What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-05 · 158 added, 151 removed, 479 unchanged (39% of the section changed)

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

As of June 30, 2025, we owned 942 properties in 46 states, the District of Columbia, Canada and Puerto Rico.

As of September 30, 2025, we owned 912 properties in 46 states, the District of Columbia, Canada and Puerto Rico.

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

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

We previously identified 122 hotels managed by Sonesta with a total of 15,931 keys for disposition.

As of August 1, 2025, we sold eight of these hotels with a total of 1,006 keys for a combined sales price of $45,600, excluding closing costs, and entered into agreements to sell the remaining 114 hotels with a total of 14,925 keys for a combined sales price of $919,952, excluding closing costs.

We and Sonesta have agreed to amend and restate our existing management agreements for the 59 retained hotels managed by Sonesta and waive any termination fees under the existing Sonesta agreements associated with the sale of the 122 hotels.

Among other things, the changes to the agreements between us and Sonesta are as follows:

• Each retained hotel will have its own individual management agreement, performance under which shall not be subject to pooling, cross-default, or similar contractual ties across more than one hotel,

• The initial term of each management agreement will be for a period of 15 years and may be renewed for two additional terms of ten years each,

• Fees payable by us will be modified to provide better alignment with market terms, which modifications are not expected to result in any material cost impact to us, and

• Performance provisions will be aligned with individual hotel measurement for both termination rights and incentive fees, both based on current estimated value rather than historical cost.

Our current strategy is focused on reducing debt, growing our net lease portfolio and improving the performance of the hotels we expect to retain after completing the sale of our previously announced dispositions.

We previously identified 122 hotels managed by Sonesta with a total of 15,931 keys for disposition in 2025.

As of November 4, 2025, we sold 52 of these hotels with a total of 7,114 keys for a combined sales price of $391,352, excluding closing costs, entered into agreements to sell 69 hotels with a total of 8,695 keys for a combined sales price of $567,500, excluding closing costs, and are marketing for sale one hotel with 122 keys.

Upon completion of the hotel sales, we expect to retain 59 hotels managed by Sonesta.

As discussed in Note 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, in August 2025, we and Sonesta amended and restated our management agreements for the 59 retained hotels managed by Sonesta and waived any termination fees under the legacy Sonesta agreement associated with the sale of the 122 hotels.

Our current strategy is focused on reducing debt, transitioning to a company with the majority of its properties being service-focused retail net lease properties through the growth of our net lease portfolio and improving the performance of the hotels we expect to retain after completing the sale of our previously announced dispositions.

Management Agreements and Leases .

At June 30, 2025, we owned 200 hotels operated under four agreements.

At September 30, 2025, we owned 160 hotels managed by four operators.

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

At June 30, 2025, we also owned 742 service-focused retail properties leased to 174 tenants subject to “triple net” leases, where the tenants are generally responsible for the payment of operating expenses and capital expenditures.

At September 30, 2025, we also owned 752 service-focused retail properties leased to 178 tenants subject to “triple net” leases, where the tenants are generally responsible for the payment of operating expenses and capital expenditures.

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

Hotel Portfolio.

As of June 30, 2025, we owned 200 hotels.

During the three and six months ended June 30, 2025, the U.S.

As of September 30, 2025, we owned 160 hotels.

During the three and nine months ended September 30, 2025, the U.S.

hotel industry generally realized increases in average daily rate, or ADR, and decreases in revenue per available room, or RevPAR, compared to the corresponding 2024 periods.

Our hotels produced increases in ADR and RevPAR, which we believe is partially a result of renovation disruption in the 2024 period.

Our hotels produced decreases in ADR and increases in RevPAR, which we believe is partially a result of renovation disruption in the 2024 period.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2025 2024 Change 2025 2024 Change

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2025 2024 Change 2025 2024 Change

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Net Lease Portfolio .

As of June 30, 2025, we owned 742 service-focused retail net lease properties with an aggregate of 13,162,020 square feet leased to 174 tenants subject to “triple net” leases (where the tenants are responsible for payments of operating expenses and capital expenditures) requiring annual minimum rents of $386,521.

Our net lease properties were 97.3% occupied as of June 30, 2025 with a weighted (by annual minimum rent) average lease term of 7.6 years, operating under 136 brands in 21 distinct industries.

TA is our largest tenant and as of June 30, 2025, leased 175 of our travel centers under five master leases that expire in 2033 and require annual minimum rents of $264,262.

As of September 30, 2025, we owned 752 service-focused retail net lease properties with an aggregate of 13,185,953 square feet leased to 178 tenants subject to “triple net” leases (where the tenants are responsible for payments of operating expenses and capital expenditures) requiring annual minimum rents of $388,745.

Our net lease properties were 97.3% occupied as of September 30, 2025 with a weighted (by annual minimum rent) average lease term of 7.5 years, operating under 139 brands in 21 distinct industries.

TA is our largest tenant and as of September 30, 2025, leased 175 of our travel centers under five master leases that expire in 2033 and require annual minimum rents of $264,262.

