10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2019

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-11527

SERVICE PROPERTIES TRUST

(Exact Name of Registrant as Specified in Its Charter)

Maryland	04-3262075
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634

(Address of Principal Executive Offices) (Zip Code)

617-964-8389

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of each Exchange on which Registered
Common Shares of Beneficial Interest	SVC	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒  No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐  No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting common shares of beneficial interest, $.01 par value, or common shares, of the registrant held by non-affiliates was approximately $4.1 billion based on the $25.00 closing price per common share on The Nasdaq Stock Market LLC on June 28, 2019. For purposes of this calculation, an aggregate of 2,104,281 common shares held directly by, or by affiliates of, the trustees and the executive officers of the registrant have been included in the number of common shares held by affiliates.

Number of the registrant’s common shares outstanding as of February 26, 2020: 164,561,654.

References in this Annual Report on Form 10-K to the Company, SVC, we, us or our include Service Properties Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated by reference to our definitive Proxy Statement for the 2020 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days after the fiscal year ended December 31, 2019.

WARNING CONCERNING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever we use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will,” “may” and negatives or derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon our present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Forward-looking statements in this Annual Report on Form 10-K relate to various aspects of our business, including:

• Our managers’ and tenants’ abilities to pay the contractual amounts of returns, rents or other obligations due to us,

• Potential defaults on, or non-renewal of, leases by our tenants,

• Decreased rental rates or increased vacancies,

• Our sales and acquisitions of properties,

• Our ability to compete for acquisitions effectively,

• Our policies and plans regarding investments, financings and dispositions,

• Our ability to pay distributions to our shareholders and to sustain the amount of such distributions,

• Our ability to pay interest on and principal of our debt,

• Our ability to raise debt or equity capital,

• Our ability to appropriately balance our use of debt and equity capital,

• Our intent to make improvements to certain of our properties and the success of our hotel renovations,

• Our ability to engage and retain qualified managers and tenants for our hotels and net lease properties on satisfactory terms,

• Our ability to diversify our sources of rents and returns that improve the security of our cash flows,

• The future availability of borrowings under our revolving credit facility,

• Our credit ratings,

• Our expectation that we benefit from our relationships with The RMR Group Inc., or RMR Inc.,

• Our qualification for taxation as a real estate investment trust, or REIT,

• Changes in federal or state tax laws, and

• Other matters.

Our actual results may differ materially from those contained in or implied by our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. Risks, uncertainties and other factors that could have a material adverse effect on our forward-looking statements and upon our business, results of operations, financial condition, funds from operations, or FFO, available for common shareholders, normalized FFO available for common shareholders, cash flows, liquidity and prospects include, but are not limited to:

• The impact of conditions in the economy and the capital markets on us and our managers and tenants,

• Competition within the real estate, hotel, transportation and travel center and other industries in which our tenants operate, particularly in those markets in which our properties are located,

• Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,

• Limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes,

• Acts of terrorism, outbreaks of so-called pandemics or other manmade or natural disasters beyond our control, and

• Actual and potential conflicts of interest with our related parties, including our managing trustees, TravelCenters of America Inc., or TA, Sonesta Holdco Corporation, or Sonesta, RMR Inc., The RMR Group LLC, or RMR LLC, and others affiliated with them.

i

For example:

• Our ability to make future distributions to our shareholders and to make payments of principal and interest on our indebtedness depends upon a number of factors, including our future earnings, the capital costs we incur to acquire and maintain our properties and our working capital requirements. We may be unable to pay our debt obligations or to maintain our current rate of distributions on our common shares and future distributions may be reduced or eliminated,

• Certain of our aggregate annual minimum returns and rents are secured by guarantees or security deposits from our managers and tenants. This may imply that these minimum returns and rents will be paid. In fact, certain of these guarantees and security deposits are limited in amount and duration and all the guarantees are subject to the guarantors’ abilities and willingness to pay. We cannot be sure of the future financial performance of our properties and whether such performance will cover our minimum returns and rents, whether the guarantees or security deposits will be adequate to cover future shortfalls in the minimum returns or rents due to us which they guarantee or secure, or regarding our managers’, tenants’ or guarantors’ future actions if and when the guarantees and security deposits expire or are depleted or their abilities or willingness to pay minimum returns and rents owed to us. Moreover, the security deposits we hold are not segregated from our other assets and although the application of security deposits to cover payment shortfalls will result in us recording income, but will not result in us receiving additional cash. Because we do not receive any additional cash payment as we apply security deposits to cover payment shortfalls, the failure of our managers or tenants to pay minimum returns or rents due to us may reduce our cash flows and our ability to pay distributions to shareholders,

• We have no guarantees or security deposits for the minimum returns due to us from our Sonesta agreement or under our Wyndham agreement. Accordingly, we may receive amounts that are less than the contractual minimum returns stated in these agreements,

• We have recently renovated certain hotels and are currently renovating additional hotels. We currently expect to fund approximately $150.0 million in 2020 for renovations and other capital improvement costs at certain of our hotels. The cost of capital projects associated with such renovations may be greater than we currently anticipate. Operating results at our hotels may decline as a result of having rooms out of service or other disruptions during renovations. Also, while our funding of these capital projects will cause our contractual minimum returns to increase, the hotels’ operating results may not increase or may not increase to the extent that the minimum returns increase. Accordingly, coverage of our minimum returns at these hotels may remain depressed for an extended period,

• If general economic activity in the country declines, the operating results of certain of our properties may decline, the financial results of our managers and our tenants may suffer and these managers and tenants may be unable to pay our returns or rents. Also, depressed operating results from our properties for extended periods may result in the operators of some or all of our properties becoming unable or unwilling to meet their obligations or their guarantees and security deposits we hold may be exhausted,

• Hotel and other competitive forms of temporary lodging supply (for example, Airbnb) have been increasing and may affect our hotel operators’ ability to grow average daily rate, or ADR, and occupancy, and ADR and occupancy could decline due to increased competition which may cause our hotel operators to become unable to pay our returns or rents,

• If the current level of commercial activity in the country declines, if the price of diesel fuel increases significantly, if fuel conservation measures are increased, if freight business is directed away from trucking, if TA is unable to effectively compete or operate its business, if fuel efficiencies, the use of alternative fuels or transportation technologies reduce the demand for products and services TA sells or for various other reasons, TA may become unable to pay current and deferred rents due to us,

• Cash flows generated by certain tenant businesses may not be sufficient for a tenant to meet its obligations to us. Our tenants’ failures to successfully operate their businesses could materially and adversely affect us.

• Our ability to grow our business and increase our distributions depends in large part upon our ability to buy properties that generate returns or can be leased for rents which exceed our operating and capital costs. We may be unable to identify properties that we want to acquire and we may fail to reach agreement with the sellers and complete the purchases of any properties we do want to acquire. In addition, any properties we may acquire may not generate returns or rents which exceed our operating and capital costs,

• We believe that our portfolio agreements include diverse groups of properties. Our portfolio agreements may not increase the security of our cash flows or increase the likelihood our agreements will be renewed as we expect,

• We expect that most of our acquisition efforts will focus on hotel and net lease service-oriented based properties; however, the focus of our acquisition efforts may include other types of properties,

ii

• To reduce our leverage, we have sold assets and have targeted additional assets to sell. We may not complete the sales of any additional assets we plan to sell, and we may determine to sell fewer, additional or other assets than those we may target for sale. Also, we may sell assets at prices that are less than we expect and less than their carrying values and we may incur losses on these sales or with respect to these assets, or may not ultimately use any proceeds we may receive to reduce debt leverage,

• Contingencies in our acquisition and sale agreements may not be satisfied and any expected acquisitions and sales and any related management or lease arrangements we expect to enter may not occur, may be delayed or the terms of such transactions or arrangements may change,

• At December 31, 2019, we had $27.6 million of cash and cash equivalents, $623.0 million available under our $1.0 billion revolving credit facility and security deposits and guarantees covering some of our minimum returns and rents. These statements may imply that we have sufficient working capital and liquidity. However, our managers and tenants may not be able to fund minimum returns and rents due to us from operating our properties or from other resources. In the past and currently, certain of our tenants and managers have in fact not paid the minimum amounts due to us from their operations of our leased or managed properties. Also, certain of the security deposits and guarantees we have to cover any such shortfalls are limited in amount and duration, and any security deposits we apply for such shortfalls do not result in additional cash flows to us. Our properties require, and we have agreed to provide, significant funding for capital improvements, renovations and other matters. Accordingly, we may not have sufficient working capital or liquidity,

• We may be unable to repay our debt obligations when they become due,

• We intend to conduct our business activities in a manner that will afford us reasonable access to capital for investment and financing activities. However, we may not succeed in this regard and we may not have reasonable access to capital,

• Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions that we may be unable to satisfy,

• Actual costs under our revolving credit facility or other floating rate debt will be higher than LIBOR plus a premium because of fees and expenses associated with such debt,

• The maximum borrowing availability under our revolving credit facility and term loan may be increased to up to $2.3 billion on a combined basis in certain circumstances; however, increasing the maximum borrowing availability under our revolving credit facility and term loan is subject to our obtaining additional commitments from lenders, which may not occur,

• The premiums used to determine the interest rate payable on our revolving credit facility and term loan and the facility fee payable on our revolving credit facility are based on our credit ratings. Changes in our credit ratings may cause the interest and fees we pay to increase,

• We have the option to extend the maturity date of our revolving credit facility upon payment of a fee and meeting other conditions; however, the applicable conditions may not be met,

• The business and property management agreements between us and RMR LLC have continuing 20 year terms. However, those agreements permit early termination in certain circumstances. Accordingly, we cannot be sure that these agreements will remain in effect for continuing 20 year terms,

• This Annual Report on Form 10-K states that the transactions contemplated by our transaction agreement with Sonesta and the terms thereof were evaluated, negotiated and recommended to our Board of Trustees for approval by a special committee of our Board of Trustees comprised solely of our Independent Trustees and were separately approved and adopted by our Independent Trustees and by our Board of Trustees and that Citigroup Global Markets Inc. acted as a financial advisor to us. Despite this process, we could be subject to claims challenging the transaction agreement or the restructuring of our business arrangements with Sonesta or our entry into the transaction agreement and related agreements because of the multiple relationships among us, Sonesta, Adam Portnoy and their related persons and entities or other reasons, and defending even meritless claims could be expensive and distracting to management,

• We believe that our relationships with our related parties, including RMR LLC, RMR Inc., TA, Sonesta and others affiliated with them may benefit us and provide us with competitive advantages in operating and growing our business. However, the advantages we believe we may realize from these relationships may not materialize, and

iii

• We are currently marketing 53 hotels for sale or rebranding. In addition, we expect to sell, rebrand or repurpose all 39 of the extended stay hotels currently managed by Sonesta. There can be no assurance that rebranding, repurposing or selling any of these hotels will result in improved performance. In fact, rebranding or repurposing hotels will result in short term disruption to operations. In addition, we cannot be sure we will be able to sell any of these hotels and any sales we may complete may be at prices less than we expect and less than net book value. We may incur losses in connection with any rebranding, repurposing or sales of these hotels or as a result of any plan to rebrand, repurpose or sell these hotels.

Currently unexpected results could occur due to many different circumstances, some of which are beyond our control, such as acts of terrorism, natural disasters, changes in our managers’ or tenants’ financial conditions, the market demand for hotel rooms or the goods and services provided at our properties or changes in capital markets or the economy generally.

The information contained elsewhere in this Annual Report on Form 10-K or in our other filings with the Securities and Exchange Commission, or the SEC, including under the caption “Risk Factors,” or incorporated herein or therein, identifies other important factors that could cause differences from our forward-looking statements. Our filings with the SEC are available on the SEC’s website at www.sec.gov.

You should not place undue reliance upon our forward-looking statements.

Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

Statement Concerning Limited Liability

The Amended and Restated Declaration of Trust establishing Service Properties Trust dated August 21, 1995, as amended and supplemented, as filed with the State Department of Assessments and Taxation of Maryland, provides that no trustee, officer, shareholder, employee or agent of Service Properties Trust shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, Service Properties Trust. All persons dealing with Service Properties Trust in any way shall look only to the assets of Service Properties Trust for the payment of any sum or the performance of any obligation.

iv

SERVICE PROPERTIES TRUST

2019 FORM 10-K ANNUAL REPORT

Table of Contents

		Page
	Part I
Item 1.	Business	1
Item 1A.	Risk Factors	31
Item 1B.	Unresolved Staff Comments	55
Item 2.	Properties	56
Item 3.	Legal Proceedings	57
Item 4.	Mine Safety Disclosures	57
	Part II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	58
Item 6.	Selected Financial Data	58
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	59
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	82
Item 8.	Financial Statements and Supplementary Data	84
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	84
Item 9A.	Controls and Procedures	84
Item 9B.	Other Information	84
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	86
Item 11.	Executive Compensation	86
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	86
Item 13.	Certain Relationships and Related Transactions, and Director Independence	86
Item 14.	Principal Accounting Fees and Services	86
	Part IV
Item 15.	Exhibits, Financial Statement Schedules	87
Item 16.	Form 10-K Summary	92

v

PART I

Item 1. Business

The Company. We are a real estate investment trust, or REIT, formed in 1995 under the laws of the State of Maryland. As of December 31, 2019, we owned 329 hotels with 51,349 rooms or suites and 816 service-oriented retail properties with approximately 14.9 million square feet. Our principal place of business is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, and our telephone number is (617) 964-8389.

On September 20, 2019, we acquired a 767-property net lease portfolio located in 45 states from Spirit MTA REIT, a Maryland REIT, (NYSE: SMTA), or SMTA, for an aggregate transaction value of $2.5 billion, or the SMTA Transaction. The portfolio consisted of 767 service-oriented retail properties net leased to tenants in 23 distinct industries and 163 brands that include quick service and casual dining restaurants, movie theaters, health and fitness, automotive parts and services and other service-oriented and necessity-based industries.

Our principal internal growth strategy is to apply asset management strategies to aid our hotel operators in improving performance and to participate through additional returns and percentage rents in increases in the operating income of our managed hotel properties. We actively manage our net lease portfolio by identifying asset recycling opportunities, monitoring the credit of our tenants and engaging in early lease renewal discussions. Our asset management team also works closely with our operators to ensure our hotels and net lease properties are well maintained and that capital investments are well planned and executed efficiently in order to maximize the long term value of our properties.

Our external growth strategy is defined by our acquisition, disposition and financing policies as described below. Our investment, financing and disposition policies and business strategies are established by our Board of Trustees and may be changed by our Board of Trustees at any time without shareholder approval.

HOTEL PORTFOLIO

As of January 1, 2020, we owned 329 hotels which were managed by or leased to separate subsidiaries of InterContinental Hotels Group, plc, or IHG, Marriott International, Inc., or Marriott, Sonesta International Hotels Corporation, or Sonesta (used to refer to subsidiaries of Sonesta Holdco Corporation as of February 27, 2020), Hyatt Hotels Corporation, or Hyatt, Radisson Hospitality, Inc., or Radisson, and Wyndham Hotels & Resorts, Inc., or Wyndham under six operating agreements. Our hotel operating agreements have initial terms expiring between 2020 and 2037. Each of these agreements is for between nine and 122 of our hotels. In general, these agreements contain renewal options for all, but not less than all, of the affected properties included in each agreement, and the renewal terms range between 15 to 60 years. Most of these agreements require the third party manager or tenant to: (1) make payments to us of minimum returns or minimum rents; (2) deposit a percentage of total hotel sales into reserves established for the regular refurbishment of our hotels, or FF&E reserves; and (3) for our managed hotels, make payments to our wholly owned “taxable REIT subsidiaries” as defined in Section 856(l) of the U.S. Internal Revenue Code of 1986, as amended, or TRSs, of additional returns to the extent of available cash flows after payment of operating expenses, funding of the FF&E reserves, payment of our minimum returns, payment of management fees and, in certain instances, replenishment of security deposits or guarantees. Some of our managers or tenants or their affiliates have provided deposits or guarantees to secure their obligations to pay us. See “Principal Management Agreement or Lease Features” below for more information regarding our agreements.

See Note 5 of the Notes to Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more information about changes to our Marriott and Sonesta agreements.

1

The following table summarizes the brand affiliations under which our hotels operate as of December 31, 2019:

		Number of	Number of
Brand	Manager	Properties	Rooms or Suites	Investment (1)
Courtyard by Marriott®	Marriott	71	10,265	$	1,020,831
Royal Sonesta Hotels®	Sonesta	7	2,666	885,655
Sonesta ES Suites®	Sonesta	39	4,731	649,316
Crowne Plaza®	IHG	11	4,141	643,913
Candlewood Suites®	IHG	61	7,553	603,372
Residence Inn by Marriott®	Marriott	35	4,488	562,374
Kimpton® Hotels & Restaurants	IHG	5	1,421	482,474
Sonesta Hotels & Resorts®	Sonesta	7	2,135	428,526
Staybridge Suites®	IHG	20	2,481	355,159
Hyatt Place®	Hyatt	22	2,724	301,942
Radisson® Hotels & Resorts and Radisson Blu®	Radisson	6	1,509	235,724
InterContinental Hotels and Resorts®	IHG	3	804	219,021
Wyndham Hotels and Resorts® and Wyndham Grand®	Wyndham	4	1,158	115,401
Marriott® Hotel	Marriott	2	748	131,798
TownePlace Suites by Marriott®	Marriott	12	1,321	118,926
Hawthorn Suites®	Wyndham	16	1,756	102,363
Holiday Inn®	IHG	3	754	73,883
Country Inns & Suites® by Radisson	Radisson	3	430	53,415
SpringHill Suites by Marriott®	Marriott	2	264	25,906
Total Hotels		329	51,349	$	7,009,999

(1) Represents historical cost of our properties plus capital improvements funded by us less impairment write-downs, if any, and excludes capital improvements made from FF&E reserves, funded from hotel operations that do not result in increases in minimum returns or rents.

The following table details the chain scale and service level of our hotels, as categorized by STR, Inc., or STR, a data benchmarking and analytic provider for the lodging industry, as of December 31, 2019:

	Service Level
Chain Scale (1)	Full Service	Select Service	Extended Stay	Total
Luxury	10	—	—	10
Upper Upscale	15	—	—	15
Upscale	20	95	94	209
Upper Midscale	6	—	12	18
Midscale	—	—	77	77
Totals	51	95	183	329

(1) Chain scales are defined by STR. Chain scale segments are grouped primarily according to average room rates.

NET LEASE PORTFOLIO

As of December 31, 2019, we owned 816 service-oriented retail properties with approximately 14.9 million square feet that are primarily subject to “triple net” leases, or leases where the tenant is generally responsible for the payment of operating expenses and capital expenditures of the property during the lease term. In general, our lease agreements include renewal terms, require the tenant to make rent payments to us and include future fixed rent increases, rent increases based on the consumer price index, or CPI, or percentage rent. As of December 31, 2019, our net lease portfolio was occupied by 194 tenants with a weighted (by annual minimum rent) lease term of 11.4 years, operating under 131 brands in 23 distinct industries. The portfolio is leased to tenants that include travel centers, quick service and casual dining restaurants, movie theaters, health and fitness centers, automotive parts and services and other businesses in service-oriented and necessity-based industries across 44 states.

TravelCenters of America Inc. and its subsidiaries, or TA, is our largest tenant. As of December 31, 2019, we leased 179 travel centers to TA under five leases that expire between 2029 and 2035; 134 of our travel centers are operated under the TravelCenters of America^®, or TA^®, brand name and 45 are operated under the Petro Stopping Centers^®, or Petro^®, brand name. As of December 31, 2019, we have invested $2.3 billion in 134 TA^® branded properties with 3,720,693 square feet and $1.0 billion in 45 Petro^® branded properties with 1,470,004 square feet.

2

Substantially all our travel centers are full service sites located at or near an interstate highway exit and offer fuel and non-fuel products and services 24 hours per day, 365 days per year. Our typical travel center includes over 25 acres of land with parking for approximately 200 tractor trailers and approximately 100 cars; a full service restaurant and one or more quick service restaurants which are operated under nationally recognized brands; a truck repair facility and parts store; multiple diesel and gasoline fueling points, including diesel exhaust fluid at the diesel lanes; a travel store; a game room; a lounge and other amenities for professional truck drivers and motorists.

For more information about our net lease portfolio, see Notes 5 and 8 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

PRINCIPAL MANAGEMENT AGREEMENT OR LEASE FEATURES

As of January 1, 2020, our 329 hotels (including one leased hotel) are included in six portfolio agreements; 328 hotels are leased to our wholly owned TRSs and managed by hotel operating companies and one hotel is leased to a hotel operating company. The principal features of hotel agreements are as follows:

• Minimum Returns or Minimum Rent. All of our hotel agreements require our managers or tenants to pay to us annual minimum returns or minimum rent.

• Additional Returns or Percentage Rent. In addition, our hotel agreements provide for payment of additional returns to us generally based on excess cash flows after payment of hotel operating expenses, funding the FF&E reserve, if any, payment of our minimum returns, payment of management fees and, in certain instances, replenishment of the security deposit or guarantee.

• Long Terms. Our hotel management agreements and leases generally have initial terms of 15 years or more. The weighted average term remaining for our hotel agreements (weighted by our investments as of December 31, 2019) is 15.3 years, without giving effect to any renewal options our managers and tenants may have.

• Pooled Agreements. All of our hotel properties are included in one of six agreements. The manager’s or tenant’s obligations with respect to each property in a portfolio agreement are subject to cross default with the obligation with respect to all the other properties in the same portfolio agreement.

• Geographic Diversification. We have broad geographical diversification across our hotel portfolio as a whole as well as within individual hotel portfolio agreements.

• Strategic Locations. Our hotel properties are located in the vicinity of major demand generators such as large suburban office parks, urban centers, airports, medical or educational facilities or major tourist attractions.

• All or None Renewals. All manager or tenant renewal options for each portfolio agreement of our hotel properties may only be exercised on an all or none basis and not for separate properties.

• Property Maintenance. Most of our hotel agreements require the deposit of 5% to 6.5% of annual gross hotel revenues into escrows to fund periodic renovations.

• Security Features. Most of our hotel management agreements include various terms intended to secure the payments to us, including some or all of the following: cash security deposits which we receive but do not escrow; subordination of management fees payable to the operator to some or all of our minimum return or rent; and full or limited guarantees from the manager’s or tenant’s parent company. Four of our six hotel portfolio agreements, a total of 256 hotels, have minimum returns or minimum rents payable to us which are subject to full or limited guarantees or are backed by security deposits. These properties represent 45.2% of our total minimum returns and minimum rents at December 31, 2019. We do not have any security deposits or guarantees for two of our six hotel portfolio agreements, a total of 73 hotels, representing 16.6% of our total annual minimum returns and minimum rents as of December 31, 2019. Accordingly, the minimum returns we are paid under these agreements will depend exclusively upon the performance of the hotels.

• Management Fees. Base and incentive management fees under most of our hotel management agreements are subordinate to payment of our annual minimum returns. Our hotel managers also have the ability to earn incentive management fees generally based on excess cash flows after payment of hotel operating expenses, funding of the required FF&E reserve, if any, payment of our minimum returns, payment of management fees and in certain instances, replenishment of the security deposit or guarantee.

3

In general, our 816 net lease properties are subject to leases pursuant to which the tenants pay fixed annual rents on a monthly, quarterly or semi-annual basis, and also pay or reimburse us for all, or substantially all, property level operating and maintenance expenses, such as real estate taxes, insurance, utilities and repairs, including increases with respect thereto. Our net lease tenants are responsible to maintain the properties including structural and non-structural components. Certain of our net lease properties also have future rent increases included in the leases either at a fixed amount or based on changes in CPI. Certain of our lease agreements also require payment of percentage rent to us based on increases in certain gross property revenues over threshold amounts. Certain of our net lease properties, including all our TA properties, are subject to pooling agreements and include all or none renewal options.

INVESTMENT AND OPERATING POLICIES

Our investment objectives include increasing cash flows from operations from dependable and diverse sources in order to increase per-share distributions to our shareholders. To achieve these objectives, we seek to: maintain a strong capital base of shareholders’ equity; invest in high quality properties operated by qualified operating companies; use moderate debt leverage to fund additional investments which increase cash flows from operations because of positive spreads between our cost of investment capital and investment yields; structure investments which generate a minimum return and provide an opportunity to participate in operating growth at our properties; when market conditions permit, refinance debt with additional equity or long term debt; and pursue diversification so that our cash flows from operations come from diverse properties and operators.

Generally, we provide capital to owners and operators in service related industries who wish to expand their businesses or divest their properties while remaining in the service business. In addition, many other hospitality REITs seek to control the operations of properties in which they invest and generally design their management agreements or leases to capture substantially all net operating income from their properties’ businesses. Most of our agreements with our managers and tenants are designed with the expectation that, over their terms, net operating income from our properties that accrues to the benefit of the operator will generally exceed the amount that would accrue to them under a typical management agreement or lease. We believe that this difference in operating philosophy may afford us a competitive advantage over other REITs in identifying and obtaining high quality investment opportunities on attractive terms, obtaining qualified managers and tenants to operate our properties and increase the dependability of our cash flows used to pay distributions.

Our first investment in travel centers was structured differently than all our other investments. We acquired an operating travel centers business, reorganized the business to retain substantially all of the real estate and then distributed a tenant operating company to our shareholders. We may in the future make investments in this fashion or in a manner different from our other investments.

One of our goals in completing the SMTA Transaction was to acquire single tenant, net lease service-oriented based properties to further diversify our sources of rents and returns with the intention of improving the security of our cash flows.

Because we are a REIT, we generally may not operate our properties. We or our tenants have entered into arrangements for operation of our properties. Under the U.S. Internal Revenue Code of 1986, as amended, or the IRC, we may lease our hotels to one of our TRSs if the hotel is managed by a third party. As of December 31, 2019, 327 of our hotels were leased to our TRSs and managed by third parties. Any income realized by a TRS in excess of the rent paid to us by the subsidiary is subject to income tax at customary corporate rates. As and if the financial performance of the hotels operated for the account of our TRSs improves, these taxes may become material.

Acquisition Policies. We intend to pursue growth through the acquisition of additional properties. Generally, we prefer to purchase multiple properties in one transaction or individual properties that can be added to a pre-existing portfolio agreement because we believe a single management or lease agreement, cross default covenants and all or none renewal rights for multiple properties in diverse locations enhance the credit characteristics and the security of our investments. In implementing our acquisition strategy, we consider a range of factors relating to proposed property purchases including:

• Historical and projected cash flows;

• The competitive market environment and the current or potential market position of each property;

• The tax and regulatory circumstances of the market area in which the property is located;

• The availability of a qualified manager or lessee;

• The financial strength of the proposed manager or lessee;

• The amount and type of financial support available from the proposed manager or lessee;

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• The property’s design, construction quality, physical condition and age and expected capital expenditures that may be needed to maintain the property or to enhance its operation;

• The size of the property;

• The location, type of property, market conditions and demographics of the area where it is located and surrounding demand generators;

• The estimated replacement cost, capital improvement requirements and proposed acquisition price of the property;

• Our weighted average long term cost of capital compared to projected returns we may realize by owning the property;

• The reputation of any operator with which the property is or may become affiliated;

• The level of services and amenities offered at the property;

• The proposed management agreement or lease terms;

• The brand under which the property operates or is expected to operate;

• The strategic fit of the property or investment with the rest of our portfolio and our own plans;

• The possibility that technological changes may affect the business operated at the property;

• Other possible uses of the property if the current use is no longer viable; and

• The existence of alternative sources, uses or needs for our capital and our debt leverage.

In determining the competitive position of a property, we examine the proximity and convenience of the property to its expected customer base, the number and characteristics of competitive properties within the property’s market area and the existence of barriers to entry for competitive properties within that market, including site availability and zoning restrictions. While we have historically focused on the acquisition of upscale limited service, extended stay and full service hotel properties and full service travel centers, we consider acquisitions in all segments of the hospitality industry. We expect most of our acquisition efforts will focus on hotel and net lease based properties; however, we may consider acquiring other types of properties, as well. An important part of our acquisition strategy is to identify and select or create qualified, experienced and financially stable operators.

Whenever we purchase an individual property or a small number of properties, we prefer arrangements in which these properties are added to agreements covering, and operated in combination with, properties we already own, but we may not always do so. We believe portfolios of diverse groups of properties may increase the security of our cash flows and likelihood our agreements will be renewed.

We have no policies which specifically limit the percentage of our assets that may be invested in any individual property, in any one type of property, in properties managed by or leased to any one entity, in properties operated under any one brand, in properties managed by or leased to an affiliated group of entities or in securities of one or more persons.

Other Investments. We prefer wholly owned investments in fee interests. However, we may invest in leaseholds, joint ventures, mortgages and other real estate interests. We may invest or enter into real estate joint ventures if we conclude that we may benefit from the participation of co-venturers or that the opportunity to participate in the investment is contingent on the use of a joint venture structure. We may invest in participating, convertible or other types of mortgages if we conclude that we may benefit from the cash flows or appreciation in the value of the mortgaged property. Convertible mortgages are similar to equity participation because they permit lenders to either participate in increasing revenues from the property or convert some or all of that mortgage into equity ownership interests. At December 31, 2019, we owned no convertible mortgages or joint venture interests.

We have in the past considered, and may in the future consider, the possibility of entering into mergers or strategic combinations with other companies. Our principal goal of any such transactions will be to increase our cash flows from operations and to further diversify our revenue sources.

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We own common shares of TA and Sonesta. We may in the future acquire additional common shares of TA and Sonesta or securities of other entities, including entities engaged in real estate activities or we may sell these common shares. We may invest in the securities of other entities for the purpose of exercising control or otherwise, make loans to other persons or entities, engage in the sale of investments, offer securities in exchange for property or repurchase our securities.

We may not achieve some or all of our investment objectives.

Disposition Policies. We generally consider ourselves to be a long term owner of properties and are more interested in the long term earnings potential of our properties than selling properties for short term gains. However, we seek to strategically sell assets from time to time as part of managing our leverage, capital recycling, or as part of long term financing of other acquisitions. During 2019, we sold 150 net lease properties for aggregate proceeds of $821.2 million. We have previously announced our intention to sell approximately $300 million of hotel assets to reduce our financial leverage. We are currently marketing for sale or rebranding 20 Wyndham branded hotels with an aggregate carrying value of $111.3 million as of December 31, 2019, and 33 Marriott branded hotels with an aggregate carrying value of $224.9 million as of December 31, 2019. We also expect to sell, rebrand or repurpose 39 Sonesta branded hotels with an aggregate carrying value of $480.5 million. As of December 31, 2019, we had 19 net lease properties with a carrying value of $87.5 million classified as held for sale. For more information on these disposition activities, please refer to Note 4 in our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K. We currently make decisions to dispose of properties based on factors including, but not limited to, the following:

• The property’s current and expected future performance;

• The competition and demand generators near the property;

• The proposed or expected sale price;

• The age and capital required to maintain the property;

• The strategic fit of the property with the rest of our portfolio and with our plans;

• The manager’s or tenant’s desire to operate or cease operation of the property;

• The remaining agreement term of the property, including the likelihood of a tenant exercising any renewal options;

• Our intended use of the proceeds we may realize from the sale of a property;

• The existence of alternative sources, uses or needs for our capital and our debt leverage; and

• The tax implications to us and our shareholders of any proposed disposition.

Our Board of Trustees may change our investment and operating policies at any time without a vote of, or notice to, our shareholders.

FINANCING POLICIES

To maintain our qualification for taxation as a REIT under the IRC, we must distribute at least 90% of our annual REIT taxable income (excluding net capital gains). Accordingly, we generally will not be able to retain sufficient cash to fund our operations, repay our debts, invest in our properties and fund acquisitions and development or redevelopment efforts. Instead, we expect to repay our debts, invest in our properties and fund acquisitions and development or redevelopment efforts with borrowings under our revolving credit facility, proceeds from equity or debt securities we may issue (domestically or in foreign markets), including in subsidiaries, proceeds from our asset sales, or retained cash from operations that may exceed distributions paid.

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We may seek to obtain other lines of credit or to issue securities senior to our common shares, including preferred shares of beneficial interest and debt securities, either of which may be convertible into common shares or be accompanied by warrants to purchase common shares, or to engage in transactions which may involve a sale or other conveyance or contribution of hotel, net lease or other properties or assets to subsidiaries or to other affiliates or unaffiliated entities. We may finance acquisitions, in whole or in part, by among other possible means, exchanging properties, issuing additional common shares or other securities or assuming outstanding mortgage debt on the acquired properties. We may also place new mortgages on our existing properties as a means of financing. The proceeds from any of our financings may be used to pay distributions, to provide working capital, to refinance existing indebtedness or to finance acquisitions and expansions of existing or new properties. For further information regarding our financing sources and activities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Investment and Financing Liquidity and Capital Resources” in this Annual Report on Form 10-K.

Although there are no limitations in our organizational documents on the amount of indebtedness we may incur, our $1.0 billion unsecured revolving credit facility, our unsecured term loan and our unsecured senior notes indentures and their supplements contain financial covenants which, among other things, restrict our ability to incur indebtedness and require us to maintain certain financial ratios. However, we may seek to amend these covenants or seek replacement financings with less restrictive covenants. In the future, we may decide to seek changes in the financial covenants which currently restrict our debt leverage based upon then current economic conditions, the relative availability and costs of debt versus equity capital and our need for capital to take advantage of acquisition opportunities or otherwise.

Generally, we intend to manage our leverage in a way that may allow us to maintain “investment grade” ratings from nationally recognized debt rating organizations; however, we cannot be sure that we will be able to maintain our investment grade ratings.

Our Board of Trustees may change our financing policies at any time without a vote of, or notice to, our shareholders.

OTHER INFORMATION

Our Manager.  The RMR Group Inc., or RMR Inc., is a holding company and substantially all of its business is conducted by its majority owned subsidiary, The RMR Group LLC, or RMR LLC, a Maryland limited liability company. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer,also serves as an officer and employee of RMR LLC. Our day to day operations are conducted by RMR LLC. RMR LLC originates and presents investment and divestment opportunities to our Board of Trustees and provides management and administrative services to us. RMR LLC has a principal place of business at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, and its telephone number is (617) 796-8390. RMR LLC or its subsidiaries also act as the manager to Industrial Logistics Properties Trust, or ILPT, Office Properties Income Trust, or OPI, Diversified Healthcare Trust (formerly known as Senior Housing Properties Trust), or DHC, and Tremont Mortgage Trust, or TRMT, and provides management and other services to other private and public companies, including Five Star Senior Living Inc., or Five Star, TA and Sonesta. As of the date of this Annual Report on Form 10-K, the executive officers of RMR LLC are: Adam Portnoy, President and Chief Executive Officer; David M. Blackman, Executive Vice President; Jennifer B. Clark, Executive Vice President, General Counsel and Secretary; Matthew P. Jordan, Executive Vice President, Chief Financial Officer and Treasurer; John G. Murray, Executive Vice President; and Jonathan M. Pertchik, Executive Vice President. Our Chief Financial Officer and Treasurer, Brian E. Donley, is a Vice President of RMR LLC, our Senior Vice President, Ethan S. Bornstein, is a Senior Vice President of RMR LLC and our Vice President, Todd Hargreaves, is a Vice President of RMR LLC. Messrs. Murray and Donley and other officers of RMR LLC also serve as officers of other companies to which RMR LLC or its subsidiaries provide management services.

Employees. We have no employees. Services which would otherwise be provided to us by employees are provided by RMR LLC and by our Managing Trustees and officers. As of December 31, 2019, RMR LLC has approximately 600 full time employees in its headquarters and regional offices located throughout the United States.

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Competition. The hotel industry is highly competitive. Generally, our hotels are located in areas that include other hotels. Our hotels compete for customers based on brand affiliation, reputation, location, pricing, amenities and the ability to earn reward program points and other competitive factors. Increases in the number of hotels in a particular area could have a material adverse effect on the occupancy and daily room rates at our hotels located in that area. Agreements with the operators of our hotels sometimes restrict the right of each operator and its affiliates for periods of time to own, build, operate, franchise or manage other hotels of the same brand within various specified areas around our hotels. Under these agreements, neither the operators nor their affiliates are usually restricted from operating other brands of hotels in the market areas of any of our hotels, and after such period of time, the operators and their affiliates may also compete with our hotels by opening, managing or franchising additional hotels under the same brand name in direct competition with our hotels. We also face competition from alternative lodging options such as cruise ships, timeshares, vacation rentals or sharing services such as Airbnb, in our markets.

The market for net lease properties is also highly competitive. As an owner and landlord of retail net lease properties, we compete in the multi-billion dollar commercial real estate market with numerous developers and owners of properties, many of which own properties similar to ours and are in the same markets in which our properties are located. In operating and managing our portfolio, we compete for tenants based on a number of factors, including location, rental rates and flexibility. Certain of our competitors have greater economies of scale, have lower cost of capital, have access to more capital and resources and have greater name recognition than we do. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, our tenants may not renew their leases, we might not enter into new leases with prospective tenants and we may be pressured to reduce our rental rates or to offer substantial rent abatements, tenant improvement allowances, early termination rights or below-market renewal options in order to retain tenants when their leases expire. Our tenants may also face competition from on-line retailers or service providers, which may in turn negatively impact their ability to pay rents due to us.

We have a large concentration of net lease properties in the travel center industry which is highly competitive. Although there are approximately 6,200 travel centers and truck stops in the U.S., we understand TA, our largest travel center tenant, believes that large, long haul trucking fleets tend to purchase the large majority of their fuel at the travel centers and truck stops that are located at or near interstate highway exits and from TA and their largest competitors. Long haul truck drivers can obtain fuel and non-fuel products and services from a variety of sources, including regional full service travel centers and fuel only truck stop chains, independently owned and operated truck stops, some large gas stations and trucking company terminals that provide fuel and services to their own trucking fleets. In addition, our travel centers compete with other truck repair and maintenance facilities, full and quick service restaurants and travel stores, and could face additional competition from state owned interstate highway rest areas, if they are commercialized. The largest competitors of TA’s travel centers are travel centers owned by Pilot Flying J Inc. and Love’s Travel Stops & Country Stores, which we believe, together with TA, represent a majority of the market for fuel sales to long haul trucking fleets. Competitive pressure from Pilot Flying J Inc. and Love’s Travel Stops & Country Stores, especially for large trucking fleets and long haul trucking fleets, could negatively impact TA’s ability to pay rents due to us.

We expect to compete for property acquisition and financing opportunities with entities which may have substantially greater financial resources than us, including, without limitation, other REITs, operating companies in the hospitality industry, banks, insurance companies, pension plans and public and private partnerships. These entities may be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of property operators and the extent of leverage used in their capital structure. Such competition may reduce the number of suitable property acquisition or financing opportunities available to us or increase the bargaining power of property owners seeking to sell or finance their properties.

Environmental and Climate Change Matters. Ownership of real estate is subject to risks associated with environmental hazards. Under various laws, owners as well as tenants and managers of real estate may be required to investigate and clean up or remove hazardous substances present at or migrating from properties they own, lease or manage and may be held liable for property damage or personal injuries that result from hazardous substances. These laws also expose us to the possibility that we may become liable to government agencies or third parties for costs and damages they incur in connection with hazardous substances. In addition, these laws also impose various requirements regarding the operation and maintenance of properties and recordkeeping and reporting requirements relating to environmental matters that require us or the operators of our properties to incur costs to comply with.

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Our travel centers include fueling areas truck repair and maintenance facilities and tanks for the storage of petroleum products and other hazardous substances and many of our net lease retail locations contain industrial machinery, including those related to automotive sales and service, all of which create a potential for environmental contamination. We review environmental surveys of the properties we acquire prior to their purchase. Based upon those surveys, other studies we may have reviewed and our understanding of the operations of these properties by our managers and tenants, we do not believe that there are environmental conditions at any of our properties that have had or will have a material adverse effect on us. Generally, under the terms of our management agreements and leases, our tenants and managers have agreed to indemnify us from all environmental liabilities we incur arising during the term of the agreements.

We cannot be sure that conditions are not present at our properties or that costs we may be required to incur in the future to remediate contamination will not have a material adverse effect on our business, financial condition or results of operations. Moreover, our tenants and managers may not have sufficient resources to pay environmental liabilities.

When major weather or climate-related events, such as hurricanes, floods or wildfires, occur near our properties, our manager or tenant may need to suspend operations of the impacted property until the event has ended and the property is then ready for operation. We or the operators of our properties may incur significant costs and losses as result of these activities, both in terms of operating, preparing and repairing our properties in anticipation of, during and after a severe weather or climate-related event and in terms of potential lost business due to the interruption in operating our properties. Our insurance and our managers’ and tenants’ insurance may not adequately compensate us or them for these costs and losses.

Concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws may cause energy or other costs at our hotel and net lease properties to increase. We do not expect the direct impact of these increases to be material to our results of operations, because the increased costs either would be the responsibility of our tenants or managers directly or in the longer term, passed through and paid by customers of our properties. Although we do not believe it is likely in the foreseeable future, laws enacted to mitigate climate change may make some of our buildings obsolete or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our tenants or managers and their ability to pay rent or returns to us. For more information regarding climate change and other environmental matters and their possible adverse impact on us, see “Risk Factors—Risks Related to Our Business—Ownership of real estate is subject to environmental risks and liabilities,” “Risk Factors—Risks Related to Our Business—Ownership of real estate is subject to risks from adverse weather and climate events” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of Climate Change.”

We are environmentally conscious and aware of the impact our properties have on the environment. We and our hotel managers have implemented numerous initiatives to encourage energy efficiencies, recycling of plastics, paper and metal or glass containers; our hotel managers have programs to encourage reduced water and energy use at a guest’s option by not laundering towels and linens every day. When we renovate our hotels we generally use energy efficient products including but not limited to lighting, windows and HVAC equipment and many of the appliances in our extended stay hotels are Energy Star rated. We or our tenants or hotel managers have also installed car battery charging stations at some of our properties to accommodate environmentally aware customers.

Insurance. We generally have insurance coverage for our properties and the operations conducted on them, including for casualty, liability, fire, extended coverage and rental or business interruption losses. Either we purchase the insurance ourselves and our managers or tenants are required to reimburse us, or our managers or tenants buy the insurance directly and are required to list us as an insured party.

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Internet Website. Our internet website address is www.svcreit.com. Copies of our governance guidelines, our code of business conduct and ethics, or our Code of Conduct, and the charters of our audit, compensation and nominating and governance committees are posted on our website and also may be obtained free of charge by writing to our Secretary, Service Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634. We also have a policy outlining procedures for handling concerns or complaints about accounting, internal accounting controls or auditing matters and a governance hotline accessible on our website that shareholders can use to report concerns or complaints about accounting, internal accounting controls or auditing matters or violations or possible violations of our Code of Conduct. We make available, free of charge, through the “Investors” section of our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after these forms are filed with, or furnished to, the Securities and Exchange Commission, or the SEC. Any material we file with or furnish to the SEC is also maintained on the SEC website, www.sec.gov. Securityholders may send communications to our Board of Trustees or individual Trustees by writing to the party for whom the communication is intended at c/o Secretary, Service Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634 or by email at secretary@svcreit.com. Our website address is included several times in this Annual Report on Form 10-K as a textual reference only. The information on or accessible through our website is not incorporated by reference into this Annual Report on Form 10-K or other documents we file with, or furnish to, the SEC. We intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Those disclosures will be included on our website in the “Investors” section. Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts.

Segment Information. As of December 31, 2019, we had two operating segments: hotel investments and net lease investments. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following summary of material United States federal income tax considerations is based on existing law, and is limited to investors who own our shares as investment assets rather than as inventory or as property used in a trade or business. The summary does not discuss all of the particular tax considerations that might be relevant to you if you are subject to special rules under federal income tax law, for example if you are:

• a bank, insurance company or other financial institution;

• a regulated investment company or REIT;

• a subchapter S corporation;

• a broker, dealer or trader in securities or foreign currencies;

• a person who marks-to-market our shares for U.S. federal income tax purposes;

• a U.S. shareholder (as defined below) that has a functional currency other than the U.S. dollar;

• a person who acquires or owns our shares in connection with employment or other performance of services;

• a person subject to alternative minimum tax;

• a person who acquires or owns our shares as part of a straddle, hedging transaction, constructive sale transaction, constructive ownership transaction or conversion transaction, or as part of a “synthetic security” or other integrated financial transaction;

• a person who owns 10% or more (by vote or value, directly or constructively under the IRC) of any class of our shares;

• a U.S. expatriate;

• a non-U.S. shareholder (as defined below) whose investment in our shares is effectively connected with the conduct of a trade or business in the United States;

• a nonresident alien individual present in the United States for 183 days or more during an applicable taxable year;

• a “qualified shareholder” (as defined in Section 897(k)(3)(A) of the IRC);

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• a “qualified foreign pension fund” (as defined in Section 897(l)(2) of the IRC) or any entity wholly owned by one or more qualified foreign pension funds;

• a person subject to special tax accounting rules as a result of their use of applicable financial statements (within the meaning of Section 451(b)(3) of the IRC); or

• except as specifically described in the following summary, a trust, estate, tax-exempt entity or foreign person.

The sections of the IRC that govern the federal income tax qualification and treatment of a REIT and its shareholders are complex. This presentation is a summary of applicable IRC provisions, related rules and regulations, and administrative and judicial interpretations, all of which are subject to change, possibly with retroactive effect. Future legislative, judicial or administrative actions or decisions could also affect the accuracy of statements made in this summary. We have not received a ruling from the U.S. Internal Revenue Service, or the IRS, with respect to any matter described in this summary, and we cannot be sure that the IRS or a court will agree with all of the statements made in this summary. The IRS could, for example, take a different position from that described in this summary with respect to our acquisitions, operations, valuations, restructurings or other matters, which, if a court agreed, could result in significant tax liabilities for applicable parties. In addition, this summary is not exhaustive of all possible tax considerations, and does not discuss any estate, gift, state, local or foreign tax considerations. For all these reasons, we urge you and any holder of or prospective acquiror of our shares to consult with a tax advisor about the federal income tax and other tax consequences of the acquisition, ownership and disposition of our shares. Our intentions and beliefs described in this summary are based upon our understanding of applicable laws and regulations that are in effect as of the date of this Annual Report on Form 10-K. If new laws or regulations are enacted which impact us directly or indirectly, we may change our intentions or beliefs.

Your federal income tax consequences generally will differ depending on whether or not you are a “U.S. shareholder.” For purposes of this summary, a “U.S. shareholder” is a beneficial owner of our shares that is:

• an individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence residency test under the federal income tax laws;

• an entity treated as a corporation for federal income tax purposes that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

• an estate the income of which is subject to federal income taxation regardless of its source; or

• a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or, to the extent provided in Treasury regulations, a trust in existence on August 20, 1996 that has elected to be treated as a domestic trust;

whose status as a U.S. shareholder is not overridden by an applicable tax treaty. Conversely, a “non-U.S. shareholder” is a beneficial owner of our shares that is not an entity (or other arrangement) treated as a partnership for federal income tax purposes and is not a U.S. shareholder.

If any entity (or other arrangement) treated as a partnership for federal income tax purposes holds our shares, the tax treatment of a partner in the partnership generally will depend upon the tax status of the partner and the activities of the partnership. Any entity (or other arrangement) treated as a partnership for federal income tax purposes that is a holder of our shares and the partners in such a partnership (as determined for federal income tax purposes) are urged to consult their own tax advisors about the federal income tax consequences and other tax consequences of the acquisition, ownership and disposition of our shares.

Taxation as a REIT

We have elected to be taxed as a REIT under Sections 856 through 860 of the IRC, commencing with our 1995 taxable year. Our REIT election, assuming continuing compliance with the then applicable qualification tests, has continued and will continue in effect for subsequent taxable years. Although we cannot be sure, we believe that from and after our 1995 taxable year we have been organized and have operated, and will continue to be organized and to operate, in a manner that qualified us and will continue to qualify us to be taxed as a REIT under the IRC.

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As a REIT, we generally are not subject to federal income tax on our net income distributed as dividends to our shareholders. Distributions to our shareholders generally are included in our shareholders’ income as dividends to the extent of our available current or accumulated earnings and profits. Our dividends are not generally entitled to the preferential tax rates on qualified dividend income, but a portion of our dividends may be treated as capital gain dividends or as qualified dividend income, all as explained below. In addition, for taxable years beginning before 2026 and pursuant to the deduction-without-outlay mechanism of Section 199A of the IRC, our noncorporate U.S. shareholders are generally eligible for lower effective tax rates on our dividends that are not treated as capital gain dividends or as qualified dividend income. No portion of any of our dividends is eligible for the dividends received deduction for corporate shareholders. Distributions in excess of our current or accumulated earnings and profits generally are treated for federal income tax purposes as returns of capital to the extent of a recipient shareholder’s basis in our shares, and will reduce this basis. Our current or accumulated earnings and profits are generally allocated first to distributions made on our preferred shares, of which there are none outstanding at this time, and thereafter to distributions made on our common shares. For all these purposes, our distributions include cash distributions, any in kind distributions of property that we might make, and deemed or constructive distributions resulting from capital market activities (such as some redemptions), as described below.

Our counsel, Sullivan & Worcester LLP, is of the opinion that we have been organized and have qualified for taxation as a REIT under the IRC for our 1995 through 2019 taxable years, and that our current and anticipated investments and plan of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT under the IRC. Our counsel’s opinions are conditioned upon the assumption that our leases, our declaration of trust, and all other legal documents to which we have been or are a party have been and will be complied with by all parties to those documents, upon the accuracy and completeness of the factual matters described in this Annual Report on Form 10-K and upon representations made by us to our counsel as to certain factual matters relating to our organization and operations and our expected manner of operation. If this assumption or a description or representation is inaccurate or incomplete, our counsel’s opinions may be adversely affected and may not be relied upon. The opinions of our counsel are based upon the law as it exists today, but the law may change in the future, possibly with retroactive effect. Given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in our circumstances, neither Sullivan & Worcester LLP nor we can be sure that we will qualify as or be taxed as a REIT for any particular year. Any opinion of Sullivan & Worcester LLP as to our qualification or taxation as a REIT will be expressed as of the date issued. Our counsel will have no obligation to advise us or our shareholders of any subsequent change in the matters stated, represented or assumed, or of any subsequent change in the applicable law. Also, the opinions of our counsel are not binding on either the IRS or a court, and either could take a position different from that expressed by our counsel.

Our continued qualification and taxation as a REIT will depend upon our compliance with various qualification tests imposed under the IRC and summarized below. While we believe that we have satisfied and will satisfy these tests, our counsel does not review compliance with these tests on a continuing basis. If we fail to qualify for taxation as a REIT in any year, we will be subject to federal income taxation as if we were a corporation taxed under subchapter C of the IRC, or a C corporation, and our shareholders will be taxed like shareholders of regular C corporations, meaning that federal income tax generally will be applied at both the corporate and shareholder levels. In this event, we could be subject to significant tax liabilities, and the amount of cash available for distribution to our shareholders could be reduced or eliminated.

If we continue to qualify for taxation as a REIT and meet the tests described below, we generally will not pay federal income tax on amounts we distribute to our shareholders. However, even if we continue to qualify for taxation as a REIT, we may still be subject to federal tax in the following circumstances, as described below:

• We will be taxed at regular corporate income tax rates on any undistributed “real estate investment trust taxable income,” determined by including our undistributed ordinary income and net capital gains, if any.

• If we have net income from the disposition of “foreclosure property,” as described in Section 856(e) of the IRC, that is held primarily for sale to customers in the ordinary course of a trade or business or other nonqualifying income from foreclosure property, we will be subject to tax on this income at the highest regular corporate income tax rate.

• If we have net income from “prohibited transactions”—that is, dispositions at a gain of inventory or property held primarily for sale to customers in the ordinary course of a trade or business other than dispositions of foreclosure property and other than dispositions excepted by statutory safe harbors—we will be subject to tax on this income at a 100% rate.

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• If we fail to satisfy the 75% gross income test or the 95% gross income test discussed below, due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to tax at a 100% rate on the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year.

• If we fail to satisfy any of the REIT asset tests described below (other than a de minimis failure of the 5% or 10% asset tests) due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to a tax equal to the greater of $50,000 or the highest regular corporate income tax rate multiplied by the net income generated by the nonqualifying assets that caused us to fail the test.

• If we fail to satisfy any provision of the IRC that would result in our failure to qualify for taxation as a REIT (other than violations of the REIT gross income tests or violations of the REIT asset tests described below) due to reasonable cause and not due to willful neglect, we may retain our qualification for taxation as a REIT but will be subject to a penalty of $50,000 for each failure.

• If we fail to distribute for any calendar year at least the sum of 85% of our REIT ordinary income for that year, 95% of our REIT capital gain net income for that year and any undistributed taxable income from prior periods, we will be subject to a 4% nondeductible excise tax on the excess of the required distribution over the amounts actually distributed.

• If we acquire a REIT asset where our adjusted tax basis in the asset is determined by reference to the adjusted tax basis of the asset in the hands of a C corporation, under specified circumstances we may be subject to federal income taxation on all or part of the built-in gain (calculated as of the date the property ceased being owned by the C corporation) on such asset. We generally do not expect to sell assets if doing so would result in the imposition of a material built-in gains tax liability; but if and when we do sell assets that may have associated built-in gains tax exposure, then we expect to make appropriate provision for the associated tax liabilities on our financial statements.

• If we acquire a corporation in a transaction where we succeed to its tax attributes, to preserve our qualification for taxation as a REIT we must generally distribute all of the C corporation earnings and profits inherited in that acquisition, if any, no later than the end of our taxable year in which the acquisition occurs. However, if we fail to do so, relief provisions would allow us to maintain our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution.

• Our subsidiaries that are C corporations, including our TRSs, generally will be required to pay federal corporate income tax on their earnings, and a 100% tax may be imposed on any transaction between us and one of our TRSs that does not reflect arm’s length terms.

Other countries (and, for this purpose, Puerto Rico is best thought of as a separate country) may impose taxes on our and our subsidiaries’ assets and operations within their jurisdictions. As a REIT, neither we nor our shareholders are expected to benefit from foreign tax credits arising from those taxes.

If we fail to qualify for taxation as a REIT in any year, then we will be subject to federal income tax in the same manner as a regular C corporation. Further, as a regular C corporation, distributions to our shareholders will not be deductible by us, nor will distributions be required under the IRC. Also, to the extent of our current and accumulated earnings and profits, all distributions to our shareholders will generally be taxable as ordinary dividends potentially eligible for the preferential tax rates discussed below under the heading “—Taxation of Taxable U.S. Shareholders” and, subject to limitations in the IRC, will be potentially eligible for the dividends received deduction for corporate shareholders. Finally, we will generally be disqualified from taxation as a REIT for the four taxable years following the taxable year in which the termination of our REIT status is effective. Our failure to qualify for taxation as a REIT for even one year could result in us reducing or eliminating distributions to our shareholders, or in us incurring substantial indebtedness or liquidating substantial investments in order to pay the resulting corporate-level income taxes. Relief provisions under the IRC may allow us to continue to qualify for taxation as a REIT even if we fail to comply with various REIT requirements, all as discussed in more detail below. However, it is impossible to state whether in any particular circumstance we would be entitled to the benefit of these relief provisions.

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REIT Qualification Requirements

General Requirements. Section 856(a) of the IRC defines a REIT as a corporation, trust or association:

(1) that is managed by one or more trustees or directors;

(2) the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;

(3) that would be taxable, but for Sections 856 through 859 of the IRC, as a domestic C corporation;

(4) that is not a financial institution or an insurance company subject to special provisions of the IRC;

(5) the beneficial ownership of which is held by 100 or more persons;

(6) that is not “closely held,” meaning that during the last half of each taxable year, not more than 50% in value of the outstanding shares are owned, directly or indirectly, by five or fewer “individuals” (as defined in the IRC to include specified tax-exempt entities); and

(7) that meets other tests regarding the nature of its income and assets and the amount of its distributions, all as described below.

Section 856(b) of the IRC provides that conditions (1) through (4) must be met during the entire taxable year and that condition (5) must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. Although we cannot be sure, we believe that we have met conditions (1) through (7) during each of the requisite periods ending on or before the close of our most recently completed taxable year, and that we will continue to meet these conditions in our current and future taxable years.

To help comply with condition (6), our declaration of trust and bylaws restrict transfers of our shares that would otherwise result in concentrated ownership positions. These restrictions, however, do not ensure that we have previously satisfied, and may not ensure that we will in all cases be able to continue to satisfy, the share ownership requirements described in condition (6). If we comply with applicable Treasury regulations to ascertain the ownership of our outstanding shares and do not know, or by exercising reasonable diligence would not have known, that we failed condition (6), then we will be treated as having met condition (6). Accordingly, we have complied and will continue to comply with these regulations, including by requesting annually from holders of significant percentages of our shares information regarding the ownership of our shares. Under our declaration of trust and bylaws, our shareholders are required to respond to these requests for information. A shareholder that fails or refuses to comply with the request is required by Treasury regulations to submit a statement with its federal income tax return disclosing its actual ownership of our shares and other information.

For purposes of condition (6), an “individual” generally includes a natural person, a supplemental unemployment compensation benefit plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes, but does not include a qualified pension plan or profit-sharing trust. As a result, REIT shares owned by an entity that is not an “individual” are considered to be owned by the direct and indirect owners of the entity that are individuals (as so defined), rather than to be owned by the entity itself. Similarly, REIT shares held by a qualified pension plan or profit-sharing trust are treated as held directly by the individual beneficiaries in proportion to their actuarial interests in such plan or trust. Consequently, five or fewer such trusts could own more than 50% of the interests in an entity without jeopardizing that entity’s qualification for taxation as a REIT.

The IRC provides that we will not automatically fail to qualify for taxation as a REIT if we do not meet conditions (1) through (6), provided we can establish that such failure was due to reasonable cause and not due to willful neglect. Each such excused failure will result in the imposition of a $50,000 penalty instead of REIT disqualification. This relief provision may apply to a failure of the applicable conditions even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

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Our Wholly Owned Subsidiaries and Our Investments Through Partnerships. Except in respect of a TRS as discussed below, Section 856(i) of the IRC provides that any corporation, 100% of whose stock is held by a REIT and its disregarded subsidiaries, is a qualified REIT subsidiary and shall not be treated as a separate corporation for U.S. federal income tax purposes. The assets, liabilities and items of income, deduction and credit of a qualified REIT subsidiary are treated as the REIT’s. We believe that each of our direct and indirect wholly owned subsidiaries, other than the TRSs discussed below (and entities owned in whole or in part by the TRSs), will be either a qualified REIT subsidiary within the meaning of Section 856(i)(2) of the IRC or a noncorporate entity that for federal income tax purposes is not treated as separate from its owner under Treasury regulations issued under Section 7701 of the IRC, each such entity referred to as a QRS. Thus, in applying all of the REIT qualification requirements described in this summary, all assets, liabilities and items of income, deduction and credit of our QRSs are treated as ours, and our investment in the stock and other securities of such QRSs will be disregarded.

We have invested and may in the future invest in real estate through one or more entities that are treated as partnerships for federal income tax purposes. In the case of a REIT that is a partner in a partnership, Treasury regulations under the IRC provide that, for purposes of the REIT qualification requirements regarding income and assets described below, the REIT is generally deemed to own its proportionate share, based on respective capital interests, of the income and assets of the partnership (except that for purposes of the 10% value test, described below, the REIT’s proportionate share of the partnership’s assets is based on its proportionate interest in the equity and specified debt securities issued by the partnership). In addition, for these purposes, the character of the assets and items of gross income of the partnership generally remains the same in the hands of the REIT. In contrast, for purposes of the distribution requirements discussed below, we must take into account as a partner our share of the partnership’s income as determined under the general federal income tax rules governing partners and partnerships under Subchapter K of the IRC.

Subsidiary REITs. We may in the future form or acquire an entity that is intended to qualify for taxation as a REIT, and we expect that any such subsidiary would so qualify at all times during which we intend for its REIT election to remain in effect. When a subsidiary qualifies for taxation as a REIT separate and apart from its REIT parent, the subsidiary’s shares are qualifying real estate assets for purposes of the REIT parent’s 75% asset test described below. However, failure of the subsidiary to separately satisfy the various REIT qualification requirements described in this summary or that are otherwise applicable (and failure to qualify for the applicable relief provisions) would generally result in (a) the subsidiary being subject to regular U.S. corporate income tax, as described above, and (b) the REIT parent’s ownership in the subsidiary (i) ceasing to be qualifying real estate assets for purposes of the 75% asset test, (ii) becoming subject to the 5% asset test, the 10% vote test and the 10% value test generally applicable to a REIT’s ownership in corporations other than REITs and TRSs, and (iii) thereby jeopardizing the REIT parent’s own REIT qualification and taxation on account of the subsidiary’s failure cascading up to the REIT parent, all as described under “—Asset Tests” below. We may make protective TRS elections with respect to any subsidiary REIT that we form or acquire and may implement other protective arrangements intended to avoid a cascading REIT failure if any of our intended subsidiary REITs were not to qualify for taxation as a REIT, but we cannot be sure that such protective elections and other arrangements will be effective to avoid or mitigate the resulting adverse consequences to us.

Taxable REIT Subsidiaries. As a REIT, we are permitted to own any or all of the securities of a TRS, provided that no more than 20% of the total value of our assets, at the close of each quarter, is comprised of our investments in the stock or other securities of our TRSs. Very generally, a TRS is a subsidiary corporation other than a REIT in which a REIT directly or indirectly holds stock and that has made a joint election with its affiliated REIT to be treated as a TRS. Our ownership of stock and other securities in our TRSs is exempt from the 5% asset test, the 10% vote test and the 10% value test discussed below. Among other requirements, a TRS of ours must:

(1) not directly or indirectly operate or manage a lodging facility or a health care facility; and

(2) not directly or indirectly provide to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility or health care facility is operated, except that in limited circumstances a subfranchise, sublicense or similar right can be granted to an independent contractor to operate or manage a lodging facility or a health care facility.

In addition, any corporation (other than a REIT) in which a TRS directly or indirectly owns more than 35% of the voting power or value of the outstanding securities is automatically a TRS. Subject to the discussion below, we believe that we and each of our TRSs have complied with, and will continue to comply with, the requirements for TRS status at all times during which we intend for the subsidiary’s TRS election to be in effect, and we believe that the same will be true for any TRS that we later form or acquire.

