What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-06 · 241 added, 123 removed, 410 unchanged (47% of the section changed)

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

As of March 31, 2026, we owned 854 properties in 46 states, the District of Columbia, Canada and Puerto Rico.

As of June 30, 2026, we owned 838 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.

At June 30, 2026, we owned 745 service-focused retail properties with an aggregate of 13,553,509 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 June 30, 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.

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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.

Significant Events.

During 2025, we sold 112 hotels containing a total of 14,631 keys for a combined sales price of $858,752, excluding closing costs.

During the six months ended June 30, 2026, we sold one hotel containing 133 keys for gross proceeds of $7,100, excluding closing costs.

We sold one additional hotel containing 133 keys for gross proceeds of $18,350 in July 2026.

As of August 3, 2026, we were under agreement to sell 12 hotels with a total of 2,328 keys for a combined sales price of $77,350, excluding closing costs.

We are also at various stages of negotiating or marketing the sale of two additional hotels containing a total of 561 keys.

In March 2026, we issued $745,000 of net lease mortgage notes.

In April 2026, we raised net proceeds of $541,798 in an underwritten public offering of common shares.

The proceeds from these transactions along with cash on hand were used to redeem an aggregate of $1,550,000 principal amount of outstanding indebtedness.

See below for further details on these transactions.

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.

Our net lease properties were 96.6% occupied as of June 30, 2026 with a weighted (by annual minimum rent) average lease term of 7.1 years, operating under 140 brands in 21 distinct industries.

TA is our largest tenant and as of June 30, 2026, leased 175 of our travel centers under five master leases that expire in 2033 and require annual minimum rents of $269,547.

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

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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.

During the six months ended June 30, 2026, the U.S.

hotel industry generally realized increases in average daily rate, or ADR, and 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.

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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.

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

Three Months Ended June 30,

Six Months Ended June 30,

2026 2025 Change 2026 2025 Change

Retained Hotels

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of rooms or suites 18,088 19,942 (1,854) 18,088 19,942 (1,854)

Occupancy 63.0 % 56.4 % 6.6 pts

Occupancy 72.7 % 69.0 % 3.7 pts 67.9 % 62.9 % 5.0 pts

ADR $ 184.96 $ 175.89 5.2 % $ 182.39 $ 175.02 4.2 %

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of rooms or suites 3,022 15,159 (12,137) 3,022 15,159 (12,137)

Occupancy 48.6 % 59.4 % (10.8) pts

Occupancy 64.7 % 69.5 % (4.8) pts 56.7 % 63.6 % (6.9) pts

ADR $ 124.33 $ 107.75 15.4 % $ 114.65 $ 145.67 (21.3) %

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of rooms or suites 21,110 35,101 (13,991) 21,110 35,101 (13,991)

Occupancy 60.9 % 57.8 % 3.1 pts

Occupancy 71.6 % 69.2 % 2.4 pts 66.3 % 63.6 % 2.7 pts

ADR $ 177.11 $ 146.32 21.0 % $ 174.09 $ 145.67 19.5 %

RevPAR $ 126.78 $ 101.27 25.2 % $ 115.40 $ 92.63 24.6 %

(1) Exit Hotels represents 15 hotels managed by Sonesta that are currently being marketed for sale.

(1) Exit Hotels represents one hotel sold in July 2026 and 14 hotels managed by Sonesta that are currently under agreement or being marketed for sale.

Comparable Hotels Data.

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

Three Months Ended March 31,

2026 2025 Change

Three Months Ended June 30,

Six Months Ended June 30,

2026 2025 Change 2026 2025 Change

Retained Hotels

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of rooms or suites 18,088 18,088 — 18,088 18,088 —

Occupancy 63.0 % 58.5 % 4.5 pts

Occupancy 72.7 % 70.3 % 2.4 pts 67.9 % 64.5 % 3.4 pts

ADR $ 184.96 $ 179.38 3.1 % $ 182.39 $ 179.47 1.6 %

RevPAR $ 134.53 $ 126.16 6.6 % $ 123.83 $ 115.69 7.0 %

Exit Hotels (1)

of hotels 15 15 — 15 15 —

of rooms or suites 3,022 3,022 — 3,022 3,022 —

Occupancy 48.6 % 49.9 % (1.3) pts

Occupancy 64.7 % 62.7 % 2.0 pts 56.7 % 56.3 % 0.4 pts

ADR $ 124.33 $ 121.83 2.1 % $ 114.65 $ 113.15 1.3 %

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of rooms or suites 21,110 21,110 — 21,110 21,110 —

