What changed in this filing

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Item 1. Financial Statements

2025-05-06 compared with 2024-11-06 · 294 added, 357 removed, 326 unchanged (67% of the section changed)

3 unchanged sentences

(dollars in thousands, except per share data)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Real estate properties:

5 unchanged sentences

Acquired real estate leases and other intangibles, net 102,855 107,956

Assets held for sale 87,111 10,500

Assets of properties held for sale

871,464 43,101

Cash and cash equivalents 80,147 143,482

5 unchanged sentences

LIABILITIES AND SHAREHOLDERS’ EQUITY

Revolving credit facility $ — $ —

Senior secured notes, net 971,066 968,017

Senior unsecured notes, net 4,017,135 3,993,327

Mortgage notes payable, net 566,046 558,876

Unsecured debt, net $ 4,023,554 $ 4,020,347

Secured debt, net 1,638,848 1,690,356

Accounts payable and other liabilities 556,167 532,522

Due to related persons 14,037 24,118

Liabilities of properties held for sale

Total liabilities 6,241,506 6,267,685

14 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Hotel operating revenues $ 334,963 $ 336,236

6 unchanged sentences

Transaction related costs 111 —

Loss on asset impairment, net 13,692 512 51,030 9,517

Loss on asset impairment 37,067 2,451

Total expenses 447,302 415,873

Gain on sale of real estate, net 4,105 123 1,110 41,959

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

Gain (loss) on sale of real estate, net 746 ( 2,963 )

Interest income 1,249 1,962

1 unchanged sentence

( 101,517 ) ( 91,414 )

Loss on early extinguishment of debt, net ( 133 ) — ( 16,181 ) ( 282 )

(Loss) income before income tax benefit (expense) and equity in earnings (losses) of an investee ( 49,941 ) ( 8,234 ) ( 192,589 ) 11,609

Income tax benefit (expense) 77 2,242 ( 1,454 ) 775

Equity in earnings (losses) of an investee 2,963 1,864 ( 5,091 ) ( 1,840 )

Net (loss) income ( 46,901 ) ( 4,128 ) ( 199,134 ) 10,544

Other comprehensive loss:

Equity interest in investee’s unrealized losses ( 286 ) ( 245 ) ( 822 ) ( 244 )

Other comprehensive loss ( 286 ) ( 245 ) ( 822 ) ( 244 )

Comprehensive (loss) income $ ( 47,187 ) $ ( 4,373 ) $ ( 199,956 ) $ 10,300

Weighted average common shares outstanding (basic and diluted) 165,398 165,027 165,252 164,933

Net (loss) income per common share (basic and diluted) $ ( 0.28 ) $ ( 0.03 ) $ ( 1.21 ) $ 0.06

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SERVICE PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(dollars in thousands)

Number of Shares Common Shares Cumulative Common Distributions Additional Paid in Capital Cumulative

Net Income Cumulative Other Comprehensive Income Total

Balance at December 31, 2023 165,769,595 $ 1,658 $ ( 5,805,816 ) $ 4,557,473 $ 2,470,500 $ 2,318 $ 1,226,133

Net loss — — — — ( 78,383 ) — ( 78,383 )

Equity interest in investee’s unrealized losses — — — — — ( 344 ) ( 344 )

Common share grants — — — 430 — — 430

Common share repurchases ( 1,537 ) — — ( 13 ) — — ( 13 )

Distributions — — ( 33,154 ) — — — ( 33,154 )

Balance at March 31, 2024 165,768,058 1,658 ( 5,838,970 ) 4,557,890 2,392,117 1,974 1,114,669

Net loss — — — — ( 73,850 ) — ( 73,850 )

Equity interest in investee’s unrealized losses — — — — — ( 192 ) ( 192 )

Common share grants 146,040 1 — 1,395 — — 1,396

Common share repurchases ( 10,261 ) — — ( 65 ) — — ( 65 )

Distributions — — ( 33,152 ) — — — ( 33,152 )

Balance at June 30, 2024 165,903,837 1,659 ( 5,872,122 ) 4,559,220 2,318,267 1,782 1,008,806

Loss before income tax expense and equity in losses of an investee ( 111,645 ) ( 72,038 )

Income tax expense ( 843 ) ( 1,007 )

Equity in losses of an investee ( 3,947 ) ( 5,338 )

Net loss ( 116,435 ) ( 78,383 )

Equity interest in investee’s unrealized losses — — — — — ( 286 ) ( 286 )

Common share grants 885,289 8 — 1,213 — — 1,221

Common share repurchases ( 137,674 ) ( 1 ) — ( 641 ) — — ( 642 )

Common share forfeitures ( 3,000 ) — — ( 1 ) — — ( 1 )

Distributions — — ( 33,178 ) — — — ( 33,178 )

Balance at September 30, 2024 166,648,452 $ 1,666 $ ( 5,905,300 ) $ 4,559,791 $ 2,271,366 $ 1,496 $ 929,019

Other comprehensive income (loss):

Equity interest in investee’s unrealized gains (losses) 153 ( 344 )

Other comprehensive income (loss) 153 ( 344 )

Comprehensive loss $ ( 116,282 ) $ ( 78,727 )

Weighted average common shares outstanding (basic and diluted) 165,615 165,158

Net loss per common share (basic and diluted) $ ( 0.70 ) $ ( 0.48 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5 unchanged sentences

Balance at December 31, 2024 166,636,537 $ 1,666 $ ( 5,906,966 ) $ 4,560,334 $ 2,194,974 $ 1,865 $ 851,873

Net income — — — — 25,950 — 25,950

Equity interest in investee’s unrealized losses — — — — — ( 214 ) ( 214 )

Common share grants — — — 514 — — 514

Common share repurchases ( 4,971 ) — — ( 46 ) — — ( 46 )

Common share forfeitures ( 1,600 ) — — ( 1 ) — — ( 1 )

Distributions — — ( 33,090 ) — — — ( 33,090 )

Balance at March 31, 2023 165,445,995 1,655 ( 5,706,476 ) 4,555,328 2,529,229 2,169 1,381,905

Net loss — — — — ( 116,435 ) — ( 116,435 )

4 unchanged sentences

Distributions — — ( 1,666 ) — — — ( 1,666 )

Balance at June 30, 2023 165,483,834 1,655 ( 5,739,565 ) 4,556,650 2,517,951 2,384 1,339,075

Balance at March 31, 2025 166,646,721 $ 1,666 $ ( 5,908,632 ) $ 4,560,982 $ 2,078,539 $ 2,018 $ 734,573

Balance at December 31, 2023 165,769,595 $ 1,658 $ ( 5,805,816 ) $ 4,557,473 $ 2,470,500 $ 2,318 $ 1,226,133

Net loss — — — — ( 78,383 ) — ( 78,383 )

2 unchanged sentences

Common share repurchases ( 1,537 ) — — ( 13 ) — — ( 13 )

Common share forfeitures ( 17,600 ) — — ( 58 ) — — ( 58 )

Distributions — — ( 33,154 ) — — — ( 33,154 )

Balance at September 30, 2023 165,772,040 $ 1,658 $ ( 5,772,661 ) $ 4,556,991 $ 2,513,823 $ 2,139 $ 1,301,950

Balance at March 31, 2024 165,768,058 $ 1,658 $ ( 5,838,970 ) $ 4,557,890 $ 2,392,117 $ 1,974 $ 1,114,669

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net (loss) income $ ( 199,134 ) $ 10,544

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Net loss $ ( 116,435 ) $ ( 78,383 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 89,100 93,107

1 unchanged sentence

Straight line rental income ( 3,878 ) ( 5,768 )

Loss on early extinguishment of debt, net 16,181 282

Loss on asset impairment, net 51,030 9,517

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

Loss on asset impairment 37,067 2,451

Equity in losses of an investee 3,947 5,338

Gain on sale of real estate, net ( 1,110 ) ( 41,959 )

(Gain) loss on sale of real estate, net ( 746 ) 2,963

Other non-cash income, net ( 718 ) ( 925 )

4 unchanged sentences

Due to related persons 1,215 ( 4,033 )

Net cash provided by operating activities 149,043 401,958

Net cash provided by (used in) operating activities 38,200 ( 926 )

Cash flows from investing activities:

Acquisition of real estate properties — ( 165,843 )

Proceeds from sale of TravelCenters of America Inc.

common shares — 101,892

Proceeds from sale of tradenames and trademarks — 89,400

Real estate improvements ( 61,426 ) ( 76,261 )

Hotel managers’ purchases with restricted cash ( 1,124 ) ( 1,002 )

Real estate acquisition deposits

Net proceeds from sale of real estate 21,081 5,826

Investment in Sonesta — ( 3,392 )

Net cash (used in) provided by investing activities ( 180,121 ) 50,966

Net cash used in investing activities ( 42,192 ) ( 74,829 )

Cash flows from financing activities:

Proceeds from mortgage notes payable, net of discounts — 576,946

Repayment of mortgage notes payable ( 489 ) ( 489 )

Proceeds from senior unsecured notes, net of discounts 1,165,007 —

Repayment of senior unsecured notes ( 1,162,653 ) ( 500,000 )

Borrowings under variable funding note 45,000 —

Repayments of revolving credit facility ( 100,000 ) —

Payment of debt issuance costs ( 2,141 ) ( 1,093 )

2 unchanged sentences

Net cash used in financing activities ( 59,300 ) ( 34,749 )

(Decrease) increase in cash and cash equivalents and restricted cash ( 134,984 ) 390,108

Decrease in cash and cash equivalents and restricted cash ( 63,292 ) ( 110,504 )

Cash and cash equivalents and restricted cash at beginning of period 157,386 197,830

4 unchanged sentences

(dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Supplemental cash flow information:

Cash paid for interest $ 46,795 $ 82,664

Cash (refunded) paid for income taxes

$ ( 183 ) $ 115

Non-cash investing activities:

Real estate improvements accrued, not paid $ 24,329 $ 39,705

Supplemental disclosure of cash and cash equivalents and restricted cash:

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:

As of March 31,

Cash and cash equivalents $ 80,147 $ 71,287

3 unchanged sentences

(1) Restricted cash consists of amounts escrowed pursuant to the terms of our hotel management agreements to fund capital improvements at our hotels and amounts escrowed as required by certain of our debt agreements.

