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Financial Services

Service Properties Trust

11/04/2026 | Press release | Distributed by Public on 11/04/2026 16:05

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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 September 30, 2026, we owned 827 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 September 30, 2026, we owned 740 service-focused retail properties with an aggregate of 13,542,332 square feet leased to 188 tenants subject to "triple net" leases, where the tenants are generally responsible for the payment of operating expenses and capital expenditures. At September 30, 2026, we also owned 87 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.

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 nine months ended September 30, 2026, we sold seven hotels containing a total of 1,346 keys for a combined sales price of $73,200, excluding closing costs. We also sold eight additional hotels containing a total of 1,509 keys for a combined sales price of $50,600 in October 2026. As of November 2, 2026, we are at various stages of marketing for sale two hotels containing a total of 795 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 97.6% occupied as of September 30, 2026 with a weighted (by annual minimum rent) average lease term of 7.0 years, operating under 141 brands in 21 distinct industries. TA is our largest tenant and as of September 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. 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. Lodging industry fundamentals have been generally favorable in 2026, supported by strengthening leisure travel and group demand and improving business transient demand. During the nine months ended September 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 are 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.

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 September 30,								Nine Months Ended September 30,
	2026			2025			Change		2026			2025			Change
All Hotels (1)
No. of hotels	87			160			(73)		87			160			(73)
No. of rooms or suites	19,897			29,536			(9,639)		19,897			29,536			(9,639)
Occupancy	71.8		%	68.9		%	2.9	pts	68.4		%	65.9		%	2.5	pts
ADR	$	171.03		$	145.50		17.5	%	$	174.99		$	149.11		17.4	%
RevPAR	$	122.81		$	100.25		22.5	%	$	119.67		$	98.22		21.8	%

(1) Includes the results of hotels owned as of the end of the periods presented.

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 September 30,								Nine Months Ended September 30,
	2026			2025			Change		2026			2025			Change
Retained Hotels
No. of hotels	77			77			-		77			77			-
No. of rooms or suites	17,593			17,593			-		17,593			17,593			-
Occupancy	72.6		%	69.3		%	3.3	pts	69.4		%	66.0		%	3.4	pts
ADR	$	176.95		$	171.08		3.4	%	$	181.28		$	177.25		2.3	%
RevPAR	$	128.38		$	118.53		8.3	%	$	125.75		$	116.94		7.5	%
Exit Hotels (1)
No. of hotels	10			10			-		10			10			-
No. of rooms or suites	2,304			2,304			-		2,304			2,304			-
Occupancy	66.1		%	63.2		%	2.9	pts	60.9		%	60.3		%	0.6	pts
ADR	$	121.42		$	124.55		(2.5)	%	$	120.21		$	120.64		(0.4)	%
RevPAR	$	80.25		$	78.76		1.9	%	$	73.21		$	72.72		0.7	%
Comparable Hotels
No. of hotels	87			87			-		87			87			-
No. of rooms or suites	19,897			19,897			-		19,897			19,897			-
Occupancy	71.8		%	68.6		%	3.2	pts	68.4		%	65.3		%	3.1	pts
ADR	$	171.03		$	166.11		3.0	%	$	174.99		$	171.20		2.2	%
RevPAR	$	122.81		$	113.93		7.8	%	$	119.67		$	111.82		7.0	%

(1) Exit Hotels represents eight hotels sold in October 2026, as well as one hotel managed by Sonesta and one hotel managed by IHG that are currently in various stages of being sold.

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


	Three Months Ended September 30,
	2026		2025		$ Change		% Change
Revenues:
Hotel operating revenues	$	298,379	$	377,576	$	(79,197)	(21.0)	%
Rental income	101,141		101,194		(53)		(0.1)	%
Total revenues	399,520		478,770		(79,250)		(16.6)	%

Expenses:
Hotel operating expenses	255,780		328,358		(72,578)		(22.1)	%
Net lease operating expenses	6,389		5,236		1,153		22.0	%
Depreciation and amortization - hotels	40,450		40,298		152		0.4	%
Depreciation and amortization - net lease properties	31,702		34,155		(2,453)		(7.2)	%
Total depreciation and amortization	72,152		74,453		(2,301)		(3.1)	%
General and administrative	9,965		11,057		(1,092)		(9.9)	%
Transaction related costs	1,857		2,683		(826)		(30.8)	%
Loss on asset impairment	53,691		27,067		26,624		98.4	%
Total expenses	399,834		448,854		(49,020)		(10.9)	%