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As discussed below, TRSs can perform services for our tenants without disqualifying the rents we receive from those tenants under the 75% gross income test or the 95% gross income test discussed below. Moreover, because our TRSs are taxed as C corporations that are separate from us, their assets, liabilities and items of income, deduction and credit generally are not imputed to us for purposes of the REIT qualification requirements described in this summary. Therefore, our TRSs may generally conduct activities that would be treated as prohibited transactions or would give rise to nonqualified income if conducted by us directly. Additionally, while a REIT is generally limited in its ability to earn qualifying rental income from a TRS, a REIT can earn qualifying rental income from the lease of a qualified lodging facility to a TRS if an eligible independent contractor operates the facility, as discussed more fully below. As regular C corporations, TRSs may generally utilize net operating losses and other tax attribute carryforwards to reduce or otherwise eliminate federal income tax liability in a given taxable year. Net operating losses and other carryforwards are subject to limitations, however, including limitations imposed under Section 382 of the IRC following an “ownership change” (as defined in applicable Treasury regulations) and a limitation providing that carryforwards of net operating losses arising in taxable years beginning after 2017 generally cannot offset more than 80% of the current year’s taxable income. Moreover, net operating losses arising in taxable years beginning after 2017 may not be carried back, but may be carried forward indefinitely. As a result, we cannot be sure that our TRSs will be able to utilize, in full or in part, any net operating losses or other carryforwards that they have generated or may generate in the future.

Restrictions and sanctions are imposed on TRSs and their affiliated REITs to ensure that the TRSs will be subject to an appropriate level of federal income taxation. For example, if a TRS pays interest, rent or other amounts to its affiliated REIT in an amount that exceeds what an unrelated third party would have paid in an arm’s length transaction, then the REIT generally will be subject to an excise tax equal to 100% of the excessive portion of the payment. Further, if in comparison to an arm’s length transaction, a third-party tenant has overpaid rent to the REIT in exchange for underpaying the TRS for services rendered, and if the REIT has not adequately compensated the TRS for services provided to or on behalf of the third-party tenant, then the REIT may be subject to an excise tax equal to 100% of the under compensation to the TRS. A safe harbor exception to this excise tax applies if the TRS has been compensated at a rate at least equal to 150% of its direct cost in furnishing or rendering the service. Finally, the 100% excise tax also applies to the underpricing of services provided by a TRS to its affiliated REIT in contexts where the services are unrelated to services for REIT tenants. We cannot be sure that arrangements involving our TRSs will not result in the imposition of one or more of these restrictions or sanctions, but we do not believe that we or our TRSs are or will be subject to these impositions.

Income Tests. We must satisfy two gross income tests annually to maintain our qualification for taxation as a REIT. First, at least 75% of our gross income for each taxable year must be derived from investments relating to real property, including “rents from real property” within the meaning of Section 856(d) of the IRC, interest and gain from mortgages on real property or on interests in real property, income and gain from foreclosure property, gain from the sale or other disposition of real property (including specified ancillary personal property treated as real property under the IRC), or dividends on and gain from the sale or disposition of shares in other REITs (but excluding in all cases any gains subject to the 100% tax on prohibited transactions). When we receive new capital in exchange for our shares or in a public offering of our five-year or longer debt instruments, income attributable to the temporary investment of this new capital in stock or a debt instrument, if received or accrued within one year of our receipt of the new capital, is generally also qualifying income under the 75% gross income test. Second, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends, gain from the sale or disposition of stock or securities, or any combination of these. Gross income from our sale of property that we hold primarily for sale to customers in the ordinary course of business, income and gain from specified “hedging transactions” that are clearly and timely identified as such, and income from the repurchase or discharge of indebtedness is excluded from both the numerator and the denominator in both gross income tests. In addition, specified foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests.

In order to qualify as “rents from real property” within the meaning of Section 856(d) of the IRC, several requirements must be met:

• The amount of rent received generally must not be based on the income or profits of any person, but may be based on a fixed percentage or percentages of receipts or sales.

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• Rents generally do not qualify if the REIT owns 10% or more by vote or value of stock of the tenant (or 10% or more of the interests in the assets or net profits of the tenant, if the tenant is not a corporation), whether directly or after application of attribution rules. We generally do not intend to lease property to any party if rents from that property would not qualify as “rents from real property,” but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control. In this regard, we already own close to, but less than, 10% of the outstanding common shares of TA, and TA has undertaken to limit its redemptions and repurchases of outstanding common shares so that we do not come to own 10% or more of its outstanding common shares. Our declaration of trust and bylaws generally disallow transfers or purported acquisitions, directly or by attribution, of our shares to the extent necessary to maintain our qualification for taxation as a REIT under the IRC. Nevertheless, we cannot be sure that these restrictions will be effective to prevent our qualification for taxation as a REIT from being jeopardized under the 10% affiliated tenant rule. Furthermore, we cannot be sure that we will be able to monitor and enforce these restrictions, nor will our shareholders necessarily be aware of ownership of our shares attributed to them under the IRC’s attribution rules.

• There is a limited exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant where the tenant is a TRS. If at least 90% of the leased space of a property is leased to tenants other than TRSs and 10% affiliated tenants, and if the TRS’s rent to the REIT for space at that property is substantially comparable to the rents paid by nonaffiliated tenants for comparable space at the property, then otherwise qualifying rents paid by the TRS to the REIT will not be disqualified on account of the rule prohibiting 10% affiliated tenants.

• There is an additional exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant. For this additional exception to apply, a real property interest in a “qualified lodging facility” must be leased by the REIT to its TRS, and the facility must be operated on behalf of the TRS by a person who is an “eligible independent contractor,” all as described in Sections 856(d)(8)-(9) of the IRC. As described below, we believe our leases with our TRSs have satisfied and will continue to satisfy these requirements.

• In order for rents to qualify, a REIT generally must not manage the property or furnish or render services to the tenants of the property, except through an independent contractor from whom it derives no income or through one of its TRSs. There is an exception to this rule permitting a REIT to perform customary management and tenant services of the sort that a tax-exempt organization could perform without being considered in receipt of “unrelated business taxable income” as defined in Section 512(b)(3) of the IRC, or UBTI. In addition, a de minimis amount of noncustomary services provided to tenants will not disqualify income as “rents from real property” as long as the value of the impermissible tenant services does not exceed 1% of the gross income from the property.

• If rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property will qualify as “rents from real property;” if this 15% threshold is exceeded, then the rent attributable to personal property will not so qualify. The portion of rental income treated as attributable to personal property is determined according to the ratio of the fair market value of the personal property to the total fair market value of the real and personal property that is rented.

• In addition, “rents from real property” includes both charges we receive for services customarily rendered in connection with the rental of comparable real property in the same geographic area, even if the charges are separately stated, as well as charges we receive for services provided by our TRSs when the charges are not separately stated. Whether separately stated charges received by a REIT for services that are not geographically customary and provided by a TRS are included in “rents from real property” has not been addressed clearly by the IRS in published authorities; however, our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, “rents from real property” also includes charges we receive for services provided by our TRSs when the charges are separately stated, even if the services are not geographically customary. Accordingly, we believe that our revenues from TRS-provided services, whether the charges are separately stated or not, qualify as “rents from real property” because the services satisfy the geographically customary standard, because the services have been provided by a TRS, or for both reasons.

We believe that all or substantially all of our rents and related service charges have qualified and will continue to qualify as “rents from real property” for purposes of Section 856 of the IRC.

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Absent the “foreclosure property” rules of Section 856(e) of the IRC, a REIT’s receipt of active, nonrental gross income from a property would not qualify under the 75% and 95% gross income tests. But as foreclosure property, the active, nonrental gross income from the property would so qualify. Foreclosure property is generally any real property, including interests in real property, and any personal property incident to such real property:

• that is acquired by a REIT as a result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or when default was imminent on a lease of such property or on indebtedness that such property secured;

• for which any related loan acquired by the REIT was acquired at a time when the default was not imminent or anticipated; and

• for which the REIT makes a proper election to treat the property as foreclosure property.

Any gain that a REIT recognizes on the sale of foreclosure property held as inventory or primarily for sale to customers, plus any income it receives from foreclosure property that would not otherwise qualify under the 75% gross income test in the absence of foreclosure property treatment, reduced by expenses directly connected with the production of those items of income, would be subject to income tax at the highest regular corporate income tax rate under the foreclosure property income tax rules of Section 857(b)(4) of the IRC. Thus, if a REIT should lease foreclosure property in exchange for rent that qualifies as “rents from real property” as described above, then that rental income is not subject to the foreclosure property income tax.

Property generally ceases to be foreclosure property at the end of the third taxable year following the taxable year in which the REIT acquired the property, or longer if an extension is obtained from the IRS. However, this grace period terminates and foreclosure property ceases to be foreclosure property on the first day:

• on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test (disregarding income from foreclosure property), or any nonqualified income under the 75% gross income test is received or accrued by the REIT, directly or indirectly, pursuant to a lease entered into on or after such day;

• on which any construction takes place on the property, other than completion of a building or any other improvement where more than 10% of the construction was completed before default became imminent and other than specifically exempted forms of maintenance or deferred maintenance; or

• which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income or a TRS.

Other than sales of foreclosure property, any gain that we realize on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of a trade or business, together known as dealer gains, may be treated as income from a prohibited transaction that is subject to a penalty tax at a 100% rate. The 100% tax does not apply to gains from the sale of property that is held through a TRS, although such income will be subject to tax in the hands of the TRS at regular corporate income tax rates; we may therefore utilize our TRSs in transactions in which we might otherwise recognize dealer gains. Whether property is held as inventory or primarily for sale to customers in the ordinary course of a trade or business is a question of fact that depends on all the facts and circumstances surrounding each particular transaction. Sections 857(b)(6)(C) and (E) of the IRC provide safe harbors pursuant to which limited sales of real property held for at least two years and meeting specified additional requirements will not be treated as prohibited transactions. However, compliance with the safe harbors is not always achievable in practice. We attempt to structure our activities to avoid transactions that are prohibited transactions, or otherwise conduct such activities through TRSs; but, we cannot be sure whether or not the IRS might successfully assert that one or more of our dispositions is subject to the 100% penalty tax. Gains subject to the 100% penalty tax are excluded from the 75% and 95% gross income tests, whereas real property gains that are not dealer gains or that are exempted from the 100% penalty tax on account of the safe harbors are considered qualifying gross income for purposes of the 75% and 95% gross income tests.

We believe that any gain from dispositions of assets that we have made, or that we might make in the future, including through any partnerships, will generally qualify as income that satisfies the 75% and 95% gross income tests, and will not be dealer gains or subject to the 100% penalty tax. This is because our general intent has been and is to: (a) own our assets for investment with a view to long-term income production and capital appreciation; (b) engage in the business of developing, owning, leasing and managing our existing properties and acquiring, developing, owning, leasing and managing new properties; and (c) make occasional dispositions of our assets consistent with our long-term investment objectives.

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If we fail to satisfy one or both of the 75% gross income test or the 95% gross income test in any taxable year, we may nevertheless qualify for taxation as a REIT for that year if we satisfy the following requirements: (a) our failure to meet the test is due to reasonable cause and not due to willful neglect; and (b) after we identify the failure, we file a schedule describing each item of our gross income included in the 75% gross income test or the 95% gross income test for that taxable year. Even if this relief provision does apply, a 100% tax is imposed upon the greater of the amount by which we failed the 75% gross income test or the amount by which we failed the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year. This relief provision may apply to a failure of the applicable income tests even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

Based on the discussion above, we believe that we have satisfied, and will continue to satisfy, the 75% and 95% gross income tests outlined above on a continuing basis beginning with our first taxable year as a REIT.

Asset Tests. At the close of each calendar quarter of each taxable year, we must also satisfy the following asset percentage tests in order to qualify for taxation as a REIT for federal income tax purposes:

• At least 75% of the value of our total assets must consist of “real estate assets,” defined as real property (including interests in real property and interests in mortgages on real property or on interests in real property), ancillary personal property to the extent that rents attributable to such personal property are treated as rents from real property in accordance with the rules described above, cash and cash items, shares in other REITs, debt instruments issued by “publicly offered REITs” as defined in Section 562(c)(2) of the IRC, government securities and temporary investments of new capital (that is, any stock or debt instrument that we hold that is attributable to any amount received by us (a) in exchange for our stock or (b) in a public offering of our five-year or longer debt instruments, but in each case only for the one-year period commencing with our receipt of the new capital).

• Not more than 25% of the value of our total assets may be represented by securities other than those securities that count favorably toward the preceding 75% asset test.

• Of the investments included in the preceding 25% asset class, the value of any one non-REIT issuer’s securities that we own may not exceed 5% of the value of our total assets. In addition, we may not own more than 10% of the vote or value of any one non-REIT issuer’s outstanding securities, unless the securities are “straight debt” securities or otherwise excepted as discussed below. Our stock and other securities in a TRS are exempted from these 5% and 10% asset tests.

• Not more than 20% of the value of our total assets may be represented by stock or other securities of our TRSs.

• Not more than 25% of the value of our total assets may be represented by “nonqualified publicly offered REIT debt instruments” as defined in Section 856(c)(5)(L)(ii) of the IRC.

Our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, our investments in the equity or debt of a TRS of ours, to the extent that and during the period in which they qualify as temporary investments of new capital, will be treated as real estate assets, and not as securities, for purposes of the above REIT asset tests.

The above REIT asset tests must be satisfied at the close of each calendar quarter of each taxable year as a REIT. After a REIT meets the asset tests at the close of any quarter, it will not lose its qualification for taxation as a REIT in any subsequent quarter solely because of fluctuations in the values of its assets, including if the fluctuations are caused by changes in the foreign currency exchange rate used to value any foreign assets. This grandfathering rule may be of limited benefit to a REIT such as us that makes periodic acquisitions of both qualifying and nonqualifying REIT assets. When a failure to satisfy the above asset tests results from an acquisition of securities or other property during a quarter, the failure can be cured by disposition of sufficient nonqualifying assets within thirty days after the close of that quarter.

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In addition, if we fail the 5% asset test, the 10% vote test or the 10% value test at the close of any quarter and we do not cure such failure within thirty days after the close of that quarter, that failure will nevertheless be excused if (a) the failure is de minimis and (b) within six months after the last day of the quarter in which we identify the failure, we either dispose of the assets causing the failure or otherwise satisfy the 5% asset test, the 10% vote test and the 10% value test. For purposes of this relief provision, the failure will be de minimis if the value of the assets causing the failure does not exceed $10,000,000. If our failure is not de minimis, or if any of the other REIT asset tests have been violated, we may nevertheless qualify for taxation as a REIT if (a) we provide the IRS with a description of each asset causing the failure, (b) the failure was due to reasonable cause and not willful neglect, (c) we pay a tax equal to the greater of (1) $50,000 or (2) the highest regular corporate income tax rate imposed on the net income generated by the assets causing the failure during the period of the failure, and (d) within six months after the last day of the quarter in which we identify the failure, we either dispose of the assets causing the failure or otherwise satisfy all of the REIT asset tests. These relief provisions may apply to a failure of the applicable asset tests even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

The IRC also provides an excepted securities safe harbor to the 10% value test that includes among other items (a) “straight debt” securities, (b) specified rental agreements in which payment is to be made in subsequent years, (c) any obligation to pay “rents from real property,” (d) securities issued by governmental entities that are not dependent in whole or in part on the profits of or payments from a nongovernmental entity, and (e) any security issued by another REIT. In addition, any debt instrument issued by an entity classified as a partnership for federal income tax purposes, and not otherwise excepted from the definition of a security for purposes of the above safe harbor, will not be treated as a security for purposes of the 10% value test if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test.

We have maintained and will continue to maintain records of the value of our assets to document our compliance with the above asset tests and intend to take actions as may be required to cure any failure to satisfy the tests within thirty days after the close of any quarter or within the six month periods described above.

Based on the discussion above, we believe that we have satisfied, and will continue to satisfy, the REIT asset tests outlined above on a continuing basis beginning with our first taxable year as a REIT.

Our Relationship with TA. As of December 31, 2019, we owned a significant percentage (but less than 10%) of the outstanding common shares of TA. Our leases with TA, TA’s articles of incorporation, and other agreements collectively contain restrictions upon the ownership of TA common shares and require TA to refrain from taking any actions that may result in any affiliation with us that would jeopardize our qualification for taxation as a REIT under the IRC. Accordingly, from and after January 31, 2007 we expect that the rental income we have received and will receive from TA and its subsidiaries has been and will be “rents from real property” under Section 856(d) of the IRC, and therefore qualifying income under the 75% and 95% gross income tests described above.

Our Relationship with Sonesta. We own (directly and indirectly through one of our TRSs) approximately 34% of the outstanding common shares of Sonesta’s parent, Sonesta Holdco Corporation, or Holdco. We have not elected to treat Holdco as a TRS and it is not otherwise an automatic TRS because no TRS of ours owns more than 35% of Holdco. This structure for our Holdco ownership permits our continued engagement of a corporate subsidiary of Holdco to manage qualified lodging facilities leased to our TRSs, as described below in greater detail.

Our Relationship with Our Taxable REIT Subsidiaries. We currently own hotels that we purchased to be leased to our TRSs or which are being leased to our TRSs as a result of modifications to, or expirations of, a prior lease, all as agreed to by applicable parties. For example, in connection with past lease defaults and expirations, we have terminated occupancy of some of our hotels by the defaulting or expiring tenants and immediately leased these hotels to our TRSs and entered into new, or continued with existing, third-party management agreements for these hotels. We may from time to time lease additional hotels to our TRSs.

In lease transactions involving our TRSs, our intent is for the rents paid to us by the TRS to qualify as “rents from real property” under the REIT gross income tests summarized above. In order for this to be the case, the manager operating the leased property on behalf of the applicable TRS must be an “eligible independent contractor” within the meaning of Section 856(d)(9)(A) of the IRC, and the hotels leased to the TRS must be “qualified lodging facilities” within the meaning of Section 856(d)(9)(D) of the IRC. Qualified lodging facilities are defined as hotels, motels or other establishments where more than half of the dwelling units are used on a transient basis, provided that legally authorized wagering or gambling activities are not conducted at or in connection with such facilities. Also included in the definition are the qualified lodging facility’s customary amenities and facilities.

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For these purposes, a contractor qualifies as an “eligible independent contractor” if it is less than 35% affiliated with the REIT and, at the time the contractor enters into the agreement with the TRS to operate the qualified lodging facility, that contractor or any person related to that contractor is actively engaged in the trade or business of operating qualified lodging facilities for persons unrelated to the TRS or its affiliated REIT. For these purposes, an otherwise eligible independent contractor is not disqualified from that status on account of (a) the TRS bearing the expenses of the operation of the qualified lodging facility, (b) the TRS receiving the revenues from the operation of the qualified lodging facility, net of expenses for that operation and fees payable to the eligible independent contractor, or (c) the REIT receiving income from the eligible independent contractor pursuant to a preexisting or otherwise grandfathered lease of another property.

We have from time to time engaged, and at present engage, as an intended eligible independent contractor a manager that manages only a modest number of qualified lodging facilities for parties other than us and our TRSs, and we may in the future continue to engage such a manager as an intended eligible independent contractor. We have received, and in future instances would expect to receive, from our counsel, Sullivan & Worcester LLP, an opinion to the effect that the intended eligible independent contractor should in fact so qualify. But if the IRS or a court determines that the opinion is incorrect, then the rental income we receive from our TRSs in respect of properties managed by ineligible contractors would be nonqualifying income for purposes of the 75% and 95% gross income tests, possibly jeopardizing our compliance with one or both of these gross income tests. Under those circumstances, however, we expect we would qualify for the gross income tests’ relief provision described above, and thereby would preserve our qualification for taxation as a REIT. If the relief provision were to apply to us, we would be subject to tax at a 100% rate upon the greater of the amount by which we failed the 75% gross income test or the amount by which we failed the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year; even though we have little or no nonqualifying income from other sources in a typical taxable year, imposition of this 100% tax in this circumstance could be material if a material number of the properties leased to our TRSs are managed for the TRSs by intended eligible independent contractors that are later deemed not to qualify as such under the IRC.

As explained above, we will be subject to a 100% tax on the rents paid to us by any of our TRSs if the IRS successfully asserts that those rents exceed an arm’s length rental rate. Although there is no clear precedent to distinguish for federal income tax purposes among leases, management contracts, partnerships, financings, and other contractual arrangements, we believe that our leases and our TRSs’ management agreements will be respected for purposes of the requirements of the IRC discussed above. Accordingly, we expect that the rental income from our current and future TRSs will qualify as “rents from real property,” and that the 100% tax on excessive rents from a TRS will not apply.

Annual Distribution Requirements. In order to qualify for taxation as a REIT under the IRC, we are required to make annual distributions other than capital gain dividends to our shareholders in an amount at least equal to the excess of:

(1) the sum of 90% of our “real estate investment trust taxable income” and 90% of our net income after tax, if any, from property received in foreclosure, over

(2) the amount by which our noncash income (e.g., imputed rental income or income from transactions inadvertently failing to qualify as like-kind exchanges) exceeds 5% of our “real estate investment trust taxable income.”

For these purposes, our “real estate investment trust taxable income” is as defined under Section 857 of the IRC and is computed without regard to the dividends paid deduction and our net capital gain and will generally be reduced by specified corporate-level income taxes that we pay (e.g., taxes on built-in gains or foreclosure property income).

The IRC generally limits the deductibility of net interest expense paid or accrued on debt properly allocable to a trade or business to 30% of “adjusted taxable income,” subject to specified exceptions. Any deduction in excess of the limitation is carried forward and may be used in a subsequent year, subject to that year’s 30% limitation. Provided a taxpayer makes an election (which is irrevocable), the 30% limitation does not apply to a trade or business involving real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage, within the meaning of Section 469(c)(7)(C) of the IRC. While legislative history and proposed Treasury regulations indicate that a real property trade or business includes a trade or business conducted by a corporation or a REIT, we have not yet made an election to be treated as a real property trade or business.

Distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely file our federal income tax return for the earlier taxable year and if paid on or before the first regular distribution payment after that declaration. If a dividend is declared in October, November or December to shareholders of record during one of those months and is paid during the following January, then for federal income tax purposes such dividend will be treated as having been both paid and received on December 31 of the prior taxable year to the extent of any undistributed earnings and profits.

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The 90% distribution requirements may be waived by the IRS if a REIT establishes that it failed to meet them by reason of distributions previously made to meet the requirements of the 4% excise tax discussed below. To the extent that we do not distribute all of our net capital gain and all of our “real estate investment trust taxable income,” as adjusted, we will be subject to federal income tax at regular corporate income tax rates on undistributed amounts. In addition, we will be subject to a 4% nondeductible excise tax to the extent we fail within a calendar year to make required distributions to our shareholders of 85% of our ordinary income and 95% of our capital gain net income plus the excess, if any, of the “grossed up required distribution” for the preceding calendar year over the amount treated as distributed for that preceding calendar year. For this purpose, the term “grossed up required distribution” for any calendar year is the sum of our taxable income for the calendar year without regard to the deduction for dividends paid and all amounts from earlier years that are not treated as having been distributed under the provision. We will be treated as having sufficient earnings and profits to treat as a dividend any distribution by us up to the amount required to be distributed in order to avoid imposition of the 4% excise tax.

If we do not have enough cash or other liquid assets to meet the 90% distribution requirements, or if we so choose, we may find it necessary or desirable to arrange for new debt or equity financing to provide funds for required distributions in order to maintain our qualification for taxation as a REIT. We cannot be sure that financing would be available for these purposes on favorable terms, or at all.

We may be able to rectify a failure to pay sufficient dividends for any year by paying “deficiency dividends” to shareholders in a later year. These deficiency dividends may be included in our deduction for dividends paid for the earlier year, but an interest charge would be imposed upon us for the delay in distribution. While the payment of a deficiency dividend will apply to a prior year for purposes of our REIT distribution requirements and our dividends paid deduction, it will be treated as an additional distribution to the shareholders receiving it in the year such dividend is paid.

In addition to the other distribution requirements above, to preserve our qualification for taxation as a REIT we are required to timely distribute all C corporation earnings and profits that we inherit from acquired corporations, as described below.

Acquisitions of C Corporations

We have engaged and may in the future engage in transactions where we acquire all of the outstanding stock of a C corporation. Upon these acquisitions, except to the extent we have made or do make an applicable TRS election, each of our acquired entities and their various wholly-owned corporate and noncorporate subsidiaries generally became or will become our QRSs. Thus, after such acquisitions, all assets, liabilities and items of income, deduction and credit of the acquired and then disregarded entities have been and will be treated as ours for purposes of the various REIT qualification tests described above. In addition, we generally have been and will be treated as the successor to the acquired (and then disregarded) entities’ federal income tax attributes, such as those entities’ (a) adjusted tax bases in their assets and their depreciation schedules; and (b) earnings and profits for federal income tax purposes, if any. The carryover of these attributes creates REIT implications such as built-in gains tax exposure and additional distribution requirements, as described below. However, when we make an election under Section 338(g) of the IRC with respect to corporations that we acquire, as we have done from time to time in the past, we generally will not be subject to such attribute carryovers in respect of attributes existing prior to such election.

Built-in Gains from C Corporations. Notwithstanding our qualification and taxation as a REIT, under specified circumstances we may be subject to corporate income taxation if we acquire a REIT asset where our adjusted tax basis in the asset is determined by reference to the adjusted tax basis of the asset as owned by a C corporation. For instance, we may be subject to federal income taxation on all or part of the built-in gain that was present on the last date an asset was owned by a C corporation, if we succeed to a carryover tax basis in that asset directly or indirectly from such C corporation and if we sell the asset during the five year period beginning on the day the asset ceased being owned by such C corporation. To the extent of our income and gains in a taxable year that are subject to the built-in gains tax, net of any taxes paid on such income and gains with respect to that taxable year, our taxable dividends paid in the following year will be potentially eligible for taxation to noncorporate U.S. shareholders at the preferential tax rates for “qualified dividends” as described below under the heading “—Taxation of Taxable U.S. Shareholders”. We generally do not expect to sell assets if doing so would result in the imposition of a material built-in gains tax liability; but if and when we do sell assets that may have associated built-in gains tax exposure, then we expect to make appropriate provision for the associated tax liabilities on our financial statements.

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Earnings and Profits. Following a corporate acquisition, we must generally distribute all of the C corporation earnings and profits inherited in that transaction, if any, no later than the end of our taxable year in which the transaction occurs, in order to preserve our qualification for taxation as a REIT. However, if we fail to do so, relief provisions would allow us to maintain our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution. C corporation earnings and profits that we inherit are, in general, specially allocated under a priority rule to the earliest possible distributions following the event causing the inheritance, and only then is the balance of our earnings and profits for the taxable year allocated among our distributions to the extent not already treated as a distribution of C corporation earnings and profits under the priority rule. The distribution of these C corporation earnings and profits is potentially eligible for taxation to noncorporate U.S. shareholders at the preferential tax rates for “qualified dividends” as described below under the heading “—Taxation of Taxable U.S. Shareholders”.

Depreciation and Federal Income Tax Treatment of Leases

Our initial tax bases in our assets will generally be our acquisition cost. We will generally depreciate our depreciable real property on a straight-line basis over forty years and our personal property over the applicable shorter periods. These depreciation schedules, and our initial tax bases, may vary for properties that we acquire through tax-free or carryover basis acquisitions, or that are the subject of cost segregation analyses.

We are entitled to depreciation deductions from our facilities only if we are treated for federal income tax purposes as the owner of the facilities. This means that the leases of our facilities must be classified for U.S. federal income tax purposes as true leases, rather than as sales or financing arrangements, and we believe this to be the case.

Like-Kind Exchanges

During the first quarter of 2019, we sold 20 travel centers to TA for an aggregate price of $308.2 million pursuant to three separate agreements. Our and TA’s obligations to complete the three transactions were subject to various conditions typical of commercial real estate purchases, and thus, on advice of counsel we believe that each of the three agreements was a separate transaction for federal income tax purposes. Our sales of the travel centers would have resulted in significant tax gains and either a significant 2019 distribution requirement or entity-level taxation to the extent the gains were not deferred. In order to defer some of the gains on these sales, we recycled proceeds from two of the three transactions into replacement property pursuant to Section 1031 of the IRC. Any gains that were not deferred under Section 1031 of the IRC constituted qualifying income for purposes of the 75% and 95% gross income tests.

Distributions to our Shareholders

As described above, we expect to make distributions to our shareholders from time to time. These distributions may include cash distributions, in kind distributions of property, and deemed or constructive distributions resulting from capital market activities. The U.S. federal income tax treatment of our distributions will vary based on the status of the recipient shareholder as more fully described below under the headings “—Taxation of Taxable U.S. Shareholders,” “—Taxation of Tax-Exempt U.S. Shareholders,” and “—Taxation of Non-U.S. Shareholders.”

Section 302 of the IRC treats a redemption of our shares for cash only as a distribution under Section 301 of the IRC, and hence taxable as a dividend to the extent of our available current or accumulated earnings and profits, unless the redemption satisfies one of the tests set forth in Section 302(b) of the IRC enabling the redemption to be treated as a sale or exchange of the shares. The redemption for cash only will be treated as a sale or exchange if it (a) is “substantially disproportionate” with respect to the surrendering shareholder’s ownership in us, (b) results in a “complete termination” of the surrendering shareholder’s entire share interest in us, or (c) is “not essentially equivalent to a dividend” with respect to the surrendering shareholder, all within the meaning of Section 302(b) of the IRC. In determining whether any of these tests have been met, a shareholder must generally take into account shares considered to be owned by such shareholder by reason of constructive ownership rules set forth in the IRC, as well as shares actually owned by such shareholder. In addition, if a redemption is treated as a distribution under the preceding tests, then a shareholder’s tax basis in the redeemed shares generally will be transferred to the shareholder’s remaining shares in us, if any, and if such shareholder owns no other shares in us, such basis generally may be transferred to a related person or may be lost entirely. Because the determination as to whether a shareholder will satisfy any of the tests of Section 302(b) of the IRC depends upon the facts and circumstances at the time that our shares are redeemed, we urge you to consult your own tax advisor to determine the particular tax treatment of any redemption.

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Taxation of Taxable U.S. Shareholders

For noncorporate U.S. shareholders, to the extent that their total adjusted income does not exceed applicable thresholds, the maximum federal income tax rate for long-term capital gains and most corporate dividends is generally 15%. For those noncorporate U.S. shareholders whose total adjusted income exceeds the applicable thresholds, the maximum federal income tax rate for long-term capital gains and most corporate dividends is generally 20%. However, because we are not generally subject to federal income tax on the portion of our “real estate investment trust taxable income” distributed to our shareholders, dividends on our shares generally are not eligible for these preferential tax rates, except that any distribution of C corporation earnings and profits and taxed built-in gain items will potentially be eligible for these preferential tax rates. As a result, our ordinary dividends generally are taxed at the higher federal income tax rates applicable to ordinary income (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the IRC, which is generally available to our noncorporate U.S. shareholders for taxable years before 2026). To summarize, the preferential federal income tax rates for long-term capital gains and for qualified dividends generally apply to:

(1) long-term capital gains, if any, recognized on the disposition of our shares;

(2) our distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation recapture, in which case the distributions are subject to a maximum 25% federal income tax rate);

(3) our dividends attributable to dividend income, if any, received by us from C corporations such as TRSs;

(4) our dividends attributable to earnings and profits that we inherit from C corporations; and

(5) our dividends to the extent attributable to income upon which we have paid federal corporate income tax (such as taxes on foreclosure property income or on built-in gains), net of the corporate income taxes thereon.

As long as we qualify for taxation as a REIT, a distribution to our U.S. shareholders that we do not designate as a capital gain dividend generally will be treated as an ordinary income dividend to the extent of our available current or accumulated earnings and profits (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the IRC, which is available to our noncorporate U.S. shareholders for taxable years before 2026). Distributions made out of our current or accumulated earnings and profits that we properly designate as capital gain dividends generally will be taxed as long-term capital gains, as discussed below, to the extent they do not exceed our actual net capital gain for the taxable year. However, corporate shareholders may be required to treat up to 20% of any capital gain dividend as ordinary income under Section 291 of the IRC.

In addition, we may elect to retain net capital gain income and treat it as constructively distributed. In that case:

(1) we will be taxed at regular corporate capital gains tax rates on retained amounts;

(2) each of our U.S. shareholders will be taxed on its designated proportionate share of our retained net capital gains as though that amount were distributed and designated as a capital gain dividend;

(3) each of our U.S. shareholders will receive a credit or refund for its designated proportionate share of the tax that we pay;

(4) each of our U.S. shareholders will increase its adjusted basis in our shares by the excess of the amount of its proportionate share of these retained net capital gains over the U.S. shareholder’s proportionate share of the tax that we pay; and

(5) both we and our corporate shareholders will make commensurate adjustments in our respective earnings and profits for federal income tax purposes.

If we elect to retain our net capital gains in this fashion, we will notify our U.S. shareholders of the relevant tax information within sixty days after the close of the affected taxable year.

If for any taxable year we designate capital gain dividends for our shareholders, then a portion of the capital gain dividends we designate will be allocated to the holders of a particular class of shares on a percentage basis equal to the ratio of the amount of the total dividends paid or made available for the year to the holders of that class of shares to the total dividends paid or made available for the year to holders of all outstanding classes of our shares. We will similarly designate the portion of any dividend that is to be taxed to noncorporate U.S. shareholders at preferential maximum rates (including any qualified dividend income and any capital gains attributable to real estate depreciation recapture that are subject to a maximum 25% federal income tax rate) so that the designations will be proportionate among all outstanding classes of our shares.

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Distributions in excess of our current or accumulated earnings and profits will not be taxable to a U.S. shareholder to the extent that they do not exceed the shareholder’s adjusted tax basis in our shares, but will reduce the shareholder’s basis in such shares. To the extent that these excess distributions exceed a U.S. shareholder’s adjusted basis in such shares, they will be included in income as capital gain, with long-term gain generally taxed to noncorporate U.S. shareholders at preferential maximum rates. No U.S. shareholder may include on its federal income tax return any of our net operating losses or any of our capital losses. In addition, no portion of any of our dividends is eligible for the dividends received deduction for corporate shareholders.

If a dividend is declared in October, November or December to shareholders of record during one of those months and is paid during the following January, then for federal income tax purposes the dividend will be treated as having been both paid and received on December 31 of the prior taxable year.

A U.S. shareholder will generally recognize gain or loss equal to the difference between the amount realized and the shareholder’s adjusted basis in our shares that are sold or exchanged. This gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the shareholder’s holding period in our shares exceeds one year. In addition, any loss upon a sale or exchange of our shares held for six months or less will generally be treated as a long-term capital loss to the extent of any long-term capital gain dividends we paid on such shares during the holding period.

U.S. shareholders who are individuals, estates or trusts are generally required to pay a 3.8% Medicare tax on their net investment income (including dividends on our shares (without regard to any deduction allowed by Section 199A of the IRC) and gains from the sale or other disposition of our shares), or in the case of estates and trusts on their net investment income that is not distributed, in each case to the extent that their total adjusted income exceeds applicable thresholds. U.S. shareholders are urged to consult their tax advisors regarding the application of the 3.8% Medicare tax.

If a U.S. shareholder recognizes a loss upon a disposition of our shares in an amount that exceeds a prescribed threshold, it is possible that the provisions of Treasury regulations involving “reportable transactions” could apply, with a resulting requirement to separately disclose the loss-generating transaction to the IRS. These Treasury regulations are written quite broadly, and apply to many routine and simple transactions. A reportable transaction currently includes, among other things, a sale or exchange of our shares resulting in a tax loss in excess of (a) $10 million in any single year or $20 million in a prescribed combination of taxable years in the case of our shares held by a C corporation or by a partnership with only C corporation partners or (b) $2 million in any single year or $4 million in a prescribed combination of taxable years in the case of our shares held by any other partnership or an S corporation, trust or individual, including losses that flow through pass through entities to individuals. A taxpayer discloses a reportable transaction by filing IRS Form 8886 with its federal income tax return and, in the first year of filing, a copy of Form 8886 must be sent to the IRS’s Office of Tax Shelter Analysis. The annual maximum penalty for failing to disclose a reportable transaction is generally $10,000 in the case of a natural person and $50,000 in any other case.

Noncorporate U.S. shareholders who borrow funds to finance their acquisition of our shares could be limited in the amount of deductions allowed for the interest paid on the indebtedness incurred. Under Section 163(d) of the IRC, interest paid or accrued on indebtedness incurred or continued to purchase or carry property held for investment is generally deductible only to the extent of the investor’s net investment income. A U.S. shareholder’s net investment income will include ordinary income dividend distributions received from us and, only if an appropriate election is made by the shareholder, capital gain dividend distributions and qualified dividends received from us; however, distributions treated as a nontaxable return of the shareholder’s basis will not enter into the computation of net investment income.

Taxation of Tax-Exempt U.S. Shareholders

The rules governing the federal income taxation of tax-exempt entities are complex, and the following discussion is intended only as a summary of material considerations of an investment in our shares relevant to such investors. If you are a tax-exempt shareholder, we urge you to consult your own tax advisor to determine the impact of federal, state, local and foreign tax laws, including any tax return filing and other reporting requirements, with respect to your acquisition of or investment in our shares.

Our distributions made to shareholders that are tax-exempt pension plans, individual retirement accounts or other qualifying tax-exempt entities should not constitute UBTI, provided that the shareholder has not financed its acquisition of our shares with “acquisition indebtedness” within the meaning of the IRC, that the shares are not otherwise used in an unrelated trade or business of the tax-exempt entity, and that, consistent with our present intent, we do not hold a residual interest in a real estate mortgage investment conduit or otherwise hold mortgage assets or conduct mortgage securitization activities that generate “excess inclusion” income.

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Taxation of Non-U.S. Shareholders

The rules governing the U.S. federal income taxation of non-U.S. shareholders are complex, and the following discussion is intended only as a summary of material considerations of an investment in our shares relevant to such investors. If you are a non-U.S. shareholder, we urge you to consult your own tax advisor to determine the impact of U.S. federal, state, local and foreign tax laws, including any tax return filing and other reporting requirements, with respect to your acquisition of or investment in our shares.

We expect that a non-U.S. shareholder’s receipt of (a) distributions from us, and (b) proceeds from the sale of our shares, will not be treated as income effectively connected with a U.S. trade or business and a non-U.S. shareholder will therefore not be subject to the often higher federal tax and withholding rates, branch profits taxes and increased reporting and filing requirements that apply to income effectively connected with a U.S. trade or business. This expectation and a number of the determinations below are predicated on our shares being listed on a U.S. national securities exchange, such as The Nasdaq Stock Market LLC, or Nasdaq. Each class of our shares has been listed on a U.S. national securities exchange; however, we cannot be sure that our shares will continue to be so listed in future taxable years or that any class of our shares that we may issue in the future will be so listed.

Distributions. A distribution by us to a non-U.S. shareholder that is not designated as a capital gain dividend will be treated as an ordinary income dividend to the extent that it is made out of our current or accumulated earnings and profits. A distribution of this type will generally be subject to U.S. federal income tax and withholding at the rate of 30%, or at a lower rate if the non-U.S. shareholder has in the manner prescribed by the IRS demonstrated to the applicable withholding agent its entitlement to benefits under a tax treaty. Because we cannot determine our current and accumulated earnings and profits until the end of the taxable year, withholding at the statutory rate of 30% or applicable lower treaty rate will generally be imposed on the gross amount of any distribution to a non-U.S. shareholder that we make and do not designate as a capital gain dividend. Notwithstanding this potential withholding on distributions in excess of our current and accumulated earnings and profits, these excess portions of distributions are a nontaxable return of capital to the extent that they do not exceed the non-U.S. shareholder’s adjusted basis in our shares, and the nontaxable return of capital will reduce the adjusted basis in these shares. To the extent that distributions in excess of our current and accumulated earnings and profits exceed the non-U.S. shareholder’s adjusted basis in our shares, the distributions will give rise to U.S. federal income tax liability only in the unlikely event that the non-U.S. shareholder would otherwise be subject to tax on any gain from the sale or exchange of these shares, as discussed below under the heading “—Dispositions of Our Shares.” A non-U.S. shareholder may seek a refund from the IRS of amounts withheld on distributions to it in excess of such shareholder’s allocable share of our current and accumulated earnings and profits.

For so long as a class of our shares is listed on a U.S. national securities exchange, capital gain dividends that we declare and pay to a non-U.S. shareholder on those shares, as well as dividends to a non-U.S. shareholder on those shares attributable to our sale or exchange of “United States real property interests” within the meaning of Section 897 of the IRC, or USRPIs, will not be subject to withholding as though those amounts were effectively connected with a U.S. trade or business, and non-U.S. shareholders will not be required to file U.S. federal income tax returns or pay branch profits tax in respect of these dividends. Instead, these dividends will generally be treated as ordinary dividends and subject to withholding in the manner described above.

Tax treaties may reduce the withholding obligations on our distributions. Under some treaties, however, rates below 30% that are applicable to ordinary income dividends from U.S. corporations may not apply to ordinary income dividends from a REIT or may apply only if the REIT meets specified additional conditions. A non-U.S. shareholder must generally use an applicable IRS Form W-8, or substantially similar form, to claim tax treaty benefits. If the amount of tax withheld with respect to a distribution to a non-U.S. shareholder exceeds the shareholder’s U.S. federal income tax liability with respect to the distribution, the non-U.S. shareholder may file for a refund of the excess from the IRS. Treasury regulations also provide special rules to determine whether, for purposes of determining the applicability of a tax treaty, our distributions to a non-U.S. shareholder that is an entity should be treated as paid to the entity or to those owning an interest in that entity, and whether the entity or its owners are entitled to benefits under the tax treaty.

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If, contrary to our expectation, a class of our shares was not listed on a U.S. national securities exchange and we made a distribution on those shares that was attributable to gain from the sale or exchange of a USRPI, then a non-U.S. shareholder holding those shares would be taxed as if the distribution was gain effectively connected with a trade or business in the United States conducted by the non-U.S. shareholder. In addition, the applicable withholding agent would be required to withhold from a distribution to such a non-U.S. shareholder, and remit to the IRS, up to 21% of the maximum amount of any distribution that was or could have been designated as a capital gain dividend. The non-U.S. shareholder also would generally be subject to the same treatment as a U.S. shareholder with respect to the distribution (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of a nonresident alien individual), would be subject to fulsome U.S. federal income tax return reporting requirements, and, in the case of a corporate non-U.S. shareholder, may owe the up to 30% branch profits tax under Section 884 of the IRC (or lower applicable tax treaty rate) in respect of these amounts.

Dispositions of Our Shares. If as expected our shares are not USRPIs, then a non-U.S. shareholder’s gain on the sale of these shares generally will not be subject to U.S. federal income taxation or withholding. We expect that our shares will not be USRPIs because one or both of the following exemptions will be available at all times.

First, for so long as a class of our shares is listed on a U.S. national securities exchange, a non-U.S. shareholder’s gain on the sale of those shares will not be subject to U.S. federal income taxation as a sale of a USRPI. Second, our shares will not constitute USRPIs if we are a “domestically controlled” REIT. We will be a “domestically controlled” REIT if less than 50% of the value of our shares (including any future class of shares that we may issue) is held, directly or indirectly, by non-U.S. shareholders at all times during the preceding five years, after applying specified presumptions regarding the ownership of our shares as described in Section 897(h)(4)(E) of the IRC. For these purposes, we believe that the statutory ownership presumptions apply to validate our status as a “domestically controlled” REIT. Accordingly, we believe that we are and will remain a “domestically controlled” REIT.

If, contrary to our expectation, a gain on the sale of our shares is subject to U.S. federal income taxation (for example, because neither of the above exemptions were then available, i.e., that class of our shares were not then listed on a U.S. national securities exchange and we were not a “domestically controlled” REIT), then (a) a non-U.S. shareholder would generally be subject to the same treatment as a U.S. shareholder with respect to its gain (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals), (b) the non-U.S. shareholder would also be subject to fulsome U.S. federal income tax return reporting requirements, and (c) a purchaser of that class of our shares from the non-U.S. shareholder may be required to withhold 15% of the purchase price paid to the non-U.S. shareholder and to remit the withheld amount to the IRS.

Information Reporting, Backup Withholding, and Foreign Account Withholding

Information reporting, backup withholding, and foreign account withholding may apply to distributions or proceeds paid to our shareholders under the circumstances discussed below. If a shareholder is subject to backup or other U.S. federal income tax withholding, then the applicable withholding agent will be required to withhold the appropriate amount with respect to a deemed or constructive distribution or a distribution in kind even though there is insufficient cash from which to satisfy the withholding obligation. To satisfy this withholding obligation, the applicable withholding agent may collect the amount of U.S. federal income tax required to be withheld by reducing to cash for remittance to the IRS a sufficient portion of the property that the shareholder would otherwise receive or own, and the shareholder may bear brokerage or other costs for this withholding procedure.

Amounts withheld under backup withholding are generally not an additional tax and may be refunded by the IRS or credited against the shareholder’s federal income tax liability, provided that such shareholder timely files for a refund or credit with the IRS. A U.S. shareholder may be subject to backup withholding when it receives distributions on our shares or proceeds upon the sale, exchange, redemption, retirement or other disposition of our shares, unless the U.S. shareholder properly executes, or has previously properly executed, under penalties of perjury an IRS Form W-9 or substantially similar form that:

• provides the U.S. shareholder’s correct taxpayer identification number;

• certifies that the U.S. shareholder is exempt from backup withholding because (a) it comes within an enumerated exempt category, (b) it has not been notified by the IRS that it is subject to backup withholding, or (c) it has been notified by the IRS that it is no longer subject to backup withholding; and

• certifies that it is a U.S. citizen or other U.S. person.

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If the U.S. shareholder has not provided and does not provide its correct taxpayer identification number and appropriate certifications on an IRS Form W-9 or substantially similar form, it may be subject to penalties imposed by the IRS, and the applicable withholding agent may have to withhold a portion of any distributions or proceeds paid to such U.S. shareholder. Unless the U.S. shareholder has established on a properly executed IRS Form W-9 or substantially similar form that it comes within an enumerated exempt category, distributions or proceeds on our shares paid to it during the calendar year, and the amount of tax withheld, if any, will be reported to it and to the IRS.

Distributions on our shares to a non-U.S. shareholder during each calendar year and the amount of tax withheld, if any, will generally be reported to the non-U.S. shareholder and to the IRS. This information reporting requirement applies regardless of whether the non-U.S. shareholder is subject to withholding on distributions on our shares or whether the withholding was reduced or eliminated by an applicable tax treaty. Also, distributions paid to a non-U.S. shareholder on our shares will generally be subject to backup withholding, unless the non-U.S. shareholder properly certifies to the applicable withholding agent its non-U.S. shareholder status on an applicable IRS Form W-8 or substantially similar form. Information reporting and backup withholding will not apply to proceeds a non-U.S. shareholder receives upon the sale, exchange, redemption, retirement or other disposition of our shares, if the non-U.S. shareholder properly certifies to the applicable withholding agent its non-U.S. shareholder status on an applicable IRS Form W-8 or substantially similar form. Even without having executed an applicable IRS Form W-8 or substantially similar form, however, in some cases information reporting and backup withholding will not apply to proceeds that a non-U.S. shareholder receives upon the sale, exchange, redemption, retirement or other disposition of our shares if the non-U.S. shareholder receives those proceeds through a broker’s foreign office.

Non-U.S. financial institutions and other non-U.S. entities are subject to diligence and reporting requirements for purposes of identifying accounts and investments held directly or indirectly by U.S. persons. The failure to comply with these additional information reporting, certification and other requirements could result in a 30% U.S. withholding tax on applicable payments to non-U.S. persons, notwithstanding any otherwise applicable provisions of an income tax treaty. In particular, a payee that is a foreign financial institution that is subject to the diligence and reporting requirements described above must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by “specified United States persons” or “United States owned foreign entities” (each as defined in the IRC and administrative guidance thereunder), annually report information about such accounts, and withhold 30% on applicable payments to noncompliant foreign financial institutions and account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States with respect to these requirements may be subject to different rules. The foregoing withholding regime generally applies to payments of dividends on our shares. In general, to avoid withholding, any non-U.S. intermediary through which a shareholder owns our shares must establish its compliance with the foregoing regime, and a non-U.S. shareholder must provide specified documentation (usually an applicable IRS Form W-8) containing information about its identity, its status, and if required, its direct and indirect U.S. owners. Non-U.S. shareholders and shareholders who hold our shares through a non-U.S. intermediary are encouraged to consult their own tax advisors regarding foreign account tax compliance.

Other Tax Considerations

Our tax treatment and that of our shareholders may be modified by legislative, judicial or administrative actions at any time, which actions may have retroactive effect. The rules dealing with federal income taxation are constantly under review by the U.S. Congress, the IRS and the U.S. Department of the Treasury, and statutory changes, new regulations, revisions to existing regulations and revised interpretations of established concepts are issued frequently. Likewise, the rules regarding taxes other than U.S. federal income taxes may also be modified. No prediction can be made as to the likelihood of passage of new tax legislation or other provisions, or the direct or indirect effect on us and our shareholders. Revisions to tax laws and interpretations of these laws could adversely affect our ability to qualify and be taxed as a REIT, as well as the tax or other consequences of an investment in our shares. We and our shareholders may also be subject to taxation by state, local or other jurisdictions, including those in which we or our shareholders transact business or reside. These tax consequences may not be comparable to the U.S. federal income tax consequences discussed above.

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ERISA PLANS, KEOGH PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

General Fiduciary Obligations

The Employee Retirement Income Security Act of 1974, as amended, or ERISA, the IRC and similar provisions to those described below under applicable foreign or state law, individually and collectively, impose certain duties on persons who are fiduciaries of any employee benefit plan subject to Title I of ERISA, or an ERISA Plan, or an individual retirement account or annuity, or an IRA, a Roth IRA, a tax-favored account (such as an Archer MSA, Coverdell education savings account or health savings account), a Keogh plan or other qualified retirement plan not subject to Title I of ERISA, each a Non-ERISA Plan. Under ERISA and the IRC, any person who exercises any discretionary authority or control over the administration of, or the management or disposition of the assets of, an ERISA Plan or Non-ERISA Plan, or who renders investment advice for a fee or other compensation to an ERISA Plan or Non-ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan or Non-ERISA Plan.

Fiduciaries of an ERISA Plan must consider whether:

• their investment in our shares or other securities satisfies the diversification requirements of ERISA;

• the investment is prudent in light of possible limitations on the marketability of our shares;

• they have authority to acquire our shares or other securities under the applicable governing instrument and Title I of ERISA; and

• the investment is otherwise consistent with their fiduciary responsibilities.

Fiduciaries of an ERISA Plan may incur personal liability for any loss suffered by the ERISA Plan on account of a violation of their fiduciary responsibilities. In addition, these fiduciaries may be subject to a civil penalty of up to 20% of any amount recovered by the ERISA Plan on account of a violation. Fiduciaries of any Non-ERISA Plan should consider that the Non-ERISA Plan may only make investments that are authorized by the appropriate governing instrument and applicable law.

Fiduciaries considering an investment in our securities should consult their own legal advisors if they have any concern as to whether the investment is consistent with the foregoing criteria or is otherwise appropriate. The sale of our securities to an ERISA Plan or Non-ERISA Plan is in no respect a representation by us or any underwriter of the securities that the investment meets all relevant legal requirements with respect to investments by the arrangements generally or any particular arrangement, or that the investment is appropriate for arrangements generally or any particular arrangement.

Prohibited Transactions

Fiduciaries of ERISA Plans and persons making the investment decision for Non-ERISA Plans should consider the application of the prohibited transaction provisions of ERISA and the IRC in making their investment decision. Sales and other transactions between an ERISA Plan or a Non-ERISA Plan and disqualified persons or parties in interest, as applicable, are prohibited transactions and result in adverse consequences absent an exemption. The particular facts concerning the sponsorship, operations and other investments of an ERISA Plan or Non-ERISA Plan may cause a wide range of persons to be treated as disqualified persons or parties in interest with respect to it. A non-exempt prohibited transaction, in addition to imposing potential personal liability upon ERISA Plan fiduciaries, may also result in the imposition of an excise tax under the IRC or a penalty under ERISA upon the disqualified person or party in interest. If the disqualified person who engages in the transaction is the individual on behalf of whom an IRA, Roth IRA or other tax-favored account is maintained (or his beneficiary), the IRA, Roth IRA or other tax-favored account may lose its tax-exempt status and its assets may be deemed to have been distributed to the individual in a taxable distribution on account of the non-exempt prohibited transaction, but no excise tax will be imposed. Fiduciaries considering an investment in our securities should consult their own legal advisors as to whether the ownership of our securities involves a non-exempt prohibited transaction.

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“Plan Assets” Considerations

The U.S. Department of Labor has issued a regulation defining “plan assets.” The regulation, as subsequently modified by ERISA, generally provides that when an ERISA Plan or a Non-ERISA Plan otherwise subject to Title I of ERISA and/or Section 4975 of the IRC acquires an interest in an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act of 1940, as amended, the assets of the ERISA Plan or Non-ERISA Plan include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established either that the entity is an operating company or that equity participation in the entity by benefit plan investors is not significant. We are not an investment company registered under the Investment Company Act of 1940, as amended.

Each class of our equity (that is, our common shares and any other class of equity that we have issued or may issue) must be analyzed separately to ascertain whether it is a publicly offered security. The regulation defines a publicly offered security as a security that is “widely held,” “freely transferable” and either part of a class of securities registered under the Exchange Act, or sold under an effective registration statement under the Securities Act of 1933, as amended, or the Securities Act, provided the securities are registered under the Exchange Act within 120 days after the end of the fiscal year of the issuer during which the offering occurred. Each class of our outstanding shares has been registered under the Exchange Act within the necessary time frame to satisfy the foregoing condition.

The regulation provides that a security is “widely held” only if it is part of a class of securities that is owned by 100 or more investors independent of the issuer and of one another. However, a security will not fail to be “widely held” because the number of independent investors falls below 100 subsequent to the initial public offering as a result of events beyond the issuer’s control. Although we cannot be sure, we believe our common shares and our previously outstanding preferred shares have been and will remain widely held, and we expect the same to be true of any future class of equity that we may issue.

The regulation provides that whether a security is “freely transferable” is a factual question to be determined on the basis of all relevant facts and circumstances. The regulation further provides that, where a security is part of an offering in which the minimum investment is $10,000 or less, some restrictions on transfer ordinarily will not, alone or in combination, affect a finding that these securities are freely transferable. The restrictions on transfer enumerated in the regulation as not affecting that finding include:    

• any restriction on or prohibition against any transfer or assignment that would result in a termination or reclassification for federal or state tax purposes, or would otherwise violate any state or federal law or court order;

• any requirement that advance notice of a transfer or assignment be given to the issuer and any requirement that either the transferor or transferee, or both, execute documentation setting forth representations as to compliance with any restrictions on transfer that are among those enumerated in the regulation as not affecting free transferability, including those described in the preceding clause of this sentence;

• any administrative procedure that establishes an effective date, or an event prior to which a transfer or assignment will not be effective; and

• any limitation or restriction on transfer or assignment that is not imposed by the issuer or a person acting on behalf of the issuer.

We believe that the restrictions imposed under our declaration of trust and bylaws on the transfer of shares do not result in the failure of our shares to be “freely transferable.” Furthermore, we believe that there exist no other facts or circumstances limiting the transferability of our shares that are not included among those enumerated as not affecting their free transferability under the regulation, and we do not expect or intend to impose in the future, or to permit any person to impose on our behalf, any limitations or restrictions on transfer that would not be among the enumerated permissible limitations or restrictions.

Assuming that each class of our shares will be “widely held” and that no other facts and circumstances exist that restrict transferability of these shares, our counsel, Sullivan & Worcester LLP, is of the opinion that our shares will not fail to be “freely transferable” for purposes of the regulation due to the restrictions on transfer of our shares in our declaration of trust and bylaws and that under the regulation each class of our currently outstanding shares is publicly offered and our assets will not be deemed to be “plan assets” of any ERISA Plan or Non-ERISA Plan that acquires our shares in a public offering. This opinion is conditioned upon certain assumptions and representations, as discussed above in “Material United States Federal Income Tax Considerations-Taxation as a REIT.”

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Item 1A. Risk Factors

Our business is subject to a number of risks and uncertainties. Investors and prospective investors should carefully consider the risks described below, together with all of the other information in this Annual Report on Form 10-K. The risks described below may not be the only risks we face but are risks we believe may be material at this time. Additional risks that we do not yet know of, or that we currently think are immaterial, also may impair our business operations or financial results. If any of the events or circumstances described below occurs, our business, financial condition, results of operations or ability to make distributions to our shareholders and the value of our securities could be adversely affected. Investors and prospective investors should consider the following risks, the information contained under the heading “Warning Concerning Forward-Looking Statements” and the risks described elsewhere in this Annual Report on Form 10-K before deciding whether to invest in our securities.

Risks Related to Our Business

Adverse general economic conditions in the United States would likely negatively impact our business.

Many of our properties are operated in two segments of the economy, the hotel industry and the travel center industry. The hotel and travel center industries have historically been highly sensitive to general economic conditions in the United States and in the geographic areas where our properties are located.

The performance of the hotel industry has historically been closely linked to the performance of the general economy both nationally and within local markets in the United States. The hotel industry is sensitive to business and personal discretionary spending levels. Declines in corporate travel and consumer demand due to adverse general economic conditions, such as a decline in U.S. gross domestic product or lower consumer confidence or government budgetary constraints may reduce the revenues and profitability of our hotels. A slowing of the U.S. economy or a new U.S. recession may lead to a significant decline in demand for the products and services offered at our hotels or increase the cost of offering such products and services. We cannot predict the pace or duration of general U.S. economic cycles or cycles which may be experienced in the hotel industry. A period of general economic weakness in the United States would likely reduce the revenues and profitability of our hotels and negatively impact our financial condition and results of operations.

Our travel centers primarily provide goods and services to the trucking industry, and demand for trucking services in the United States generally reflects the amount of commercial activity in the U.S. economy. When the U.S. economy declines, demand for goods moved by trucks declines, and in turn demand for the products and services provided at our travel centers typically declines. Increases in global trade have historically mitigated the adverse impact of economic slowdowns upon the travel center business, but world trade was negatively impacted during the most recent U.S. recession. In addition, the Trump administration has taken certain actions, and indicated it may take additional actions, that significantly change U.S. trade policy, including imposing tariffs on certain goods imported into the United States. Changes in U.S. trade policy have triggered, and additional changes could further trigger, retaliatory actions by affected countries, resulting in “trade wars,” and in increased costs for goods imported into the United States, which may reduce customer demand for these products if the parties having to pay those tariffs increase their prices, or in trading partners limiting their trade with the United States. If these consequences are realized, the volume of economic activity in the United States, including trucking freight volume, may materially decline. Such a reduction may materially and adversely affect TA’s sales and its business and, consequently, its ability to pay us rent.

The businesses operated at the properties we acquired in the SMTA Transaction are generally considered necessity-based retail operations which may experience greater resiliency during economic downturns. However, any benefit from these properties may not be as expected and may not offset the possible negative impact on our other businesses in an economic downturn. Furthermore, if our tenants for these properties experience declines in their businesses due to competitive pressures, adverse economic conditions or otherwise, they may fail to pay rent owed to us.

Inherent risks in the hotel industry could affect our business.

Approximately 57.2% of our historical real estate investments as of December 31, 2019, are in our hotel properties. Our hotels are subject to operating risks common to the hotel industry, many of which are beyond our control, including risks associated with:

• competition from other hotels in our markets, or an oversupply of hotels in our markets;

• increased operating costs, including wages, benefits, insurance, property taxes and energy, due to inflation, increased minimum wages and other factors, which may not be offset in the future by increased room rates;

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• changes in marketing and distribution for the industry including the ability of third party internet and other travel intermediaries to attract and retain customers;

• competition from other hotel operators or others to attract and retain qualified employees;

• competition from alternative lodging options such as cruise ships, timeshares, vacation rentals or sharing services such as Airbnb, in our markets;

• low unemployment in the U.S. and a lack of suitable employees for certain job classifications, especially those for less skilled positions, which may drive up costs or affect service levels;

• labor strikes, disruptions or lockouts that may impact operating performance;

• dependence on demand from business and leisure travelers, which may fluctuate and be seasonal;

• increases in energy costs, airline fares and other expenses related to travel, which may negatively affect traveling;

• decreases in demand for business and leisure travel due to terrorism, terrorism alerts and warnings, military actions, pandemics or other medical events;

• decreases in demand for business travel due to use of technologies that enhance interpersonal communication and interaction without the need to travel or meet in person; and

• changes in customer preferences for various types of hotels or hotel locations.

These and other factors could materially and adversely affect our financial condition and results of operations and cause the value of our securities to decline.

Certain of our returns and rents are guaranteed by the parent companies of our managers and tenants, but these guarantees may not ensure that payments due to us will be made and some of these guarantees are limited in dollar amount and duration.

Certain of our returns and rents are guaranteed by the parent companies of our managers and tenants. However, most of these guarantees are limited in dollar amount and duration. For example, our guaranty from Marriott for 122 hotels is limited to $30.0 million and expires in 2026; our guaranty from Hyatt is limited to $50.0 million (of which $19.7 million remained available at December 31, 2019); and our guaranty from Radisson is limited to $47.5 million (of which $41.2 million remained available at December 31, 2019). If our Marriott, Hyatt and Radisson properties produce less net operating income than the guaranteed amounts of our minimum returns or rents for extended future periods, these guarantees may be exhausted. Further, many of our hotel operating costs are fixed or we may be practically limited in our ability to reduce these expenses. As a result, if we do not receive our minimum returns and we do not have any security deposit or guarantee available, our operating results and our cash flows will be adversely impacted. Also certain of our net lease tenants, including TA, provide parent company guarantees. If these tenants do not earn sufficient income from their businesses, they may not have sufficient resources independent of these leaseholds to pay their guaranty obligations to us. Despite the existence of parent companies’ guarantees of our managers’ and tenants’ obligations to us, we cannot be sure that these obligations will be paid.

Certain of our returns and rents are secured with cash deposits that, if used to cover shortfalls in our minimum returns and rents, will not provide cash flows to us.

As of December 31, 2019, our IHG agreement requires annual minimum returns and rents to us of $216.2 million. As of December 31, 2019, we have a security deposit balance of $75.7 million to cover future shortfalls. Our agreement with Marriott for 122 hotels requires annual minimum returns to us of $192.8 million. As of December 31, 2019, we have a security deposit balance of $33.4 million. When we reduce the amounts of the security deposits we hold under our management and lease agreements for future payment deficiencies, we record income equal to the amounts applied, but we do not receive additional cash flows.

