 and use the net sales proceeds from these sales to repay debt.

During the year ended December 31, 2024, we funded $15,266 of capital contributions to Sonesta to support its growth initiatives, including its franchising efforts, using cash on hand.

During the year ended December 31, 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

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

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

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On January 16, 2025, we declared a regular quarterly distribution to common shareholders of record on January 27, 2025 of $0.01 per share, or $1,666.

We paid this amount on February 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 the amended and restated credit agreement that we entered into on June 29, 2023.

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.

We paid this distribution on February 20, 2025 using cash on hand.

This revolving credit facility is available for general business purposes, including acquisitions.

We can borrow, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayments are due until maturity.

Availability of borrowings under our credit agreement is subject to ongoing minimum performance and market values of the collateral properties, satisfying certain financial covenants and other credit facility conditions.

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.

Interest payable on drawings under the new facility is based on the secured overnight financing rate, or 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 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.

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 of the facility 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 December 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 $1,717,254 as of December 31, 2024.

During the year ended December 31, 2024, we sold three hotels that served as collateral under our revolving credit facility.

In connection with the sales of these hotels, the hotels were released from the collateral pool in accordance with the terms of our revolving credit facility.

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, the annual interest rate payable on borrowings under our revolving credit facility was 7.88%.

We had no borrowings outstanding under the facility as of December 31, 2023.

In February 2023, one of our subsidiaries, SVC ABS LLC, or the Issuer, issued $610,200 in aggregate principal amount of net lease mortgage notes.

The notes are non-recourse and secured by the assets of the Issuer, which include 308 net lease retail properties with annual minimum rents of $63,283 and a gross book carrying value of $755,116 as of December 31, 2023.

The net proceeds from this issuance were $550,564 after initial purchaser discounts and offering costs.

We redeemed our 4.50% senior notes due in 2023 at a redemption price equal to the principal amount of $500,000, plus accrued and unpaid interest to, but excluding the date of redemption in March 2023, using the proceeds from these net lease mortgage notes.

The net lease mortgage notes are summarized below:

Note Class S&P Rating Principal Outstanding as of December 31, 2023

Coupon Rate Term Maturity

Class A AAA $ 303,729 5.15% 5 years February 2028

Class B AA 172,640 5.55% 5 years February 2028

Class C A 132,200 6.70% 5 years February 2028

Total / weighted average $ 608,569 5.60%

In November 2023, we issued $1,000,000 principal amount of 8.625% senior secured notes due 2031, or the 2031 Notes.

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 70 properties leased to TA with a gross carrying value of $785,876 as of December 31, 2023 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.

We redeemed our 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 to, but excluding the date of redemption in December 2023, using the proceeds from the 2031 Notes and cash on hand.

As of December 31, 2024 and 2023, the annual interest rate payable on borrowings under our revolving credit facility was 6.99% and 7.88%, respectively.

As of December 31, 2024 and February 24, 2025, we had $150,000 and $50,000, respectively, outstanding under our revolving credit facility and $500,000 and $600,000, respectively, available for borrowing.

Availability under our revolving credit facility is partially based on the performance of the properties serving as collateral under the facility.

Based on expectations of performance of certain of the collateral properties, we and our lenders amended the credit facility in October 2024 to temporarily reduce the required collateral property debt yield from 12% to 8.5% from September 30, 2024 through December 31, 2024, and increase the required collateral property debt yield to 9.5% for the quarter ending March 31, 2025;

10% for the quarter ending June 30, 2025;

11% for the quarter ending September 30, 2025;

and 12% for the quarter ending December 31, 2025 and thereafter.

Subject to meeting these revised collateral property debt yield levels and meeting other conditions, we will continue to have full access to undrawn amounts under our revolving credit facility.

In February 2025, we and our lenders further amended our revolving credit facility to reduce the required debt service coverage ratio covenant from 1.50 times to 1.30 times effective with respect to the fourth quarter of 2024 and continuing through the end of the loan term.