(Loss) gain on sale of real estate, net	(1,103)		25,256		(26,359)		(104.4)	%
Interest income	375		4,841		(4,466)		(92.3)	%
Interest expense	(85,932)		(107,776)		21,844		(20.3)	%
Loss on early extinguishment of debt, net	(335)		(529)		194		(36.7)	%
Loss before income tax expense and equity in earnings of an investee	(87,309)		(48,292)		(39,017)		80.8	%
Income tax expense	(875)		(253)		(622)		n/m
Equity in earnings of an investee	244		1,600		(1,356)		(84.8)	%
Net loss	$	(87,940)	$	(46,945)	$	(40,995)	87.3	%

Weighted average common shares outstanding (basic and diluted)	129,262		33,217		96,045		n/m

Net loss per common share (basic and diluted)	$	(0.68)	$	(1.41)	$	0.73	(51.8)	%

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

Hotel operating revenues. The decrease in hotel operating revenues is primarily a result of our sales of certain hotels since July 1, 2025 ($94,624), partially offset by increases in occupancy and average rates at certain hotels during the 2026 period ($15,427). Additional operating statistics of our hotels are included in the tables beginning on page 37.

Rental income. The decrease in rental income is primarily a result of our sales of certain properties since July 1, 2025 ($667) and decreases from our net leasing activity ($495), partially offset by our acquisitions of certain net lease properties since July 1, 2025 ($1,109).

Hotel operating expenses. The decrease in hotel operating expenses is primarily a result of our sales of certain hotels since July 1, 2025 ($83,369), as well as decreases in room expenses ($782) and food and beverage expenses ($584), partially offset by increases in marketing and sales expense ($4,907), utilities expense ($3,737), insurance expense ($425) and other operating expenses ($3,088) in the 2026 period.

Net lease operating expenses. The increase in net lease operating expenses is primarily the result of increases of property management fees ($626), other operating expenses ($517) and our acquisition activity ($124) in the 2026 period, partially offset by decreases resulting from the sale of certain net lease properties since July 1, 2025 ($114).

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 July 1, 2025 ($3,818), partially offset by certain of our depreciable assets becoming fully depreciated or classified as held for sale since July 1, 2025 ($3,054) and our sales of certain hotels since July 1, 2025 ($612).

General and administrative. The decrease in general and administrative costs is primarily due to a decrease in business management fees ($1,144) and decreases in legal and other professional fees ($372), partially offset by increases in other general and administrative expenses ($424) since July 1, 2025.

Transaction related costs. Transaction related costs for the 2026 and 2025 periods primarily consisted of costs related to the sale and renovation of certain hotels.

Loss on asset impairment. We recorded a $53,691 loss on asset impairment during the 2026 period to reduce the carrying value of six hotels and six net lease properties to their estimated fair value less costs to sell. We recorded a $27,067 loss on asset impairment during the 2025 period to reduce the carrying value of 25 hotels and one net lease property to their estimated fair value less costs to sell.

(Loss) gain on sale of real estate, net. We recorded a $1,103 net loss on sale of real estate during the 2026 period in connection with the sales of six net lease properties and six hotels. We recorded a $25,256 net gain on sale of real estate during the 2025 period in connection with the sales of three net lease properties and 40 hotels.

Interest income. The decrease in interest income is due to lower 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 $335 loss on early extinguishment of debt, net in the 2026 period as a result of the repayment and termination of the VFN. We recorded a $529 loss on early extinguishment of debt, net in the 2025 period as a result of the redemption of certain senior unsecured notes.

Income tax expense. The increase in income tax expense is due to increases in foreign tax expense ($336) and state tax expense ($286) during the 2026 period.

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

Net loss. 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 on April 2, 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 an increase in the number of common shares outstanding following the closing of our equity offering on April 2, 2026, partially offset by an increase in net loss in the 2026 period compared to the 2025 period.

Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025


	Nine Months Ended September 30,
	2026		2025		$ Change		% Change
Revenues:
Hotel operating revenues	$	883,025	$	1,116,944	$	(233,919)	(20.9)	%
Rental income	301,920		300,441		1,479		0.5	%
Total revenues	1,184,945		1,417,385		(232,440)		(16.4)	%

Expenses:
Hotel operating expenses	763,078		963,111		(200,033)		(20.8)	%
Net lease operating expenses	19,875		16,303		3,572		21.9	%
Depreciation and amortization - hotels	127,074		132,495		(5,421)		(4.1)	%
Depreciation and amortization - net lease properties	98,004		106,088		(8,084)		(7.6)	%
Total depreciation and amortization	225,078		238,583		(13,505)		(5.7)	%
General and administrative	29,854		30,831		(977)		(3.2)	%
Transaction related costs	4,829		4,139		690		16.7	%
Loss on asset impairment	270,883		81,788		189,095		n/m
Total expenses	1,313,597		1,334,755		(21,158)		(1.6)	%