When and if the IHG security deposit and the Marriott security deposit and guaranty are exhausted, we may not receive the contractually guaranteed amounts or minimum returns due to us from IHG and Marriott, respectively. We have no security deposits or guarantees under our Sonesta or Wyndham agreements. Accordingly, the returns we receive from our hotels managed under those agreements are dependent upon the financial results of those hotel operations. For the year ended December 31, 2019, we had an aggregate of $69.9 million in unfunded shortfalls, which represents the unguaranteed portions of our minimum returns under our Sonesta and Wyndham agreements.

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We may not successfully sell or rebrand the hotels that we have identified or agreed to sell or rebrand.

We previously announced our intention to sell approximately $300 million of hotel assets to reduce our financial leverage. We are currently marketing 20 Wyndham branded hotels with an aggregate carrying value of $111.3 million as of December 31, 2019 for sale and announced our intention to sell or rebrand up to 33 Marriott branded hotels with an aggregate carrying value of $224.9 million as of December 31, 2019. In addition, we have identified 39 Sonesta branded hotels with an aggregate carrying value of $480.5 million as of December 31, 2019 that we intend to sell, rebrand or repurpose. We cannot be sure that we will be able to find attractive sale opportunities for the hotels we have identified for sale or that any sale will be completed in a timely manner, if at all. Our ability to sell those hotels, and the prices we receive upon a sale, may be affected by many factors, and we may be unable to execute our strategy. In particular, these factors could arise from weakness in or the lack of an established market for the hotels, changes in the financial condition or prospects of prospective purchasers and those purchasers’ prospective tenants or managers of the hotels, the characteristics, quality and prospects of the hotels, and the availability of financing to potential purchasers on reasonable terms, the number of prospective purchasers, the number of competing hotels in the market, unfavorable local, national or international economic conditions, industry trends, and changes in laws, regulations or fiscal policies of jurisdictions in which the hotels are located. We may not succeed in selling properties that we have identified, or in the future identify, for sale, the terms of any such sales may not meet our expectations and we may incur losses in connection with these potential sales. In addition, we may elect to change the amount or mix of assets we may seek to sell or to otherwise change or abandon the plan. Further, any of these hotels that we elect to rebrand or repurpose rather than sell, may not provide us with our expected or desirable returns.

We have a high concentration of properties with a limited number of operators for our hotels and travel centers.

We lease 179 of our travel centers to TA, which constituted approximately 26.9% of our total historical real estate investments as of December 31, 2019. Two of our hotel managers, IHG and Marriott, operate 103 and 122 of our hotels, respectively, which constituted approximately 19.4% and 15.1%, respectively, of our total historical real estate investments as of December 31, 2019. If any of these operators were to fail to provide quality services and amenities or to maintain quality brands, our income from these properties may be adversely affected. Further, if we were required to replace any of our operators, we could experience significant disruptions in operations at the applicable properties, which could reduce our income and cash flows from, and the value of, those properties.

TA’s business is subject to substantial risks, which could adversely affect us.

TA has not been consistently profitable since it became a public company in 2007, and it operates in highly competitive industries, including travel centers and restaurants. TA’s business is subject to a number of risks, including the following:

• Competition from other travel centers or an oversupply of travel centers in our markets.

• Increasing truck fuel efficiency may adversely impact TA’s business. Government regulation and increasing and volatile fuel prices are causing truck manufacturers and TA’s trucking customers to remain focused on fuel efficiency. The largest part of TA’s revenue is derived from selling motor fuel. If TA’s trucking customers purchase less motor fuel because their trucks are operated more fuel efficiently, TA’s financial results will decline unless it is sufficiently able to offset those declines by selling substitute or other products or services, gaining market share, increasing its gross margins per gallon of fuel sold or reducing its operating costs.    

• TA’s operating margins are narrow, and fuel sales comprise the majority of TA’s revenues. Historically, TA’s fuel margins per gallon have declined during periods of rising fuel prices, and during the last U.S. recession and the periods of historically high and volatile fuel prices, TA realized large operating losses.    

• The trucking industry is the primary customer for TA’s goods and services. When the U.S. economy declines, demand for goods moved by trucks declines, and in turn demand for TA’s products and services typically declines.

• TA’s indebtedness and rent obligations are substantial. A decline in TA’s revenues or an increase in its expenses or capital improvements may make it difficult or impossible for TA to make payments of interest and principal on its debt or meet all of its rent obligations. TA’s substantial indebtedness and rent obligations may also place TA at a disadvantage in relation to competitors that have lower relative debt levels.

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• Increasing fuel prices and fuel price volatility have various adverse impacts upon TA’s business. For example, high fuel prices result in higher truck shipping costs, which causes shippers to consider alternative means for transporting freight and therefore reduces trucking business and, in turn, TA’s business. Higher fuel prices may also result in less disposable income for TA’s customers to purchase TA’s non-fuel goods and services. Higher and more volatile fuel commodity prices increase the working capital needed to maintain TA’s fuel inventory and receivables, and this increases TA’s costs of doing business. Further, increases in fuel prices may place TA at a cost disadvantage to its competitors that may have larger fuel inventory or forward contracts executed during periods of lower fuel prices.    

• TA’s labor costs have increased, and may further increase, due to increased demand for labor in the market and for higher skilled personnel, such as technicians, that TA requires. This increased demand may continue to increase TA’s labor costs and prevent TA from fully staffing its positions. Further, legislation that increases the minimum wage may further increase TA’s labor costs. TA may not be able to successfully pass through its increased labor costs in the prices it charges its customers.

• To mitigate the risks arising from fuel price volatility, TA generally maintains limited fuel inventory. Accordingly, an interruption in TA’s fuel supplies, which may be caused by local conditions, such as a malfunction in a particular pipeline or terminal, by weather related events, such as hurricanes in the areas where petroleum or natural gas is extracted or refined, or by national or international conditions, such as government rationing, acts of terrorism, wars and the like, would materially adversely affect TA’s business.    

• If the trucking industry fails to satisfy market demands for transporting goods or it increases its use of efficient and alternative fuels, the demand for TA’s products and services may decline. For example, electronic or battery powered trucks may reduce the demand for petroleum based fuels which are TA’s principal products or driverless trucks may reduce the number of people who are employed as professional drivers who are TA’s principal customers. In addition, a shortage in truck drivers may result in the increased use of alternative modes of transporting goods, such as railroad, airplanes or drones, among other possibilities.    

• TA’s business is subject to laws relating to the protection of the environment. The travel centers TA operates include fueling areas, truck repair and maintenance facilities and tanks for the storage and dispensing of petroleum products, natural gas, waste and other hazardous substances, all of which create the potential for environmental damage. As a result, TA regularly incurs environmental costs related to monitoring, prevention and remediation. TA cannot predict what environmental legislation or regulations may be enacted or how existing laws or regulations will be administered or interpreted; more stringent laws, more vigorous enforcement policies or stricter interpretation of existing laws in the future could cause TA to expend significant amounts or experience losses.    

• Climate change and other environmental legislation and regulation, and market reaction to such legislation and regulation, may decrease demand for TA’s major product, diesel fuel, and require TA to make significant changes to its business and to make capital or other expenditures, which may adversely affect its business.    

• TA may incur significant costs and losses as a result of severe weather, both in terms of operating, preparing and repairing the travel centers in anticipation of, during and after a severe weather event and in terms of lost business due to the interruption in operating TA’s travel centers or decreased truck movements.

For these reasons, among others, TA may be unable to pay amounts due to us under the terms of our agreements with TA. For more information about our agreements with TA, see Notes 4 and 5 to our consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K.

We and Sonesta have restructured our business arrangements, but those arrangements may not result in the benefits we expect.

On February 27, 2020, we restructured our business arrangements with Sonesta, to, among other things, agree to sell, rebrand or repurpose our 39 extended stay hotels currently managed by Sonesta, and, with respect to our 14 full-service hotels that Sonesta will continue to manage, reduce the annual minimum returns due to us from Sonesta, establish an FF&E reserve based on a percentage of revenues (subject to available cash flow after payment of the annual minimum returns due to us), implement a portfolio wide performance termination test, and eliminate the right to require the marketing for sale of non-economic hotels. Also as part of the restructuring, we received an approximately 34% equity interest in Sonesta, post-issuance. Historically, we have generally not received in full our annual minimum returns due to us from Sonesta. We cannot be sure that Sonesta will generate the reduced annual minimum returns due to us with respect to our full-service hotels that Sonesta will continue to manage or for any hotels that Sonesta may manage for us in the future. In addition, there may not be sufficient cash flow generated by our Sonesta managed hotels to fund FF&E reserves, and the changes to the termination provisions may limit our rights with respect to underperforming hotels in the future.

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We have debt and we may incur additional debt.

As of December 31, 2019, our consolidated indebtedness was $6.1 billion, our consolidated total debt to gross book value of real estate ratio was 52.0% and we had $623 million available for borrowing under our $1.0 billion revolving credit facility. The agreement governing our revolving credit facility and our $400 million term loan, or our credit agreement, includes a feature under which the maximum aggregate borrowing availability may be increased to up to $2.3 billion on a combined basis in certain circumstances.

We are subject to numerous risks associated with our debt, including the risk that our cash flows could be insufficient for us to make required payments on our debt. There are no limits in our organizational documents on the amount of debt we may incur, and we may incur substantial debt. Our debt obligations could have important consequences to our securityholders.

In connection with the SMTA Transaction, we incurred significant additional indebtedness. Our incurring debt may increase our vulnerability to adverse economic, market and industry conditions, limit our flexibility in planning for, or reacting to, changes in our business, and place us at a disadvantage in relation to competitors that have lower debt levels. Our incurring debt could also increase the costs to us of incurring additional debt, increase our exposure to floating interest rates, limit our ability to compete with other companies that are not as highly leveraged, restrict us from making strategic acquisitions, developing properties or exploiting business opportunities, or expose us to potential events of default (if not cured or waived) under covenants contained in debt instruments that could have a material adverse effect on our business, financial condition and operating results. Excessive debt could reduce the available cash flow to fund, or limit our ability to obtain financing for working capital, capital expenditures, acquisitions, construction projects, refinancing, lease obligations or other purposes, and hinder our ability to maintain investment grade ratings from nationally recognized credit rating agencies or to make or sustain distributions to our shareholders.

If we default under any of our debt obligations, we may be in default under the agreements governing other debt obligations of ours which have cross default provisions, including our credit agreement and our senior unsecured notes indentures and their supplements. In such case, our lenders may demand immediate payment of any outstanding indebtedness and we could be forced to liquidate our assets for less than the values we would receive in a more orderly process.

Changes in market interest rates, including changes that may result from the expected phase out of LIBOR, may adversely affect us.

Since the last U.S. recession, the Board of Governors of the U.S. Federal Reserve System, or the U.S. Federal Reserve, has taken actions which have resulted in low interest rates prevailing in the marketplace for a historically long period of time. The U.S. Federal Reserve steadily increased the targeted federal funds rate over the last several years, but recently took action to decrease its federal funds rate and may continue to make adjustments in the future. In addition, as noted in Item 7A of this Annual Report on Form 10-K, LIBOR is expected to be phased out in 2021. The interest rates under our revolving credit facility and term loan are based on LIBOR and future debt we may incur may also be based on LIBOR. We currently expect that the determination of interest under our revolving credit facility and term loan agreement would be based on the alternative rates provided under the agreement or would be revised to provide for an interest rate that approximates the existing interest rate as calculated in accordance with LIBOR. Despite our current expectations, we cannot be sure that, if LIBOR is phased out or transitioned, the changes to the determination of interest under our agreement would approximate the current calculation in accordance with LIBOR. An alternative interest rate index that may replace LIBOR may result in our paying increased interest. Interest rate increases may materially and negatively affect us in several ways, including:

Investors may consider whether to buy or sell our common shares based upon the distribution rate on our common shares relative to the then prevailing market interest rates. If market interest rates go up, investors may expect a higher distribution rate than we are able to pay, which may increase our cost of capital, or they may sell our common shares and seek alternative investments that offer higher distribution rates. Sales of our common shares may cause a decline in the value of our common shares.

Amounts outstanding under our revolving credit facility and term loans require interest to be paid at floating interest rates. When interest rates increase, our interest costs will increase, which could adversely affect our cash flows, our ability to pay principal and interest on our debt, our cost of refinancing our fixed rate debts when they become due and our ability to make or sustain distributions to our shareholders.

Property values are often determined, in part, based upon a capitalization of rental income formula. When market interest rates increase, property investors often demand higher capitalization rates and that causes property values to decline. Increases in interest rates could lower the value of our properties and cause the value of our securities to decline.

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Low market interest rates, particularly if they remain over a sustained period, may result in increased use of debt capital to fund property acquisitions, lower capitalization rates for property purchases and increased competition for property purchases which my reduce our ability to acquire new properties.

Our credit ratings have been adversely affected by the SMTA Transaction.

As a result of the SMTA Transaction, Standard & Poor’s Global, or S&P, assigned a negative outlook to our credit ratings and Moody’s Investor Service, or Moody’s downgraded our credit ratings. These negative actions imply that our debt ratings may be downgraded to below “investment grade.” If our credit ratings are further downgraded, we may have difficulty accessing debt capital markets to meet our obligations or pursue business opportunities and the costs of any debt we do obtain may be increased. For example, the interest rates we are required to pay on our revolving credit facility, term loan and other floating rate debt obligations will increase if our debt ratings are further downgraded. We intend to sell assets to reduce leverage and to take other actions which we believe may avoid our credit ratings being downgraded below investment grade, however, we can provide no assurance that these efforts will be successful in avoiding our credit ratings being downgraded below investment grade.

We may be unable to fund capital improvements and renovation costs at our properties and our capital projects may be disruptive to our operations and result in reduced revenues at the affected properties.

Some of our management agreements and lease arrangements require us to fund capital improvements at certain of our properties. We currently expect to invest approximately $155.0 million during 2020 for capital improvements and renovation costs under certain of our hotel and net lease agreements. We may not have the funds necessary to make these investments, and such investments, if made, may not be sufficient to maintain or improve the financial results of our properties. Certain of our management agreements and lease arrangements require us to maintain the applicable properties in a certain required condition. If we fail to maintain these properties in the required condition, the manager or tenant may terminate the applicable management or lease agreement and hold us liable for damages.

In addition, renovation projects at our hotel properties may require taking rooms out of service or closing down properties during the renovations, which could reduce revenues at the affected properties. During 2019, we had 38 comparable hotels under renovation for all or part of the year and these hotels experienced a 9.2% decrease in revenue per available room, or RevPAR, compared to the prior year, compared to a 0.2% decrease in RevPAR compared to the prior year for those of our comparable hotels that were not under renovation during 2019.

Certain of our management agreements and leases limit our ability to sell or finance our properties.

Under the terms of certain of our management agreements and leases, we generally may not sell, lease or otherwise transfer the applicable property unless the transferee is not a competitor of the applicable manager or tenant and the transferee assumes the related management agreement or lease and meets other specified conditions. Our ability to finance or sell our properties, depending upon the structure of such transactions, may require a manager’s or tenant’s consent under the applicable agreement. If, in these circumstances, the manager or tenant does not consent, we may be prevented from taking actions which might be beneficial to our shareholders.

We may be unable to grow our business by acquisitions of additional properties.

Our business plans involve the acquisition of additional properties. Our ability to make profitable acquisitions is subject to risks, including, but not limited to, risks associated with:

• competition from other investors, including publicly traded and private REITs, numerous financial institutions, developers, individuals, foreign investors and other public and private companies;

• our long term cost of capital;

• contingencies in our acquisition agreements; and

• the availability and terms of financing.

We might encounter unanticipated difficulties and expenditures relating to our acquired properties. For example:

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• we do not believe that it is possible to understand fully a property before it is owned and operated for a reasonable period of time, and, notwithstanding pre-acquisition due diligence, we could acquire a property that contains undisclosed defects in design or construction or which was not properly staffed;

• the market in which an acquired property is located may experience unexpected changes that adversely affect the property’s value;

• the occupancy of and rents or returns from properties that we acquire may decline during our ownership;

• property operating costs for our acquired properties may be higher than anticipated and our acquired properties may not yield expected returns;

• we may acquire properties subject to unknown liabilities and without any recourse, or with limited recourse, such as liability for the cleanup of undisclosed environmental contamination or for claims by tenants, vendors or other persons related to actions taken by former owners of the properties; and

• acquired properties might require significant management attention that would otherwise be devoted to our other business activities.

For these reasons, among others, we might not realize the anticipated benefits of our acquisitions, and our business plan to acquire additional properties may not succeed or may cause us to experience losses.

We are limited in our ability to operate or manage our properties and are thus dependent on our managers and tenants.

Because federal income tax laws restrict REITs and their subsidiaries from operating or managing businesses at their properties, we do not operate or manage our hotels or net lease properties. Instead, we lease our hotels to operating companies or to our subsidiaries that qualify as TRSs under the IRC and lease our other properties to operating companies. We have retained third party managers to operate and manage our hotels that are leased to our subsidiaries. Our income from our properties may be adversely affected if our managers or tenants fail to provide quality services and amenities to customers. While we monitor the performance of our managers and tenants and apply asset management strategies and discipline, we have limited recourse under our management agreements and leases if we believe that our managers or tenants are not performing adequately. Any failure by our managers or tenants to fully perform the duties agreed to in our management agreements and leases could adversely affect our results of operations. In addition, our managers and tenants operate, and in some cases own or have invested in, properties that compete with our properties, which may result in conflicts of interest and a reduction of our returns. As a result, our managers and tenants have made, and may in the future make, decisions regarding competing properties or our properties’ operations that may not be in our best interests.

We face significant competition.

The businesses conducted at our properties face significant competition. For example, our hotels compete with other hotels operated in our markets, and the hotel industry has recently experienced significant growth in supply from construction in certain markets where we own hotels. Our travel center properties compete with other large, national operators of travel centers, and certain of their competitors have significantly increased the number of travel centers they operate, including as a result of new construction of travel centers.

We face significant competition for acquisition opportunities from other investors, including publicly traded and private REITs, numerous financial institutions, operating companies in the hospitality industry, individuals, foreign investors and other public and private companies. Some of our competitors may have greater financial and other resources than us and may be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of property operators and the extent of leverage used in their capital structure. Because of competition for acquisitions, we may be unable to acquire desirable properties or we may pay higher prices for, and realize lower net cash flows than we hope to achieve from, acquisitions.

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REIT distribution requirements and limitations on our ability to access reasonably priced capital may adversely impact our ability to carry out our business plan.

To maintain our qualification for taxation as a REIT under the IRC, we are required to satisfy distribution requirements under the IRC. See “Material United States Federal Income Tax Considerations—REIT Qualification Requirements—Annual Distribution Requirements.” Accordingly, we may not be able to retain sufficient cash to fund our operations, repay our debts, invest in our properties or fund our acquisitions or development or redevelopment efforts. Our business strategies therefore depend, in part, upon our ability to raise additional capital at reasonable costs. The volatility in the availability of capital to businesses on a global basis in most debt and equity markets generally may limit our ability to raise reasonably priced capital. We may also be unable to raise reasonably priced capital because of reasons related to our business, market perceptions of our prospects, the terms of our indebtedness, the extent of our leverage or for reasons beyond our control, such as market conditions. Because the earnings we are permitted to retain are limited by the rules governing REIT qualification and taxation, if we are unable to raise reasonably priced capital, we may not be able to carry out our business plan.

Substantially all of our net lease properties are leased to single tenants, which may subject us to greater risks of loss than if each of those properties had multiple tenants.

As of December 31, 2019, 38.3% of our minimum returns and rents were from properties leased to single tenants. The value of single tenant properties is materially dependent on the performance of those tenants under their respective leases. Many of our single tenant leases require that certain property level operating expenses and capital expenditures, such as real estate taxes, insurance, utilities, maintenance and repairs, including increases with respect thereto, be paid, or reimbursed to us, by our tenants. Accordingly, in addition to our not receiving rental income, a tenant default on such leases could make us responsible for paying these expenses. Because most of our net lease properties are leased to single tenants, the adverse impact of individual tenant defaults or non-renewals is likely to be greater than would be the case if our properties were leased to multiple tenants.

The properties we acquired in the SMTA Transaction have significantly increased our property portfolio and we are now operating in industries that are new to us.

The SMTA Transaction involved the acquisition of 767 properties which expanded our portfolio and operations into industries that are new to us and in which we have limited or no experience. Our future success will depend, in part, upon our ability to adapt to operating and competing in new industries, attract and retain tenants in these new markets at rents that we expect, integrate new operations into our existing business in an efficient and timely manner, successfully manage our operations and costs, avoid this new operation negatively impacting the performance of our existing business and maintain necessary internal controls. We cannot be sure that we will be able to increase future cash flows or property level rent coverage, maintain current rents and occupancy at the properties we acquired in the SMTA Transaction, that we will realize any expected benefits from the SMTA Transaction, particularly with respect to the properties in new industries in which we have limited or no experience, or that the SMTA Transaction will not negatively impact the performance of our existing business.

We may be subject to unknown or contingent liabilities related to the properties we acquired in the SMTA Transaction for which we may have no recourse against SMTA.

The properties we acquired in the SMTA Transaction may be subject to unknown or contingent liabilities, including environmental liabilities, for which we may have no recourse against SMTA. The amount of liabilities associated with the properties we acquired in the SMTA Transaction may exceed our expectations. We do not believe that it is possible to understand fully a property before it is owned and operated for a reasonable period of time, and, notwithstanding pre-acquisition due diligence, we may have acquired a property that contains undisclosed defects in design or construction or which was not properly operated.

Our tenants may fail to successfully operate their businesses, which could adversely affect us.

Adverse economic conditions such as high unemployment levels, interest rates, tax rates, fuel and energy costs, and changes in customer demand or consumer sentiment may have an impact on the results of operations and financial condition of our tenants and result in their defaulting their obligations under our leases, including failing to pay the rent due to us. Such adverse economic conditions may also reduce overall demand for rental space, which could adversely affect our ability to maintain our current tenants and attract new tenants.

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At any given time, our tenants may experience a downturn in their business that may weaken the operating results and financial condition of individual properties or of their business as whole. As a result, a tenant may delay lease commencement, decline to extend a lease upon its expiration, fail to make rental payments when due, become insolvent or declare bankruptcy. We depend on our tenants to operate the properties we lease to them in a manner that generates revenues sufficient to allow them to meet their obligations to us, including their obligations to pay rent, maintain certain insurance coverage and pay real estate taxes and maintain the properties. Our tenants’ failure to successfully operate their businesses could materially and adversely affect us.

Many of our tenants do not have credit ratings.

The majority of our tenants are not rated by any nationally recognized credit rating organization. It is more difficult to assess the ability of a tenant that is not rated to meet its obligations than that of a rated tenant. Moreover, tenants may be rated when we enter leases with them, but their ratings may be later lowered or terminated during the term of the leases. Because we have many unrated tenants, we may experience a higher percentage of tenant defaults than landlords who have a higher percentage of highly rated tenants.

We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all.

Our results of operations depend, in part, on our ability to lease our retail properties by renewing or re-leasing expiring leases and leasing vacant space and optimizing our tenant mix. As of December 31, 2019, leases representing approximately 1.5% of our annualized minimum rent will expire during 2020. As of December 31, 2019, 2% of the leasable square footage of our net lease properties was vacant. Current tenants may decline, or may not have the financial resources available, to renew current leases and we cannot guarantee that leases that are renewed will have terms that are as economically favorable to us as the expiring lease terms. If tenants do not renew their leases as they expire, we will have to find new tenants to lease our properties and there is no guarantee that we will be able to find new tenants or that our properties will be re-leased at rental rates equal to or above the current average rental rates or that substantial rent abatements, tenant improvement allowances, early termination rights, below-market renewal options or other lease incentive payments will not be offered to attract new tenants. We may experience significant costs in connection with renewing, leasing or re-leasing our properties, which could materially and adversely affect us.

Property vacancies could result in significant capital expenditures and illiquidity.

The loss of a tenant, either through lease expiration or tenant bankruptcy or insolvency, may require us to spend significant amounts of capital to renovate the property before it is suitable for a new tenant. Many of the leases we enter into or acquire are for properties that are especially suited to the particular business of our tenants. Because these properties have been designed or physically modified for a particular tenant, if the current lease is terminated or not renewed, we may be required to renovate the property at substantial costs, decrease the rent we charge or provide other concessions in order to lease the property to another tenant. In the event we are required to sell the property, we may have difficulty selling it to a party other than the tenant due to the special purpose for which the property may have been designed or modified. This potential illiquidity may limit our ability to quickly modify our portfolio in response to changes in economic or other conditions, including tenant demand. These limitations may materially and adversely affect us.

Bankruptcy law may adversely impact us.

The occurrence of a bankruptcy of a tenant of our net lease properties could reduce the rent we receive from such tenant’s lease. If a tenant becomes bankrupt, federal law may prohibit us from evicting such tenant based solely upon its bankruptcy. In addition, a bankrupt tenant may be authorized to reject and terminate its lease with us. Any claims against a bankrupt tenant for unpaid future rent would be subject to statutory limitations that may be substantially less than the contractually specified rent we are owed under the lease, and any claim we have for unpaid past rent, may not be paid in full. Further, if a hotel manager files for bankruptcy, we may experience delays in enforcing our rights, may be limited in our ability to replace the hotel manager and may incur substantial costs in protecting our investment and re-leasing or finding a replacement manager for the property.

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Some of our net lease tenants operate the properties they lease from us under franchise or license agreements, which, if terminated or not renewed prior to the expiration of their leases with us, would likely impair their ability to pay us rent. 

Some of our net lease properties are operated by our tenants under franchise or license agreements. Those franchise or license agreements may have terms that end earlier than the respective expiration dates of our related leases. In addition, a franchisee’s or licensee’s rights as a franchisee or licensee could be terminated by the franchisor or licensor, in which case our tenant may be precluded from competing with the franchisor or licensor upon that termination. A franchisor’s or licensor’s termination or refusal to renew a franchise or license agreement with our tenant would likely have a material adverse effect on the ability of the tenant to pay rent to us. In addition, we may have no notice or cure rights with respect to such a termination and have no rights to assignment of any such franchise or license agreement. This may have an adverse effect on our ability to mitigate losses that may result from a default of our leases by a terminated franchisee or licensee.

We may fail to comply with the terms of our credit agreement and our senior unsecured notes indentures and their supplements, which could adversely affect our business and may prevent our making distributions to our shareholders.

Our credit agreement and our senior unsecured notes indentures and their supplements include various conditions, covenants and events of default. We may not be able to satisfy all of these conditions or may default on some of these covenants for various reasons, including for reasons beyond our control. For example, our credit agreement and our senior unsecured notes indentures and their supplements require us to maintain certain debt service ratios. Our ability to comply with such covenants will depend upon the returns and rents we receive from our properties. If our returns and rents decline, we may be unable to borrow under our revolving credit facility. Complying with these covenants may limit our ability to take actions that may be beneficial to us and our securityholders.

If we are unable to borrow under our revolving credit facility, we may be unable to meet our obligations or grow our business by acquiring additional properties. If we default under our credit agreement, our lenders may demand immediate payment and may elect not to fund future borrowings. During the continuance of any event of default under our credit agreement, we may be limited or in some cases prohibited from making distributions to our shareholders. Any default under our credit agreement that results in acceleration of our obligations to repay outstanding indebtedness or in our no longer being permitted to borrow under our revolving credit facility would likely have serious adverse consequences to us and would likely cause the value of our securities to decline.

In the future, we may obtain additional debt financing, and the covenants and conditions which apply to any such additional debt may be more restrictive than the covenants and conditions that are contained in our credit agreement or our senior unsecured notes indentures and their supplements.

Ownership of real estate is subject to environmental risks and liabilities.

Ownership of real estate is subject to risks associated with environmental hazards. Under various laws, owners as well as tenants and managers of real estate may be required to investigate and clean up or remove hazardous substances present at or migrating from properties they own, lease or manage and may be held liable for property damage or personal injuries that result from hazardous substances. These laws also expose us to the possibility that we may become liable to government agencies or third parties for costs and damages they incur in connection with hazardous substances. The costs and damages that may arise from environmental hazards are difficult to assess and estimate for numerous reasons, including uncertainty about the extent of contamination, alternative treatment methods that may be applied, the location of the property which subjects it to differing local laws and regulations and their interpretations, as well as the time it may take to remediate contamination. In addition, these laws also impose various requirements regarding the operation and maintenance of properties and recordkeeping and reporting requirements relating to environmental matters that require us or the operators of our properties to incur costs to comply with.

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Our travel centers and certain of our other properties include fueling areas, truck repair and maintenance facilities and vehicles and tanks for the storage of petroleum products and other hazardous substances, all of which create the potential for environmental contamination. As a result, the tenants of these properties regularly incur environmental costs related to monitoring, prevention and remediation. Under our net lease property leases, we are generally indemnified from all environmental liabilities arising at our respective properties during the term of the leases. Despite this indemnity, various federal and state laws impose environmental liabilities upon property owners, such as us, for any environmental damages arising at, or migrating from, properties they own and we cannot be sure that we will not be liable for environmental investigation and clean up at, or near, our properties. Moreover, tenants may not have sufficient resources to pay their environmental liabilities and environmental indemnity to us. The negative impact on our tenants from economic downturns, volatility in the petroleum markets, industry challenges facing the trucking and service industries and our tenants’ businesses and other factors may make it more likely that they will be unable to fulfill their indemnification obligations to us in the event that environmental claims arise at our properties. Any environmental liabilities for which we are responsible and not indemnified could adversely affect our financial condition and result in losses.

We may incur substantial liabilities and costs for environmental matters.

Ownership of real estate is subject to risks from adverse weather and climate events.

Severe weather may have an adverse effect on certain properties we own. Flooding caused by rising sea levels and severe weather events, including hurricanes, tornadoes and widespread fires, may have an adverse effect on properties we own and result in significant losses to us and interruption of our business. When major weather or climate-related events, such as hurricanes, floods and wildfires, occur near our properties, our manager or tenant may need to suspend operations of the impacted property until the event has ended and the property is then ready for operation. We or the operators of our properties may incur significant costs and losses as a result of these activities, both in terms of operating, preparing and repairing our properties in anticipation of, during and after a severe weather or climate-related event and in terms of potential lost business due to the interruption in operating our properties. Our insurance and our managers’ and tenants’ insurance may not adequately compensate us or them for these costs and losses.

Also, concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws and market reactions may cause energy or other costs at our hotel, travel center and other service-oriented retail properties to increase. Laws enacted to mitigate climate change may make some of our buildings obsolete or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our tenants or managers and their ability to pay rent or returns to us and cause the value of our securities to decline. In addition, concerns about climate change and increasing storm intensities may increase the cost of insurance for our properties or potentially render it unavailable to obtain.

Real estate ownership creates risks and liabilities.

In addition to the risks discussed above, our business is subject to other risks associated with real estate ownership, including:

• the illiquid nature of real estate markets, which limits our ability to sell our assets rapidly to respond to changing market conditions;

• the subjectivity of real estate valuations and changes in such valuations over time;

• costs that may be incurred relating to property maintenance and repair, and the need to make expenditures due to changes in government regulations; and

• liabilities and litigations arising from injuries on our properties or otherwise incidental to the ownership of our properties.

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Real estate construction and redevelopment creates risks.

Our business may involve the development of new properties or the redevelopment of some of our existing properties as the existing management agreements or leases expire, or as our managers’ or tenants’ needs change or to pursue any other opportunities that we believe are desirable. The development and redevelopment of new and existing buildings involves significant risks in addition to those involved in the ownership and operation of properties, including the risks that construction may not be completed on schedule or within budget, resulting in increased construction costs and delays in such properties generating cash flows. Development activities are also subject to risks relating to the inability to obtain, or delays in obtaining, all necessary zoning, land use, building, occupancy, and other required government permits and authorizations. Once completed, any new properties may perform below anticipated financial results. The occurrence of one or more of these circumstances in connection with our development or redevelopment activities could have an adverse effect on our financial condition, results of operations and the value of our securities.

RMR LLC and our hotel managers rely on information technology and systems in their operations, and any material failure, inadequacy, interruption or security failure of that technology or those systems could materially and adversely affect us.

RMR LLC and our hotel managers rely on information technology and systems, including the Internet and cloud-based infrastructures, commercially available software and their internally developed applications, to process, transmit, store and safeguard information and to manage or support a variety of their business processes (including managing our building systems), including financial transactions and maintenance of records, which may include personal identifying information of employees, guests and tenants and lease data. If RMR LLC or any of our hotel managers experiences material security or other failures, inadequacies or interruptions of its information technology, it could incur material costs and losses and our operations could be disrupted as a result. Further, third party vendors could experience similar events with respect to their information technology and systems that impact the products and services they provide to RMR LLC, our hotel managers or us. RMR LLC and our hotel managers rely on commercially available systems, software, tools and monitoring, as well as their internally developed applications and internal procedures and personnel, to provide security for processing, transmitting, storing and safeguarding confidential guest, tenant, customer and vendor information, such as personally identifiable information related to their employees and others, including in our hotel managers’ case, guests, and information regarding their and our financial accounts. RMR LLC and each of our hotel managers takes various actions, and incurs significant costs, to maintain and protect the operation and security of its information technology and systems, including the data maintained in those systems. Some of our managers have in the past been victim to business email compromise fraud, which resulted in payments being made to illegitimate bank accounts. Although these instances have not resulted in our incurring material losses, if similar instances occur in the future, we may incur such losses. However, it is possible that these measures will not prevent the systems’ improper functioning or a compromise in security, such as in the event of a cyberattack or the improper disclosure of personally identifiable information.

Security breaches, computer viruses, attacks by hackers, online fraud schemes and similar breaches can create significant system disruptions, shutdowns, fraudulent transfer of assets or unauthorized disclosure of confidential information. The cybersecurity risks to RMR LLC, our hotel managers and third party vendors are heightened by, among other things, the evolving nature of the threats faced, advances in computer capabilities, new discoveries in the field of cryptography and new and increasingly sophisticated methods used to perpetrate illegal or fraudulent activities against RMR LLC or our hotel managers including cyberattacks, email or wire fraud and other attacks exploiting security vulnerabilities in RMR LLC’s, our hotel managers’ or other third parties’ information technology networks and systems or operations. Any failure to maintain the security, proper function and availability of RMR LLC’s or our hotel managers’ information technology and systems, or certain third party vendors’ failure to similarly protect their information technology and systems that are relevant to RMR LLC’s, our hotel managers’ or our operations, or to safeguard RMR LLC’s, our hotel managers’ or our business processes, assets and information could result in financial losses, interrupt RMR LLC’s or our hotel managers’ operations, damage RMR LLC’s or our hotel managers’ reputation, cause RMR LLC or our hotel managers to be in default of material contracts and subject RMR LLC or our hotel managers to liability claims or regulatory penalties, any of which could materially and adversely affect our business and the value of our securities.

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We currently own some properties located outside the United States and may consider additional investments outside this country in the future, and such investments create risks.

We currently own two hotels in Canada. If we make other investments in real estate outside the United States, we will face risks arising from those investments, including:

• Laws affecting the operations of properties in foreign countries may require us to assume responsibility for payments due to employees working at properties we own or in which we invest.

• Foreign laws affecting real estate may restrict the ability of entities organized or controlled by persons outside those countries, like us, to own or make management decisions affecting the properties in which we invest.

• In most foreign countries, we will not have the same or similar tax status as we have in the United States, we will be subject to local taxes, and our net earnings may be less than we would realize by making investments in the United States.

• Most of the properties located in foreign countries in which we would invest will conduct business in local currencies rather than in U.S. dollars. We may be able to mitigate some of the risk of changing comparative currency valuations by funding our foreign investments in local currencies; however, it is unlikely we will be able to completely mitigate such foreign currency exchange rate risk.

• Some foreign countries do not have judicial dispute resolution processes which are as efficient or impartial as the U.S. judicial system generally. We may mitigate this risk by making the resolution of disputes which may arise from our foreign investments subject to arbitration; however, the enforcement of arbitration awards will remain subject to local judicial processes and there may be no way for us to mitigate the risks of our dealings in a foreign legal system.

• Investments by U.S. entities like us in foreign countries may be particularly subject to terrorism risks as it relates to the ownership of prominently identified properties such as hotels.

• The political systems in certain foreign countries are less stable than in the United States, and certain foreign governments have in the past expropriated properties owned by U.S. entities like us without paying fair compensation.

Although we will attempt to balance the potential rewards of future investments in foreign countries against these and other risks, we may not be successful in doing so and investments we make in real estate located in foreign countries may result in material losses.

Insurance may not adequately cover our losses and the cost of obtaining such insurance may continue to increase.

We or our managers and tenants are responsible for the costs of insurance coverage for our properties, including for casualty, liability, fire, extended coverage and rental or business interruption loss insurance. Recently, the costs of insurance have increased and these increased costs have had an adverse effect on us and our managers and certain tenants. Increased insurance costs may adversely affect our managers' ability to operate our properties profitably and provide us with desirable returns and our tenants' ability to pay us rent or result in downward pressure on rents we can charge under new or renewed leases. In the future, we may acquire additional properties for which we are responsible for the costs of insurance. Losses of a catastrophic nature, such as those caused by hurricanes, flooding, volcanic eruptions and earthquakes, among other things, or losses from terrorism, may be covered by insurance policies with limitations such as large deductibles or co-payments that we, our managers or a responsible tenant may not be able to pay. Insurance proceeds may not be adequate to restore an affected property to its condition prior to a loss or to compensate us for our losses, including the loss of future revenues from an affected property. Similarly, our other insurance, including our general liability insurance, may not provide adequate insurance to cover our losses. In addition, we do not have any insurance to limit losses that we may incur as a result of known or unknown environmental conditions. Further, we cannot be sure that certain types of risks that are currently insurable will continue to be insurable on an economically feasible basis, and we may discontinue, or agree to our managers' and tenants' discontinuing, certain insurance coverage on some or all of our properties in the future if the cost of premiums for any of these policies in our judgment exceeds the value of the coverage. If an uninsured loss or a loss in excess of insured limits occurs, we may have to incur uninsured costs to mitigate such losses or lose all or a portion of the capital invested in a property, as well as the anticipated future revenue from the property. We might also remain obligated for any financial obligations related to the property, even if the property is irreparably damaged. In addition, future changes in the insurance industry’s risk assessment approach and pricing structure could further increase the cost of insuring our properties or decrease the scope of insurance coverage, either of which could have an adverse effect on our financial condition, results of operations, liquidity or ability to pay distributions to our shareholders.

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We may incur significant costs complying with the Americans with Disabilities Act and fire, safety and other laws.

Under the Americans with Disabilities Act and certain similar state statutes, many commercial properties must meet specified requirements related to access and use by disabled persons. In addition, our properties are subject to various laws and regulations relating to fire, safety and other matters. The tenants of our net lease properties are generally responsible for compliance with these requirements pursuant to our lease agreements. We fund the expenditures for our managed hotels for complying with these requirements. In addition, although our tenants may be responsible for complying with these requirements for our net lease properties, we could be held liable as the owner of the properties for our tenants’ failure to comply. We may be required to make substantial capital expenditures at our properties to comply with these laws. In addition, non-compliance could result in the imposition of fines or an award of damages and costs to private litigants. These expenditures may have an adverse impact on our financial results and the value of our securities. Further, with respect to our net lease properties, we may not be able to recoup these amounts from our tenants if they are unable or unwilling to pay.

We are subject to risks associated with our hotel managers’ employment of personnel.

Our hotel managers are responsible for hiring and maintaining the labor force at each of our hotel properties. Although we do not directly employ or manage employees at our hotel properties, we are subject to many of the costs and risks associated with the hotel labor force. From time to time, hotel operations may be disrupted as a result of strikes, lockouts, public demonstrations or other negative actions and publicity. We may also incur increased legal costs and indirect labor costs as a result of contract disputes and other events. The resolution of labor disputes or renegotiated labor contracts could lead to increased labor costs, either by increases in wages or benefits or by changes in work rules. Unemployment in the United States is currently at historically low levels, and labor costs have been increasing in the United States due to market pressures and regulation in certain jurisdictions, such as increases in minimum wages. These labor cost pressures have increased labor costs at our hotels and these increased costs may negatively impact the future operating results at our hotels if those hotels do not realize increased revenues or a reduction of other expenses sufficient to offset increased labor costs. In addition, the current labor cost pressures may intensify in the future, and our hotel operators may be unable to adequately staff our hotels as a result, which may limit the business activity at our hotels.

Consolidation of hotel managers through merger and acquisition transactions may adversely affect our hotel properties.

Consolidation of third party managers could adversely affect our hotel properties due to the undefined and unknown costs associated with the integrations of property-level point of sale and back-of-house computer systems and other technology related processes, the training and other labor costs associated with merging of labor forces, and the impact of hotel reward point program consolidation. Additionally, the consolidation of third party managers may negatively impact the terms we are able to obtain in future hotel operating agreements.

Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or our internal control over financial reporting.

The design and effectiveness of our disclosure controls and procedures and our internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and our internal control over financial reporting, there can be no guarantee that our disclosure controls and procedures and internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material weaknesses, in our disclosure controls and procedures or internal control over financial reporting could result in misstatements of our results of operations or our financial statements or could otherwise materially and adversely affect our business, reputation, results of operations, financial condition or liquidity.

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Risks Related to Our Relationships with RMR Inc., RMR LLC, Sonesta and TA.

We are dependent upon RMR LLC to manage our business and implement our growth strategy.

We have no employees. Personnel and services that we require are provided to us by RMR LLC pursuant to our management agreements with RMR LLC. Our ability to achieve our business objectives depends on RMR LLC and its ability to effectively manage our properties, to appropriately identify and complete our acquisitions and dispositions and to execute our growth strategy. Accordingly, our business is dependent upon RMR LLC’s business contacts, its ability to successfully hire, train, supervise and manage its personnel and its ability to maintain its operating systems. If we lose the services provided by RMR LLC or its key personnel, our business and growth prospects may decline. We may be unable to duplicate the quality and depth of management available to us by becoming internally managed or by hiring another manager. In the event RMR LLC is unwilling or unable to continue to provide management services to us, our cost of obtaining substitute services may be greater than the fees we pay RMR LLC under our management agreements, and as a result our expenses may increase.

RMR LLC has broad discretion in operating our day to day business.

Our manager, RMR LLC, is authorized to follow broad operating and investment guidelines and, therefore, has discretion in identifying the properties that will be appropriate investments for us, as well as our individual operating and investment decisions. Our Board of Trustees periodically reviews our operating and investment guidelines and our operating activities and investments but it does not review or approve each decision made by RMR LLC on our behalf. In addition, in conducting periodic reviews, our Board of Trustees relies primarily on information provided to it by RMR LLC. RMR LLC may exercise its discretion in a manner that results in investment returns that are substantially below expectations or that results in losses.

Our management structure and agreements and relationships with RMR LLC and RMR LLC’s and its controlling shareholder’s relationships with others may create conflicts of interest, or the perception of such conflicts, and may restrict our investment activities.

RMR LLC is a subsidiary of RMR Inc. The Chair of our Board and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. Ethan Bornstein, our Senior Vice President, is the brother-in-law of Adam Portnoy. RMR LLC or its subsidiary also acts as the manager for four other Nasdaq listed REITs: OPI, which primarily owns office properties leased to single tenants and high credit quality tenants, including government tenants; ILPT, which owns industrial and logistics properties; DHC, which primarily owns healthcare, senior living properties and medical office buildings; and TRMT, which primarily originates and invests in first mortgage loans secured by middle market and transitional commercial real estate. RMR LLC also provides services to other publicly and privately owned companies, including: Five Star, which operates senior living communities; TA, our largest tenant, which operates and franchises travel centers and restaurants; and Sonesta, which managed 53 of our hotels as of December 31, 2019 and operates, manages and franchises hotels, resorts and cruise boats and of which we own an approximately 34% equity interest as of February 27, 2020. A subsidiary of RMR LLC is an investment adviser to the RMR Real Estate Income Fund, or RIF, a closed end investment company listed on the NYSE American, which invests in securities of real estate companies that are not managed by RMR LLC. Mr. Portnoy serves as chair of the board of trustees or board of directors, as applicable, of OPI, ILPT, DHC, Five Star and TA and as managing director, managing trustee, director or trustee, as applicable, of the companies managed by RMR LLC or its subsidiaries.

John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, Brian E. Donley, our Chief Financial Officer and Treasurer, and Ethan Bornstein, our Senior Vice President and Todd Hargreaves, our Vice President, are also officers and employees of RMR LLC. Mr. Murray is also a managing trustee, president and chief executive officer of ILPT and Mr. Donley is also the chief financial officer and treasurer of RIF. Messrs. Murray, Donley, Bornstein and Hargreaves have duties to RMR LLC, and Mr. Murray has duties to ILPT and Mr. Donley has duties to RIF, as well as to us, and we do not have their undivided attention. They and other RMR LLC personnel may have conflicts in allocating their time and resources between us and RMR LLC and other companies to which RMR LLC or its subsidiaries provide services. Some of our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services.

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In addition, we may in the future enter into additional transactions with RMR LLC, its affiliates, or entities managed by it or its subsidiaries. In addition to his investments in RMR Inc. and RMR LLC, Adam Portnoy holds equity investments in other companies to which RMR LLC or its subsidiaries provide management services and some of these companies have significant cross ownership interests, including, for example: as of December 31, 2019, Adam Portnoy beneficially owned, in aggregate, 1.1% of our outstanding common shares, 35.3% (6.3% as of January 1, 2020) of Five Star’s outstanding common stock (including through ABP Trust), 1.2% of ILPT’s outstanding common shares, 1.5% of OPI’s outstanding common shares, 1.1% of DHC’s outstanding common shares, 2.3% of RIF’s outstanding common shares, 4.0% of TA’s outstanding common shares (including through RMR LLC) and 19.5% of TRMT’s outstanding common shares (including through Tremont Realty Advisors LLC); and we owned 8.2% of TA’s outstanding common shares. Our executive officers also own equity investments in other companies to which RMR LLC or its subsidiaries provide management services. These multiple responsibilities, relationships and cross ownerships could give rise to conflicts of interest or the perception of such conflicts of interest with respect to matters involving us, RMR Inc., RMR LLC, our Managing Trustees, the other companies to which RMR LLC or its subsidiaries provide management services and their related parties. Conflicts of interest or the perception of conflicts of interest could have a material adverse impact on our reputation, business and the market price of our common shares and other securities and we may be subject to increased risk of litigation as a result.

In our management agreements with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to our policies and objectives and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC.

Accordingly, we may lose investment opportunities to, and may compete for tenants with, other businesses managed by RMR LLC or its subsidiaries. We cannot be sure that our Code of Conduct or our Governance Guidelines, or other procedural protections we adopt will be sufficient to enable us to identify, adequately address or mitigate actual or alleged conflicts of interest or ensure that our transactions with related persons are made on terms that are at least as favorable to us as those that would have been obtained with an unrelated person.

Our management agreements with RMR LLC were not negotiated on an arm’s length basis and their fee and expense structure may not create proper incentives for RMR LLC, which may increase the risk of an investment in our common shares.

As a result of our relationships with RMR LLC and its current and former controlling shareholder(s), our management agreements with RMR LLC were not negotiated on an arm’s length basis between unrelated parties, and therefore, while such agreements were negotiated with the use of a special committee and disinterested trustees, the terms, including the fees payable to RMR LLC, may not be as favorable to us as they would have been if they were negotiated on an arm’s length basis between unrelated parties. Our property management fees are calculated based on rents we receive and construction supervision fees for construction at our properties overseen and managed by RMR LLC, and our base business management fee is calculated based upon the lower of the historical costs of our real estate investments and our market capitalization. We pay RMR LLC substantial base management fees regardless of our financial results. These fee arrangements could incentivize RMR LLC to pursue acquisitions, capital transactions, tenancies and construction projects or to avoid disposing of our assets in order to increase or maintain its management fees and might reduce RMR LLC’s incentive to devote its time and effort to seeking investments that provide attractive returns for us. If we do not effectively manage our investment, disposition and capital transactions and leasing, construction and other property management activities, we may pay increased management fees without proportional benefits to us. In addition, we are obligated under our management agreements to reimburse RMR LLC for employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel and our share of RMR LLC’s costs for providing our internal audit function. We are also required to pay for third party costs incurred with respect to us. Our obligation to reimburse RMR LLC for certain of its costs and to pay third party costs may reduce RMR LLC’s incentive to efficiently manage those costs, which may increase our costs.

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The termination of our management agreements with RMR LLC may require us to pay a substantial termination fee, including in the case of a termination for unsatisfactory performance, which may limit our ability to end our relationship with RMR LLC.

The terms of our management agreements with RMR LLC automatically extend on December 31st of each year so that such terms thereafter end on the 20th anniversary of the date of the extension. We have the right to terminate these agreements: (1) at any time on 60 days’ written notice for convenience, (2) immediately upon written notice for cause, as defined in the agreements, (3) on written notice given within 60 days after the end of any applicable calendar year for a performance reason, as defined in the agreements, and (4) by written notice during the 12 months following a manager change of control, as defined in the agreements. However, if we terminate a management agreement for convenience, or if RMR LLC terminates a management agreement with us for good reason, as defined in such agreement, we are obligated to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined in the applicable agreement, payable to RMR LLC for the term that was remaining before such termination, which, depending on the time of termination, would be between 19 and 20 years. Additionally, if we terminate a management agreement for a performance reason, as defined in the agreement, we are obligated to pay RMR LLC the termination fee calculated as described above, but assuming a remaining term of 10 years. These provisions substantially increase the cost to us of terminating the management agreements without cause, which may limit our ability to end our relationship with RMR LLC as our manager. The payment of the termination fee could have a material adverse effect on our financial condition, including our ability to pay dividends to our shareholders.

Our management arrangements with RMR LLC may discourage a change of control of us.

Our management agreements with RMR LLC have continuing 20 year terms that renew annually. As noted in the preceding risk factor, if we terminate either of these management agreements other than for cause or upon a change of control of our manager, we are obligated to pay RMR LLC a substantial termination fee. For these reasons, our management agreements with RMR LLC may discourage a change of control of us, including a change of control which might result in payment of a premium for our common shares.

Our business dealings with TA and Sonesta comprise a significant part of our business and operations and they may create conflicts of interest or the perception of such conflicts of interest.

TA is our former 100% owned subsidiary and our largest tenant, and we are TA’s largest shareholder and landlord. TA was created as a separate public company in 2007 as a result of its spin-off from us. Adam Portnoy, one of our Managing Trustees, serves as the chairman of the board of directors and a managing director of TA and, through RMR LLC, beneficially owns 4.0% of TA’s outstanding common shares. Adam Portnoy is the controlling shareholder, managing director and chief executive officer of RMR Inc., the parent of RMR LLC, which provides management services to both us and TA. We recognized rental income of $262.0 million for the year ended December 31, 2019 under our TA leases.

Sonesta managed 53 of our hotels as of December 31, 2019. Sonesta is majority owned by Adam Portnoy and his affiliates. Mr. Portnoy, Mr. Murray and Jennifer Clark, our Secretary, are directors of Sonesta. Sonesta’s chief executive officer and chief financial officer are also officers of RMR LLC, and other officers and employees of Sonesta are former employees of RMR LLC. We realized returns of $67.6 million under our Sonesta agreement and incurred management, system and reservation fees payable to Sonesta of $36.2 million and procurement and construction supervision fees payable to Sonesta of $3.3 million for the year ended December 31, 2019.

The historical and continuing relationships which we, RMR LLC, Adam Portnoy and certain other officers of RMR LLC have with TA and Sonesta could create, or appear to create, conflicts of interest with respect to matters involving us, the other companies to which RMR LLC or its subsidiaries provide management services and their related parties. As a result of these relationships, our agreements with TA and Sonesta were not negotiated on an arm’s length basis between unrelated parties, and therefore, while such agreements were negotiated with the use of a special committee and disinterested trustees, may not be as favorable to us as they would have been if they were negotiated on an arm’s length basis between unrelated parties.

Conflicts of interest or the perception of conflicts of interest could have a material adverse impact on our reputation, business and the market price of our common shares and other securities and we may be subject to increased risk of litigation as a result.

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We may not realize the benefits we expect from our ownership interest in Sonesta.

Pursuant to our agreements with Sonesta, we received an approximately 34% ownership interest in Sonesta. Risks that we have identified elsewhere in this Risk Factors section, particularly those relating to the hotel industry, are applicable to our ownership of Sonesta shares. In addition, Sonesta is a private company that is majority owned by Adam Portnoy, one of our Managing Trustees, and his affiliates. We have a minority interest in Sonesta, and we will be limited in our ability to direct or influence Sonesta’s corporate level decisions or to affect changes in Sonesta’s business, strategies, operations and management. In addition, Sonesta’s common stock is not publicly traded and our ability to sell our Sonesta shares will be limited. Further, any attempt we may make to sell our Sonesta shares may be unsuccessful and any price that we may be able to realize for those shares may be at a discount due to the minority interest they represent and the lack of an active trading market for those shares. As a result of the foregoing, and for other possible reasons, we may not realize any of the benefits we currently expect from our ownership of Sonesta common stock, we may be prevented from selling our Sonesta common stock and we could incur losses from our ownership of Sonesta common stock, including our proportion of any operating or other losses that Sonesta may realize.

We are party to transactions with related parties that may increase the risk of allegations of conflicts of interest, and such allegations may impair our ability to realize the benefits we expect from these transactions.

We are party to transactions with related parties, including with entities controlled by Adam Portnoy or to which RMR LLC or its subsidiaries provide management services. Our agreements with related parties or in respect of transactions among related parties may not be on terms as favorable to us as they would have been if they had been negotiated among unrelated parties. We are subject to the risk that our shareholders or the shareholders of TA, RMR Inc. or other related parties may challenge any such related party transactions and the agreements entered into as part of them. If such a challenge were to be successful, we might not realize the benefits expected from the transactions being challenged. Moreover, any such challenge could result in substantial costs and a diversion of our management’s attention, could have a material adverse effect on our reputation, business and growth and could adversely affect our ability to realize the benefits expected from the transactions, whether or not the allegations have merit or are substantiated.

We may be at an increased risk for dissident shareholder activities due to perceived conflicts of interest arising from our management structure and relationships.

Companies with business dealings with related persons and entities may more often be the target of dissident shareholder trustee nominations, dissident shareholder proposals and shareholder litigation alleging conflicts of interest in their business dealings. Our relationships with RMR Inc., RMR LLC, TA, Sonesta, the other companies to which RMR LLC or its subsidiaries provide management services, Adam Portnoy and other related persons of RMR LLC may precipitate such activities. Certain proxy advisory firms which have significant influence over the voting by shareholders of public companies have, in the past, recommended, and in the future may recommend, that shareholders vote against the election of our incumbent Trustees, vote against our say on pay vote or other management proposals or vote for shareholder proposals that we oppose. These recommendations by proxy advisory firms have affected the outcomes of past Board of Trustees elections and votes on our say on pay, and similar recommendations in the future would likely affect the outcome of future Board of Trustees elections and votes on our say on pay, which may increase shareholder activism and litigation. These activities, if instituted against us, could result in substantial costs, and diversion of our management’s attention and could have a material adverse impact on our reputation and business.

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Risks Related to Our Organization and Structure

Ownership limitations and certain provisions in our declaration of trust, bylaws and agreements, as well as certain provisions of Maryland law, may deter, delay or prevent a change in our control or unsolicited acquisition proposals.

Our declaration of trust and bylaws prohibit any shareholder other than RMR LLC and its affiliates (as defined under Maryland law) and certain persons who have been exempted by our Board of Trustees from owning, directly and by attribution, more than 9.8% of the number or value of shares (whichever is more restrictive) of any class or series of our outstanding shares of beneficial interest, including our common shares. These provisions are intended to, among other purposes, assist with our REIT compliance under the IRC and otherwise promote our orderly governance. However, these provisions may also inhibit acquisitions of a significant stake in us and may deter, delay or prevent a change in control of us or unsolicited acquisition proposals that a shareholder may consider favorable. Additionally, provisions contained in our declaration of trust and bylaws or under Maryland law may have a similar impact, including, for example, provisions relating to:

• the current division of our Trustees into three classes, with the term of one class expiring each year, which could delay a change of control of us;

• the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees;

• shareholder voting standards which require a supermajority for approval of certain actions;

• the fact that only our Board of Trustees, or, if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting;

• required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be “Managing Trustees” and other Trustees be “Independent Trustees,” as defined in our governing documents;

• limitations on the ability of our shareholders to propose nominees for election as Trustees and propose other business to be considered at a meeting of our shareholders;

• limitations on the ability of our shareholders to remove our Trustees;

• requirements that shareholders comply with regulatory requirements (including Nevada and Louisiana gaming) affecting us which could effectively limit share ownership of us, including in some cases, to 5% of our outstanding shares;

• the authority of our Board of Trustees to create and issue new classes or series of shares (including shares with voting rights and other rights and privileges that may deter a change in control) and issue additional common shares;

• restrictions on business combinations between us and an interested shareholder that have not first been approved by our Board of Trustees (including a majority of Trustees not related to the interested shareholder); and

• the authority of our Board of Trustees, without shareholder approval, to implement certain takeover defenses.

As changes occur in the marketplace for corporate governance policies, the above provisions may change, be removed, or new ones may be added.

Certain aspects of our business may prevent shareholders from accumulating a large stake in us, from nominating or serving as our Trustees, or from taking actions to otherwise control our business.

Certain of our properties include gambling operations. Applicable state laws require that any shareholder who owns or controls 5% or more of our securities or anyone who wishes to serve as one of our Trustees must be licensed or approved by the state regulators responsible for gambling operations. These approval procedures may discourage or prevent investors from purchasing our securities, from nominating persons to serve as our Trustees or from taking other actions.

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Our rights and the rights of our shareholders to take action against our Trustees and officers are limited.

Our declaration of trust limits the liability of our Trustees and officers to us and our shareholders for money damages to the maximum extent permitted under Maryland law. Under current Maryland law, our Trustees and officers will not have any liability to us and our shareholders for money damages other than liability resulting from:

• actual receipt of an improper benefit or profit in money, property or services; or

• active and deliberate dishonesty by the Trustee or officer that was established by a final judgment as being material to the cause of action adjudicated.

Our declaration of trust and indemnification agreements require us to indemnify, to the maximum extent permitted by Maryland law, any present or former Trustee or officer who is made or threatened to be made a party to a proceeding by reason of his or her service in these and certain other capacities. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former Trustees and officers without requiring a preliminary determination of their ultimate entitlement to indemnification. As a result, we and our shareholders may have more limited rights against our present and former Trustees and officers than might otherwise exist absent the provisions in our declaration of trust and indemnification agreements or that might exist with other companies, which could limit our shareholders’ recourse in the event of actions not in their best interest.

Shareholder litigation against us or our Trustees, officers, manager, other agents or employees may be referred to mandatory arbitration proceedings, which follow different procedures than in-court litigation and may be more restrictive to shareholders asserting claims than in-court litigation.

Our shareholders agree, by virtue of becoming shareholders, that they are bound by our governing documents, including the arbitration provisions of our bylaws, as they may be amended from time to time. Our bylaws provide that certain actions by one or more of our shareholders against us or any of our Trustees, officers, manager, other agents or employees, other than disputes, or any portion thereof, regarding the meaning, interpretation or validity of any provision of our declaration of trust or bylaws, will be referred to mandatory, binding and final arbitration proceedings if we, or any other party to such dispute, including any of our Trustees, officers, manager, other agents or employees, unilaterally so demands. As a result, we and our shareholders would not be able to pursue litigation in state or federal court against us or our Trustees, officers, manager, other agents or employees, including, for example, claims alleging violations of federal securities laws or breach of fiduciary duties or similar director or officer duties under Maryland law, if we or any of our Trustees, officers, manager, other parties or employees against whom the claim is made unilaterally demands the matter be resolved by arbitration. Instead, our shareholders would be required to pursue such claims through binding and final arbitration.

Our bylaws provide that such arbitration proceedings would be conducted in accordance with the procedures of the Commercial Arbitration Rules of the American Arbitration Association, as modified in our bylaws. These procedures may provide materially more limited rights to our shareholders than litigation in a federal or state court. For example, arbitration in accordance with these procedures does not include the opportunity for a jury trial, document discovery is limited, arbitration hearings generally are not open to the public, there are no witness depositions in advance of arbitration hearings and arbitrators may have different qualifications or experiences than judges. In addition, although our bylaws’ arbitration provisions contemplate that arbitration may be brought in a representative capacity or on behalf of a class of our shareholders, the rules governing such representation or class arbitration may be different from, and less favorable to shareholders than, the rules governing representative or class action litigation in courts. Our bylaws also generally provide that each party to such an arbitration is required to bear its own costs in the arbitration, including attorneys’ fees, and that the arbitrators may not render an award that includes shifting of such costs or, in a derivative or class proceeding, award any portion of our award to any shareholder or such shareholder’s attorneys. The arbitration provisions of our bylaws may discourage our shareholders from bringing, and attorneys from agreeing to represent our shareholders wishing to bring, litigation against us or our Trustees, officers, manager, other agents or employees. Our agreements with TA, RMR LLC and Sonesta have similar arbitration provisions to those in our bylaws.

We believe that the arbitration provisions in our bylaws are enforceable under both state and federal law, including with respect to federal securities laws claims. We are a Maryland real estate investment trust and Maryland courts have upheld the enforceability of arbitration bylaws. In addition, the United States Supreme Court has repeatedly upheld agreements to arbitrate other federal statutory claims, including those that implicate important federal policies. However, some academics, legal practitioners and others are of the view that charter or bylaw provisions mandating arbitration are not enforceable with respect to federal securities laws claims. It is possible that the arbitration provisions of our bylaws may ultimately be determined to be unenforceable.

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By agreeing to the arbitration provisions of our bylaws, shareholders will not be deemed to have waived compliance by us with federal securities laws and the rules and regulations thereunder.

Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our Trustees, officers, manager, agents or employees.