Occupancy 60.9 % 57.3 % 3.6 pts

Occupancy 71.6 % 69.2 % 2.4 pts 66.3 % 63.3 % 3.0 pts

ADR $ 177.11 $ 171.92 3.0 % $ 174.09 $ 171.02 1.8 %

RevPAR $ 126.78 $ 119.03 6.5 % $ 115.40 $ 108.25 6.6 %

(1) Exit Hotels represents one hotel sold in July 2026 and 14 hotels managed by Sonesta that are currently under agreement or being marketed for sale.

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.

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,

Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025

Three Months Ended June 30,

2026 2025 $ Change % Change

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General and administrative 11,093 10,218 875 8.6 %

Transaction related costs 2,509 111 2,398 n/m

Transaction related costs 463 1,345 (882) (65.6) %

Loss on asset impairment 189,097 17,654 171,443 n/m

Total expenses 548,436 438,599 109,837 25.0 %

Loss on sale of real estate, net (383) (156) (227) 145.5 %

Interest income 1,165 822 343 41.7 %

Interest expense (87,655) (102,679) 15,024 (14.6) %

Loss on early extinguishment of debt, net (9,383) — (9,383) n/m

Loss before income tax benefit (expense) and equity in losses of an investee (223,718) (37,176) (186,542) n/m

Income tax benefit (expense) 132 (457) 589 (128.9) %

Equity in losses of an investee (252) (526) 274 (52.1) %

Net loss $ (223,838) $ (38,159) $ (185,679) n/m

Weighted average common shares outstanding (basic and diluted) 128,085 33,148 94,937 n/m

Net loss per common share (basic and diluted) $ (1.75) $ (1.15) $ (0.60) 52.2 %

References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

Hotel operating revenues.

The decrease in hotel operating revenues is primarily a result of our sales of certain hotels since April 1, 2025 ($98,615), partially offset by increases in occupancy and average rates at certain hotels during the 2026 period ($14,281).

Additional operating statistics of our hotels are included in the tables beginning on page 38.

Rental income.

The increase in rental income is primarily a result of our acquisitions of certain net lease properties since April 1, 2025 ($1,553), increases from our net leasing activity ($505) and credit losses recognized at certain of our net lease properties in the 2025 period ($478), partially offset by our sales of certain properties since April 1, 2025 ($664).

Hotel operating expenses.

The decrease in hotel operating expenses is primarily a result of our sales of certain hotels since April 1, 2025 ($80,507), partially offset by increases in marketing and sales expense ($4,261), insurance expense ($1,571), room expenses ($1,030), food and beverage expenses ($555) and other operating expenses ($8,831) in the 2026 period.

Net lease operating expenses.

The increase in net lease operating expenses is primarily the result of our acquisition activity ($55) and increases of property management fees ($668) and other operating expenses ($127) in the 2026 period, partially offset by decreases resulting from the sale of certain net lease properties since April 1, 2025 ($243).

Depreciation and amortization - hotels.

The increase in depreciation and amortization - hotels is primarily a result of depreciation and amortization related to capital expenditures made since April 1, 2025 ($8,445), partially offset by our sales of certain hotels since April 1, 2025 ($229) and certain of our depreciable assets becoming fully depreciated or classified as held for sale since April 1, 2025 ($2,952).

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, 2025 ($3,267) and our sale of certain net lease properties since April 1, 2025 ($696), partially offset by depreciation and amortization related to capital expenditures made since April 1, 2025 ($752).

General and administrative.

The increase in general and administrative costs is primarily due to increases in legal and other professional fees ($966) and other general and administrative expenses due to trustee share grants ($291), partially offset by a decrease in business management fees since April 1, 2025 ($382).

Transaction related costs .

Transaction related costs for the 2026 period primarily consisted of costs related to the sales of certain hotels, partially offset by the recovery of deposits associated with certain previously terminated hotel sales.

Loss on asset impairment.

We recorded a $189,097 loss on asset impairment during the 2026 period to reduce the carrying value of six hotels and one net lease property to their estimated fair value less costs to sell.

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.

Loss on sale of real estate, net.