(Loss) gain on sale of real estate, net	(131)		25,846		(25,977)		(100.5)	%
Interest income	2,483		6,912		(4,429)		(64.1)	%
Interest expense	(270,134)		(311,972)		41,838		(13.4)	%
Loss on early extinguishment of debt, net	(61,589)		(529)		(61,060)		n/m
Loss before income tax expense and equity in losses of an investee	(458,023)		(197,113)		(260,910)		132.4	%
Income tax expense	(1,924)		(1,553)		(371)		23.9	%
Equity in losses of an investee	(3,009)		(2,873)		(136)		4.7	%
Net loss	$	(462,956)	$	(201,539)	$	(261,417)	129.7	%

Weighted average common shares outstanding (basic and diluted)	97,227		33,163		64,064		193.2	%

Net loss per common share (basic and diluted)	$	(4.76)	$	(6.08)	$	1.32	(21.7)	%

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

Hotel operating revenues. The decrease in hotel operating revenues is primarily a result of our sales of certain hotels since January 1, 2025 ($276,652), partially offset by increases in occupancy and average rates at certain hotels during the 2026 period ($42,733). Additional operating statistics of our hotels are included in the tables beginning on page 37.

Rental income. The increase in rental income is primarily a result of acquisitions of certain net lease properties since January 1, 2025 ($3,098) and increases from our net leasing activity ($1,517), partially offset by our sales of certain properties since January 1, 2025 ($1,701), and credit losses recognized at certain of our net lease properties in the 2026 period ($1,435).

Hotel operating expenses. The decrease in hotel operating expenses is primarily a result of our sales of certain hotels since January 1, 2025 ($244,390), partially offset by increases in marketing and sales expense ($12,010), utilities expense ($11,135) insurance expense ($5,913), room expenses ($1,980), food and beverage expenses ($733) and other operating expenses ($12,586) in the 2026 period.

Net lease operating expenses. The increase in net lease operating expenses is primarily the result of increases in real estate taxes ($2,132), property management fees ($1,948), our acquisition activity ($261) and other operating expenses ($191) in the 2026 period, partially offset by decreases resulting from the sale of certain net lease properties since January 1, 2025 ($960).

Depreciation and amortization - hotels. The decrease in depreciation and amortization - hotels is primarily a result of our sales of certain hotels in the 2026 period ($15,073) and certain of our depreciable assets becoming fully depreciated or classified as held for sale since January 1, 2025 ($9,163), partially offset by depreciation and amortization related to capital expenditures made in the 2026 period ($18,815).

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 ($6,613) and our sale of certain net lease properties since January 1, 2025 ($1,625), partially offset by depreciation and amortization related to capital expenditures and our acquisition of certain net lease properties since January 1, 2025 ($154).

General and administrative. The decrease in general and administrative costs is primarily due to a decrease in business management fees ($2,275), partially offset by increases in legal fees and other professional fees ($675) and other general and administrative expenses ($623) since January 1, 2025.

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. Transaction related costs for the 2025 period primarily consisted of costs related to the sale and renovation of certain hotels, partially offset by the recovery of a working capital reserve related to our former agreement with Marriott International, Inc. previously deemed uncollectable and expensed in 2021.

Loss on asset impairment. We recorded a $270,883 loss on asset impairment during the 2026 period to reduce the carrying value of 27 net lease properties and 12 hotels to their estimated fair value less costs to sell. We recorded a $81,788 loss on asset impairment during the 2025 period to reduce the carrying value of three net lease properties and 28 hotels to their estimated fair value less costs to sell.

(Loss) gain on sale of real estate, net. We recorded a $131 net loss on sale of real estate during the 2026 period in connection with the sales of 25 net lease properties and seven hotels. We recorded a $25,846 net gain on sale of real estate during the 2025 period in connection with the sales of 10 net lease properties and 46 hotels.

Interest income. The decrease in interest income is due to lower average cash balances 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 $61,589 loss on early extinguishment of debt, net in the 2026 period as a result of the redemption of certain senior notes and the repayment and termination of the VFN. We recorded a $529 loss on early extinguishment of debt, net in the 2025 period as a result of the redemption of certain senior unsecured notes.

Income tax expense. The increase in income tax expense is primarily due to an increase in our foreign tax expense ($160) and state income tax expense ($211) 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 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 on April 2, 2026.

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

Our Managers and Tenants

As of September 30, 2026, our 740 service-focused retail net lease properties were leased to 188 tenants and our 87 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 September 30, 2026, TA is our largest tenant (175 travel centers) and Sonesta (62 hotels) is our largest hotel manager.