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

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

Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024

Three Months Ended June 30,

Three Months Ended September 30, 2025, Compared to Three Months Ended September 30, 2024

Three Months Ended September 30,

2025 2024 $ Change % Change

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Total expenses 448,854 446,495 2,359 0.5 %

Loss on sale of real estate, net (156) (32) (124) n/m

Interest income 822 819 3 0.4 %

Gain on sale of real estate, net 25,256 4,105 21,151 n/m

Interest income 4,841 537 4,304 n/m

Interest expense (107,776) (99,126) (8,650) 8.7 %

Loss on early extinguishment of debt, net (529) (133) (396) n/m

Loss before income tax expense and equity in losses of an investee (37,176) (70,610) 33,434 (47.4) %

Income tax expense (457) (524) 67 (12.8) %

Equity in losses of an investee (526) (2,716) 2,190 (80.6) %

Loss before income tax (expense) benefit and equity in earnings of an investee (48,292) (49,941) 1,649 (3.3) %

Income tax (expense) benefit (253) 77 (330) n/m

Equity in earnings of an investee 1,600 2,963 (1,363) (46.0) %

Net loss $ (46,945) $ (46,901) $ (44) 0.1 %

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Net loss per common share (basic and diluted) $ (0.28) $ (0.28) $ — — %

References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Hotel operating revenues.

The decrease in hotel operating revenues is primarily a result of our sales of certain hotels since April 1, 2024 ($11,654), partially offset by increases in occupancy and average rates at certain hotels during the 2025 period ($3,573).

The decrease in hotel operating revenues is primarily a result of our sales of certain hotels since July 1, 2024 ($17,030), partially offset by increases in occupancy and average rates at certain hotels during the 2025 period ($3,671).

Additional operating statistics of our hotels are included in the tables beginning on page 41.

Rental income.

The decrease in rental income is primarily a result of lower rental income recognized in the 2025 period ($1,423) and the sale of certain net lease properties since April 1, 2024 ($271), partially offset by our acquisitions of certain net lease properties since April 1, 2024 ($263).

The increase in rental income is primarily a result of the acquisitions of certain net lease properties since July 1, 2024 ($937) and higher rental income recognized in the 2025 period ($137), partially offset by our sale of certain net lease properties since July 1, 2024 ($116).

Hotel operating expenses.

The increase in hotel operating expenses is primarily a result of increases in wages and benefits ($8,496) and other operating expenses ($3,954) in the 2025 period, partially offset by our sales of certain hotels since April 1, 2024 ($11,784).

The decrease in hotel operating expenses is primarily a result of our sales of certain hotels since July 1, 2024 ($14,373), partially offset by increases in wages and benefits ($7,510) and other operating expenses ($6,686) in the 2025 period.

Net lease operating expenses.

The increase in net lease operating expenses is primarily the result of increased property management fees ($609), partially offset by decreases in other operating expenses ($128) in the 2025 period.

The increase in net lease operating expenses is primarily the result of increased property management fees ($648) and other operating expenses ($529) in the 2025 period, partially offset by decreases resulting from the sale of certain net lease properties since July 1, 2024 ($732).

Depreciation and amortization - hotels.

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Depreciation and amortization - net lease properties.

The decrease in depreciation and amortization - net lease properties is primarily a result of certain of our depreciable assets becoming fully depreciated since April 1, 2024 ($3,308) and our sale of certain net lease properties since April 1, 2024 ($401).

The decrease in depreciation and amortization - net lease properties is primarily a result of certain of our depreciable assets becoming fully depreciated since July 1, 2024 ($2,203) and our sale of certain net lease properties since July 1, 2024 ($492), partially offset by increases from our acquisition of certain net lease properties since July 1, 2024 ($607).

General and administrative.

The decrease in general and administrative costs is primarily due to decreases in business management fees ($540), partially offset by an increase in other professional fees ($77) in the 2025 period.

The increase in general and administrative costs is primarily due to increases in other professional fees ($420) and business management fees ($165) in the 2025 period.

Transaction related costs .

Transaction related costs for the 2025 period primarily consisted of costs related to the renovation of certain hotels.

Transaction related costs for the 2025 period primarily consisted of costs related to the sale and renovation of certain hotels.

Loss on asset impairment.

We recorded a $17,654 loss on asset impairment during the 2025 period to reduce the carrying value of 17 hotels and two net lease properties to their estimated fair value less costs to sell.

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

Loss on sale of real estate, net.

We recorded a $156 loss on sale of real estate during the 2025 period in connection with the sales of two hotels and four net lease properties.

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

We recorded a $27,067 loss on asset impairment during the 2025 period to reduce the carrying value of 25 hotels and one net lease property to their estimated fair value less costs to sell.

We recorded a $13,692 loss on asset impairment during the 2024 period to reduce the carrying value of four hotels and two net lease properties to their estimated fair value or estimated fair value less costs to sell.

Gain on sale of real estate, net.

We recorded a $25,256 net gain on sale of real estate during the 2025 period in connection with the sales of 40 hotels and three net lease properties.

We recorded a $4,105 net gain on sale of real estate during the 2024 period in connection with the sales of six hotels and four net lease properties.

Interest income.

Interest income was relatively unchanged during the 2025 period compared to the 2024 period.

The increase in interest income is due to higher average cash balances invested and higher interest rates during the 2025 period compared to the 2024 period.

Interest expense.