In order to exercise the first extension option, we would be required to maintain the 1.50 times debt service coverage level as of and for the duration of the extension period.

We also agreed to change the required collateral property debt yield to 10% effective with respect to the first quarter of 2025 and continuing through the end of the loan term and to swap collateral properties as follows:

49 hotels with an aggregate of 8,197 keys and an aggregate undepreciated carrying value of $1,402,307 will be released from the collateral pool and 35 travel centers leased to TA, which travel centers we refer to as our TA No.

5 lease, with an aggregate undepreciated carrying value of $601,684, will be added as collateral to our revolving credit facility.

Of the hotels being released from the collateral pool, 38 hotels with an aggregate of 5,078 keys and an aggregate undepreciated carrying value of $689,592 are part of our hotel disposition plan.

The corresponding equity pledges will be swapped as well.

We expect to complete this collateral swap by the end of the second quarter of 2025.

Senior Guaranteed Unsecured Notes Issuance and Repayment of 2025 Maturities

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 offerings were $1,162,077, after underwriting discounts and other 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 2031 Notes and subsidiaries whose assets secure our net lease mortgage notes.

We used the net proceeds from the issuance of 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.

Net Lease Mortgage Notes

On January 27, 2025, our wholly owned, special purpose bankruptcy remote, indirect subsidiary, SVC ABS LLC, or the Issuer, issued a variable funding note, or VFN, secured by the 315 net lease properties that also secure our existing $606,611 of net lease mortgage notes.

The VFN permits borrowings on a revolving basis up to $45,000 and the Issuer can borrow, repay and reborrow funds available until maturity.

The maturity date of the VFN is January 27, 2027, and, subject to the payment of an extension fee and meeting certain other conditions, can be extended by one year at the Issuer’s option.

The VFN requires interest payments only on drawings under the VFN based on SOFR plus a margin of 1.75%, and an unused commitment fee of 50 basis points per annum paid on undrawn amounts.

We borrowed $45,000 for general business purposes under the VFN upon closing.

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

Year Maturity

2025 1,151,958

Year Debt Maturities

2028 1,000,737

2029 1,125,000

Thereafter 1,900,000

None of our senior note debt obligations require principal or sinking fund payments prior to their maturity dates.

Our mortgage notes require monthly principal payments as described in Part II, Item 7A of this Annual Report on Form 10-K.

We currently expect to use cash on hand, the cash flows from our operations, borrowings under our revolving credit facility, net proceeds from any asset sales and net proceeds of offerings of equity or the incurrence of debt to fund our operations, capital expenditures, investments, future debt maturities, distributions to our shareholders and other general business purposes.

We currently expect to use cash on hand, the cash flows from our operations, borrowings under our revolving credit facility or VFN, net proceeds from any asset sales and net proceeds of offerings of equity or the incurrence of debt to fund our operations, capital expenditures, investments, future debt maturities, distributions to our shareholders and other general business purposes.

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.

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We intend to conduct our business activities in a manner which will afford us reasonable access to capital for investment and financing activities.

However, as discussed elsewhere in this Annual Report on Form 10-K, the impacts of the current, and possibly future, inflationary conditions, increasing or sustained high interest rates and a possible economic recession are uncertain and may have various negative consequences on us and our operations, including a decline in financing availability and increased costs for financing.

However, as discussed elsewhere in this Annual Report on Form 10-K, the impacts of the current, and possibly future, inflationary conditions, uncertainties surrounding interest rates and a possible economic recession are uncertain and may have various negative consequences on us and our operations, including a decline in financing availability and increased costs for financing.

Further, such conditions could also disrupt the capital markets generally and limit our access to financing from public sources or on favorable terms, particularly if the global financial markets experience significant disruptions.

Debt Covenants

Our debt obligations at December 31, 2023 consisted of $5,025,000 aggregate principal amounts of senior notes and $608,569 aggregate principal amounts of mortgage notes.