Our bylaws currently provide that, unless the dispute has been referred to binding arbitration, the Circuit Court for Baltimore City, Maryland will be the sole and exclusive forum for: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim for breach of a fiduciary duty owed by any Trustee, officer, manager, agent or employee of ours to us or our shareholders; (3) any action asserting a claim against us or any Trustee, officer, manager, agent or employee of ours arising pursuant to Maryland law, our declaration of trust or bylaws brought by or on behalf of a shareholder, either on his, her or its own behalf, on behalf of the Trust or on behalf of any series or class of shares of beneficial interest of the Trust or shareholders against the Trust or any Trustee, officer, manager, agent or employee of the Trust, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of our declaration of trust or bylaws; or (4) any action asserting a claim against us or any Trustee, officer, manager, agent or employee of ours that is governed by the internal affairs doctrine. Our bylaws currently also provide that the Circuit Court for Baltimore City, Maryland will be the sole and exclusive forum for any dispute, or portion thereof, regarding the meaning, interpretation or validity of any provision of our declaration of trust or bylaws. The exclusive forum provision of our bylaws does not apply to any action for which the Circuit Court for Baltimore City, Maryland does not have jurisdiction or to a dispute that has been referred to binding arbitration in accordance with our bylaws. The exclusive forum provision of our bylaws does not establish exclusive jurisdiction in the Circuit Court for Baltimore City, Maryland for claims that arise under the Securities Act, the Exchange Act or other federal securities laws if there is exclusive or concurrent jurisdiction in the federal courts. Any person or entity purchasing or otherwise acquiring or holding any interest in our shares of beneficial interest shall be deemed to have notice of and to have consented to these provisions of our bylaws, as they may be amended from time to time. The arbitration and exclusive forum provisions of our bylaws may limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder believes is favorable for disputes with us or our Trustees, officers, manager, agents or employees, which may discourage lawsuits against us and our Trustees, officers, manager, agents or employees.

We may change our operational, financing and investment policies without shareholder approval and we may become more highly leveraged, which may increase our risk of default under our debt obligations.

Our Board of Trustees determines our operational, financing and investment policies and may amend or revise our policies, including our policies with respect to our intention to qualify for taxation as a REIT, acquisitions, dispositions, growth, operations, indebtedness, capitalization and distributions, or approve transactions that deviate from these policies, without a vote of, or notice to, our shareholders. Policy changes could adversely affect the market price of our common shares and our ability to make distributions to our shareholders. Further, our organizational documents do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. Our Board of Trustees may alter or eliminate our current policy on borrowing at any time without shareholder approval. If this policy changes, we could become more highly leveraged, which could result in an increase in our debt service costs. Higher leverage also increases the risk of default on our obligations. In addition, a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase our exposure to interest rate risk, real estate market fluctuations and liquidity risk.

Risks Related to Our Taxation

Our failure to remain qualified for taxation as a REIT under the IRC or the loss of our other special tax statuses could have significant adverse consequences.

As a REIT, we generally do not pay federal or most state income taxes as long as we distribute all of our REIT taxable income and meet other qualifications set forth in the IRC. However, actual qualification for taxation as a REIT under the IRC depends on our satisfying complex statutory requirements, for which there are only limited judicial and administrative interpretations. We believe that we have been organized and have operated, and will continue to be organized and to operate, in a manner that qualified and will continue to qualify us to be taxed as a REIT under the IRC. However, we cannot be sure that the IRS, upon review or audit, will agree with this conclusion. Furthermore, we cannot be sure that the federal government, or any state or other taxation authority, will continue to afford favorable income tax treatment to REITs and their shareholders.

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Maintaining our qualification for taxation as a REIT under the IRC will require us to continue to satisfy tests concerning, among other things, the nature of our assets, the sources of our income and the amounts we distribute to our shareholders. In order to meet these requirements, it may be necessary for us to sell or forgo attractive investments.

If we cease to qualify for taxation as a REIT under the IRC, then our ability to raise capital might be adversely affected, we will be in breach under our credit agreement, we may be subject to material amounts of federal and state income taxes, our cash available for distribution to our shareholders could be reduced, and the market price of our common shares could decline. In addition, if we lose or revoke our qualification for taxation as a REIT under the IRC for a taxable year, we will generally be prevented from requalifying for taxation as a REIT for the next four taxable years.     

Similarly, under existing law and through available tax concessions, we have minimized the Canadian and Puerto Rican income taxes that we must pay. We believe that we have operated, and are operating, in compliance with the requirements of these laws and tax concessions. However, we cannot be sure that, upon review or audit, the local tax authority will agree. If the existing laws or concessions are unavailable to us in the future, then we may be subject to material amounts of income taxes and the market price of our common shares could decline.

Distributions to shareholders generally will not qualify for reduced tax rates applicable to “qualified dividends.”

Dividends payable by U.S. corporations to noncorporate shareholders, such as individuals, trusts and estates, are generally eligible for reduced federal income tax rates applicable to “qualified dividends.” Distributions paid by REITs generally are not treated as “qualified dividends” under the IRC and the reduced rates applicable to such dividends do not generally apply. However, for tax years beginning before 2026, REIT dividends paid to noncorporate shareholders are generally taxed at an effective tax rate lower than applicable ordinary income tax rates due to the availability of a deduction under the IRC for specified forms of income from passthrough entities. More favorable rates will nevertheless continue to apply to regular corporate “qualified” dividends, which may cause some investors to perceive that an investment in a REIT is less attractive than an investment in a non-REIT entity that pays dividends, thereby reducing the demand and market price of our common shares.

REIT distribution requirements could adversely affect us and our shareholders.

We generally must distribute annually at least 90% of our REIT taxable income, subject to specified adjustments and excluding any net capital gain, in order to maintain our qualification for taxation as a REIT under the IRC. To the extent that we satisfy this distribution requirement, federal corporate income tax will not apply to the earnings that we distribute, but if we distribute less than 100% of our REIT taxable income, then we will be subject to federal corporate income tax on our undistributed taxable income. We intend to make distributions to our shareholders to comply with the REIT requirements of the IRC. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our shareholders in a calendar year is less than a minimum amount specified under federal tax laws.

From time to time, we may generate taxable income greater than our income for financial reporting purposes prepared in accordance with U.S. generally accepted accounting principles, or GAAP, or differences in timing between the recognition of taxable income and the actual receipt of cash may occur. If we do not have other funds available in these situations, among other things, we may borrow funds on unfavorable terms, sell investments at disadvantageous prices or distribute amounts that would otherwise be invested in future acquisitions in order to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our shareholders’ equity. Thus, compliance with the REIT distribution requirements may hinder our ability to grow, which could cause the market price of our common shares to decline.

Even if we remain qualified for taxation as a REIT under the IRC, we may face other tax liabilities that reduce our cash flow.

Even if we remain qualified for taxation as a REIT under the IRC, we may be subject to federal, state and local taxes on our income and assets, including taxes on any undistributed income, excise taxes, state or local income, property and transfer taxes, and other taxes. Also, some jurisdictions may in the future limit or eliminate favorable income tax deductions, including the dividends paid deduction, which could increase our income tax expense. In addition, in order to meet the requirements for qualification and taxation as a REIT under the IRC, prevent the recognition of particular types of non-cash income, or avert the imposition of a 100% tax that applies to specified gains derived by a REIT from dealer property or inventory, we may hold or dispose of some of our assets and conduct some of our operations through our TRSs or other subsidiary corporations that will be subject to corporate level income tax at regular rates. In addition, while we intend that our transactions with our TRSs will be conducted on arm’s length bases, we may be subject to a 100% excise tax on a transaction that the IRS or a court determines was not conducted at arm’s length. Any of these taxes would decrease cash available for distribution to our shareholders.

52

If arrangements involving our TRSs fail to comply as intended with the REIT qualification and taxation rules, we may fail to qualify for taxation as a REIT under the IRC or be subject to significant penalty taxes.

We lease most of our hotel properties to our TRSs pursuant to arrangements that, under the IRC, are intended to qualify the rents we receive from our TRSs as income that satisfies the REIT gross income tests. We also intend that our transactions with our TRSs be conducted on arm’s length bases so that we and our TRSs will not be subject to penalty taxes under the IRC applicable to mispriced transactions. While relief provisions can sometimes excuse REIT gross income test failures, significant penalty taxes may still be imposed.

For our TRS arrangements to comply as intended with the REIT qualification and taxation rules under the IRC, a number of requirements must be satisfied, including:

• our TRSs may not directly or indirectly operate or manage a lodging facility, as defined by the IRC;    

• the leases to our TRSs must be respected as true leases for federal income tax purposes and not as service contracts, partnerships, joint ventures, financings or other types of arrangements;    

• the leased properties must constitute qualified lodging facilities (including customary amenities and facilities) under the IRC;    

• our leased properties must be managed and operated on behalf of the TRSs by independent contractors who are less than 35% affiliated with us and who are actively engaged (or have affiliates so engaged) in the trade or business of managing and operating qualified lodging facilities for any person unrelated to us; and

• the rental and other terms of the leases must be arm’s length.

We cannot be sure that the IRS or a court will agree with our assessment that our TRS arrangements comply as intended with REIT qualification and taxation rules. If arrangements involving our TRSs fail to comply as we intended, we may fail to qualify for taxation as a REIT under the IRC or be subject to significant penalty taxes.

Legislative or other actions affecting REITs could materially and adversely affect us and our shareholders.

The rules dealing with U.S. federal, state, and local taxation are constantly under review by persons involved in the legislative process and by the IRS, the U.S. Department of the Treasury, and other taxation authorities. Changes to the tax laws, with or without retroactive application, could materially and adversely affect us and our shareholders. We cannot predict how changes in the tax laws might affect us or our shareholders. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to remain qualified for taxation as a REIT or the tax consequences of such qualification to us and our shareholders.

Risks Related to our Securities

We may not be able to continue paying distributions at or above our current annualized distribution rate.

Our current annualized distribution rate is $2.16 per common share. We may not be able to sustain our current distribution rate, or pay distributions at all, for various reasons, including that:

• our ability to pay distributions may be adversely affected if any of the risks described in this Annual Report on Form 10-K occur;

• our declaration and payment of distributions are subject to compliance with restrictions contained in our credit agreement and public debt covenants and may be subject to restrictions governing future debt that we may incur;

• we may desire or need to retain cash to obtain, maintain or improve our credit ratings, to reduce leverage, fund capital expenditures or pursue other business opportunities; and

• we have no obligation to pay distributions; each distribution is made at the discretion of our Board of Trustees and the payment of a distribution depends on various factors that our Board of Trustees at the time deems relevant, including among other things, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement, the availability to us of debt and equity capital, our distribution rate as a percentage of the trading price of our shares, or dividend yield, and the dividend yield 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.

53

For these reasons, among others, our distribution rate may decline or we may cease making distributions to our shareholders.

Changes in market conditions could adversely affect the value of our securities.

As with other publicly traded equity securities and REIT securities, the value of our common shares and other securities depends on various market conditions that are subject to change from time to time, including:

• the extent of investor interest in our securities;

• the general reputation of REITs and externally managed companies and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate based companies or by other issuers less sensitive to rises in interest rates;

• our underlying asset value;

• investor confidence in the stock and bond markets, generally;

• market interest rates;

• national economic conditions;

• changes in tax laws;

• changes in our credit ratings;

• general market conditions; and

• perception of our environmental, social and governance policies relative to other companies.

We believe that one of the factors that investors consider important in deciding whether to buy or sell equity securities of a REIT is the distribution rate, considered as a percentage of the price of the equity securities, relative to market interest rates. Interest rates have been at historically low levels for an extended period of time. There is a general market perception that REIT shares outperform in low interest rate environments and underperform in rising interest rate environments when compared to the broader market. The U.S. Federal Reserve steadily increased the targeted federal funds rate over the last several years, but recently took action to decrease its federal funds rate and may continue to make adjustments in the future. If the U.S. Federal Reserve increases interest rates or if there is a market expectation of such increases, prospective purchasers of REIT equity securities may want to achieve a higher distribution rate. Thus, higher market interest rates, or the expectation of higher interest rates, could cause the value of our securities to decline.

Further issuances of equity securities may be dilutive to current shareholders.

The interests of our existing shareholders could be diluted if we issue additional equity securities to finance future acquisitions, to repay indebtedness or for other reasons. Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, which may include secured and unsecured debt, and equity financing, which may include common and preferred shares.

The Notes are structurally subordinated to the payment of all indebtedness and other liabilities and any preferred equity of our subsidiaries.

We are the sole obligor on our outstanding senior unsecured notes, and our outstanding senior unsecured notes and any notes or other debt securities we may issue in the future, or, together with our outstanding senior unsecured notes, the Notes, and such Notes are not, and any Notes we may issue in the future may not be guaranteed by any of our subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on the Notes, or to make any funds available therefor, whether by dividend, distribution, loan or other payments. The rights of holders of Notes to benefit from any of the assets of our subsidiaries are subject to the prior satisfaction of claims of our subsidiaries’ creditors and any preferred equity holders. As a result, the Notes are, and, except to the extent that future Notes are guaranteed by our subsidiaries, will be, structurally subordinated to all of the debt and other liabilities and obligations of our subsidiaries, including guarantees of other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity. As of December 31, 2019, our subsidiaries had total indebtedness and other liabilities (excluding security and other deposits and guaranties) of less than $10 million.

54

The Notes are unsecured and effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness.

The outstanding Notes are not secured and any Notes we may issue in the future may not be secured. Upon any distribution to our creditors in a bankruptcy, liquidation, reorganization or similar proceeding relating to us or our property, the holders of our secured debt will be entitled to exercise the remedies available to a secured lender under applicable law and pursuant to the instruments governing such debt and to be paid in full from the assets securing that secured debt before any payment may be made with respect to Notes that are not secured by those assets. In that event, because such Notes will not be secured by any of our assets, it is possible that there will be no assets from which claims of holders of such Notes can be satisfied or, if any assets remain, that the remaining assets will be insufficient to satisfy those claims in full. If the value of such remaining assets is less than the aggregate outstanding principal amount of such Notes and accrued interest and all future debt ranking equally with such Notes, we will be unable to fully satisfy our obligations under such Notes. In addition, if we fail to meet our payment or other obligations under our secured debt, the holders of that secured debt would be entitled to foreclose on our assets securing that secured debt and liquidate those assets. Accordingly, we may not have sufficient funds to pay amounts due on such Notes. As a result, noteholders may lose a portion or the entire value of their investment in such Notes. Further, the terms of the outstanding Notes permit, and the terms of any Notes we may issue in the future may permit us to incur additional secured indebtedness subject to compliance with certain debt ratios. The Notes that are not secured will be effectively subordinated to any such additional secured indebtedness. As of December 31, 2019, we had no secured mortgage debt.

There is no public market for the Notes, and one may not develop, be maintained or be liquid.

We have not applied for listing of the Notes on any securities exchange or for quotation on any automatic dealer quotation system, and we may not do so for Notes issued in the future. We can give no assurances concerning the liquidity of any market that may develop for the Notes, the ability of any holder to sell the Notes or the price at which holders would be able to sell the Notes. If a market for the Notes does not develop, holders may be unable to resell the Notes for an extended period of time, if at all. If a market for the Notes does develop, it may not continue or it may not be sufficiently liquid to allow holders to resell any of the Notes. Consequently, holders of the Notes may not be able to liquidate their investment readily, and lenders may not readily accept the Notes as collateral for loans.

The Notes may trade at a discount from their initial issue price or principal amount, depending upon many factors, including prevailing interest rates, the ratings assigned by rating agencies, the market for similar securities and other factors, including general economic conditions and our financial condition, performance and prospects. Any decline in market prices, regardless of cause, may adversely affect the liquidity and trading markets for the Notes.

A downgrade in credit ratings could materially adversely affect the market price of the Notes and may increase our cost of capital.

The outstanding Notes are rated by two rating agencies and any Notes we may issue in the future may be rated by one or more rating agencies. These credit ratings are continually reviewed by rating agencies and may change at any time based upon, among other things, our results of operations and financial condition. Negative changes in the ratings assigned to our debt securities could have an adverse effect on the market price of the Notes and our cost and availability of capital, which could in turn have a material adverse effect on our results of operations and our ability to satisfy our debt service obligations. As a result of the SMTA Transaction, S&P Global assigned a negative outlook to our credit ratings and Moody’s downgraded our credit ratings. These negative actions imply that our debt ratings may be downgraded further to below “investment grade.”

Redemption may adversely affect noteholders’ return on the Notes.

We have the right to redeem some or all of the outstanding Notes prior to maturity and may have such a right with respect to any Notes we issue in the future. We may redeem such Notes at times when prevailing interest rates may be relatively low compared to the interest rate of such Notes. Accordingly, noteholders may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as that of the Notes.

Item 1B. Unresolved Staff Comments

None.

55

Item 2. Properties

At December 31, 2019, we owned 329 hotels and 816 retail net lease properties. The following tables summarize certain information about our properties as of December 31, 2019 (dollars in thousands).

	Hotels					Net Lease					All Properties
	Number of Properties	Undepreciated Carrying Value		Depreciated Carrying Value		Number of Properties	Undepreciated Carrying Value		Depreciated Carrying Value		Total Number of Properties	Total Undepreciated Carrying Value		Total Depreciated Carrying Value
Location of Properties
United States
Alabama	6	$	51,211	$	35,637	32	$	128,931	$	98,105	38	$	180,142	$	133,742
Alaska	—	—		—		1	3,716		3,627		1	3,716		3,627
Arizona	15	213,330		137,025		25	225,144		164,797		40	438,474		301,822
Arkansas	—	—		—		17	116,347		73,483		17	116,347		73,483
California	36	958,527		670,389		22	234,800		197,372		58	1,193,327		867,761
Colorado	6	148,019		113,189		9	102,935		85,601		15	250,954		198,790
Connecticut	1	4,997		3,323		3	33,448		14,776		4	38,445		18,099
Delaware	2	32,209		23,560		—	—		—		2	32,209		23,560
Florida	14	285,074		190,705		48	221,513		176,628		62	506,587		367,333
Georgia	23	471,135		339,502		74	241,609		199,502		97	712,744		539,004
Hawaii	1	89,049		46,929		—	—		—		1	89,049		46,929
Idaho	—	—		—		2	20,399		15,354		2	20,399		15,354
Illinois	17	441,804		346,234		58	252,788		214,676		75	694,592		560,910
Indiana	3	33,982		17,944		42	200,282		170,976		45	234,264		188,920
Iowa	2	17,846		9,256		15	33,902		29,585		17	51,748		38,841
Kansas	4	29,706		16,968		5	38,109		34,643		9	67,815		51,611
Kentucky	1	2,987		1,856		14	68,840		49,051		15	71,827		50,907
Louisiana	3	240,798		192,221		12	124,837		81,976		15	365,635		274,197
Maryland	7	164,914		108,419		13	59,880		37,937		20	224,794		146,356
Massachusetts	14	339,649		230,467		—	94		94		14	339,743		230,561
Michigan	12	98,663		66,798		53	106,706		92,802		65	205,369		159,600
Minnesota	5	128,095		106,833		12	70,717		69,826		17	198,812		176,659
Mississippi	—	—		—		5	29,480		19,059		5	29,480		19,059
Missouri	7	180,844		148,237		25	109,368		85,351		32	290,212		233,588
Nebraska	2	12,421		8,914		5	45,527		21,139		7	57,948		30,053
Nevada	3	50,332		30,902		6	160,907		117,786		9	211,239		148,688
New Hampshire	—	—		—		1	6,235		4,186		1	6,235		4,186
New Jersey	15	273,428		189,776		3	96,691		62,892		18	370,119		252,668
New Mexico	2	26,880		14,601		16	129,665		81,115		18	156,545		95,716
New York	5	118,279		72,621		9	50,464		37,751		14	168,743		110,372
North Carolina	14	177,810		120,469		19	85,222		71,108		33	263,032		191,577
North Dakota	—	—		—		1	3,476		3,432		1	3,476		3,432
Ohio	11	178,494		146,999		39	278,508		212,058		50	457,002		359,057
Oklahoma	3	34,427		22,941		12	71,233		63,148		15	105,660		86,089
Oregon	1	115,294		101,180		7	79,028		69,288		8	194,322		170,468
Pennsylvania	10	204,672		122,394		32	205,958		154,525		42	410,630		276,919
Rhode Island	2	29,510		21,209		1	3,417		3,368		3	32,927		24,577
South Carolina	3	70,217		43,839		17	100,766		80,940		20	170,983		124,779
Tennessee	9	162,039		96,570		42	122,900		95,543		51	284,939		192,113
Texas	36	496,481		298,441		58	481,089		334,982		94	977,570		633,423
Utah	3	69,850		38,426		3	20,225		10,954		6	90,075		49,380
Vermont	1	14,616		11,868		—	—		—		1	14,616		11,868
Virginia	15	179,008		100,156		18	83,965		66,147		33	262,973		166,303
Washington	8	209,427		162,986		4	24,342		20,417		12	233,769		183,403
West Virginia	1	10,243		5,929		5	15,260		12,962		6	25,503		18,891
Wisconsin	2	44,901		37,896		6	23,854		19,992		8	68,755		57,888
Wyoming	—	—		—		6	81,906		48,236		6	81,906		48,236
	325	6,411,168		4,453,609		797	4,594,483		3,507,190		1,122	11,005,651		7,960,799
Other
Washington, DC	1	143,746		141,094		—	—		—		1	143,746		141,094
Ontario, Canada	2	52,899		36,164		—	—		—		2	52,899		36,164
Puerto Rico	1	182,740		126,218		—	—		—		1	182,740		126,218
	4	379,385		303,476		—	—		—		4	379,385		303,476
Total	329	$	6,790,553	$	4,757,085	797	$	4,594,483	$	3,507,190	1,126	$	11,385,036	$	8,264,275

56

	Hotels					Net Lease					All Properties
	Number of Properties	Undepreciated Carrying Value		Depreciated Carrying Value		Number of Properties	Undepreciated Carrying Value		Depreciated Carrying Value		Total Number of Properties	Total Undepreciated Carrying Value		Total Depreciated Carrying Value
Location of Properties
Held For Sale
Arizona	—	$	—	$	—	1	$	3,200	$	2,790	1	$	3,200	$	2,790
Arkansas	—	—		—		2	3,961		3,651		2	3,961		3,651
Illinois	—	—		—		3	3,160		2,915		3	3,160		2,915
Kansas	—	—		—		1	789		710		1	789		710
Louisiana	—	—		—		1	749		656		1	749		656
Massachusetts	—	—		—		1	69,973		63,380		1	69,973		63,380
Minnesota	—	—		—		1	3,774		2,457		1	3,774		2,457
Missouri	—	—		—		1	1,200		1,098		1	1,200		1,098
Nebraska	—	—		—		3	2,764		2,195		3	2,764		2,195
Ohio	—	—		—		2	3,643		2,693		2	3,643		2,693
Oklahoma	—	—		—		1	443		386		1	443		386
Wyoming	—	—		—		2	4,814		4,562		2	4,814		4,562
Total	—	$	—	$	—	19	$	98,470	$	87,493	19	$	98,470	$	87,493

At December 31, 2019, 14 of our hotels were on land we leased partially or entirely from unrelated third parties. The average remaining term of the ground leases (including renewal options) is approximately 37 years (range of 15 to 68 years). Ground rent payable under nine of the ground leases is generally calculated as a percentage of hotel revenues. Twelve (12) of the 14 ground leases require annual minimum rents averaging $260 per year; future rents under two ground leases have been prepaid. Pursuant to the terms of our management agreements and leases, payments of ground lease obligations are generally made by our hotel managers or tenants. However, if a hotel manager or tenant did not perform obligations under a ground lease or elected not to renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property. Any pledge, sale or transfer of our interests in a ground lease may require the consent of the applicable ground lessor and its lenders.

At December 31, 2019, 17 of our net lease properties were on land we leased partially or entirely from unrelated third parties. The average remaining term of the ground leases (including renewal options) is approximately 12 years (range of 1 year to 31 years). Ground rent payable under the ground leases is generally a fixed amount, averaging $508 per year. Payments of these ground lease obligations are made by our tenants. However, if our tenants did not perform obligations under a ground lease or elected not to renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property. Any pledge, sale or transfer of our interests in a ground lease may require the consent of the applicable ground lessor and its lenders.

The aggregate depreciated carrying value of our properties subject to ground leases was as follows at December 31, 2019 (in thousands):

14 hotels (1)	$	202,782
17 net lease (2)	77,788
Total	$	280,570

(1) Two of these hotels with a depreciated carrying value totaling $62,664 are partially on land we lease from unrelated third parties. The leased land is generally used for parking. We believe these two hotels would be operable without the leased land.

(2) Three of these net lease properties with a depreciated carrying value totaling $31,863 are partially on land we lease from unrelated third parties. The leased land is generally used for additional parking or storm water runoff; however, certain building structures for one of these three net lease properties are located on leased land. We believe these three net lease properties would be operable without the leased land, although we would have to remove the part of the building structure that is located on the leased land and might replace that structure with a new building on land we own.

Item 3. Legal Proceedings

From time to time, we may become involved in litigation matters incidental to the ordinary course of our business. Although we are unable to predict with certainty the eventual outcome of any litigation, we are currently not a party to any litigation which we expect to have a material adverse effect on our business.

Item 4. Mine Safety Disclosures

Not applicable.

57

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common shares are traded on Nasdaq (symbol: SVC). As of February 11, 2020, there were 549 shareholders of record of our common shares.

Item 6. Selected Financial Data

The following table sets forth selected financial data for the periods and dates indicated. This data should be read in conjunction with, and is qualified in its entirety by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes included in “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

	Year Ended December 31,
	2019			2018			2017			2016			2015
	(in thousands, except per share data)
Income Statement Data:
Revenues:
Hotel operating revenues	$	1,989,173		$	1,958,598		$	1,840,829		$	1,733,103		$	1,636,834
Rental income	322,236			330,806			326,436			309,600			280,935
FF&E reserve income	4,739			5,132			4,670			4,508			4,135
Total revenues	2,316,148			2,294,536			2,171,935			2,047,211			1,921,904
Expenses:
Hotel operating expenses	1,410,927			1,387,065			1,274,642			1,197,776			1,138,449
Other operating expenses	8,357			5,290			4,905			4,762			5,532
Depreciation and amortization	428,448			403,077			386,659			357,342			329,776
General and administrative	54,639			104,862			125,402			99,105			109,837
Acquisition and transaction related costs	1,795			—			—			1,367			2,375
Loss on asset impairment	39,296			—			—			—			—
Total expenses	1,943,462			1,900,294			1,791,608			1,660,352			1,585,969
Gain on sale of real estate	159,535			—			9,348			—			11,015
Dividend income	1,752			2,754			2,504			2,001			2,640
Unrealized losses on equity securities	(40,461		)	(16,737		)	—			—			—
Interest income	2,215			1,528			798			274			44
Interest expense	(225,126		)	(195,213		)	(181,579		)	(161,913		)	(144,898		)
Loss on distribution to common shareholders of The RMR Group Inc. common stock	—			—			—			—			(36,773		)
Loss on early extinguishment of debt	(8,451		)	(160		)	(146		)	(228		)	—
Income before income taxes and equity in earnings of an investee	262,150			186,414			211,252			226,993			167,963
Income tax benefit (expense)	(2,793		)	(1,195		)	3,284			(4,020		)	(1,566		)
Equity in earnings of an investee	393			515			607			137			21
Net income	259,750			185,734			215,143			223,110			166,418
Preferred distributions	—			—			(1,435		)	(20,664		)	(20,664		)
Excess of liquidation preference over carrying value of preferred shares redeemed	—			—			(9,893		)	—			—
Net income available for common shareholders	$	259,750		$	185,734		$	203,815		$	202,446		$	145,754
Common distributions paid (1)	$	353,620		$	346,832		$	340,084		$	314,135		$	299,967
Weighted average common shares outstanding (basic)	164,312			164,229			164,146			156,062			150,709
Weighted average common shares outstanding (diluted)	164,340			164,258			164,175			156,088			151,002
Per Common Share Data:
Net income available for common shareholders (basic and diluted)	$	1.58		$	1.13		$	1.24		$	1.30		$	0.97
Distributions paid per common share (1)	$	2.15		$	2.11		$	2.07		$	2.03		$	1.99
Balance Sheet Data (as of December 31):
Real estate properties, gross	$	11,385,036		$	9,522,973		$	9,427,659		$	8,723,389		$	8,261,772
Real estate properties, net	8,264,275			6,549,589			6,643,181			6,209,393			6,044,637
Total assets	9,033,967			7,177,079			7,150,385			6,634,228			6,394,797
Debt, net of discounts and certain issuance costs	6,062,547			4,172,587			4,001,048			3,163,807			3,274,673
Shareholders’ equity	2,505,878			2,597,431			2,755,422			3,129,389			2,812,082
(1) Excludes a non-cash distribution of $0.1974 per share related to the distribution of shares of RMR Inc. class A common stock to our shareholders on December 14, 2015.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included in Part IV, Item 15 of this Annual Report on Form 10-K.

Overview (dollar amounts in thousands, except share amounts and per room hotel data)

We are a REIT organized under the laws of the State of Maryland. As of December 31, 2019, we owned 1,145 properties in 47 states, the District of Columbia, Canada and Puerto Rico.

On September 20, 2019, we completed the SMTA Transaction as a result of which, we acquired 767 properties with 12.4 million rentable square feet for an aggregate transaction value of $2,482,382. The portfolio consisted of 767 service-oriented retail properties net leased to tenants in 23 distinct industries and 163 brands including quick service and casual dining restaurants, movie theaters, health and fitness, automotive parts and services and other service-oriented and necessity-based industries across 45 states.

On December 31, 2019, we entered into agreements with Marriott, which combined our three then-existing Marriott operating agreements, historically referred to as the Marriott Nos. 1, 234 and 5 agreements, into a single portfolio for a 16-year term commencing on January 1, 2020. Additional details of this agreement are set forth in Note 5 to our consolidated financial statements in Item 15 of this Annual Report on Form 10-K, which disclosure is incorporated herein by reference.

On February 27, 2020, we entered into a transaction agreement with Sonesta pursuant to which we and Sonesta modified our existing business arrangements. Additional details regarding this transaction are set forth in Note 5 to our consolidated financial statements in Item 15 of this Annual Report on Form 10-K, which disclosure is incorporated herein by reference.

Management agreements and leases. At February 26, 2020, we owned 329 hotels operated under six agreements. We leased 328 of these hotels to our wholly owned TRSs that are managed by hotel operating companies and one is leased to a hotel operating company. We own 816 service-oriented properties with 194 tenants subject to “triple net” leases, where the tenants are generally responsible for payment of operating expenses and capital expenditures. Our consolidated statements of comprehensive income include hotel operating revenues and hotel operating expenses of our managed hotels and rental income and other operating expenses from our leased hotels and net lease properties.

Many of our operating agreements contain security features, such as guarantees and security deposits, which are intended to protect minimum returns and rents due to us in accordance with our agreements regardless of property performance. However, the effectiveness of various security features to provide us uninterrupted receipt of minimum returns and rents is not assured, especially if economic conditions generally decline for a prolonged period. Also, certain of the guarantees that we hold are limited in amount and duration and do not provide for payment of the entire amount of the applicable minimum returns.

Hotel Portfolio

Comparable hotels data. We present RevPAR, average daily rate, or ADR, and occupancy for the periods presented on a comparable basis to facilitate comparisons between periods. We generally define comparable hotels as those that were owned by us and were open and operating for the entire periods being compared. For the years ended December 31, 2019 and 2018, we excluded 10 hotels from our comparable results. Six of these hotels were not owned for the entire periods and four were closed for major renovations during part of the periods presented.

Hotel operations. In 2019, the U.S. hotel industry generally realized increases in ADR and RevPAR and no change in occupancy compared to 2018. During the year ended December 31, 2019, our 319 comparable hotels that we owned continuously since January 1, 2018 produced aggregate year over year decreases in ADR and RevPAR and a decline in occupancy. We believe these results are, in part, due to the disruption and displacement at certain of our hotels undergoing renovations, increased competition from new hotel room supply in certain markets and decreased business activity in areas where some of our hotels are located.

For the year ended December 31, 2019 compared to the year ended December 31, 2018 for our 319 comparable hotels that we owned continuously since January 1, 2018, ADR decreased 1.1% to $126.30, occupancy decreased 0.3 percentage points to 73.0% and RevPAR decreased 1.5% to $92.20.

For the year ended December 31, 2019 compared to the year ended December 31, 2018 for all our 329 hotels, ADR decreased 1.5% to $128.76, occupancy decreased 0.9 percentage points to 72.5% and RevPAR decreased 2.7% to $93.35.

Net Lease Portfolio

As of December 31, 2019, we owned 816 net lease service-oriented retail properties with 14.9 million square feet and annual minimum rent of $381,679, which represented approximately 38% of our total annual minimum returns and rents. Our net lease portfolio was 98% occupied as of December 31, 2019 by 194 tenants with a weighted (by annual minimum rent) lease term of 11.4 years, operating under 131 brands in 23 distinct industries. TA is our largest tenant. As of December 31, 2019, we leased 179 of our travel centers to TA under five leases that expire between 2029 and 2035 and require annual minimum rents of $246,088, which represents 24.6% of our consolidated annual minimum rents and returns.

Additional details of our hotel operating agreements and net lease agreements are set forth in Notes 5 and 9 to our consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K and in the table and notes thereto on pages 74 through 76 below.

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Results of Operations (dollar amounts in thousands, except share amounts)

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

	For the Year Ended December 31,
							Increase (Decrease)			% Increase (Decrease)
	2019			2018
Revenues:
Hotel operating revenues	$	1,989,173		$	1,958,598		$	30,575		1.6	%
Rental income - hotels	20,985			28,644			(7,659		)	(26.7	)%
Rental income - net lease portfolio	301,251			302,162			(911		)	(0.3	)%
Total rental income	322,236			330,806			(8,570		)	(2.6	)%
FF&E reserve income	4,739			5,132			(393		)	(7.7	)%
Expenses:
Hotel operating expenses	1,410,927			1,387,065			23,862			1.7	%
Other operating expenses	8,357			5,290			3,067			58.0	%
Depreciation and amortization - hotels	268,088			255,759			12,329			4.8	%
Depreciation and amortization - net lease portfolio	160,360			147,318			13,042			8.9	%
Total depreciation and amortization	428,448			403,077			25,371			6.3	%
General and administrative	54,639			104,862			(50,223		)	(47.9	)%
Acquisition and transaction related costs	1,795			—			1,795			n/m
Loss on asset impairment	39,296			—			39,296			n/m
Gain on sale of real estate	159,535			—			159,535			n/m
Dividend income	1,752			2,754			(1,002		)	(36.4	)%
Unrealized losses on equity securities	(40,461		)	(16,737		)	(23,724		)	141.7	%
Interest income	2,215			1,528			687			45.0	%
Interest expense	(225,126		)	(195,213		)	(29,913		)	15.3	%
Loss on early extinguishment of debt	(8,451		)	(160		)	(8,291		)	5,181.9	%
Income before income taxes and equity earnings of an investee	262,150			186,414			75,736			40.6	%
Income tax expense	(2,793		)	(1,195		)	(1,598		)	133.7	%
Equity in earnings of an investee	393			515			(122		)	(23.7	)%
Net income	$	259,750		$	185,734		$	74,016		39.9	%
Weighted average shares outstanding (basic)	164,312			164,229			83			0.1	%
Weighted average shares outstanding (diluted)	164,340			164,258			82			n/m
Net income per common share: basic and diluted	$	1.58		$	1.13		$	0.45		39.8	%

References to changes in the income and expense categories below relate to the comparison of consolidated results for the year ended December 31, 2019, compared to the year ended December 31, 2018. For a comparison of consolidated results for the year ended December 31, 2018 compared to the year ended December 31, 2017 please see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Hotel operating revenues. The increase in hotel operating revenues is a result of our hotel acquisitions since January 1, 2018 ($53,364), increased revenues at certain of our managed hotels due to increases in ADR and higher occupancies ($49,888) and the conversion of one hotel from a leased to managed property during 2018 ($4,427), partially offset by decreased revenues at certain of our managed hotels primarily as a result of lower occupancies ($44,167) and decreased revenues at certain of our other managed hotels undergoing renovations during all or part of 2019 resulting primarily from lower occupancies ($32,937). Additional operating statistics of our hotels are included in the table on page 76.

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Rental income - hotels. The decrease in rental income - hotels is primarily the result of a previously deferred gain from a historical lease default becoming fully amortized in 2018 ($3,631), the conversion of one hotel from a leased to managed property during 2018 ($2,812) and amending the lease terms for 48 vacation units we lease at one hotel during 2019 ($1,265), partially offset by contractual rent increases under certain of our hotel leases ($49). We reduced rental income by $985 in the 2019 period and increased rental income by $382 in the 2018 period to record rent on a straight line basis. Rental income for 2018 includes $147 of percentage rental income. No percentage rent was earned under our hotel leases in 2019.

Rental income net lease portfolio. The decrease in rental income - net lease portfolio is a result of the sale of 20 travel centers to TA and our lease amendments with TA in January 2019 ($47,628), partially offset by rents related to properties acquired pursuant to the SMTA Transaction ($46,717). See Notes 4 and 5 to our consolidated financial statements included in this Annual Report on Form 10-K for more information regarding these transactions. We reduced rental income by $9,734 in the 2019 period and increased rental income by $12,127 in the 2018 period to record scheduled rent increases under certain leases, the deferred rent obligations payable to us under our TA leases and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks on a straight line basis. Rental income for 2019 and 2018 includes $4,238 and $3,548, respectively, of percentage rental income.

FF&E Reserve income. FF&E reserve income represents amounts paid by certain of our hotel tenants into restricted accounts owned by us to accumulate funds for future capital expenditures. The terms of our hotel leases require these amounts to be calculated as a percentage of total sales at our hotels. We do not report the amounts, if any, which are escrowed as FF&E reserves for our managed hotels as FF&E reserve income. The decrease in FF&E reserve income is the result of decreased sales at certain of our leased hotels in 2019.

Hotel operating expenses. The increase in hotel operating expenses is a result of our hotel acquisitions since January 1, 2018 ($53,738), an increase in wage and benefit costs, sales and marketing expenses and other operating costs at certain of our managed hotels resulting primarily from higher occupancies and general expense increases ($31,216), the conversion of one hotel from a leased to managed property during 2018 ($4,642) and an increase in real estate taxes at certain of our hotels ($1,988), partially offset by operating expense decreases at certain managed hotels undergoing renovations during all or part of 2019 resulting primarily from lower occupancies ($33,382), an increase in the amount of guaranty and security deposit utilization under certain of our hotel operating agreements ($24,331) and a decrease in the amount of guaranty and security deposit replenishment under certain of our hotel operating agreements ($10,009). Certain guarantees and security deposits which have been applied to past payment deficits may be replenished from a share of subsequent cash flows from the applicable hotel operations pursuant to the terms of the respective operating agreements. When our guarantees and our security deposits are replenished by cash flows from hotel operations, we reflect such replenishments in our consolidated statements of comprehensive income as an increase to hotel operating expenses. Hotel operating expenses were increased by $734 and $10,743 in 2019 and 2018, respectively, as a result of such replenishments. When our guarantees and security deposits are utilized to cover shortfalls of hotels’ cash flows from the minimum payments due to us, we reflect such utilizations in our consolidated statements of comprehensive income as a decrease to hotel operating expenses. Hotel operating expenses were decreased by $29,897 and $5,569 in 2019 and 2018, respectively, as a result of such utilization.

Other operating expenses. The increase in other operating expenses is a result of operating expenses we pay at certain properties we acquired as part of the SMTA Transaction in 2019.

Depreciation and amortization - hotels. The increase in depreciation and amortization - hotels is a result of the depreciation and amortization of improvements acquired with funds from our FF&E reserves or directly funded by us since January 1, 2018 ($24,072) and our hotel acquisitions since January 1, 2018 ($5,778), partially offset by certain of our depreciable assets becoming fully depreciated since January 1, 2018 ($17,521).

Depreciation and amortization - net lease portfolio. The increase in depreciation and amortization - net lease portfolio is a result of the net lease properties we acquired as part of the SMTA Transaction ($32,023) and the depreciation and amortization of travel center improvements we purchased since January 1, 2018 ($438), partially offset by our travel center dispositions since January 1, 2018 ($11,175) and certain of our depreciable assets becoming fully depreciated since January 1, 2018 ($8,244).

General and administrative. The decrease in general and administrative costs is primarily due to a decrease in business management incentive fee expense ($53,635), partially offset by a loss contingency ($1,997) and increased business management fees ($1,665) in 2019.

Acquisition and transaction related costs. Acquisition and transaction related costs represent costs related to our exploration of possible financing transactions.

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Loss on asset impairment. We recorded a $39,296 loss on asset impairment during 2019 to reduce the carrying value of 19 net lease properties to their estimated fair value less costs to sell and two hotels to their estimated fair value.

Gain on sale of real estate. We recorded a $159,535 gain on sale of real estate in 2019 in connection with the sales of 20 travel centers.

Dividend income. Dividend income represents the dividends we received from our former investment in RMR Inc.

Unrealized losses on equity securities. Unrealized losses on equity securities represent the adjustment required to adjust the carrying value of our investments in RMR Inc., which we sold in July 2019, and TA common shares to their fair value as of December 31, 2019 and 2018.

Interest income. The increase in interest income is due to higher average cash and restricted cash balances during 2019.

Interest expense. The increase in interest expense is due to higher average outstanding borrowings, primarily as a result of our financing of the SMTA Transaction, and a higher weighted average interest rate in 2019.

Loss on early extinguishment of debt. We recorded a loss of $8,451 on early extinguishment of debt in 2019 resulting from the termination of a term loan commitment we arranged in connection with the SMTA Transaction. We recorded a loss of $160 on early extinguishment of debt in 2018 in connection with the amendment of our revolving credit facility and term loan.

Income tax expense. We recognized higher state taxes during the 2019 period primarily due to an increase in the amount of state sourced income subject to income taxes.

Equity in earnings of an investee. Equity in earnings of an investee represents our proportionate share of the earnings of Affiliates Insurance Company, or AIC.

Net income. Our net income, net income per common share (basic and diluted) each increased in 2019 compared to 2018 primarily due to the revenue and expense changes discussed above.

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

Our Managers and Tenants

As of February 26, 2020, 329 of our hotels (including one leased hotel) are included in six combination portfolio agreements and all 329 hotels were managed by or leased to hotel operating companies. Our 816 net lease properties are leased to 194 tenants as of December 31, 2019. The costs of operating and maintaining our properties are generally paid by the hotel managers as agents for us or by our tenants for their own account. Our hotel managers and tenants derive their funding for property operating expenses and for returns and rents due to us generally from property operating revenues and, to the extent that these parties themselves fund our minimum returns and rents, from their separate resources. Our hotel managers and tenants include Marriott, IHG, Sonesta, Wyndham, Hyatt and Radisson. TA is our largest net lease tenant. No other net lease tenant represents more than 1% of our total annualized minimum returns or rents.

We define coverage for each of our hotel management agreements or leases as total hotel property level revenues minus all hotel property level expenses and FF&E reserve escrows which are not subordinated to the hotel minimum returns or rents due to us divided by the hotel minimum returns or rents due to us. More detail regarding coverage, guarantees and other features of our hotel operating agreements is presented in the tables and related notes on pages 74 through 76. For the year ended December 31, 2019, five of our six hotel operating agreements, representing 42.5% of our total annual minimum returns and minimum rents, generated coverage of less than 1.0x (with a range of 0.50x to 0.93x).

We define net lease 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. 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 the tenant. Operating information furnished by the tenant often are unaudited and, in certain cases, may not have been prepared in accordance with GAAP and are not independently verified by us. Properties for which tenants do not report operating information are excluded from the coverage calculations. As of December 31, 2019, our net lease properties generated coverage of 2.32x.

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Certain of our management arrangements or leases are subject to full or limited guarantees or are secured by a security deposit which we control. These guarantees may provide us with continued payments if the property level cash flows fail to equal or exceed guaranteed amounts due to us. Some of our managers and tenants, or their affiliates, may also supplement cash flows from our properties in order to make payments to us and preserve their rights to continue operating our properties even if they are not required to do so by guarantees or security deposits. Guarantee payments, security deposit applications or supplemental payments to us, if any, made under any of our management agreements or leases do not subject us to repayment obligations, but, under some of our agreements, the manager or tenant may recover these guarantee or supplemental payments and the security deposits may be replenished from subsequent cash flows from our properties after our future minimum returns and rents are paid.

When cash flows from our hotels under certain of our agreements are less than the minimum returns or rents contractually due to us, we have utilized the applicable security features in our agreements to cover some of these shortfalls. However, several of the guarantees and all the security deposits we hold are for limited amounts, are for limited durations and may be exhausted or expire, especially if our hotel renovation and rebranding activities do not result in improved operating results at these hotels. Accordingly, the effectiveness of our various security features to provide uninterrupted payments to us is not assured. If any of our hotel managers, tenants or guarantors default in their payment obligations to us, our cash flows will decline and we may become unable to continue to pay distributions to our shareholders or the amount of the distributions may decline.

On December 31, 2019, we entered into agreements with Marriott which combined our three then-existing Marriott operating agreements, which we historically referred to as our Marriott Nos. 1, 234 and 5 agreements, into a single portfolio for a 16-year term commencing January 1, 2020, or the Marriott Agreement. The Marriott Nos. 1, 234 and 5 agreements included 122 hotels, provided for aggregate annual minimum returns and rents due to us of $192,774 and were scheduled to expire on December 31, 2024, 2025 and 2019, respectively. The previously available guarantee under the Marriott No. 234 agreement of $30,672 expired on December 31, 2019. The then existing security deposit held by us for the Marriott No. 234 agreement ($33,445 as of December 31, 2019) will continue to secure payment of the aggregate annual minimum returns due to us under the Marriott Agreement and may be replenished up to the security deposit cap of $64,700 from 60% of the cash flows realized from operations of the 122 hotels after payment of the aggregate annual minimum returns due to us, Marriott’s base management fees and certain other advances by us or Marriott, if any. Marriott provided a new $30.0 million limited guaranty for 85% of the aggregate annual minimum returns due to us through 2026 under the Marriott Agreement if the security deposit is exhausted. Under the Marriott Agreement, we agreed to fund approximately $400,000 for capital improvements at certain hotels over a four year period. Additional details of this agreement are set forth in Note 5 to our consolidated financial statements in Item 15 of this Annual Report on Form 10-K, which disclosure is incorporated herein by reference.

On February 27, 2020, we entered into a transaction agreement with Sonesta and Holdco pursuant to which we and Sonesta restructured our existing business arrangements, as follows:

• We amended and restated our existing management agreements with Sonesta for each of our hotels currently managed by Sonesta, which we refer to collectively as our Sonesta agreement, and our existing pooling agreement with Sonesta, which combines our management agreements with Sonesta for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us, as further described below;

• We and Sonesta agreed to sell, rebrand or repurpose our 39 extended stay hotels currently managed by Sonesta, with an aggregate carrying value of $480,547 and which currently require aggregate minimum returns of $49,467. As the hotels are sold, rebranded or repurposed, the management agreement for the applicable hotel(s) will terminate without our being required to pay Sonesta a termination fee and the annual minimum returns due to us under our Sonesta agreement will decrease by the amount allocated to the applicable hotel(s);

• Sonesta will continue to manage 14 of our full-service hotels and the aggregate annual minimum returns due for these hotels was reduced from $99,013 to $69,013;

• Holdco issued to us a number of its shares of common stock representing approximately (but not more than) 34% of its outstanding shares of common stock (post-issuance);

• We modified our Sonesta agreement and pooling agreement so that up to 5% of the gross revenues of each of our 14 full-service hotels managed by Sonesta will be escrowed for future capital expenditures as “FF&E reserves,” subject to available cash flow after payment of the annual minimum returns due to us under our Sonesta agreement;

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• We modified our Sonesta agreement and pooling agreement so that (1) our termination rights under those agreements for our 14 full-service hotels managed by Sonesta are generally limited to performance and for “cause”, casualty and condemnation events, (2) a portfolio wide performance test now applies for determining whether the management agreement for any of our full service hotels managed by Sonesta may be terminated for performance reasons, and (3) the provisions included in our historical pooling agreement that allowed either us or Sonesta to require the marketing for sale of non-economic hotels were removed; and

• We extended the initial expiration date of the management agreements for our full-service hotels located in Chicago, IL and Irvine, CA that are managed by Sonesta to expire in January 2037 to align with the initial expiration date for our other full-service hotels managed by Sonesta.

Except as described above, the economic terms of our amended and restated Sonesta agreement and amended and restated pooling agreement are consistent with the historical Sonesta agreement and pooling agreement. Additional details of this agreement are set forth in Item 9B. Other information and Note 5 to our consolidated financial statements in Item 15 of this Annual Report on Form 10-K, which disclosure is incorporated herein by reference.

We are exiting our relationship with Wyndham. On November 1, 2019, we rebranded two full-service hotels previously managed by Wyndham in Chicago, IL and Irvine, CA to the Sonesta brands. We also lease 48 vacation units in the Chicago, IL Sonesta hotel to a subsidiary of Wyndham Destinations, Inc. (NYSE: WYND), or Destinations, which requires annual minimum rent of $1,537. We amended this lease so the term of the lease expires on March 31, 2020, at which time Destinations will vacate the leased space.

We amended our agreement with Wyndham in 2019 whereby the term of the management agreement will expire on September 30, 2020 unless sooner terminated with respect to any of our Wyndham hotels that are sold or rebranded. We expect to sell the remaining 20 hotels currently managed by Wyndham by that expiration date. Wyndham was previously paying us 85% of the annual minimum returns due under the management agreement. Under the amendment, Wyndham will pay to us all available cash flows of the hotels after payment of hotel operating expenses. Wyndham will not be entitled to any base management fees for the remainder of the agreement term.

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 minimum returns from our managed hotels, minimum rents from our leased hotel and net lease portfolio and borrowings under our revolving credit facility. We receive minimum returns and rents from our managers and tenants 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 that these sources of funds will be sufficient to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders for the next twelve months and for the foreseeable future thereafter. However, as a result of economic conditions or otherwise, our managers and tenants may become unable or unwilling to pay minimum returns and rents to us when due, and, as a result, our cash flows and net income would decline and we may need to reduce the amount of, or even eliminate, our distributions to common shareholders.

Changes in our cash flows for the year ended December 31, 2019 compared to the year ended December 31, 2018 were as follows: (1) cash flows provided by operating activities increased from $596,953 in 2018 to $617,722 in 2019; (2) cash used in investing activities increased from $427,742 in 2018 to $2,130,044 in 2019; and (3) cash flows from financing activities changed from $190,704 of cash used by financing activities in 2018 to $1,517,578 of cash provided in financing activities in 2019.

The increase in cash flows provided by operating activities for the year ended December 31, 2019 as compared to the prior year is due primarily to a decrease in incentive business management fees paid to RMR LLC in 2019 with respect to 2018, and an increase in the minimum returns and rents paid to us as a result of our acquisitions and funding of improvements to certain properties since January 1, 2018, partially offset by a decrease in security deposits received or replenished in 2019 and higher interest payments in 2019. The increase in cash used in investing activities for the year ended December 31, 2019 as compared to the prior year is primarily due to our higher real estate acquisition activity in 2019 and an increase in our capital improvement fundings, partially offset by proceeds from asset sales and a decrease in our hotel managers’ purchases with FF&E reserves in 2018. The change to cash flows provided by financing activities in 2019 from cash used in financing activities in 2018 is primarily due to an increase in our net borrowings in 2019.

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

Various percentages of total sales at some of our hotels are escrowed as FF&E reserves to fund future capital improvements. During the year ended December 31, 2019, our hotel managers and tenants deposited $73,189 into these accounts and spent $208,241 from the FF&E reserve escrow accounts to renovate and refurbish our hotels. As of December 31, 2019, there was $53,626 on deposit in these escrow accounts, which was held directly by us and is reflected in our consolidated balance sheets as restricted cash.

Our hotel operating agreements generally provide that, if necessary, we may provide our managers and tenants 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. To the extent we make such additional fundings, our annual minimum returns or rents generally increase by a percentage of the amount we fund. During the year ended December 31, 2019, we funded $242,571 for capital improvements in excess of FF&E reserve fundings available from hotel operations to our hotels as follows:

• During the year ended December 31, 2019, we funded $51,056 for capital improvements to certain hotels under our then-existing Marriott agreements using cash on hand and borrowings under our revolving credit facility. Under the Marriott Agreement, we agreed to fund approximately $400,000 for capital improvements at certain hotels over a four year period. We currently expect to fund approximately $80,000 of this amount during 2020 using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase.

• During the year ended December 31, 2019, we funded $55,359 for capital improvements to certain hotels under our IHG agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately $15,000 for capital improvements under this agreement during 2020 using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase.

• Previously, our Sonesta agreement did not require FF&E escrow deposits. During the year ended December 31, 2019, we funded $114,082 for capital improvements to certain hotels included in our Sonesta agreement using cash on hand and borrowings under our revolving credit facility. Under our amended agreement with Sonesta, FF&E deposits are required only if there are excess cash flows after payment of our minimum returns. We currently expect to fund approximately $30,000 during 2020 for capital improvements under this agreement using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase.

• During the year ended December 31, 2019, we funded $19,034 for capital improvements to certain hotels under our Radisson agreement using cash on hand or borrowings under our revolving credit facility. We currently do not expect to fund any capital improvements under this agreement in 2020. As we fund improvements in the future, the contractual minimum returns payable to us will increase.

• During the year ended December 31, 2019, we did not fund capital improvements to any hotels operating under our Hyatt agreement. We currently expect to fund approximately $20,000 during 2020 for capital improvements to certain hotels under this agreement using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase.

• Previously, our Wyndham agreement required FF&E escrow deposits only if there are excess cash flows after payment of our minimum returns. No FF&E escrow deposits were required during the year ended December 31, 2019. During the year ended December 31, 2019, we funded $3,040 for capital improvements to certain hotels included in our Wyndham agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately $5,000 during 2020 for capital improvements under this agreement using cash on hand or borrowings under our revolving credit facility.

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Our net lease portfolio leases do not require FF&E escrow deposits. However, tenants under these leases are required to maintain the leased properties, including structural and non-structural components. Tenants under certain of our net lease portfolio leases, including TA, may request that we purchase qualifying capital improvements to the leased facilities in return for minimum rent increases or we may agree to provide allowances for tenant improvements upon execution of new leases or when renewing our existing tenants. We funded $2,295 of capital improvements at certain of our net lease properties during the year ended December 31, 2019. We currently expect to fund approximately $5,000 of capital improvements under these leases during 2020 using cash on hand or borrowings under our revolving credit facility. Certain tenants are not obligated to request and we are not obligated to purchase any such improvements.

As of December 31, 2019, we had $5,346 of unspent leasing-related obligations under our net lease portfolio.

During the year ended December 31, 2019, we paid quarterly cash distributions to our shareholders totaling $353,619 using existing cash balances and borrowings under our revolving credit facility. On January 16, 2020, we declared a regular quarterly distribution of $0.54 per common share, or approximately $88,864, to shareholders of record on January 27, 2020. We paid this distribution on February 20, 2020 using cash on hand and borrowings under our revolving credit facility. For more information regarding our distributions, see Note 7 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

In January 2019, in a series of transactions, we sold 20 travel centers in 15 states to TA for $308,200. We used a portion of the proceeds from these sales to repay borrowings under our revolving credit facility and for general business purposes, including hotel acquisitions.

On July 1, 2019, we sold all the shares of class A common stock of RMR Inc. that we owned in an underwritten public offering at a price to the public of $40.00 per share pursuant to an underwriting agreement among us, RMR Inc., certain other REITs managed by RMR LLC that also sold their class A common stock of RMR Inc. in the offering and the underwriters named therein. We received net proceeds of $93,892 from this sale, after deducting the underwriting discounts and commissions and after other offering expenses, which we used to repay borrowings under our revolving credit facility. For more information regarding the sale of our shares of class A common stock of RMR Inc., see Note 9 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

On September 18, 2019, we issued $825,000 aggregate principal amount of our 4.350% unsecured senior notes due 2024, $450,000 aggregate principal amount of our 4.750% unsecured senior notes due 2026 and $425,000 aggregate principal amount of our 4.950% unsecured senior notes due 2029. We used the aggregate net proceeds from these offerings of $1,680,461, after underwriting discounts and other offering expenses, to finance a portion of the SMTA Transaction.

On September 20, 2019, we completed the SMTA Transaction as a result of which, we acquired 767 net lease service-oriented retail properties with 12.4 million rentable square feet. The aggregate transaction value of the SMTA Transaction was $2,482,382, including $2,384,577 in cash consideration, $82,069 of prepayment penalties to extinguish mortgage debt on the portfolio and $15,736 of other capitalized acquisition costs. The properties included in the portfolio are net leased to tenants in 23 distinct industries and 163 brands that include quick service and casual dining restaurants, movie theaters, health and fitness, automotive parts and services and other service-oriented and necessity-based industries across 45 states. We financed the SMTA Transaction with borrowings under our revolving credit facility and with cash on hand, including net proceeds from our public offerings of senior unsecured notes, as further described above.

During 2019, we acquired three hotels with 794 rooms for an aggregate purchase price of $226,450, excluding capitalized acquisition costs of $3,087 using proceeds from certain dispositions, cash on hand or outstanding borrowings under our revolving credit facility. Additional details of these transactions are set forth in Note 4 to our consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K, which disclosure is incorporated herein by reference.

During 2019, we sold 130 net lease properties with 2.8 million square feet for aggregate proceeds of $513,012, excluding closing costs of $3,402. We used the proceeds from these sales to reduce borrowings under our revolving credit facility and for general business purposes. As of December 31, 2019, we had 19 net lease properties with a carrying value of $87,493 classified as held for sale.

In February 2020, we entered an agreement to acquire three net lease properties with approximately 6,696 square feet in two states with leases requiring an aggregate of $387 of annual minimum rents for an aggregate sales price of $7,000, excluding closing costs, using existing cash balances.

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Since January 1, 2020, we sold four vacant net lease properties with approximately 160,434 square feet in three states for an aggregate sales price of $5,010, excluding closing costs. Additional details of these transactions are set forth in Note 4 to our consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K, which disclosure is incorporated herein by reference.

We have also commenced marketing certain hotels as part of our previously announced plan to sell approximately $300,000 of hotels to reduce our financial leverage. We expect to sell the 20 hotels currently managed by Wyndham and have agreed to sell or rebrand 33 hotels as part of the Marriott Agreement. We also expect to sell, rebrand or repurpose 39 hotels currently managed by Sonesta. We expect to use the proceeds from any sales of these hotels to repay debt or for general business purposes.

We currently intend to continue to expand our investments by primarily acquiring additional hotels and other single tenant, net lease properties and we expect to use the extensive nationwide resources of RMR LLC to locate, acquire and manage such properties. One of our goals in acquiring single tenant, net lease properties is to further diversify our sources of rents and returns with the intention of improving the security of our cash flows. Another of our goals is to purchase properties that produce rents, less property operating expenses, that are greater than our capital costs to acquire the properties and, accordingly, allow us to increase distributions to our shareholders over time. We expect that most of our acquisition efforts will focus on hotel and net lease properties; however, we may consider acquiring other types of properties.

In order to fund acquisitions and to meet cash needs that may result from our desire or need to make distributions or pay operating or capital expenses, we maintain a $1,000,000 revolving credit facility and $400,000 term loan which are governed by a credit agreement with a syndicate of institutional lenders. The maturity date of our revolving credit facility is July 15, 2022, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to extend the maturity date of this facility for two additional six month periods. We are required to pay interest at the rate of LIBOR plus a premium, which was 120 basis points per annum at December 31, 2019, on the amount outstanding under our revolving credit facility. We also have to pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum at December 31, 2019. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. As of December 31, 2019, the annual interest rate payable on borrowings under our revolving credit facility was 2.80%. As of December 31, 2019, we had $377,000 outstanding and $623,000 available to borrow under our revolving credit facility. As of February 27, 2020, we had $437,000 outstanding and $563,000 available to borrow under our revolving credit facility.

Our $400,000 term loan, which matures on July 15, 2023, is prepayable without penalty at any time. We are required to pay interest on the amount outstanding under our term loan at the rate of LIBOR plus a premium, which was 135 basis points per annum at December 31, 2019. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2019, the annual interest rate for the amount outstanding under our term loan was 3.04%.

Our credit agreement also includes a feature under which the maximum borrowing availability may be increased to up to $2,300,000 on a combined basis in certain circumstances.

Our term debt maturities (other than our revolving credit facility and term loan) as of December 31, 2019 were as follows:

Year	Maturity
2021	$	400,000
2022	500,000
2023	500,000
2024	1,175,000
2025	350,000
2026	800,000
2027	400,000
2028	400,000
2029	425,000
2030	400,000
	$	5,350,000

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

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We currently expect to use cash on hand, the cash flows from our operations, borrowings under our revolving credit facility, net proceeds from any asset sales and net proceeds of offerings of equity or debt securities to fund our future debt maturities, operations, capital expenditures, distributions to our shareholders, property acquisitions 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. Although we have not historically done so, we may also assume mortgage debt on properties we may acquire or obtain mortgage financing on our existing properties.

While we believe we will 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 depends primarily upon credit market conditions and our then 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.

As of December 31, 2019, our contractual obligations were as follows (dollars in thousands):

	Payment due by period
Contractual Obligations	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Long-term debt obligations	$	6,127,000	$	—	$	1,277,000	$	2,075,000	$	2,775,000
Ground lease obligations (1)	236,471		71,107		82,620		11,259		71,485
Security deposits (2)	109,403		—		—		—		109,403
Capital improvements (3)	475,000		155,000		220,000		100,000		—
Projected interest expense (4)	1,500,598		271,105		510,916		355,358		363,219
Total	$	8,448,472	$	497,212	$	2,090,536	$	2,541,617	$	3,319,107

(1) 14 of our hotels and 17 of our net lease properties are on land leased partially or in its entirety. In each case the ground lessors are unrelated to us. Pursuant to the terms of our management agreements and leases, payments of ground lease obligations are generally made by our managers or tenants. However, if a manager or tenant fails to perform obligations under a ground lease or elects not to renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected hotel or travel center. We have included the future rent expense under these ground leases in the table above.

(2) Represents the security deposit balance as of December 31, 2019. We may draw upon security deposits to cover any rent or return shortfalls thereby decreasing the potential obligation to repay some of these deposits.

(3) Represents amounts we expect to fund for capital improvements to our hotels in excess of amounts available in FF&E reserves and to our net lease properties as of December 31, 2019.

(4) Projected interest expense is interest attributable to only debt obligations listed above at existing rates as of December 31, 2019 and is not intended to project future interest costs which may result from debt prepayments, additional borrowings under our revolving credit facility, new debt issuances or changes in interest rates.

Off Balance Sheet Arrangements

As of December 31, 2019, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Debt Covenants

Our debt obligations at December 31, 2019 consisted of outstanding borrowings under our $1,000,000 revolving credit facility, our $400,000 term loan and $5,350,000 of publicly issued term debt. Our publicly issued term debt is 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 debts, including debts secured by mortgages on our properties, in excess of calculated amounts, and require us to maintain various financial ratios and our credit agreement restricts our ability to make distributions under certain circumstances. Our credit agreement and our 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 LLC ceasing to act as our business manager. As of December 31, 2019, we believe we were in compliance with all of the covenants under our indentures and their supplements and our credit agreement.