Supplemental cash flow information:

Cash paid for interest $ 230,027 $ 243,204

Cash paid for income taxes $ 3,219 $ 1,463

Non-cash investing activities:

Real estate improvements accrued, not paid $ 35,915 $ 25,555

Non-cash financing activities:

Extinguishment of senior unsecured notes $ ( 2,569 ) $ —

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4 unchanged sentences

Service Properties Trust, or we, us or our, is a real estate investment trust, or REIT, organized on February 7, 1995 under the laws of the State of Maryland, which invests in hotels and service-focused retail net lease properties.

At September 30, 2024, we owned, directly and through our subsidiaries, 214 hotels and 745 service-focused retail net lease properties.

At March 31, 2025, we owned, directly and through our subsidiaries, 202 hotels and 739 service-focused retail net lease properties.

Basis of Presentation

8 unchanged sentences

Our operating results for interim periods and those of our managers and tenants are not necessarily indicative of the results that may be expected for the full year.

Certain prior period balances have been reclassified to conform to the current period presentation.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts.

3 unchanged sentences

We have concluded that we must consolidate each of our wholly owned TRSs because we are the entity with the power to direct the activities that most significantly impact such VIEs’ performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE and are, therefore, the primary beneficiary of each VIE.

The assets of our TRSs were $ 156,875 and $ 142,789 as of September 30, 2024 and December 31, 2023, respectively, and consist primarily of our TRSs’ investment in Sonesta International Hotels Corporation’s, or, collectively with its parent and subsidiaries, Sonesta’s, common stock and amounts due from and working capital advances to certain of our hotel managers.

The liabilities of our TRSs were $ 95,849 and $ 81,262 as of September 30, 2024 and December 31, 2023, respectively, and consist primarily of amounts payable to certain of our hotel managers.

The assets of our TRSs were $ 157,084 and $ 144,079 as of March 31, 2025 and December 31, 2024, respectively, and consist primarily of our TRSs’ investment in Sonesta International Hotels Corporation’s, or, collectively with its parent and subsidiaries, Sonesta’s, common stock and amounts due from and working capital advances to certain of our hotel managers.

The liabilities of our TRSs were $ 94,169 and $ 78,749 as of March 31, 2025 and December 31, 2024, respectively, and consist primarily of amounts payable to certain of our hotel managers.

The assets of our TRSs are available to satisfy our TRSs’ obligations and we have guaranteed certain obligations of our TRSs.

Recent Accounting Pronouncements

On November 27, 2023, the FASB issued Accounting Standards Update, or ASU, No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , or ASU No.

2023-07, which requires public entities to:

(i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the Chief Operating Decision Maker, or the CODM, and included in each reported measure of segment profit or loss;

(ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by ASC 280, Segment Reporting , or ASC 280, in interim periods;

and (iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures.

The amendments in ASU No.

2023-07 are incremental to the requirements in ASC 280 and do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

2023-07 should be applied retrospectively to all prior periods presented in the financial statements and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We expect to include additional disclosures in the notes to our condensed consolidated financial statements as a result of the implementation of ASU No.

however, these changes are not expected to have a material effect on our condensed consolidated financial statements.

SERVICE PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts)

On December 14, 2023, the FASB issued ASU No.

In December 2023, the FASB issued Accounting Standards Update, or ASU, No.

2023-09, Income Taxes (Topic 740):

5 unchanged sentences

We are currently evaluating the impact ASU No.

2023-09 will have on our consolidated financial statements and disclosures.

2023-09 will have on our condensed consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, or ASU 2024-03, which requires public entities to disclose specific expense categories such as employee compensation, depreciation and intangible asset amortization.

These details must be presented in a tabular format in the notes to financial statements for both interim and annual reporting periods.

ASU 2024-03 is required to be applied prospectively but can be applied retrospectively, and is effective for the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the impact ASU 2024-03 will have on our condensed consolidated financial statements.

SERVICE PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts)

Revenue Recognition

3 unchanged sentences

We recognize rental income from operating leases on a straight line basis over the terms of the lease agreements.

We increased rental income by $ 4,030 and $ 6,548 for the three months ended September 30, 2024 and 2023, respectively, and increased rental income by $ 14,576 and $ 6,867 for the nine months ended September 30, 2024 and 2023, respectively, to record scheduled rent changes under certain of our leases on a straight line basis.

Other assets, net, includes $ 76,059 and $ 56,833 of straight line rent receivables at September 30, 2024 and December 31, 2023, respectively.

We increased rental income by $ 3,878 and $ 5,768 for the three months ended March 31, 2025 and 2024, respectively, to record scheduled rent changes under certain of our leases on a straight line basis.

Other assets, net, includes $ 87,001 and $ 81,574 of straight line rent receivables at March 31, 2025 and December 31, 2024, respectively.

Certain of our lease agreements require additional percentage rent if gross revenues of our properties exceed certain thresholds defined in our lease agreements.

We determine percentage rent due to us under our leases monthly, quarterly or annually, as applicable, depending on the specific lease terms, and recognize it when all contingencies are met and the rent is earned.

We recorded percentage rent of $ 1,055 and $ 591 for the three months ended September 30, 2024 and 2023, respectively, and $ 2,070 and $ 5,383 for the nine months ended September 30, 2024 and 2023, respectively.

We own all the escrowed reserves established for the regular refurbishment of our hotels, or FF&E reserves.

We do not report the FF&E reserves for our managed hotels as FF&E reserve income.

We recorded percentage rent of $ 846 and $ 544 for the three months ended March 31, 2025 and 2024, respectively.

Per Common Share Amounts

1 unchanged sentence

We calculate diluted earnings per common share using the more dilutive of the two class method or the treasury stock method.

Unvested common share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per share.

For the three and nine months ended September 30, 2024 and 2023, there were no dilutive common shares and certain unvested common shares were not included in the calculation of diluted earnings per share because to do so would have been antidilutive.

Unvested common share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per common share.

The calculation of basic and diluted earnings per common share is as follows (amounts in thousands, except per share data):

Three Months Ended March 31,

Net loss $ ( 116,435 ) $ ( 78,383 )

Income attributable to unvested participating securities ( 10 ) ( 122 )

Net loss used in calculating earnings per common share $ ( 116,445 ) $ ( 78,505 )

Denominators:

Weighted average common shares outstanding (basic and diluted) 165,615 165,158

Net loss per common share (basic and diluted) $ ( 0.70 ) $ ( 0.48 )

Real Estate Properties

As of September 30, 2024, we owned 214 hotels with an aggregate of 36,875 rooms or suites and 745 service-focused retail net lease properties with an aggregate of 13,332,131 square feet that are primarily subject to “triple net” leases, or net leases where the tenant is generally responsible for payment of operating expenses and capital expenditures of the property during the lease term.

Our properties had an aggregate undepreciated carrying value of $ 9,757,372 , including $ 181,070 related to properties classified as held for sale as of September 30, 2024.

We funded capital improvements to certain of our properties of $ 217,108 during the nine months ended September 30, 2024.

During the nine months ended September 30, 2024, we sold 14 properties for an aggregate sales price of $ 54,747 , excluding closing costs.

The sales of these properties as presented in the table below do not represent significant dispositions, individually or in the aggregate, nor do they represent a strategic shift in our business.

As a result, the results of the operations of these properties are included in continuing operations through the date of sale in our condensed consolidated statements of comprehensive income (loss).

As of March 31, 2025, we owned 202 hotels with an aggregate of 35,359 rooms or suites and 739 service-focused retail net lease properties with an aggregate of 13,189,476 square feet that are primarily subject to “triple net” leases, or net leases where the tenant is generally responsible for payment of operating expenses and capital expenditures of the property during the lease term.

Our properties had an aggregate undepreciated book value of $ 9,589,528 , including $ 1,722,906 related to properties classified as held for sale as of March 31, 2025.

We funded capital improvements to certain of our properties of $ 45,869 and $ 68,782 during the three months ended March 31, 2025 and 2024, respectively.