Our debt obligations at December 31, 2024 consisted of $150,000 of borrowings outstanding under our $650,000 revolving credit facility, $5,075,000 aggregate principal amounts of senior notes and $606,611 aggregate principal amounts of mortgage notes secured by 315 net lease retail properties.

For further information regarding our indebtedness, see Note 6 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

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Total unencumbered assets / unsecured debt 175.3% Minimum 150%

Total unencumbered assets in guarantor subsidiaries / senior guaranteed unsecured debt

4.14x Minimum of 2.20x

As of December 31, 2024, adjusted total assets for covenant purposes as defined in our senior notes indentures were $10,625,259 and assets encumbered under our revolving credit facility, serving as collateral for our net lease mortgage notes or secured senior notes represented $3,482,758 of adjusted total assets, as defined in our senior notes indentures.

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Adjusted total assets $ 10,625,259

Our ability to incur additional debt is subject to meeting the required covenant levels and subject to the provisions of our credit facility and senior notes indentures.

Our ability to incur additional debt is subject to meeting the required covenant levels and subject to the provisions of our credit agreement and senior notes indentures.

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).

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 2025 Notes and our 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 2027 Notes, 2029 Notes and 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, 2027 Notes and 2031 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, in the case of the 2031 Notes, both agencies, 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, and 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:

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Related Person Transactions

We have relationships and historical and continuing transactions with RMR, RMR Inc., TA and Sonesta and others affiliated with them.

We have relationships and historical and continuing transactions with RMR, RMR Inc.

and Sonesta and others affiliated with them.

For further information about these and other such relationships and related person transactions, see Notes 4, 5, 8 and 9 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K, which are incorporated herein by reference and our other filings with the SEC, including our definitive Proxy Statement for our 2025 Annual Meeting of Shareholders, or our definitive Proxy Statement, to be filed with the SEC within 120 days after the fiscal year ended December 31, 2024.

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• income taxes.

We have determined that each of our wholly owned TRSs is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board 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 VIE’s performance and we have the obligation to absorb the majority of the potential variability in gains and losses of each VIE, with the primary focus on losses, and are therefore the primary beneficiary of each VIE.

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Incorrect assumptions or estimates may result in misclassification of our leases.

We account for income taxes in accordance with the Income Taxes Topic of the Codification.

We account for income taxes in accordance with the Income Taxes Topic of the ASC.

Under this Topic, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

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Hotel Portfolio

The following tables summarize the operating statistics, including ADR, RevPAR and occupancy reported to us by our hotel managers by hotel brand for the periods indicated.

The following tables summarize the operating statistics, including occupancy, ADR and RevPAR reported to us by our hotel managers by hotel brand for the periods indicated.

All operating data presented are based upon the operating results provided by our hotel managers for the indicated periods.

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Comparable Hotels Total/Average 204 35,523 63.4 % 62.9 % 0.5 pts $ 140.96 $ 142.14 (0.8) % $ 89.32 $ 89.44 (0.1) %

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

* 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 years ended December 31, 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.

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

All Hotels* No.

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As of December 31, 2024, our net lease properties were 97.6% occupied and we had 18 properties available for lease.

During the year ended December 31, 2023, we entered into lease renewals for 5,774,455 rentable square feet (214 properties) at weighted (by rentable square feet) average rents that were 9.4% above the prior rents for the same space.

During the year ended December 31, 2024, we entered into lease renewals for 613,543 rentable square feet (56 properties) at weighted (by rentable square feet) average rents that were 3.8% below the prior rents for the same space.

The weighted (by rentable square feet) average lease term for these leases was 5.3 years.

We also entered into new leases for 161,875 rentable square feet (seven properties) at weighted (by rentable square feet) average rents that were 21.9% above the prior rents for the same space.