The increase in interest expense is primarily due to higher weighted average interest rates during the 2025 period compared to the 2024 period.

The increase in interest expense is primarily due to higher debt outstanding and weighted average interest rates during the 2025 period compared to the 2024 period.

Loss on early extinguishment of debt, net.

We recorded a $529 loss on early extinguishment of debt, net in the 2025 period as a result of the redemption and write off of unamortized deferred financing costs and discounts of certain unsecured senior notes in the 2025 period.

We recorded a $133 loss on early extinguishment of debt, net in the 2024 period as a result of the redemption and purchase of certain senior notes in the 2024 period.

Income tax expense.

The decrease in income tax expense is primarily due to a decrease in foreign tax expense ($126), partially offset by an increase in state tax expense ($59) during the 2025 period.

Equity in losses of an investee.

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

Our net loss and net loss per common share (basic and diluted) each decreased in the 2025 period compared to the 2024 period primarily due to the revenue and expense changes discussed above.

Six Months Ended June 30, 2025, Compared to the Six Months Ended June 30, 2024

Six Months Ended June 30,

Income tax (expense) benefit.

The change from income tax benefit in the 2024 period to income tax expense in the 2025 period is due to increases in foreign tax expense ($279) and state tax expense ($51) during the 2025 period.

Equity in earnings of an investee.

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

Our net loss increased and our net loss per common share (basic and diluted) did not change in the 2025 period compared to the 2024 period primarily due to the revenue and expense changes discussed above.

Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024

Nine Months Ended September 30,

2025 2024 $ Change % Change

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Total expenses 1,334,755 1,336,815 (2,060) (0.2) %

Gain (loss) on sale of real estate, net 590 (2,995) 3,585 (119.7) %

Gain on sale of real estate, net 25,846 1,110 24,736 n/m

Interest income 6,912 3,318 3,594 108.3 %

Interest expense (311,972) (284,390) (27,582) 9.7 %

Loss on early extinguishment of debt, net — (16,048) 16,048 n/m

Loss on early extinguishment of debt, net (529) (16,181) 15,652 (96.7) %

Loss before income tax expense and equity in losses of an investee (197,113) (192,589) (4,524) 2.3 %

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Net loss per common share (basic and diluted) $ (1.22) $ (1.21) $ (0.01) 0.8 %

References to changes in the income and expense categories below relate to the comparison of consolidated results for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Hotel operating revenues.

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Rental income.

The decrease in rental income is primarily a result of our sales of certain net lease properties since January 1, 2024 ($726) and lower rental income recognized during the 2025 period ($503).

The decrease in rental income is primarily a result of our sales of certain net lease properties since January 1, 2024 ($934) and lower rental income recognized in the 2025 period ($538), partially offset by our acquisition of certain net lease properties during the 2025 period ($1,201).

Hotel operating expenses.

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Net lease operating expenses.

The increase in net lease operating expenses is primarily the result of increased property management fees ($1,208) and other operating expenses at certain net lease properties ($178) in the 2025 period.

The increase in net lease operating expenses is primarily the result of increased property management fees ($1,847), partially offset by a decrease in other operating expenses at certain net lease properties ($16) in the 2025 period.

Depreciation and amortization - hotels.

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Depreciation and amortization - net lease properties.

The decrease in depreciation and amortization - net lease properties is primarily a result of our sale of certain net lease properties since January 1, 2024 ($5,437) and certain of our depreciable assets becoming fully depreciated since January 1, 2024 ($936).

The decrease in depreciation and amortization - net lease properties is primarily a result of certain of our depreciable assets becoming fully depreciated since January 1, 2024 ($7,855) and our sale of certain net lease properties since January 1, 2024 ($1,428), partially offset by increases from our acquisition of certain net lease properties since January 1, 2024 ($822).

General and administrative.

The decrease in general and administrative costs is primarily due to decreases in business management fees ($1,367) and other professional fees ($46) in the 2025 period.

The decrease in general and administrative costs is primarily due to decreases in business management fees ($1,202), partially offset by increase in other professional fees ($374) in the 2025 period.

Transaction related cos ts.

Transaction related costs for the 2025 period primarily consisted of costs related to the renovation of certain hotels, partially offset by the recovery of a working capital reserve related to our former agreement with Marriott International, Inc.

Transaction related costs for the 2025 period primarily consisted of costs related to the sale and renovation of certain hotels, partially offset by the recovery of a working capital reserve related to our former agreement with Marriott International, Inc.

previously deemed uncollectable and expensed in 2021.

Loss on asset impairment.

We recorded a $54,721 loss on asset impairment during the 2025 period to reduce the carrying value of 17 hotels and two net lease properties to their estimated fair value less costs to sell.

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

Gain (loss) on sale of real estate, net.

We recorded a $590 net gain on sale of real estate during the 2025 period in connection with the sale of six hotels and seven net lease properties.

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

We recorded a $81,788 loss on asset impairment during the 2025 period to reduce the carrying value of 28 hotels and three net lease properties to their estimated fair value less costs to sell.

We recorded a $51,030 net loss on asset impairment during the 2024 period to reduce the carrying value of ten hotels and eight net lease properties to their estimated fair value or estimated fair value less costs to sell.

Gain on sale of real estate, net.