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. However, under our credit agreement, our highest senior debt rating is used to determine the fees and interest rates we pay. Accordingly, if that debt rating is downgraded, our interest expense and related costs under our revolving credit facility and term loan would increase.

Our public debt indentures and their supplements contain cross default provisions to any other debt of $20,000 or more ($50,000 or more in the case of our indenture entered into in February 2016 and its supplements). 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.

Related Person Transactions

We have relationships and historical and continuing transactions with RMR LLC, RMR Inc., TA and Sonesta and others related to them. For example: we have no employees and the personnel and various services we require to operate our business are provided to us by RMR LLC pursuant to our business and property management agreements with RMR LLC; RMR Inc. is the managing member of RMR LLC; Adam Portnoy, the Chair of our Board of Trustees and one of our Managing Trustees, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., a managing director, president and chief executive officer of RMR Inc., an officer and employee of RMR LLC, the chair of the board of directors and a managing director of TA, and, together with certain of his affiliates, a majority owner and director of Sonesta; John Murray, our other Managing Trustee and our President and Chief Executive Officer, also serves as an executive officer of RMR LLC and a director of Sonesta; and, until July 1, 2019, we owned shares of class A common stock of RMR Inc. We also have relationships and historical and continuing transactions with other companies to which RMR LLC or its subsidiaries provide management services and which may have trustees, directors and officers who are also trustees, directors or officers of us, RMR LLC or RMR Inc., including: TA, which is our former subsidiary and largest tenant and of which we are the largest shareholder; and Sonesta, which is one of our hotel managers and is owned in part by Adam Portnoy and of which we own an approximately 34% equity interest.

For further information about these and other such relationships and related person transactions, see Notes 4, 5, 8 and 9 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K, which are incorporated herein by reference and our other filings with the SEC, including our definitive Proxy Statement for our 2020 Annual Meeting of Shareholders, or our definitive Proxy Statement, to be filed with the SEC within 120 days after the fiscal year ended December 31, 2019. For further information about the risks that may arise as a result of these and other related person transactions and relationships, see elsewhere in this Annual Report on Form 10-K, including “Warning Concerning Forward-Looking Statements,” Part I, Item 1, “Business” and Part I, Item 1A, “Risk Factors.” Our filings with the SEC and copies of certain of our agreements with these related persons, including our business and property management agreements with RMR LLC and our various agreements with TA and Sonesta, are available as exhibits to our public filings with the SEC and accessible at the SEC’s website, www.sec.gov. We may engage in additional transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide management services.

Critical Accounting Policies

Our critical accounting policies are those that will have the most impact on the reporting of our financial condition and results of operations and those requiring significant judgments and estimates. We believe that our judgments and estimates have been and will be consistently applied and produce financial information that fairly presents our results of operations. Our most critical accounting policies involve our investments in real property. These policies affect our:

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• variable interest entities, or VIEs;

• allocation of purchase prices between various asset categories and the related impact on the recognition of depreciation and amortization expenses;

• assessment of the carrying values and impairments of real estate, intangible assets and equity investments;

• classification of leases and the related impact to our financial statements; and

• income taxes.

We have determined that each of our wholly owned TRSs is a VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification™, or the Codification. We have concluded that we must consolidate each of our wholly owned TRSs because we are the entity with the power to direct the activities that most significantly impact such VIE’s performance and we have the obligation to absorb the majority of the potential variability in gains and losses of each VIE, with the primary focus on losses, and are therefore the primary beneficiary of each VIE.

We allocate the acquisition cost of each property investment to various property components such as land, buildings and equipment and intangibles based on their relative fair values and each component generally has a different useful life. For acquired real estate, we record building, land, furniture, fixtures and equipment, and, if applicable, the value of acquired in-place leases, the fair market value of above or below market leases and customer relationships at fair value. For transactions that qualify as business combinations we allocate the excess, if any, of the consideration over the fair value of assets acquired to goodwill. We base purchase price allocations and the determination of useful lives on our estimates and, under some circumstances, studies from independent real estate appraisers to provide market information and evaluations that are relevant to our purchase price allocations and determinations of useful lives; however, our management is ultimately responsible for the purchase price allocations and determination of useful lives.

We compute depreciation expense using the straight line method over estimated useful lives of up to 40 years for buildings and improvements, and up to 12 years for personal property. We amortize the value of intangible assets over the shorter of their estimated useful lives, or the term of the respective lease or the affected contract. We do not depreciate the allocated cost of land. Purchase price allocations and estimates of useful lives require us to make certain assumptions and estimates. Incorrect assumptions and estimates may result in inaccurate depreciation and amortization charges over future periods.

We periodically evaluate our real estate and other assets for possible impairment indicators. These indicators may include weak or declining operating profitability, cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life or market or industry changes that could permanently reduce the value of our investments. If indicators of impairment are present, we evaluate the carrying value of the related investment by comparing it to the expected future undiscounted cash flows to be generated from that investment. If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the property to its estimated fair value.

We test our indefinite lived intangible assets and goodwill for impairment on an annual basis and on an interim basis if events or changes in circumstances between annual tests indicate that the asset might be impaired. The impairment test requires us to determine the estimated fair value of the intangible asset. An impairment charge is recorded if the fair value is determined to be lower than the carrying value.

We periodically evaluate our equity method investments for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time and degree to which the market value of our investment is below our cost basis, the financial condition of the issuer, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we may record an impairment charge to adjust the basis of the investment to its fair value.

We determine the fair value for our long lived assets and indefinite lived intangible assets by evaluating recent financial performance and projecting discounted cash flows using standard industry valuation techniques. These analyses require us to judge whether indicators of impairment exist and to estimate likely future cash flows. If we misjudge or estimate incorrectly or if future operating profitability, market or industry factors differ from our expectations, we may record an impairment charge which is inappropriate, fail to record a charge when we should have done so or the amount of such charges may be inaccurate.

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Certain of our properties are leased on a triple net basis, pursuant to non-cancelable, fixed term, operating leases. Each time we enter a new lease or materially modify an existing lease we evaluate its classification as either a finance or operating lease. The classification of a lease as finance, sales-type, direct financing or operating affects the carrying value of a property, as well as our recognition of rental payments as revenue. These evaluations require us to make estimates of, among other things, the remaining useful life and market value of a leased property, appropriate present value discount rates and future cash flows. Incorrect assumptions or estimates may result in misclassification of our leases. See Note 2 to consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K for further discussion on the impact to our accounting for leases due to recent accounting pronouncements.

We account for income taxes in accordance with the Income Taxes Topic of the Codification. Under this Topic, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We establish valuation allowances to reduce deferred tax assets to the amounts that are expected to be realized when necessary. We have elected to be taxed as a REIT under the IRC and are generally not subject to federal and state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements. Despite our qualification for taxation as a REIT, we are subject to income tax in Canada, Puerto Rico and in certain states. Further, we lease our managed hotels to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated tax return and are subject to federal, state and foreign income tax. Our consolidated income tax provision (or benefit) includes the income tax provision (or benefit) related to the operations of the TRSs and state and foreign income taxes incurred by us despite our qualification for taxation as a REIT. The Income Taxes Topic also prescribes how we should recognize, measure and present in our financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Tax benefits are recognized only to the extent that it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized upon settlement. Tax returns filed for the 2016 through 2019 tax years are subject to examination by taxing authorities. We classify interest and penalties related to uncertain tax positions, if any, in our financial statements as a component of general and administrative expense.

These accounting policies involve significant judgments made based upon our experience and the experience of our management and our Board of Trustees, including judgments about current valuations, ultimate realizable value, estimated useful lives, salvage or residual value, the ability and willingness of our tenants and operators to perform their obligations to us, and the current and likely future operating and competitive environments in which our properties operate. In the future, we may need to revise our carrying value assessments to incorporate information which is not now known, and such revisions could increase or decrease our depreciation expense related to properties we own, result in the classification of our leases as other than operating leases or decrease the carrying values of our assets.

Management Agreements, Leases and Operating Statistics (dollar amounts in thousands)

As of December 31, 2019, we owned and managed a diverse portfolio of hotels and net lease properties across the United States and in Puerto Rico and Canada with 151 brands across 24 industries.

Hotel Portfolio

As of January 1, 2020, 329 of our hotels (including one leased hotel) were included in six portfolio agreements and managed by or leased to separate affiliates of IHG, Marriott, Sonesta, Hyatt, Radisson and Wyndham.

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The table and related notes below through page 76 summarize significant terms of our hotel lease and management agreements as of December 31, 2019. These tables also include statistics reported to us or derived from information reported to us by our hotel managers and tenant. These statistics include coverage of our minimum returns or minimum rents and occupancy, ADR and RevPAR for our hotel properties. We consider these statistics and the management agreement or lease security features also presented in the tables and related notes on the following pages to be important measures of our managers’ and tenant’s success in operating our hotel properties and their ability to continue to pay us. However, this third party reported information is not a direct measure of our financial performance and we have not independently verified the operating data.

		Number of Rooms or Suites			Annual Minimum Return/Rent (2)		Rent / Return Coverage (3), Year Ended December 31,
Operating Agreement Reference Name	Number of Properties
			Investment (1)				2019	2018
IHG (4)	103	17,154	$	2,377,821	$	216,239	0.91x	1.05x
Marriott (5)	122	17,086	1,859,836		192,774		1.06x	1.13x
Sonesta (6)	53	9,532	1,963,497		146,800		0.54x	0.67x
Hyatt (7)	22	2,724	301,942		22,037		0.90x	1.04x
Radisson (8)	9	1,939	289,139		20,442		0.93x	1.11x
Wyndham (9)	20	2,914	217,764		18,866		0.50x	0.56x
Subtotal / Average Hotels	329	51,349	$	7,009,999	$	617,158	0.86x	0.97x

(1) Represents the historical cost of our hotel properties plus capital improvements funded by us less impairment write-downs, if any, and excludes capital improvements made from FF&E reserves funded from hotel operations that do not result in increases in hotel minimum returns or rents.

(2) Each of our hotel management agreements or lease provides for payment to us of an annual minimum return or rent, respectively. Certain of these minimum payment amounts are secured by full or limited guarantees or security deposits as more fully described below. In addition, certain of our hotel management agreements provide for payment to us of additional amounts to the extent of available cash flows as defined in the management agreement. Payments of these additional amounts are not guaranteed or secured by deposits. Annualized minimum rent amounts represent cash rent amounts due to us and exclude adjustments necessary to record rent on a straight line basis.

(3) We define hotel coverage as combined total hotel property level revenues minus all hotel property level expenses and FF&E reserve escrows which are not subordinated to hotel minimum returns or rents due to us (which data is provided to us by our managers or tenant), divided by the minimum returns or rents due to us. Coverage amounts for our IHG, Sonesta and Radisson agreements include data for periods prior to our ownership of certain hotel properties. Coverage amounts for our Sonesta agreement include data for three hotels prior to when these hotels were managed by Sonesta.

(4) We lease 102 IHG branded hotels (20 Staybridge Suites^®, 61 Candlewood Suites^®, two InterContinental^®, 11 Crowne Plaza^®, three Holiday Inn^® and five Kimpton^® Hotels & Restaurants) in 30 states in the U.S., the District of Columbia and Ontario, Canada to one of our TRSs. These 102 hotels are managed by subsidiaries of IHG under a combination management agreement. We lease one additional InterContinental^® branded hotel in Puerto Rico to a subsidiary of IHG. The annual minimum return amount presented in the table on page 74 includes $7,908 of minimum rent related to the leased Puerto Rico hotel. The management agreement and the lease expire in 2036; IHG has two renewal options for 15 years each for all, but not less than all, of the hotels.

As of December 31, 2019, we held a security deposit of $75,717 under this agreement to cover payment shortfalls of our minimum return. This security deposit, if utilized, may be replenished and increased up to $100,000 from the hotels’ available cash flows in excess of our minimum return and certain management fees. Under this agreement, IHG is required to maintain a minimum security deposit of $37,000.

In addition to our minimum return, this management agreement provides for an annual additional return payment to us of $12,067 from the hotels’ available cash flows after payment of hotel operating expenses, funding of the required FF&E reserve, if any, payment of our minimum return, payment of certain management fees and replenishment and expansion of the security deposit. In addition, the agreement provides for payment to us of 50% of the hotels’ available cash flows after payment to us of the annual additional return amount. These additional return amounts are not guaranteed or secured by the security deposit we hold.

(5) On December 31, 2019, we entered into agreements with Marriott which combined our three then-existing Marriott operating agreements, historically referred to as our Marriott Nos. 1, 234 and 5 agreements, into a single portfolio for a 16-year term commencing January 1, 2020. The Marriott Nos. 1, 234 and 5 agreements included 122 hotels, provided for aggregate annual minimum returns and rents due to us of $192,774 and were scheduled to expire on December 31, 2024, 2025 and 2019, respectively. As of January 1, 2020, we leased our 122 Marriott branded hotels (two full service Marriott^®, 35 Residence Inn by Marriott^®, 71 Courtyard by Marriott^®, 12 TownePlace Suites by Marriott^® and two SpringHill Suites by Marriott^® hotels) in 31 states to one of our TRSs. The hotels under the Marriott agreement are managed by subsidiaries of Marriott and require aggregate annual minimum returns of $190,573. The Marriott Agreement is scheduled to expire in 2035 and Marriott has two renewal options for 10 years each for all, but not less than all, of the hotels.

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We originally held a security deposit of $64,700 under this agreement to cover payment shortfalls of our minimum return. As of December 31, 2019, the available balance of this security deposit was $33,445. This security deposit may be replenished from a share of the hotels’ available cash flows in excess of our minimum return and certain management fees. Marriott has also provided us with a $30,000 limited guaranty to cover payment shortfalls up to 85% of our minimum return after the available security deposit balance has been depleted. This limited guaranty expires in 2026.

In addition to our minimum return, this agreement provides for payment to us of 60% of the hotels’ available cash flows after payment of hotel operating expenses, funding of the required FF&E reserve, payment of our minimum return, payment of certain management fees and replenishment of the security deposit. This additional return amount is not guaranteed or secured by the security deposit.

(6) As of December 31, 2019, we leased our 53 Sonesta branded hotels (seven Royal Sonesta^® Hotels, seven Sonesta Hotels & Resorts^® and 39 Sonesta ES Suites^® hotels) in 26 states to one of our TRSs. The management agreements for two hotels expire on December 31, 2020 and includes automatic one year renewals. The management agreement for the remaining 51 hotels expires in 2037. Sonesta has two renewal options for 15 years each for all, but not less than all, of these 51 hotels.

As of December 31, 2019, we e have no security deposit or guaranty from Sonesta. Accordingly, payment by Sonesta of the minimum return due to us under this management agreement is limited to the hotels’ available cash flows after the payment of operating expenses, including certain management fees, and we are financially responsible for operating cash flows deficits, if any.

In addition to our minimum return, this management agreement provides for payment to us of 80% of the hotels’ available cash flows after payment of hotel operating expenses, management fees to Sonesta, our minimum return, an imputed FF&E reserve to us and reimbursement of operating loss or working capital advances, if any.

We lease 48 vacation units in one of our Sonesta hotels to Destinations, under a lease that expires in on March 31, 2020 at which time Destinations will vacate the leased space.

On February 27, 2020, we entered into a transaction agreement with Sonesta and Holdco pursuant to which we and Sonesta restructured our business arrangements, as follows:

• We amended and restated our existing management agreements with Sonesta for each of our hotels currently managed by Sonesta, which we refer to collectively as our Sonesta agreement, and our existing pooling agreement with Sonesta, which combines our management agreements with Sonesta for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us, as further described below;

• We and Sonesta agreed to sell, rebrand or repurpose our 39 extended stay hotels currently managed by Sonesta with an aggregate carrying value of $480,547 and which currently require aggregate annual minimum returns of $49,467. As the hotels are sold, rebranded or repurposed, the management agreement for the applicable hotel(s) will terminate without our being required to pay Sonesta a termination fee and our annual minimum returns due to us under our Sonesta agreement will decrease by the amount allocated to the applicable hotel(s);

• Sonesta will continue to manage 14 of our full-service hotels and the annual minimum returns due for these hotels will be reduced from $99,013 to $69,013;

• Holdco issued to us a number of its shares of common stock representing approximately (but not more than) 34% of its outstanding share of common stock (post-issuance);

• We modified our Sonesta agreement and pooling agreement so that up to 5% of the gross revenues of each of our 14 full-service hotels managed by Sonesta will be escrowed for future capital expenditures as “FF&E reserves,” subject to available cash flow after payment of the annual minimum returns due to us under our Sonesta agreement;

• We modified our Sonesta agreement and pooling agreement so that (1) our termination rights under those agreements for our 14 full service hotels managed by Sonesta are generally limited to performance and for “cause,” casualty and condemnation events, (2) a portfolio wide performance test now applies for determining whether the management agreement for any of our full-service hotels managed by Sonesta may be terminated for performance reasons, and (3) the provisions included in our historical pooling agreement that allowed either us or Sonesta to require the marketing for sale of non-economic hotels were removed; and

• We extended the initial expiration date of the management agreements for our full-service hotels located in Chicago, IL and Irvine, CA that are managed by Sonesta to expire in January 2037 to align with the initial expiration date for our other full-service hotels managed by Sonesta.

Except as described above, the economic terms of our amended and restated Sonesta agreement and amended and restated pooling agreement are consistent with the historical Sonesta agreement and pooling agreement.

(7) We lease our 22 Hyatt Place^® branded hotels in 14 states to one of our TRSs. The hotels are managed by a subsidiary of Hyatt under a combination management agreement that expires in 2030; Hyatt has two renewal options for 15 years each for all, but not less than all, of the hotels.

We have a limited guaranty of $50,000 under this agreement to cover payment shortfalls of our minimum return. As of December 31, 2019, the available Hyatt guaranty was $19,655. The guaranty is limited in amount but does not expire in time and may be replenished from a share of the hotels’ available cash flows in excess of our minimum return.

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In addition to our minimum return, this management agreement provides for payment to us of 50% of the hotels’ available cash flows after payment of operating expenses, funding the required FF&E reserve, payment of our minimum return and reimbursement to Hyatt of working capital and guaranty advances, if any. This additional return is not guaranteed.

(8) We lease our nine Radisson branded hotels (four Radisson^® Hotels & Resorts, four Country Inns & Suites^® by Radisson and one Radisson Blu^® hotel) in six states to one of our TRSs and these hotels are managed by a subsidiary of Radisson under a combination management agreement which expires in 2035 and Radisson has two 15 year renewal options for all, but not less than all, of the hotels.

We have a limited guaranty of $47,523 under this agreement to cover payment shortfalls of our minimum return. As of December 31, 2019, the available Radisson guaranty was $41,216. The guaranty is limited in amount but does not expire in time and may be replenished from a share of the hotels’ available cash flows in excess of our minimum return.

In addition to our minimum return, this management agreement provides for payment to us of 50% of the hotels’ available cash flows after payment of operating expenses, funding the required FF&E reserve, payment of our minimum return and reimbursement to Radisson of working capital and guaranty advances, if any. This additional return is not guaranteed.

(9) We lease our 20 Wyndham branded hotels (four Wyndham Hotels and Resorts^® and 16 Hawthorn Suites^® hotels) in 13 states to one of our TRSs. The hotels are managed by a subsidiary of Wyndham under a combination management agreement which expires on September 30, 2020. We have no guarantee or security deposit from Wyndham. Payment by Wyndham is limited to the available cash flows after payment of operating expenses. Wyndham is not entitled to any base management fees for the remainder of the agreement.

The following tables summarize the operating statistics, including ADR, occupancy and RevPAR reported to us by our hotel managers or tenants by management agreement or lease for the periods indicated. All operating data presented are based upon the operating results provided by our hotel managers and tenants for the indicated periods. We have not independently verified our managers’ or tenants’ operating data.

		No. of Rooms/ Suites	Year Ended December 31,
	No. of Hotels		2019			2018			Change
ADR
IHG (1)	103	17,154	$	122.41		$	125.70		(2.6	)%
Marriott	122	17,086	137.47			136.65			0.6	%
Sonesta (1) (2)	53	9,532	144.58			148.75			(2.8	)%
Hyatt	22	2,724	108.11			111.17			(2.8	)%
Radisson (1)	9	1,939	133.67			133.45			0.2	%
Wyndham	20	2,914	82.26			85.13			(3.4	)%
All Hotels Total / Average	329	51,349	$	128.76		$	130.73		(1.5	)%
OCCUPANCY
IHG (1)	103	17,154	76.3		%	78.4		%	-2.1 pts
Marriott	122	17,086	71.2		%	72.2		%	-1.0 pts
Sonesta (1) (2)	53	9,532	68.6		%	68.5		%	0.1 pts
Hyatt	22	2,724	77.3		%	78.2		%	-0.9 pts
Radisson (1)	9	1,939	71.7		%	71.5		%	0.2 pts
Wyndham	20	2,914	65.9		%	64.1		%	1.8 pts
All Hotels Total / Average	329	51,349	72.5		%	73.4		%	-0.9 pts
RevPAR
IHG (1)	103	17,154	$	93.40		$	98.55		(5.2	)%
Marriott	122	17,086	97.88			98.66			(0.8	)%
Sonesta (1) (2)	53	9,532	99.18			101.89			(2.7	)%
Hyatt	22	2,724	83.57			86.93			(3.9	)%
Radisson (1)	9	1,939	95.84			95.42			0.4	%
Wyndham	20	2,914	54.21			54.57			(0.7	)%
All Hotels Total / Average	329	51,349	$	93.35		$	95.96		(2.7	)%

(1) Operating data includes data for certain hotels for periods prior to when we acquired them.

(2) Operating data includes data for three hotels prior to when these hotels were managed by Sonesta.

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Net Lease Portfolio

As of December 31, 2019, our 816 net lease properties located in 44 states were leased to 194 tenants. These tenants operate in 23 distinct industries including travel centers, casual dining and quick service restaurants, movie theaters, health and fitness, automobile service and others. TA is our largest tenant and leases 179 travel centers under five lease agreements that expire between 2029 and 2035 and require annual minimum rents of $246,088, which represents approximately 24.6% of our total minimum returns and rent as of December 31, 2019.

As of December 31, 2019, our net lease properties were 98% occupied and we had 17 properties available for lease. During 2019 we entered into lease renewals for 217,807 rentable square feet at weighted (by rentable square feet) average rents that were 0.75% below prior rents for the same space. The weighted (by rentable square feet) average lease term for these leases was 8.1 years and leasing concessions and capital commitments for these leases were $551, or $0.31 per square foot, per lease year.

As of December 31, 2019, our net lease tenants operated across more than 131 brands. The following table identifies the top ten brands based on annualized minimum rent.

	Brand	No. of Buildings	Investment (1) (2)		Percent of Total Investment		Annualized Minimum Rent (2) (3)		Percent of Total Annualized Minimum Rent (2)		Coverage (4)
1.	TravelCenters of America	134	$	2,281,589	43.2	%	$	167,992	44.0	%	2.02x
2.	Petro Stopping Centers	45	1,021,226		19.4	%	78,096		20.5	%	1.70x
3.	AMC Theatres	14	123,553		2.3	%	10,565		2.8	%	1.33x
4.	The Great Escape	14	98,242		1.9	%	7,140		1.9	%	4.13x
5.	Life Time Fitness	3	92,617		1.8	%	5,246		1.4	%	3.56x
6.	Casual Male	1	69,973		1.3	%	5,221		1.4	%	1.22x
7.	Buehler's Fresh Foods	5	76,536		1.5	%	5,143		1.3	%	2.09x
8.	Heartland Dental	59	61,120		1.2	%	4,427		1.2	%	3.72x
9.	Pizza Hut	62	61,434		1.2	%	4,384		1.1	%	1.35x
10.	Regal Cinemas	6	44,476		0.8	%	3,658		1.0	%	1.84x
11.	Other (5)	473	1,345,373		25.4	%	89,807		23.4	%	3.47x
	Total	816	$	5,276,139	100.0	%	$	381,679	100.0	%	2.32x

(1) Represents historical cost of our properties plus capital improvements funded by us less impairment write-downs, if any.

(2) Each of the leases in our net lease portfolio provides for payment to us of minimum rent. Certain of these minimum payment amounts are secured by full or limited guarantees. Annualized minimum rent amounts represent cash rent amounts due to us and exclude adjustments, if any, to record scheduled rent changes under certain of our leases, the deferred rent obligations payable to us under our leases with TA, and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks at our travel centers on a straight line basis, or any reimbursement of expenses paid by us.

(3) As of December 31, 2019, we have 19 net lease properties with a carrying value of $87,493 and annual minimum rent of $5,625 classified as held for sale.

(4) We define net lease 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. EBITDAR amounts used to determine rent coverage are generally for the latest twelve months period reported based on the most recent operating information, if any, furnished by the tenant. Operating information furnished by the tenant often are unaudited and, in certain cases, may not have been prepared in accordance with GAAP and are not independently verified by us. Properties for which tenants do not report operating information are excluded from the coverage calculations. Coverage amounts include data for certain properties for periods prior to when we assumed ownership of them.

(5) Other includes 119 distinct brands with an average investment of $11,119 and average annual minimum rent of $734.

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As of December 31, 2019, our top ten net lease tenants based on annualized minimum rent are listed below.

	Tenant	Brand Affiliation	No. of Buildings	Investment (1) (2)		Percent of Total Investment		Annualized Minimum Rent (2) (3)		Percent of Total Annualized Minimum Rent		Coverage (4)
1.	TravelCenters of America Inc.	TravelCenters	179	$	3,302,815	62.6	%	$	246,088	64.5	%	1.92x	(5) (6)
2.	Universal Pool Co., Inc.	The Great Escape	14	98,242		1.9	%	7,140		1.9	%	4.13x
3.	Healthy Way of Life II, LLC	Life Time Fitness	3	92,617		1.8	%	5,246		1.4	%	3.56x	(5)
4.	Destination XL Group, Inc.	Casual Male	1	69,973		1.3	%	5,221		1.4	%	1.22x	(7)
5.	Styx Acquisition, LLC	Buehler's Fresh Foods	5	76,536		1.5	%	5,143		1.3	%	2.09x
6.	Professional Resource Development, Inc.	Heartland Dental	59	61,120		1.2	%	4,427		1.2	%	3.72x
7.	Carmike Cinemas LLC	AMC Theaters	7	48,120		0.9	%	4,158		1.1	%	1.71x
8.	Regal Cinemas, Inc.	Regal Cinemas	6	44,476		0.8	%	3,658		1.0	%	1.84x
9.	Eastwynn Theaters, Inc.	AMC Theaters	5	41,771		0.8	%	3,541		0.9	%	0.87x
10.	Express Oil Change, LLC	Express Oil Change	23	49,724		0.9	%	3,379		0.9	%	3.44x
	Subtotal, top 10		302	3,885,394		73.7	%	288,001		75.6	%	2.09x
11.	Other (8)	Various	514	1,390,745		26.3	%	93,678		24.4	%	3.30x
	Total		816	$	5,276,139	100.0	%	$	381,679	100.0	%	2.32x

(1) Represents historical cost of our net lease properties plus capital improvements funded by us less impairment write-downs, if any.

(2) Each of the leases in our net lease portfolio provides for payment to us of minimum rent. Certain of these minimum payment amounts are secured by full or limited guarantees. Annualized minimum rent amounts represent cash rent amounts due to us and exclude adjustments, if any, to record scheduled rent changes under certain of our leases, the deferred rent obligations payable to us under our leases with TA, and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks at our travel centers on a straight line basis, or any reimbursement of expenses paid by us.

(3) As of December 31, 2019, we have 19 net lease properties with a carrying value of $87,493 and annual minimum rent of $5,625 classified as held for sale.

(4) See page 78 for our definition of coverage. Coverage amounts include data for certain properties for periods prior to when we assumed ownership of them.

(5) Leases subject to full or partial corporate guarantee.

(6) TA is our largest tenant. We lease 179 travel centers (134 under the TravelCenters of America brand and 45 under the Petro Stopping Centers brand) to a subsidiary of TA under master leases that expire in 2029, 2031, 2032, 2033 and 2035, respectively. TA has two renewal options for 15 years each for all of the travel centers. In addition to the payment of our minimum rent, the TA leases provide for payment to us of percentage rent based on increases in total non-fuel revenues over base levels (3% of non-fuel revenues above threshold amounts defined in the agreements). Commencing in 2020, these leases provide for payment of an additional half percent (0.5%) of non-fuel revenues above 2019 non-fuel base revenues. TA’s remaining deferred rent obligation of $57,247 as of December 31, 2019 is being paid in quarterly installments of $4,404 through January 31, 2023.

(7) This property is held for sale as of December 31, 2019.

(8) Other includes 184 tenants with an average investment of $7,558 and average annual minimum rent of $509.

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As of December 31, 2019, our net lease tenants operated across 23 distinct industries within the service-oriented retail sector of the U.S. economy.

Industry	No. of Buildings	Investment (1) (2)		Percent of Total Investment	Annualized Minimum Rent (2) (3)		Percent of Total Annualized Minimum Rent		Coverage (4)
Travel Centers	182	$	3,344,496	63.5%	$	249,209	65.5	%	1.94x
Restaurants-Quick Service	249	313,578		5.9%	20,939		5.6	%	2.58x
Movie Theaters	25	211,698		4.0%	17,922		4.7	%	1.50x
Restaurants-Casual Dining	63	227,278		4.3%	13,535		3.5	%	2.43x
Health and Fitness	14	188,161		3.6%	11,166		2.9	%	2.83x
Medical/Dental Office	71	118,098		2.2%	8,895		2.3	%	3.75x
Miscellaneous Retail	19	114,433		2.2%	8,866		2.3	%	3.55x
Grocery	19	129,219		2.4%	8,587		2.2	%	2.72x
Automotive Parts and Service	63	96,496		1.8%	6,531		1.7	%	2.85x
Apparel	2	81,000		1.5%	5,891		1.5	%	1.54x
Automotive Dealers	9	64,756		1.2%	4,664		1.2	%	4.54x
Entertainment	4	61,436		1.2%	4,221		1.1	%	2.19x
Educational Services	9	55,647		1.1%	4,074		1.1	%	2.89x
Sporting Goods	3	52,022		1.0%	3,489		0.9	%	3.44x
Miscellaneous Manufacturing	7	32,873		0.6%	2,402		0.6	%	25.29x
Building Materials	27	31,124		0.6%	2,113		0.6	%	3.40x
Car Washes	5	28,658		0.5%	2,076		0.5	%	4.78x
Drug Stores and Pharmacies	8	23,970		0.5%	1,646		0.4	%	1.79x
Other	3	8,282		0.2%	2,502		0.7	%	1.15x
Home Furnishings	6	47,454		0.9%	1,217		0.3	%	1.65x
Legal Services	5	11,362		0.2%	993		0.3	%	1.45x
General Merchandise	3	7,492		0.1%	555		0.1	%	3.27x
Dollar Stores	3	2,971		0.1%	186		—	%	2.83x
Vacant	17	23,635		0.4%	—		—	%	—
Total	816	$	5,276,139	100.0%	$	381,679	100.0	%	2.32x

(1) Represents historical cost of our net lease properties plus capital improvements funded by us less impairment write-downs, if any.

(2) As of December 31, 2019, we have 19 net lease properties with a carrying value of $87,493 and annual minimum rent of $5,625 classified as held for sale.

(3) Each of the leases in our net lease portfolio provides for payment to us of minimum rent, respectively. Certain of these minimum payment amounts are secured by full or limited guarantees. Annualized minimum rent amounts represent cash rent amounts due to us and exclude adjustments, if any, to record scheduled rent changes under certain of our leases, the deferred rent obligations payable to us under our leases with TA, and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks at our travel centers on a straight line basis, or any reimbursement of expenses paid by us.

(4) See page 78 for our definition of coverage. Coverage amounts include data for certain properties for periods prior to when we assumed ownership of them.

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As of December 31, 2019, lease expirations at our net lease properties by year are as follows.

				Percent of Total	Cumulative % of
	Square	Annualized Minimum		Annualized Minimum	Total Minimum
Year(1)	Feet	Rent Expiring (2)		Rent Expiring	Rent Expiring
2020	423,734	$	5,860	1.5%	1.5%
2021	655,606	7,755		2.0%	3.5%
2022	905,744	10,827		2.8%	6.3%
2023	155,619	2,746		0.7%	7.0%
2024	694,836	9,612		2.5%	9.5%
2025	485,411	12,275		3.2%	12.7%
2026	1,603,671	14,610		3.8%	16.5%
2027	1,146,673	13,077		3.4%	19.9%
2028	412,079	7,376		1.9%	21.8%
2029	1,326,015	47,589		12.5%	34.3%
2030	171,295	3,649		1.0%	35.3%
2031	1,455,097	51,271		13.4%	48.7%
2032	1,131,435	50,433		13.3%	62.0%
2033	1,093,402	50,962		13.4%	75.4%
2034	310,042	9,426		2.5%	77.9%
2035	2,257,031	79,947		21.0%	98.9%
2036	264,727	3,536		0.9%	99.8%
2037	—	—		0.0%	99.8%
2038	10,183	409		0.1%	99.9%
2039	34,789	252		0.1%	100.0%
2040	1,739	67		0.0%	100.0%
Total	14,539,128	$	381,679	100.0%

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

(2) As of December 31, 2019, we have 19 net lease properties with a carrying value of $87,493 and annual minimum rent of $5,625 classified as held for sale.

As of December 31, 2019, shown below is the list of our top ten states where our net lease properties were located. No other state represents more than 3% of our net lease annual minimum rents.

				Percent of Total
	Square	Annualized Minimum		Annualized Minimum
State	Feet	Rent		Rent
Texas	1,187,237	$	31,038	8.1%
Illinois	1,024,937	26,072		6.8%
Ohio	1,271,539	23,926		6.3%
California	399,045	23,230		6.1%
Georgia	597,248	19,824		5.2%
Indiana	608,140	17,872		4.7%
Arizona	506,085	16,955		4.4%
Florida	538,130	15,683		4.1%
Pennsylvania	642,533	15,441		4.0%
New Mexico	246,478	10,982		2.9%
Other	7,865,595	180,656		47.4%
Total	14,886,967	$	381,679	100.0%

(1) Includes properties located in 34 states.

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Impact of Inflation

Inflation in the past several years in the United States has been modest but recently there have been indications of inflation in the U.S. economy and elsewhere and some market forecasts indicate an expectation of increased inflation in the near to intermediate term. Future inflation might have both positive and negative impacts on our business. Inflation might cause the value of our assets to increase. In periods of rapid U.S. inflation, our managers’ and tenants’ operating expenses may increase faster than their revenues, which may have an adverse impact upon us if the operating income from our properties becomes insufficient to pay our returns or rents and the security features, such as security deposits or guarantees of our returns or rents are exhausted. To mitigate the adverse impact of any increased cost of debt capital in the event of material inflation, we may enter into interest rate hedge arrangements in the future. The decision to enter into these agreements will be based on various factors, including the amount of our floating rate debt outstanding, our belief that material interest rate increases are likely to occur, the costs of, and our expected benefit from, these agreements and upon possible requirements of our borrowing arrangements.

Generally, we do not expect inflation to have a material adverse impact on our financial results for the next 12 months or for the currently foreseeable future thereafter.

Seasonality

Our hotels and travel centers have historically experienced seasonal differences typical of their industries with higher revenues in the second and third quarters of calendar years compared with the first and fourth quarters. Most of our management agreements and leases require our managers and tenants to make the substantial portion of our return and rent payments to us in equal amounts throughout the year. So long as guarantees and security deposits are available to supplement earnings shortfalls at our properties, seasonality is not expected to cause material fluctuations in our income or cash flows from these properties. If and as guarantees and security deposits which secure the minimum returns and rents due to us are exhausted or expire, our financial results may begin to reflect more of the seasonality of the industries in which our tenants and managers operate. The return payments to us under certain of our management agreements depend exclusively upon earnings at these properties and, accordingly, our income and cash flows from these properties reflect the seasonality of the hotel industry.

Impact of Climate Change

Concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws may cause energy or other costs at our properties to increase. We do not expect the direct impact of these increases to be material to our results of operations, because the increased costs either would be the responsibility of our tenants or managers directly or in the longer term, passed through and paid by customers of our properties. Although we do not believe it is likely in the foreseeable future, laws enacted to mitigate climate change may make some of our buildings obsolete or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our tenants or managers and their ability to pay rent or returns to us.

We are environmentally conscious and aware of the impact our properties have on the environment. We and our tenants and managers have implemented numerous initiatives to encourage recycling of plastics, paper and metal or glass containers; we have programs to encourage reduced water and energy use at a hotel guest’s option by not laundering towels and linens every day. When we renovate our hotels we generally use energy efficient products including but not limited to lighting, windows and HVAC equipment and many of the appliances in our extended stay hotels are Energy Star rated. We or our tenants or managers have also installed car battery charging stations at some of the properties in our portfolio to accommodate environmentally aware customers.

In an effort to reduce the effects of any increased energy costs in the future, we continuously study ways to improve the energy efficiency at all of our properties. Our property manager, RMR LLC, is a member of the Energy Star program, a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy that is focused on promoting energy efficiency at commercial properties through its “Energy Star” partner program, and a member of the U.S. Green Building Council, a nonprofit organization focused on promoting energy efficiency at commercial properties through its Leadership in Energy and Environmental Design, or LEED^®, green building program.

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Some observers believe severe weather in different parts of the world over the last few years is evidence of global climate change. Severe weather may have an adverse effect on certain properties we own. Rising sea levels could cause flooding at some of our properties, which may have an adverse effect on individual properties we own. We mitigate these risks by procuring, or requiring our managers or tenants to procure, insurance coverage we believe adequate to protect us from material damages and losses resulting from the consequences of losses caused by climate change. However, we cannot be sure that our mitigation efforts will be sufficient or that future storms, rising sea levels or other changes that may occur due to future climate change could not have a material adverse effect on our financial results.

Non-GAAP Financial Measures

We present certain “non-GAAP financial measures” within the meaning of 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 as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income as presented in our consolidated statements of income. We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income. 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, calculated in accordance with GAAP, excluding any gain or loss on sale of properties and loss on impairment of real estate assets, if any, plus real estate depreciation and amortization, less any unrealized gains and losses on equity securities, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO, we adjust for the item shown below and include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any such business management incentive fees will be payable when all contingencies for determining such fees are known at the end of the calendar year. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement and public debt covenants, the availability to us of debt and equity capital, our dividend yield and the dividend yield 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.

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Our calculations of FFO available for common shareholders and Normalized FFO available for common shareholders for the years ended December 31, 2019, 2018 and 2017 and reconciliations of net income available for common shareholders, the most directly comparable financial measure under GAAP reported in our consolidated financial statements, to those amounts appear in the following table (amounts in thousands, except per share amounts).

		For the Year Ended December 31,
		2019			2018		2017
Net income available for common shareholders		$	259,750		$	185,734	$	203,815
Add (Less):	Depreciation and amortization expense	428,448			403,077		386,659
	Gain on sale of real estate (1)	(159,535		)	—		(9,348		)
	Loss on asset impairment (2)	39,296			—		—
	Unrealized losses on equity securities (3)	40,461			16,737		—
FFO available for common shareholders		608,420			605,548		581,126
Add (Less):	Acquisition and transaction related costs (4)	1,795			—		—
	Loss on early extinguishment of debt (5)	8,451			160		146
	Loss contingency (6)	1,997			—		—
	Excess of liquidation preference over carrying value of preferred shares redeemed (7)	—			—		9,893
	Deferred tax benefit (8)	—			—		(5,431		)
Normalized FFO available for common shareholders		$	620,663		$	605,708	$	585,734
Weighted average shares outstanding (basic)		164,312			164,229		164,146
Weighted average shares outstanding (diluted) (9)		164,340			164,258		164,175
Basic and diluted per common share amounts:
	Net income available for common shareholders	$	1.58		$	1.13	$	1.24
	FFO available for common shareholders	$	3.70		$	3.69	$	3.54
	Normalized FFO available for common shareholders	$	3.78		$	3.69	$	3.57
	Distributions declared per share	$	2.15		$	2.11	$	2.07

(1) We recorded a $159,535 gain on sale of real estate during the year ended December 31, 2019 in connection with the sales of 20 travel centers. We recorded a $9,348 gain on sale of real estate during the year ended December 31, 2017 in connection with the sales of three hotels.

(2) We recorded a $39,296 loss on asset impairment during the three months ended December 31, 2019 to reduce the carrying value of 19 net lease properties to their estimated fair value less costs to sell and two hotels to their estimated fair value.

(3) Unrealized gains and losses on equity securities, net represent the adjustment required to adjust the carrying value of our investments in RMR Inc. and TA common shares to their fair value as of December 31, 2019 and 2018, respectively. We sold our shares of RMR Inc. on July 1, 2019.

(4) Acquisition and transaction related costs represents costs related to our exploration of possible financing transactions.

(5) We recorded a loss of $8,451 on early extinguishment of debt during the year ended December 31, 2019 related to the termination of a term loan commitment we arranged in connection with the SMTA Transaction. We recorded losses of $160 on early extinguishment of debt during the year ended December 31, 2018 in connection with the amendment of our revolving credit facility and term loan and $146 on early extinguishment of debt during the year ended December 31, 2017 in connection with the redemption of certain senior unsecured notes.

(6) We recorded a $1,997 loss contingency during the three months ended December 31, 2019 for an expected settlement of a historical pension withdrawal liability for a hotel we rebranded.

(7) In February 2017, we redeemed all 11,600,000 of our outstanding 7.125% Series D cumulative redeemable preferred shares at the stated liquidation preference of $25.00 per share plus accrued and unpaid distributions to the date of redemption (an aggregate of $291,435). The liquidation preference of the redeemed shares exceeded the carrying amount for the redeemed shares as of the date of redemption by$9,893 and we reduced net income available for common shareholders in the year ended December 31, 2017 by that excess amount.

(8) We realized a $5,431 tax benefit in the year ended December 31, 2017 related to the enactment of the Tax Cuts and Jobs Act.

(9) Represents weighted average common shares adjusted to reflect the potential dilution of unvested share awards.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk (dollar amounts in thousands)

We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Other than as described below, we do not currently foresee any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.

Fixed Rate Debt

At December 31, 2019, our outstanding publicly tradable debt consisted of twelve issues of fixed rate, senior notes:

Principal Balance		Annual Interest Rate		Annual Interest Expense		Maturity	Interest Payments Due
$	400,000	4.250	%	$	17,000	2021	Semi-Annually
500,000		5.000	%	25,000		2022	Semi-Annually
500,000		4.500	%	22,500		2023	Semi-Annually
350,000		4.650	%	16,275		2024	Semi-Annually
825,000		4.350	%	35,888		2024	Semi-Annually
350,000		4.500	%	15,750		2025	Semi-Annually
350,000		5.250	%	18,375		2026	Semi-Annually
450,000		4.750	%	21,375		2026	Semi-Annually
400,000		4.950	%	19,800		2027	Semi-Annually
400,000		3.950	%	15,800		2028	Semi-Annually
425,000		4.950	%	21,038		2029	Semi-Annually
400,000		4.375	%	17,500		2030	Semi-Annually
$	5,350,000			$	246,301

No principal repayments are due under these notes until maturity. Because these notes require interest at fixed rates, changes in market interest rates during the term of these debts will not affect our interest obligations. If these notes were refinanced at interest rates which are one percentage point higher than the rates shown above, our per annum interest cost would increase by approximately $53,500. Changes in market interest rates would affect the fair value of our fixed rate debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at December 31, 2019 and discounted cash flows analyses through the respective maturity dates, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligations, a hypothetical immediate one percentage point change in interest rates would change the fair value of those debt obligations by approximately $246,331.

Each of these fixed rate unsecured debt arrangements allows us to make repayments earlier than the stated maturity date. We are generally allowed to make prepayments only at a premium equal to a make whole amount, as defined, which is generally designed to preserve a stated yield to the noteholder. Also, we have in the past repurchased and retired some of our outstanding debts and we may do so again in the future. These prepayment rights and our ability to repurchase and retire outstanding debt may afford us opportunities to mitigate the risks of refinancing our debts at their maturities at higher rates by refinancing prior to maturity.

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Floating Rate Debt

At December 31, 2019, our floating rate debt consisted of $377,000 outstanding under our $1,000,000 revolving credit facility and our $400,000 term loan. The maturity date of our revolving credit facility is July 15, 2022, and, subject to our meeting certain conditions, including our payment of an extension fee, we have an option to extend the stated maturity date of the facility for two additional six month periods. The maturity date of our term loan is July 15, 2023. No principal repayments are required under our revolving credit facility prior to maturity, and repayments may be made and redrawn subject to conditions at any time without penalty. No principal prepayments are required under our term loan prior to maturity and we can repay principal amounts outstanding under the term loan subject to conditions at any time without penalty, but after amounts outstanding under our term loan are repaid, amounts may not be redrawn. Borrowings under our revolving credit facility and term loan are in U.S. dollars and require annual interest to be paid at the rate of LIBOR plus premiums that are subject to adjustment based upon changes to our credit ratings. Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates, specifically LIBOR and to changes in our credit ratings. In addition, upon renewal or refinancing of our revolving credit facility or our term loan, we are vulnerable to increases in interest rate premiums due to market conditions or our perceived credit characteristics. Generally, a change in interest rates would not affect the value of this floating rate debt but would affect our operating results.

The following table presents the impact a one percentage point increase in interest rates would have on our annual floating rate interest expense as of December 31, 2019:

	Impact of Increase in Interest Rates
	Interest Rate Per Year (1)		Outstanding Debt		Total Interest Expense Per Year		Annual Per Share Impact (2)
At December 31, 2019	2.93	%	$	777,000	$	22,766	$	0.14
One percentage point increase	3.93	%	$	777,000	$	30,536	$	0.19

(1) Weighted average based on the interest rates and the respective outstanding borrowings as of December 31, 2019.

(2) Based on diluted weighted average common shares outstanding for the year ending December 31, 2019.

The following table presents the impact that a one percentage point increase in interest rates would have on our annual floating rate interest expense at December 31, 2019 if we were fully drawn on our revolving credit facility and our $400,000 term loan remained outstanding:

	Impact of Increase in Interest Rates
	Interest Rate Per Year (1)		Outstanding Debt		Total Interest Expense Per Year		Annual Per Share Impact (2)
At December 31, 2019	2.87	%	$	1,400,000	$	40,180	$	0.24
One percentage point increase	3.87	%	$	1,400,000	$	54,180	$	0.33

(1) Weighted average based on the interest rates and the respective outstanding borrowings (assuming fully drawn) as of December 31, 2019.

(2) Based on diluted weighted average common shares outstanding for the year ending December 31, 2019.

The foregoing tables show the impact of an immediate change in floating interest rates as of December 31, 2019. If interest rates were to change gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amounts under our revolving credit facility and term loan or other floating rate debt, if any. Although we have no present plans to do so, we may in the future enter into hedge arrangements from time to time to mitigate our exposure to changes in interest rates.

LIBOR Phase Out

LIBOR is currently expected to be phased out in 2021. We are required to pay interest on borrowings under our credit facility and term loan at floating rates based on LIBOR. Future debt that we may incur may also require that we pay interest based upon LIBOR. We currently expect that the determination of interest under our credit agreement would be revised as provided under the agreement or amended as necessary to provide for an interest rate that approximates the existing interest rate as calculated in accordance with LIBOR for similar types of loans. Despite our current expectations, we cannot be sure that, if LIBOR is phased out or transitioned, the changes to the determination of interest under our agreements would approximate the current calculation in accordance with LIBOR. We do not know what standard, if any, will replace LIBOR if it is phased out or transitioned.

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Item 8. Financial Statements and Supplementary Data

The information required by this item is included in Part IV, Item 15 of this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management Report on Assessment of Internal Control Over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013 Framework). Based on this assessment, we believe that, as of December 31, 2019, our internal control over financial reporting is effective.

Ernst & Young LLP, the independent registered public accounting firm that audited our 2019 consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting. The report appears elsewhere herein.

Item 9B. Other Information

Restructuring of our existing business arrangements with Sonesta

On February 27, 2020, we entered into a transaction agreement with Sonesta and its newly formed parent company, Holdco, pursuant to which we restructured our business agreements as follows:

• We amended and restated our existing management agreements with Sonesta for each of our hotels currently managed by Sonesta, which we refer to collectively as our Sonesta agreement, and our existing pooling agreement with Sonesta, which combines our management agreements with Sonesta for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us, as further described below;

• We and Sonesta agreed to sell, rebrand or repurpose our 39 extended stay hotels managed by Sonesta with an aggregate carrying value of $480,547 and which currently require aggregate annual minimum returns of $49,467. As the hotels are sold, rebranded or repurposed, the management agreement for the applicable hotel(s) will terminate without our being required to pay Sonesta a termination fee and our annual minimum returns due to us under our Sonesta agreement will decrease by the amount allocated to the applicable hotel(s);

• Sonesta will continue to manage 14 of our full-service hotels and the annual minimum returns due for these hotels will be reduced from $99,013 to $69,013;

• Holdco issued to us a number of its shares of common stock representing approximately (but not more than) 34% of its outstanding share of common stock (post-issuance);

• We modified our Sonesta agreement and pooling agreement so that up to 5% of the gross revenues of each of our 14 full-service hotels managed by Sonesta will be escrowed for future capital expenditures as “FF&E reserves,” subject to available cash flow after payment of the annual minimum returns due to us under our Sonesta agreement;

• We modified our Sonesta agreement and pooling agreement so that (1) our termination rights under those agreements for our 14 full service hotels managed by Sonesta are generally limited to performance and for “cause,” casualty and condemnation events, (2) a portfolio wide performance test now applies for determining whether the management agreement for any of our full-service hotels managed by Sonesta may be terminated for performance reasons, and (3) the provisions included in our historical pooling agreement that allowed either us or Sonesta to require the marketing for sale of non-economic hotels were removed; and

• We extended the initial expiration date of the management agreements for our full-service hotels located in Chicago, IL and Irvine, CA that are managed by Sonesta to expire in January 2037 to align with the initial expiration date for our other full-service hotels managed by Sonesta.

Except as described above, the economic terms of our amended and restated Sonesta agreement and amended and restated pooling agreement are consistent with the historical Sonesta agreement and pooling agreement.

The Holdco shares we acquired in the transaction are unregistered. Concurrently with entering into, and pursuant to, the transaction agreement, we entered into a stockholders agreement with Holdco, Adam Portnoy and the other stockholder of Holdco, as described below, and a registration rights agreement with Holdco with respect to our Holdco shares pursuant to which we received customary piggy-back registration rights.

Pursuant to the stockholders agreement, among other things: (1) we received consent rights with respect to certain amendments to Holdco’s and its subsidiaries’ organizational documents and other stockholders agreements and certain related party transactions; (2) we are subject to transfer restrictions with respect to our Holdco shares, with certain exceptions; (3) Holdco has a right of first offer before we may sell our Holdco shares to a third party; (4) pursuant to their drag-along right, the other Holdco stockholders may require us to sell our Holdco shares to a third party in a change of control transaction, as defined; (5) pursuant to our tag-along rights, we may participate equally with the other Holdco stockholders in the sale of their Holdco shares to a third party; (6) Holdco has a call right to purchase our Holdco shares in the event that we terminate our Sonesta agreement, which right is exercisable within a year following such termination, subject in certain circumstances to our right to sell to a third party through the right of first offer process; (7) we have a preemptive right to participate equally in any future issuance of Holdco stock; and (8) we have certain financial information and access rights. Also pursuant to the stockholders agreement, Holdco and the other Holdco stockholders agreed to certain covenants related to our ability to maintain our qualification for taxation as a REIT under the IRC, including not taking any action that would cause us to constructively own more than 34% of Holdco’s outstanding shares, and, in the event this covenant is breached, we can require Holdco to purchase the number of Holdco shares which caused us to exceed the 34% limitation. The stockholders agreement provides a valuation process to determine the purchase price of the Holdco shares in connection with the right of first refusal, call right and put right, which includes independent third party valuations. The stockholders agreement terminates under certain circumstances, including the earlier of such time as we or our permitted transferees no longer own any Holdco shares or a change in control or an initial public offering of Holdco.

The foregoing descriptions of the transaction agreement, the amended and restated Sonesta agreement and amended and restated pooling agreement, the stockholders agreement and the registration rights agreement are qualified in their entirety by reference to the full text of the transaction agreement (including the forms of amended and restated management agreement, amended and restated pooling agreement, stockholders agreement and registration rights agreement attached as exhibits thereto), a copy of which is filed as Exhibit 10.11 to this Annual Report on Form 10-K and is incorporated herein by reference.

We have relationships and historical and continuing transactions with Sonesta and Adam Portnoy. Please see Notes 4, 5, 8 and 9 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K, which are incorporated herein by reference, for further information regarding our relationships with Sonesta and Adam Portnoy. Because of these continuing relationships, the transactions contemplated by the transaction agreement and the terms thereof were evaluated, negotiated and recommended to our Board of Trustees for approval by a special committee of our Board of Trustees, comprised solely of our Independent Trustees, and were separately approved and adopted by our Independent Trustees and our Board of Trustees. Citigroup Global Markets Inc. acted as financial advisor to the special committee of our Board of Trustees.

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Board expansion

On February 27, 2020, our Board of Trustees pursuant to a recommendation of the Nominating and Governance Committee of our Board of Trustees, increased its size from five to seven members, with one new Trustee to be in Class II of our Board of Trustees with a term expiring at our 2021 annual meeting of shareholders and the other new Trustee to be in Class III of our Board of Trustees with a term expiring at our 2022 annual meeting of shareholders, and in order to fill the vacancies created by such increase, elected Laurie B. Burns and Robert E. Cramer, as Independent Trustees in Class II and Class III of our Board of Trustees, respectively. Ms. Burns and Mr. Cramer were also each elected as a member of the Audit Committee, Compensation Committee and the Nominating and Governance Committee of our Board of Trustees.

Ms. Burns, age 57, has been the founder and chief executive officer of LBB Growth Partners, a real estate advisory firm focusing on restaurant and hospitality businesses, since 2017, or LBB. Prior to founding LBB, since 1999, Ms. Burns held various positions at Darden Restaurants, Inc., an owner and operator of full-service restaurants in the United States and Canada, or Darden, including, senior vice president and chief development officer, from 2014 to 2016, senior vice president, specialty restaurant group strategic platform and development, from 2012 to 2014, and president of Bahama Breeze Island Grille from 2003 to 2012. Prior to joining Darden, Ms. Burns held various real estate development positions in the hospitality industry.

Mr. Cramer, age 62, has been managing partner of Riparian Partners, LLC, a mergers and acquisitions advisory firm that provides investment banking services to privately held middle market companies, or Riparian, since 2019. Prior to joining Riparian, Mr. Cramer served as managing director and head of the financial institutions and real estate group of Oppenheimer and Co. Inc., a financial services firm, from 2013 to 2018. Prior to that, Mr. Cramer served as managing director, financial services group, of RBC Capital Markets, LLC, an investment banking firm, or RBC, from 2001 to 2013. Prior to joining RBC, Mr. Cramer held various positions in financial services. Mr. Cramer is also currently an adjunct professor of finance at Boston College Carroll School of Management.

There is no arrangement or understanding between Ms. Burns or Mr. Cramer and any other person pursuant to which Ms. Burns or Mr. Cramer, respectively, was selected as a Trustee. There are no transactions, relationships or agreements between Ms. Burns, Mr. Cramer and us that would require disclosure pursuant to Item 404(a) of Regulation S-K promulgated under the Exchange Act.

Our Board of Trustees concluded that each of Ms. Burns and Mr. Cramer is qualified to serve as our Independent Trustee in accordance with the requirements of The Nasdaq Stock Market LLC, the Securities and Exchange Commission and our bylaws. For their service as Trustees, Ms. Burns and Mr. Cramer will be entitled to the compensation we generally provide to our Independent Trustees, with the annual cash fees prorated. A summary of our currently effective Trustee compensation is filed as Exhibit 10.3 to this Annual Report on Form 10-K and is incorporated herein by reference. Consistent with those compensation arrangements, on February 27, 2020, we awarded to each of Ms. Burns and Mr. Cramer 3,000 of our common shares in connection with their election, all of which vested on the award date.

In connection with their elections, we entered into an indemnification agreement with each of Ms. Burns and Mr. Cramer, effective as of February 27, 2020, on substantially the same terms as the agreements previously entered into between us and each of our other Trustees.  The form of indemnification agreement entered into between us and our Trustees is filed as Exhibit 10.8 to this Annual Report on Form 10-K and is incorporated herein by reference.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

We have a Code of Conduct that applies to our officers and Trustees, RMR Inc. and RMR LLC, senior level officers of RMR LLC, senior level officers and directors of RMR Inc. and certain other officers and employees of RMR LLC. Our Code of Conduct is posted on our website, www.svcreit.com. A printed copy of our Code of Conduct is also available free of charge to any person who requests a copy by writing to: Secretary, Service Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of our Code of Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website.

The remainder of the information required by Item 10 is incorporated by reference to our definitive Proxy Statement.

Item 11. Executive Compensation

The information required by Item 11 is incorporated by reference to our definitive Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information. We may grant common shares to our officers and other employees of RMR LLC under our 2012 Equity Compensation Plan, or the 2012 Plan. In addition, each of our Trustees receives common shares as part of his or her annual compensation for serving as a Trustee and such shares are awarded under the 2012 Plan. The terms of awards made under the 2012 Plan are determined by the Compensation Committee of our Board of Trustees at the time of the award. The following table is as of December 31, 2019.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by securityholders—2012 Plan	None.	None.	2,290,692 (1)
Equity compensation plans not approved by securityholders	None.	None.	None.
Total	None.	None.	2,290,692 (1)

(1) Consists of common shares available for issuance pursuant to the terms of the 2012 Plan.  Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2012 Plan.

Payments by us to RMR LLC employees are described in Notes 7 and 9 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K. The remainder of the information required by Item 12 is incorporated by reference to our definitive Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is incorporated by reference to our definitive Proxy Statement.

Item 14. Principal Accounting Fees and Services

The information required by Item 14 is incorporated by reference to our definitive Proxy Statement.

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PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) Index to Financial Statements and Financial Statement Schedules

	Page
Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets as of December 31, 2019 and 2018	F-5
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2019	F-6
Consolidated Statements of Shareholders' Equity for each of the three years in the period ended December 31, 2019	F-7
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2019	F-8
Notes to Financial Statements	F-10
Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2019	S-1
Notes to Schedule III	S-8

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable, and therefore have been omitted.

Significant Tenant

TA is our former subsidiary and is the lessee of 26.6% of our real estate properties, at cost, as of December 31, 2019.

Financial information about TA may be found on the SEC’s website by entering TA’s name at http://www.sec.gov/edgar/searchedgar/companysearch.html. Reference to TA’s financial information on this external website is presented to comply with applicable accounting regulations of the SEC. Except for such financial information contained therein as is required to be included herein under such regulations, TA’s public filings and other information located in external websites are not incorporated by reference into these financial statements. See Notes 4, 5 and 9 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for further information relating to our leases with TA.