We recorded reserves for uncollectable amounts and reduced rental income by $421 and $3,291 for the three and nine months ended September 30, 2026, respectively, based on our assessment of the collectability of rents. We recorded reserves for uncollectable amounts and reduced rental income by $479 and $1,856 for the three and nine months ended September 30, 2025, respectively, based on our assessment of the collectability of rents. We had reserves for uncollectable rents of $3,864 and $3,115 as of September 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. 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 2.17x and 2.04x as of September 30, 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. 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:


	Nine Months Ended September 30,
	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	132,226		136,305
Investing activities	(46,219)		123,218
Financing activities	(395,603)		24,323
Cash and cash equivalents and restricted cash at the end of the period	$	62,492	$	441,232

The decrease in cash flow provided by operating activities in the 2026 period is primarily due to decreases in net operating cash flows from hotel sales between the periods, partially offset by decreases in interest paid in the 2026 period resulting from our repayment of debt. The change from cash flow provided by investing activities in the 2025 period to cash flow used in investing activities in the 2026 period is primarily due to a decrease in the net proceeds from the sale of real estate in the 2026 period. The change from cash flow provided by financing activities in the 2025 period to 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. We lease 87 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 nine months ended September 30, 2026, we funded $2,014 for capital improvements to our net lease properties. As of September 30, 2026, we had $10,264 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 nine months ended September 30, 2026, we funded $73,498 for capital improvements in excess of FF&E reserves available to our hotels. We currently expect to fund between approximately $25,000 and $40,000 during the last three 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 nine months ended September 30, 2026, certain of our hotel managers deposited $4,478 to these accounts and spent $5,399 from the FF&E reserve escrow accounts to renovate and refurbish our hotels. As of September 30, 2026, there was $5,797 on deposit in these escrow accounts, which was held directly by us and is reflected in our condensed consolidated balance sheets as restricted cash.

During the nine months ended September 30, 2026, we sold 32 properties for a combined sales price of $88,159, excluding closing costs. From October 1, 2026 through November 2, 2026, we sold one net lease property with 1,333 square feet for a sales price of $295, excluding closing costs, and eight hotels with a total of 1,509 keys for a combined sales price of $50,600, excluding closing costs. We have also entered into an agreement to sell one net lease property with 6,800 square feet for a sales price of $655, excluding closing costs. This pending sale is subject to conditions; accordingly, we cannot be sure that we will complete this sale, that this sale will not be delayed or that the terms will not change. We are at various stages of marketing for sale 16 net lease properties with a total of 34,224 square feet and two hotels containing a total of 795 keys. We expect to use the net sales proceeds from these sales for general business purposes, including to repay debt.

During the nine months ended September 30, 2026, we acquired five net lease properties with a total of 19,615 square feet for a combined purchase price of $15,105, excluding closing costs, using cash on hand. From October 1, 2026 through November 2, 2026, we acquired a portfolio of four net lease properties with a total of 41,020 square feet for a combined purchase price of $8,314, excluding closing costs, using cash on hand.

During the nine months ended September 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
April 9, 2026	April 21, 2026	May 14, 2026	0.05		6,471
July 9, 2026	July 20, 2026	August 13, 2026	0.05		6,475
			$	0.15	$	14,627

On October 8, 2026, we declared a regular quarterly distribution to common shareholders of record as of October 19, 2026 of $0.05 per common share, or approximately $6,491. We expect to pay this distribution on or about November 12, 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.

Interest payable on drawings under our revolving credit facility is based on SOFR plus a margin ranging from 1.50% to 3.00% based on our leverage ratio, as defined in our credit agreement, which was 2.50% as of September 30, 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 September 30, 2026 and 2025, the annual interest rate payable on borrowings under our revolving credit facility was 6.50% and 6.74%, respectively. As of September 30, 2026 and November 2, 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 September 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 $874,751.

We are currently exploring our options to extend or refinance our secured revolving credit facility. There can be no assurance that we will be able to do so or the timing, size, or terms of any such replacement facility. We believe we have adequate sources of liquidity to meet our near term operating requirements while these discussions continue.

Equity Offering

On April 2, 2026, we issued and sold 95,833,333 common shares (479,166,667 common shares prior to giving effect to the Reverse Share Split), including 12,500,000 common shares (62,500,000 common shares prior to giving effect to 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 to 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 as described below.

Redemption of Senior Unsecured Notes

In January 2026 and May 2026, we redeemed all $400,000 of our outstanding 4.95% senior unsecured notes due 2027 for redemption prices equal to the principal amount, 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 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 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.

Termination of Secured Variable Funding Note

In September 2026, we repaid and terminated the $45,000 VFN which had a maturity date of January 2027, using existing cash balances.

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 September 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 September 30, 2026, the current leases relating to the 471 properties required annual minimum rents of $153,013 and had an aggregate undepreciated book value of $1,506,624. 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 as of September 30, 2026 were as follows:


Year	Fixed Rate Debt
2026	$	999
2027	584,150
2028	1,002,775
2029	427,038
2030	402,038
Thereafter	2,235,322
	$	4,652,322

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, net proceeds from any asset sales, 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.