We recorded a $383 net loss on sale of real estate during the 2026 period in connection with the sales of 17 net lease properties.

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

Interest income.

The increase in interest income is due to higher average cash balances invested 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 $9,383 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 benefit (expense).

The increase in income tax benefit (expense) is due to increases in foreign tax benefit ($381) and state tax benefit ($208) 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.

Our net loss increased in the 2026 period compared to the 2025 period primarily due to the revenue and expense changes discussed above.

Weighted average common shares outstanding (basic and diluted).

The increase in weighted average shares outstanding is primarily driven by our issuance of 95,833,333 common shares during the three months ended June 30, 2026.

Net loss per common share (basic and diluted).

Our net loss per common share increased in the 2026 period compared to the 2025 period primarily driven by our increase in net loss in the 2026 period compared to the 2025 period, partially offset by an increase in the number of common shares outstanding resulting from our equity offering during the three months ended June 30, 2026.

Six Months Ended June 30, 2026, Compared to the Six Months Ended June 30, 2025

Six Months Ended June 30,

2026 2025 $ Change % Change

Hotel operating revenues $ 584,646 $ 739,368 $ (154,722) (20.9) %

Rental income 200,779 199,247 1,532 0.8 %

Total revenues 785,425 938,615 (153,190) (16.3) %

Hotel operating expenses 507,298 634,753 (127,455) (20.1) %

Net lease operating expenses 13,486 11,067 2,419 21.9 %

Depreciation and amortization - hotels 86,624 92,197 (5,573) (6.0) %

Depreciation and amortization - net lease properties 66,302 71,933 (5,631) (7.8) %

Total depreciation and amortization 152,926 164,130 (11,204) (6.8) %

General and administrative 19,889 19,774 115 0.6 %

Transaction related costs 2,972 1,456 1,516 104.1 %

Loss on asset impairment 217,192 54,721 162,471 n/m

Total expenses 913,763 885,901 27,862 3.1 %

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Net loss per common share (basic and diluted) $ (4.63) $ (4.67) $ 0.04 (0.9) %

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.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

Hotel operating revenues.

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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).

The increase in rental income is primarily a result of acquisitions of certain net lease properties since January 1, 2025 ($3,086) and increases from our net leasing activity ($1,047), partially offset by our sales of certain properties since January 1, 2025 ($1,040), and credit losses recognized at certain of our net lease properties in the 2026 period ($1,561).

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.

The decrease in hotel operating expenses is primarily a result of our sales of certain hotels since January 1, 2025 ($162,761), partially offset by increases in marketing and sales expense ($7,595), insurance expense ($5,920), room expenses ($3,137), food and beverage expenses ($1,319) and other operating expenses ($17,335) in the 2026 period.

Net lease operating expenses.

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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).

The decrease in depreciation and amortization - hotels is primarily a result of certain of our sales of certain hotels in the 2026 period ($14,017) and of certain of our depreciable assets becoming fully depreciated or classified as held for sale since January 1, 2025 ($6,319), partially offset by depreciation and amortization related to capital expenditures made in the 2026 period ($14,763).

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).

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 ($6,343) and our sale of certain net lease properties since January 1, 2025 ($1,064), partially offset by depreciation and amortization related to capital expenditures and our acquisition of certain net lease properties since January 1, 2025 ($1,776).

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.

The increase in general and administrative costs is primarily due to increases in legal fees and other professional fees ($1,124) and other general and administrative expenses ($121), partially offset by a decrease in business management fees ($1,130) since April 1, 2025.

Transaction related cos ts.

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.

We recorded a $217,192 loss on asset impairment during the 2026 period to reduce the carrying value of 13 hotels and 22 net lease properties to their estimated fair value less costs to sell.

We recorded a $54,721 net 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.

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.

We recorded a $972 net gain on sale of real estate during the 2026 period in connection with the sales of one hotel and 19 net lease properties.

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.

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.

The increase in interest income is due to higher average cash balances invested during the 2026 period compared to the 2025 period.

Interest expense.

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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.

The decrease in income tax expense is primarily due to a decrease in our foreign tax expense ($176) and state income tax expense ($75) 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.

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.

Our net loss increased in the 2026 period compared to the 2025 period primarily due to the revenue and expense changes discussed above.

Weighted average common shares outstanding (basic and diluted).

The increase in weighted average shares outstanding is primarily driven by our issuance of 95,833,333 common shares during the six months ended June 30, 2026.