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(b) Exhibits

Exhibit Number	Description
2.1	Equity Purchase Agreement, dated as of June 2, 2019, by and among the Company, Spirit MTA REIT, SMTA Financing JV, LLC and Banner NewCo LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 2, 2019.)
3.1	Composite Copy of Amended and Restated Declaration of Trust, dated as of August 21, 1995, as amended to date. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 20, 2019.)
3.2	Amended and Restated Bylaws of the Company, adopted effective September 23, 2019. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 20, 2019.)
4.1	Form of Common Share Certificate. (Filed herewith.)
4.2	Indenture, dated as of February 25, 1998, between the Company and State Street Bank and Trust Company. (Incorporated by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997.)
4.3	Supplemental Indenture No. 14, dated as of August 16, 2012, between the Company and U.S. Bank National Association, relating to the Company’s 5.000% Senior Notes due 2022, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.)
4.4	Supplemental Indenture No. 15, dated as of June 6, 2013, between the Company and U.S. Bank National Association, relating to the Company’s 4.500% Senior Notes due 2023, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.)
4.5	Authentication Order, dated January 13, 2017, from the Company to U.S. Bank National Association, relating to the Company’s 4.500% Senior Notes due 2023. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.)
4.6	Supplemental Indenture No. 16, dated as of March 12, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 4.650% Senior Notes due 2024, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.)
4.7	Supplemental Indenture No. 17, dated as of September 12, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 4.50% Senior Notes due 2025, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.)
4.8	Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 1, 2016.)
4.9	First Supplemental Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association, relating to the Company’s 4.25% Senior Notes due 2021, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 1, 2016.)
4.10	Second Supplemental Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association, relating to the Company’s 5.25% Senior Notes due 2026, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 1, 2016.)
4.11	Third Supplemental Indenture, dated as of January 13, 2017, between the Company and U.S. Bank National Association, relating to the Company’s 4.950% Senior Notes due 2027, including form thereof. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.)
4.12	Fourth Supplemental Indenture, dated as of October 26, 2017, between the Company and U.S. Bank National Association, relating to the Company’s 3.950% Senior Notes due 2028, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.)
4.13	Fifth Supplemental Indenture, dated as of February 2, 2018, between the Company and U.S. Bank National Association, relating to the Company’s 4.375% Senior Notes due 2030, including form thereof. (Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2017.)
4.14	Sixth Supplemental Indenture, dated as of September 18, 2019, between the Company and U.S. Bank National Association, relating to the Company’s 4.350% Senior Notes due 2024, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 18, 2019.)
4.15	Seventh Supplemental Indenture, dated as of September 18, 2019, between the Company and U.S. Bank National Association, relating to the Company’s 4.750% Senior Notes due 2026, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 18, 2019.)
4.16	Eighth Supplemental Indenture, dated as of September 18, 2019, between the Company and U.S. Bank National Association, relating to the Company’s 4.950% Senior Notes due 2029, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 18, 2019.)
4.17	Registration Rights and Lock-Up Agreement, dated as of June 5, 2015, among the Company, ABP Trust (f/k/a Reit Management & Research Trust) and Adam D. Portnoy. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)

88

4.18	Description of Securities. (Filed herewith.)
8.1	Opinion of Sullivan & Worcester LLP as to certain tax matters. (Filed herewith.)
10.1	Second Amended and Restated Business Management Agreement, dated as of June 5, 2015, between the Company and The RMR Group LLC. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
10.2	Second Amended and Restated Property Management Agreement, dated as of June 5, 2015, between the Company and The RMR Group LLC. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
10.3	Summary of Trustee Compensation. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 13, 2019.)
10.4	2012 Equity Compensation Plan. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 9, 2012.)
10.5	First Amendment to 2012 Equity Compensation Plan. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.)
10.6	Form of Restricted Share Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.)
10.7	Form of Share Award Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.)
10.8	Form of Indemnification Agreement. (+) (Filed herewith.)
10.9	Second Amended and Restated Credit Agreement, dated as of May 10, 2018, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other financial institutions initially a signatory thereto. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 10, 2018.)
10.10	First Amendment to Second Amended and Restated Credit Agreement, dated as of September 17, 2019, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other financial institutions signatory thereto. (Filed herewith.)
10.11	Transaction Agreement, dated as of February 27, 2020, between Sonesta Holdco Corporation and the Company. (Filed herewith.)
10.12	Second Amended and Restated Lease Agreement No. 1, dated as of October 14, 2019, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)
10.13	Amended and Restated Guaranty Agreement, dated as of October 14, 2019, by TravelCenters of America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Second Amended and Restated Lease Agreement No. 1). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)
10.14	Second Amended and Restated Lease Agreement No. 2, dated as of October 14, 2019, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)
10.15	Amended and Restated Guaranty Agreement, dated as of October 14, 2019, by TravelCenters of America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Second Amended and Restated Lease Agreement No. 2). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)
10.16	Second Amended and Restated Lease Agreement No. 3, dated as of October 14, 2019, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)
10.17	Amended and Restated Guaranty Agreement, dated as of October 14, 2019, by TravelCenters of America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Second Amended and Restated Lease Agreement No. 3). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)
10.18	Second Amended and Restated Lease Agreement No. 4, dated as of October 14, 2019, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)
10.19	Amended and Restated Guaranty Agreement, dated as of October 14, 2019, by TravelCenters of America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Second Amended and Restated Lease Agreement No. 4). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)
10.20	Amended and Restated Lease Agreement No. 5, dated as of October 14, 2019, among Highway Ventures Properties Trust, Highway Ventures Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)

89

10.21	Amended and Restated Guaranty Agreement, dated as of October 14, 2019, by TravelCenters of America Inc. for the benefit of Highway Ventures Properties Trust and Highway Ventures Properties LLC (relating to Amended and Restated Lease Agreement No. 5). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)
10.22	Second Amended and Restated Management Agreement, dated as of December 31, 2019, between Marriott Hotel Services, Inc. and HPT TRS MRP, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2019.)
10.23	Second Amended and Restated Management Agreement, dated as of December 31, 2019, among Courtyard Management Corporation, HPT TRS MRP, Inc. and HPT CY TRS, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2019.)
10.24	Second Amended and Restated Management Agreement, dated as of December 31, 2019, between Residence Inn By Marriott, LLC and HPT TRS MRP, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2019.)
10.25	Second Amended and Restated Management Agreement, dated as of December 31, 2019, between SpringHill SMC, LLC and HPT TRS MRP, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2019.)
10.26	Second Amended and Restated Management Agreement, dated as of December 31, 2019, between TownePlace Management, LLC and HPT TRS MRP, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2019.)
10.27	Management Agreement, dated as of December 31, 2019, between Essex House Condominium Corporation and HPT TRS MRP, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2019.)
10.28	Amended and Restated Pooling Agreement, dated as of December 31, 2019, among Marriott International, Inc., Marriott Hotel Services, Inc., Residence Inn By Marriott, LLC, Courtyard Management Corporation, SpringHill SMC, LLC, TownePlace Management, LLC, Essex House Condominium Corporation, HPT TRS MRP, Inc. and HPT CY TRS, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2019.)
10.29	Letter Agreement, dated as of December 31, 2019, among Marriott International, Inc., Marriott Hotel Services, Inc., Residence Inn By Marriott, LLC, Courtyard Management Corporation, SpringHill SMC, LLC, TownePlace Management, LLC, Essex House Condominium Corporation, HPT TRS MRP, Inc. and HPT CY TRS, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 31, 2019.)
10.30	Management Agreement, dated as of July 1, 2011, among HPT TRS IHG-1, Inc., HPT TRS IHG-2, Inc., HPT TRS IHG-3, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC, and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated July 25, 2011.)
10.31	Amendment to Management Agreement, dated as of March 16, 2015, among HPT TRS IHG-2, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.)
10.32	Second Amendment to Management Agreement, dated as of February 11, 2016, among HPT TRS IHG-2, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.)
10.33	Third Amendment to Management Agreement, dated as of February 1, 2017, among HPT TRS IHG-2, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.)
10.34	Fourth Amendment to Management Agreement, dated as of March 24, 2017, among HPT TRS IHG-2, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.)
10.35	Fifth Amendment to Management Agreement, dated as of June 28, 2017, among HPT TRS IHG-2, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.)
10.36	Sixth Amendment to Management Agreement, dated as of May 11, 2018, among HPT TRS IHG-2, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018.)

90

10.37	Seventh Amendment to Management Agreement, dated as of October 9, 2019, among HPT TRS IHG-2, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.)
21.1	Subsidiaries of the Company. (Filed herewith.)
23.1	Consent of Ernst & Young LLP. (Filed herewith.)
23.2	Consent of Sullivan & Worcester LLP. (Contained in Exhibit 8.1.)
31.1	Rule 13a-14(a) Certification. (Filed herewith.)
31.2	Rule 13a-14(a) Certification. (Filed herewith.)
32.1	Section 1350 Certification. (Furnished herewith.)
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

(+) Management contract or compensatory plan or arrangement.

91

Item 16. Form 10-K Summary

None.

Report of Independent Registered Public Accounting Firm

To the Trustees and Shareholders of Service Properties Trust

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Service Properties Trust (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and the financial statement schedule listed in the Index at item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2020 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for Transactions with TA

Description of the Matter

As discussed in Note 5 to the consolidated financial statements, in January 2019, the Company entered into agreements with TravelCenters of America Inc. (“TA”), a related party and the Company’s largest tenant, to modify the terms of existing lease agreements with TA and to sell 20 travel center properties to TA. The Company recognized a $159.5 million gain on sale of the real estate. Auditing the Company’s accounting for the transactions with TA involved a high degree of subjectivity due to significant estimation required in allocating consideration to the lease agreements and the sales of real estate. The allocation involved estimating the standalone prices of the lease agreements and the real estate properties, which are affected by economic, market and industry factors. The estimated standalone prices of the lease agreements were based on the stated lease terms and assumptions about market rent coverage ratios. The estimated standalone prices of the real estate properties were based primarily on assumptions about replacement cost and comparable sales.

F-1

How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to allocate consideration to the lease agreements and real estate properties. This included controls over management’s review of the significant assumptions underlying the standalone price determinations. To test the allocation of consideration to lease agreements and real estate properties, our audit procedures included, among others, with the assistance of our valuation specialists, evaluating the valuation methodologies applied by the Company to estimate the standalone prices and testing the significant assumptions used. We compared the rent coverage ratios for the Company’s lease agreements to current industry rent coverage ratios supported by third party data. We evaluated the replacement cost estimates by comparing the inputs used to third party published cost data and corroborated comparable land sales to third party sources. In addition, we compared the total standalone prices of the real estate properties to sales of comparable properties. We also performed sensitivity analyses to evaluate the changes in standalone prices that would result from changes in significant assumptions.
	Accounting for SMTA Transaction
Description of the Matter	As discussed in Note 4 to the consolidated financial statements, in September 2019, the Company acquired a portfolio of 767 net leased retail properties located in 45 states from Spirit MTA REIT, or SMTA, for $2.5 billion, or the SMTA Transaction. The transaction was accounted for as an asset acquisition. Auditing the Company’s accounting for the acquisition of the SMTA portfolio involved a high degree of subjectivity due to the significant estimation required to determine the fair value of the acquired assets used to allocate the cost of the acquisition on a relative fair value basis. The fair value estimates were sensitive to significant assumptions, such as market rents, terminal capital rates, and discount rates, which are affected by expectations about future market and economic conditions in the geographic markets where the properties are located, as well as expectations about future market and economic conditions relevant to the industries of the properties’ tenants.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s acquisition accounting, including the allocation of costs to acquired assets. For example, we tested controls over management’s review of the significant assumptions underlying the fair value estimates. Among other procedures performed, we tested the estimated fair values of the acquired assets. With the assistance of our valuation specialist, we evaluated the valuation methodologies applied by the Company and tested the significant assumptions and inputs to the valuation models. For example, we compared market rent, terminal capital rates, and discount rates to current industry, market and economic trends and other relevant factors. We also compared the concluded fair value for each property acquired to sales of comparable properties using third party data. Further, we tested the completeness and accuracy of the underlying data by, among other things, testing the replacement cost calculations and agreeing inputs to leases and other third-party sources on a test basis. In addition, we performed sensitivity analyses to evaluate the changes in fair value that would result from changes in the Company’s significant assumptions.

F-2

	Impairment of Real Estate Properties
Description of the Matter	The Company’s net real estate properties totaled $8.3 billion as of December 31, 2019. As discussed in Note 2 and Note 14 to the consolidated financial statements, the Company periodically evaluates real estate properties for impairment. Auditing management’s property impairment analysis was complex and involved a high degree of subjectivity due to the significant estimation required in determining the estimated undiscounted net cash flows expected to be generated from those assets with indicators of impairment. The estimated undiscounted net cash flows are sensitive to significant assumptions, such as hold periods, property cash flows, and estimated sales proceeds, which are forward-looking and could be affected by future economic and market conditions.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for assessing impairment of real estate properties. For example, we tested controls over management’s review of the estimated undiscounted net cash flows calculations, including the significant assumptions and data inputs used to develop the cash flows. Our testing of the Company’s impairment assessment included, among other procedures, evaluating the assumptions used to develop the estimated undiscounted net cash flows to assess the recoverability of real estate properties. Specifically, we evaluated the significant assumptions used to estimate the property cash flows and estimated sales proceeds and assessed the completeness and accuracy of the underlying data. We compared estimates to historical performance and available market data. We also held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the hold period and other cash flow assumptions for the properties including estimated sales proceeds upon disposition. We searched for and evaluated information that corroborated or contradicted the Company’s assumptions.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Boston, Massachusetts

February 28, 2020

F-3

Report of Independent Registered Public Accounting Firm

To the Trustees and Shareholders of Service Properties Trust

Opinion on Internal Control Over Financial Reporting

We have audited Service Properties Trust’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Service Properties Trust (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and the financial statement schedule listed in the Index at item 15(a), and our report dated February 28, 2020, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Boston, Massachusetts

February 28, 2020

F-4

SERVICE PROPERTIES TRUST

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

	As of December 31,
	2019			2018
ASSETS
Real estate properties:
Land	$	2,066,602		$	1,626,239
Buildings, improvements and equipment	9,318,434			7,896,734
Total real estate properties, gross	11,385,036			9,522,973
Accumulated depreciation	(3,120,761		)	(2,973,384		)
Total real estate properties, net	8,264,275			6,549,589
Acquired real estate leases and other intangibles	378,218			105,749
Assets held for sale	87,493			144,008
Cash and cash equivalents	27,633			25,966
Restricted cash	53,626			50,037
Due from related persons	68,653			91,212
Other assets, net	154,069			210,518
Total assets	$	9,033,967		$	7,177,079
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility	$	377,000		$	177,000
Unsecured term loan, net	397,889			397,292
Senior unsecured notes, net	5,287,658			3,598,295
Security deposits	109,403			132,816
Accounts payable and other liabilities	335,696			211,332
Due to related persons	20,443			62,913
Total liabilities	6,528,089			4,579,648
Commitments and contingencies
Shareholders’ equity:
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 164,563,034 and 164,441,709 shares issued and outstanding, respectively	1,646			1,644
Additional paid in capital	4,547,529			4,545,481
Cumulative other comprehensive income (loss)	—			(266		)
Cumulative net income available for common shareholders	3,491,645			3,231,895
Cumulative common distributions	(5,534,942		)	(5,181,323		)
Total shareholders’ equity	2,505,878			2,597,431
Total liabilities and shareholders’ equity	$	9,033,967		$	7,177,079

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

F-5

SERVICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except share data)

	Year Ended December 31,
	2019			2018			2017
Revenues:
Hotel operating revenues	$	1,989,173		$	1,958,598		$	1,840,829
Rental income	322,236			330,806			326,436
FF&E reserve income	4,739			5,132			4,670
Total revenues	2,316,148			2,294,536			2,171,935
Expenses:
Hotel operating expenses	1,410,927			1,387,065			1,274,642
Other operating expenses	8,357			5,290			4,905
Depreciation and amortization	428,448			403,077			386,659
General and administrative	54,639			104,862			125,402
Acquisition and transaction related costs	1,795			—			—
Loss on asset impairment	39,296			—			—
Total expenses	1,943,462			1,900,294			1,791,608
Gain on sale of real estate	159,535			—			9,348
Dividend income	1,752			2,754			2,504
Unrealized losses on equity securities	(40,461		)	(16,737		)	—
Interest income	2,215			1,528			798
Interest expense (including amortization of debt issuance costs and debt discounts and premiums of $11,117, $10,177 and $8,871, respectively)	(225,126		)	(195,213		)	(181,579		)
Loss on early extinguishment of debt	(8,451		)	(160		)	(146		)
Income before income taxes and equity in earnings of an investee	262,150			186,414			211,252
Income tax benefit (expense)	(2,793		)	(1,195		)	3,284
Equity in earnings of an investee	393			515			607
Net income	259,750			185,734			215,143
Other comprehensive income (loss):
Unrealized gain on investment in available for sale securities	—			—			39,315
Equity interest in investee’s unrealized gains (losses)	91			(68		)	460
Other comprehensive income (loss)	91			(68		)	39,775
Comprehensive income	$	259,841		$	185,666		$	254,918
Net income	$	259,750		$	185,734		$	215,143
Preferred distributions	—			—			(1,435		)
Excess of liquidation preference over carrying value of preferred shares redeemed	—			—			(9,893		)
Net income available for common shareholders	$	259,750		$	185,734		$	203,815
Weighted average common shares outstanding (basic)	164,312			164,229			164,146
Weighted average common shares outstanding (diluted)	164,340			164,258			164,175
Net income available for common shareholders per common share: Basic and diluted	$	1.58		$	1.13		$	1.24

The accompanying notes are an integral part of these financial statements

F-6

SERVICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except share data)

	Series D Preferred Shares								Common Shares								Additional Paid in Capital			Cumulative Net Income			Cumulative Other Comprehensive Income (Loss)
	Number of Shares		Preferred Shares			Cumulative Preferred			Number of Shares		Common Shares			Cumulative Common Distributions
						Distributions																				Total
Balance at December 31, 2016	11,600,000		$	280,107		$	(341,977	)	164,268,199		$	1,643		$	(4,494,407	)	$	4,539,673		$	3,104,767		$	39,583		$	3,129,389
Net income	—		—			—			—		—			—			—			215,143			—			215,143
Unrealized gain on investment in available for sale securities	—		—			—			—		—			—			—			—			39,315			39,315
Equity in unrealized gains of investees	—		—			—			—		—			—			—			—			460			460
Redemption of preferred shares, net	(11,600,000	)	(280,107		)	—			—		0			—			—			—			—			(280,107		)
Common share grants	—		—			—			100,000		1			—			3,168			—			—			3,169
Common share repurchases	—		—			—			(19,058	)	(1		)	—			(534		)	—			—			(535		)
Excess of liquidation preference over carrying value of preferred shares redeemed	—		—			—			—		—			—			—			(9,893		)	—			(9,893		)
Distributions	—		—			(1,435		)	—		—			(340,084		)	—			—			—			(341,519		)
Balance at December 31, 2017	—		—			(343,412		)	164,349,141		1,643			(4,834,491		)	4,542,307			3,310,017			79,358			2,755,422
Cumulative effect of an accounting change	—		—			—			—		—			—			—			79,556			(79,556		)	—
Net income	—		—			—			—		—			—			—			185,734			—			185,734
Equity in unrealized losses of investees	—		—			—			—		—			—			—			—			(68		)	(68		)
Common share grants	—		—			—			115,000		1			—			3,780			—			—			3,781
Common share repurchases	—		—			—			(22,432	)	—			—			(606		)	—			—			(606		)
Distributions	—		—			—			—		—			(346,832		)	—			—			—			(346,832		)
Balance at December 31, 2018	—		—			(343,412		)	164,441,709		1,644			(5,181,323		)	4,545,481			3,575,307			(266		)	2,597,431
Net income	—		—			—			—		—			—			—			259,750			—			259,750
Amounts reclassified from cumulative other comprehensive income to net income	—		—			—			—		—			—			—			—			175			175
Equity in unrealized gains of investees	—		—			—			—		—			—			—			—			91			91
Common share grants	—		—			—			155,100		2			—			2,855			—			—			2,857
Common share repurchases and forfeitures	—		—			—			(33,775	)	—			—			(807		)	—			—			(807		)
Distributions	—		—			—			—		—			(353,619		)	—			—			—			(353,619		)
Balance at December 31, 2019	—		$	—		$	(343,412	)	164,563,034		$	1,646		$	(5,534,942	)	$	4,547,529		$	3,835,057		$	—		$	2,505,878

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

F-7

SERVICE PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the Year Ended December 31,
	2019			2018			2017
Cash flows from operating activities:
Net income	$	259,750		$	185,734		$	215,143
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	428,448			403,077			386,659
Amortization of debt issuance costs and debt discounts and premiums as interest	11,117			10,177			8,871
Straight line rental income	10,719			(12,509		)	(12,378		)
Security deposits received or replenished	(23,549		)	6,740			36,743
Loss on early extinguishment of debt	8,451			160			146
Loss on asset impairment	39,296			—			—
Unrealized losses on equity securities	40,461			16,737			—
Equity in earnings of an investee	(393		)	(515		)	(607		)
Distribution of earnings from Affiliates Insurance Company	2,423			—			—
Gain on sale of real estate	(159,535		)	—			(9,348		)
Deferred income taxes	(127		)	(1,047		)	(236		)
Other non-cash (income) expense, net	(614		)	(2,713		)	(3,233		)
Changes in assets and liabilities:
Due from related persons	3,272			(572		)	(1,215		)
Other assets	(11,385		)	6,200			(13,117		)
Accounts payable and other liabilities	60,484			5,824			(572		)
Due to related persons	(51,096		)	(20,340		)	21,639
Net cash provided by operating activities	617,722			596,953			628,495
Cash flows from investing activities:
Real estate acquisitions and deposits	(2,713,191		)	(127,703		)	(594,693		)
Real estate improvements	(150,531		)	(182,862		)	(131,120		)
Hotel managers’ purchases with restricted cash	(208,241		)	(135,177		)	(92,733		)
Hotel manager’s deposit of insurance proceeds into restricted cash	25,000			18,000			—
Net proceeds from sale of real estate	816,450			—			23,438
Net proceeds from sale of equity securities	93,892			—			—
Distributions in excess of earnings from Affiliates Insurance Company	6,577			—			—
Net cash used in investing activities	(2,130,044		)	(427,742		)	(795,108		)
Cash flows from financing activities:
Proceeds from issuance of senior unsecured notes, after discounts and premiums	1,693,879			389,976			989,890
Repayment of senior unsecured notes	—			—			(350,000		)
Redemption of preferred shares	—			—			(290,000		)
Repurchase of convertible senior notes	—			—			(8,478		)
Borrowings under unsecured revolving credit facility	1,124,000			517,000			1,102,000
Repayments of unsecured revolving credit facility	(924,000		)	(738,000		)	(895,000		)
Deferred financing costs	(21,882		)	(12,242		)	(8,437		)
Repurchase of common shares	(800		)	(606		)	(533		)
Distributions to preferred shareholders	—			—			(6,601		)
Distributions to common shareholders	(353,619		)	(346,832		)	(340,084		)
Net cash provided by (used in) financing activities	1,517,578			(190,704		)	192,757
Increase (decrease) in cash and cash equivalents and restricted cash	5,256			(21,493		)	26,144
Cash and cash equivalents and restricted cash at beginning of year	76,003			97,496			71,352
Cash and cash equivalents and restricted cash at end of year	$	81,259		$	76,003		$	97,496

F-8

	For the Year Ended December 31,
	2019		2018		2017
Supplemental disclosure of cash and cash equivalents and restricted cash:
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the amount shown in the consolidated statements of cash flows:
Cash and cash equivalents	$	27,633	$	25,966	$	24,139
Restricted cash	53,626		50,037		73,357
Total cash and cash equivalents and restricted cash	$	81,259	$	76,003	$	97,496
Supplemental cash flow information:
Cash paid for interest	$	191,155	$	174,158	$	172,558
Cash paid for income taxes	2,927		3,218		2,827

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

F-9

SERVICE PROPERTIES TRUST

NOTES TO FINANCIAL STATEMENTS

December 31, 2019

(dollars in thousands, except share data)

Note 1. Organization

Service Properties Trust (formerly known as Hospitality Properties Trust), or we, us or our, is a real estate investment trust, or REIT, organized on February 7, 1995 under the laws of the State of Maryland, which invests in hotels and net lease service-oriented retail properties. At December 31, 2019, we owned, directly and through subsidiaries, 329 hotels and 816 net lease properties.

At December 31, 2019, our 329 hotels were leased, managed or operated by subsidiaries of the following companies: InterContinental Hotels Group, plc, or IHG, Marriott International, Inc., or Marriott, Sonesta International Hotels Corporation, or Sonesta (used to refer to subsidiaries of Sonesta Holdco Corporation as of February 27, 2020), Hyatt Hotels Corporation, or Hyatt, Radisson Hospitality, Inc., or Radisson, and Wyndham Hotels & Resorts, Inc., or Wyndham. We also owned, as of December 31, 2019, 816 net lease properties with 194 tenants, including 179 travel centers leased to TravelCenters of America Inc., or TA, our largest tenant. Hereinafter these companies are sometimes referred to as managers and/or tenants or, collectively, operators.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation. These consolidated financial statements include our accounts and the accounts of our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.

We have determined that each of our wholly owned taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification^™, or the Codification. We have concluded that we must consolidate each of our wholly owned TRSs because we are the entity with the power to direct the activities that most significantly impact such VIEs’ performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE and are, therefore, the primary beneficiary of each VIE. The assets of our TRSs were $31,920 and $31,917 as of December 31, 2019 and 2018, respectively, and consist primarily of amounts due from and working capital advances to certain of our hotel managers. The liabilities of our TRSs were $138,708 and $148,459 as of December 31, 2019 and 2018, respectively, and consist primarily of security deposits they hold and amounts payable to certain of our hotel managers. The assets of our TRSs are available to satisfy our TRSs’ obligations and we have guaranteed certain obligations of our TRSs.

Real Estate Properties. We record real estate properties at cost less impairments, if any. We record the cost of real estate acquired at the relative fair value of building, land, furniture, fixtures and equipment, and, if applicable, acquired in place leases, above or below market leases and customer relationships. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill. We depreciate real estate properties on a straight line basis over estimated useful lives of up to 40 years for buildings and improvements and up to 12 years for personal property and we amortize finite lived intangible assets over the shorter of their useful lives or the term of the associated lease. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determination of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives.

F-10

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of our real estate properties. These indicators may include weak or declining operating profitability, cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life or market or industry changes that could permanently reduce the value of our investments. If there is an indication that the carrying value of a property is not recoverable, we estimate the projected undiscounted cash flows of the asset to determine if an impairment loss should be recognized. We determine the amount of an impairment loss by comparing the historical carrying value of the property to its estimated fair value. We estimate fair value by evaluating recent financial performance and projecting discounted cash flows of properties using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our real estate properties. If we change estimated lives, we depreciate or amortize the carrying values of affected assets over the revised remaining lives.

Intangible Assets and Liabilities. Intangible assets consist primarily of trademarks and tradenames, acquired above market operating leases where we are the lessor and below market ground leases for which we are the tenant or lessee. Intangible liabilities consist of acquired below market operating leases where we are the lessor and acquired above market ground leases for which we are the tenant or lessee. We include intangible assets in acquired real estate leases and other intangibles and intangible liabilities in accounts payable and other liabilities in our consolidated balance sheets.

At December 31, 2019 and 2018, our intangible assets and liabilities were as follows:

	As of December 31,
	2019		2018
Assets:
Tradenames and trademarks	$	89,375	$	89,375
Above market operating leases, net of accumulated amortization of $15,748	275,814		—
Below market ground leases, net of accumulated amortization of $21,125 and $21,985, respectively	10,034		12,698
Other, net of accumulated amortization of $1,803 and $1,451, respectively	3,323		3,676
	$	378,546	$	105,749
Liabilities:
Below market operating leases, net of accumulated amortization of $367	$	3,653	$	—
Above market ground leases, net of accumulated amortization of $5,886 and $5,441, respectively	856		1,301
	$	4,509	$	1,301

We amortize above and below market leases on a straight line basis over the term of the associated lease (three and six years on a weighted average basis for intangible liabilities and assets, respectively). For the years ended December 31, 2019, 2018 and 2017 amortization relating to intangible assets was $1,757, $2,542 and $2,814, respectively, and amortization relating to intangible liabilities was $441 for the year ended December 31, 2019 and $455 for each of the years ended December 31, 2018 and 2017. As of December 31, 2019, the weighted average amortization period for capitalized above market leases and below market lease values were 10.2 years and 5.0 years, respectively. As of December 31, 2019, we estimate future amortization relating to intangible assets and liabilities as follows:

	Above Market Operating Leases		Below Market Ground Leases & Other		Below Market Operating Leases			Above Market Ground Leases & Other
2020	$	51,392	$	1,398	$	(1,262	)	$	(441	)
2021	40,945		1,375		(1,163		)	(369		)
2022	30,436		1,366		(306		)	(21		)
2023	27,138		1,355		(192		)	(18		)
2024	24,404		1,137		(185		)	(7		)
Thereafter	101,499		6,726		(545		)	—
	$	275,814	$	13,357	$	(3,653	)	$	(856	)

We do not amortize our indefinite lived trademarks and tradenames, but we review the assets at least annually for impairment and reassess their classification as indefinite lived assets. In addition, we regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in value. We determine the amount of an impairment loss, if any, by comparing the carrying value of the intangible asset to its estimated fair value.

F-11

Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents.

Restricted Cash. Restricted cash, or FF&E reserve escrows, consists of amounts escrowed pursuant to the terms of our management agreements and leases to fund periodic renovations and improvements at our hotels.

Debt Issuance Costs. Debt issuance costs consist of capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective debt. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets, net in our consolidated balance sheets. As of December 31, 2019 and 2018, debt issuance costs for our revolving credit facility were $4,212 and $6,822, respectively, and accumulated amortization of debt issuance costs for our revolving credit facility were $2,610 and $1,005, respectively. Debt issuance costs, net of accumulated amortization, for our term loan and senior notes are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2019 and 2018, debt issuance costs, net of accumulated amortization, for our term loan and senior notes were $31,065 and $22,243, respectively. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, term loan and senior notes as of December 31, 2019, are as follows:

	Future Amortization of Deferred Finance Fees
2020	$	7,727
2021	7,173
2022	6,335
2023	4,529
2024	3,369
Thereafter	6,144
	$	35,277

Equity Method Investments. We account for our investment in Affiliates Insurance Company, or AIC, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us and AIC. One of our Managing Trustees, Adam D. Portnoy, is the sole trustee of ABP Trust, which is the controlling shareholder of The RMR Group Inc., or RMR Inc. Mr. Portnoy is also a managing director and president and chief executive officer of RMR Inc. and an officer and employee of The RMR Group LLC, or RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, is also an officer and employee of RMR LLC. RMR LLC also provides management and administrative services to AIC, and each of our Trustees (other than Mr. Murray) is a director of AIC. In 2019, AIC began the process of dissolving, pursuant to which we received a distribution of $9,000 on December 27, 2019. See Note 9 for a further discussion of our relationships and transactions with RMR Inc. and RMR LLC and our investment in AIC.

Equity Securities. We record our equity securities at fair value based on their quoted market price at the end of each reporting period. Changes in the fair value of our equity securities are recorded through earnings in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to January 1, 2018, unrealized gains and losses on equity securities were recorded as a component of cumulative comprehensive income (loss) in shareholders’ equity. As of December 31, 2019, we owned 684,000 common shares of TA. On July 1, 2019, we sold all the shares of class A common stock of RMR Inc. that we previously owned. See Notes 9 and 14 for further information on these investments.

Revenue Recognition. We report hotel operating revenues for managed hotels in our consolidated statements of comprehensive income. We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when goods and services are provided.

We report rental income for leased properties in our consolidated statements of comprehensive income. We recognize rental income from operating leases on a straight line basis over the term of the lease agreements. We reduced rental income during the year ended December 31, 2019 by $10,719 and increased rental income by $12,509, and $12,378 during the years ended December 31, 2018 and 2017, respectively, to record scheduled rent changes under certain of our leases, the deferred rent obligations payable to us under our leases with TA and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks at our travel centers on a straight line basis. See Notes 4, 5 and 9 for further information regarding our TA leases. Due from related persons includes $47,057 and $66,347 and other assets, net, includes $1,897 and $3,073 of straight line rent receivables at December 31, 2019 and 2018, respectively.

F-12

Certain of our lease agreements require additional percentage rent if gross revenues of our properties exceed certain thresholds defined in our lease agreements. We may determine percentage rent due to us under our leases monthly, quarterly or annually, depending on the specific lease terms, and recognize it when all contingencies are met and the rent is earned. We earned percentage rental income of $4,238, $3,695 and $2,106 in 2019, 2018 and 2017, respectively.

We own all the FF&E reserve escrows for our hotels. We report deposits by our third party tenants into the escrow accounts as FF&E reserve income. We do not report the amounts which are escrowed as reserves established for the regular refurbishment of our hotels, or FF&E reserves, for our managed hotels as FF&E reserve income.

Per Common Share Amounts. We calculate basic earnings per common share by dividing allocable net income available for common shareholders by the weighted average number of common shares outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares and the related impact on earnings are considered when calculating diluted earnings per share.

Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of real estate and impairment of long lived assets.

Segment Information. As of December 31, 2019, we had two reportable segments: hotel investments and net lease investments.

Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, as such, are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements. We are subject to income tax in Canada, Puerto Rico and certain states despite our qualification for taxation as a REIT. Further, we lease our managed hotels to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated tax return and are subject to federal, state and foreign income taxes. Our consolidated income tax provision (or benefit) includes the income tax provision (or benefit) related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our qualification for taxation as a REIT.

The Income Taxes Topic of the Codification prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Tax benefits are recognized to the extent that it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized upon settlement. Our tax returns filed for the 2016 through 2019 tax years are subject to examination by taxing authorities. We classify interest and penalties related to uncertain tax positions, if any, in our consolidated statements of comprehensive income as a component of general and administrative expense.

New Accounting Pronouncements. In February 2016, the FASB issued ASU No. 2016-02, Leases. Additional guidance and targeted improvements to ASU No. 2016-02 were made through the issuance of supplemental ASUs in July 2018, December 2018 and March 2019, or collectively with ASU No. 2016-02, the Lease Standard. We adopted the Lease Standard on January 1, 2019. The Lease Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The Lease Standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. Upon adoption, we applied the package of practical expedients that allowed us not to reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases, (iii) initial direct costs for any expired or existing leases and (iv) the option to initially apply the Lease Standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption, although we did not have such an adjustment. Additionally, our leases met the criteria not to separate non-lease components from the related lease component.

As a lessor. We are required to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. Adoption of the Lease Standard did not have a material impact in our consolidated financial statements for our leases where we are the lessor.

F-13

As a lessee. We are required to record right of use assets and lease liabilities in our consolidated balance sheets for leases with terms greater than 12 months, where we are the lessee. We recorded right of use assets and related lease liabilities of $77,010 upon implementation of the Lease Standard. Adoption of the Lease Standard did not have a material effect in our consolidated statements of comprehensive income or consolidated statements of cash flows for our leases where we are the lessee.

See Note 5 for further information regarding our leases and the adoption of the Lease Standard.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Lease related receivables are governed by the Lease Standard referred to above and are not subject to ASU No. 2016-13. We have adopted ASU No. 2016-13 using the modified retrospective approach and this standard did not have a material impact in our consolidated financial statements.

Note 3. Weighted Average Common Shares

The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share:

	For the Year Ended December 31,
	2019	2018	2017
	(in thousands)
Weighted average common shares for basic earnings per share	164,312	164,229	164,146
Effect of dilutive securities: Unvested share awards	28	29	29
Weighted average common shares for diluted earnings per share	164,340	164,258	164,175

Note 4. Real Estate Properties

As of December 31, 2019, we owned 329 hotels with 51,349 rooms or suites and 816 service-oriented retail properties with approximately 14.9 million square feet that are primarily subject to “triple net” leases, or net leases where the tenant is generally responsible for payment of operating expenses and capital expenditures of the property during the lease term. Our properties had an aggregate undepreciated carrying value of $11,472,529, including $87,493 classified as held for sale as of December 31, 2019.

Our real estate properties, at cost after impairments, consisted of land of $2,066,602, buildings and improvements of $8,731,002 and furniture, fixtures and equipment of $587,432, as of December 31, 2019; and land of $1,626,239, buildings and improvements of $7,194,758 and furniture, fixtures and equipment of $701,976, as of December 31, 2018.

During 2019, 2018 and 2017, we funded $242,571, $200,044 and $162,482, respectively, for improvements to certain of our properties, which, pursuant to the terms of our management and lease agreements with our managers and tenants, resulted in increases in our contractual annual minimum returns and rents of $18,432, $14,888 and $10,274 in 2019, 2018 and 2017, respectively. See Note 5 for further information about our management and lease agreements and our fundings of improvements to certain of our properties.

At December 31, 2019, 14 of our hotels were on land we leased partially or entirely from unrelated third parties. The average remaining term of the ground leases (including renewal options) is approximately 37 years (range of 15 to 68 years). Ground rent payable under nine of the ground leases is generally calculated as a percentage of hotel revenues. Twelve (12) of the 14 ground leases require annual minimum rents averaging $260 per year; future rents under two ground leases have been prepaid. Seventeen (17) of our net lease properties are on land we leased partially or entirely from unrelated third parties. The remaining terms on the leases range from one year to 31 years with rents averaging $508 per year. Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant does not perform obligations under a ground lease or does not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property. Any pledge, sale or transfer of our interests in a ground lease may require the consent of the applicable ground lessor and its lenders.

F-14

Acquisitions

Our allocation of the purchase price of each of our acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.

Properties acquired during the year ended December 31, 2019 (1)
Acquisition Date	Location	Type	Purchase Price		Land		Land Improvements		Building and Improvements		Furniture, Fixtures and Equipment		Held For Sale		Intangible Assets
2/22/2019	Washington, D.C. (2)	Hotel	$	143,742	$	44,972	$	151	$	93,412	$	5,207	$	—	$	—
5/7/2019	Milwaukee, WI (3)	Hotel	30,235		3,442		1,053		25,132		608		—		—
8/1/2019	Southington, CT (4)	Land	66		66		—		—		—		—		—
9/20/2019	Various (5)	Net Lease	2,482,382		388,057		—		1,201,922		—		604,989		287,414
10/9/2019	Chicago, IL (6)	Hotel	55,560		7,723		—		45,059		2,778		—		—
			$	2,711,985	$	444,260	$	1,204	$	1,365,525	$	8,593	$	604,989	$	287,414
Properties acquired during the year ended December 31, 2018 (1)
6/15/2018	Minneapolis, MN (7)	Hotel	$	75,576	$	2,196	$	—	$	68,388	$	4,992	$	—	$	—
6/15/2018	Baton Rouge, LA (8)	Hotel	16,022		2,242		173		12,842		765		—		—
10/30/2018	Scottsdale, AZ (9)	Hotel	35,999		6,450		833		25,898		2,818		—		—
			$	127,597	$	10,888	$	1,006	$	107,128	$	8,575	$	—	$	—
Properties acquired during the year ended December 31, 2017 (1)
2/1/2017	Chicago, IL (10)	Hotel	$	86,201	$	13,609	$	40	$	58,929	$	11,926	$	—	$	1,697
3/31/2017	Seattle, WA (11)	Hotel	73,041		24,562		30		47,103		898		—		448
5/3/2017	Columbia, SC (12)	Net Lease	27,604		4,040		7,172		16,392		—		—		—
6/2/2017	St. Louis, MO (13)	Hotel	88,080		4,250		161		79,737		3,394		—		538
6/29/2017	Atlanta, GA (14)	Hotel	88,748		16,612		483		68,864		2,789		—		—
8/1/2017	Columbus, OH (15)	Hotel	49,188		6,100		49		40,678		2,361		—		—
8/23/2017	Charlotte, NC (16)	Hotel	44,000		2,684		1,012		35,288		5,016		—		—
9/8/2017	Atlanta, GA (17)	Land	940		940		—		—		—		—		—
9/26/2017	Various (18)	Hotels	139,923		30,720		6,392		93,899		8,912		—		—
9/28/2017	Sayre, OK (19)	Net Lease	8,672		1,031		—		7,641		—		—		—
			$	606,397	$	104,548	$	15,339	$	448,531	$	35,296	$	—	$	2,683

(1) We accounted for these transactions as acquisitions of assets.

(2) On February 22, 2019, we acquired the 335 room Hotel Palomar located in Washington, D.C. for a purchase price of $143,742, including capitalized acquisition costs of $2,292. We added this Kimpton^® branded hotel to our management agreement with IHG.

(3) On May 7, 2019, we acquired the 198 room Crowne Plaza Milwaukee West hotel in Milwaukee, WI for a purchase price of $30,235, including capitalized acquisition costs of $235. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(4) On August 1, 2019, we acquired a land parcel adjacent to our travel center located in Southington, CT for a purchase price of $66, including capitalized acquisition costs of $6. This land parcel has been added to the TA lease for that travel center.

(5) On September 20, 2019, we completed the SMTA Transaction for total consideration of $2,482,382. See below for further information regarding the SMTA Transaction.

(6) On October 9, 2019, we acquired the 261-room Kimpton Palomar Hotel located in Chicago, IL for a purchase price of $55,560, including acquisition related costs of $560. We added this Kimpton® branded hotel to our management agreement with IHG.

(7) On June 15, 2018, we acquired the 360 room Radisson Blu^® hotel in Minneapolis, MN for a purchase price of $75,576, including capitalized acquisition costs of $576. We added this hotel to our management agreement with Radisson.

(8) On June 15, 2018, we acquired the 117 suite Staybridge Suites^® at Louisiana State University in Baton Rouge, LA for a purchase price of $16,022, including capitalized acquisition costs of $272. We added this hotel to our management agreement with IHG.

F-15

(9) On October 30, 2018, we acquired a hotel with 164 suites in Scottsdale, AZ for a purchase price of $35,999, including capitalized acquisition costs of $114. We converted this hotel to the Sonesta Suites^® brand and entered into a management agreement for this hotel with Sonesta.

(10) On February 1, 2017, we acquired the 483 room Hotel Allegro in Chicago, IL for a purchase price of $86,201, including capitalized acquisition costs of $707. We added this Kimpton^® branded hotel to our management agreement with IHG.

(11) On March 31, 2017, we acquired the 121 room Hotel Alexis in Seattle, WA for a purchase price of $73,041, including capitalized acquisition costs of $1,416. We added this Kimpton^® branded hotel to our management agreement with IHG.

(12) On May 3, 2017, we acquired a travel center from TA for $27,604 pursuant to a transaction agreement we entered with TA in 2015. Simultaneously with this acquisition, we leased the travel center back to TA.

(13) On June 2, 2017, we acquired the 389 room Chase Park Plaza Hotel in St. Louis, MO for a purchase price of $88,080, including capitalized acquisition costs of $466. We converted this hotel to the Royal Sonesta^® hotel brand and entered into a management agreement for this hotel with Sonesta.

(14) On June 29, 2017, we acquired the 495 room Crowne Plaza Ravinia hotel located in Atlanta, GA for a purchase price of $88,748, including capitalized acquisition costs of $144. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(15) On August 1, 2017, we acquired the 419 room Crowne Plaza & Lofts hotel in Columbus, OH for a purchase price of $49,188, including capitalized acquisition costs of $198. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(16) On August 23, 2017, we acquired the 300 room Crowne Plaza hotel in Charlotte, NC for a purchase price of $44,000, including capitalized acquisition costs of $143. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(17) On September 8, 2017, we acquired a land parcel adjacent to our Crowne Plaza hotel located in Atlanta, GA for a purchase price of $940, including capitalized acquisition costs of $40.

(18) On September 26, 2017, we acquired 14 extended stay hotels with 1,653 suites located in 12 states for a purchase price of $139,923, including capitalized acquisition costs of $1,923. In connection with this acquisition, we converted these hotels to the Sonesta ES Suites^® brand and entered into management agreements for these hotels with Sonesta.

(19) On September 28, 2017, we acquired land and certain improvements at a travel center located in Sayre, OK that we previously leased from a third party and subleased to TA for a purchase price of $8,672, including capitalized acquisition costs of $72. We now directly lease this land and these improvements to TA under our TA No. 4 lease.

See Note 5 for further information regarding our IHG and Radisson agreements. See Note 5 and 9 for further information regarding our relationship, agreements and transactions with Sonesta and TA.

SMTA Transaction

On September 20, 2019, we acquired a 767 property net lease portfolio with 12.4 million rentable square feet from Spirit MTA REIT, a Maryland REIT, (NYSE: SMTA), or SMTA, located in 45 states, or the SMTA Transaction. The aggregate transaction value of the SMTA Transaction was $2,482,382, including $2,384,577 in cash consideration, $82,069 of prepayment penalties related to SMTA’s extinguishment of the mortgage debt on the portfolio and $15,736 of other capitalized acquisition costs. The properties included in the portfolio were net leased to 279 tenants operating in 23 distinct industries and 163 brands that include quick service and casual dining restaurants, movie theaters, health and fitness, automotive parts and services and other service-oriented and necessity-based industries across 45 states. We financed the SMTA Transaction with borrowings under our revolving credit facility and with cash on hand, including net proceeds from our public offerings of senior unsecured notes, as described further in Note 6. As of December 31, 2019, we had $5,346 of unspent leasing related obligations assumed as a part of the SMTA Transaction.

Other Acquisition Agreements

In February 2020, we entered into an agreement to acquire three net lease properties with approximately 6,696 square feet in two states with leases requiring an aggregate of $387 of annual minimum rent for an aggregate sales price of $7,000, excluding closing costs.

F-16

Dispositions

During the year ended December 31, 2019, we sold 150 net lease properties with an aggregate of 3,314,724 rentable square feet for an aggregate purchase price of $821,212, excluding closing costs, in eight separate transactions. The sales of these properties, as presented in the table below, do not represent significant dispositions individually or in the aggregate nor do they represent a strategic shift. As a result, the results of operations of these properties are included in continuing operations through the date of sale in our consolidated statements of income.

Date of Sale	Number of Properties	Location	Tenant	Square Feet	Gross Sales Price
1/16/2019	20	Various (1)	TravelCenters	541,483	$	308,200
10/22/2019	1	4726 Mall Drive, Hermantown, MN (2)	HOM Furniture	103,631	6,250
10/29/2019	1	1505 South Pavilion Center Drive Las Vegas, NV (2)	Station Casino	138,558	57,000
11/14/2019	1	1855 S. Range Avenue, Colby, KS (2)	Vacant	6,900	590
11/25/2019	123	Various (2)	Various	2,429,333	435,104
12/16/2019	1	4740 Radio Road, Naples, FL 34110 (2)	Rick Johnson Auto & Tire	4,480	1,112
12/16/2019	1	996 Central Avenue, Naples, FL 34102 (2)	Rick Johnson Auto & Tire	4,500	706
12/30/2019	2	9032 & 9080 Harry Hines Boulevard, Dallas, TX (2)	Pine Creek Medical Center	85,839	12,250
	150			3,314,724	$	821,212

(1) In January 2019, in a series of transactions, we sold 20 travel centers in 15 states to TA for $308,200. We recorded a gain of $159,535 in 2019 as a result of these sales.

(2) During 2019, we sold 130 net lease properties that we acquired in the SMTA Transaction in 28 states with 2,773,241 square feet and annual minimum rent of $43,180 for $513,012.

During the year ended December 31, 2017, we sold three of our Radisson branded hotels. On August 1, 2017, we sold our 159 room Radisson hotel located in Chandler, AZ for net proceeds of $9,085. On August 31, 2017, we sold our 143 room Country Inn & Suites hotel located in Naperville, IL for net proceeds of $6,313. On September 22, 2017, we sold our 209 room Park Plaza hotel located in Bloomington, MN for net proceeds of $8,030. As a result of these sales, we recorded a $9,348 gain on sale of real estate in the year ended December 31, 2017. Also in 2017, we received, net of expenses, $1,030 as the final payment with respect to a travel center we previously owned in Roanoke, VA that we leased to TA and which was taken by eminent domain proceedings brought by the Virginia Department of Transportation in 2014. This final payment was allocated to TA as set forth in the lease.

We are currently marketing for sale or rebranding 20 Wyndham-branded hotels with a net carrying value of $111,271, 33 Marriott hotels with a net carrying value of $224,895 and 19 net lease properties with a net carrying value of $87,493 we have classified as held for sale. See Notes 5 and 14 for further information on these disposition activities.

Since January 1, 2020, we have sold four vacant net lease properties with approximately 160,434 square feet in three states for an aggregate sales price of $5,010, excluding closing costs.

Note 5. Management Agreements and Leases

As of December 31, 2019, we owned 329 hotels included in six operating agreements and 816 service-oriented retail properties net leased to 194 tenants. We do not operate any of our properties.

F-17

Hotel agreements

As of December 31, 2019, 327 of our hotels were leased to our TRSs and managed by independent hotel operating companies and two hotels are leased to third parties. As of December 31, 2019, our hotel properties were managed by or leased to separate subsidiaries of Marriott, IHG, Sonesta, Wyndham, Hyatt and Radisson under eight agreements. These hotel agreements had initial terms expiring between 2019 and 2038. Each of these agreements is for between one and 103 of our hotels. In general, the agreements contain renewal options for all, but not less than all, of the affected properties included in each agreement, and the renewal terms range between 15 to 60 years. Most of these agreements require the third party manager or tenant to: (1) make payments to us of minimum returns or minimum rents; (2) deposit a percentage of total hotel sales into FF&E reserves; and (3) for our managed hotels, make payments to our TRSs of additional returns to the extent of available cash flows after payment of operating expenses, funding of the FF&E reserves, payment of our minimum returns, payment of certain management fees and replenishment of security deposits or guarantees. Some of our managers or tenants or their affiliates have provided deposits or guarantees to secure their obligations to pay us.

IHG agreement. Our management agreement with IHG for 103 hotels, or our IHG agreement, which expires in 2036, provides that, as of December 31, 2019, we are to be paid annual minimum returns and rents of $216,239. We realized minimum returns and rents of $205,941, $189,981 and $178,883 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. We also realized additional returns under this agreement $12,250 during the year ended December 31, 2017 from our share of hotel cash flows in excess of the minimum returns and rents due to us for those years. There were no additional returns realized under this agreement during the years ended December 31, 2019 and 2018 .

Pursuant to our IHG agreement, IHG has provided us with a security deposit to cover minimum payment shortfalls, if any. Under this agreement, IHG is required to maintain a minimum security deposit of $37,000 and this security deposit may be replenished and increased up to $100,000 from a share of future cash flows from the hotels in excess of our minimum returns and rents. The available balance of the IHG security deposit was $75,717 as of December 31, 2019.

We funded $55,359 and $39,668 for capital improvements to certain of the hotels included in our IHG agreement during the years ended December 31, 2019 and 2018, respectively.

Marriott No. 1 agreement. Our management agreement with Marriott for 53 hotels, or our Marriott No. 1 agreement, provided that, as of December 31, 2019, we were to be paid an annual minimum return of $71,872 to the extent that gross revenues of the hotels, after payment of hotel operating expenses and funding of the FF&E reserve, were sufficient to do so. Marriott’s base and incentive management fees were only earned after we received our minimum returns. We realized minimum returns of $71,410, $69,325 and $68,944 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. We also realized additional returns of $2,052, $4,457 and $6,180 during the years ended December 31, 2019, 2018 and 2017, respectively, which represented our share of hotel cash flows in excess of the minimum returns due to us for those years. We did not have any security deposits or guarantees for our minimum returns from the 53 hotels included in our Marriott No. 1 agreement. Accordingly, the minimum returns we received from these hotels managed by Marriott were limited to the hotels’ available cash flows after payment of operating expenses and funding of the FF&E reserve.

We funded $17,356 and $9,050 for capital improvements to certain of the hotels included in our Marriott No. 1 agreement during the years ended December 31, 2019 and 2018.

Marriott No. 234 agreement. Our management agreement with Marriott for 68 hotels, or our Marriott No. 234 agreement, provided that, as of December 31, 2019, we were to be paid an annual minimum return of $110,383. We realized minimum returns of $108,564, $106,978 and $106,405 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. Pursuant to our Marriott No. 234 agreement, Marriott had provided us with a security deposit to cover minimum return payment shortfalls, if any. Under this agreement, this security deposit may have been replenished and increased up to $64,700 from a share of hotel cash flows in excess of the minimum returns due to us. Marriott’s base and incentive management fees were only earned after we received our minimum returns. During the year ended December 31, 2019, our available security deposit was replenished by $734 from a share of hotel cash flows in excess of the minimum returns due to us for the year. The available balance of this deposit was $33,445 as of December 31, 2019. Pursuant to our Marriott No. 234 agreement, Marriott had also provided us with a limited guaranty for shortfalls up to 90% of our minimum returns, if and after the available security deposit had been depleted. This guaranty expired on December 31, 2019.

We funded $33,700 and $9,030 for capital improvements to certain of the hotels included in our Marriott No. 234 agreement during the years ended December 31, 2019 and 2018.

F-18

Marriott No. 5 agreement. We leased one hotel in Kauai, HI to Marriott which required that, as of December 31, 2019, we were paid annual minimum rents of $10,518. This lease was guaranteed by Marriott and we realized $10,518, $10,321 and $10,159 of rent for this hotel during the years ended December 31, 2019, 2018 and 2017, respectively. This lease expired on December 31, 2019.

On December 31, 2019, we entered into agreements with Marriott, which combined our Marriott Nos. 1, 234 and 5 agreements into a single portfolio for a 16-year term commencing January 1, 2020, or the Marriott Agreement. Among other terms, the new combined agreements with Marriott provide as follows:

• That all 122 Marriott hotels will be combined economically so that excess cash flows from any of these hotels are available to pay the aggregate annual minimum returns due to SVC for these hotels, which was initially $190,600. Our TRS subsidiaries will continue to participate in the net cash flows from hotel operations after payment of management fees to Marriott and these base fees will continue to be subordinated to the annual minimum return due to us.

• That the existing security deposit we held for the Marriott No. 234 agreement ($33,445 as of December 31, 2019) will continue to secure payment of the aggregate annual minimum returns due to us under the new combined agreements and may be replenished up to the security deposit cap of $64,700 from 60% of the cash flows realized from operations of the 122 hotels after payment of the aggregate annual minimum return due to us, Marriott’s base management fees and certain other advances by us or Marriott, if any.

• That Marriott will provide a new $30,000 limited guaranty for 85% of the aggregate annual minimum return due to us through 2026 under the new combined agreements if the security deposit is exhausted.

• That the term of the agreements will be extended through 2035, with Marriott having the option to renew for two consecutive 10-year terms on an all or none basis.

• That 5.5%-6.5% of gross revenues from hotel operations will continue to be placed in escrow for hotel maintenance and periodic renovations, or an FF&E reserve.

We and Marriott identified 33 of the 122 hotels covered by the Marriott Agreement that will be sold or rebranded, at which time we would retain the proceeds of any such sale and the aggregate annual minimum returns due to us would decrease by the amount allocated to the applicable hotel.

Sonesta agreement. As of December 31, 2019, Sonesta managed 14 of our full service hotels and 39 of our limited service hotels pursuant to management agreements for each of the hotels, which we refer to collectively as our Sonesta agreement, and a pooling agreement, which combines those management agreements for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us. See Notes 4 and 9 for further information regarding our relationship, agreements and transactions with Sonesta.

As of December 31, 2019, our Sonesta agreement provided that we are paid a fixed annual minimum return equal to 8% of our invested capital, as defined therein, which was $146,800, as of December 31, 2019, if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so. Our Sonesta agreement further provided that we are paid an additional return based upon operating profits, as defined therein, after payment of Sonesta’s incentive fee, if applicable. We realized returns of $67,592, $78,076 and $70,576 during the years ended December 31, 2019, 2018 and 2017, respectively, under our Sonesta agreement. We do not have any security deposits or guarantees for our Sonesta hotels. Accordingly, the returns we receive from our Sonesta hotels are limited to the hotels’ available cash flows after payment of operating expenses including management and related fees.

As of December 31, 2019 our Sonesta agreement provided that Sonesta is entitled to receive, after payment of hotel operating expenses, a base management fee equal to 3.0% of gross revenues for our full service Sonesta hotels and 5.0% of gross revenues for our limited service Sonesta hotels. Additionally, Sonesta is entitled to a reservation fee equal to 1.5% of gross room revenues, as defined in the Sonesta agreement, a system fee for centralized services of 1.5% of gross revenues, a procurement and construction supervision fee equal to 3.0% of third party costs of capital expenditures and an incentive management fee equal to 20.0% of operating profits remaining after reimbursement to us and to Sonesta of certain advances and payment of our minimum returns. Sonesta’s incentive management fee, but not its other fees, is earned only after our minimum returns are paid. Our Sonesta agreement also provided that the costs incurred by Sonesta for advertising, marketing, promotional and public relations programs and campaigns, including “frequent stay” rewards programs, for the benefit of our Sonesta hotels are subject to reimbursement by us or are otherwise treated as hotel operating expenses, subject to our approval.

F-19

Pursuant to our Sonesta agreement, as of December 31, 2019, we incurred base management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing program and third party reservation transmission fees of $36,169, $34,821 and $28,238 for the years ended December 31, 2019, 2018 and 2017, respectively, under our Sonesta agreement. In addition, as of December 31, 2019, we recognized procurement and construction supervision fees of $3,320, $2,374 and $1,080 for the years ended December 31, 2019, 2018 and 2017, respectively, under our Sonesta agreement. These amounts are included in hotel operating expenses or have been capitalized, as appropriate, in our consolidated financial statements.

As of December 31, 2019 our Sonesta agreement did not require FF&E escrow deposits, but did require us to fund capital expenditures that we approved at our Sonesta hotels. We funded $114,082, $82,329 and $34,933 for renovations and other capital improvements to hotels included in our Sonesta agreement during the years ended December 31, 2019, 2018 and 2017, respectively. We owed Sonesta $15,537 and $5,703 for capital expenditure reimbursements and for a previously estimated overpayment of minimum returns advanced at December 31, 2019 and 2018, respectively. Amounts due from Sonesta are included in due from related persons and amounts owed to Sonesta are included in due to related persons in our consolidated balance sheets, respectively.

Our Sonesta agreement expires in January 2037, and will be extended automatically for up to two successive 15 year renewal terms unless Sonesta elects not to renew any such agreement. Under the pooling agreement, if Sonesta elects not to renew a management agreement, that will be deemed to be a notice of non-renewal for all our management agreements with Sonesta. We generally have the right to terminate a management agreement with Sonesta after three to four years without cause upon payment of a termination fee. We also have the right to terminate a management agreement with Sonesta without a termination fee if our minimum return is less than 6% of our invested capital during any three of four applicable consecutive years. Both we and Sonesta have the right to terminate any management agreement included in our Sonesta agreement upon a change in control, as defined therein, of the other party, and under certain other circumstances that, in the case of termination by Sonesta, may require that we pay a termination fee to Sonesta. Under the pooling agreement, if we terminate or Sonesta terminates a management agreement following a change of control, that will be deemed a termination of all of our management agreements with Sonesta. Under our Sonesta agreement, if we terminate without cause, or if Sonesta terminates under certain circumstances, the termination fee is an amount equal to the present value of the payments that would have been made to Sonesta as a base management fee, reservation fee, system fee and incentive management fee, each as defined therein, between the date of termination of the applicable agreement and the scheduled expiration date of the term that was remaining prior to such termination, which present value is calculated based upon the average of each of such fees earned in each of the three years ended prior to the date of termination, discounted at an annual rate equal to 8%. We may designate a hotel as “non-economic” under the pooling agreement, in which case the hotel would be subject to sale and the applicable Sonesta management agreement would be terminated, and we have an early termination right under each of the management agreements included in our Sonesta agreement if the applicable hotel does not meet certain criteria for the stipulated measurement period. These stipulated measurement periods begin on the later of January 1, 2017 and January 1st of the year beginning at least 18 months following the effective date of the applicable management agreement.

On November 1, 2019, we rebranded two full service hotels previously managed by Wyndham (Chicago, IL and Irvine, CA) to the Sonesta brands under short term agreements with Sonesta that expire on December 31, 2020.

We also lease 48 vacation units in the Chicago, IL Sonesta hotel to a subsidiary of Wyndham Destinations, Inc. (NYSE: WYND), or Destinations, which requires that, as of December 31, 2019, we are paid annual minimum rents of $1,537. The guaranty provided by Destinations with respect to the Destinations lease for part of one hotel is unlimited. We recognized rental income of $503 during the year ended December 31, 2019 and $1,456 and $1,414 during the years ended December 31, 2018 and 2017, respectively, under our Destinations agreement. We reduced rental income by $997 for the year ended December 31, 2019 and increased rental income by $358 and $400 for the years ended December 31, 2018 and 2017, respectively, to record adjustments necessary to record rent on a straight line basis. We have amended the lease of the 48 Destinations units at the Chicago hotel so the term of the lease expires on March 31, 2020, at which time Destinations will vacate the leased space.

See Note 4 for information regarding the effects of certain of our property acquisitions on our management agreements with Sonesta.

F-20

On February 27, 2020, we entered into a transaction agreement with Sonesta and its newly formed parent company, Sonesta Holdco Corporation, or Holdco, pursuant to which we and Sonesta restructured our existing business arrangements as follows:

• We amended and restated our existing management agreements with Sonesta for each of our hotels currently manage by Sonesta, which we refer to collectively as our Sonesta agreement, and our existing pooling agreement with Sonesta, which combines our management agreements with Sonesta for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us, as further described below;

• We and Sonesta agreed to sell, rebrand or repurpose our 39 extended stay hotels currently managed by Sonesta with an aggregate carrying value of $480,547 and which currently require aggregate minimum returns of $49,467. As the hotels are sold, rebranded or repurposed, the management agreement for the applicable hotel(s) will terminate witout our being required to pay Sonesta a termination fee and our annual minimum returns due to us under our Sonesta agreement will decrease by the amount allocated to the applicable hotel(s);

• Sonesta will continue to manage 14 of our full-service hotels that Sonesta currently manages and the annual minimum returns due for these hotels will be reduced from $99,013 to $69,013;

• Holdco issued to us a number of its shares of common stock representing approximately (but not more than) 34% of its outstanding shares of common stock (post-issuance);

• We modified our Sonesta agreement and pooling agreement so that 5% of the hotel gross revenues of each of our 14 full-service hotels managed by Sonesta will be escrowed for future capital expenditures as “FF&E reserves,” subject to available cash flow after payment of the annual minimum returns due to us under the Sonesta agreement;

• We modified our Sonesta agreement and pooling agreement so that (1) our termination rights under those agreements for our 14 full-service hotels managed by Sonesta are generally limited to performance and for “cause,” casualty and condemnation events, (2) a portfolio wide performance test now applies for determining whether the management agreement for any of our full service hotels managed by Sonesta may be terminated for performance reasons, and (3) the provisions included in our historical pooling agreement that allowed either us or Sonesta to require the marketing for sale of non-economic hotels were removed; and

• We extended the initial expiration date of the management agreements for our full service hotels located in Chicago, IL and Irvine, CA that are managed by Sonesta to January 2037 to align with the initial expiration date for our other full-service hotels managed by Sonesta.

Except as described above, the economic terms of our amended and restated Sonesta agreement and amended and restated pooling agreement are consistent with the historical Sonesta agreement and pooling agreement.

Hyatt agreement. Our management agreement with Hyatt for 22 hotels, or our Hyatt agreement, which expires in 2030, provides that, as of December 31, 2019, we are to be paid an annual minimum return of $22,037. We realized minimum returns of $22,037 during each of the years ended December 31, 2019, 2018 and 2017 under this agreement. Pursuant to our Hyatt agreement, Hyatt has provided us with a guaranty, which is limited to $50,000. During the year ended December 31, 2019, the hotels under this agreement generated cash flows that were less than the minimum rents due to us for the period and Hyatt made $2,260 guarantee payments to cover the shortfall. The available balance of the guaranty was $19,655 as of December 31, 2019.

Radisson agreement. Our management agreement with Radisson for nine hotels, or our Radisson agreement, which expires in 2035, provides that, as of December 31, 2019, we are to be paid an annual minimum return of $20,443. We realized minimum returns of $20,056, $16,183 and $12,920 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. Pursuant to our Radisson agreement, Radisson has provided us with a limited guaranty which, as a result of capital improvement amounts funded by us during the year ended December 31, 2019, increased by $1,523 to a total of $47,523. During the year ended December 31, 2019, the hotels under this agreement generated cash flows that were less than the minimum returns due to us for the period, and Radisson made $1,343 of guaranty payments to cover the shortfall. The available balance of the guarantee was $41,216 at December 31, 2019. We funded $19,034 for capital improvements at certain of the hotels included in our Radisson agreement during the year ended December 31, 2019.

F-21

Wyndham agreements. In October 2019, we amended our agreement with Wyndham whereby the term of the management agreement will expire on September 30, 2020 unless sooner terminated with respect to any hotels that are sold or rebranded. Under the amendment, Wyndham will pay us all cash flows of the hotels after payment of hotel operating costs. Wyndham will not be entitled to any base management fees for the remainder of the agreement term. We realized returns of $20,023, $23,562 and $27,452 during the years ended December 31, 2019, 2018 and 2017, respectively. Wyndham had provided us with a guaranty, which was limited to $35,656, subject to an annual payment limit of $17,828 which was depleted during 2017. To avoid default, Wyndham was required to pay 85% of the minimum returns due to us. Our Wyndham agreement requires FF&E escrow deposits equal to 5% of total hotel sales for all hotels included in the agreement subject to available cash flows after payment of our minimum return. No FF&E escrow deposits were made during the year ended December 31, 2019. We funded $3,040, $2,883 and $1,449 for capital improvements to certain of the hotels included in our Wyndham agreement during the years ended December 31, 2019, 2018 and 2017, respectively.