We recorded a $25,846 net gain on sale of real estate during the 2025 period in connection with the sales of 46 hotels and ten net lease properties.

We recorded a $1,110 net gain on sale of real estate during the 2024 period in connection with the sale of seven hotels and seven net lease properties.

Interest income.

The decrease in interest income is due to lower average cash balances invested and lower interest rates during the 2025 period compared to the 2024 period.

The increase in interest income is due to higher average cash balances invested during the 2025 period compared to the 2024 period.

Interest expense.

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Loss on early extinguishment of debt, net.

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

Income tax expense.

The decrease in income tax expense is primarily due to decreases in our state income tax expense ($209) and foreign tax expense ($22) during the 2025 period.

The increase in income tax expense is primarily due to an increase in our foreign tax expense ($257), partially offset by a decrease in state income tax expense ($158) during the 2025 period.

Equity in losses of an investee.

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Our Managers and Tenants

As of June 30, 2025, all 200 of our hotels were managed by four hotel operating companies.

As of September 30, 2025, all 160 of our hotels were managed by four hotel operating companies.

Our 752 service-focused retail net lease properties were leased to 178 tenants.

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

As of June 30, 2025, Sonesta is our largest hotel manager (175 hotels) and TA is our largest tenant (175 travel centers).

We recorded reserves for uncollectable amounts and reduced rental income by $1,142 and $1,377 for the three and six months ended June 30, 2025, respectively, based on our assessment of the collectability of rents.

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

We had reserves for uncollectable rents of $6,016 and $5,058 as of June 30, 2025 and December 31, 2024, respectively, included in other assets, net in our condensed consolidated balance sheets.

As of September 30, 2025, Sonesta is our largest hotel manager (135 hotels) and TA is our largest tenant (175 travel centers).

We recorded reserves for uncollectable amounts and reduced rental income by $479 and $1,856 for the three and nine months ended September 30, 2025, respectively, based on our assessment of the collectability of rents.

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 had reserves for uncollectable rents of $6,235 and $5,058 as of September 30, 2025 and December 31, 2024, respectively, included in other assets, net in our condensed consolidated balance sheets.

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

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

Our net lease properties generated rent coverage of 2.04x and 2.25x as of June 30, 2025 and 2024, respectively.

Our net lease properties generated rent coverage of 2.04x and 2.16x as of September 30, 2025 and 2024, respectively.

Our Operating Liquidity and Capital Resources

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enters an economic recession, or otherwise, our managers and tenants may become unable or unwilling to pay returns and rents to us when due, and, as a result, our cash flows and net income would decline.

As of June 30, 2025, we did not meet the 1.50x consolidated income available for debt service to debt service ratio level necessary under our senior notes indentures to incur additional debt, and as a result, we will not be able to incur additional debt while the ratio is below this requirement.

We may sell additional properties, access equity markets, refinance our debt with unsecured and/or secured debt, or seek other sources of capital if favorable conditions exist for us in order to enhance our liquidity, reduce debt and fund cash needs.

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

Six Months Ended June 30,

Nine Months Ended September 30,

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

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Cash and cash equivalents and restricted cash at the end of the period $ 441,232 $ 62,846

The decrease in cash flow provided by operating activities in the 2025 period is primarily due to lower returns from our hotel portfolio in the 2025 period.

The decrease in cash flow used in investing activities in the 2025 period is primarily due to higher proceeds from the sale of real estate in the 2025 period and decreased real estate improvements, partially offset by real estate acquisitions during the 2025 period.

The decrease in cash flow used in financing activities in the 2025 period is primarily due to lower distributions to common shareholders during the 2025 period.

The decrease in cash flow provided by operating activities in the 2025 period is primarily due to the sale of certain hotels and lower returns from our hotel portfolio in the 2025 period.

The change from cash flow used in investing activities in the 2024 period to cash flow provided by investing activities in the 2025 period is primarily due to higher proceeds from the sale of real estate and decreased real estate improvements during the 2025 period, partially offset by real estate acquisitions during the 2025 period.

The change from cash flow used in financing activities in the 2024 period to cash flow provided by financing activities during the 2025 period is primarily due to higher net borrowings, partially offset by lower distributions to common shareholders during the 2025 period.

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

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

During the six months ended June 30, 2025, we funded $82,838 for capital improvements in excess of FF&E reserves available to our hotels.

We currently expect to fund $170,000 during the last six months of 2025 and $150,000 in 2026 for capital improvements to certain hotels using cash on hand.

During the nine months ended September 30, 2025, we funded $126,465 for capital improvements in excess of FF&E reserves available to our hotels.

We currently expect to fund $70,000 during the last three months of 2025 and $150,000 in 2026 for capital improvements to certain hotels using cash on hand.

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

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

During the six months ended June 30, 2025, certain of our hotel managers deposited $2,710 to these accounts and spent $2,064 from the FF&E reserve escrow accounts to renovate and refurbish our hotels.

As of June 30, 2025, there was $6,089 on deposit in these escrow accounts, which was held directly by us and is reflected in our condensed consolidated balance sheets as restricted cash.

During the nine months ended September 30, 2025, certain of our hotel managers deposited $4,519 to these accounts and spent $3,570 from the FF&E reserve escrow accounts to renovate and refurbish our hotels.