Net loss per common share (basic and diluted).

Our net loss per common share decreased in the 2026 period compared to the 2025 period primarily driven by our equity offering during the six months ended June 30, 2026.

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.

As of June 30, 2026, our 745 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.

As of June 30, 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 $635 and $2,870 for the three and six months ended June 30, 2026, respectively, based on our assessment of the collectability of rents.

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 had reserves for uncollectable rents of $5,567 and $3,115 as of June 30, 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.

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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 2.01x and 2.07x as of March 31, 2026 and 2025, respectively.

Our net lease properties generated rent coverage of 2.09x and 2.04x as of June 30, 2026 and 2025, respectively.

Our Operating Liquidity and Capital Resources

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

Three Months Ended March 31,

Six Months Ended June 30,

Cash and cash equivalents and restricted cash at the beginning of the period $ 372,088 $ 157,386

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Cash and cash equivalents and restricted cash at the end of the period $ 28,676 $ 86,031

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.

The increase in cash flow provided by operating activities in the 2026 period is primarily due to decreases in interest paid in the 2026 period resulting from our repayments of debt, partially offset by the decreases in net operating cash flows from hotel sales between the periods.

The decrease in cash flow used in investing activities in the 2026 period is primarily due to 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 and equity issuances during 2026.

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

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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.

During the six months ended June 30, 2026, we funded $1,860 for capital improvements to our net lease properties.

As of June 30, 2026, we had $9,745 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.

During the six months ended June 30, 2026, we funded $45,656 for capital improvements in excess of FF&E reserves available to our hotels.

We currently expect to fund between approximately $70,000 and $90,000 during the last six 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.

During the six months ended June 30, 2026, certain of our hotel managers deposited $2,545 to these accounts and spent $3,870 from the FF&E reserve escrow accounts to renovate and refurbish our hotels.

As of June 30, 2026, there was $5,439 on deposit in these escrow accounts, which was held directly by us and is reflected in our condensed consolidated balance sheets as restricted cash.

During the six months ended June 30, 2026, we sold 20 properties for a combined sales price of $20,575, excluding closing costs.

From July 1, 2026 through August 3, 2026, we sold two net lease properties with a total of 11,220 square feet for a combined sales price of $1,076, excluding closing costs, and one hotel with 133 keys for a sales price of $18,350, excluding closing costs.

We have also entered into agreements to sell 12 hotels with a total of 2,328 keys for a combined sales price of $77,350, 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 are at various stages of selling five net lease properties with a total of 8,709 square feet and two hotels with a total of 561 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:

During the six months ended June 30, 2026, we acquired four net lease properties with a total of 11,988 square feet for a combined purchase price of $9,174, excluding closing costs, using cash on hand.

We have also entered into agreements to acquire five net lease properties with a total of 47,921 square feet for a combined purchase price of $14,245, excluding closing costs.

We expect to use cash on hand for these acquisitions.

During the six months ended June 30, 2026, we declared and paid regular quarterly distributions 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 $ 0.05 $ 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.

April 9, 2026 April 21, 2026 May 14, 2026 0.05 6,471

$ 0.10 $ 8,152

On July 9, 2026, we declared a regular quarterly distribution to common shareholders of record as of July 20, 2026 of $0.05 per common share, or approximately $6,476.

We expect to pay this distribution on or about August 13, 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.

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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 2.75% 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 of June 30, 2026 and 2025, the annual interest rate payable on borrowings under our revolving credit facility was 6.43% and 6.89%, respectively.

As of June 30, 2026, we had $25,000 outstanding under our revolving credit facility and $625,000 available for borrowing.

As of August 3, 2026, we had no amounts 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.

As of June 30, 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 $879,676.

Equity Offering

Our net proceeds from this offering were approximately $542,300, after deducting the underwriters’ discount and other offering expenses.

On April 2, 2026, we issued and sold 95,833,333 common shares (479,166,667 common shares prior to giving effect for the Reverse Share Split), including 12,500,000 common shares (62,500,000 common shares prior to giving effect for the Reverse Share Split) pursuant to the exercise of the underwriters’ option to purchase additional shares, at $6.00 per share ($1.20 per share prior to giving effect for the Reverse Share Split) in an underwritten public offering.

Our net proceeds from this offering were approximately $541,798, after deducting the underwriters’ discount and other offering expenses, to redeem outstanding debt described below.