Net lease portfolio

As of December 31, 2019, we owned 816 net lease service-oriented retail properties with 14.9 million square feet with annual minimum rent of $381,679 with a weighted (by annual minimum rents) average lease term of 8.6 years. The portfolio was 98% leased by 194 tenants operating under 131 brands in 23 distinct industries.

TA Leases

On January 16, 2019, we entered agreements with TA pursuant to which:

• We sold to TA 20 travel center properties that TA previously leased from us for a total purchase price of $308,200. We recorded a gain of $159,535 as a result of these sales. 

• Upon completing these sales, these travel center properties were removed from the TA leases and TA’s annual minimum rent payable to us decreased by $43,148.

• Commencing on April 1, 2019, TA paid us the first of the 16 quarterly installments of approximately $4,404 each (an aggregate of $70,458) to fully satisfy and discharge its $150,000 deferred rent obligation to us that otherwise would have become due in five installments between 2024 and 2030. TA paid to us $13,200 in respect of such obligation for the year ended December 31, 2019.

• Commencing with the year ending December 31, 2020, TA will be obligated to pay to us an additional amount of percentage rent equal to one-half percent (0.5%) of the excess of its annual nonfuel revenues at leased sites over the nonfuel revenues for each respective site for the year ending December 31, 2019.

• The term of each TA lease was extended by three years.

• Certain of the 179 travel center properties that TA continues to lease from us were reallocated among the TA leases.

TA is our largest tenant. As of December 31, 2019, we leased to TA a total of 179 travel centers under five leases that expire between 2029 and 2035 and require annual minimum returns of $246,088 which represents approximately 24.6% of our total annual minimum rents as of December 31, 2019. The number of travel centers, the terms, the annual minimum rent and the deferred rent balances owed to us by TA under our TA leases as of December 31, 2019, were as follows:

	Number of Travel Centers	Initial Term End (1)	Annual Minimum Rent		Deferred Rent (2) (3)
TA No. 1 Lease	36	December 31, 2032	$	49,707	$	15,148
TA No. 2 Lease	36	December 31, 2031	44,077		14,068
TA No. 3 Lease	35	December 31, 2029	42,409		13,870
TA No. 4 Lease	37	December 31, 2033	48,241		14,161
TA No. 5 Lease	35	June 30, 2035	61,654		—
	179		$	246,088	$	57,247

(1) TA has two renewal options of 15 years each under each of our TA leases.

(2) Commencing April 1, 2019, TA is required to pay us $70,458 in 16 quarterly installments of $4,404 each for deferred rent TA owes us.

(3) Represents the balance as of December 31, 2019.

F-22

Our TA leases are “triple net” leases that require TA to pay all costs incurred in the operation of the leased travel centers, including personnel, utility, inventory, customer service and insurance expenses, real estate and personal property taxes, environmental related expenses, underground storage tank removal costs and ground lease payments at those travel centers at which we lease the property and sublease it to TA. Our TA leases generally require TA to indemnify us for certain environmental matters and for liabilities that arise during the terms of the leases from ownership or operation of the leased travel centers. In addition, TA is obligated to pay us at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks on the leased properties. Our TA leases do not require FF&E escrow deposits. However, TA is required to maintain the leased travel centers, including structural and non-structural components. Under our TA leases, TA generally cannot own, franchise, finance, operate, lease or manage any travel center or similar property that is not owned by us within 75 miles in either direction along the primary interstate on which a travel center owned by us is located without our consent.

We recognized rental income from TA of $262,038, $302,309 and $293,273 for the years ended December 31, 2019, 2018 and 2017 respectively. We reduced rental income by $11,894 for the year ended December 31, 2019 and increased rental income of $12,127 and $11,966 for the years ended December 31, 2018 and 2017, respectively, to record the deferred rent obligations under our TA leases and the estimated future payments to us by TA for the cost of removing underground storage tanks on a straight line basis. As of December 31, 2019 and 2018, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $68,653 and $91,212, respectively. These amounts are included in due from related persons in our consolidated balance sheets. For the years ended December 31, 2018 and 2017, we recognized the deferred rent obligations under our TA leases as rental income on a straight line basis over the then in-place lease terms. Beginning in January 2019, our recognition of the amended deferred rent obligations are recorded on a straight line basis over the new lease terms of our TA leases.

In addition to the payment of annual minimum rent, our TA Nos. 1, 2, 3 and 4 leases provide for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2015 non-fuel revenues, and, beginning with the year ending December 31, 2020, an additional half percent (0.5%) of non-fuel revenues above 2019 non-fuel revenues) and our TA No. 5 lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2012 non-fuel revenues, and, beginning with the year ending December 31, 2020, an additional 0.5% of non-fuel revenues above 2019 non-fuel revenues). The total amount of percentage rent from TA that we recognized was $4,075, $3,548 and $2,106 during the years ended December 31, 2019, 2018 and 2017, respectively.

Under our TA leases, TA may request that we fund capital improvements in return for increases in TA’s annual minimum rent according to the following formula: the annual minimum rent is increased by an amount equal to the amount funded by us multiplied by the greater of (1) 8.5% or (2) a benchmark U.S. Treasury interest rate plus 3.5%. TA is not obligated to request and we are not obligated to fund any such improvements. We funded $56,346 and $84,632 during the years ended December 31, 2018 and 2017, respectively, for capital improvements to our travel center properties and, as a result, TA’s annual minimum rent payable to us increased by $4,789 and $7,194, respectively. We did not fund any improvements under these leases during 2019.

See Notes 4 and 9 for further information regarding our relationship with TA.

Other net lease agreements

We recognized rental income from the net lease properties we acquired under the SMTA Transaction of $46,861 during the year ended December 31, 2019, which includes $2,160 of adjustments to record scheduled rent changes under certain of our leases on a straight line basis.

Additional lease information (as lessor). As of December 31, 2019, our leases with parties other than our TRSs provide for contractual minimum rents to be paid to us during the remaining current terms as follows:

2019	$	406,518
2020	402,000
2021	390,585
2022	372,440
2023	364,541
Thereafter	2,718,281
Total	$	4,654,365

F-23

Additional lease information (as lessee). As of December 31, 2019, 14 of our hotels were subject to ground leases where we are the lessee. In addition, our hotel operators enter various leases on our behalf in the normal course of business at our hotels, or our hotel operating leases. We calculated right of use assets and lease liabilities as the present value of the remaining lease payment obligations for our operating leases, which include the ground leases and hotel operating leases, over the remaining lease term using our estimated incremental borrowing rate. The right of use assets and related lease liabilities are included within other assets, net and accounts payable and other liabilities, respectively, in our consolidated balance sheets.

At December 31, 2019, our right of use assets and related lease liabilities totaled $75,040 and $75,040, respectively, which represented our future obligations under our operating leases and are included in other assets and other liabilities, respectively, in our consolidated balance sheets. Our operating leases require minimum fixed rent payments, percentage rent payments based on a percentage of hotel revenues in excess of certain thresholds, or rent payments equal to the greater of a minimum fixed rent or percentage rent. Rental expense related to our operating leases of $13,892 for year ended December 31, 2019, is included in hotel operating expenses within our consolidated statements of comprehensive income. As of December 31, 2019, our operating leases provide for contractual minimum rent payments to third parties during the remaining lease terms, as follows:

2020	$	7,052
2021	6,424
2022	5,877
2023	5,761
2024	5,762
Thereafter	150,826
Total lease payments	181,702
Less: imputed interest	(106,662		)
Present value of lease liabilities (1)	$	75,040

(1) The weighted average discount rate used to calculate the lease liability and the weighted average remaining term for our ground leases (assuming all extension options) and our hotel operating leases are approximately 5.50% and 31 years (range of 12 years to 68 years) and 5.53% and 31 years (range of 1 month to 54 years), respectively.

As of December 31, 2019, 17 of our net lease properties are on land we leased partially or entirely from unrelated third parties. We are not required to record right of use assets and lease liabilities for these properties as we are not the primary obligor under the leases. The average remaining term of these 17 ground leases was 12 years (range of two to 31 years) with rents averaging $508 per year.

Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant did not perform obligations under a ground lease or did not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property.

Note 6. Indebtedness

Our principal debt obligations at December 31, 2019 were: (1) $377,000 of outstanding borrowings under our $1,000,000 unsecured revolving credit facility; (2) our $400,000 unsecured term loan; and (3) $5,350,000 aggregate outstanding principal amount of senior unsecured notes. Our revolving credit facility and our term loan are governed by a credit agreement with a syndicate of institutional lenders.

Our $1,000,000 revolving credit facility is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is July 15, 2022, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to extend the maturity date of the facility for two additional six-month periods. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. We are required to pay interest at the rate of LIBOR plus a premium, which was 120 basis points per annum as of December 31, 2019, on the amount outstanding under our revolving credit facility. We also have to pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum as of December 31, 2019. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings.

F-24

As of December 31, 2019 and 2018, the annual interest rate payable on borrowings under our revolving credit facility was 2.80% and 3.14%, respectively. The weighted average annual interest rate for borrowings under our revolving credit facility was 3.21%, 3.06% and 2.24% for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, we had $377,000 outstanding and $623,000 available under our revolving credit facility. As of February 27, 2020, we had $437,000 outstanding and $563,000 available to borrow under our revolving credit facility.

Our $400,000 term loan, which matures on July 15, 2023, is prepayable without penalty at any time. We are required to pay interest on the amount outstanding under our term loan at the rate of LIBOR plus a premium, which was 135 basis points per annum at December 31, 2019. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2019 and 2018, the annual interest rate for the amount outstanding under our term loan was 3.04% and 3.45%, respectively. The weighted average annual interest rate for borrowings under our term loan was 3.43%, 3.12% and 2.27% for the years ended December 31, 2019, 2018 and 2017, respectively.

Our credit agreement also includes a feature under which maximum aggregate borrowings may be increased to up to $2,300,000 on a combined basis in certain circumstances. Our credit agreement and our 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 LLC ceasing to act as our business manager. Our credit agreement and our unsecured senior notes indentures and their supplements also contain covenants, including those that restrict our ability to incur debts or to make distributions under certain circumstances and generally require us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of our credit agreement and our unsecured senior notes indentures and their supplements at December 31, 2019.

On January 13, 2017, we issued $600,000 aggregate principal amount of senior notes in public offerings, which included $200,000 aggregate principal amount of 4.500% senior notes due 2023 and $400,000 aggregate principal amount 4.950% senior notes due 2027. Net proceeds from these offerings were $593,228 after discounts, premiums and expenses.

On March 15, 2017, we repurchased at par plus accrued interest $8,431 of the outstanding principal amount of our 3.80% convertible senior notes due 2027, which were tendered by the holders of these notes for repurchase by us. On April 24, 2017, we redeemed at par plus accrued interest the remaining $47 of the outstanding principal amount of these notes.

On October 26, 2017, we issued $400,000 principal amount of 3.950% senior notes due 2028 in a public offering. Net proceeds from this offering were $388,244 after discounts and expenses.

On October 29, 2017, we redeemed at par all of our outstanding 6.700% senior notes due 2018 for a redemption price equal to the principal amount of $350,000, plus accrued and unpaid interest (an aggregate of $356,774). As a result of the redemption, we recorded a loss on early extinguishment of debt of $146 in the year ended December 31, 2017, which represented the unamortized discounts and issuance costs of these notes.

On February 2, 2018, we issued $400,000 principal amount of 4.375% senior notes due 2030 in a public offering. Net proceeds from this offering were $386,400 after discounts and expenses.

On September 18, 2019, we issued $825,000 aggregate principal amount of our 4.350% unsecured senior notes due 2024, $450,000 aggregate principal amount of our 4.750% unsecured senior notes due 2026 and $425,000 aggregate principal amount of our 4.950% unsecured senior notes due 2029. The aggregate net proceeds from these offerings were $1,680,461, after underwriting discounts and other offering expenses.

In connection with the SMTA Transaction, a syndicate of lenders committed to provide us with a one year unsecured term loan facility, under which we would be able to borrow up to 2,000,000. We terminated these commitments in September 2019 and recorded a loss on early extinguishment of debt of $8,451 during the year ended December 31, 2019 to write off unamortized issuance costs. See Note 4 for further information about the SMTA Transaction.

All of our senior notes are prepayable at any time prior to their maturity date at par plus accrued interest plus a premium equal to a make whole amount, as defined, generally designed to preserve a stated yield to the noteholder. Interest on all of our senior notes is payable semi-annually in arrears.

None of our debt obligations require sinking fund payments prior to their maturity dates.

F-25

The required principal payments due during the next five years and thereafter under all our outstanding debt at December 31, 2019 are as follows:

2020	$	—
2021	400,000
2022	877,000
2023	900,000
2024	1,175,000
Thereafter	2,775,000
	$	6,127,000

Note 7. Shareholders' Equity

Common Share Awards

We have common shares available for issuance under the terms of our 2012 Equity Compensation Plan, or our Share Award Plan. During the years ended December 31, 2019, 2018 and 2017, we granted 140,100 of our common shares with an aggregate market value of $3,507, 97,000 of our common shares with an aggregate market value of $2,810 and 85,000 of our common shares with an aggregate market value of $2,387, respectively, to our officers and certain other employees of our manager, RMR LLC, pursuant to the Share Award Plan. The value of the share grants was based upon the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the date of the grant. See Note 9 for a further discussion of the grants we made to our officers and certain other employees of RMR LLC. On April 12, 2018, we granted 3,000 of our common shares with an aggregate market value of $75 to one of our Managing Trustees who was elected as a Managing Trustee that day. In addition, we granted each of our then Trustees 3,000 of our common shares in each of 2019 and 2018 and 2017 with an aggregate market value of $370 ($74 per trustee), $427 ($85 per trustee) and $452 ($90 per trustee), respectively, as part of their annual compensation. The values of the share grants were based upon the closing price of our common shares on Nasdaq on the dates of the grants. The shares granted to our Trustees vest immediately. The shares granted to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of grant. Share grants are expensed ratably over the vesting period and the value of such share grants are included in general and administrative expense in our consolidated statements of comprehensive income.

A summary of shares granted, vested, forfeited and unvested under the terms of the Share Award Plan for the years ended December 31, 2019, 2018 and 2017 is as follows:

	2019				2018				2017
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested shares, beginning of year	164,000		$	28.39	146,605		$	27.93	148,535		$	29.40
Shares granted	155,100		25.00		115,000		28.80		100,000		28.39
Shares vested	(122,010	)	25.09		(96,375	)	28.73		(101,930	)	28.52
Shares forfeited	(2,550	)	27.49		(1,230	)	—		—		—
Unvested shares, end of year	194,540		$	26.59	164,000		$	28.39	146,605		$	27.93

The 194,540 unvested shares as of December 31, 2019 are scheduled to vest as follows: 67,290 shares in 2020, 55,930 shares in 2021, 43,600 shares in 2022 and 27,720 shares in 2023. As of December 31, 2019, the estimated future compensation expense for the unvested shares was $4,652. The weighted average period over which the compensation expense will be recorded is approximately 23 months. During the years ended December 31, 2019, 2018 and 2017, we recorded $2,849, $3,187 and $2,759, respectively, of compensation expense related to the Share Award Plan.

At December 31, 2019, 2,290,692 of our common shares remain reserved for issuance under our current Share Award Plan.

F-26

Stock Repurchases

During 2019, we purchased an aggregate of 31,225 of our common shares valued at a weighted average price per common share of $25.61, based on the closing price of our common shares on Nasdaq, on the date of repurchase, from certain of our officers and certain current or former employees of RMR LLC, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

During 2018, we purchased an aggregate of 21,202 of our common shares valued at a weighted average price per common share of $28.59, based on the closing price of our common shares on Nasdaq, on the date of repurchase, from certain of our officers and certain current or former employees of RMR LLC, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

During 2017, we purchased an aggregate of 19,058 of our common shares valued at a weighted average price per common share of $28.01, based on the closing price of our common shares on Nasdaq, on the dates of repurchase, from certain of our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

Distributions

During the years ended December 31, 2019, 2018 and 2017, we paid distributions on our common shares as follows:

	Annual Per Share Distribution	Total Distribution	Characterization of Distribution
Year			Ordinary Income	Capital Gain	Return of Capital	Qualified Dividend
2019	$2.15	$353,620	44.50%	37.93%	17.57%	0.50%
2018	$2.11	$346,832	100.00%	—	—	—
2017	$2.07	$340,084	94.69%	—	4.39%	0.92%

On January 16, 2020, we declared a distribution of $0.54 per common share, or $88,864, which we paid on February 20, 2020, to shareholders of record on January 27, 2020.

On February 10, 2017, we redeemed all 11,600,000 of our outstanding 7.125% Series D cumulative redeemable preferred shares at the stated liquidation preference of $25.00 per share plus accrued and unpaid dividends to the date of redemption (an aggregate of $291,435). We reduced net income available for common shareholders in 2017 by $9,893, which represents the amount by which the liquidation preference for our Series D cumulative redeemable preferred shares that were redeemed exceeded our carrying amount for those preferred shares as of the date of redemption.

Cumulative Other Comprehensive Income (Loss)

Cumulative other comprehensive income (loss), as of December 31, 2019, represents our share of the comprehensive loss of AIC. See Note 9 for further information regarding this investment.

The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the year ended December 31, 2019:

	Unrealized Gain			Equity in
	(Loss) on Investment			Unrealized Gain
	Securities, net			(Loss) of Investees			Total
Balance at December 31, 2017	$	78,715		$	643		$	79,358
Amounts reclassified from cumulative other comprehensive income to retained earnings	(78,715		)	(841		)	(79,556		)
Current year other comprehensive income	—			(68		)	(68		)
Balance at December 31, 2018	—			(266		)	(266		)
Current year other comprehensive loss	—			91			91
Amounts reclassified from cumulative other comprehensive income to net income	—			175			175
Balance at December 31, 2019	$	—		$	—		$	—

F-27

Note 8. Business and Property Management Agreements with RMR LLC

We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which currently relates to our property level operations of our net lease portfolio, excluding properties leased to TA, and the office building component of one of our hotels. See Note 9 for further information regarding our relationship, agreements and transactions with RMR LLC.

Management Agreements with RMR LLC. Our management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:

• Base Management Fee. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of:

◦ the sum of (a) 0.7% of the average aggregate historical cost of our real estate investments up to $250,000, plus (b) 0.5% of the average aggregate historical cost of our real estate investments exceeding $250,000; and

◦ the sum of (a) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded, during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (b) 0.5% of our Average Market Capitalization exceeding $250,000.

The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves.

• Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows:

◦ An amount, subject to a cap based on the value of our common shares outstanding, equal to 12% of the product of:

- our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and

- the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the SNL U.S. REIT Hotel Index, or the benchmark return per share, for the relevant measurement period.

For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.

◦ The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if additional common shares are issued, or if we repurchase our common shares during the measurement period.

◦ No incentive management fee is payable by us unless our total return per share during the measurement period is positive.

◦ The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated.

F-28

◦ If our total return per share exceeds 12% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the SNL U.S. REIT Hotel Index for such measurement period and 12% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the SNL U.S. REIT Hotel Index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the SNL U.S. REIT Hotel Index.

◦ The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period.

◦ Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements.

Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $41,607, $39,942 and $40,694 for the years ended December 31, 2019, 2018 and 2017, respectively. The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income for these periods. The net business management fees we recognized for each of the years ended December 31, 2019, 2018 and 2017 reflect a reduction of $3,585 for each of those years for the amortization of the liability we recorded in connection with our prior investment in RMR Inc., as further described in Note 9.

Pursuant to our business management agreement, in January 2019 and 2018, we paid RMR LLC an incentive management fee of $53,635 and $74,753 for the years ended December 31, 2018 and 2017, respectively. We did not incur an incentive management fee payable to RMR LLC for the year ended December 31, 2019. In calculating the incentive management fee payable by us, our total shareholder return per share was adjusted in accordance with the business management agreement to reflect aggregate net increases in the number of our common shares outstanding as a result of certain share issuances and repurchases by us during the three year measurement period. In addition, the calculation of our benchmark return per share was also adjusted for these issuances and repurchases in accordance with the business management agreement.

• Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0% of construction costs for our net lease portfolio, excluding properties leased to TA, and the office building component of one of our hotels that are subject to our property management agreement with RMR LLC.

Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $1,399, $64 and $45 for the years ended December 31, 2019, 2018 and 2017, respectively. These amounts are included in hotel operating expenses in our consolidated statements of comprehensive income.

• Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC employees assigned to work exclusively or partly at our net lease properties (excluding properties leased to TA), and the office building component of one of our hotels, our share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function, and as otherwise agreed. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $620, $399 and $482 for these expenses and costs for the years ended December 31, 2019, 2018 and 2017, respectively. We included these amounts in other operating expenses and selling, general and administrative expense, as applicable, for these periods.

F-29

• Term. Our management agreements with RMR LLC have terms that end on December 31, 2039, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension.

• Termination Rights. We have the right to terminate one or both of our management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein.

• Termination Fee. If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC.

• Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable.

• Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC or its subsidiaries provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers.

• Investment Opportunities. Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC.

Note 9. Related Person Transactions

We have relationships and historical and continuing transactions with TA, Sonesta, RMR LLC, RMR Inc. and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR Inc. is the managing member of RMR LLC. One of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, and each of our other officers is also an officer and employee of RMR LLC, including Ethan S. Bornstein, the brother-in-law of Adam Portnoy, Brian E. Donley, our Chief Financial Officer and Treasurer, and Todd Hargreaves, our Vice President. Certain of TA’s and Sonesta’s executive officers are officers and employees of RMR LLC. Some of our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as the chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these companies and other officers of RMR LLC serve as managing trustees or managing directors of certain of these companies. In addition, officers of RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services.

Our Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations of certain net lease properties and the office building component of one of our hotels. See Note 8 for further information regarding our management agreements with RMR LLC.

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Lease With RMR LLC. We lease office space to RMR LLC in the office building component of one of our hotels. We recognized rental income from RMR LLC for leased office space of $35 for each of the years ended December 31, 2019, 2018 and 2017. Our office space lease with RMR LLC is terminable by RMR LLC if our management agreements with RMR LLC are terminated.

Share Awards to RMR LLC Employees. As described in Note 7, we award shares to our officers and other employees of RMR LLC annually. Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next four anniversaries of the grant dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR LLC. These awards to RMR LLC employees are in addition to the share awards to our Managing Trustees, as Trustee compensation, and the fees we paid to RMR LLC. See Note 7 for information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligation on vesting share awards.

RMR Inc. We initially acquired 2,503,777 shares of class A common stock of RMR Inc. on June 5, 2015 for cash and share consideration of $55,922. We concluded, for accounting purposes, that the consideration we paid for our investment in these shares represented a discount to the fair value of these shares and we recorded a liability for the amount by which the estimated fair value of these shares exceeded the price we paid for these shares. This liability is included in accounts payable and other liabilities in our consolidated balance sheets and is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to our business management and property management fee expense. We amortized $3,585 of this liability during each of the years ended December 31, 2019, 2018 and 2017. As of December 31, 2019, the remaining unamortized amount of this liability was $57,421. Future amortization of this liability as of December 31, 2019, is estimated to be $3,585 for each of the years 2020 through 2024 and $39,496 thereafter.

On July 1, 2019, we sold all the 2,503,777 shares of class A common stock of RMR Inc. we owned in an underwritten public offering at a price to the public of $40.00 per share pursuant to an underwriting agreement among us, RMR Inc., certain other REITs managed by RMR LLC that also sold their class A common stock of RMR Inc. in the offering, and the underwriters named therein. We received net proceeds of $93,568 from this sale, after deducting the underwriting discounts and commissions and before other offering expenses.

TA. TA was our 100% owned subsidiary until we distributed its common shares to our shareholders in 2007. TA is our largest tenant and property operator, leasing 27% of our gross carrying value of real estate properties as of December 31, 2019. We are TA’s largest shareholder; as of December 31, 2019, we owned 684,000 common shares, representing approximately 8.2% of TA’s outstanding common shares. One of our Managing Trustees, Adam Portnoy, is a managing director of TA. TA’s chief executive officer, president and chief operating officer, executive vice president, chief financial officer and treasurer and executive vice president and general counsel are also officers and employees of RMR LLC, and TA’s two most recent former chief executive officers were also officers of RMR LLC until they resigned those positions in 2017 and 2019, respectively. RMR LLC provides management services to both us and TA. As of December 31, 2019, RMR LLC owned 298,538 common shares, representing approximately 3.6% of TA’s outstanding common shares.

Spin-Off of TA. In connection with TA’s spin-off, we entered a transaction agreement with TA and RMR LLC, pursuant to which TA granted us a right of first refusal to purchase, lease, mortgage or otherwise finance any interest TA owns in a travel center before it sells, leases, mortgages or otherwise finances that travel center to or with another party, and TA also granted us and any other company managed by RMR LLC a right of first refusal to acquire or finance any real estate of the types in which we or they invest before TA does. TA also agreed that for so long as TA is a tenant of ours it will not permit: the acquisition by any person or group of beneficial ownership of 9.8% or more of the voting shares or the power to direct the management and policies of TA or any of its subsidiary tenants or guarantors under its leases with us; the sale of a material part of the assets of TA or any such tenant or guarantor; or the cessation of certain continuing directors constituting a majority of the board of directors of TA or any such tenant or guarantor. TA also agreed not to take any action that might reasonably be expected to have a material adverse impact on our ability to qualify as a REIT and to indemnify us for any liabilities we may incur relating to TA’s assets and business.

Lease Arrangements with TA. We lease 179 of our travel centers to TA under the TA leases.

See Notes 4 and 5 for further information regarding our relationships, agreements and transactions with TA.

F-31

Sonesta. Sonesta is a private company majority owned by Adam Portnoy, who also serves as Sonesta’s director. One of Sonesta’s other directors is our other Managing Trustee, President and Chief Executive Officer and Sonesta’s other director serves as RMR Inc.’s executive vice president, general counsel and secretary and as our Secretary. Sonesta’s chief executive officer and chief financial officer are officers of RMR LLC. Certain other officers and employees of Sonesta are former employees of RMR LLC. RMR LLC also provides certain services to Sonesta. As of December 31, 2019, Sonesta managed 53 of our hotels pursuant to our Sonesta agreement. See Notes 4 and 5 for further information regarding our relationships, agreements and transactions with Sonesta including our recent restructuring of our business arrangements with Sonesta.

AIC. We, ABP Trust, TA and four other companies to which RMR LLC provides management services currently own AIC, an Indiana insurance company, in equal amounts. Certain of our Trustees and certain directors or trustees of the other AIC shareholders currently serve on the board of directors of AIC.

We and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC. The policies under that program expired on June 30, 2019, and we and the other AIC shareholders elected not to renew the AIC property insurance program; we have instead purchased standalone property insurance coverage with unrelated third party insurance providers. We paid aggregate annual premiums, including taxes and fees, of $5,738, $6,387 and $4,004 in connection with this insurance program for the policy years ending June 30, 2019, 2018, and 2017 respectively.

On February 13, 2020, AIC was dissolved and in connection with its dissolution, we and each other AIC shareholder received an initial liquidating distribution of $9,000 from AIC in December 2019.

As of December 31, 2019, 2018 and 2017, our investment in AIC had a carrying value of $298, $8,639 and $8,192, respectively. These amounts are included in other assets in our consolidated balance sheets. We recognized income of $393, $515 and $607 related to our investment in AIC for the years ended December 31, 2019, 2018 and 2017, respectively. These amounts are presented as equity in earnings of an investee in our consolidated statements of comprehensive income. Our other comprehensive income (loss) includes our proportionate part of unrealized gains (losses) on securities which are owned and held for sale by AIC of $(175), $(68) and $460 related to our investment in AIC for the years ended December 31, 2019, 2018 and 2017, respectively.

RMR LLC historically provided management and administrative services to AIC for a fee equal to 3.0% of the total premiums paid for insurance arranged by AIC. As a result of the property insurance program having been discontinued, AIC has not incurred fees payable to RMR LLC since that time.

Directors’ and Officers’ Liability Insurance. We, RMR Inc., RMR LLC and certain other companies to which RMR LLC or its subsidiaries provide management services, including TA, participate in a combined directors’ and officers’ liability insurance policy. The current combined policy expires in September 2020. We paid aggregate premiums of $201, $247 and $253 in 2019, 2018 and 2017, respectively, for these policies.

Note 10. Income Taxes

Our provision (benefit) for income taxes consists of the following:

	For the Year Ended December 31,
	2019			2018			2017
Current:
Federal (1)	$	—		$	—		$	(5,431	)
State	2,327			1,575			1,713
Foreign	593			667			670
	2,920			2,242			(3,048		)
Deferred:
Foreign	(127		)	(1,047		)	(236		)
	(127		)	(1,047		)	(236		)
	$	2,793		$	1,195		$	(3,284	)

(1) We realized a $5,431 tax benefit in 2017 related to the enactment of the Tax Cuts and Jobs Act, or the Tax Act.

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A reconciliation of our effective tax rate and the current U.S. Federal statutory income tax rate is as follows:

	For the Year Ended December 31,
	2019		2018		2017
Taxes at statutory U.S. federal income tax rate	21.0	%	21.0	%	35.0	%
Nontaxable income of SVC	(21.0	)%	(21.0	)%	(35.0	)%
Minimum tax credit refund	0.0	%	0.0	%	(2.6	)%
State and local income taxes, net of federal tax benefit	0.7	%	0.8	%	0.8	%
Foreign taxes	0.1	%	(0.2	)%	0.2	%
Tax Act adjustment	0.0	%	0.0	%	21.8	%
Change in valuation allowance	0.0	%	0.0	%	(21.8	)%
Other differences, net	0.0	%	0.0	%	0.0	%
Effective tax rate	0.8	%	0.6	%	(1.6	)%

Deferred income tax balances generally reflect the net tax effects of temporary differences between the carrying amounts of certain of our assets and liabilities in our consolidated balance sheets and the amounts used for income tax purposes and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. Significant components of our deferred tax assets and liabilities are as follows:

	As of December 31,
	2019			2018
Deferred tax assets:
Tax credits	$	—		$	—
Tax loss carryforwards	44,285			62,436
Other	3,612			2,829
	47,897			65,265
Valuation allowance	(47,897		)	(65,265		)
	—			—
Deferred tax liabilities:
Property basis difference	(6,996		)	(7,174		)
Net deferred tax liabilities	$	(6,996	)	$	(7,174	)

Net deferred tax liabilities are included in accounts payable and other liabilities in the accompanying consolidated balance sheets.

At December 31, 2019 and 2018, our consolidated TRS had a net deferred tax asset, prior to any valuation allowance, of $42,434 and $59,892 respectively, which consists primarily of the tax benefit of net operating loss carryforwards and tax credits. Because of the uncertainty surrounding our ability to realize the future benefit of these assets, we have provided a 100% valuation allowance as of December 31, 2019 and 2018. As of December 31, 2019, our consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $167,780 which begin to expire in 2023 if unused.

Note 11. Concentration

Geographic Concentration

At December 31, 2019, our 1,145 properties were located in 47 states in the United States, plus Washington, DC, Ontario, Canada and Puerto Rico. Between 6% and 10% of our properties, by investment, were located in each of California, Texas, Georgia and Illinois. Our two hotels in Ontario, Canada and our hotel in Puerto Rico represent 2% of our hotels, by investment, in the aggregate at December 31, 2019.

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Credit Concentration

All of our managers and tenants are subsidiaries of other companies. The percentage of our annual minimum returns and rents, for each management or lease agreement is shown below, as of December 31, 2019.

Agreement Reference Name	Number of Properties	Annual Minimum Returns/Rents		% of Total		Investment(1)		% of Total
IHG (2)	103	$	216,239	21.6	%	$	2,377,821	19.4	%
Marriott (No. 1)	53	71,872		7.2	%	723,663		5.9	%
Marriott (No. 234)	68	110,384		11.1	%	1,046,094		8.5	%
Marriott (No. 5)	1	10,518		1.1	%	90,079		0.7	%
Subtotal Marriott	122	192,774		19.3	%	1,859,836		15.1	%
Sonesta	53	146,800		14.7	%	1,963,497		16.0	%
Hyatt	22	22,037		2.2	%	301,942		2.5	%
Radisson	9	20,442		2.0	%	289,139		2.4	%
Wyndham (3)	20	18,866		1.9	%	217,764		1.8	%
Subtotal Hotels	329	617,158		61.7	%	7,009,999		57.2	%
TravelCenters of America Inc. (4)	179	246,088		24.6	%	3,302,815		26.9	%
Other Net Leases (5)	637	135,591		13.7	%	1,973,324		15.9	%
Subtotal Net Lease	816	381,679		38.3	%	5,276,139		42.8	%
Total	1,145	$	998,837	100.0	%	$	12,286,138	100.0	%

(1) Hotel investments represent historical cost of our properties plus capital improvements funded by us less impairment writedowns, if any, and excludes capital improvements made from FF&E reserves funded from hotel operations which do not result in increases to minimum returns or rents. Net lease investments represents historical cost of our properties plus capital improvements funded by us less impairment write-downs, if any.

(2) The annual minimum return/minimum rent amount presented includes $7,908 of rent related to our lease with IHG for one hotel in Puerto Rico.

(3) The annual minimum return/minimum rent amount presented includes $1,537 of rent related to our lease with Destinations for 48 vacation units in one hotel.

(4) The annual minimum rent amount for our TA No. 4 lease includes approximately $2,175 of ground rent paid by TA for a property we lease and sublease to TA.

(5) Represents 193 individual tenants. No other tenant represents more than 1% of our annual minimum returns or rents.

Minimum return and minimum rent payments due to us under some of these hotel management agreements and leases are supported by guarantees. As of January 1, 2020 the guaranty provided by Marriott with respect to the 122 hotels managed by Marriott under our Marriott Agreement is limited to $30,000 and expires on December 31, 2026. The guaranty provided by Hyatt with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($19,655  remaining at December 31, 2019). The guaranty provided by Radisson with respect to the nine hotels managed by Radisson is limited to $47,523 ( $41,216 remaining at December 31, 2019). These guarantees may be replenished by future cash flows from the hotels in excess of our minimum returns. The guaranty provided by Destinations is unlimited.

Security deposits support minimum return and minimum rent payments that may be due to us under some of our management agreements and leases. As of December 31, 2019, we hold security deposits for our 103 hotels managed or leased by IHG ($75,717) and for the 122 hotels included in our Marriott Agreement ($33,445). These deposits may be replenished further in the future from available cash flows.

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Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $96,744, $50,203 and $31,477 less than the minimum returns due to us for the years ended December 31, 2019, 2018, and 2017, respectively. When managers of these hotels are required to fund the shortfalls under the terms of our management agreements or their guarantees, we reflect such fundings (including security deposit applications) in our consolidated statements of comprehensive income as a reduction of hotel operating expenses. The reduction to hotel operating expenses was $29,897, $5,569 and $4,673 in the years ended December 31, 2019, 2018 and 2017, respectively. When we reduce the amounts of the security deposits we hold for any of our operating agreements for payment deficiencies, it does not result in additional cash flows to us of the deficiency amounts, but reduces the refunds due to the respective tenants or managers who have provided us with these deposits upon expiration of the respective operating agreement. The security deposits are non-interest bearing and are not held in escrow. We had shortfalls at certain of our managed hotel portfolios not funded by the managers of these hotels under the terms of our management agreements of $69,929 and $44,634 during the years ended December 31, 2019 and 2018, respectively, which represents the unguaranteed portion of our minimum returns from our Sonesta and Wyndham agreements and shortfalls of $26,804 during the year ended December 31, 2017, which represents the unguaranteed portion of our minimum returns from our Sonesta agreement.

Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $10,702, $35,464 and $68,338 more than the minimum returns due to us during the years ended December 31, 2019, 2018 and 2017, respectively. Certain of our guarantees and our security deposits may be replenished by a share of future cash flows from the applicable hotel operations in excess of the minimum returns due to us pursuant to the terms of the respective agreements. When our guarantees and security deposits are replenished by cash flows from hotel operations, we reflect such replenishments in our consolidated statements of comprehensive income as an increase to hotel operating expenses. We had $734, $10,743 and $25,419 of guaranty and security deposit replenishments during the years ended December 31, 2019, 2018 and 2017, respectively.

Note 12. Selected Quarterly Financial Data (Unaudited)

	2019
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Revenues	$	524,908	$	610,562	$	599,772	$	580,906
Net income (loss)	225,787		8,782		40,074		(14,893		)
Net income (loss) per share (basic and diluted)(1)	1.37		0.05		0.24		(0.09		)
Distributions per common share(2)	0.53		0.54		0.54		0.54

	2018
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Revenues	$	528,633	$	611,951	$	603,153	$	550,799
Net income (loss)	80,206		97,289		117,099		(108,860		)
Net income (loss) per share (basic and diluted)(1)	0.49		0.59		0.71		(0.66		)
Distributions per common share(2)	0.52		0.53		0.53		0.53

(1) The sum of per common share amounts for the four quarters differs from annual per share amounts due to the required method of computing weighted average number of shares in interim periods and rounding.

(2) Amounts represent distributions paid in the periods shown.

F-35

Note 13. Segment Information

We aggregate our hotels and net lease portfolio into two reportable segments, hotel investments and net lease investments (previously named travel centers), based on their similar operating and economic characteristics.

	For the Year Ended December 31, 2019
	Hotels		Net Lease		Corporate			Consolidated
Hotel operating revenues	$	1,989,173	$	—	$	—		$	1,989,173
Rental income	20,985		301,251		—			322,236
FF&E reserve income	4,739		—		—			4,739
Total revenues	2,014,897		301,251		—			2,316,148
Hotel operating expenses	1,410,927		—		—			1,410,927
Other operating expenses	—		8,357		—			8,357
Depreciation and amortization	268,088		160,360		—			428,448
General and administrative	—		—		54,639			54,639
Acquisition and other transaction related costs	—		—		1,795			1,795
Loss on asset impairment	28,371		10,925		—			39,296
Total expenses	1,707,386		179,642		56,434			1,943,462
Gain on sale of real estate	—		159,535		—			159,535
Dividend income	—		—		1,752			1,752
Unrealized losses on equity securities	—		—		(40,461		)	(40,461		)
Interest income	795		—		1,420			2,215
Interest expense	—		—		(225,126		)	(225,126		)
Loss on early extinguishment of debt	—		—		(8,451		)	(8,451		)
Income (loss) before income taxes and equity in earnings of an investee	308,306		281,144		(327,300		)	262,150
Income tax expense	—		—		(2,793		)	(2,793		)
Equity in earnings of an investee	—		—		393			393
Net income (loss)	$	308,306	$	281,144	$	(329,700	)	$	259,750

	As of December 31, 2019
	Hotels		Net Lease		Corporate		Consolidated
Total assets	$	4,866,549	$	4,042,831	$	124,587	$	9,033,967

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	For the Year Ended December 31, 2018
	Hotels		Net Lease		Corporate			Consolidated
Hotel operating revenues	$	1,958,598	$	—	$	—		$	1,958,598
Rental income	28,644		302,162		—			330,806
FF&E reserve income	5,132		—		—			5,132
Total revenues	1,992,374		302,162		—			2,294,536
Hotel operating expenses	1,387,065		—		—			1,387,065
Other operating expenses	—		5,290		—			5,290
Depreciation and amortization	255,759		147,318		—			403,077
General and administrative	—		—		104,862			104,862
Acquisition and other transaction related costs	—		—		—			—
Loss on asset impairment	—		—		—			—
Total expenses	1,642,824		152,608		104,862			1,900,294
Dividend income	—		—		2,754			2,754
Unrealized losses on equity securities	—		—		(16,737		)	(16,737		)
Interest income	990		—		538			1,528
Interest expense	—		—		(195,213		)	(195,213		)
Loss on early extinguishment of debt	—		—		(160		)	(160		)
Income (loss) before income taxes and equity in earnings of an investee	350,540		149,554		(313,680		)	186,414
Income tax expense	—		—		(1,195		)	(1,195		)
Equity in earnings of an investee	—		—		515			515
Net income (loss)	$	350,540	$	149,554	$	(314,360	)	$	185,734

	As of December 31, 2018
	Hotels		Net Lease		Corporate		Consolidated
Total assets	$	4,586,709	$	2,398,118	$	192,252	$	7,177,079

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	For the Year Ended December 31, 2017
	Hotels		Net Lease		Corporate			Consolidated
Hotel operating revenues	$	1,840,829	$	—	$	—		$	1,840,829
Rental income	33,162		293,274		—			326,436
FF&E reserve income	4,670		—		—			4,670
Total revenues	1,878,661		293,274		—			2,171,935
Hotel operating expenses	1,274,642		—		—			1,274,642
Other operating expenses	—		4,905		—			4,905
Depreciation and amortization	242,829		143,830		—			386,659
General and administrative	—		—		125,402			125,402
Total expenses	1,517,471		148,735		125,402			1,791,608
Gain on sale of real estate	—		—		9,348			9,348
Dividend income	—		—		2,504			2,504
Interest income	401		—		397			798
Interest expense	—		—		(181,579		)	(181,579		)
Loss on early extinguishment of debt	—		—		(146		)	(146		)
Income (loss) before income taxes and equity in earnings of an investee	361,591		144,539		(294,878		)	211,252
Income tax benefit	—		—		3,284			3,284
Equity in earnings of an investee	—		—		607			607
Net income (loss)	$	361,591	$	144,539	$	(290,987	)	$	215,143

	As of December 31, 2017
	Hotels		Net Lease		Corporate		Consolidated
Total assets	$	4,477,512	$	2,476,073	$	196,800	$	7,150,385

Note 14. Fair Value of Assets and Liabilities

The table below presents certain of our assets carried at fair value at December 31, 2019, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

			Fair Value at Reporting Date Using
Description	Carrying Value at December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Fair Value Measurement Assets:
Investment in TA(1)	$	11,731	$	11,731	$	—	$	—
Non-recurring Fair Value Measurement Assets
Assets of properties held for sale (2)	87,493		—		—		90,122
Assets of properties held and used (3)	38,000		—		—		38,000

(1) Our 684,000 common shares of TA, which are included in other assets in our consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $17,407 as of December 31, 2019. During the year ended December 31, 2019, we recorded unrealized losses of $1,129 to adjust the carrying value of our investment in TA shares to their fair value as of December 31, 2019.

(2) As of December 31, 2019, we owned 19 net lease properties located in 12 states classified as held for sale of $87,493. These properties are recorded at their estimated fair value less costs to sell based on information derived from third party appraisals (Level 3 inputs as defined in the fair value hierarchy under GAAP). We recorded a $10,925 loss on asset impairment in 2019 to reduce the carrying value of these properties to their estimated fair value less costs to sell.

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(3) We recorded a $28,371 loss on asset impairment in 2019 to reduce the carrying value of two hotels to their estimated fair value of $38,000 based on discounted cash flow analyses (Level 3 inputs).

In addition to the investment securities included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, term loan, senior notes and security deposits. At December 31, 2019 and December 31, 2018, the fair values of these additional financial instruments approximated their carrying values in our consolidated balance sheets due to their short term nature or floating interest rates, except as follows:

	December 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
	Amount (1)		Value		Amount (1)		Value
Senior Unsecured Notes, due 2021 at 4.25%	$	398,379	$	406,838	$	396,938	$	404,582
Senior Unsecured Notes, due 2022 at 5.00%	496,821		526,500		495,609		510,658
Senior Unsecured Notes, due 2023 at 4.50%	499,432		520,478		499,268		503,295
Senior Unsecured Notes, due 2024 at 4.65%	348,295		364,277		347,890		349,741
Senior Unsecured Notes, due 2024 at 4.35%	818,075		848,847		—		—
Senior Unsecured Notes, due 2025 at 4.50%	346,431		361,783		345,743		341,114
Senior Unsecured Notes, due 2026 at 5.25%	343,083		369,185		341,955		354,060
Senior Unsecured Notes, due 2026 at 4.75%	445,905		464,315		—		—
Senior Unsecured Notes, due 2027 at 4.95%	394,649		414,012		393,893		391,660
Senior Unsecured Notes, due 2028 at 3.95%	390,759		393,940		389,610		361,232
Senior Unsecured Notes, due 2029 at 4.95%	417,307		434,248		—		—
Senior Unsecured Notes, due 2030 at 4.375%	388,522		394,788		387,389		367,110
Total financial liabilities	$	5,287,658	$	5,499,211	$	3,598,295	$	3,583,452

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

At December 31, 2019 and 2018, we estimated the fair values of our senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 2 inputs).

F-39

Service Properties Trust

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2019

(dollars in millions)

	Initial Cost to Company				Costs Capitalized Subsequent to Acquisition								Gross Amount at which Carried at Close of Period
	Land		Building & Improvements		Improvements		Impairment			Cost Basis Adjustment(1)			Land		Building & Improvements		Total(2)
Hotel Properties
71 Courtyards	$	125	$	643	$	257	$	(8	)	$	(10	)	$	125	$	882	$	1,007
7 Royal Sonesta	106		518		179		(16		)	(9		)	106		672		778
35 Residence Inns	68		326		145		(3		)	(3		)	68		465		533
11 Crowne Plaza	72		374		129		—			—			72		503		575
39 Sonesta ES Suites	80		297		203		(35		)	(27		)	80		438		518
61 Candlewood Hotels	71		383		77		(14		)	(7		)	71		439		510
20 Staybridge Suites	53		224		33		—			—			53		257		310
7 Sonesta Hotels & Resorts	65		198		113		(15		)	(5		)	65		291		356
5 Kimpton Hotels	98		347		11		—			—			98		358		456
4 Wyndham	12		90		42		(66		)	(8		)	9		61		70
22 Hyatt Place	24		185		16		—			—			24		201		225
3 InterContinental	14		100		128		—			—			14		228		242
6 Radisson	10		165		43		—			—			10		208		218
2 Marriott Full Service	10		69		53		—			—			10		122		132
12 TownePlace Suites	17		78		24		(15		)	(18		)	17		69		86
3 Holiday Inn	7		33		30		—			—			7		63		70
3 Country Inn and Suites	3		35		4		—			—			3		39		42
16 Hawthorn Suites	14		77		19		(33		)	(18		)	14		45		59
2 SpringHill Suites	3		15		6		—			—			3		21		24
Net Lease Properties
134 TravelCenters of America	568		939		683		—			(2		)	568		1,620		2,188
45 Petro Stopping Centers	260		522		25		—			—			260		547		807
14 AMC Theatres	37		69		1		—			—			37		70		107
14 The Great Escape	19		63		—		—			—			19		63		82
3 Life Time Fitness	17		55		—		—			—			17		55		72
5 Buehler's Fresh Foods	10		49		—		—			—			10		49		59
62 Pizza Hut	16		37		—		—			—			16		37		53
59 Heartland Dental	11		36		—		—			—			11		36		47
10 Norms	22		24		—		—			—			22		24		46
23 Express Oil Change	5		36		—		—			—			5		36		41
6 Regal Cinemas	9		25		—		—			—			9		25		34
3 Flying J Travel Plaza	6		32		—		—			—			6		32		38
4 Courthouse Athletic Club	5		28		—		—			—			5		28		33
1 Mills Fleet Farm	3		27		—		—			—			3		27		30
45 Church's Chicken	7		25		—		—			—			7		25		32
2 Big Al's	3		28		—		—			—			3		28		31
4 B&B Theatres	12		15		—		—			—			12		15		27
6 America's Auto Auction	7		23		—		—			—			7		23		30
21 Burger King	9		22		—		—			—			9		22		31
19 Hardee's	4		24		—		—			—			4		24		28
16 Martin's	7		20		—		—			—			7		20		27
3 Mealey's Furniture	4		27		—		—			—			4		27		31
20 Popeye's Chicken & Biscuits	8		18		—		—			—			8		18		26
19 Arby's	7		19		—		—			—			7		19		26
4 Creme de la Creme	7		18		—		—			—			7		18		25
5 Mister Car Wash	2		19		—		—			—			2		19		21
6 United Supermarkets	4		17		—		—			—			4		17		21
6 Golden Corral	6		16		—		—			—			6		16		22
2 Gold's Gym	3		17		—		—			—			3		17		20
28 Uncle Ed's Oil Shoppe	6		12		—		—			—			6		12		18

S-1

	Initial Cost to Company		Costs Capitalized Subsequent to Acquisition			Gross Amount at which Carried at Close of Period
	Land	Building & Improvements	Improvements	Impairment	Cost Basis Adjustment(1)	Land	Building & Improvements	Total(2)
1 CarMax	5	13	—	—	—	5	13	18
1 Dave & Buster's	3	11	—	—	—	3	11	14
5 Pike Nursery	8	6	—	—	—	8	6	14
6 Rite Aid	4	10	—	—	—	4	10	14
2 HHI-Formtech	3	10	—	—	—	3	10	13
3 Max & Erma's	3	9	—	—	—	3	9	12
4 Bonfire and Axels	2	12	—	—	—	2	12	14
10 Taco Bell	3	10	—	—	—	3	10	13
1 Baptist Emergency Hospital	2	8	—	—	—	2	8	10
5 Fuddruckers	4	6	—	—	—	4	6	10
2 YouFit	3	7	—	—	—	3	7	10
1 Cermak Fresh Market	2	7	—	—	—	2	7	9
5 Lerner and Rowe	1	8	—	—	—	1	8	9
1 Kohl's	2	6	—	—	—	2	6	8
2 Eddie Merlot's	2	8	—	—	—	2	8	10
1 Columbus Preparatory Academy	1	8	—	—	—	1	8	9
1 LA Fitness	1	7	—	—	—	1	7	8
2 Sanford's Grub & Pub	1	10	—	—	—	1	10	11
1 HOM Furniture	1	8	—	—	—	1	8	9
13 Core & Main	4	5	—	—	—	4	5	9
1 Austin's Park n' Pizza	—	8	—	—	—	—	8	8
1 Columbus Arts & Tech Academy	1	6	—	—	—	1	6	7
1 Marcus Theaters	3	5	1	—	—	3	6	9
4 Meineke Car Care Center	3	6	—	—	—	3	6	9
1 Academy Sports + Outdoors	1	6	—	—	—	1	6	7
2 Diagnostic Health	1	6	—	—	—	1	6	7
2 Blue Rhino	3	4	—	—	—	3	4	7
2 Walgreens	1	6	—	—	—	1	6	7
3 Oregano's Pizza Bistro	1	6	—	—	—	1	6	7
5 Brookshire Brothers	1	5	—	—	—	1	5	6
3 Krispy Kreme	2	5	—	—	—	2	5	7
9 Sonic Drive-In	3	4	—	—	—	3	4	7
2 10 Box	2	3	—	—	—	2	3	5
1 RGB Eye Associates	1	4	—	—	—	1	4	5
3 Jack's Family Restaurant	2	4	—	—	—	2	4	6
2 Texas Roadhouse	3	4	—	—	—	3	4	7
2 Flying Star Cafe	1	5	—	—	—	1	5	6
1 Adult & Pediatric Orthopedics	1	4	—	—	—	1	4	5
1 Jack Stack Barbeque	1	5	—	—	—	1	5	6
1 Multi-Tenant	1	4	—	—	—	1	4	5
3 Wendy's	1	5	—	—	—	1	5	6
2 Bricktown Brewery	1	4	—	—	—	1	4	5
2 Bondcote	1	5	—	—	—	1	5	6
1 ConForm Automotive	2	3	—	—	—	2	3	5
1 Planet Fitness	1	4	—	—	—	1	4	5
3 Focus Child Development Center	1	3	—	—	—	1	3	4
7 Hughes Supply	2	4	—	—	—	2	4	6
6 Long John Silver's	2	3	—	—	—	2	3	5
1 Boozman-Hof	2	2	—	—	—	2	2	4
2 Gerber Collision & Glass	1	4	—	—	—	1	4	5
1 Humperdinks	1	4	—	—	—	1	4	5
2 HD Supply White Cap	2	3	—	—	—	2	3	5
2 Famous Dave's	1	3	—	—	—	1	3	4
1 Caldwell Country Chevrolet	—	4	—	—	—	—	4	4
1 Sportsman's Warehouse	1	3	—	—	—	1	3	4

S-2

	Initial Cost to Company				Costs Capitalized Subsequent to Acquisition								Gross Amount at which Carried at Close of Period
	Land		Building & Improvements		Improvements		Impairment			Cost Basis Adjustment(1)			Land		Building & Improvements		Total(2)
1 Renn Kirby Chevrolet Buick	1		3		—		—			—			1		3		4
1 Ashley Furniture	1		3		—		—			—			1		3		4
1 Metaldyne BSM	—		4		—		—			—			—		4		4
3 Anixter	1		3		—		—			—			1		3		4
2 Primanti Bros.	1		3		—		—			—			1		3		4
1 Rainbow Kids Clinic	1		3		—		—			—			1		3		4
1 Joe's Crab Shack	1		3		—		—			—			1		3		4
1 Applebee's	1		2		—		—			—			1		2		3
1 Tractor Supply	—		3		—		—			—			—		3		3
2 Orscheln Farm and Home	1		2		—		—			—			1		2		3
1 Providence Athletic Club	1		3		—		—			—			1		3		4
17 Vacant	—		3		—		—			—			—		3		3
1 Sunbelt Supply LP	—		3		—		—			—			—		3		3
1 Ojos Locos Sports Cantina	1		2		—		—			—			1		2		3
1 Black Angus Steakhouse	1		2		—		—			—			1		2		3
2 Hooters	1		1		—		—			—			1		1		2
1 Bridgestone Tire	1		1		—		—			—			1		1		2
1 Kerry's Car Care	1		2		—		—			—			1		2		3
1 Buffalo Wild Wings	1		2		—		—			—			1		2		3
2 KFC	—		2		—		—			—			—		2		2
1 What the Buck	—		3		—		—			—			—		3		3
2 Taco Bueno	1		1		—		—			—			1		1		2
1 Slim Chickens	1		2		—		—			—			1		2		3
2 Rick Johnson Auto & Tire	1		2		—		—			—			1		2		3
2 Monterey's Tex Mex	1		2		—		—			—			1		2		3
2 Affordable Care, Inc.	1		1		—		—			—			1		1		2
2 Dollar General	—		2		—		—			—			—		2		2
1 Red Robin Gourmet Burgers	1		1		—		—			—			1		1		2
3 Rally's	1		1		—		—			—			1		1		2
1 Pier1 Imports	1		1		—		—			—			1		1		2
1 SRS Distribution	—		1		—		—			—			—		1		1
1 The Atlanta Center for Foot & Ankle Surgery	—		1		—		—			—			—		1		1
1 Bru Burger Bar	—		1		—		—			—			—		1		1
1 Old Mexico Cantina	—		1		—		—			—			—		1		1
1 Touchstone Imaging	—		1		—		—			—			—		1		1
1 Solea Mexican Grill	1		1		—		—			—			1		1		2
1 Harbor Court	2		7		—		—			—			2		7		9
1 O'Reilly Auto Parts	—		1		—		—			—			—		1		1
1 Aggregate Industries	1		—		—		—			—			1		—		1
1 NAPA Auto Parts	—		1		—		—			—			—		1		1
1 Jack in the Box	—		1		—		—			—			—		1		1
1 Off the Hook Seafood & More	—		—		—		—			—			—		—		—
1 Consolidated Pipe	—		—		—		—			—			—		—		—
1 Family Dollar Stores	—		—		—		—			—			—		—		—
	2,069		6,824		2,222		(205		)	(107		)	2,066		8,737		10,803
Assets Held for Sale
17 Net lease properties																	(87		)
Total (1,145 properties)	$	2,069	$	6,824	$	2,222	$	(205	)	$	(107	)	$	2,066	$	8,737	$	10,716

(1) Represents reclassifications between accumulated depreciation and building & improvements made to record certain properties at fair value in accordance with GAAP.

(2) Excludes $588 of personal property classified in our consolidated balance sheets as furniture, fixtures and equipment.

S-3

Service Properties Trust

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2019

(dollars in millions)

	Accumulated Depreciation(1)			Date of Construction	Date Acquired	Life on which Depreciation in Latest Income Statement is Computed
Hotel Properties
71 Courtyards	$	(448	)	1987 through 2000	1995 through 2003	10 - 40 Years
35 Residence Inns	(227		)	1989 through 2002	1996 through 2005	10 - 40 Years
61 Candlewood Hotels	(205		)	1996 through 2000	1997 through 2003	10 - 40 Years
20 Staybridge Suites	(113		)	1989 through 2009	1996 through 2018	10 - 40 Years
22 Hyatt Place	(105		)	1992 through 2000	1997 through 2002	10 - 40 Years
7 Royal Sonesta	(122		)	1913 through 1987	2005 through 2017	10 - 40 Years
11 Crowne Plaza	(98		)	1971 through 1988	2006 and 2017	10 - 40 Years
39 Sonesta ES Suites	(88		)	1984 through 2000	1996 through 2017	10 - 40 Years
3 InterContinental	(76		)	1924 through 1989	2006	10 - 40 Years
2 Marriott Full Service	(61		)	1972 through 1995	1998 through 2001	10 - 40 Years
5 Radisson	(64		)	1987 through 1990	1996 through 2018	10 - 40 Years
4 Wyndham Hotels and Resorts	(9		)	1960 through 1988	2006 through 2013	10 - 40 Years
7 Sonesta Hotels and Resorts	(51		)	1924 through 1999	2005 through 2018	10 - 40 Years
4 Country Inn and Suites	(17		)	1987 through 1997	1996 and 2005	10 - 40 Years
12 TownePlace Suites	(26		)	1997 through 2000	1998 through 2001	10 - 40 Years
3 Holiday Inn	(15		)	1984 through 2001	2006	10 - 40 Years
16 Hawthorn Suites	(14		)	1996 through 2000	1997 through 2006	10 - 40 Years
3 Kimpton Hotels	(20		)	1901 through 1927	2016 through 2019	10 - 40 Years
2 SpringHill Suites	(9		)	1997 through 2000	2000 through 2001	10 - 40 Years
Net Lease Properties
134 TravelCenters of America	(745		)	1962 through 2017	2007 through 2017	10 - 40 Years
45 Petro Stopping Centers	(321		)	1975 through 2017	2007 through 2017	10 - 40 Years
14 AMC Theatres	(1		)	1993 through 2008	2019	10 - 40 Years
14 The Great Escape	(1		)	1986 through 2007	2019	10 - 40 Years
3 Life Time Fitness	(1		)	1987 through 2012	2019	10 - 40 Years
5 Buehler's Fresh Foods	(1		)	1985 through 2000	2019	10 - 40 Years
62 Pizza Hut	(1		)	1972 through 2006	2019	10 - 40 Years
59 Heartland Dental	(1		)	1920 through 2005	2019	10 - 40 Years
10 Norms	(1		)	1957 through 2014	2019	10 - 40 Years
23 Express Oil Change	(1		)	1970 through 2001	2019	10 - 40 Years
6 Regal Cinemas	(1		)	2005 through 2010	2019	10 - 40 Years
3 Flying J Travel Plaza	(1		)	2001	2019	10 - 40 Years
4 Courthouse Athletic Club	(1		)	1997 through 2001	2019	10 - 40 Years
1 Mills Fleet Farm	(1		)	1979	2019	10 - 40 Years
45 Church's Chicken	(1		)	1968 through 1985	2019	10 - 40 Years
2 Big Al's	(1		)	2006 through 2010	2019	10 - 40 Years
4 B&B Theatres	(1		)	1998 through 2004	2019	10 - 40 Years
6 America's Auto Auction	(1		)	1965 through 2005	2019	10 - 40 Years
21 Burger King	(1		)	1977 through 2004	2019	10 - 40 Years
19 Hardee's	—			1969 through 1994	2019	10 - 40 Years
16 Martin's	—			1962 through 2003	2019	10 - 40 Years
3 Mealey's Furniture	—			1987 through 2004	2019	10 - 40 Years

S-4

	Accumulated Depreciation(1)	Date of Construction	Date Acquired	Life on which Depreciation in Latest Income Statement is Computed
20 Popeye's Chicken & Biscuits	—	1968 through 2004	2019	10 - 40 Years
19 Arby's	—	1969 through 2005	2019	10 - 40 Years
4 Creme de la Creme	—	1999 through 2008	2019	10 - 40 Years
5 Mister Car Wash	—	1960 through 2002	2019	10 - 40 Years
6 United Supermarkets	—	1979 through 1997	2019	10 - 40 Years
6 Golden Corral	—	1993 through 2000	2019	10 - 40 Years
2 Gold's Gym	—	1983 through 2007	2019	10 - 40 Years
28 Uncle Ed's Oil Shoppe	—	1959 through 1999	2019	10 - 40 Years
1 CarMax	—	2005	2019	10 - 40 Years
1 Dave & Buster's	—	1992	2019	10 - 40 Years
5 Pike Nursery	—	1970 through 1996	2019	10 - 40 Years
6 Rite Aid	—	1901 through 2000	2019	10 - 40 Years
2 HHI-Formtech	—	1952	2019	10 - 40 Years
3 Max & Erma's	—	1990 through 1997	2019	10 - 40 Years
4 Bonfire and Axels	—	1995 through 1996	2019	10 - 40 Years
10 Taco Bell	—	1982 through 2010	2019	10 - 40 Years
1 Baptist Emergency Hospital	—	2013	2019	10 - 40 Years
5 Fuddruckers	—	1994 through 1995	2019	10 - 40 Years
2 YouFit	—	2007 through 2008	2019	10 - 40 Years
1 Cermak Fresh Market	—	1989	2019	10 - 40 Years
5 Lerner and Rowe	—	1973 through 2007	2019	10 - 40 Years
1 Kohl's	—	1986	2019	10 - 40 Years
2 Eddie Merlot's	—	1997 through 2003	2019	10 - 40 Years
1 Columbus Preparatory Academy	—	2004	2019	10 - 40 Years
1 LA Fitness	—	2012	2019	10 - 40 Years
2 Sanford's Grub & Pub	—	1928 through 2003	2019	10 - 40 Years
1 HOM Furniture	—	1003	2019	10 - 40 Years
13 Core & Main	—	1972 through 2001	2019	10 - 40 Years
1 Austin's Park n' Pizza	—	2003	2019	10 - 40 Years
1 Columbus Arts & Tech Academy	—	1980	2019	10 - 40 Years
1 Marcus Theaters	—	1999	2019	10 - 40 Years
4 Meineke Car Care Center	—	1999 through 2000	2019	10 - 40 Years
1 Academy Sports + Outdoors	—	2016	2019	10 - 40 Years
2 Diagnostic Health	—	1985 through 1997	2019	10 - 40 Years
2 Blue Rhino	—	2004	2019	10 - 40 Years
2 Walgreens	—	1999 through 2000	2019	10 - 40 Years
3 Oregano's Pizza Bistro	—	1964 through 2006	2019	10 - 40 Years
5 Brookshire Brothers	—	1990 through 1999	2019	10 - 40 Years
3 Krispy Kreme	—	2000 through 2004	2019	10 - 40 Years
9 Sonic Drive-In	—	1987 through 2010	2019	10 - 40 Years
2 10 Box	—	1994	2019	10 - 40 Years
1 RGB Eye Associates	—	2013	2019	10 - 40 Years
3 Jack's Family Restaurant	—	2008 through 2016	2019	10 - 40 Years
2 Texas Roadhouse	—	2003 through 2005	2019	10 - 40 Years
2 Flying Star Cafe	—	1994 through 1999	2019	10 - 40 Years
1 Adult & Pediatric Orthopedics	—	1991	2019	10 - 40 Years
1 Jack Stack Barbeque	—	1983	2019	10 - 40 Years

S-5

	Accumulated Depreciation(1)	Date of Construction	Date Acquired	Life on which Depreciation in Latest Income Statement is Computed
1 Multi-Tenant	—	2001	2019	10 - 40 Years
3 Wendy's	—	1984 through 1989	2019	10 - 40 Years
2 Bricktown Brewery	—	1904 through 1984	2019	10 - 40 Years
2 Bondcote	—	1967 through 1985	2019	10 - 40 Years
1 ConForm Automotive	—	1987	2019	10 - 40 Years
1 Planet Fitness	—	2007	2019	10 - 40 Years
3 Focus Child Development Center	—	1965 through 1998	2019	10 - 40 Years
7 Hughes Supply	—	1993	2019	10 - 40 Years
6 Long John Silver's	—	1972 through 1987	2019	10 - 40 Years
1 Boozman-Hof	—	1988	2019	10 - 40 Years
2 Gerber Collision & Glass	—	2001 through 2002	2019	10 - 40 Years
1 Humperdinks	—	1995	2019	10 - 40 Years
2 HD Supply White Cap	—	1990 through 2001	2019	10 - 40 Years
2 Famous Dave's	—	1997 through 1999	2019	10 - 40 Years
1 Caldwell Country Chevrolet	—	2000	2019	10 - 40 Years
1 Sportsman's Warehouse	—	1983	2019	10 - 40 Years
1 Renn Kirby Chevrolet Buick	—	2005	2019	10 - 40 Years
1 Ashley Furniture	—	1973	2019	10 - 40 Years
1 Metaldyne BSM	—	1960	2019	10 - 40 Years
3 Anixter	—	1984 through 1999	2019	10 - 40 Years
2 Primanti Bros.	—	2014	2019	10 - 40 Years
1 Rainbow Kids Clinic	—	2011	2019	10 - 40 Years
1 Joe's Crab Shack	—	1997	2019	10 - 40 Years
1 Applebee's	—	1996	2019	10 - 40 Years
1 Tractor Supply	—	2007	2019	10 - 40 Years
2 Orscheln Farm and Home	—	1977 through 1986	2019	10 - 40 Years
1 Providence Athletic Club	—	1980	2019	10 - 40 Years
17 Vacant	—	1962 through 2007	2019	10 - 40 Years
1 Sunbelt Supply LP	—	1984	2019	10 - 40 Years
1 Ojos Locos Sports Cantina	—	1993	2019	10 - 40 Years
1 Black Angus Steakhouse	—	1996	2019	10 - 40 Years
2 Hooters	—	1977 through1994	2019	10 - 40 Years
1 Bridgestone Tire	—	1998	2019	10 - 40 Years
1 Kerry's Car Care	—	2015	2019	10 - 40 Years
1 Buffalo Wild Wings	—	2014	2019	10 - 40 Years
2 KFC	—	1977 through 2006	2019	10 - 40 Years
1 What the Buck	—	1958	2019	10 - 40 Years
2 Taco Bueno	—	1991 through 2003	2019	10 - 40 Years
1 Slim Chickens	—	2013	2019	10 - 40 Years
2 Monterey's Tex Mex	—	1979 through 1997	2019	10 - 40 Years
2 Affordable Care, Inc.	—	2008 through 2010	2019	10 - 40 Years
2 Dollar General	—	2012 through 2015	2019	10 - 40 Years
1 Red Robin Gourmet Burgers	—	1995	2019	10 - 40 Years
3 Rally's	—	1990 through 1992	2019	10 - 40 Years
1 Pier1 Imports	—	1996	2019	10 - 40 Years
1 SRS Distribution	—	1975	2019	10 - 40 Years
1 The Atlanta Center for Foot & Ankle Surgery	—	1963	2019	10 - 40 Years

S-6

	Accumulated Depreciation(1)			Date of Construction	Date Acquired	Life on which Depreciation in Latest Income Statement is Computed
1 Bru Burger Bar	—			1996	2019	10 - 40 Years
1 Old Mexico Cantina	—			2007	2019	10 - 40 Years
1 Touchstone Imaging	—			1992	2019	10 - 40 Years
1 Solea Mexican Grill	—			1993	2019	10 - 40 Years
1 Harbor Court	—			1986	2019	10 - 40 Years
1 O'Reilly Auto Parts	—			2006	2019	10 - 40 Years
1 Aggregate Industries	—			1930	2019	10 - 40 Years
1 NAPA Auto Parts	—			2001	2019	10 - 40 Years
1 Jack in the Box	—			1992	2019	10 - 40 Years
1 Off the Hook Seafood & More	—			2007	2019	10 - 40 Years
1 Consolidated Pipe	—			1987	2019	10 - 40 Years
1 Family Dollar Stores	—			1988	2019	10 - 40 Years
1 Fazoli's	—			1982	2019	10 - 40 Years
	(2,851		)
Assets Held for Sale
17 Net Lease Properties	—
Total (1,145 properties)	$	(2,851	)

(1) Excludes accumulated depreciation of $276 related to personal property classified in our consolidated balance sheets as furniture, fixtures and equipment.