As of September 30, 2025, there was $6,391 on deposit in these escrow accounts, which was held directly by us and is reflected in our condensed consolidated balance sheets as restricted cash.

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

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

During the six months ended June 30, 2025, we funded $982 for capital improvements to our net lease properties.

As of June 30, 2025, we had $3,433 of unspent leasing-related obligations related to certain of our net lease tenants.

During the six months ended June 30, 2025, we sold 13 properties for a combined sales price of $49,296, excluding closing costs.

From July 1, 2025 through August 1, 2025, we sold two hotels with a total of 234 keys for a combined sales price of $13,100, excluding closing costs, and one net lease property with 33,106 square feet for a sales price of $850, excluding closing costs.

We have also entered into agreements to sell 114 hotels with a total of 14,925 keys for a combined sales price of $919,952, excluding closing costs, and two net lease properties with 10,301 square feet for a combined sales price of $1,395, excluding closing costs.

During the nine months ended September 30, 2025, we funded $1,431 for capital improvements to our net lease properties.

As of September 30, 2025, we had $5,576 of unspent leasing-related obligations related to certain of our net lease tenants.

During the nine months ended September 30, 2025, we sold 56 properties for a combined sales price of $343,893, excluding closing costs.

From October 1, 2025 through November 4, 2025, we sold six hotels with a total of 777 keys for a combined sales price of $66,500, excluding closing costs, and one net lease property with 37,440 square feet for a sales price of $550, excluding closing costs.

We have also entered into agreements to sell 69 hotels with a total of 8,695 keys for a combined sales price of $567,500, 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 are at various stages of selling six net lease properties with a total of 80,249 square feet.

We believe it is probable that the sales of the hotel properties will be completed in the second half of 2025 and the sales of the remainder of these properties will be completed within one year.

We are at various stages of selling six net lease properties with a total of 80,249 square feet and one hotel with 122 keys.

We believe it is probable that the sales of the 69 hotel properties will be completed by the end of 2025 and the sales of the remainder of these properties will be completed within one year.

We expect to use the net sales proceeds from these sales for general business purposes, including to repay debt.

During the six months ended June 30, 2025, we acquired seven net lease properties with a total of 83,436 square feet for a combined purchase price of $29,923, excluding closing costs, using cash on hand.

From July 1, 2025 through August 1, 2025, we acquired seven net lease properties with a total of 54,141 square feet for a combined purchase price of $14,524, excluding closing costs, using cash on hand.

We have also entered into agreements to acquire six net lease properties with a total of 13,250 square feet for a combined purchase price of $10,254, excluding closing costs.

During the nine months ended September 30, 2025, we acquired 20 net lease properties with a total of 150,776 square feet for a combined purchase price of $54,701, excluding closing costs, using cash on hand.

From October 1, 2025 through November 4, 2025, we acquired four net lease properties with a total of 21,703 square feet for a combined purchase price of $15,942, excluding closing costs, using cash on hand.

We have also entered into agreements to acquire five net lease properties with a total of 111,279 square feet for a combined purchase price of $25,350, excluding closing costs.

We currently expect to fund these acquisitions using cash on hand.

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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 six months ended June 30, 2025, we declared and paid a regular quarterly distribution to common shareholders using cash on hand as follows:

During the nine months ended September 30, 2025, we declared and paid a regular quarterly distribution to common shareholders using cash on hand as follows:

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

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April 10, 2025 April 22, 2025 May 15, 2025 0.01 1,667

July 10, 2025 July 21, 2025 August 14, 2025 0.01 1,669

$ 0.03 $ 5,002

On July 10, 2025, we declared a regular quarterly distribution to common shareholders of record as of July 21, 2025 of $0.01 per common share, or approximately $1,669.

We expect to pay this distribution on or about August 14, 2025 using cash on hand.

On October 9, 2025, we declared a regular quarterly distribution to common shareholders of record as of October 27, 2025 of $0.01 per common share, or approximately $1,681.

We expect to pay this distribution on or about November 13, 2025 using cash on hand.

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

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

Interest payable on drawings under our revolving credit facility is based on SOFR plus a margin ranging from 1.50% to 3.00% based on our leverage ratio, as defined in our credit agreement, which was 2.50% as of June 30, 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 June 30, 2025 and 2024, the annual interest rate payable on borrowings under our revolving credit facility was 6.89% and 7.83%, respectively.

As of June 30, 2025, we had $100,000 outstanding under our revolving credit facility and $550,000 available for borrowings.

On July 1, 2025, we borrowed the remaining $550,000 available under our revolving credit facility as a precautionary measure to preserve financial flexibility.

As of August 1, 2025, we remain fully drawn under our revolving credit facility.

As of September 30, 2025 and 2024, the annual interest rate payable on borrowings under our revolving credit facility was 6.74% and 7.46%, respectively.

As of September 30, 2025 and November 4, 2025, we had no borrowings outstanding under our revolving credit facility and $650,000 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 certain properties, as discussed below.

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5, were added as collateral to our revolving credit facility.

Our disposition plan includes 36 hotels with an aggregate of 4,862 keys and an aggregate undepreciated book value of $650,093 that were released from the collateral pool.