Debt Covenants

Our debt obligations at September 30, 2026 consisted of $3,305,155 aggregate principal amount of senior notes and $1,347,167 aggregate principal amount of net lease mortgage notes. 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, senior secured notes and senior unsecured 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 September 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 September 30, 2026:

Actual Results

Covenant Requirement

Total debt / adjusted total assets

53.9%

Maximum of 60%

Secured debt / adjusted total assets

33.9%

Maximum of 40%

Consolidated income available for debt service / debt service

1.83x

Minimum of 1.50x

Total unencumbered assets / unsecured debt

273.2%

Minimum of 150%

Total unencumbered assets in guarantor subsidiaries / senior guaranteed unsecured debt

8.79x

Minimum of 2.20x

As of September 30, 2026, adjusted total assets for covenant purposes as defined in our senior notes indentures were $8,631,686 and assets encumbered under our revolving credit facility, serving as collateral for our net lease mortgage notes or senior secured notes represented $3,918,944 of adjusted total assets, as defined in our senior notes indentures. Our unencumbered hotels, other net lease properties and other corporate assets represent $4,093,665, $456,711 and $162,366 of adjusted total assets, respectively.

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


	As of September 30, 2026
Total assets	$	5,720,456
Plus: accumulated depreciation (1)	2,553,628
Plus: impairment and other adjustments to reflect original cost of real estate assets	573,798
Less: accounts receivable and intangibles	(216,196)
Adjusted total assets	$	8,631,686

(1)Includes $95,177 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. 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. 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.

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 September 30, 2026		As of December 31, 2025
Real estate properties, net (1)	$	2,585,266	$	3,514,819
Other assets, net	301,500		679,235

Indebtedness, net	$	3,216,989	$	4,711,060
Intercompany balances (2)	2,236,517		1,630,868
Other liabilities	234,083		255,069


	Nine Months Ended September 30, 2026
Revenues	$	832,656
Expenses	1,089,887
Net loss	$	(257,231)

(1)Real estate properties, net as of September 30, 2026 includes $16,153 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 September 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 150 distinct brands across 22 industries.

Net Lease Portfolio

As of September 30, 2026, our net lease properties were 97.6% occupied and we had 18 properties available for lease. During the nine months ended September 30, 2026, we entered into lease renewals for 1,005,733 rentable square feet (80 properties) at weighted (by rentable square feet) average rents that were 2.8% above the prior rents for the same space. The weighted (by rentable square feet) average lease term for these leases was 8.8 years. We also entered into new leases for 60,569 rentable square feet (seven properties) at rent that was 16.4% above the prior rent for the same space. The weighted (by rentable square feet) average lease term for these leases was 10.6 years.

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 September 30, 2026, our net lease tenants operated across 141 brands. The following table identifies the top 10 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 / Petro Stopping Centers	175	$	3,270,106	64.5	%	$	269,547	68.2	%	1.44	x	(3)
2.	The Great Escape	14	98,242		1.9	%	7,711		1.9	%	4.00	x
3.	Life Time Fitness	3	92,617		1.8	%	6,347		1.6	%	3.28	x
4.	Buehler's Fresh Foods	5	76,469		1.5	%	6,223		1.6	%	2.67	x
5.	Express Oil Change	23	49,724		1.0	%	4,088		1.0	%	5.24	x
6.	Pizza Hut	43	51,106		1.0	%	4,068		1.0	%	2.18	x
7.	Norms	10	53,673		1.1	%	3,498		0.9	%	3.55	x
8.	America's Auto Auction	6	38,314		0.8	%	3,457		0.9	%	10.11	x
9.	Flying J Travel Plaza	3	41,681		0.8	%	3,345		0.8	%	3.11	x
10.	AMC Theatres	5	57,457		1.1	%	3,143		0.8	%	2.45	x
	Subtotal, top 10	287	3,829,389		75.5	%	311,427		78.7	%	1.77	x
11.	Other (4)	435	1,185,011		23.4	%	84,065		21.3	%	3.65	x
12.	Vacant	18	56,705		1.1	%	-		-	%	-	x
	Total	740	$	5,071,105	100.0	%	$	395,492	100.0	%	2.17	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 31 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 September 30, 2026.

(4)Consists of 131 distinct brands with an average investment of $2,724 per property and average annual minimum rent of $193 per property.