SERVICE PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share amounts)

Quarter Sold Property Type Number of Properties Rooms or Suites / Square Feet Gross Sales Price (Loss) Gain on Sale of Real Estate

Q1 2024 Hotel 1 84 $ 3,315 $ ( 863 )

Q1 2024 Net Lease 3 34,849 2,932 ( 2,132 )

Q3 2024 Hotel 6 822 44,900 5,283

Q3 2024 Net Lease 4 52,088 3,600 ( 1,178 )

From April 1, 2025 through May 2, 2025, we acquired three net lease properties with a total of 18,218 square feet for a combined purchase price of $ 12,597 , excluding closing costs.

We have also entered into agreements to acquire six net lease properties with a total of 69,236 square feet for a combined purchase price of $ 20,734 , excluding closing costs.

These pending acquisitions are subject to conditions;

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

During the three months ended March 31, 2025, we sold seven properties for a combined sales price of $ 22,700 , excluding closing costs.

The sales of these properties as presented in the table below do not represent significant dispositions, individually or in the aggregate, nor do they represent a strategic shift in our business.

As a result, the results of the operations of these properties are included in continuing operations through the date of sale in our condensed consolidated statements of comprehensive income (loss).

Quarter Sold Property Type Number of Properties Rooms or Suites / Square Feet Gross Sales Price (1)

Gain on Sale of Real Estate, net

Hotel 4 514 $ 19,600 $ 403

Net Lease 3 103,043 3,100 343

7 514 / 103,043

$ 22,700 $ 746

As of September 30, 2024, we had 16 hotels with an aggregate of 2,010 keys and an aggregate carrying value of $ 81,935 and 10 net lease properties with an aggregate of 136,241 square feet and an aggregate carrying value of $ 3,148 classified as held for sale.

See Note 14 for further information on these properties.

From October 1, 2024 through November 4, 2024, we sold five hotels with an aggregate of 642 keys for an aggregate sales price of $ 32,200 , excluding closing costs.

As of November 4, 2024, we have entered into agreements to sell eight hotels with an aggregate of 985 keys for an aggregate sales price of $ 44,150 , excluding closing costs, and one net lease property with 3,381 square feet for a sales price of $ 1,000 , excluding closing costs.

(1) Gross sales price is the gross contract price, excluding closing costs.

As of March 31, 2025, we had 118 hotels with a total of 15,417 keys and seven net lease properties with a total of 82,302 square feet classified as held for sale.

See Note 14 for further information on certain of these properties.

The following table summarizes the major class of assets and liabilities by our hotel investments and net lease investments segments as of March 31, 2025:

As of March 31, 2025

Hotels Net Lease Total

Assets of properties held for sale:

Real estate properties, net $ 846,594 $ 1,092 $ 847,686

Other assets, net (1)

23,754 24 23,778

Total assets of properties held for sale $ 870,348 $ 1,116 $ 871,464

Liabilities of properties held for sale:

Accounts payable and other liabilities $ 8,849 $ 51 $ 8,900

Total liabilities of properties held for sale $ 8,849 $ 51 $ 8,900

(1) Other assets, net includes working capital of $ 15,556 for our hotel investments segment as described in Note 6.

From April 1, 2025 through May 2, 2025, we sold one net lease property with 2,053 square feet for a sales price of $ 365 , excluding closing costs.

We have also entered into agreements to sell four hotels with a total of 492 keys for a combined sales price of $ 26,500 , excluding closing costs, and one net lease property with 1,122 square feet for a sales price of $ 395 , 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 383 keys and nine net lease properties with an aggregate of 132,860 square feet for sale.

We are at various stages of selling 114 hotels with a total of 14,925 keys and six net lease properties with a total of 80,249 square feet for sale.

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

Management Agreements and Leases

As of September 30, 2024, we owned 214 hotels included in four operating agreements and 745 service-focused retail properties net leased to 176 tenants.

As of March 31, 2025, we owned 202 hotels included in four operating agreements and 739 service-focused retail properties net leased to 175 tenants.

We do not operate any of our properties.

As of September 30, 2024, all 214 of our hotels were managed by subsidiaries of the following companies:

Sonesta ( 189 hotels), Hyatt Hotels Corporation, or Hyatt ( 17 hotels), Radisson Hospitality, Inc., or Radisson ( seven hotels), and InterContinental Hotels Group, plc, or IHG ( one hotel).

As of September 30, 2024, we owned 745 service-focused retail net lease properties with 176 tenants, including 175 travel centers leased to TravelCenters of America Inc., or TA, our largest tenant.

Hereinafter, these companies are sometimes referred to as our managers and/or tenants, or collectively, operators.

SERVICE PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share amounts)

As of March 31, 2025, all 202 of our hotels were managed by subsidiaries of the following companies:

Sonesta ( 177 hotels), Hyatt Hotels Corporation, or Hyatt ( 17 hotels), Radisson Hospitality, Inc., or Radisson ( seven hotels), and InterContinental Hotels Group, plc, or IHG ( one hotel).

As of March 31, 2025, our 739 service-focused retail net lease properties were leased by 175 tenants, including 175 travel centers leased to TravelCenters of America Inc., or TA, our largest tenant.

Hereinafter, these companies are sometimes referred to as our managers and/or tenants, or collectively, operators.

Hotel Agreements

Sonesta Agreement

As of September 30, 2024, Sonesta managed 39 of our full-service hotels, 107 of our extended stay hotels and 43 of our select service hotels pursuant to management agreements for all of the hotels, which we collectively refer to as our Sonesta agreement.

As of September 30, 2024, the hotels Sonesta managed for us comprised approximately 50.1 % of our total historical real estate investments.

As of March 31, 2025, Sonesta managed 39 of our full service hotels, 99 of our extended stay hotels and 39 of our select service hotels pursuant to management agreements for all of the hotels, which we collectively refer to as our Sonesta agreement.

As of March 31, 2025, the hotels Sonesta managed for us comprised approximately 49.8 % of our total historical real estate investments.

Our Sonesta agreement, which expires on January 31, 2037 and includes two 15 -year renewal options, provides that we are paid an annual owner’s priority return if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so.

1 unchanged sentence

We do not have any security deposits or guarantees for our Sonesta hotels.

We realized returns under our Sonesta agreement of $ 54,554 and $ 67,868 during the three months ended September 30, 2024 and 2023, respectively, and $ 157,059 and $ 183,004 during the nine months ended September 30, 2024 and 2023, respectively.

We realized returns under our Sonesta agreement of $ 18,169 and $ 27,375 during the three months ended March 31, 2025 and 2024, respectively.

Our Sonesta agreement requires us to fund capital expenditures made at our hotels.

We incurred capital expenditures for hotels included in our Sonesta agreement in an aggregate amount of $ 182,493 and $ 97,745 during the nine months ended September 30, 2024 and 2023, respectively, which resulted in increases in our contractual annual owner’s priority returns of $ 10,950 and $ 5,864 , respectively.

Our annual priority return under our Sonesta agreement as of September 30, 2024 was $ 357,295 .

We owed Sonesta $ 12,978 and $ 13,300 for capital expenditures and other reimbursements at September 30, 2024 and December 31, 2023, respectively.

Sonesta owed us $ 20,139 and $ 6,376 in owner’s priority returns and other amounts as of September 30, 2024 and December 31, 2023, respectively.

We incurred capital expenditures for hotels included in our Sonesta agreement in an aggregate amount of $ 41,561 and $ 46,996 during the three months ended March 31, 2025 and 2024, respectively, which resulted in increases in our contractual annual owner’s priority returns of $ 2,494 and $ 2,820 , respectively.

Our annual priority return under our Sonesta agreement as of March 31, 2025 was $ 354,924 .

We owed Sonesta $ 7,517 and $ 18,199 for capital expenditures and other reimbursements at March 31, 2025 and December 31, 2024, respectively.

Sonesta owed us $ 19,908 and $ 3,911 in owner’s priority returns and other amounts as of March 31, 2025 and December 31, 2024, respectively.

Amounts due from Sonesta are included in due from related persons and amounts owed to Sonesta are included in due to related persons in our condensed consolidated balance sheets.

Our Sonesta agreement requires that 5 % of the hotel gross revenues be escrowed for future capital expenditures as FF&E reserves, subject to available cash flows after payment of the owner’s priority returns due to us.

No FF&E escrow deposits were required during either of the three or nine months ended September 30, 2024 or 2023.

Pursuant to our Sonesta agreement, we incurred management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing programs and third-party reservation transmission fees of $ 31,500 and $ 32,055 for the three months ended September 30, 2024 and 2023, respectively, and $ 91,484 and $ 90,312 for the nine months ended September 30, 2024 and 2023, respectively.

No FF&E escrow deposits were required during either of the three months ended March 31, 2025 or 2024.

Pursuant to our Sonesta agreement, we incurred management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing programs and third-party reservation transmission fees of $ 26,276 and $ 27,015 for the three months ended March 31, 2025 and 2024, respectively.

These fees and costs are included in hotel operating expenses in our condensed consolidated statements of comprehensive income (loss).