Of the 47 hotels released from the collateral pool, 36 hotels with an aggregate of 4,862 keys and an aggregate undepreciated book value of $650,093 at the time of the amendment are part of our disposition plan.

The collateral swap was completed in May 2025.

As of June 30, 2025, our revolving credit facility was secured by 55 properties, including 17 hotels and 38 net lease properties, with an aggregate undepreciated book value of $900,148.

As of September 30, 2025, our revolving credit facility was secured by 55 properties, including 17 hotels and 38 net lease properties, with an aggregate undepreciated book value of $894,032.

Senior Secured Notes Issuance

In September 2025, we issued $580,155 in aggregate principal amount at maturity of zero coupon senior secured notes due 2027 in a private offering, raising net proceeds of approximately $490,000, after giving effect to original issue discount and deducting the initial purchasers’ discount and estimated transaction fees and expenses.

These notes are fully and unconditionally guaranteed on a joint and several basis by (i) the TA Landlord Subsidiaries that are the landlords with respect to a portfolio of our properties leased to TA, which we refer to as TA Lease No.

2, and (ii) all of our subsidiaries that guarantee our existing senior unsecured notes.

These notes are secured by first-priority liens on the equity interests of subsidiaries that own and lease 36 of our travel center properties with an undepreciated carrying value of $416,952 as of September 30, 2025.

These notes require no cash interest payments to accrue prior to maturity.

The accreted value of these secured notes will increase at a rate of 7.50% per annum compounded semiannually on March 30 and September 30 of each year.

We have a one-time option to extend the maturity date of these notes by one year, subject to the satisfaction of certain conditions and the payment of an extension fee.

The net proceeds from this offering were used repay amounts outstanding under our revolving credit facility.

Redemption of Senior Unsecured Notes

On August 5, 2025, we announced the early redemption of our $350,000 5.25% senior unsecured notes due 2026 at par, plus accrued and unpaid interest to, but excluding the date of redemption.

We expect to fund this redemption on or about September 4, 2025, using cash on hand.

In September 2025, we redeemed at par all of our outstanding 5.25% senior unsecured notes due 2026 for a redemption price equal to the principal amount of $350,000, plus accrued and unpaid interest to but excluding the date of redemption.

The redemption was funded using cash on hand.

In October 2025, we redeemed all $450,000 of our outstanding $450,000 4.75% senior unsecured notes due 2026 for a redemption price equal to the principal amount plus accrued and unpaid interest to but excluding the date of redemption and a make whole premium of $1,796.

The redemption was funded using cash on hand and borrowings under our revolving credit facility.

Net Lease Mortgage Notes

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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 June 30, 2025, the annual interest rate payable on borrowings under the VFN was 6.04%.

The weighted average annual interest rate for borrowings under the VFN was 6.05% for the three and six months ended June 30, 2025, respectively.

As of both June 30, 2025 and August 1, 2025, $45,000 was outstanding under the VFN.

Our debt maturities (other than our revolving credit facility and VFN) as of June 30, 2025 were as follows:

As of September 30, 2025, the annual interest rate payable on borrowings under the VFN was 5.73%.

The weighted average annual interest rate for borrowings under the VFN was 6.00% and 6.03% for the three and nine months ended September 30, 2025, respectively.

As of both September 30, 2025 and November 4, 2025, $45,000 was outstanding under the VFN.

Our debt maturities (other than our revolving credit facility and VFN) as of September 30, 2025 were as follows:

Year Debt Maturities

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2028 1,000,737

2029 1,125,000

Thereafter 1,900,000

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While we believe we will generally have access to various types of financings, including debt or equity, to fund our future acquisitions and to pay our debts and other obligations, we cannot be sure that we will be able to complete any debt or equity offerings or other types of financings or that our cost of any future public or private financings will not increase.

Also, as noted above, we are limited in our ability to incur additional debt pursuant to our debt agreements and are not permitted under our debt agreements to incur any debt while below the 1.50x consolidated income available for debt service to debt service ratio requirement under our public debt covenants as described below.

Our ability to complete, and the costs associated with, future debt transactions depend primarily upon credit market conditions and our then perceived creditworthiness.

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Debt Covenants

Our debt obligations at June 30, 2025 consisted of $100,000 of borrowings outstanding under our $650,000 revolving credit facility, $5,075,000 aggregate principal amounts of senior notes, $605,632 aggregate principal amounts of net lease mortgage notes and $45,000 of borrowings outstanding under the VFN.

Our debt obligations at September 30, 2025 consisted of $5,305,155 aggregate principal amounts of senior notes, $605,143 aggregate principal amounts of net lease mortgage notes and $45,000 of borrowings outstanding under the VFN.

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

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

As of June 30, 2025, we believe we were in compliance with all of the covenants under our indentures and their supplements, net lease mortgage notes and our credit agreement, except as noted above and below.

As of September 30, 2025, we believe we were in compliance with all of the covenants under our indentures and their supplements, net lease mortgage notes and our credit agreement.