We also entered into new leases for 109,591 rentable square feet (four properties) at weighted (by rentable square feet) average rents that were 13.5% below the prior rents for the same space.

The weighted (by rentable square feet) average lease term for these leases was 18.4 years.

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Percent of Total Investment Annualized

Minimum Rent (2)

Percent of Total Annualized

Minimum Rent Percent of Total Annualized

Minimum Rent Rent Coverage (2)

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Heartland Dental 59 61,120 1.2 % 4,769 1.3 % 4.90x

AMC Theatres 6 67,023 1.3 % 4,438 1.2 % 1.61x

Express Oil Change 23 49,724 1.0 % 3,717 1.0 % 4.32x

Norms 10 53,673 1.1 % 3,759 1.0 % 3.42x

Express Oil Change 23 49,724 1.0 % 3,717 1.0 % 5.88x

AMC Theatres 5 57,339 1.1 % 3,558 0.9 % 1.76x

Pizza Hut 40 45,285 0.9 % 3,463 0.9 % 2.33x

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(1) Represents the historical cost of our properties plus capital improvements funded by us less impairment write-downs, if any.

(2) See above for our definition of annualized minimum rent.

(3) See page 58 for our definition of coverage.

(4) Consists of 127 distinct brands with an average investment of $2,991 and average annual minimum rent of $190 per property.

(2) See page 58 for our definition of rent coverage.

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

(4) Consists of 126 distinct brands with an average investment of $3,022 and average annual minimum rent of $204 per property.

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

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Percent of Total Investment Annualized

Minimum Rent (2)

Percent of Total Annualized

Minimum Rent (2)

Minimum Rent Percent of Total Annualized

Minimum Rent Rent Coverage (2)

TravelCenters of America Inc.

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Heartland Dental 59 61,120 1.2 % 4,769 1.3 % 4.90 x

American Multi-Cinema, Inc.

AMC Theatres 6 67,023 1.3 % 4,438 1.2 % 1.61 x

Norms Restaurants, LLC Norms 10 53,673 1.1 % 3,759 1.0 % 3.42 x

Express Oil Change, L.L.C.

Express Oil Change 23 49,724 1.0 % 3,717 1.0 % 5.88 x

Norms Restaurants, LLC Norms 10 53,673 1.1 % 3,693 1.0 % 3.35 x

Pilot Travel Centers LLC Flying J Travel Plaza 3 41,681 0.8 % 3,279 0.9 % 4.24 x

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America's Auto Auction 6 38,314 0.8 % 3,216 0.8 % 8.03 x

American Multi-Cinema, Inc.

AMC Theatres 3 46,993 0.9 % 2,552 0.7 % 1.02 x

Subtotal, Top 10

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(1) Represents the historical cost of our net lease properties plus capital improvements funded by us less impairment write-downs, if any.

(2) See page 67 for our definition of annualized minimum rent.

(3) See page 58 for our definition of coverage.

(2) See page 58 for our definition of rent coverage.

(3) TA is our largest tenant.

We lease 175 travel centers (131 under the TravelCenters of America brand and 44 under the Petro Stopping Centers brand) to a subsidiary of TA under five master leases that expire in 2033.

TA has five renewal options for 10 years each for all of the travel centers under each lease.

TA has five renewal options for ten years each for all of the travel centers under each lease.

BP Corporation North America Inc.

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Percent of Total Investment Annualized Minimum

Percent of Total Annualized

Minimum Rent (2)

Rent Percent of Total Annualized

Minimum Rent Rent Coverage (2)

Travel Centers 178 $ 3,311,787 65.7 % $ 262,359 68.9 % 1.42x (3)

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Restaurants - Casual Dining 55 194,448 3.9 % 12,136 3.2 % 2.89x