As of September 30, 2026, our top 10 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	64.5	%	$	269,547	68.2	%	1.44x
2.	Universal Pool Co., Inc.	The Great Escape	14	98,242		1.9	%	7,711		1.9	%	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	%	2.67x
5.	Express Oil Change, L.L.C.	Express Oil Change	23	49,724		1.0	%	4,088		1.0	%	5.24x
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	%	10.11x
8.	Pilot Travel Centers LLC	Flying J Travel Plaza	3	41,681		0.8	%	3,345		0.8	%	3.11x
9.	Fleet Farm Group LLC	Fleet Farm	1	37,802		0.7	%	2,952		0.7	%	2.38x
10.	Heartland Dental, LLC	Heartland Dental	35	31,045		0.6	%	2,686		0.7	%	5.33x
	Subtotal, top 10		275	3,789,673		74.7	%	309,854		78.3	%	1.80x
11.	Other (4)	Various	447	1,224,727		24.2	%	85,638		21.7	%	3.52x
12.	Vacant	Vacant	18	56,705		1.1	%	-		-	%	-x
	Total		740	$	5,071,105	100.0	%	$	395,492	100.0	%	2.17x

(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 31 for our definition of rent coverage.

(3)TA is our largest tenant. As of September 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. BP Corporation North America Inc. guarantees payment under each of the five master leases. The aggregate guaranty as of September 30, 2026 was $2,782,917. 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 1.35x, 1.43x, 1.53x, 1.61x and 1.32x for our TA leases no. 1, no. 2, no. 3, no. 4 and no. 5, respectively. Rent coverage is as of September 30, 2026.

(4)Consists of 178 tenants with an average investment of $2,740 per property and an average annual minimum rent of $192 per property.

As of September 30, 2026, our net lease tenants operated across 21 distinct industries within the service-focused retail sector of the U.S. economy. Our top 10 industries are shown below:


	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	65.3%	$	272,892	69.1	%	1.46 x		(3)
2.	Restaurants - Quick Service	211	296,723		5.9%	21,000		5.3	%	2.97	x
3.	Restaurants - Casual Dining	59	213,490		4.2%	13,728		3.5	%	2.90	x
4.	Health and Fitness	15	204,048		4.0%	13,362		3.4	%	2.43	x
5.	Grocery Stores	19	129,152		2.5%	9,895		2.5	%	3.16	x
6.	Automotive Equipment and Services	65	109,145		2.2%	8,426		2.1	%	4.84	x
7.	Home Goods and Leisure	14	98,242		1.9%	7,711		1.9	%	4.00	x
8.	Movie Theaters	14	134,490		2.7%	7,061		1.8	%	2.41	x
9.	Medical, Dental Office	48	75,606		1.5%	6,110		1.5	%	3.76	x
10.	Automotive Dealers	8	62,656		1.2%	5,345		1.4	%	8.05	x
	Subtotal, top 10	631	4,635,339		91.4%	365,530		92.5	%	1.97	x
11.	Other (4)	91	379,061		7.5%	29,962		7.5	%	4.66	x
12.	Vacant	18	56,705		1.1%	-		-	%	-	x
	Total	740	$	5,071,105	100.0%	$	395,492	100.0%		2.17	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 31 for our definition of rent coverage.

(3)Rent coverage for TA is as of September 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)Primarily consists of miscellaneous businesses with an average investment of $4,166 per property.

As of September 30, 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	14	76,170	$	1,575	0.4%	0.4%
2027	31	919,786	10,968		2.8%	3.2%
2028	20	586,419	9,529		2.4%	5.6%
2029	78	622,283	10,708		2.7%	8.3%
2030	24	269,526	5,874		1.5%	9.8%
2031	69	719,312	9,636		2.4%	12.2%
2032	26	299,670	4,703		1.2%	13.4%
2033	203	5,338,721	274,609		69.4%	82.8%
2034	23	293,210	5,924		1.5%	84.3%
2035	48	1,188,024	22,211		5.6%	89.9%
2036	49	509,395	9,979		2.5%	92.4%
2037	15	494,359	4,039		1.0%	93.4%
2038	7	47,654	1,284		0.3%	93.7%
2039	14	241,746	4,891		1.2%	94.9%
2040	33	223,031	6,043		1.5%	96.4%
2041	11	222,691	3,222		0.8%	97.2%
2042	15	288,309	2,385		0.6%	97.8%
2043	7	127,440	2,233		0.6%	98.4%
2044	2	93,010	278		0.1%	98.5%
2045	22	188,018	4,912		1.2%	99.7%
2046	1	6,500	216		0.1%	99.8%
Thereafter	3	219,237	273		0.2%	100.0%
Total	715	12,974,511	$	395,492	100.0%

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

As of September 30, 2026, shown below is the list of our top 10 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	56	1,182,445	$	35,430	9.0%
Ohio	35	1,268,678	28,146		7.1%
Illinois	50	970,421	27,808		7.0%
California	22	399,045	26,494		6.7%
Georgia	69	573,419	20,835		5.3%
Florida	44	576,815	18,325		4.6%
Arizona	23	514,480	17,994		4.5%
Pennsylvania	27	506,563	16,045		4.1%
Indiana	36	562,721	15,781		4.0%
New Mexico	18	251,172	12,564		3.2%
Other	360	6,736,573	176,070		44.5%
Total	740	13,542,332	$	395,492	100.0%

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	Three Months Ended September 30,
	Service Level	No. of Hotels		Occupancy						ADR				RevPAR
Brand				2026		2025		Change		2026	2025	Change		2026		2025		Change
Retained Hotels:
Royal Sonesta Hotels®	Full Service	14	4,821	70.7	%	68.4	%	2.3 pts		$242.47	$231.59	4.7	%	$	171.32	$	158.30	8.2	%
Sonesta Hotels & Resorts®	Full Service	18	6,040	69.3	%	67.7	%	1.6 pts		169.72	163.30	3.9	%	117.67		110.52		6.5	%
Radisson® Hotels & Resorts	Full Service	5	1,149	68.3	%	61.6	%	6.7 pts		152.98	153.93	(0.6)	%	104.42		94.78		10.2	%
Country Inn & Suites® by Radisson	Full Service	2	346	82.8	%	80.3	%	2.5 pts		163.79	158.34	3.4	%	135.58		127.10		6.7	%
Full Service Total/Average		39	12,356	70.1	%	67.7	%	2.4 pts		196.60	189.22	3.9	%	137.86		128.15		7.6	%
Sonesta ES Suites®	Extended Stay	7	958	87.2	%	81.0	%	6.2 pts		153.62	151.09	1.7	%	133.95		122.45		9.4	%
Sonesta Select®	Select Service	7	1,028	77.3	%	68.9	%	8.4 pts		145.96	142.76	2.2	%	112.84		98.41		14.7	%
Sonesta Simply Suites®	Extended Stay	7	1,144	73.6	%	73.1	%	0.5 pts		132.26	125.04	5.8	%	97.36		91.35		6.6	%
Hyatt Place®	Select Service	17	2,107	77.3	%	71.2	%	6.1 pts		122.61	119.27	2.8	%	94.72		84.95		11.5	%
Focused Service Total/Average		38	5,237	78.3	%	73.0	%	5.3 pts		135.43	131.35	3.1	%	106.03		95.85		10.6	%
Retained Hotels Total/Average		77	17,593	72.6	%	69.3	%	3.3 pts		$176.95	$171.08	3.4	%	$	128.38	$	118.53	8.3	%

Exit Hotels:
Royal Sonesta Hotels®	Full Service	2	581	62.9	%	55.9	%	7.0 pts		$141.26	$144.08	(2.0)	%	$88.90		$80.50		10.4	%
Sonesta Hotels & Resorts®	Full Service	2	600	50.2	%	52.1	%	(1.9) pts		108.61	107.32	1.2	%	54.49		55.87		(2.5)	%
Crowne Plaza®	Full Service	1	495	68.3	%	65.6	%	2.7 pts		139.29	150.00	(7.1)	%	95.09		98.36		(3.3)	%
Full Service Total/Average		5	1,676	59.9	%	57.4	%	2.5 pts		130.82	134.14	(2.5)	%	78.41		76.96		1.9	%
Sonesta ES Suites®	Extended Stay	3	384	82.5	%	79.4	%	3.1 pts		117.45	120.55	(2.6)	%	96.89		95.66		1.3	%
Sonesta Simply Suites®	Extended Stay	2	244	82.5	%	78.1	%	4.4 pts		80.82	82.58	(2.1)	%	66.71		64.54		3.4	%
Focused Service Total/Average		5	628	82.5	%	78.9	%	3.6 pts		103.21	105.94	(2.6)	%	85.17		83.57		1.9	%
Exit Hotels Total/Average		10	2,304	66.1	%	63.2	%	2.9	pts	121.42	124.55	(2.5)	%	80.25		78.76		1.9	%

Retained & Exit Hotels Total/Average		87	19,897	71.8	%	68.6	%	3.2 pts		$171.03	$166.11	3.0	%	$	122.81	$	113.93	7.8	%

*Includes results of all hotels owned as of September 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 and seven hotels managed by Radisson that we will continue to own after the Exit Hotels are sold. Exit Hotels represents eight hotels sold in October 2026, as well as one hotel managed by Sonesta and one hotel managed by IHG that are currently at various stages of being sold.