Redemption of Senior Unsecured Notes

During the six months ended June 30, 2026, we redeemed all $400,000 of our outstanding 4.95% senior unsecured notes due 2027, plus accrued and unpaid interest to, but excluding, the date of redemption and a combined make whole premium of $1,785 using cash on hand and net proceeds from our equity offering.

In April 2026, we redeemed 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, using net proceeds from our equity offering.

Net Lease Mortgage Notes

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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.

The Series 2026-1 Notes are non-recourse and, as of June 30, 2026, were secured by cash and 471 retail net lease properties, including 158 properties that we contributed in connection with this transaction.

As of June 30, 2026, the current leases relating to the 471 properties required annual minimum rents of $152,996 and had an aggregate undepreciated book value of $1,508,727.

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

Our debt maturities as of June 30, 2026 were as follows:

Year Fixed Rate Debt Revolving Credit Facility and VFN

2026 $ 2,000 $ —

2027 584,151 70,000

2028 1,002,775 —

2029 427,038 —

2030 402,038 —

Thereafter 2,235,319 —

$ 4,653,321 $ 70,000

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

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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.

Our debt obligations at June 30, 2026 consisted of $25,000 of borrowings outstanding under our $650,000 revolving credit facility, $3,305,155 aggregate principal amount of senior notes;

$1,348,166 aggregate principal amount 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 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.

As of June 30, 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

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, 2026:

Actual Results Covenant Requirement

Total debt / adjusted total assets 53.7% Maximum of 60%

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Consolidated income available for debt service / debt service 1.74x Minimum of 1.50x

Total unencumbered assets / unsecured debt 283.8% Minimum 150%

Total unencumbered assets / unsecured debt 281.5% Minimum of 150%

Total unencumbered assets in guarantor subsidiaries / senior guaranteed unsecured debt

9.08x 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.

As of June 30, 2026, adjusted total assets for covenant purposes as defined in our senior notes indentures were $8,790,187 and assets encumbered under our revolving credit facility, serving as collateral for our net lease mortgage notes or secured senior notes represented $3,934,966 of adjusted total assets, as defined in our senior notes indentures.

Our unencumbered hotels, other net lease properties and other corporate assets represent $4,271,354, $455,174 and $128,693 of adjusted total assets, respectively.

The following table presents the calculation of adjusted total assets to total assets in accordance with GAAP:

As of June 30, 2026

Total assets $ 5,838,485

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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.

Our $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.

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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 March 31, 2026 As of December 31, 2025

As of June 30, 2026 As of December 31, 2025

Real estate properties, net (1)

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Other liabilities 195,535 255,069

Three Months Ended March 31, 2026

(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.

Six Months Ended June 30,

Revenues $ 549,121

Expenses 735,264

Net loss $ (186,143)

(1) Real estate properties, net as of June 30, 2026 includes $16,418 of properties owned directly by us and not included in the assets of the subsidiary guarantors.

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

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

As of March 31, 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.

As of June 30, 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.

As of June 30, 2026, our net lease properties were 96.6% occupied and we had 25 properties available for lease.

During the six months ended June 30, 2026, we entered into lease renewals for 378,242 rentable square feet (25 properties) at weighted (by rentable square feet) average rents that were 23.8% above the prior rents for the same space.

The weighted (by rentable square feet) average lease term for these leases was 5.4 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.

We also entered into new leases for 51,517 rentable square feet (four properties) at rent that was 26.4% above the prior rent for the same space.

The weighted (by rentable square feet) average lease term for these leases was 10.1 years.

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

As of March 31, 2026, our net lease tenants operated across 140 brands.

As of June 30, 2026, our net lease tenants operated across 140 brands.

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

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Buehler's Fresh Foods 5 76,469 1.5 % 6,223 1.6 % 2.75 x

Heartland Dental 58 55,511 1.1 % 5,111 1.3 % 4.43 x

Pizza Hut 43 51,512 1.0 % 4,065 1.0 % 2.31 x

Express Oil Change 23 49,724 1.0 % 4,088 1.0 % 5.24 x

Pizza Hut 43 51,512 1.0 % 4,068 1.0 % 2.24 x

Norms 10 53,673 1.1 % 3,498 0.9 % 3.55 x

America's Auto Auction 6 38,314 0.8 % 3,457 0.9 % 10.19 x

Flying J Travel Plaza 3 41,681 0.8 % 3,345 0.8 % 3.11 x

463 1,297,335 25.6 % 88,285 22.3 % 3.53 x

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(2) See page 32 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.