Senior Notes Indenture Covenants

The following table summarizes the results of the financial tests required by the indentures and related supplements for our senior secured and unsecured notes as of June 30, 2025:

Actual Results Covenant Requirement

The following table summarizes the results of the financial tests required by the indentures and related supplements for our senior secured and unsecured notes as of September 30, 2025:

Actual Results (1)

Covenant Requirement

Total debt / adjusted total assets 57.5% Maximum of 60%

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3.84x Minimum of 2.20x

The above consolidated income available for debt service to debt service ratio was 1.49x on a pro forma basis as of June 30, 2025, which was below the required level that would permit us to incur additional debt.

We are not permitted under our debt agreements to incur additional debt while we remain below the required covenant level.

As of June 30, 2025, adjusted total assets for covenant purposes as defined in our senior notes indentures were $10,414,487 and assets encumbered under our revolving credit facility, serving as collateral for our net lease mortgage notes or secured senior notes represented $2,670,993 of adjusted total assets, as defined in our senior notes indentures.

(1) As adjusted for the redemption of $450,000 of 4.75% senior unsecured notes redeemed in October 2025.

As of September 30, 2025, as adjusted for the redemption of $450,000 of 4.75% senior unsecured notes redeemed in October 2025, adjusted total assets for covenant purposes as defined in our senior notes indentures were $9,746,354 and assets encumbered under our revolving credit facility, serving as collateral for our net lease mortgage notes or secured senior notes represented $3,112,680 of adjusted total assets, as defined in our senior notes indentures.

Our unencumbered hotels, travel centers, other net lease properties and other corporate assets represent $5,130,095, $457,181, $851,505 and $194,893 of adjusted total assets, respectively.

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

As of June 30, 2025 As of December 31, 2024

As of September 30, 2025 As of December 31, 2024

Real estate properties, net (1)

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Other liabilities 330,279 358,778

Six Months Ended June 30, 2025

(1) Real estate properties, net as of June 30, 2025 includes $133,061 of properties owned directly by us and not included in the assets of the subsidiary guarantors.

Nine Months Ended September 30, 2025

(1) Real estate properties, net as of September 30, 2025 includes $33,234 of properties owned directly by us and not included in the assets of the subsidiary guarantors.

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

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

As of June 30, 2025, we owned and managed a diverse portfolio of hotels and net lease properties across the United States and in Puerto Rico and Canada with 145 distinct brands across 22 industries.

As of September 30, 2025, we owned and managed a diverse portfolio of hotels and net lease properties across the United States and in Puerto Rico and Canada with 148 distinct brands across 22 industries.

Hotel Portfolio

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of Hotels Three Months Ended

June 30, Three Months Ended

September 30, Three Months Ended

September 30,

Brand 2025 2024 Change 2025 2024 Change 2025 2024 Change

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All Hotels Total/Average 160 29,536 68.9 % 67.9 % 1.0 pts $145.50 $147.27 (1.2) % $ 100.25 $ 100.05 0.2 %

* Includes results of all hotels owned as of June 30, 2025.

* Includes results of all hotels owned as of September 30, 2025.

Excludes the results of hotels sold during the periods presented.

Retained Hotels represents 59 hotels managed by Sonesta, 17 hotels managed by Hyatt, seven hotels managed by Radisson, and one hotel managed by IHG that we will continue to own after the Exit Hotels are sold.

Exit Hotels represent 116 hotels managed by Sonesta that we plan to sell.

We are no longer marketing our Crowne Plaza hotel for sale.

Exit Hotels represents 76 hotels managed by Sonesta that we plan to sell.

of Rooms or Suites Occupancy ADR RevPAR

Service Level No.

of Hotels Six Months Ended

June 30, Six Months Ended

of Hotels Nine Months Ended

September 30, Nine Months Ended

September 30,

Brand 2025 2024 Change 2025 2024 Change 2025 2024 Change

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All Hotels Total/Average 160 29,536 65.9 % 65.1 % 0.8 pts $149.11 $148.96 0.1 % $ 98.22 $ 97.04 1.2 %

* Includes results of all hotels owned as of June 30, 2025.

* Includes results of all hotels owned as of September 30, 2025.

Excludes the results of hotels sold during the periods presented.

Exit Hotels represent 116 hotels managed by Sonesta that we plan to sell.

Exit Hotels represents 76 hotels managed by Sonesta that we plan to sell.

Net Lease Portfolio

As of June 30, 2025, our net lease properties were 97.3% occupied and we had 20 properties available for lease.

During the six months ended June 30, 2025, we entered into lease renewals for 383,743 rentable square feet (14 properties) at weighted (by rentable square feet) average rents that were 10.8% above the prior rents for the same space.

As of September 30, 2025, our net lease properties were 97.3% occupied and we had 20 properties available for lease.

During the nine months ended September 30, 2025, we entered into lease renewals for 559,303 rentable square feet (21 properties) at weighted (by rentable square feet) average rents that were 5.3% below the prior rents for the same space.

The weighted (by rentable square feet) average lease term for these leases was 10.4 years.

We also entered into new leases for 7,893 rentable square feet (two properties) at rent that was 9.9% above the prior rent for the same space.

We also entered into new leases for 19,371 rentable square feet (four properties) at rent that was 1.9% below the prior rent for the same space.

The weighted (by rentable square feet) average lease term for these leases was 14.5 years.

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

As of June 30, 2025, our net lease tenants operated across 136 brands.

As of September 30, 2025, our net lease tenants operated across 139 brands.