Home Goods and Leisure 20 121,128 2.4 % 10,465 2.7 % 4.97x

Health and Fitness 13 187,579 3.7 % 11,246 3.0 % 2.26x

Home Goods and Leisure 20 134,539 2.7 % 10,699 2.8 % 4.14x

Grocery Stores 19 129,152 2.6 % 9,305 2.4 % 3.18x

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Automotive Dealers 8 62,656 1.2 % 4,973 1.3 % 6.59x

Educational Services 8 54,759 1.1 % 4,356 1.2 % 1.51x

Entertainment 4 61,436 1.2 % 4,590 1.2 % 2.27x

General Merchandise Stores 4 55,457 1.1 % 3,983 1.0 % 2.97x

Educational Services 7 44,820 0.9 % 3,563 0.9 % 1.76x

Building Materials 29 34,006 0.7 % 2,944 0.8 % 7.90x

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Drug Stores and Pharmacies 6 17,111 0.3 % 1,710 0.4 % 1.03x

Legal Services 5 11,362 0.2 % 1,075 0.3 % 5.49x

Sporting Goods 3 18,448 0.4 % 1,104 0.3 % 4.26x

Legal Services 5 11,362 0.2 % 1,097 0.3 % 4.19x

Dollar Stores 3 2,971 0.1 % 190 — % 1.95x

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(1) Represents the historical cost of our net lease properties plus capital improvements funded by us less impairment write-downs, if any.

(2) See page 67 for our definition of annualized minimum rent.

(3) See page 58 for our definition of coverage.

(2) See page 58 for our definition of rent coverage.

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

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Number of Properties

Square Feet Annualized Minimum Rent Expiring (2)

Percent of Total Annualized Minimum Rent Expiring Cumulative Percent of Total Minimum Rent Expiring

2024 37 586,223 $ 7,966 2.1% 2.1%

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

2025 26 470,584 $ 8,475 2.2% 2.2%

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

(2) See page 67 for our definition of annualized minimum rent.

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

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State Number of Properties

Square Feet Annualized Minimum Rent (1)

Percent of Total Annualized Minimum Rent

Square Feet Annualized Minimum Rent Percent of Total Annualized Minimum Rent

Texas 55 1,168,354 $ 33,680 8.8%

Ohio 39 1,368,924 27,031 7.3%

Illinois 53 972,329 27,346 7.2%

Ohio 38 1,335,923 26,691 7.0%

California 22 399,045 25,885 6.8%

Georgia 71 583,634 20,642 5.4%

Florida 46 529,040 16,600 4.5%

Arizona 25 476,651 17,083 4.5%

Florida 46 529,040 16,967 4.5%

Pennsylvania 28 544,003 16,287 4.3%

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Total 742 13,292,519 $ 380,863 100.0%

(1) See page 67 for our definition of annualized minimum rent.

Our hotels and travel centers have historically experienced seasonal differences typical of their industries with higher revenues in the second and third quarters of calendar years compared with the first and fourth quarters.

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FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders.

Other factors include, but are not limited to, requirements to satisfy our REIT distribution requirements, the availability to us of debt and equity capital, our dividend yield, and to the dividend yield of other REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations.

Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in our debt agreements, the availability to us of debt and equity capital, our dividend yield, and our dividend yield compared to the dividend yields of other REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations.

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

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Depreciation and amortization expense 371,786 384,060

Gain on sale of real estate, net (43,239) (47,818)

Loss on asset impairment, net 56,212 9,544

(Gain) loss on equity securities, net (48,837) 8,104

Gain on sale of real estate, net (6,269) (43,239)

Gain on equity securities, net — (48,837)

Adjustments to reflect our share of FFO attributable to an investee

FFO 150,550 272,692

Transaction related costs (1,623) 1,920

Loss on early extinguishment of debt 1,524 791

Loss on early extinguishment of debt, net 16,181 1,524

Adjustments to reflect our share of Normalized FFO attributable to an investee

Transaction related costs 6,894 (1,623)

Normalized FFO $ 176,402 $ 274,418

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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-K

Item 7. Management’s Discussion and Analysis