(3) Rent coverage information provided by tenant is for all 175 sites on a consolidated basis and is as of June 30, 2026.

(4) Consists of 130 distinct brands with an average investment of $2,802 per property and average annual minimum rent of $191 per property.

As of March 31, 2026, our top ten net lease tenants based on our annualized minimum rent are listed below:

As of June 30, 2026, our top ten net lease tenants based on our annualized minimum rent are listed below:

Tenant Brand Affiliation No.

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(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.

As of June 30, 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.

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guarantees payment under each of the five master leases.

The aggregate guaranty as of March 31, 2026 was $2,943,588.

The aggregate guaranty as of June 30, 2026 was $2,863,781.

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.

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5, respectively.

Rent coverage is as of March 31, 2026.

Rent coverage is as of June 30, 2026.

(4) Consists of 175 tenants with an average investment of $2,723 per property and an average annual minimum rent of $185 per property.

As of March 31, 2026, our net lease tenants operated across 21 distinct industries within the service-focused retail sector of the U.S.

As of June 30, 2026, 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 211 297,129 5.9% 21,384 5.4 % 2.92 x

Restaurants - Casual Dining 59 209,058 4.1% 13,365 3.4 % 2.93 x

Health and Fitness 15 204,048 4.0% 13,318 3.4 % 2.42 x

Restaurants - Casual Dining 58 207,505 4.1% 13,284 3.3 % 2.91 x

Grocery Stores 19 129,152 2.5% 9,895 2.5 % 3.21 x

Medical, Dental Office 69 98,433 1.9% 8,662 2.2 % 3.48 x

Automotive Equipment and Services 65 109,145 2.2% 8,382 2.1 % 4.78 x

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Home Goods and Leisure 14 98,242 1.9% 7,711 1.9 % 4.00 x

Medical, Dental Office 55 80,117 1.6% 6,568 1.7 % 3.94 x

Automotive Dealers 8 62,656 1.2% 5,345 1.3 % 8.15 x

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Car Washes 7 36,125 0.7% 2,892 0.7 % 4.78 x

Sporting Goods 4 29,386 0.6% 1,920 0.5 % 4.38 x

Miscellaneous Manufacturing 5 24,355 0.5% 2,046 0.5 % 12.51 x

Sporting Goods 4 29,386 0.6% 1,922 0.5 % 4.35 x

Dollar Stores 7 10,253 0.2% 721 0.2 % 2.40 x

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(2) See page 32 for our definition of rent coverage.

(3) Rent coverage for TA is as of March 31, 2026.

(3) Rent coverage for TA is as of June 30, 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 $5,711 per property.

As of March 31, 2026, lease expirations at our net lease properties by year are as follows:

As of June 30, 2026, 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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2046 1 6,500 216 0.1% 99.9%

2051 3 7,414 274 0.1% 100.0%

Thereafter 3 56,919 273 0.1% 100.0%

Total 720 12,820,646 $ 396,569 100.0%

(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.

As of June 30, 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.

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Arizona 23 514,480 17,970 4.5%

Indiana 40 582,761 15,973 4.1%

Pennsylvania 27 506,563 16,030 4.0%

Indiana 37 564,664 15,820 4.0%

New Mexico 18 251,172 12,564 3.2%

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of Hotels Three Months Ended

March 31, Three Months Ended

June 30, Three Months Ended

Brand 2026 2025 Change 2026 2025 Change 2026 2025 Change

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Retained & Exit Hotels Total/Average 93 21,110 71.6 % 69.2 % 2.4 pts $177.11 $171.92 3.0 % $ 126.78 $ 119.03 6.5 %

* Includes results of all hotels owned as of March 31, 2026.

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

Exit Hotels represents one hotel sold in July 2026 and 14 hotels managed by Sonesta that are currently under agreement or being marketed for sale.