Retained & Exit Hotels*			No. of Rooms or Suites	Nine Months Ended September 30,
	Service Level	No. of Hotels		Occupancy						ADR				RevPAR
Brand				2026		2025		Change		2026	2025	Change		2026		2025		Change
Retained Hotels:
Royal Sonesta Hotels®	Full Service	14	4,821	67.3	%	64.7	%	2.6 pts		$251.85	$244.02	3.2	%	$	169.59	$	157.84	7.4	%
Sonesta Hotels & Resorts®	Full Service	18	6,040	66.8	%	63.5	%	3.3 pts		177.15	173.82	1.9	%	118.39		110.33		7.3	%
Radisson® Hotels & Resorts	Full Service	5	1,149	68.3	%	62.0	%	6.3 pts		157.72	153.67	2.6	%	107.77		95.22		13.2	%
Country Inn & Suites® by Radisson	Full Service	2	346	73.5	%	68.7	%	4.8 pts		149.00	146.38	1.8	%	109.52		100.61		8.9	%
Full Service Total/Average		39	12,356	67.4	%	64.0	%	3.4 pts		203.58	198.87	2.4	%	137.12		127.18		7.8	%
Sonesta ES Suites®	Extended Stay	7	958	81.0	%	76.6	%	4.4 pts		154.43	151.22	2.1	%	125.14		115.77		8.1	%
Sonesta Select®	Select Service	7	1,028	71.6	%	67.5	%	4.1 pts		136.91	136.30	0.4	%	98.08		91.94		6.7	%
Sonesta Simply Suites®	Extended Stay	7	1,144	71.1	%	71.3	%	(0.2) pts		126.61	123.54	2.5	%	90.07		88.09		2.2	%
Hyatt Place®	Select Service	17	2,107	73.8	%	69.4	%	4.4 pts		125.02	122.90	1.7	%	92.25		85.29		8.2	%
Focused Service Total/Average		38	5,237	74.1	%	70.7	%	3.4 pts		133.49	131.16	1.8	%	98.93		92.78		6.6	%
Retained Hotels Total/Average		77	17,593	69.4	%	66.0	%	3.4 pts		$181.28	$177.25	2.3	%	$	125.75	$	116.94	7.5	%

Exit Hotels:
Royal Sonesta Hotels®	Full Service	2	581	48.8	%	42.9	%	5.9 pts		$136.62	$137.98	(1.0)	%	$66.63		$59.23		12.5	%
Sonesta Hotels & Resorts®	Full Service	2	600	49.4	%	53.2	%	(3.8) pts		107.60	106.72	0.8	%	53.15		56.81		(6.4)	%
Crowne Plaza®	Full Service	1	495	71.4	%	68.9	%	2.5 pts		140.38	144.53	(2.9)	%	100.29		99.55		0.7	%
Full Service Total/Average		5	1,676	55.7	%	54.3	%	1.4 pts		128.83	129.46	(0.5)	%	71.75		70.27		2.1	%
Sonesta ES Suites®	Extended Stay	3	384	75.1	%	75.6	%	(0.5) pts		116.79	118.92	(1.8)	%	87.74		89.86		(2.4)	%
Sonesta Simply Suites®	Extended Stay	2	244	74.3	%	77.4	%	(3.1) pts		81.29	80.82	0.6	%	60.37		62.58		(3.5)	%
Focused Service Total/Average		5	628	74.8	%	76.3	%	(1.5) pts		103.09	103.90	(0.8)	%	77.10		79.26		(2.7)	%
Exit Hotels Total/Average		10	2,304	60.9	%	60.3	%	0.6	pts	120.21	120.64	(0.4)	%	73.21		72.72		0.7	%

Retained & Exit Hotels Total/Average		87	19,897	68.4	%	65.3	%	3.1 pts		$174.99	$171.20	2.2	%	$	119.67	$	111.82	7.0	%

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.

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, plus real estate depreciation and amortization, excluding any gain or loss on sale of real estate and any loss on impairment of real estate assets, 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 and nine months ended September 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 September 30,				Nine Months Ended September 30,
		2026		2025		2026		2025
Net loss		$	(87,940)	$	(46,945)	$	(462,956)	$	(201,539)
Add (less):	Depreciation and amortization	72,152		74,453		225,078		238,583
	Loss (gain) on sale of real estate, net	1,103		(25,256)		131		(25,846)
	Loss on asset impairment	53,691		27,067		270,883		81,788
	Adjustments to reflect our share of FFO attributable to an investee	1,184		1,113		3,669		3,495
FFO		40,190		30,432		36,805		96,481
Add (less):	Loss on early extinguishment of debt, net	335		529		61,589		529
	Transaction related costs	1,857		2,683		4,829		4,139
	Adjustments to reflect our share of Normalized FFO attributable to an investee	1,457		266		3,085		1,200
Normalized FFO		$	43,839	$	33,910	$	106,308	$	102,349

Weighted average common shares outstanding (basic and diluted)		129,262		33,217		97,227		33,163

Basic and diluted per common share amounts:
	Net loss	$	(0.68)	$	(1.41)	$	(4.76)	$	(6.08)
	FFO	$	0.31	$	0.92	$	0.38	$	2.91
	Normalized FFO	$	0.34	$	1.02	$	1.09	$	3.09
	Distributions declared per share	$	0.05	$	0.05	$	0.15	$	0.15

Service Properties Trust published this content on November 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 04, 2026 at 22:37 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]