In addition, we incurred procurement and construction supervision fees payable to Sonesta of $ 805 and $ 459 for the three months ended September 30, 2024 and 2023, respectively, and $ 1,792 and $ 1,007 for the nine months ended September 30, 2024 and 2023, respectively, which amounts have been capitalized in our condensed consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets.

In addition, we incurred procurement and construction supervision fees payable to Sonesta of $ 621 and $ 400 for the three months ended March 31, 2025 and 2024, respectively, which amounts have been capitalized in our condensed consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets.

We are required to maintain working capital for each of our hotels managed by Sonesta and have advanced a fixed amount based on the number of rooms in each hotel to meet the cash needs for hotel operations.

As of September 30, 2024 and December 31, 2023, we had advanced $ 47,470 and $ 48,490 , respectively, of initial working capital to Sonesta net of any working capital returned to us on termination of the applicable management agreements in connection with hotels we have sold.

These amounts are included in other assets, net in our condensed consolidated balance sheets.

As of March 31, 2025 and December 31, 2024, we had advanced $ 45,952 and $ 46,466 , respectively, of initial working capital to Sonesta net of any working capital returned to us on termination of the applicable management agreements in connection with hotels we have sold.

These amounts are included in other assets, net and assets of properties held for sale, as applicable, in our condensed consolidated balance sheets.

Any remaining working capital would be returned to us upon termination in accordance with the terms of our Sonesta agreement.

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Hyatt Agreement

As of September 30, 2024, Hyatt managed 17 of our select service hotels pursuant to a portfolio management agreement that expires on March 31, 2031, or our Hyatt agreement, and provides that, as of September 30, 2024, we are to be paid an annual owner’s priority return of $ 17,062 .

As of March 31, 2025, Hyatt managed 17 of our select service hotels pursuant to a portfolio management agreement that expires on March 31, 2031, or our Hyatt agreement, and provides that, as of March 31, 2025, we are to be paid an annual owner’s priority return of $ 17,400 .

Any returns we receive from Hyatt are currently limited to the hotels’ available cash flows, if any, after payment of operating expenses.

Hyatt has provided us with a $ 30,000 limited guarantee for 75 % of the aggregate annual owner’s priority returns due to us that will become effective upon substantial completion of planned renovations of the hotels, which we currently expect to be completed by the end of the fourth quarter of 2024.

We realized returns of $ 2,037 and $ 2,974 during the three months ended September 30, 2024 and 2023, respectively, and $ 4,243 and $ 9,685 during the nine months ended September 30, 2024 and 2023, respectively, under our Hyatt agreement.

In February 2024, we funded $ 2,300 of additional working capital to Hyatt.

We may recover this amount in the future, if cash flows are sufficient to pay our owner’s priority return and other amounts in accordance with our Hyatt agreement.

During the nine months ended September 30, 2024 and 2023, we incurred capital expenditures for certain hotels included in our Hyatt agreement of $ 25,113 and $ 17,652 , respectively, which resulted in an aggregate increase in our contractual annual owner’s priority returns of $ 1,507 and $ 1,059 , respectively.

Hyatt has provided us with a $ 30,000 limited guarantee for 75 % of the aggregate annual owner’s priority returns due to us that became effective upon substantial completion of planned renovations of the hotels, which occurred in January 2025.

We realized returns under our Hyatt agreement of $ 3,127 during the three months ended March 31, 2025 and a net operating loss of $ 1,108 during the three months ended March 31, 2024.

During the three months ended March 31, 2025, the hotels under this agreement generated cash flows that were less than the guaranteed owner’s priority level due to us for this period, and we reduced hotel operating expenses by $ 1,367 , to record the guaranteed amount of the shortfall due from Hyatt.

The available balance of the guaranty was $ 28,633 as of March 31, 2025.

During the three months ended March 31, 2025, we incurred capital expenditures for certain hotels included in our Hyatt agreement of $ 1,619 ;

however, the contractual annual owner’s priority returns did not increase as the cost of the renovations had reached the maximum stated in our management agreement with Hyatt.

During the three months ended March 31, 2024, we incurred capital expenditures for certain hotels included in our Hyatt agreement of $ 20,225 , which resulted in an increase in our contractual annual owner’s priority returns of $ 1,214 .

Radisson Agreement

As of September 30, 2024, Radisson managed seven of our full-service hotels pursuant to a portfolio management agreement that expires on July 31, 2031, or our Radisson agreement, and provides that we are to be paid an annual owner’s priority return of $ 10,908 .

Radisson has provided us with a $ 22,000 limited guarantee for 75 % of the aggregate annual owner’s priority returns due to us that became effective on January 1, 2023, subject to adjustment for planned renovations of certain hotels, which we currently expect to be completed by the end of the fourth quarter of 2024.

We realized returns under our Radisson agreement of $ 2,160 and $ 2,364 during the three months ended September 30, 2024 and 2023, respectively, and $ 5,400 and $ 5,728 during the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024 and 2023, the hotels under this agreement generated cash flows that exceeded the guaranteed owner’s priority level due to us for these periods.

The available balance of the guaranty was $ 21,350 as of September 30, 2024.

During the nine months ended September 30, 2024 and 2023, we incurred capital expenditures of $ 714 and $ 6,898 , respectively, for the hotels included in our Radisson agreement, which resulted in an aggregate increase in our contractual owner’s priority returns of $ 42 and $ 414 , respectively.

As of March 31, 2025, Radisson managed seven of our full service hotels pursuant to a portfolio management agreement that expires on July 31, 2031, or our Radisson agreement, and provides that we are to be paid an annual owner’s priority return of $ 10,906 .

We realized returns under our Radisson agreement of $ 1,403 and $ 1,451 during the three months ended March 31, 2025 and 2024, respectively.

During the three months ended March 31, 2025 and 2024, the hotels under this agreement generated cash flows that were less than the guaranteed owner’s priority level due to us for these periods, and we reduced hotel operating expenses by $ 2,045 and $ 522 , respectively, to record the guaranteed amount of the shortfalls due from Radisson.

The available balance of the guaranty was $ 19,305 as of March 31, 2025.

We did not incur any capital expenditures during the three months ended March 31, 2025 for the hotels included in our Radisson agreement.

During the three months ended March 31, 2024, we incurred capital expenditures of $ 286 for the hotels included in our Radisson agreement, which resulted in an increase in our contractual owner’s priority returns of $ 17 .

IHG Agreement

Our management agreement with IHG for one hotel expires on January 31, 2026.

We realized returns under our management agreement with IHG of $ 1,189 and $ 1,482 during the three months ended September 30, 2024 and 2023, respectively, and $ 4,318 and $ 3,762 during the nine months ended September 30, 2024 and 2023, respectively.

We realized returns under our management agreement with IHG of $ 2,243 and $ 1,593 during the three months ended March 31, 2025 and 2024, respectively.

Any returns we receive from IHG are limited to the hotel’s available cash flows, if any, after payment of operating expenses.

During the nine months ended September 30, 2024 and 2023, we incurred capital expenditures of $ 700 and $ 373 , respectively, for the hotel included in our IHG agreement.

During the three months ended March 31, 2025 and 2024, we incurred capital expenditures of $ 975 and $ 149 , respectively, for the hotel included in our IHG agreement.

Net Lease Portfolio

As of September 30, 2024, we owned 745 service-focused retail net lease properties with an aggregate of 13,332,131 square feet with leases requiring annual minimum rents of $ 380,034 with a weighted (by annual minimum rents) average remaining lease term of 8.3 years.

As of March 31, 2025, we owned 739 service-focused retail net lease properties with an aggregate of 13,189,476 square feet with leases requiring annual minimum rents of $ 380,568 with a weighted (by annual minimum rents) average remaining lease term of 7.8 years.

Our net lease properties were 97.8 % occupied and leased by 175 tenants operating under 136 brands in 21 distinct industries.

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(dollars in thousands, except per share amounts)

As of September 30, 2024, TA is our largest tenant, representing 28.6 % of our total historical real estate investments.

We lease to TA a total of 175 travel centers under five master leases that expire in 2033, or our TA leases, subject to TA’s right to extend those leases, and require annual minimum rents of $ 259,080 as of September 30, 2024.

As of March 31, 2025, TA is our largest tenant, representing 28.8 % of our total historical real estate investments.

TA receives a monthly rent credit totaling $ 25,000 per year over the 10-year initial term of the TA leases as a result of rent it prepaid.

On February 28, 2024, TA acquired the leasehold interest of one of our travel centers from a third party landlord.

The aggregate minimum rent due to us under our leases with TA for the remaining 175 travel centers was unchanged as a result of TA’s acquisition of this leasehold interest.

Our TA leases are “triple net” leases that require TA to pay all costs incurred in the operation of the leased travel centers, including personnel, utility, inventory, customer service and insurance expenses, real estate and personal property taxes, environmental related expenses, underground storage tank maintenance costs and ground lease payments at those travel centers at which we lease the property and sublease it to TA.

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However, TA is required to maintain the leased travel centers, including structural and non-structural components.

BP Corporation North America Inc.

guarantees payment under each of the TA leases, limited to an aggregate cap which was $ 3,037,475 as of September 30, 2024.

We recognized rental income from our TA leases of $ 67,834 and $ 67,809 for the three months ended September 30, 2024 and 2023, respectively, and $ 203,502 and $ 195,210 for the nine months ended September 30, 2024 and 2023, respectively.

Rental income was increased by $ 3,039 and $ 4,309 for the three months ended September 30, 2024 and 2023, respectively, and increased by $ 11,233 and $ 3,623 for the nine months ended September 30, 2024 and 2023, respectively, to record the scheduled rent changes on a straight line basis.

As of September 30, 2024 and December 31, 2023, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $ 35,374 and $ 19,816 , respectively, included in other assets, net in our condensed consolidated balance sheets.

Until May 15, 2023, our TA leases required TA to pay us percentage rent based upon increases in certain sales.

We recognized percentage rent due under our TA leases as rental income when all contingencies were met.

We recognized percentage rent of $ 3,507 during the nine months ended September 30, 2023 under our TA leases.

We had no deferred percentage rent for either the three or nine months ended September 30, 2023.

For more information regarding our relationships with TA, including the TA Merger (as defined below), see Notes 7 and 11.

BP Corporation North America Inc., a subsidiary of BP p.l.c., guarantees payment under each of the TA leases, limited to an aggregate cap which was $ 3,037,475 as of March 31, 2025.

We recognized rental income from our TA leases of $ 67,834 for each of the three months ended March 31, 2025 and 2024.

Rental income was increased by $ 3,039 and $ 4,309 for the three months ended March 31, 2025 and 2024, respectively, to record the scheduled rent changes on a straight line basis.

As of March 31, 2025 and December 31, 2024, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $ 44,811 and $ 40,097 , respectively, included in other assets, net in our condensed consolidated balance sheets.

Our other net lease agreements generally provide for minimum rent payments and in addition may include variable payments.

1 unchanged sentence

Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term.

We recognized rental income from our net lease properties (excluding TA) of $ 32,402 and $ 33,490 for the three months ended September 30, 2024 and 2023, respectively, which included $ 991 and $ 2,239 , respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight line basis, and $ 97,210 and $ 99,954 for the nine months ended September 30, 2024 and 2023, respectively, which included $ 3,343 and $ 3,244 , respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight line basis.

We recognized rental income from our net lease properties (excluding TA) of $ 32,382 and $ 32,180 for the three months ended March 31, 2025 and 2024, respectively, which included $ 839 and $ 1,459 , respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight line basis.

We continually review receivables related to rent, straight line rent and property operating expense reimbursements and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located.

3 unchanged sentences

We recognize all changes in the collectability assessment for an operating lease as an adjustment to rental income.

We recorded reserves for uncollectable amounts and reduced rental income by $ 515 and $ 1,557 for the three and nine months ended September 30, 2024, respectively, based on our assessment of the collectability of rents.

We reduced reserves for uncollectable amounts and increased rental income by $ 1,041 for the three months ended September 30, 2023 and recorded reserves for uncollectible amounts and reduced rental income by $ 4,312 for the nine months ended September 30, 2023 based on our assessment of the collectability of rents.

We had reserves for uncollectable rents of $ 4,872 and $ 3,436 as of September 30, 2024 and December 31, 2023, respectively, included in other assets, net in our condensed consolidated balance sheets.

SERVICE PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts)

Other Investments

We recorded reserves for uncollectable amounts and reduced rental income by $ 235 and $ 665 for the three months ended March 31, 2025 and 2024, respectively, based on our assessment of the collectability of rents.

We had reserves for uncollectable rents of $ 4,959 and $ 5,058 as of March 31, 2025 and December 31, 2024, respectively, included in other assets, net in our condensed consolidated balance sheets.

Equity Method Investment

As of both September 30, 2024 and December 31, 2023, we owned 34 % of Sonesta’s outstanding common stock.

As of both March 31, 2025 and December 31, 2024, we owned 34 % of Sonesta’s outstanding common stock.

We account for our 34 % non-controlling interest in Sonesta under the equity method of accounting.

As of September 30, 2024 and December 31, 2023, our investment in Sonesta had a carrying value of $ 110,783 and $ 113,304 , respectively.

As of March 31, 2025 and December 31, 2024, our investment in Sonesta had a carrying value of $ 112,024 and $ 115,818 , respectively.

On the date of acquisition of our initial equity interest in Sonesta (February 27, 2020), the cost basis of our investment in Sonesta exceeded our proportionate share of Sonesta’s total stockholders’ equity book value by an aggregate of $ 8,000 .

As required under GAAP, we are amortizing this difference to equity in earnings of an investee over 31 years, the weighted average remaining useful life of the real estate assets and intangible assets and liabilities owned by Sonesta as of the date of our acquisition.

We recorded amortization of the basis difference of $ 65 in each of the three months ended September 30, 2024 and 2023 and $ 195 in each of the nine months ended September 30, 2024 and 2023.

We recognized earnings related to our investment in Sonesta of $ 2,963 and $ 1,864 for the three months ended September 30, 2024 and 2023, respectively, and losses of $ 5,091 and $ 1,840 for the nine months ended September 30, 2024 and 2023, respectively.

These amounts, which include amortization of the basis difference, are included in equity in earnings (losses) of an investee in our condensed consolidated statements of comprehensive income (loss).

We recorded amortization of the basis difference of $ 65 in each of the three months ended March 31, 2025 and 2024.

We recognized losses of $ 3,947 and $ 5,338 related to our investment in Sonesta for the three months ended March 31, 2025 and 2024, respectively.

These amounts, which include amortization of the basis difference, are included in equity in losses of an investee in our condensed consolidated statements of comprehensive income (loss).

SERVICE PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts)

We recorded a liability of $ 42,000 for the fair value of our initial investment in Sonesta, as no cash consideration was exchanged related to the modification of our management agreement with, and investment in, Sonesta.

This liability for our investment in Sonesta is included in accounts payable and other liabilities in our condensed consolidated balance sheets and is being amortized on a straight line basis through the initial term of the Sonesta agreement, January 31, 2037, as a reduction to hotel operating expenses in our condensed consolidated statements of comprehensive income (loss).

We reduced hotel operating expenses by $ 621 for each of the three months ended September 30, 2024 and 2023 and $ 1,863 for each of the nine months ended September 30, 2024 and 2023 for amortization of this liability.

As of September 30, 2024 and December 31, 2023, the unamortized balance of this liability was $ 30,616 and $ 32,479 , respectively.

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

We reduced hotel operating expenses by $ 621 for each of the three months ended March 31, 2025 and 2024 for amortization of this liability.

As of March 31, 2025 and December 31, 2024, the unamortized balance of this liability was $ 29,374 and $ 29,995 , respectively.

During the three months ended March 31, 2024, we funded a capital contribution to Sonesta of $ 3,392 to support its growth initiatives, including its franchising efforts.

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

See Notes 6 and 11 for further information regarding our relationships, agreements and transactions with Sonesta.

Investment in Equity Securities

Until May 15, 2023 , we owned 1,184,797 shares, or approximately 7.8 %, of TA common stock, which were reported at fair value based on quoted market prices (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the end of the period, with changes in fair value recorded in earnings in our condensed consolidated statements of comprehensive income (loss).

As of May 15, 2023, our historical cost basis for these shares was $ 24,418 and our carrying value for these shares was $ 101,893 .

On May 15, 2023, BP Products North America Inc.

acquired TA pursuant to a merger, or the TA Merger, for $ 86.00 per share of TA common stock in cash.

We recorded a gain of $ 48,837 during the nine months ended September 30, 2023 to adjust the carrying value of our former investment in shares of TA common stock to its fair value.

Our principal debt obligations at September 30, 2024 were:

Our principal debt obligations at March 31, 2025 were:

(1) $ 50,000 of outstanding borrowings under our $ 650,000 revolving credit facility;

(2) $ 4,075,000 aggregate outstanding principal amount of senior unsecured notes;

(3) $ 1,000,000 aggregate outstanding principal amount of senior secured notes;

and (3) $ 607,101 aggregate outstanding principal amount of net lease mortgage notes.

We had no amounts outstanding under our revolving credit facility as of September 30, 2024.

(4) $ 606,122 aggregate outstanding principal amount of net lease mortgage notes;

and (5) $ 45,000 of outstanding borrowings under our $ 45,000 variable funding note.

Revolving Credit Facility

Our $ 650,000 secured 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 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 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 March 31, 2025.

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, 2025 and 2024, the annual interest rate payable on borrowings under our revolving credit facility was 6.91 % and 7.84 %, respectively.

The weighted average interest rate for borrowings under our revolving credit facility was 6.94 % for the three months ended March 31, 2025.

We had no borrowings outstanding under our revolving credit facility for the three months ended March 31, 2024.

As of both March 31, 2025 and May 2, 2025, we had $ 50,000 outstanding under our revolving credit facility and $ 600,000 available for borrowings.

As collateral for all loans and other obligations under our revolving credit 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 67 properties, including 64 hotels and three net lease properties, with an aggregate undepreciated book value of $ 1,691,230 as of March 31, 2025.

During the three months ended March 31, 2025, we sold two hotels that previously 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.

SERVICE PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share amounts)

As collateral for all loans and other obligations under the credit 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 70 properties, including 67 hotels and three net lease properties, with an aggregate undepreciated carrying value of $ 1,720,032 as of September 30, 2024.

During the three months ended September 30, 2024, we sold two 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 September 30, 2024 and 2023, the annual interest rate payable on borrowings under our revolving credit facility was 7.46 % and 7.93 %, respectively.

We had no borrowings outstanding under our revolving credit facility for either the three or nine months ended September 30, 2024 or 2023.

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

Based on recent and near term 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 currently have full access to undrawn amounts under our revolving credit facility.

In February 2025, we and our lenders amended the agreement governing 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 are required to maintain a 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:

47 hotels with an aggregate of 7,981 keys and an aggregate undepreciated book value of $ 1,375,449 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 book value of $ 598,908 , will be added as collateral to our revolving credit facility.

Of the hotels being released from the collateral pool, 36 hotels with an aggregate of 4,862 keys and an aggregate undepreciated book value of $ 655,514 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.

Our debt agreements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes The RMR Group LLC, or RMR, ceasing to act as our business manager.

1 unchanged sentence

Borrowings under our revolving credit facility are subject to meeting ongoing minimum performance and market values of the collateral properties, satisfying certain financial covenants and other credit facility conditions.

We believe we were in compliance with the terms and conditions of our debt agreements as of September 30, 2024.

Senior Guaranteed Unsecured Notes Issuance

In June 2024, we issued $ 700,000 aggregate principal amount of 8.375 % senior guaranteed unsecured notes due 2029, or the 2029 Notes, and $ 500,000 aggregate principal amount of 8.875 % senior guaranteed unsecured notes due 2032, or the 2032 Notes, in underwritten public offerings.

The aggregate net proceeds from these notes 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 8.625 % senior secured notes due 2031, and subsidiaries whose assets secure our net lease mortgage notes.

Repayment of 2025 Maturities

In June 2024, we redeemed all of our outstanding 7.50 % senior unsecured notes due 2025 for a redemption price equal to the principal amount of $ 800,000 , plus accrued and unpaid interest and a premium equal to a make whole amount.

As a result of the redemption, we recorded a loss on early extinguishment of debt of $ 17,681 during the nine months ended September 30, 2024, which represented the make whole premium and the write-off of unamortized discounts and issuance costs related to these notes.

In June 2024, we repurchased $ 272,803 principal amount of our $ 350,000 4.50 % senior unsecured notes due 2025 at a total cost of $ 270,396 , excluding accrued interest, pursuant to a cash tender offer.

Also in June 2024, we effected the satisfaction and discharge of the remaining $ 77,197 principal amount of our $ 350,000 4.50 % senior unsecured notes due 2025 that were not purchased as part of the tender offer in accordance with its terms.

As a result of these transactions, we recorded a gain on early extinguishment of debt of $ 1,500 during the nine months ended September 30, 2024, which represented the discount to par paid to repurchase the notes, net of the write-off of unamortized discounts and issuance costs related to these notes .

SERVICE PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts)

We believe we were in compliance with the terms and conditions of our debt agreements as of March 31, 2025.

Net Lease Mortgage Notes

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Our net lease mortgage notes are summarized below:

Note Class Principal Outstanding as of September 30, 2024

Note Class Principal Outstanding as of March 31, 2025

Coupon Rate Initial Term (in years) Maturity

5 unchanged sentences

The notes mature in February 2028 and may be redeemed without penalty 24 months prior to the scheduled maturity date beginning in February 2026.

The notes are non-recourse and, as of September 30, 2024, were secured by 308 net lease retail properties owned by the Issuer.

As of September 30, 2024, the current leases relating to those properties required annual minimum rents of $ 64,822 and had an aggregate undepreciated carrying value of $ 754,290 .

In October 2024, the Issuer substituted six net lease retail properties with an aggregate undepreciated carrying value of $ 13,645 as of September 30, 2024 for 13 unencumbered net lease retail properties with an aggregate undepreciated carrying value of $ 19,232 as of September 30, 2024.

Following the substitution, the net lease mortgage notes are secured by 315 net lease retail properties owned by the Issuer and require annual minimum rents of $ 66,173 and had an aggregate undepreciated carrying value of $ 759,877 as of September 30, 2024.

Shareholders’ Equity

On June 14, 2024, in accordance with our Trustee compensation arrangements, we awarded 18,255 of our common shares, valued at $ 4.93 per share, the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day to each of our eight Trustees as part of their annual compensation.

On September 11, 2024, we awarded under our equity compensation plan an aggregate of 885,289 of our common shares, valued at $ 4.43 per share, the closing price of our common shares on Nasdaq on that day, to our officers and certain other employees of RMR and certain employees of Sonesta.

Share Purchases

During the nine months ended September 30, 2024, we purchased an aggregate of 149,472 of our common shares, valued at a weighted average share price of $ 4.82 per common share, from our officers and certain other current and former officers and employees of RMR and certain employees of Sonesta in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on Nasdaq on the applicable purchase dates.

The notes are non-recourse and, as of March 31, 2025, were secured by 315 net lease retail properties owned by the Issuer.

As of March 31, 2025, the current leases relating to those properties required annual minimum rents of $ 67,001 and had an aggregate undepreciated book value of $ 760,165 .

On January 27, 2025, the Issuer issued a variable funding note, or the VFN, secured by the 315 net lease properties that secure our existing $ 606,122 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.

As of March 31, 2025, the annual interest rate payable on borrowings under the VFN was 6.16 %.

The weighted average interest rate for borrowings under the VFN was 6.19 % for the three months ended March 31, 2025.

As of March 31, 2025, $ 45,000 was outstanding under the VFN.

SERVICE PROPERTIES TRUST

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(dollars in thousands, except per share amounts)

Shareholders’ Equity

On March 26, 2025, in accordance with our Trustee compensation arrangements, we awarded 32,490 of our common shares, valued at $ 2.77 per common share, the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day, in connection with the appointment of one of our Managing Trustees as part of his annual compensation.

Share Purchases

During the three months ended March 31, 2025, we purchased 1,539 of our common shares, valued at $ 2.77 per common share, from a former employee of RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

We withheld and purchased these common shares at their fair market value based upon the trading price of our common shares at the close of trading on Nasdaq, on the applicable purchase date.

Distributions

During the nine months ended September 30, 2024, we declared and paid regular quarterly distributions to common shareholders as follows:

During the three months ended March 31, 2025, we declared and paid a regular quarterly distribution to common shareholders as follows:

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

January 16, 2025 January 27, 2025 February 20, 2025 $ 0.01 $ 1,666

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

July 11, 2024 July 22, 2024 August 15, 2024 0.20 33,178

$ 0.60 $ 99,484

On October 16, 2024, we declared a regular quarterly distribution to common shareholders of record as of October 28, 2024 of $ 0.01 per common share, or approximately $ 1,666 .

We expect to pay this distribution on or about November 14, 2024.

On April 10, 2025, we declared a regular quarterly distribution to common shareholders of record as of April 22, 2025 of $ 0.01 per common share, or approximately $ 1,666 .

We expect to pay this distribution on or about May 15, 2025.

Cumulative Other Comprehensive Income (Loss)

Cumulative other comprehensive income (loss) represents our share of the comprehensive income (loss) of Sonesta.

See Notes 6, 7 and 11 for further information regarding this investment.

Business and Property Management Agreements with RMR

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(1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations of our net lease portfolio, the office building component of one of our hotels and major renovation or repositioning activities at our hotels that we may request RMR to manage from time to time.

Pursuant to our business management agreement with RMR, we recognized net business management fees of $ 7,411 and $ 8,287 for the three months ended September 30, 2024 and 2023, respectively, and $ 22,608 and $ 24,959 for the nine months ended September 30, 2024 and 2023, respectively.

Based on our common share total return, as defined in our business management agreement, as of each of September 30, 2024 and 2023, no incentive fees are included in the net business management fees we recognized for the three and nine months ended September 30, 2024 or 2023.

The actual amount of annual incentive fees for 2024, if any, will be based on our common share total return, as defined in our business management agreement, for the three-year period ending December 31, 2024, and will be payable in January 2025.

We did not incur an incentive fee payable to RMR for the year ended December 31, 2023.

We include business management fee amounts in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).

Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $ 3,054 and $ 2,031 for the three months ended September 30, 2024 and 2023, respectively, and $ 9,073 and $ 5,289 for the nine months ended September 30, 2024 and 2023, respectively.

Of those amounts, for the three months ended September 30, 2024 and 2023, $ 1,514 and $ 923 , respectively, were expensed to net lease operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 1,540 and $ 1,108 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

Of the amounts for the nine months ended September 30, 2024 and 2023, $ 4,503 and $ 2,805 , respectively, were expensed to net lease operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 4,570 and $ 2,484 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.

We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR on our behalf.

We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR employees assigned to work exclusively or partly at our net lease properties and the office building component of one of our hotels, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function, and as otherwise agreed.

We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our net lease properties and the office building component of one of our hotels, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function and as otherwise agreed.

Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR.

We reimbursed RMR $ 1,080 and $ 1,182 for these expenses and costs for the three months ended September 30, 2024 and 2023, respectively, and $ 3,206 and $ 3,301 for these expenses and costs for the nine months ended September 30, 2024 and 2023, respectively.

We included these amounts in net lease operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss).

SERVICE PROPERTIES TRUST

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(dollars in thousands, except per share amounts)

For the three months ended March 31, 2025 and 2024, the business management fees, property management fees and construction supervision fees and expense reimbursements recognized in our condensed consolidated financial statements were as follows:

Financial Statement Three Months Ended March 31,

Line Item 2025 2024

Pursuant to business management agreement:

Net business management fees (1)

General and administrative

$ 6,930 $ 7,757

Pursuant to property management agreement:

Property management fees Net lease operating expenses $ 2,087 $ 1,484

Construction supervision fees Buildings, improvements and equipment (2)

$ 2,744 $ 3,180

Expense reimbursement:

Property level expenses Net lease operating expenses, general and administrative and buildings, improvements and equipment (2)

$ 1,195 $ 1,094

(1) The net business management fees we recognized for each of the three months ended March 31, 2025 and 2024 reflect a reduction of $ 896 for the amortization of the liability we recorded in connection with our former investment in The RMR Group Inc., or RMR Inc.

(2) Amounts capitalized as buildings, improvements and equipment are depreciated over the estimated useful lives of the related assets.

Based on our common share total return, as defined in our business management agreement, as of March 31, 2025, no incentive fees are included in the net business management fees we recognized for the three months ended March 31, 2025.

The actual amount of annual incentive fees for 2025, if any, will be based on our common share total return, as defined in our business management agreement, for the three-year period ending December 31, 2025, and will be payable in January 2026.

We did not incur an incentive fee payable to RMR for the year ended December 31, 2024.

In January 2025, in connection with a $ 100,000 credit agreement and related security agreement entered into by RMR and certain of its subsidiaries with Citibank, N.A., or Citibank, and the other lenders party thereto, we consented to the pledge and assignment of RMR’s interest in our management agreements under the security agreement.

Pursuant to the consent, we agreed, among other things, that upon notice that an event of default under the RMR credit agreement has occurred and is continuing, we will continue to make all payments under our management agreements in accordance with the instructions of Citibank, and that if there is an event of default by RMR under our management agreements that would allow us to terminate or suspend our obligations, we will not terminate or suspend without notice to Citibank and provide Citibank 30 days to cure the default on RMR’s behalf.

The consent was approved by our Independent Trustees.

Related Person Transactions

We have relationships and historical and continuing transactions with TA, Sonesta, RMR, The RMR Group, Inc., or RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers.

As of the effective time of the TA Merger on May 15, 2023, TA is no longer a related person to us.

We have relationships and historical and continuing transactions with Sonesta, RMR, RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers.

RMR is a majority owned subsidiary of RMR Inc.

The Chair of our Board of Trustees and one of our Managing Trustees, Adam D.

Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc.

The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc.

and an officer and employee of RMR.

Murray, our other Managing Trustee and our former President and Chief Executive Officer, also serves as an officer and employee of RMR and as president and chief executive officer of Sonesta.

Christopher Bilotto, our other Managing Trustee and our President and Chief Executive Officer since March 2025, also serves as an officer and employee of RMR.

John Murray, our former Managing Trustee and President and Chief Executive Officer, also serves as an officer and employee of RMR and as president and chief executive officer of Sonesta.

In addition, each of our other officers serves as an officer of RMR.

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Other officers of RMR, including certain of our officers, serve as managing trustees or officers of certain of these companies.

RMR provides management services to us and, until the TA Merger, provided services to TA, and Mr.

Portnoy, until the TA Merger, also served as the chair of the board of directors and as a managing director of TA and, as of immediately prior to the TA Merger, beneficially owned 661,506 shares of TA common stock (including through RMR), representing approximately 4.4 % of TA’s outstanding shares of common stock.

See Notes 6 and 7 for further information regarding our relationships, agreements and transactions with TA.

Sonesta is a private company.

Portnoy is the largest owner and controlling shareholder and a director of Sonesta.

Murray is a director of Sonesta and is its president and chief executive officer, and he is an officer and employee of RMR.

Sonesta’s other director serves as RMR’s and RMR Inc.’s executive vice president, general counsel and secretary, as a managing director of RMR Inc.

and as our Secretary.

RMR also provides certain services to Sonesta.

As of September 30, 2024, we owned 34 % of Sonesta’s outstanding shares of common stock and Sonesta managed 189 of our hotels.

See Notes 6 and 7 for further information regarding our relationships, agreements and transactions with Sonesta.

SERVICE PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts)

Our Manager, RMR

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See Note 10 for further information regarding our management agreements with RMR.

Sonesta is a private company of which Adam Portnoy, one of our Managing Trustees, is a director and the controlling shareholder.

One of Sonesta’s other directors and president and chief executive officer was our other Managing Trustee until March 2025, and Sonesta’s other director serves as one of RMR Inc.’s managing directors, as RMR’s and RMR Inc.’s executive vice president, general counsel and secretary and as our Secretary.

Certain other officers and employees of Sonesta are former officers and employees of RMR.

RMR also provides certain services to Sonesta.

As of March 31, 2025, we owned 34 % of Sonesta’s outstanding shares of common stock and Sonesta managed 177 of our hotels.

See Notes 6 and 7 for further information regarding our relationships, agreements and transactions with Sonesta.

For further information about these and certain other such relationships and certain other related person transactions, refer to our 2024 Annual Report.

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Our consolidated income tax provision (or benefit) includes the income tax provision (or benefit) related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our qualification for taxation as a REIT.

During the three months ended September 30, 2024, we recognized income tax benefit of $ 77 , which includes $ 50 of state tax benefit and $ 27 of foreign tax benefit.

During the three months ended September 30, 2023, we recognized income tax benefit of $ 2,242 , which includes $ 1,773 of state tax benefit and $ 469 of foreign tax benefit.

During the nine months ended September 30, 2024, we recognized income tax expense of $ 1,454 , which includes $ 659 of state tax expense and $ 795 of foreign tax expense.

During the nine months ended September 30, 2023, we recognized income tax benefit of $ 775 , which includes $ 1,186 of state tax benefit and $ 411 of foreign tax expense.

During the three months ended March 31, 2025, we recognized income tax expense of $ 843 , which includes $ 353 of state tax expense and $ 490 of foreign tax expense.

During the three months ended March 31, 2024, we recognized income tax expense of $ 1,007 , which includes $ 621 of state tax expense and $ 386 of foreign tax expense.

Segment Information

Our operating segments are based on our internal reporting structure and property type and are aligned with how our Chief Operating Decision Maker, or CODM, reviews the operating results to allocate resources and assess segment performance.

The CODM is our President and Chief Executive Officer.

Our two reportable segments are hotel investments and net lease investments.

Our hotel investments segment consists of hotels managed by subsidiaries of Sonesta, Hyatt, Radisson and IHG.

Our net lease investments segment consists of service-focused retail net lease properties, including travel centers leased to TA, our largest tenant.

The significant expense categories and amounts presented below align with the segment-level information that is regularly provided to our CODM.

Our CODM reviews operating and financial results, including net income (loss) and its components, to allocate resources and assess segment performance.

The accounting policies of our reportable segments are the same as those described in Note 2 to our consolidated financial statements included in our 2024 Annual Report.

The tables below present information about our segments.

SERVICE PROPERTIES TRUST

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(dollars in thousands, except per share amounts)

We aggregate our hotels and net lease portfolio into two reportable segments, hotel investments and net lease investments, based on their similar operating and economic characteristics.

Three Months Ended September 30, 2024

Hotels Net Lease Corporate Consolidated

Three Months Ended March 31, 2025

Hotels Net Lease Total

Hotel operating revenues $ 334,963 $ — $ 334,963

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Total revenues 334,963 100,216 435,179

Hotel operating expenses 328,535 — — 328,535

Net lease operating expenses — 4,791 — 4,791

Labor and benefits (1)

138,689 841 139,530

Management fees 12,485 2,087 14,572

Real estate taxes and insurance 29,613 788 30,401

Other operating expenses (2)

125,053 1,912 126,965

Depreciation and amortization 53,743 35,357 89,100

General and administrative — — 10,472 10,472

Loss on asset impairment, net 6,043 7,649 — 13,692

Total expenses 387,340 48,683 10,472 446,495

Gain (loss) on sale of real estate, net 5,283 ( 1,178 ) — 4,105

Interest income 63 — 474 537

Interest expense — 12,126 12,126

Loss on early extinguishment of debt, net — — ( 133 ) ( 133 )

Income (loss) before income tax benefit and equity in earnings of an investee

Other segment items (3)

36,698 ( 490 ) 36,208

Income tax benefit — — 77 77

Equity in earnings of an investee — — 2,963 2,963

Net income (loss) $ 8,941 $ 38,792 $ ( 94,634 ) $ ( 46,901 )

Nine Months Ended September 30, 2024

Hotels Net Lease Corporate Consolidated

Hotel operating revenues $ 1,139,657 $ — $ — $ 1,139,657

Rental income — 300,712 — 300,712

Total revenues 1,139,657 300,712 — 1,440,369

Hotel operating expenses 961,868 — — 961,868

Net lease operating expenses — 14,472 — 14,472

Depreciation and amortization 163,237 114,549 — 277,786

Segment (loss) profit ( 61,318 ) 47,595 ( 13,723 )

Reconciliation of segment profit or loss:

General and administrative ( 9,556 )

Loss on asset impairment, net 39,150 11,880 — 51,030

Total expenses 1,164,255 140,901 31,659 1,336,815

Gain (loss) on sale of real estate, net 4,420 ( 3,310 ) — 1,110

Transaction costs ( 29 )

Interest income 1,054

Interest expense ( 89,391 )

Loss on early extinguishment of debt, net — — ( 16,181 ) ( 16,181 )

(Loss) income before income tax expense and equity in losses of an investee ( 19,988 ) 122,099 ( 294,700 ) ( 192,589 )

Income tax expense ( 843 )

Equity in losses of an investee ( 3,947 )

Net (loss) income $ ( 19,988 ) $ 122,099 $ ( 301,245 ) $ ( 199,134 )

As of September 30, 2024

Hotels Net Lease Corporate Consolidated

Total assets $ 3,923,732 $ 2,968,845 $ 194,215 $ 7,086,792

Net loss $ ( 116,435 )

(1) Labor and benefits for our net lease investments segment include property level expense reimbursements as discussed in Note 10.

(2) Other operating expenses for each reportable segment include expenses such as repairs and maintenance, utilities and other costs incurred in connection with the operation of our properties.

(3) Other segment items for each reportable segment include transaction related costs, gains and losses on asset impairment and sale of real estate and interest income, as applicable.

SERVICE PROPERTIES TRUST

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(dollars in thousands, except per share amounts)

Three Months Ended September 30, 2023

Hotels Net Lease Corporate Consolidated

Three Months Ended March 31, 2024

Hotels Net Lease Total

Hotel operating revenues $ 336,236 $ — $ 336,236

1 unchanged sentence

Total revenues 336,236 100,014 436,250

Hotel operating expenses 317,752 — — 317,752

Net lease operating expenses — 4,802 — 4,802

Labor and benefits (1)

135,998 1,011 137,009

Management fees 12,295 1,484 13,779

Real estate taxes and insurance 33,511 690 34,201

Other operating expenses (2)

123,282 1,538 124,820

Depreciation and amortization 55,086 38,021 93,107

General and administrative — — 10,849 10,849

Transaction related costs 115 — — 115

Loss on asset impairment, net — 512 — 512

Total expenses 372,269 45,410 10,849 428,528

Gain on sale of real estate, net — 123 — 123

Interest income 54 55 5,517 5,626

Interest expense — 11,517 11,517

Income (loss) before income tax benefit and equity in earnings of an investee 23,311 44,541 ( 76,086 ) ( 8,234 )

Income tax benefit — — 2,242 2,242

Equity in earnings of an investee — — 1,864 1,864

Net income (loss) $ 23,311 $ 44,541 $ ( 71,980 ) $ ( 4,128 )

Nine Months Ended September 30, 2023

Hotels Net Lease Corporate Consolidated

Hotel operating revenues $ 1,134,649 $ — $ — $ 1,134,649

Rental income — 295,164 — 295,164

Total revenues 1,134,649 295,164 — 1,429,813

Hotel operating expenses 926,418 — — 926,418

Net lease operating expenses — 13,079 — 13,079

Depreciation and amortization 161,236 127,872 — 289,108

Other segment items (3)

773 4,473 5,246

Segment (loss) profit ( 24,709 ) 41,280 16,571

Reconciliation of segment profit or loss:

General and administrative ( 10,506 )

Transaction related costs 588 415 930 1,933

Loss on asset impairment, net — 9,517 — 9,517

Total expenses 1,088,242 150,883 35,110 1,274,235

Gain on sale of real estate, net 41,918 41 — 41,959

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

Interest income 1,794

Interest expense ( 79,897 )

Loss on early extinguishment of debt — — ( 282 ) ( 282 )

Income (loss) before income tax benefit and equity in losses of an investee 88,430 115,119 ( 191,940 ) 11,609

Income tax benefit — — 775 775

Income tax expense ( 1,007 )

Equity in losses of an investee ( 5,338 )

Net income (loss) $ 88,430 $ 115,119 $ ( 193,005 ) $ 10,544

Net loss $ ( 78,383 )

(1) Labor and benefits for our net lease investments segment include property level expense reimbursements as discussed in Note 10.

(2) Other operating expenses for each reportable segment include expenses such as repairs and maintenance, utilities and other costs incurred in connection with the operation of our properties.

(3) Other segment items for each reportable segment include gains and losses on asset impairment and sale of real estate and interest income, as applicable.

As of March 31, 2025

As of December 31, 2024

Hotels Net Lease Corporate Consolidated

Hotels $ 3,849,611 $ 3,897,132

Net Lease 2,911,420 2,942,585

Corporate 215,048 279,841

Total assets $ 6,976,079 $ 7,119,558

Three Months Ended March 31,

Capital expenditures:

Hotels $ 45,121 $ 68,340

Net Lease 748 442

Total capital expenditures $ 45,869 $ 68,782

SERVICE PROPERTIES TRUST

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Fair Value of Assets and Liabilities

The table below presents certain of our assets carried at fair value at September 30, 2024, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

The table below presents certain of our assets carried at fair value at March 31, 2025, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

Fair Value at Reporting Date Using

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$ 124,400 $ — $ 124,400 $ —

Assets of properties held and used (3)

$ 7,500 $ — $ — $ 7,500

(1) We recorded impairment charges totaling $ 14,583 during the nine months ended September 30, 2024, to reduce the carrying value of seven hotels in our condensed consolidated balance sheet to their estimated fair value, less estimated costs to sell of $ 936 , based on negotiated sales prices with third party buyers (Level 2 inputs as defined in the fair value hierarchy under GAAP).

(2) We recorded impairment charges totaling $ 5,202 during the nine months ended September 30, 2024, to reduce the carrying value of three net lease properties in our condensed consolidated balance sheet to their estimated fair value, less estimated costs to sell of $ 102 , based on brokers’ opinion of values (Level 3 inputs as defined in the fair value hierarchy under GAAP).

(3) We recorded impairment charges totaling $ 4,285 during the nine months ended September 30, 2024, to reduce the carrying value of one net lease property in our condensed consolidated balance sheet to its estimated fair value.

We determined the estimated fair value of this property by discounting expected future cash flows based on prevailing market rents and including an exit capitalization rate to determine the final year of cash flows.

Our assessment to determine the estimated fair value of this property used significant unobservable inputs (Level 3 inputs as defined in the fair value hierarchy under GAAP) including a discount rate of 7.0 % and an exit capitalization rate of 6.3 %.

In addition to the assets included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, net lease mortgage notes, senior notes and security deposits.

At September 30, 2024 and December 31, 2023, the fair values of these financial instruments approximated their carrying values in our condensed consolidated balance sheets due to their short-term nature or floating interest rates, except as follows:

September 30, 2024 December 31, 2023

(1) We recorded impairment charges totaling $ 37,067 during the three months ended March 31, 2025, to reduce the carrying value of 16 hotels in our condensed consolidated balance sheet to their estimated fair value, less estimated costs to sell of $ 2,633 , based on negotiated sales prices with third party buyers (Level 2 inputs as defined in the fair value hierarchy under GAAP).

In addition to the assets included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, VFN, net lease mortgage notes, senior notes and security deposits.

At March 31, 2025 and December 31, 2024, the fair values of these financial instruments approximated their carrying values in our condensed consolidated balance sheets due to their short-term nature or floating interest rates, except as follows:

March 31, 2025 December 31, 2024

Carrying Value (1)

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398,617 388,760 398,428 373,796

Senior Unsecured Notes, due 2026 at 4.75 %

448,805 432,441 448,347 419,909

Senior Unsecured Notes, due 2027 at 4.95 %

398,239 378,632 397,672 362,108

Senior Guaranteed Unsecured Notes, due 2027 at 5.50 %

16 unchanged sentences

(1) Carrying value includes unamortized discounts, premiums and certain debt issuance costs.

SERVICE PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share amounts)

At September 30, 2024 and December 31, 2023, we estimated the fair values of our senior notes using an average of the bid and ask price of the notes (Level 2 inputs) as of the measurement dates.

At September 30, 2024 and December 31, 2023, we estimated the fair value of our net lease mortgage notes using discounted cash flow analyses and current prevailing market rates as of the measurement dates (Level 3 inputs).

At March 31, 2025 and December 31, 2024, we estimated the fair values of our senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 2 inputs).

At March 31, 2025 and December 31, 2024, we estimated the fair value of our net lease mortgage notes using discounted cash flow analyses and current prevailing market rates as of the measurement dates (Level 3 inputs).

As Level 3 inputs are unobservable, our estimated value may differ materially from the actual fair value.

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 1. Financial Statements