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

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Heartland Dental 59 61,120 1.2 % 4,841 1.2 % 4.79 x

Norms 10 53,673 1.1 % 3,826 1.0 % 3.36 x

Pizza Hut 44 51,312 1.0 % 4,124 1.1 % 2.17 x

Express Oil Change 23 49,724 1.0 % 3,717 1.0 % 5.77 x

AMC Theatres 5 57,446 1.1 % 3,575 0.9 % 1.83 x

Pizza Hut 40 45,285 0.9 % 3,552 0.9 % 2.14 x

Norms 10 53,673 1.1 % 3,430 0.9 % 3.75 x

414 1,244,967 24.7 % 85,081 21.8 % 3.74 x

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(2) See page 33 for our definition of rent coverage.

(3) Rent coverage information provided by tenant is for all 175 sites on a consolidated basis and is as of June 30, 2025.

(3) Rent coverage information provided by tenant is for all 175 sites on a consolidated basis and is as of September 30, 2025.

(4) Consists of 129 distinct brands with an average investment of $3,007 per property and average annual minimum rent of $206 per property.

As of June 30, 2025, our top ten net lease tenants based on our annualized minimum rent are listed below:

As of September 30, 2025, our top ten net lease tenants based on our annualized minimum rent are listed below:

Tenant Brand Affiliation No.

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Heartland Dental 59 61,120 1.2 % 4,841 1.2 % 4.79x

Norms Restaurants, LLC Norms 10 53,673 1.1 % 3,826 1.0 % 3.36x

Express Oil Change, L.L.C.

Express Oil Change 23 49,724 1.0 % 3,717 1.0 % 5.77x

Norms Restaurants, LLC Norms 10 53,673 1.1 % 3,430 0.9 % 3.75x

Pilot Travel Centers LLC Flying J Travel Plaza 3 41,681 0.8 % 3,312 0.9 % 3.14x

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(3) TA is our largest tenant.

As of June 30, 2025, we leased 175 travel centers (131 under the TravelCenters of America brand and 44 under the Petro Stopping Centers brand) to a subsidiary of TA under five master leases that expire in 2033.

As of September 30, 2025, we leased 175 travel centers (131 under the TravelCenters of America brand and 44 under the Petro Stopping Centers brand) to a subsidiary of TA under five master leases that expire in 2033.

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

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guarantees payment under each of the five master leases.

The aggregate guaranty as of June 30, 2025 was $3,037,475.

The aggregate guaranty as of September 30, 2025 was $3,037,475.

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

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5, respectively.

Rent coverage is as of June 30, 2025.

Rent coverage is as of September 30, 2025.

(4) Consists of 168 tenants with an average investment of $2,728 per property and an average annual minimum rent of $184 per property.

As of June 30, 2025, our net lease tenants operated across 21 distinct industries within the service-focused retail sector of the U.S.

As of September 30, 2025, our net lease tenants operated across 21 distinct industries within the service-focused retail sector of the U.S.

of Properties Investment (1)

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Restaurants - Quick Service 211 293,499 5.8% 20,758 5.3 % 2.88 x

Restaurants - Casual Dining 54 193,351 3.8% 12,051 3.1 % 2.94 x

Health and Fitness 14 196,097 3.9% 12,463 3.2 % 2.11 x

Restaurants - Casual Dining 56 198,586 3.9% 12,184 3.1 % 3.26 x

Grocery Stores 19 129,152 2.6% 9,317 2.4 % 3.22 x

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Legal Services 5 11,362 0.2% 1,097 0.3 % 3.32 x

Drug Stores and Pharmacies 6 17,111 0.3% 957 0.2 % 1.07 x

Dollar Stores 7 10,164 0.2% 721 0.2 % 2.34 x

Drug Stores and Pharmacies 3 9,699 0.2% 590 0.2 % 1.26 x

11 66,054 1.3% 6,351 1.9 % 4.53 x

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(2) See page 33 for our definition of rent coverage.

(3) Rent coverage for TA is as of June 30, 2025.

(3) Rent coverage for TA is as of September 30, 2025.

(4) Consists of miscellaneous businesses with an average investment of $6,005 per property.

As of June 30, 2025, lease expirations at our net lease properties by year are as follows:

As of September 30, 2025, lease expirations at our net lease properties by year are as follows:

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

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

As of June 30, 2025, shown below is the list of our top ten states where our net lease properties are located.

As of September 30, 2025, shown below is the list of our top ten states where our net lease properties are located.

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

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

Our calculations of FFO and Normalized FFO for the three and six months ended June 30, 2025 and 2024 and reconciliations of net loss, the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to those amounts appear in the following table (amounts in thousands, except per share amounts):

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

Our calculations of FFO and Normalized FFO for the three and nine months ended September 30, 2025 and 2024 and reconciliations of net loss, the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to those amounts appear in the following table (amounts in thousands, except per share amounts):

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

2025 2024 2025 2024

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Loss on asset impairment 27,067 13,692 81,788 51,030

Loss (gain) on sale of real estate, net 156 32 (590) 2,995

Gain on sale of real estate, net (25,256) (4,105) (25,846) (1,110)

Adjustments to reflect our share of FFO attributable to an investee 1,113 1,045 3,495 3,032

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis