Service Properties Trust 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our 2025 Annual Report. Overview (dollars in thousands, except per share amounts and per room hotel data) We are a REIT organized under the laws of the State of Maryland. As of March 31, 2026, we owned 854 properties in 46 states, the District of Columbia, Canada and Puerto Rico. Our strategy continues to focus on reducing debt, transitioning to a company with the majority of our 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. Leases and Management Agreements . At March 31, 2026, we owned 761 service-focused retail properties with an aggregate of 13,605,978 square feet leased to 185 tenants subject to “triple net” leases, where the tenants are generally responsible for the payment of operating expenses and capital expenditures. At March 31, 2026, we also owned 93 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. Our condensed consolidated statements of comprehensive income (loss) include rental income and net lease operating expenses from our net lease properties and hotel operating revenues and hotel operating expenses of our managed hotels. Market Outlook. Consumer confidence, corporate travel and lodging demand will continue to be affected by economic and market conditions, inflationary pressures and potential impacts from tariffs, uncertainties surrounding interest rates, unemployment levels, work from home policies, use of technologies, geopolitical events and broader economic trends. Increased labor costs and other price inflation may continue to negatively impact our hotel operations and the operations of our tenants. An economic recession or continued or intensified disruptions in the financial markets could adversely affect our financial condition, operations at our hotels, our tenants and their ability or willingness to renew our leases or pay rent to us, may restrict our ability to obtain new or replacement financing, would likely increase our cost of capital, and may cause the values of our properties to decline. Net Lease Portfolio . Our net lease properties were 96.6% occupied as of March 31, 2026 with a weighted (by annual minimum rent) average lease term of 7.3 years, operating under 140 brands in 21 distinct industries. TA is our largest tenant and as of March 31, 2026, 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. BP Corporation North America Inc. guarantees payment under the TA leases, subject to a cap. We use a variety of operating and other information to evaluate the financial condition and operating performance of our net lease portfolio, including the lease structure, credit evaluations, tenants’ payment history and net lease rent coverage metrics as defined below. Our net lease portfolio is diverse geographically in service-focused and necessity-based industries, by brand concepts and tenants. We believe this diversification may help mitigate the impact of macroeconomic factors. Hotel Portfolio. During the three months ended March 31, 2026, 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 2025 period. Our comparable hotels produced increases in ADR and RevPAR, which we believe is partially a result of renovation disruption in the 2025 period. In addition to the macroeconomic factors noted above, ADR, occupancy, and RevPAR performance are dependent on the continued success of our hotels' brands and our hotel operators. While we do not operate our hotel properties, our asset management team and our executive management team monitor and work with our hotel managers by conducting regular revenue, sales, and financial performance reviews and also perform in-depth on-site reviews focused on ongoing operating margin improvement initiatives. Significant Events We sold 112 hotels with a total of 14,631 keys for a combined sales price of $858,752, excluding closing costs, during 2025. During the three months ended March 31, 2026, we sold one hotel with 133 keys for a sales price of $7,100, excluding closing costs, and we are at various stages of selling 15 additional hotels with 3,022 keys. In January 2026, we redeemed $300,000 of our $400,000 of 4.95% senior unsecured notes due 2027 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 $1,569, using cash on hand. 23 Table of Contents In March 2026, we redeemed all $700,000 of our outstanding 8.375% senior guaranteed unsecured notes due 2029 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 $37,128, using net proceeds from the issuance of $745,000 of net lease mortgage notes and cash on hand. In April 2026, we issued and sold 479,166,667 common shares, including 62,500,000 common shares pursuant to the exercise of the underwriters’ option to purchase additional shares, at $1.20 per share in an underwritten public offering. Our net proceeds from this offering were approximately $542,300, after deducting the underwriters’ discount and other offering expenses. In April 2026, we used the net proceeds from this offering to redeem all $450,000 of our outstanding 5.50% senior guaranteed unsecured notes due 2027 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 $7,191. Additionally, in May 2026, we used the remaining net proceeds from this offering and cash on hand to redeem the remaining $100,000 of our outstanding 4.95% senior unsecured notes due 2027 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 $216. The following table provides a summary for all of our hotels with these revenue metrics for the periods presented, which we believe are key indicators of performance at our hotels. Three Months Ended March 31, 2026 2025 Change Retained Hotels No. of hotels 78 83 (5) No. of rooms or suites 18,088 19,447 (1,359) Occupancy 63.0 % 56.4 % 6.6 pts ADR $ 179.39 $ 174.76 2.6 % RevPAR $ 113.00 $ 98.59 14.6 % Exit Hotels (1) No. of hotels 15 119 (104) No. of rooms or suites 3,022 15,912 (12,890) Occupancy 48.6 % 59.4 % (10.8) pts ADR $ 101.63 $ 109.54 (7.2) % RevPAR $ 49.43 $ 65.07 (24.0) % All Hotels No. of hotels 93 202 (109) No. of rooms or suites 21,110 35,359 (14,249) Occupancy 60.9 % 57.8 % 3.1 pts ADR $ 170.50 $ 144.61 17.9 % RevPAR $ 103.90 $ 83.52 24.4 % (1) Exit Hotels represents 15 hotels managed by Sonesta that are currently being marketed for sale. 24 Table of Contents Comparable Hotels Data. We present occupancy, ADR and RevPAR for the periods presented on a comparable basis to facilitate comparisons between periods. We define comparable hotels as those that were owned by us and were open and operating for the entirety of the periods being compared. The following table provides a summary of these revenue metrics for the periods presented. Three Months Ended March 31, 2026 2025 Change Retained Hotels No. of hotels 78 78 — No. of rooms or suites 18,088 18,088 — Occupancy 63.0 % 58.5 % 4.5 pts ADR $ 179.39 $ 179.58 (0.1) % RevPAR $ 113.00 $ 105.10 7.5 % Exit Hotels No. of hotels 15 15 — No. of rooms or suites 3,022 3,022 — Occupancy 48.6 % 49.9 % (1.3) pts ADR $ 101.63 $ 102.11 (0.5) % RevPAR $ 49.43 $ 50.94 (3.0) % Comparable Hotels No. of hotels 93 93 — No. of rooms or suites 21,110 21,110 — Occupancy 60.9 % 57.3 % 3.6 pts ADR $ 170.50 $ 169.92 0.3 % RevPAR $ 103.90 $ 97.35 6.7 % Additional details of our net lease agreements and our hotel operating agreements are set forth in Note 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. 25 Table of Contents Results of Operations (amounts in thousands, except per share data) Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025 Three Months Ended March 31, 2026 2025 $ Change % Change Revenues: Hotel operating revenues $ 264,575 $ 334,963 $ (70,388) (21.0) % Rental income 99,876 100,216 (340) (0.3) % Total revenues 364,451 435,179 (70,728) (16.3) % Expenses: Hotel operating expenses 242,644 305,840 (63,196) (20.7) % Net lease operating expenses 7,440 5,628 1,812 32.2 % Depreciation and amortization - hotels 42,906 53,743 (10,837) (20.2) % Depreciation and amortization - net lease properties 32,937 35,357 (2,420) (6.8) % Total depreciation and amortization 75,843 89,100 (13,257) (14.9) % General and administrative 8,796 9,556 (760) (8.0) % Transaction related costs 2,509 111 2,398 n/m Loss on asset impairment 28,095 37,067 (8,972) (24.2) % Total expenses 365,327 447,302 (81,975) (18.3) % Gain on sale of real estate, net 1,355 746 609 81.6 % Interest income 943 1,249 (306) (24.5) % Interest expense (96,547) (101,517) 4,970 (4.9) % Loss on early extinguishment of debt, net (51,871) — (51,871) n/m Loss before income tax expense and equity in losses of an investee (146,996) (111,645) (35,351) 31.7 % Income tax expense (1,181) (843) (338) 40.1 % Equity in losses of an investee (3,001) (3,947) 946 (24.0) % Net loss $ (151,178) $ (116,435) $ (34,743) 29.8 % Weighted average common shares outstanding (basic and diluted) 166,395 165,615 780 0.5 % Net loss per common share (basic and diluted) $ (0.91) $ (0.70) $ (0.21) 30.0 % References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Hotel operating revenues. The decrease in hotel operating revenues is primarily a result of our sales of certain hotels since January 1, 2025 ($84,440), partially offset by increases in occupancy and average rates at certain hotels during the 2026 period ($14,052). Additional operating statistics of our hotels are included in the tables beginning on page 34. Rental income. The decrease in rental income is primarily a result of lower rental income from credit losses recognized at certain of our net lease properties in the 2026 period ($2,000) and certain sales of our net lease properties since January 1, 2025 ($248), partially offset by our acquisitions of certain net lease properties since January 1, 2025 ($1,908). Hotel operating expenses. The decrease in hotel operating expenses is primarily a result of our sales of certain hotels since January 1, 2025 ($82,018), partially offset by increases in insurance expense ($4,060), room expenses ($2,801), food and beverage expenses ($758) and other operating expenses ($11,203) in the 2026 period. Net lease operating expenses. The increase in net lease operating expenses is primarily the result of our acquisition activity ($1,382) and increases of property management fees ($684) and other operating expenses ($148) in the 2026 period, partially offset by decreases resulting from the sale of certain net lease properties since January 1, 2025 ($402). 26 Table of Contents Depreciation and amortization - hotels. The decrease in depreciation and amortization - hotels is primarily a result of our sales of certain hotels since January 1, 2025 ($14,050) and certain of our depreciable assets becoming fully depreciated since January 1, 2025 ($3,248), partially offset by depreciation and amortization related to capital expenditures made since January 1, 2025 ($6,461). Depreciation and amortization - net lease properties. The decrease in depreciation and amortization - net lease properties is primarily a result of certain of our depreciable assets becoming fully depreciated since January 1, 2025 ($3,088) and our sale of certain net lease properties since January 1, 2025 ($355), partially offset by depreciation and amortization related to capital expenditures made since January 1, 2025 ($1,023). General and administrative. The decrease in general and administrative costs is primarily due to a decrease in business management fees ($749) in the 2026 period. Transaction related costs . Transaction related costs for the 2026 period primarily consisted of costs related to the sales of certain hotels. Loss on asset impairment. We recorded a $28,095 loss on asset impairment during the 2026 period to reduce the carrying value of seven hotels and 21 net lease properties to their estimated fair value less costs to sell. We recorded a $37,067 loss on asset impairment during the 2025 period to reduce the carrying value of 16 hotels to their estimated fair value less costs to sell. Gain on sale of real estate, net. We recorded a $1,355 net gain on sale of real estate during the 2026 period in connection with the sales of one hotel and two net lease properties. We recorded a $746 net gain on sale of real estate during the 2025 period in connection with the sales of four hotels and three net lease properties. Interest income. The decrease in interest income is due to lower average cash balances invested and lower average interest rates during the 2026 period compared to the 2025 period. Interest expense. The decrease in interest expense is primarily due to lower debt outstanding and lower weighted average interest rates during the 2026 period compared to the 2025 period. Loss on early extinguishment of debt, net. We recorded a $51,871 loss on early extinguishment of debt, net in the 2026 period as a result of the redemption of certain senior notes. See Note 8 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information. Income tax expense. The increase in income tax expense is due to increases in foreign tax expense ($205) and state tax expense ($133) during the 2026 period. Equity in losses of an investee. Equity in losses of an investee represents our proportionate share of the losses of Sonesta. Net loss. Our net loss and our net loss per common share (basic and diluted) each increased in the 2026 period compared to the 2025 period primarily due to the revenue and expense changes discussed above. 27 Table of Contents Liquidity and Capital Resources (dollars in thousands, except per share amounts) Our Managers and Tenants As of March 31, 2026, our 761 service-focused retail net lease properties were leased to 185 tenants and our 93 hotels were managed and operated by four hotel operating companies. The costs of operating and maintaining our properties are generally paid by our tenants for their own account or by the hotel managers as agents for us. Our tenants and hotel managers derive their funding for property operating expenses and for rents and returns due to us generally from property operating revenues and, to the extent these parties themselves fund rents and our owner’s priority returns, from their separate resources. As of March 31, 2026, TA is our largest tenant (175 travel centers) and Sonesta (68 hotels) is our largest hotel manager. We recorded reserves for uncollectable amounts and reduced rental income by $2,235 and $235 for the three months ended March 31, 2026 and 2025, respectively, based on our assessment of the collectability of rents. We had reserves for uncollectable rents of $5,349 and $3,115 as of March 31, 2026 and December 31, 2025, 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. Tenants with no minimum rent required under the lease are excluded. EBITDAR amounts used to determine rent coverage are generally for the latest twelve-month period, based on the most recent operating information, if any, furnished by our tenants. Operating statements furnished by our tenants often are unaudited and, in certain cases, may not have been prepared in accordance with GAAP and are not independently verified by us. In instances where we do not have tenant financial information, we calculate an implied coverage ratio for the period based on other tenants with available financial statements operating the same brand or within the same industry. 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 2.01x and 2.07x as of March 31, 2026 and 2025, respectively. Our Operating Liquidity and Capital Resources Our principal sources of funds to meet operating and capital expenses, debt service obligations and distributions to our shareholders are rents from our net lease portfolio, returns generated from our hotels and borrowings under our revolving credit facility and VFN. We receive rents and hotel returns from our tenants and managers monthly. We may receive additional returns, percentage rents and our share of the operating profits of our managed hotels after payment of management fees and other deductions, if any, either monthly or quarterly, and these amounts are usually subject to annual reconciliations. We believe these sources of funds will be sufficient to meet our operating expenses and capital expenditures, pay debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter. However, as a result of economic conditions, including if the U.S. enters an economic recession, or otherwise, our tenants and managers 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. The following is a summary of our sources and uses of cash flows for the periods presented: Three Months Ended March 31, 2026 2025 Cash and cash equivalents and restricted cash at the beginning of the period $ 372,088 $ 157,386 Net cash provided by (used in): Operating activities 35,578 38,200 Investing activities (50,472) (42,192) Financing activities (317,836) (59,300) Cash and cash equivalents and restricted cash at the end of the period $ 39,358 $ 94,094 The decrease in cash flow provided by operating activities in the 2026 period is primarily due to lower returns from our hotel portfolio in the 2026 period. The increase in cash flow used in investing activities in the 2026 period is primarily due to lower net proceeds from sales of real estate properties and higher acquisitions in the 2026 period, partially offset by a decrease in real estate improvements in the 2026 period. The increase in cash flow used in financing activities in the 2026 period is primarily due to higher net debt repayments in the 2026 period, partially offset by debt issuances during 2026. 28 Table of Contents We maintain our qualification for taxation as a REIT under the IRC by meeting certain requirements. We lease 93 hotels to our wholly owned TRSs that are managed by hotel operating companies. As a REIT, we do not expect to pay federal income taxes on the majority of our income; however, the income realized by our TRSs in excess of the rent they pay to us is subject to U.S. federal income tax at corporate income tax rates. In addition, the income we receive from our hotels in Canada and Puerto Rico is subject to taxes in those jurisdictions and we are subject to taxes in certain states where we have properties despite our qualification for taxation as a REIT. Our Investment and Financing Liquidity and Capital Resources Tenants in our net lease portfolio are generally required to maintain the leased properties, including structural and non-structural components under their respective leases. We may provide tenant improvement allowances to tenants in certain cases or may develop sites with the intent to lease them. During the three months ended March 31, 2026, we funded $580 for capital improvements to our net lease properties. As of March 31, 2026, we had $8,297 of unspent leasing-related obligations related to certain of our net lease tenants. Our hotel operating agreements generally provide that, if necessary, we may provide our managers with funding for capital improvements to our hotels in excess of amounts otherwise available in escrowed FF&E reserves or when no FF&E reserves are available. During the three months ended March 31, 2026, we funded $19,161 for capital improvements in excess of FF&E reserves available to our hotels. We currently expect to fund between approximately $100,000 and $120,000 during the last nine months of 2026 for capital improvements to certain properties 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 three months ended March 31, 2026, certain of our hotel managers deposited $786 to these accounts and spent $1,845 from the FF&E reserve escrow accounts to renovate and refurbish our hotels. As of March 31, 2026, there was $5,704 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 three months ended March 31, 2026, we sold three properties for a combined sales price of $8,385, excluding closing costs. From April 1, 2026 through May 4, 2026, we sold 11 net lease properties with a total of 88,084 square feet for a combined sales price of $9,160, excluding closing costs. We have also entered into agreements to sell seven net lease properties with a total of 30,161 square feet for a combined sales price of $3,415, 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 four net lease properties with a total of 5,526 square feet and 15 hotels with 3,022 keys. We expect to use the net sales proceeds from these sales for general business purposes, including to repay debt. During the three months ended March 31, 2026, we acquired three net lease properties with a total of 8,788 square feet for a combined purchase price of $7,398, excluding closing costs, using cash on hand. From April 1, 2026 through May 4, 2026, we acquired one net lease property with a total of 3,200 square feet for a purchase price of $1,776, excluding closing costs, using cash on hand. During the three months ended March 31, 2026, 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 January 15, 2026 January 26, 2026 February 19, 2026 $ 0.01 $ 1,681 On April 9, 2026, we declared a regular quarterly distribution to common shareholders of record as of April 21, 2026 of $0.01 per common share, or approximately $6,472. We expect to pay this distribution on or about May 14, 2026 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. We can borrow, subject to meeting certain financial covenants, 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. 29 Table of Contents 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 2.75% as of March 31, 2026. 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, 2026 and 2025, the annual interest rate payable on borrowings under our revolving credit facility was 6.43% and 6.91%, respectively. As of March 31, 2026 and May 4, 2026, we had no borrowings outstanding under our revolving credit facility and $650,000 available for borrowing. 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 of March 31, 2026, our revolving credit facility was secured by 55 properties, including 38 net lease properties and 17 hotels, with an aggregate undepreciated book value of $887,212. Equity Offering In April 2026, we issued and sold 479,166,667 common shares, including 62,500,000 common shares pursuant to the exercise of the underwriters’ option to purchase additional shares, at $1.20 per share in an underwritten public offering. Our net proceeds from this offering were approximately $542,300, after deducting the underwriters’ discount and other offering expenses. In April 2026, we used the net proceeds from this offering to redeem all $450,000 of our outstanding 5.50% senior guaranteed unsecured notes due 2027 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 $7,191. Additionally, in May 2026, we used the remaining net proceeds from this offering and cash on hand to redeem the remaining $100,000 of our outstanding 4.95% senior unsecured notes due 2027 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 $216. Redemption of Senior Unsecured Notes In January 2026, we redeemed $300,000 of our $400,000 of 4.95% senior unsecured notes due 2027 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 $1,569, using cash on hand. In March 2026, we redeemed all $700,000 of our outstanding 8.375% senior guaranteed unsecured notes due 2029 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 $37,128, using net proceeds from the issuance of $745,000 of net lease mortgage notes and cash on hand. 30 Table of Contents Net Lease Mortgage Notes On March 6, 2026, the Issuers issued $745,000 in aggregate principal amount of net lease mortgage notes in three classes. The weighted average coupon rate of the three classes is 5.96%. The Series 2026-1 Class A notes and the Series 2026-1 Class B notes require monthly principal repayments at an annualized rate of 0.50% and 0.25% of the balances outstanding, respectively, and the Series 2026-1 Class M notes require interest payments only, with balloon payments due at maturity. The Series 2026-1 Notes mature in March 2031 and may be redeemed without penalty 24 months prior to the scheduled maturity date beginning in March 2029. The Series 2026-1 Notes are non-recourse and, as of March 31, 2026, were secured by 472 retail net lease properties, including 158 properties that we contributed in connection with this transaction. As of March 31, 2026, the current leases relating to the 472 properties required annual minimum rents of $150,754 and had an aggregate undepreciated book value of $1,511,474. As discussed above, we used the net proceeds from this transaction and cash on hand to redeem all $700,000 of our outstanding 8.375% senior guaranteed unsecured notes due 2029. Our debt maturities (other than our revolving credit facility and VFN) as of May 4, 2026 were as follows: Year Debt Maturities 2026 $ 2,998 2027 584,151 2028 1,002,775 2029 427,038 2030 402,038 Thereafter 2,235,319 $ 4,654,319 None of our senior note debt obligations require principal or sinking fund payments prior to their maturity dates. Our mortgage notes require monthly principal payments as described in Part I, Item 3 of this Quarterly Report on Form 10-Q. We currently expect to use cash on hand, the cash flows from our operations, borrowings available under our revolving credit facility, if any, or VFN, net proceeds from any asset sales and net proceeds of offerings of equity or the incurrence of debt to fund our operations, capital expenditures, investments, future debt maturities, distributions to our shareholders and other general business purposes. When significant amounts are outstanding for an extended period of time under our revolving credit facility, or the maturities of our indebtedness approach, we currently expect to explore refinancing alternatives. Such alternatives may include incurring additional debt, issuing new equity securities and the sale of properties. We have an effective shelf registration statement that allows us to issue public securities on an expedited basis, but it does not assure that there will be buyers for such securities. We may also seek to participate in joint ventures or other arrangements that may provide us additional sources of financing. We may also assume mortgage debt on properties we may acquire or obtain mortgage financing on our existing properties. 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. Our ability to complete, and the costs associated with, future debt transactions depend primarily upon credit market conditions and our then perceived creditworthiness. We have no control over market conditions. Our credit ratings depend upon evaluations by credit rating agencies of our business practices and plans, including our ability to maintain our earnings, to stagger our debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes. Similarly, our ability to raise equity capital in the future will depend primarily upon equity capital market conditions and our ability to conduct our business to maintain and grow our operating cash flows. We intend to conduct our business activities in a manner which will afford us reasonable access to capital for investment and financing activities. However, as discussed elsewhere in this Quarterly Report on Form 10-Q, the impacts of the current, and possibly future, inflationary conditions, uncertainties surrounding interest rates and a possible economic recession are uncertain and may have various negative consequences on us and our operations, including a decline in financing availability and increased costs for financing. Further, such conditions could also disrupt the capital markets generally and limit our access to financing from public sources or on favorable terms, particularly if the global financial markets experience significant disruptions. 31 Table of Contents Debt Covenants Our debt obligations at May 4, 2026 consisted of $3,305,155 aggregate principal amounts of senior notes, $1,349,164 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. Our publicly and privately issued senior notes are governed by our indentures and related supplements. These indentures and related supplements and our credit agreement contain covenants that generally restrict our ability to incur debt, including debt secured by mortgages on our properties, in excess of calculated amounts, and require us to maintain various financial ratios. Our credit agreement, net lease mortgage notes, secured senior notes and unsecured senior notes, indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR ceasing to act as our business manager. As of March 31, 2026, we believe we were in compliance with all of the covenants under our indentures and their supplements, net lease mortgage notes and our credit agreement. Senior Notes Indenture Covenants The following table summarizes the results of the financial tests required by the indentures and related supplements for our senior secured and unsecured notes as of March 31, 2026: Actual Results (1) Covenant Requirement Total debt / adjusted total assets 53.1% Maximum of 60% Secured debt / adjusted total assets 33.6% Maximum of 40% Consolidated income available for debt service / debt service 1.75x Minimum of 1.50x Total unencumbered assets / unsecured debt 283.8% Minimum 150% Total unencumbered assets in guarantor subsidiaries / senior guaranteed unsecured debt 9.17x Minimum of 2.20x (1) Adjusted for the redemptions of $450,000 of 5.50% senior guaranteed unsecured notes due 2027 in April 2026 and $100,000 of 4.95% senior unsecured notes due 2027 in May 2026. As of March 31, 2026, adjusted total assets for covenant purposes as defined in our senior notes indentures were $8,845,030 and assets encumbered under our revolving credit facility, serving as collateral for our net lease mortgage notes or secured senior notes represented $3,949,765 of adjusted total assets, as defined in our senior notes indentures. Our unencumbered hotels, other net lease properties and other corporate assets represent $4,269,955, $481,860 and $143,450 of adjusted total assets, respectively. 32 Table of Contents The following table presents the calculation of adjusted total assets to total assets in accordance with GAAP: Total assets $ 6,081,625 Plus: accumulated depreciation (1) 2,543,917 Plus: impairment and other adjustments to reflect original cost of real estate assets 432,650 Less: accounts receivable and intangibles (213,162) Adjusted total assets $ 8,845,030 (1) Includes $55,665 of accumulated depreciation on assets of properties held for sale. Our ability to incur additional debt is subject to meeting the required covenant levels and subject to the provisions of our debt agreements. Acceleration and Cross-Default Our indentures and their supplements contain cross default provisions to any other debt of $50,000 or more. Similarly, our credit agreement has cross default provisions to other indebtedness that is recourse of $25,000 or more and indebtedness that is non-recourse of $75,000 or more. Neither our indentures and their supplements nor our credit agreement contain provisions for acceleration which could be triggered by a change in our debt ratings. Supplemental Guarantor Information Our 8.875% Senior Guaranteed Unsecured Notes due 2032, or the 2032 Notes, are fully and unconditionally guaranteed, on a joint and several basis and on a senior unsecured basis, by all of our subsidiaries, except for certain excluded subsidiaries, including our foreign subsidiaries and our subsidiaries pledged under our credit agreement and our net lease mortgage notes. The notes and the guarantees will be effectively subordinated to all of our and the subsidiary guarantors’ secured indebtedness, respectively, to the extent of the value of the collateral securing such secured indebtedness, and will be structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes. In April 2026, we redeemed $450,000 of 5.50% senior guaranteed unsecured notes due 2027. Our remaining $1,225,000 of senior unsecured notes do not have the benefit of any guarantees. A subsidiary guarantor’s guarantee of the 2032 Notes and all other obligations of such subsidiary guarantor under the indentures governing the notes will automatically terminate and such subsidiary guarantor will automatically be released from all of its obligations under such subsidiary guarantee and such indenture under certain circumstances, including on or after the date on which (a) the notes have received a rating equal to or higher than Baa2 (or the equivalent) by Moody’s Investor Services, or Moody’s, and BBB (or the equivalent) by Standard & Poor’s Rating Services, or S&P, or if Moody’s or S&P ceases to rate the notes for reasons outside of our control, the equivalent investment grade rating from any other rating agency and (b) no default or event of default has occurred and is continuing under the indenture. Our non-guarantor subsidiaries are separate and distinct legal entities and will have no obligation, contingent or otherwise, to pay any amounts due on these notes or the guarantees, or to make any funds available therefor, whether by dividend, distribution, loan or other payments. The rights of holders of these notes to benefit from any of the assets of our non-guarantor subsidiaries are subject to the prior satisfaction of claims of those subsidiaries’ creditors and any preferred equity holders. As a result, these notes and the related guarantees will be effectively subordinated to all of our and the subsidiary guarantors’ secured indebtedness, respectively, to the extent of the value of the collateral securing such secured indebtedness, and will be structurally subordinated to all indebtedness and other liabilities of our subsidiaries that do not guarantee these notes, including guarantees of or pledges under other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity. 33 Table of Contents The following table presents summarized financial information for us and the subsidiary guarantors, on a combined basis, after elimination of (i) intercompany transactions and balances among us and the subsidiary guarantors, and (ii) equity in earnings from, and any investments in, any of our non-guarantor subsidiaries: As of March 31, 2026 As of December 31, 2025 Real estate properties, net (1) $ 2,914,553 $ 3,514,819 Other assets, net 283,950 679,235 Indebtedness, net $ 3,738,310 $ 4,711,060 Intercompany balances (2) 2,123,971 1,630,868 Other liabilities 231,035 255,069 Three Months Ended March 31, 2026 Revenues $ 246,914 Expenses 366,921 Net loss $ (120,007) (1) Real estate properties, net as of March 31, 2026 includes $17,211 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. Related Person Transactions We have relationships and historical and continuing transactions with RMR, RMR Inc. and Sonesta and others related to them. For further information about these and other such relationships and related person transactions, see Notes 6, 10 and 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2025 Annual Report, our definitive Proxy Statement for our 2026 Annual Meeting of Shareholders and our other filings with the Securities and Exchange Commission, or SEC. In addition, see the section captioned “Risk Factors” in our 2025 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services. Critical Accounting Estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Estimates in the condensed consolidated financial statements include consolidation of VIEs, purchase price allocations, the determination of useful lives of fixed assets, classification of leases and the assessment of the book values and impairment of real estate intangible assets and equity investments. A discussion of our critical accounting estimates is included in our 2025 Annual Report. There have been no significant changes in our critical accounting estimates since the year ended December 31, 2025. Property and Operating Statistics (dollars in thousands, except hotel statistics) As of March 31, 2026, we owned and managed a diverse portfolio of net lease and hotel properties across the United States and in Puerto Rico and Canada with 149 distinct brands across 22 industries. Net Lease Portfolio As of March 31, 2026, our net lease properties were 96.6% occupied and we had 26 properties available for lease. During the three months ended March 31, 2026, we entered into lease renewals for 194,474 rentable square feet (18 properties) at weighted (by rentable square feet) average rents that were 35.3% above the prior rents for the same space. The weighted (by rentable square feet) average lease term for these leases was 5.9 years. We also entered into new leases for 24,802 rentable square feet (two properties) at rent that was 146.8% above the prior rent for the same space. The weighted (by rentable square feet) average lease term for these leases was 10.1 years. 34 Table of Contents Generally, lease agreements with our net lease tenants require payment of minimum rent to us. Certain of these minimum rent payment amounts are secured by full or limited guarantees. Annualized minimum rent represents cash amounts and excludes adjustments, if any, necessary to record scheduled rent changes on a straight line basis or any expense reimbursement. Annualized minimum rent excludes the impact of rents prepaid by TA. As of March 31, 2026, our net lease tenants operated across 140 brands. The following table identifies the top ten brands based on annualized minimum rent: Brand No. of Properties Investment (1) Percent of Total Investment Annualized Minimum Rent Percent of Total Annualized Minimum Rent Rent Coverage (2) 1. TravelCenters of America Inc. 131 $ 2,254,950 44.3 % $ 180,329 46.0 % 1.24 x (3) 2. Petro Stopping Centers 44 1,015,156 19.9 % 83,933 21.4 % 1.24 x (3) 3. The Great Escape 14 98,242 1.9 % 7,711 2.0 % 4.00 x 4. Life Time Fitness 3 92,617 1.8 % 6,347 1.6 % 3.28 x 5. Buehler's Fresh Foods 5 76,469 1.5 % 6,223 1.6 % 2.75 x 6. Heartland Dental 58 55,511 1.1 % 5,111 1.3 % 4.43 x 7. Pizza Hut 43 51,512 1.0 % 4,065 1.0 % 2.31 x 8. Express Oil Change 23 49,724 1.0 % 3,717 0.9 % 5.77 x 9. Norms 10 53,673 1.1 % 3,498 0.9 % 3.55 x 10. America's Auto Auction 6 38,314 0.8 % 3,457 0.9 % 9.88 x 11. Other (4) 424 1,303,942 25.6 % 87,808 22.4 % 3.34 x Total 761 $ 5,090,110 100.0 % $ 392,199 100.0 % 2.01 x (1) Represents the historical cost of our net lease properties plus capital improvements funded by us less impairment write-downs, if any. (2) See page 28 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 March 31, 2026. (4) Consists of 130 distinct brands with an average investment of $3,075 per property and average annual minimum rent of $207 per property. 35 Table of Contents As of March 31, 2026, our top ten net lease tenants based on our annualized minimum rent are listed below: Tenant Brand Affiliation No. of Properties Investment (1) Percent of Total Investment Annualized Minimum Rent Percent of Total Annualized Minimum Rent Rent Coverage (2) 1. TravelCenters of America Inc. (3) TravelCenters of America / Petro Stopping Centers 175 $ 3,270,106 64.2 % $ 264,262 67.4 % 1.24x 2. Universal Pool Co., Inc. The Great Escape 14 98,242 1.9 % 7,711 2.0 % 4.00x 3. Healthy Way of Life II, LLC Life Time Fitness 3 92,617 1.8 % 6,347 1.6 % 3.28x 4. Styx Acquisition, LLC Buehler's Fresh Foods 5 76,469 1.5 % 6,223 1.6 % 2.75x 5. Express Oil Change, L.L.C. Express Oil Change 23 49,724 1.0 % 3,717 0.9 % 5.77x 6. Norms Restaurants, LLC Norms 10 53,673 1.1 % 3,498 0.9 % 3.55x 7. Automotive Remarketing Group, Inc. America's Auto Auction 6 38,314 0.8 % 3,457 0.9 % 9.88x 8. Pilot Travel Centers LLC Flying J Travel Plaza 3 41,681 0.8 % 3,345 0.9 % 3.11x 9. Fleet Farm Group LLC Fleet Farm 1 37,802 0.7 % 2,894 0.7 % 2.26x 10. Heartland Dental, LLC Heartland Dental 35 31,045 0.6 % 2,686 0.7 % 5.21x Subtotal, top 10 275 3,789,673 74.4 % 304,140 77.6 % 1.63x 11. Other (4) Various 486 1,300,437 25.6 % 88,059 22.4 % 3.34x Total 761 $ 5,090,110 100.0 % $ 392,199 100.0 % 2.01x (1) Represents the historical cost of our net lease properties plus capital improvements funded by us less impairment write-downs, if any. (2) See page 28 for our definition of rent coverage. (3) TA is our largest tenant. As of March 31, 2026, 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. BP Corporation North America Inc. guarantees payment under each of the five master leases. The aggregate guaranty as of March 31, 2026 was $2,943,588. Annualized minimum rent amounts and the rent used to calculate rent coverage are based on the stated rent amounts in the lease and exclude the impact of rents prepaid by TA. Rent coverage was 1.21x, 1.26x, 1.40x, 1.27x and 1.11x for our TA leases no. 1, no. 2, no. 3, no. 4 and no. 5, respectively. Rent coverage is as of March 31, 2026. (4) Consists of 175 tenants with an average investment of $2,676 per property and an average annual minimum rent of $181 per property. 36 Table of Contents As of March 31, 2026, our net lease tenants operated across 21 distinct industries within the service-focused retail sector of the U.S. economy. Industry No. of Properties Investment (1) Percent of Total Investment Annualized Minimum Rent Percent of Total Annualized Minimum Rent Rent Coverage (2) 1. Travel Centers 178 $ 3,311,787 65.1% $ 267,607 68.3 % 1.26 x (3) 2. Restaurants - Quick Service 212 297,779 5.9% 21,398 5.5 % 2.89 x 3. Restaurants - Casual Dining 59 209,058 4.1% 13,365 3.4 % 2.93 x 4. Health and Fitness 15 204,048 4.0% 13,302 3.4 % 2.42 x 5. Grocery Stores 19 129,152 2.5% 9,895 2.5 % 3.21 x 6. Medical, Dental Office 69 98,433 1.9% 8,662 2.2 % 3.48 x 7. Automotive Equipment and Services 64 107,341 2.1% 7,869 2.0 % 4.98 x 8. Movie Theaters 14 134,479 2.6% 7,804 2.0 % 1.94 x 9. Home Goods and Leisure 14 98,242 1.9% 7,711 2.0 % 4.00 x 10. Automotive Dealers 8 62,656 1.2% 5,336 1.4 % 7.83 x 11. General Merchandise Stores 4 55,457 1.1% 4,054 1.0 % 3.06 x 12. Entertainment 3 51,473 1.0% 3,966 1.0 % 0.99 x 13. Building Materials 30 35,554 0.7% 3,537 0.9 % 7.85 x 14. Educational Services 6 37,730 0.7% 2,902 0.7 % 2.44 x 15. Car Washes 7 36,125 0.7% 2,846 0.7 % 4.85 x 16. Sporting Goods 4 29,386 0.6% 1,920 0.5 % 4.38 x 17. Miscellaneous Manufacturing 5 24,355 0.5% 1,744 0.4 % 13.56 x 18. Dollar Stores 7 10,253 0.2% 721 0.2 % 2.36 x 19. Legal Services 3 7,609 0.1% 681 0.2 % 0.90 x 20. Drug Stores and Pharmacies 3 9,699 0.2% 590 0.2 % 1.26 x 21. Other (4) 11 66,060 1.3% 6,289 1.5 % 4.64 x 22. Vacant 26 73,434 1.6% — — % — x Total 761 $ 5,090,110 100.0% $ 392,199 100.0% 2.01 x (1) Represents the historical cost of our net lease properties plus capital improvements funded by us less impairment write-downs, if any. (2) See page 28 for our definition of rent coverage. (3) Rent coverage for TA is as of March 31, 2026. Annualized minimum rent amounts and the rent used to calculate rent coverage are based on the stated rent amounts in the lease and exclude the impact of rents prepaid by TA. (4) Consists of miscellaneous businesses with an average investment of $6,005 per property. 37 Table of Contents As of March 31, 2026, lease expirations at our net lease properties by year are as follows: Year (1) Number of Properties Square Feet Annualized Minimum Rent Expiring Percent of Total Annualized Minimum Rent Expiring Cumulative Percent of Total Annualized Minimum Rent Expiring 2026 47 492,035 $ 6,668 1.7% 1.7% 2027 35 1,007,179 12,148 3.1% 4.8% 2028 22 592,579 9,666 2.5% 7.3% 2029 79 621,771 10,665 2.7% 10.0% 2030 39 319,702 7,568 1.9% 11.9% 2031 58 498,546 7,799 2.0% 13.9% 2032 36 189,355 4,308 1.1% 15.0% 2033 213 5,371,427 270,612 69.0% 84.0% 2034 22 289,885 5,767 1.5% 85.5% 2035 48 1,188,024 21,836 5.6% 91.1% 2036 29 437,780 7,449 1.9% 93.0% 2037 16 713,670 5,184 1.3% 94.3% 2038 6 44,484 1,201 0.3% 94.6% 2039 14 241,746 4,886 1.2% 95.8% 2040 33 223,031 6,039 1.5% 97.3% 2041 12 241,872 3,391 0.9% 98.2% 2042 1 5,775 160 —% 98.2% 2043 7 127,440 2,233 0.6% 98.8% 2044 2 93,010 278 0.1% 98.9% 2045 12 157,306 3,851 1.0% 99.9% 2046 1 6,500 216 —% 99.9% 2051 3 7,414 274 0.1% 100.0% Total 735 12,870,531 $ 392,199 100.0% (1) The year of lease expiration is pursuant to contract terms. As of March 31, 2026, 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. State Number of Properties Square Feet Annualized Minimum Rent Percent of Total Annualized Minimum Rent Texas 57 1,188,461 $ 35,176 9.0% Ohio 38 1,289,668 27,999 7.1% Illinois 54 973,236 27,692 7.1% California 22 399,045 26,063 6.6% Georgia 72 587,103 21,251 5.4% Florida 47 585,504 18,541 4.7% Arizona 25 476,651 17,613 4.5% Indiana 40 582,761 15,973 4.1% Pennsylvania 27 506,563 15,761 4.0% New Mexico 18 251,172 12,341 3.1% Other 361 6,765,814 173,789 44.4% Total 761 13,605,978 $ 392,199 100.0% 38 Table of Contents Hotel Portfolio The following tables summarize the operating statistics, including occupancy, ADR and RevPAR reported to us by our hotel managers by hotel brand for the periods indicated. All operating data presented are based upon the operating results provided by our hotel managers for the indicated periods. We have not independently verified our managers’ operating data. Retained & Exit Hotels* No. of Rooms or Suites Occupancy ADR RevPAR Service Level No. of Hotels Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31, Brand 2026 2025 Change 2026 2025 Change 2026 2025 Change Retained Hotels: Royal Sonesta Hotels® Full Service 14 4,821 57.3 % 55.5 % 1.8 pts $259.06 $255.61 1.3 % $ 148.47 $ 141.76 4.7 % Sonesta Hotels & Resorts® Full Service 18 6,040 61.9 % 54.4 % 7.5 pts 179.93 182.33 (1.3) % 111.36 99.10 12.4 % Radisson® Hotels & Resorts Full Service 5 1,149 66.6 % 59.5 % 7.1 pts 161.61 154.09 4.9 % 107.69 91.62 17.5 % Country Inn & Suites® by Radisson Full Service 2 346 63.9 % 55.6 % 8.3 pts 126.76 131.03 (3.3) % 81.03 72.84 11.3 % Crowne Plaza® Full Service 1 495 69.0 % 73.4 % (4.4) pts 140.26 149.84 (6.4) % 96.78 109.98 (12.0) % Full Service Total/Average 40 12,851 60.9 % 56.0 % 4.9 pts 202.81 203.85 (0.5) % 123.57 114.14 8.3 % Sonesta ES Suites® Extended Stay 7 958 74.3 % 68.2 % 6.1 pts 155.88 152.94 1.9 % 115.86 104.27 11.1 % Sonesta Select® Select Service 7 1,028 64.1 % 62.6 % 1.5 pts 124.49 128.84 (3.4) % 79.83 80.66 (1.0) % Sonesta Simply Suites® Extended Stay 7 1,144 68.6 % 67.7 % 0.9 pts 114.11 115.05 (0.8) % 78.30 77.91 0.5 % Hyatt Place® Select Service 17 2,107 66.8 % 62.6 % 4.2 pts 123.13 123.07 — % 82.28 77.05 6.8 % Focused Service Total/Average 38 5,237 68.1 % 64.7 % 3.4 pts 127.94 128.09 (0.1) % 87.07 82.93 5.0 % Retained Hotels Total/Average 78 18,088 63.0 % 58.5 % 4.5 pts $179.39 $179.58 (0.1) % $ 113.00 $ 105.10 7.5 % Exit Hotels: Royal Sonesta Hotels® Full Service 3 842 30.0 % 26.6 % 3.4 pts $129.34 $133.54 (3.1) % $38.76 $35.55 9.0 % Sonesta Hotels & Resorts® Full Service 4 1,168 49.7 % 53.9 % (4.2) pts 93.65 93.29 0.4 % 46.52 50.31 (7.5) % Full Service Total/Average 7 2,010 41.4 % 42.5 % (1.1) pts 104.47 103.85 0.6 % 43.27 44.13 (2.0) % Sonesta ES Suites® Extended Stay 6 768 63.1 % 61.1 % 2.0 pts 103.66 108.71 (4.6) % 65.43 66.45 (1.5) % Sonesta Simply Suites® Extended Stay 2 244 62.5 % 75.4 % (12.9) pts 79.72 77.19 3.3 % 49.82 58.20 (14.4) % Focused Service Total/Average 8 1,012 63.0 % 64.6 % (1.6) pts 97.93 99.84 (1.9) % 61.66 64.46 (4.3) % Exit Hotels Total/Average 15 3,022 48.6 % 49.9 % (1.3) pts 101.63 102.11 (0.5) % 49.43 50.94 (3.0) % Retained & Exit Hotels Total/Average 93 21,110 60.9 % 57.3 % 3.6 pts $170.50 $169.92 0.3 % $ 103.90 $ 97.35 6.7 % * Includes results of all hotels owned as of March 31, 2026. Excludes the results of hotels sold during the periods presented. Retained Hotels represents 53 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 represents 15 hotels managed by Sonesta that are currently being marketed for sale. Non-GAAP Financial Measures We present certain “non-GAAP financial measures” within the meaning of the applicable SEC rules, including funds from operations, or FFO, and normalized funds from operations, or Normalized FFO. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss) as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income (loss) as presented in our condensed consolidated statements of comprehensive income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss). We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of our operating performance between periods and with other REITs. 39 Table of Contents Funds From Operations and Normalized Funds From Operations We calculate FFO and Normalized FFO as shown below. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, which is net income (loss), calculated in accordance with GAAP, excluding any gain or loss on sale of real estate and loss on impairment of real estate assets, if any, plus real estate depreciation and amortization, as well as adjustments to reflect our share of FFO attributable to an investee and certain other adjustments currently not applicable to us. In calculating Normalized FFO, we adjust for the items shown below. FFO and Normalized FFO are among the factors considered by our Board when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to satisfy our REIT distribution requirements, limitations in our debt agreements, the availability to us of debt and equity capital, our distribution rate as a percentage of the trading price of our common shares, or dividend yield, and our dividend yield compared to the dividend yields of other REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do. Our calculations of FFO and Normalized FFO for the three months ended March 31, 2026 and 2025 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 March 31, 2026 2025 Net loss $ (151,178) $ (116,435) Add (less): Depreciation and amortization 75,843 89,100 Loss on asset impairment 28,095 37,067 Gain on sale of real estate, net (1,355) (746) Adjustments to reflect our share of FFO attributable to an investee 1,268 1,200 FFO (47,327) 10,186 Add (less): Loss on early extinguishment of debt, net 51,871 — Transaction related costs 2,509 111 Adjustments to reflect our share of Normalized FFO attributable to an investee 392 539 Normalized FFO $ 7,445 $ 10,836 Weighted average common shares outstanding (basic and diluted) 166,395 165,615 Basic and diluted per common share amounts: Net loss $ (0.91) $ (0.70) FFO $ (0.28) $ 0.06 Normalized FFO $ 0.04 $ 0.07 Distributions declared per share $ 0.01 $ 0.01 40 Table of Contents