Retained & Exit Hotels* No.

of Rooms or Suites Occupancy ADR RevPAR

Service Level No.

of Hotels Six Months Ended

June 30, Six Months Ended

Brand 2026 2025 Change 2026 2025 Change 2026 2025 Change

Retained Hotels:

Royal Sonesta Hotels® Full Service 14 4,821 65.7 % 62.8 % 2.9 pts $256.98 $250.89 2.4 % $ 168.71 $ 157.60 7.1 %

Sonesta Hotels & Resorts® Full Service 18 6,040 65.6 % 61.3 % 4.3 pts 181.14 179.72 0.8 % 118.75 110.23 7.7 %

Radisson® Hotels & Resorts Full Service 5 1,149 68.4 % 62.2 % 6.2 pts 160.13 153.53 4.3 % 109.48 95.44 14.7 %

Country Inn & Suites® by Radisson Full Service 2 346 68.8 % 62.9 % 5.9 pts 139.96 138.62 1.0 % 96.28 87.14 10.5 %

Crowne Plaza® Full Service 1 495 73.1 % 70.6 % 2.5 pts 140.90 141.95 (0.7) % 102.93 100.16 2.8 %

Full Service Total/Average 40 12,851 66.2 % 62.4 % 3.8 pts 204.53 201.50 1.5 % 135.44 125.66 7.8 %

Sonesta ES Suites® Extended Stay 7 958 77.9 % 74.3 % 3.6 pts 154.89 151.29 2.4 % 120.66 112.38 7.4 %

Sonesta Select® Select Service 7 1,028 68.8 % 66.7 % 2.1 pts 131.74 132.91 (0.9) % 90.58 88.65 2.2 %

Sonesta Simply Suites® Extended Stay 7 1,144 69.9 % 70.4 % (0.5) pts 123.58 122.75 0.7 % 86.37 86.44 (0.1) %

Hyatt Place® Select Service 17 2,107 72.0 % 68.5 % 3.5 pts 126.34 124.82 1.2 % 90.99 85.46 6.5 %

Focused Service Total/Average 38 5,237 72.0 % 69.6 % 2.4 pts 132.42 131.05 1.0 % 95.33 91.22 4.5 %

Retained Hotels Total/Average 78 18,088 67.9 % 64.5 % 3.4 pts $182.39 $179.47 1.6 % $ 123.83 $ 115.69 7.0 %

Royal Sonesta Hotels® Full Service 3 842 46.8 % 42.0 % 4.8 pts $167.03 $161.45 3.5 % $78.09 $67.79 15.2 %

Sonesta Hotels & Resorts® Full Service 4 1,168 52.0 % 54.8 % (2.8) pts 94.40 95.95 (1.6) % 49.06 52.62 (6.8) %

Full Service Total/Average 7 2,010 49.8 % 49.5 % 0.3 pts 122.97 119.24 3.1 % 61.22 58.98 3.8 %

Sonesta ES Suites® Extended Stay 6 768 70.6 % 67.7 % 2.9 pts 109.73 113.51 (3.3) % 77.44 76.84 0.8 %

Sonesta Simply Suites® Extended Stay 2 244 70.1 % 77.1 % (7.0) pts 81.57 79.92 2.1 % 57.15 61.58 (7.2) %

Focused Service Total/Average 8 1,012 70.5 % 70.0 % 0.5 pts 102.97 104.59 (1.5) % 72.55 73.16 (0.8) %

Exit Hotels Total/Average 15 3,022 56.7 % 56.3 % 0.4 pts 114.65 113.15 1.3 % 65.01 63.73 2.0 %

Retained & Exit Hotels Total/Average 93 21,110 66.3 % 63.3 % 3.0 pts $174.09 $171.02 1.8 % $ 115.40 $ 108.25 6.6 %

* Includes results of all hotels owned as of June 30, 2026.

Excludes the results of hotels sold during the periods presented.

Exit Hotels represents one hotel sold in July 2026 and 14 hotels managed by Sonesta that are currently under agreement or being marketed for sale.

Non-GAAP Financial Measures

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

Our calculations of FFO and Normalized FFO for the three months ended March 31, 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,

Our calculations of FFO and Normalized FFO for the three and six months ended June 30, 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 June 30, Six Months Ended June 30,

2026 2025 2026 2025

Net loss $ (223,838) $ (38,159) $ (375,016) $ (154,594)

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Loss on asset impairment 189,097 17,654 217,192 54,721

Gain on sale of real estate, net (1,355) (746)

Loss (gain) on sale of real estate, net 383 156 (972) (590)

Adjustments to reflect our share of FFO attributable to an investee 1,217 1,182 2,485 2,382

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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