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SERVICE PROPERTIES TRUST

NOTES TO SCHEDULE III

December 31, 2019

(dollars in thousands)

(A) The change in total cost of properties for the period from January 1, 2017 to December 31, 2019 is as follows:

	2019			2018			2017
Balance at beginning of year	$	8,820,346		$	8,778,907		$	8,100,844
Additions: acquisitions and capital expenditures	1,983,380			324,227			743,340
Dispositions	—			(62,923		)	(71,054		)
Reclassification of properties held for sale	(87,493		)	(219,865		)	5,777
Balance at close of year	$	10,716,233		$	8,820,346		$	8,778,907

(B) The change in accumulated depreciation for the period from January 1, 2017 to December 31, 2019 is as follows:

	2019			2018			2017
Balance at beginning of year	$	2,574,297		$	2,409,416		$	2,176,537
Additions: depreciation expense	305,441			304,224			278,353
Dispositions	(28,617		)	(62,923		)	(45,474		)
Reclassification of properties held for sale	—			(76,420		)	—
Balance at close of year	$	2,851,121		$	2,574,297		$	2,409,416

(C) The aggregate cost tax basis for federal income tax purposes of our real estate properties was $8,414,576 on December 31, 2019.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Service Properties Trust
By:	/s/ John G. Murray
	John G. Murray President and Chief Executive Officer

Dated: February 28, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ John G. Murray	Managing Trustee, President and Chief Executive Officer	February 28, 2020
John G. Murray
/s/ Brian E. Donley	Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)	February 28, 2020
Brian E. Donley
/s/ Donna D. Fraiche	Independent Trustee	February 28, 2020
Donna D. Fraiche
/s/ John L. Harrington	Independent Trustee	February 28, 2020
John L. Harrington
/s/ William A. Lamkin	Independent Trustee	February 28, 2020
William A. Lamkin
/s/ Adam D. Portnoy	Managing Trustee	February 28, 2020
Adam D. Portnoy

EX-4.1

Exhibit 4.1 SVC COMMON SHARES COMMON SHARES $.01 PAR VALUE PER SHARE $.01 PAR VALUE PER SHARE SEE REVERSE FOR IMPORTANT NOTICE A MARYLAND REAL ESTATE INVESTMENT TRUST ON TRANSFER RESTRICTIONS AND OTHER INFORMATION CUSIP 81761L 10 2 THIS CERTIFIES THAT is the registered holder of BY COUNTERSIGNED AND REGISTERED: FULLY PAID AND NONASSESSABLE COMMON SHARES OF BENEFICIAL INTEREST IN EQUINITI TRUST COMPANY SERVICE PROPERTIES TRUST a Maryland real estate investment trust (the “Trust”), transferable on the books of the Trust by the holder hereof in person or by its duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate and the shares evidenced hereby are issued and shall be held subject to all of the provisions of theCOMMON Declaration of Trust and Bylaws of the Trust and any amendments thereto. The holder of this Certificate and every transferee or assignee hereof by accepting or holding the same agrees to be bound by all of the provisions of the Declaration of Trust and Bylaws of the Trust, as amended from time to time. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. IN WITNESS WHEREOF, the Trust has caused this Certificate to be executed on its behalf by its duly authorized officers. AUTHORIZED SIGNATURE Dated: TRANSFER AGENT AND REGISTRAR PRESIDENT AND CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER AND TREASURER THE DECLARATION OF TRUST PROVIDES THAT THE NAME “SERVICE PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION OF TRUST, COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND NO TRUSTEE, SHAREHOLDER, EMPLOYEE OR AGENT OF THE TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, IN CONNECTION WITH THIS INSTRUMENT. ALL PERSONS DEALING WITH THE TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF THE TRUST FOR PAYMENT OF ANY SUM OR PERFORMANCE OF ANY OBLIGATION. AMERICAN FINANCIAL PRINTING INCORPORATED – MINNEAPOLIS

SERVICE PROPERTIES TRUST IMPORTANT NOTICE PURSUANT AND SUBJECT TO THE TERMS OF THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE TRUST, AS AMENDED FROM TIME TO TIME (THE “DECLARATION”), THE TRUST HAS THE AUTHORITY TO CREATE ONE OR MORE ADDITIONAL CLASSES OR SERIES OF SHARES AND ISSUE ADDITIONAL SHARES OF ANY EXISTING CLASS OR SERIES OF SHARES. THE TRUST WILL FURNISH A FULL STATEMENT OF (i) THE AUTHORITY OF THE TRUST TO CREATE ADDITIONAL CLASSES OR SERIES OF SHARES AND ISSUE ADDITIONAL SHARES OF ANY EXISTING CLASS OR SERIES OF SHARES, (ii) THE TERMS OF ANY EXISTING CLASS OR SERIES OF SHARES, AND (iii) SUCH OTHER INFORMATION AS IS REQUIRED BY APPLICABLE LAW, WITHOUT CHARGE TO ANY SHAREHOLDER UPON REQUEST TO THE SECRETARY OF THE TRUST. THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON OWNERSHIP AND TRANSFER WHICH ARE OR MAY HEREAFTER BE CONTAINED IN THE DECLARATION OR IN THE AMENDED AND RESTATED BYLAWS ADOPTED BY THE TRUST, AS AMENDED FROM TIME TO TIME (THE “BYLAWS”), INCLUDING PROVISIONS WHICH PROHIBIT THE OWNERSHIP OF MORE THAN 9.8% OF ANY CLASS OR SERIES OF THE TRUST’S SHARES OF BENEFICIAL INTEREST BY ANY PERSON OR GROUP. THIS DESCRIPTION OF THE RESTRICTIONS UPON OWNERSHIP OR TRANSFER OF THE TRUST’S SECURITIES IS NOT COMPLETE. A MORE COMPLETE DESCRIPTION OF THESE RESTRICTIONS AND OF VARIOUS RIGHTS AND OBLIGATIONS OF SHAREHOLDERS APPEARS IN THE DECLARATION OR BYLAWS, AS APPLICABLE, AND IN CERTAIN OTHER AGREEMENTS WHICH MAY FROM TIME TO TIME BE ENTERED INTO BY THE TRUST AFFECTING THE RIGHTS AND OBLIGATIONS OF SHAREHOLDERS. COPIES OF THE DECLARATION, BYLAWS AND AGREEMENTS AFFECTING THE RIGHTS AND OBLIGATIONS OF SHAREHOLDERS AS IN EFFECT FROM TIME TO TIME WILL BE SENT WITHOUT CHARGE TO ANY SHAREHOLDER UPON REQUEST TO THE SECRETARY OF THE TRUST. THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE RENEWED RIGHTS AGREEMENT DATED AS OF MAY 15, 2007 BETWEEN THE TRUST AND WELLS FARGO BANK, NATIONAL ASSOCIATION, AS SUCCESSOR RIGHTS AGENT, AND ANY AMENDMENTS OR RENEWALS THEREOF (THE “RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE TRUST. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE TRUST WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF MAILING, WITHOUT CHARGE PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) BY ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON, OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE. The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as though they were written out in full according to applicable laws or regulations: UTMA – ____________ Custodian ____________ TEN COM – as tenants in common (Cust) (Minor) TEN ENT – as tenants by entireties under Uniform Transfers to Minors JT TEN – as joint tenants with right of survivorship Act ________________________________ and not as tenants in common (State) Additional abbreviations may also be used though not in above list. For value received ________________________________________________ hereby sell, assign, and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE) Shares of beneficial interest represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said shares on the books of the within-named Trust with full power of substitution in the premises. Dated ________________ X X NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. SIGNATURE GUARANTEED ALL GUARANTEES MUST BE MADE BY A FINANCIAL INSTITUTION (SUCH AS A BANK OR BROKER) WHICH IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM (“STAMP”), THE NEW YORK STOCK EXCHANGE, INC. MEDALLION SIGNATURE PROGRAM (“MSP”), OR THE STOCK EXCHANGES MEDALLION PROGRAM (“SEMP”) AND MUST NOT BE DATED. GUARANTEES BY A NOTARY PUBLIC ARE NOT ACCEPTABLE.

EX-4.18

Exhibit 4.18

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12

OF THE SECURITIES EXCHANGE ACT OF 1934

As of February 27, 2020, Service Properties Trust (formerly known as Hospitality Properties Trust) (the “Company,” “we,” “us” or “our”) had one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Common Shares of Beneficial Interest,$.01 par value per share (the “common shares”). The common shares are listed on The Nasdaq Stock Market LLC (“Nasdaq”).

DESCRIPTION OF SHARES OF BENEFICIAL INTEREST

The following description of the terms of our shares of beneficial interest is a summary only. This summary is not complete and is qualified in its entirety by reference to the Company’s declaration of trust and bylaws and applicable Maryland law, including but not limited to provisions of Maryland law applicable to Maryland real estate investment trusts (the “Maryland REIT Law”). The Company’s declaration of trust and bylaws are filed as exhibits to this Annual Report on Form 10-K.

General

Our declaration of trust authorizes us to issue up to an aggregate of 300,000,000 shares of beneficial interest, of which 200,000,000 are currently designated as common shares and 100,000,000 are currently designated as preferred shares of beneficial interest, without par value (“preferred shares”). As of February 27, 2020, we had 164,561,654 common shares issued and outstanding. As of February 27, 2020, 3,450,000 of our preferred shares were designated as 8 7/8% Series B Cumulative Redeemable Preferred Shares, none of which were issued and outstanding, 13,800,000 of our preferred shares were designated as 7% Series C Cumulative Redeemable Preferred Shares, none of which were issued and outstanding, and 12,650,000 of our preferred shares were designated as 7 1/8% Series D Cumulative Redeemable Preferred Shares, none of which were issued and outstanding.

Our declaration of trust contains a provision permitting our Board of Trustees, without any action by our shareholders, to amend our declaration of trust to increase or decrease the total number of shares of beneficial interest or the number of shares of any class or series that we have authority to issue. Our declaration of trust further authorizes our Board of Trustees to reclassify any unissued shares from time to time by setting the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of preferred shares or any new class or series of shares created by our Board of Trustees.

Common Shares

Voting rights.Subject to the provisions of our declaration of trust regarding the restriction on the transfer of shares of beneficial interest, each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders, including the election of Trustees. Holders of our common shares do not have cumulative voting rights in the election of Trustees. Whenever shareholders are required or permitted to take any action by a vote, the action may only be taken by a vote at a shareholders meeting. Under our bylaws, shareholders do not have the right to take any action by written consent. With respect to matters brought before a meeting of shareholders other than the election of Trustees, except where a different voting standard is required by any applicable law, the listing requirements of the principal securities exchange on which our common shares are listed or a specific provision of our declaration of trust or bylaws, a majority of all common shares entitled to vote at the meeting shall be required to approve the matter.

Under the Maryland REIT Law, a Maryland real estate investment trust (“REIT”) generally cannot dissolve, amend its declaration of trust, convert or merge unless these actions are approved by at least two thirds of all shares entitled to be cast on the matter. The Maryland REIT Law allows a trust's declaration of trust to set a lower percentage, so long as the percentage is not less than a majority of the votes entitled to be cast on the matter. Our

declaration of trust provides for approval of an amendment of the declaration of trust (except amendments to certain provisions of the declaration of trust) by a majority of shares entitled to vote on these actions provided the amendment has been approved by a two thirds vote of our Board of Trustees. Under the Maryland REIT Law, a declaration of trust may permit the trustees by a two thirds vote to amend the declaration of trust from time to time to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), or the Maryland REIT Law without the affirmative vote or written consent of the shareholders. Our declaration of trust permits this type of action by our Board of Trustees.

Board of Trustees. Our Board of Trustees is divided into three classes. At each annual meeting, shareholders elect the successors of the class of Trustees whose term expires at that meeting for a term expiring at the annual meeting held in the third year following the year of their election. The classified board provision could have the effect of making the replacement of incumbent Trustees more time consuming and difficult. At least two annual meetings of shareholders will generally be required to effect a change in a majority of our Board of Trustees.

Except as may be mandated by any applicable law or the listing requirements of the principal exchange on which our common shares are listed, and subject to the voting rights of any class or series of our shares of beneficial interest which may be hereafter created, the election of a Trustee in an uncontested election, which is an election in which the number of nominees for election equals (or is less than) the number to be elected at the meeting, shall be by the affirmative vote of shares of beneficial interest representing a majority of the total number of votes cast and the election of a Trustee in a contested election shall be by a plurality of the votes cast by shares of beneficial interest then outstanding and entitled to vote thereon.

In case of failure to elect Trustees at an annual meeting of shareholders, the incumbent Trustees will hold over and continue to direct the management of our business and affairs until they resign or their successors are elected and qualify. Any vacancy on our Board of Trustees may be filled only by a majority of the remaining Trustees, even if the remaining Trustees do not constitute a quorum, for the remaining term of the class in which the vacancy exists and until a successor is elected and qualifies. Our declaration of trust and bylaws provide that a Trustee may be removed only for cause by the affirmative vote either of all the remaining Trustees or of the holders of not less than two thirds of our common shares then outstanding and entitled to vote generally in the election of Trustees. These provisions preclude shareholders from removing our incumbent Trustees unless for cause and they can obtain the requisite affirmative vote of shares.

Distribution rights.Subject to the preferential rights of any other class or series of shares then outstanding or which may be issued, and to the ownership restrictions described in our declaration of trust and bylaws, all of our common shares are entitled to receive distributions on our common shares if, as and when authorized by our Board of Trustees and declared by us out of assets legally available for distribution.

Liquidation rights.Subject to the preferential rights of any other class or series of shares then outstanding or which may be issued, and to the ownership restrictions described in our declaration of trust and bylaws, all of our common shares are entitled to share ratably in our assets legally available for distribution to our shareholders in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all of our known debts and liabilities.

Registration rights.Some of our shareholders have certain demand registration rights and piggyback and other registration rights with respect to our common shares held by them, as described from time to time in our periodic reports filed with the Securities and Exchange Commission.

Other rights and preferences.Holders of our common shares have no preference, conversion, exchange, sinking fund, redemption or appraisal rights, or preemptive rights to subscribe for any of our securities.

Preferred Shares

Pursuant to our declaration of trust, our Board of Trustees, without any action by our shareholders, may issue preferred shares from time to time, in one or more classes or series, with the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption of any preferred shares as determined by our Board of Trustees from time to time. The

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issuance of preferred shares, the issuance of rights to purchase preferred shares or the possibility of the issuance of preferred shares or such rights could have the effect of delaying or preventing a change in our control. In addition, the rights of holders of common shares will be subject to, and may be adversely affected by, the rights of holders of any preferred shares that we have issued or may issue in the future.

Restrictions on Transfer and Ownership of Shares

Our declaration of trust provides that our Board of Trustees has the power to refuse to permit a transfer of shares if it determines such transfer would jeopardize our qualification for taxation as a REIT under the Code. In connection with the foregoing, if our Board of Trustees shall, at any time, be of the opinion that (1) direct or indirect ownership (as defined in our declaration of trust) of shares representing more than 9.8% of the number, value or voting power of the total of our outstanding shares has or may become concentrated in the hands of one beneficial owner, other than specified excepted persons, (2) our shares would be owned by fewer than 100 persons, or (3) we would be ‘closely held’ under Section 856(h) of the Code, our Board of Trustees shall have the power and right to (a) refuse to transfer or issue such excess shares to any person whose acquisition of such shares would, in the opinion of our Board of Trustees, result in the direct or indirect beneficial ownership of such excess shares by a person other than an excepted person and (b) to treat such excess shares as having been transferred to a trustee, as described more fully below, and the purported transfer to the proposed transferee shall be void ab initio, and such intended transferee deemed never to have had an interest in the shares.

Our bylaws provide that no person may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.8% in value or in number, whichever is more restrictive, of any class or series of our outstanding shares, or 9.8% in value or in number, whichever is more restrictive, of our outstanding common shares. Our bylaws also prohibit any person from beneficially or constructively owning our shares if that ownership would result in us being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify for taxation as a REIT. Any transfer of shares which results in our shares being owned by fewer than 100 persons will be void ab initio and the proposed transferee shall acquire no rights in such shares.

Our Board of Trustees, in its discretion, may exempt a person from the share ownership limitation if it determines, in its discretion, that: (1) the ownership of shares by such person would not result in our being "closely held" under Section 856(h) of the Code or otherwise failing to qualify for taxation as a REIT; (2) such person does not and will not own, actually or constructively, an interest in one of our tenants (or a tenant of any entity owned or controlled by us) that would cause us to own, actually or constructively, more than a 9.8% interest in the tenant; (3) the ownership of shares in excess of the ownership limit pursuant to the exception requested would not cause a default under the terms of any contract to which we or any of our subsidiaries are party or reasonably expect to become a party; and (4) the ownership of shares in excess of the ownership limit is in our best interest. In connection with any requested exemption, our Board of Trustees may require such rulings from the Internal Revenue Service or opinions of counsel as it deems necessary or advisable in order to determine or ensure our qualification for taxation as a REIT and such representations, undertakings and agreements it determines to be necessary in order for it to make the foregoing determinations.

In determining whether to grant an exemption, our Board of Trustees may consider, among other factors, the following:

• the general reputation and moral character of the person requesting an exemption;

• whether the person’s ownership of shares would be direct or through ownership attribution;

• whether the person’s ownership of shares would interfere with the conduct of our business, including, without limitation, our ability to acquire additional properties or additional investments in issuers currently invested in by us or other issuers;

• whether granting an exemption would adversely affect any of our existing contractual arrangements;

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• whether the person requesting an exemption has been approved as an owner by all regulatory or other governmental authorities that have jurisdiction over us; and

• whether the person requesting an exemption is attempting a change in control or to affect our policies in a way in which the Board of Trustees, in its discretion, considers adverse to our or our shareholders’ best interests.

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If a person attempts a transfer of our shares in violation of the ownership limitations described above, then the Board of Trustees is authorized and empowered to deem that number of shares which would cause the violation (a) to be automatically transferred to a charitable trust for the exclusive benefit of one or more charitable beneficiaries designated by us or (b) to the fullest extent provided by law, to be void ab initio. A transfer to the charitable trust will be deemed to be effective on the business day prior to the date of the purported transfer. The prohibited owner will not acquire any rights in these excess shares (except to the extent provided below upon sale of the shares), will not benefit economically from ownership of any excess shares, will have no rights to distributions, will not possess any rights to vote and, to the extent permitted by law, will have no claim, cause of action or other recourse against the purported transferor of such shares. Subject to Maryland law, the trustee of the charitable trust will have the authority to rescind as void any vote cast by the prohibited owner prior to our discovery that the shares have been transferred to the trust and to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible action, then the trustee will not have the authority to rescind and recast the vote. Any dividend or other distribution paid prior to our discovery that shares have been transferred to the trust for the charitable beneficiary will be paid by the recipient to the trustee. Any dividend or other distribution authorized but unpaid will be paid when due to the trustee. Any dividend or distribution paid to the trustee will be held in trust for the charitable beneficiary.

Unless otherwise directed by the Board of Trustees, within 20 days after receiving notice from us that our shares have been transferred to a charitable trust, or as soon thereafter as is practicable, the trustee will sell the shares and related rights held in the charitable trust to a person designated by the trustee whose ownership of the shares will not violate the ownership limitations set forth in our bylaws. Upon this sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited owner and to the charitable beneficiary as follows:

• the prohibited owner will receive the lesser of:

(1)     the price paid by the prohibited owner for the shares or, if the prohibited owner did not give value for the shares in connection with the event causing the shares to be held in the charitable trust, for example, in the case of a gift, devise or other similar transaction, the market price (as defined in our bylaws) of the shares on the day of the event causing the shares to be transferred to the charitable trust, less our and the charitable trustee’s costs, expenses and compensation described below; and

(2)     the price received by the trustee from the sale of the shares held in the charitable trust; and

• any proceeds in excess of the amount payable to the prohibited owner shall be paid to the charitable beneficiary, less the costs, expenses and compensation of the charitable trust and trustee.

If such shares are sold by a prohibited owner, then:

• those shares will be deemed to have been sold on behalf of the charitable trust; and

• to the extent that the prohibited owner received an amount for those shares that exceeds the amount that the prohibited owner was entitled to receive from a sale by the trustee, the prohibited owner must pay the excess to the trustee upon demand.

Also, shares held in the charitable trust will be deemed to be offered for sale to us, or our designee, at a price per share equal to the lesser of:

• the price that was paid for the shares by the proposed transferee; and

• the market price of the shares on the date we or our designee accepts the trustee’s offer to sell.

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In either of the above cases, the price per share will be less our and the charitable trustee’s costs, expenses and compensation described below.

We will have the right to accept the offer for a period of 90 days following the receipt by us of notice of the event that has caused the shares to be transferred. The net proceeds of the sale to us will be distributed to the prohibited owner pursuant to our declaration of trust.

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of any shares that will or may violate the foregoing share ownership limitations, or any person who would have owned shares that resulted in a transfer to a charitable trust, is required to immediately give written notice to us of such event, or in the case of such a proposed or attempted transaction, give at least 15 days’ prior written notice, and to provide to us such other information as we may request.

Every owner of 5% or more of any class or series of our shares is required to give written notice to us within 30 days after the end of each taxable year, and also within three business days after we so request, stating the name and address of the owner, the number of shares of each class and series of our shares which the owner beneficially owns and a description of the manner in which those shares are held. Any such owner who holds our shares as nominee for another person who is required to include distributions on our shares in his or her gross income (the actual owner) is required to give written notice to us stating the name and address of the actual owner and the number of each class and series of our shares of the actual owner with respect to whom the holder of our shares is nominee. Each such shareholder and each such actual owner is required to provide us with any additional information that we may request in order to determine our qualification for taxation as a REIT, to determine our compliance with other applicable laws or requirements of any governmental authority or to ensure compliance with the foregoing share ownership limitations. In addition, each beneficial and constructive shareholder (and each person holding our shares on behalf of such shareholder) is required to provide us with such information as we may request, in good faith, in order to determine our qualification for taxation as a REIT, to determine our compliance with other applicable laws or requirements of any governmental authority and compliance with such share ownership limitations.

Our bylaws provide that the trustee of the charitable trust is entitled to reasonable compensation, as approved by our Board of Trustees, and is entitled to be indemnified for its costs and expenses reasonably incurred in connection with conducting its duties and satisfying its obligations under our bylaws. Any such compensation, costs and expenses may be funded from the charitable trust or by us and, if funded by us, we are entitled to reimbursement on a first priority basis from the charitable trust.

We are also entitled, without limiting a shareholder’s other obligations under our declaration of trust and bylaws, to collect from the charitable trust our costs and expenses incurred in the process of enforcing the ownership limitations contained in our bylaws.

The restrictions in our declaration of trust and bylaws described above will not preclude the settlement of any transaction entered into through the facilities of any national securities exchange or automated interdealer quotation system. Our bylaws provide, however, that the fact that the settlement of any transaction occurs will not negate the effect of any of the foregoing limitations and any transferee in this kind of transaction will be subject to all of the provisions and limitations described above.

All certificates evidencing our shares and any share statements for our uncertificated shares may bear legends referring to the foregoing restrictions.

The restrictions on transfer in our declaration of trust and bylaws are intended to assist with our compliance with the requirements for qualification for taxation as a REIT under the Code and otherwise to promote our orderly governance. These restrictions do not apply to the RMR Group LLC (“RMR LLC”) or its affiliates.

Business Combinations

The Maryland General Corporation Law (the “MGCL”) contains a provision which regulates business combinations with interested shareholders. This provision applies to REITs formed under Maryland law like us.

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Under the MGCL, business combinations such as mergers, consolidations, share exchanges, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities between a REIT formed under Maryland law and an interested shareholder or an affiliate of an interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. Under the MGCL the following persons are deemed to be interested shareholders:

• any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the trust’s outstanding voting shares; or

• an affiliate or associate of the trust who, at any time within the two year period immediately prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding voting shares of the trust.

After the five year prohibition period has ended, a business combination between a trust and an interested shareholder generally must be recommended by the board of trustees of the trust and must receive the following shareholder approvals:

• the affirmative vote of at least 80% of the votes entitled to be cast by holders of outstanding voting shares of the trust; and

• the affirmative vote of at least two thirds of the votes entitled to be cast by holders of voting shares other than shares held by the interested shareholder with whom or with whose affiliate or associate the business combination is to be effected or held by an affiliate or associate of the interested shareholder.

The shareholder approvals discussed above are not required if the trust’s shareholders receive the minimum price set forth in the MGCL for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares.

The foregoing provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by our Board of Trustees prior to the time that the interested shareholder becomes an interested shareholder. A person is not an interested shareholder under the statute if the board of trustees approves in advance the transaction by which that shareholder otherwise would have become an interested shareholder. The board of trustees may provide that its approval is subject to compliance with any terms and conditions determined by the board of trustees. Our declaration of trust provides that we have elected not to be governed by these provisions of the MGCL.

Control Share Acquisitions

The MGCL contains a provision which regulates control share acquisitions. This provision applies to REITs formed under Maryland law like us. The MGCL provides that control shares of a REIT formed under Maryland law acquired in a control share acquisition have no voting rights except to the extent that the acquisition is approved by a vote of two thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquiror, by officers or by trustees who are employees of the trust. Control shares are voting shares, which, if aggregated with all other such shares previously acquired by the acquiror, or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing trustees within one of the following ranges of voting power:

• one tenth or more but less than one third;

• one third or more but less than a majority; or

• a majority or more of all voting power.

An acquiror must obtain the necessary shareholder approval each time it acquires control shares in an amount sufficient to cross one of the thresholds noted above.

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Control shares do not include shares which the acquiring person is entitled to vote as a result of having previously obtained shareholder approval or shares acquired directly from the company. The MGCL provides for certain exceptions from the definition of control share acquisition.

A person who has made or proposes to make a control share acquisition, upon satisfaction of the conditions set forth in the statute, including an undertaking to pay the expenses of the meeting, may compel the board of trustees of the trust to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the trust may itself present the matter at any shareholders meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the MGCL, then the trust may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the trust to redeem control shares is subject to conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of shareholders at which the voting rights of the shares are considered and not approved. If voting rights for control shares are approved at a shareholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

The control share acquisition statute of the MGCL does not apply to the following:

• shares acquired in a merger, consolidation or share exchange if the trust is a party to the transaction; or

• acquisitions approved or exempted by a provision in the declaration of trust or bylaws of the trust adopted before the acquisition of shares.

Our declaration of trust provides that we have elected not to be governed by these provisions of the MGCL.

Subtitle 8

Subtitle 8 of Title 3 of the MGCL permits a Maryland REIT with a class of equity securities registered under the Exchange Act and at least three independent trustees to elect to be subject, by provision in its declaration of trust or bylaws or a resolution of its board of trustees and notwithstanding any contrary provision in the declaration of trust or bylaws, to any or all of five provisions:

• a classified board;

• a two thirds vote requirement for removing a trustee;

• a requirement that the number of trustees be fixed only by vote of the trustees;

• a requirement that a vacancy on the board be filled only by the remaining trustees in office and for the replacement trustee to serve for the remainder of the full term of the class of trustees in which the vacancy occurred; and

• a majority requirement for the calling of a shareholder requested special meeting of shareholders.

Through other provisions in our declaration of trust and bylaws unrelated to Subtitle 8, we require the affirmative vote of the holders of not less than two thirds of all of the votes entitled to be cast in the election of such Trustee for the removal of any Trustee from our Board of Trustees, which removal will be allowed only for cause, subject to conditions, and require that only our Board of Trustees may fill vacancies on our Board of Trustees and vest in our Board of Trustees the exclusive power to call meetings of our shareholders. We have made elections

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pursuant to Subtitle 8 to (1) classify our Board of Trustees and (2) vest in our Board of Trustees the exclusive power to fix the number of our Trustees.

Anti‑Takeover Effect of Maryland Law and of Our Declaration of Trust and Bylaws

The following provisions in our declaration of trust and bylaws and in Maryland law could delay or prevent a change in our control:

• the prohibition in our declaration of trust and bylaws of any shareholder other than excepted holders, including RMR LLC and its affiliates, from owning more than 9.8% in value or in number, whichever is more restrictive, of any class or series of our outstanding shares, including our common shares;

• the division of our Trustees into three classes, with the term of one class expiring each year and, in each case, until a successor is elected and qualifies;

• shareholder voting rights and standards for the election of Trustees and other matters which generally require larger majorities for approval of actions which are not approved by our Trustees than for actions which are approved by our Trustees;

• the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees;

• the fact that only our Board of Trustees, or if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting;

• required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be Managing Trustees and other Trustees be Independent Trustees;

• limitations on the ability of, and various requirements that must be satisfied in order for, our shareholders to propose nominees for election to our Board of Trustees and propose other business to be considered at a meeting of our shareholders;

• the requirement that an individual Trustee may be removed only for cause, subject to conditions, by the affirmative vote of the holders of not less than two thirds of our common shares entitled to vote in the election of Trustees or, with or without cause, by the affirmative vote of all the remaining Trustees;

• the authority of our Board of Trustees to adopt certain amendments to our declaration of trust without shareholder approval, including the authority to increase or decrease the number of authorized shares, to create new classes or series of shares (including a class or series of shares that could delay or prevent a transaction or a change in our control that might involve a premium for our shares or otherwise be in the best interests of our shareholders), to increase or decrease the number of shares of any class or series, and to classify or reclassify any unissued shares from time to time by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of our shares or any new class or series of shares created by our Board of Trustees;

• requirements that shareholders comply with regulatory requirements (including Nevada and Louisiana gaming) affecting us which could effectively limit share ownership of us, including in some cases, to 5% of our outstanding shares;

• the requirement that amendments to our declaration of trust may be made only if approved by two thirds of our Trustees;

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• the business combination provisions of the MGCL, if the provision in our declaration of trust regarding our election not to be governed by such provisions is amended or eliminated; and

• the control share acquisition provisions of the MGCL, if the provision in our declaration of trust regarding our election not to be governed by such provisions is amended or eliminated.

In addition, our credit agreement governing our revolving credit and term loan facilities also contains change in control provisions, as further described in that agreement, and our business and property management agreements with RMR LLC contain provisions that allow for termination for convenience and termination for a performance reason but require the payment of a termination fee, as further described in those agreements.

For all of these reasons, among others, our shareholders may be unable to realize a change of control premium for any of our shares they own or otherwise effect a change of our policies.

Transfer Agent and Registrar

            The transfer agent and registrar for our common shares is Equiniti Trust Company.

Listing

Our common shares are listed on Nasdaq under the symbol “SVC.”

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EX-8.1

Exhibit 8.1

February 28, 2020

Service Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Ladies and Gentlemen:

The following opinion is furnished to Service Properties Trust, a Maryland real estate investment trust (the “Company”), to be filed with the Securities and Exchange Commission (the “SEC”) as Exhibit 8.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Form 10-K”) under the Securities Exchange Act of 1934, as amended.

We have acted as counsel for the Company in connection with the preparation of the Form 10-K. We have reviewed originals or copies of such corporate records, such certificates and statements of officers of the Company and of public officials, and such other documents as we have considered relevant and necessary in order to furnish the opinion hereinafter set forth. In doing so, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, and the authenticity of the originals of such documents. Specifically, and without limiting the generality of the foregoing, we have reviewed: (i) the Company’s amended and restated declaration of trust, as amended and supplemented, and its amended and restated bylaws, as amended; and (ii) the Form 10-K. For purposes of the opinion set forth below, we have assumed that any documents (other than documents which have been executed, delivered, adopted or filed, as applicable, by the Company prior to the date hereof) that have been provided to us in draft form will be executed, delivered, adopted and filed, as applicable, without material modification.

The opinion set forth below is based upon the Internal Revenue Code of 1986, as amended, the Treasury regulations issued thereunder, published administrative interpretations thereof, and judicial decisions with respect thereto, all as of the date hereof (collectively, “Tax Laws”), and upon the Employee Retirement Income Security Act of 1974, as amended, the Department of Labor regulations issued thereunder, published administrative interpretations thereof, and judicial decisions with respect thereto, all as of the date hereof (collectively, “ERISA Laws”). No assurance can be given that Tax Laws or ERISA Laws will not change. In the discussions with respect to Tax Laws matters and ERISA Laws matters in the sections of Item 1 of the Form 10-K captioned “Material United States Federal Income Tax Considerations” and “ERISA Plans, Keogh Plans and Individual Retirement Accounts”, certain assumptions have been made therein and certain conditions and qualifications have been expressed therein, all of which assumptions, conditions and qualifications are incorporated herein by reference. With respect to all questions of fact on which our opinion is based, we have assumed the initial and continuing truth, accuracy and completeness of: (i) the information set forth in the Form 10-K and in the exhibits thereto; and (ii) representations made to us by officers of the Company or contained in the Form 10-K and in the exhibits thereto, in each such instance without regard to qualifications such as “to the best knowledge of” or “in the belief of”. We have not independently verified such information.

We have relied upon, but not independently verified, the foregoing assumptions. If any of the foregoing assumptions are inaccurate or incomplete for any reason, or if the transactions described in the Form 10-K or in the exhibits thereto have been or are consummated in a manner that is inconsistent with the manner contemplated therein, our opinion as expressed below may be adversely affected and may not be relied upon.

Based upon and subject to the foregoing: (i) we are of the opinion that the discussions with respect to Tax Laws matters and ERISA Laws matters in the sections of Item 1 of the Form 10-K captioned “Material United States Federal Income Tax Considerations” and “ERISA Plans, Keogh Plans and Individual Retirement Accounts” in all material respects are, subject to the limitations set forth therein, the material Tax Laws considerations and the material ERISA Laws considerations relevant to holders of the securities of the Company discussed therein (the “Securities”); and (ii) we hereby confirm that the opinions of counsel referred to in said sections represent our opinions on the subject matters thereof.

Our opinion above is limited to the matters specifically covered hereby, and we have not been asked to address, nor have we addressed, any other matters or any other transactions. Further, we disclaim any undertaking to advise you of any subsequent changes of the matters stated, represented or assumed herein or any subsequent changes in Tax Laws or ERISA Laws.

This opinion is rendered to you in connection with the filing of the Form 10-K. Purchasers and holders of the Securities are urged to consult their own tax advisors or counsel, particularly with respect to their particular tax consequences of acquiring, holding and disposing of the Securities, which may vary for investors in different tax situations. We hereby consent to the filing of a copy of this opinion as an exhibit to the Form 10-K, which is incorporated by reference in the Company’s Registration Statement on Form S-3, File No. 333-226944 (the “Registration Statement”), under the Securities Act of 1933, as amended (the “Securities Act”), and to the references to our firm in the Form 10-K and the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or under the rules and regulations of the SEC promulgated thereunder.

Very truly yours,

/s/ Sullivan & Worcester LLP

SULLIVAN & WORCESTER LLP

EX-10.8

Exhibit 10.8

SERVICE PROPERTIES TRUST
FORM OF [AMENDED AND RESTATED]¹ INDEMNIFICATION AGREEMENT

THIS [AMENDED AND RESTATED] INDEMNIFICATION AGREEMENT (this “Agreement”), effective as of [DATE] (the “Effective Date”), by and between Service Properties Trust, a Maryland real estate investment trust (the “Company”), and [TRUSTEE/OFFICER] (“Indemnitee”).

WHEREAS, Indemnitee currently serves as a trustee and/or officer of the Company and may, in connection therewith, be subjected to claims, suits or proceedings arising from such service; and

WHEREAS, as an inducement to Indemnitee to continue to serve as such, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law as hereinafter provided; and

WHEREAS, the parties [are currently parties to an Indemnification Agreement dated as of [DATE] (the “Prior Indemnification Agreement”) and] desire to [amend and restate the Prior Indemnification Agreement and] set forth their agreement regarding indemnification and advancement of expenses [as reflected herein];

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1.Definitions.  For purposes of this Agreement:

(a) “Board” means the board of trustees of the Company.

(b)“Bylaws” means the bylaws of the Company, as they may be amended from time to time.

(c)“Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date:

(i)any “person” (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of all the Company’s then outstanding securities entitled to vote generally in the election of trustees without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such person attaining such percentage interest;

(ii)there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board then in office, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or

(iii)during any period of two consecutive years, other than as a result of an event described in clause (a)(ii) of this Section 1, individuals who at the beginning of such period constituted the Board (including for this purpose any new trustee whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the trustees then still in office who were trustees at the beginning of such period) cease for any reason to constitute at least a majority of the Board.

¹ Bracketed text to be included for trustees and officers with existing agreements. Bracketed text would not be included for persons who are first elected as a trustee or appointed as an officer after this form is adopted.

(d)“Company Status” means the status of a Person who is or was a trustee, director, manager, officer, partner, employee, agent or fiduciary of the Company or any predecessor of the Company or any of their majority owned subsidiaries and the status of a Person who, while a trustee, director, manager, officer, partner, employee, agent or fiduciary of the Company or any predecessor of the Company or any of their majority owned subsidiaries, is or was serving at the request of the Company or any predecessor of the Company or any of their majority owned subsidiaries as a trustee, director, manager, officer, partner, employee, agent or fiduciary of another real estate investment trust, corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or any other Enterprise.

(e)“control” of an entity, shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities, by contract or otherwise.

(f)“Declaration of Trust” means the declaration of trust (as defined in the Maryland REIT Law) of the Company, as it may be in effect from time to time.

(g)“Disinterested Trustee” means a trustee of the Company who is not and was not a party to the Proceeding in respect of which indemnification or advance of Expenses is sought by Indemnitee.

(h)“Enterprise” shall mean the Company and any other real estate investment trust, corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a trustee, director, manager, officer, partner, employee, agent or fiduciary.

(i)“Expenses”  means all expenses, including, but not limited to, all attorneys’ fees and costs, retainers, court or arbitration costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond or other appeal bond or its equivalent.

(j)“Independent Counsel” means a law firm, or a member of a law firm, selected by the Company and acceptable to Indemnitee, that is experienced in matters of business law.  If, within twenty (20) days after submission by Indemnitee of a written demand for indemnification pursuant to Section 7(a) hereof, no Independent Counsel shall have been selected and agreed to by Indemnitee, either the Company or Indemnitee may petition a Chosen Court (as defined in Section 18) for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person so appointed shall act as Independent Counsel hereunder.

(k)“MGCL” means the Maryland General Corporation Law.

(l)“Maryland REIT Law” means Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland.

(m)“Person” means an individual, a corporation, a general or limited partnership, an association, a limited liability company, a governmental entity, a trust, a joint venture, a joint stock company or another entity or organization.

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(n)“Proceeding” means any threatened, pending or completed claim, demand, action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal), whether or not by or in the right of the Company, except one initiated by an Indemnitee pursuant to Section 9.

Section 2.Indemnification - General.  The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date.  The rights of Indemnitee provided in this Section 2 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the MGCL, as applicable to a Maryland real estate investment trust by virtue of Section 8-301(15) of the Maryland REIT Law, the Declaration of Trust or the Bylaws.

Section 3.Proceedings Other Than Derivative Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, other than a derivative Proceeding by or in the right of the Company (or, if applicable, such other Enterprise at which Indemnitee is or was serving at the request of the Company or a predecessor of the Company or any of their majority owned subsidiaries).  Pursuant to this Section 3, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with a Proceeding by reason of Indemnitee’s Company Status unless it is finally determined that such indemnification is not permitted by the MGCL, the Declaration of Trust or the Bylaws.

Section 4.Derivative Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be, made a party to any derivative Proceeding brought by or in the right of the Company (or, if applicable, such other Enterprise at which Indemnitee is or was serving at the request of the Company or a predecessor of the Company or any of their majority owned subsidiaries).  Pursuant to this Section 4, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding unless it is finally determined that such indemnification is not permitted by the MGCL, the Declaration of Trust or the Bylaws.

Section 5.Indemnification for Expenses of a Party Who is Partly Successful.  Without limitation on Section 3 or Section 4, if Indemnitee is not wholly successful in any Proceeding covered by this Agreement, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 5 for all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis.  For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 6.Advancement of Expenses.  The Company, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding in which Indemnitee may be involved, or is threatened to be involved, including as a party, a witness or otherwise, by reason of Indemnitee’s Company Status, within ten (10) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by the MGCL, the Declaration of Trust and the Bylaws has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form of Exhibit A hereto or in such other form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee relating to any claims, issues or matters in the Proceeding as to

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which it shall be finally determined that the standard of conduct has not been met and which have not been successfully resolved as described in Section 5.  For the avoidance of doubt, the Company shall advance Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with such a Proceeding pursuant to this Section 6 until it is finally determined that Indemnitee is not entitled to indemnification under the MGCL, the Declaration of Trust or the Bylaws in respect of such Proceeding.  To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis.  The undertaking required by this Section 6 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.  At Indemnitee’s request, advancement of any such Expense shall be made by the Company’s direct payment of such Expense instead of reimbursement of Indemnitee’s payment of such Expense.

Section 7.Procedure for Determination of Entitlement to Indemnification.

(a)To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written demand therefor.  The Secretary of the Company shall, promptly upon receipt of such a demand for indemnification, provide copies of the demand to the Board.

(b)Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 7(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred or if, after a Change in Control, Indemnitee shall so request, (A) by the Board (or a duly authorized committee thereof) by a majority vote of a quorum consisting of Disinterested Trustees, or (B) if a quorum of the Board consisting of Disinterested Trustees is not obtainable or, even if obtainable, such quorum of Disinterested Trustees so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a majority of the members of the Board, by the shareholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination.  Any Independent Counsel, member of the Board or shareholder of the Company shall act reasonably and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement.

(c)    The Company shall pay the fees and expenses of Independent Counsel, if one is appointed, and shall agree to fully indemnify such Independent Counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or the Independent Counsel’s engagement as such pursuant hereto.

Section 8.Presumptions and Effect of Certain Proceedings.

(a)In making a determination with respect to entitlement to indemnification hereunder, the Person or Persons making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(b)It shall be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.  Without limitation of the foregoing, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise.  In addition, the knowledge or actions, or failure to act, of any trustee, director, manager, officer, partner,

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employee, agent or fiduciary of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

(c)Neither the failure to make a determination pursuant to Section 7(b) as to whether indemnification is proper in the circumstances because Indemnitee has met any particular standard of conduct, nor an actual determination by the Company (including by the Board or Independent Counsel) pursuant to Section 7(b) that Indemnitee has not met such standard of conduct, shall be a defense to Indemnitee’s claim that indemnification is proper in the circumstances or create a presumption that Indemnitee has not met any particular standard of conduct. 

(d)The termination of any Proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, shall not in and of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not meet the standard of conduct required for indemnification.  The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration), it shall be presumed that Indemnitee has been successful on the merits or otherwise in such Proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

Section 9.    Remedies of Indemnitee.

(a)If (i) a determination is made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 6, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 7(b) within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall (A) unless the Company demands arbitration as provided by Section 17, be entitled to an adjudication in a Chosen Court or (B) be entitled to seek an award in arbitration as provided by Section 17, in each case of Indemnitee’s entitlement to such indemnification or advance of Expenses.

(b)In any judicial proceeding or arbitration commenced pursuant to this Section 9, the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.  In the event that a determination shall have been made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 9 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 7(b).

(c)If a determination shall have been made pursuant to Section 7(b) that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 9, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the demand for indemnification.

(d)In the event that Indemnitee, pursuant to this Section 9, seeks a judicial adjudication of or an award in arbitration as provided by Section 17 to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement by the Company, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall indemnify Indemnitee against any and all Expenses incurred by Indemnitee in such judicial adjudication or arbitration and, if requested by Indemnitee, the Company shall (within ten (10) days after receipt by the Company of a written demand therefor) advance, to the extent not prohibited by law, the Declaration of Trust or the Bylaws, any and all such Expenses.

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(e)The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 9 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such judicial proceeding or arbitration that the Company is bound by all the provisions of this Agreement.

(f)To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.

(g)Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth (10th) day after the date on which the Company was requested to advance Expenses in accordance with Section 6 of this Agreement or the thirtieth (30th) day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 7(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.

Section 10.Defense of the Underlying Proceeding.

(a)Indemnitee shall notify the Company promptly upon being served with or receiving any summons, citation, subpoena, complaint, indictment, information, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

(b)Subject to the provisions of the last sentence of this Section 10(b) and of Section 10(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within fifteen (15) days following receipt of notice of any such Proceeding under Section 10(a) above, and the counsel selected by the Company shall be reasonably satisfactory to Indemnitee.  The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee or (iii) has the actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder.  This Section 10(b) shall not apply to a Proceeding brought by Indemnitee under Section 9 above or Section 15.

(c)Notwithstanding the provisions of Section 10(b), if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Company Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company.  In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other Person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of

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Indemnitee’s choice, at the expense of the Company (subject to Section 9(d)), to represent Indemnitee in connection with any such matter.

Section 11.Liability Insurance.

(a)To the extent the Company maintains an insurance policy or policies providing liability insurance for any of its trustees or officers, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company trustee or officer during Indemnitee’s tenure as a trustee or officer and, following a termination of Indemnitee’s service in connection with a Change in Control, for a period of six (6) years thereafter.

(b)If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(c)In the event of any payment by the Company under this Agreement the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee with respect to any insurance policy.  Indemnitee shall take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights in accordance with the terms of such insurance policy. The Company shall pay or reimburse all expenses actually and reasonably incurred by Indemnitee in connection with such subrogation.

Section 12.Non-Exclusivity; Survival of Rights.

(a)The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Declaration of Trust or the Bylaws, any agreement or a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by Indemnitee in Indemnitee’s Company Status prior to such amendment, alteration or repeal.  To the extent that a change in the Maryland REIT Law or the MGCL permits greater indemnification to Indemnitee than would be afforded currently under the Maryland REIT Law or the MGCL, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change if permitted by the Maryland REIT Law or the MGCL.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b)The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

Section 13.Binding Effect.

(a)The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a trustee, director, manager, officer, partner, employee, agent or fiduciary of the Company or a trustee, director, manager, officer, partner, employee, agent or fiduciary of another Enterprise which such Person is or was serving at

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the request of the Company or a predecessor of the Company or any of their majority owned subsidiaries, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

(b)Any successor of the Company (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part of, the business or assets of the Company shall be automatically deemed to have assumed and agreed to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place, provided that no such assumption shall relieve the Company of its obligations hereunder.  To the extent required by applicable law to give effect to the foregoing sentence and to the extent requested by Indemnitee, the Company shall require and cause any such successor to expressly assume and agree to perform this Agreement by written agreement in form and substance satisfactory to Indemnitee.

Section 14.Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 15.Limitation and Exception to Right of Indemnification or Advance of Expenses.  Notwithstanding any other provision of this Agreement, (a) any indemnification or advance of Expenses to which Indemnitee is otherwise entitled under the terms of this Agreement shall be made only to the extent such indemnification or advance of Expenses does not conflict with applicable Maryland law and (b) Indemnitee shall not be entitled to indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee, unless (i) the Proceeding is brought to enforce rights under this Agreement, the Declaration of Trust, the Bylaws, liability insurance policy or policies, if any, or otherwise or (ii) the Declaration of Trust, the Bylaws, a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board or an agreement approved by the Board to which the Company is a party expressly provides otherwise.  Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:  (a) if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or (b) if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standard of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.

Section 16.Specific Performance, Etc.  The parties hereto recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law.  Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.

Section 17.Arbitration.

(a)Any disputes, claims or controversies regarding Indemnitee’s entitlement to indemnification or advancement of Expenses hereunder or otherwise arising out of or relating to this Agreement, including any disputes, claims or controversies brought by or on behalf of a party hereto or any holder of equity interests (which, for purposes of this Section 17, shall mean any holder of record or any beneficial owner of equity

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interests or any former holder of record or beneficial owner of equity interests) of a party, either on his, her or its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of equity interests of a party against a party or any of their respective trustees, directors, members, officers, managers, agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this Section 17 or the governing documents of a party (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes, shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 17.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those individuals or entities and a party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.  For purposes of this Section 17, the term “equity interest” shall mean (i) in respect of the Company, shares of beneficial interest of the Company, (ii) shares of “membership interests” in an entity that is a limited liability company, (iii) general partnership interests in an entity that is a partnership, (iv) shares of capital stock of an entity that is a corporation and (v) similar equity ownership interests in other entities.

(b)There shall be three (3) arbitrators.  If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration.  The arbitrators may be affiliated or interested persons of the parties.  If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration. The arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA.  If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator.  The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator.  If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

(c)    The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

(d)There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.  For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

(e)In rendering an award or decision (an “Award”), the arbitrators shall be required to follow the laws of the State of Maryland without regard to principles of conflicts of law.  Any arbitration proceedings or award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  An Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based.  Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Subject to Section 17(g), each party against which an Award

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assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as the Award may provide.

(f)Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties hereto, each party and each Person acting or seeking to act in a representative capacity (such Person, a “Named Representative”) involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to its attorneys, a Named Representative or any attorney of a Named Representative.  Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.

(g)Notwithstanding any language to the contrary in this Agreement, an Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (the “Appellate Rules”).  An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired.  Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof.  For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 17(f) shall apply to any appeal pursuant to this Section 17 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party or Named Representative or the payment of such costs and expenses, and all costs and expenses of a party or Named Representative shall be its sole responsibility.

(h)Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 17(g), an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon an Award may be entered in any court having jurisdiction.  To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

(i)This Section 17 is intended to benefit and be enforceable by the parties hereto and their respective holders of equity interests, trustees, directors, officers, managers, agents or employees, and their respective successors and assigns, and shall be binding upon all such parties and their respective holders of equity interests, and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

Section 18.Venue.  Each party hereto agrees that it shall bring any Proceeding in respect of any claim arising out of or related to this Agreement exclusively in the courts of the State of Maryland and the Federal courts of the United States, in each case, located in the City of Baltimore (the “Chosen Courts”).  Solely in connection with claims arising under this Agreement, each party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of the Chosen Courts, (ii) agrees not to commence any such Proceeding except in such courts, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the Chosen Courts, (iv) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such Proceeding, (v) agrees that service of process upon such party in any such Proceeding shall be effective if notice is given in accordance with Section 24and (vi) agrees to request and/or consent to the assignment of any dispute arising out of this Agreement or the transactions contemplated by this Agreement to the Chosen Courts’ Business and Technology Case Management Program, or similar program.  Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by law.  A final judgment in any such Proceeding shall be conclusive and may be enforced in other

10

jurisdictions by suit on the judgment or in any other manner provided by law.  EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS.  Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute is made pursuant to Section 17, this Section 18 shall not preempt resolution of the Dispute pursuant to Section 17.

Section 19.Adverse Settlement.  The Company shall not seek, nor shall it agree to or support, or agree not to contest any settlement or other resolution of any matter that has the actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder, including without limitation the entry of any bar order or other order, decree or stipulation, pursuant to 15 U.S.C. § 78u-4 (the Private Securities Litigation Reform Act), or any similar foreign, federal or state statute, regulation, rule or law.

Section 20.Period of Limitations.  To the fullest extent permitted by law, no legal action shall be brought, and no cause of action shall be asserted, by or on behalf of the Company or any controlled affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its controlled affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

Section 21.Counterparts.  This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party hereto need not sign the same counterpart.

Section 22.Delivery by Electronic Transmission.  This Agreement and any signed agreement or instrument entered into in connection with this Agreement or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of an electronic transmission, including by a facsimile machine or via email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to the other parties.  No party hereto or to any such agreement or instrument shall raise the use of electronic transmission by a facsimile machine or via email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through electronic transmission as a defense to the formation of a contract and each such party forever waives any such defense.

Section 23.Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed to, or shall, constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 24.Notices.  Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is accepted by the party to whom it is given, and shall be given by being delivered at the following addresses to the parties hereto:

(a) If to Indemnitee, to:  The address set forth on the signature page hereto.

(b) If to the Company to:

Service Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458-1634

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Attn: Secretary

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

Section 25.Governing Law.  The provisions of this Agreement and any Dispute, whether in contract, tort or otherwise, shall be governed by and construed in accordance with the laws of the State of Maryland without regard to its conflicts of laws rules.

Section 26.Interpretation.

(a)Generally.  Unless the context otherwise requires, as used in this Agreement: (a) words defined in the singular have the parallel meaning in the plural and vice versa; (b) “Articles,” “Sections,” and “Exhibits” refer to Articles, Sections and Exhibits of this Agreement unless otherwise specified; and (c) “hereto” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(b)Additional Interpretive Provisions.  The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.  Any capitalized term used in any Exhibit to this Agreement, but not otherwise defined therein, shall have the meaning as defined in this Agreement.  References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder and any successor statute or statutory provision.  References to any agreement are to that agreement as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.  References to any Person include the successors and permitted assigns of that Person.  Reference to any agreement, document or instrument means the agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof.

(c)[Expansion of Indemnification. This amendment and restatement of the Prior Indemnification Agreement is intended to expand, and not to limit, the scope of indemnification provided to Indemnitee under the Prior Indemnification Agreement, and this Agreement shall be interpreted consistent with such intent.]

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Agreement as of the date first written above.

Inf	SERVICE PROPERTIES TRUST
	By:
	Name:
	Title:
	[INDEMNITEE]
	Indemnitee’s Address:
	[ ]

[Signature Page to [Amended and Restated] Indemnification Agreement]

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EXHIBIT A

FORM OF AFFIRMATION AND

UNDERTAKING TO REPAY EXPENSES ADVANCED

To the Board of Trustees of Service Properties Trust:

This affirmation and undertaking is being provided pursuant to that certain [Amended and Restated] Indemnification Agreement dated                                 , 20   (the “Indemnification Agreement”), by and between Service Properties Trust, a Maryland real estate investment trust (the “Company”), and the undersigned Indemnitee, pursuant to which Indemnitee is entitled to advancement of expenses in connection with [Description of Claims/Proceeding] (together, the “Claims”).  Terms used, and not otherwise defined, herein shall have the meanings specified in the Indemnification Agreement.

Indemnitee is subject to the Claims by reason of Indemnitee’s Company Status or by reason of alleged actions or omissions by Indemnitee in such capacity.

Indemnitee hereby affirms Indemnitee’s good faith belief that the standard of conduct necessary for Indemnitee’s indemnification has been met.

In consideration of the advancement of Expenses by the Company for attorneys’ fees and related expenses incurred by Indemnitee in connection with the Claims (the “Advanced Expenses”), Indemnitee hereby agrees that if, in connection with a proceeding regarding the Claim, it is ultimately determined that Indemnitee is not entitled to indemnification under law, the Declaration of Trust, the Bylaws or the Indemnification Agreement with respect to an act or omission by Indemnitee, then Indemnitee shall promptly reimburse the portion of the Advanced Expenses relating to the Claim(s) as to which the foregoing findings have been established and which have not been successfully resolved as described in Section 5 of the Indemnification Agreement.  To the extent that Advanced Expenses do not relate to specific Claims, Indemnitee agrees that such Advanced Expenses may be allocated on a reasonable and proportionate basis.

IN WITNESS WHEREOF, the undersigned Indemnitee has executed this Affirmation and Undertaking to Repay Expenses Advanced on                      ,      .

WITNESS:
Print name of witness	Print name of Indemnitee

Schedule to Exhibit 10.8

The following trustees and executive officers of Service Properties Trust, or SVC, are parties to Indemnification Agreements with SVC which are substantially identical in all material respects to the representative Indemnification Agreement filed herewith and are dated as of the respective dates listed below. The other Indemnification Agreements are omitted pursuant to Instruction 2 to Item 601 of Regulation S-K.

Name of Signatory	Date
Laurie B. Burns	February 27, 2020
Ethan S. Bornstein	June 14, 2018
Robert E. Cramer	February 27, 2020
Brian E. Donley	January 1, 2019
Donna D. Fraiche	June 14, 2018
Mark L. Kleifges	June 14, 2018
John L. Harrington	June 14, 2018
William A. Lamkin	June 14, 2018
John G. Murray	June 14, 2018
Adam D. Portnoy	June 14, 2018

EX-10.10

Exhibit 10.10

FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) dated as of September 17, 2019, by and among HOSPITALITY PROPERTIES TRUST, a real estate investment trust formed under the laws of the State of Maryland (the “Borrower”), each of the financial institutions party hereto and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the “Administrative Agent”).

WHEREAS, the Borrower, the Lenders, the Administrative Agent and certain other parties have entered into that certain Second Amended and Restated Credit Agreement dated as of May 10, 2018 (as amended and as in effect immediately prior to the effectiveness of this Amendment, the “Credit Agreement”); and

WHEREAS, as permitted by Section 12.6. of the Credit Agreement, the parties hereto desire to amend the Credit Agreement subject to the terms and conditions of this Amendment (the Credit Agreement as so amended, the “Amended Credit Agreement”);

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby agree as follows:

Section 1. Specific Amendments to Credit Agreement. Upon the effectiveness of this Amendment, the parties hereto agree that the Credit Agreement is amended as follows:

(a) The Credit Agreement is hereby amended by adding the following new defined terms to Section 1.1. thereof in the appropriate alphabetical order:

“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 CFR § 1010.230.

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

“Capital Expenditure Reserves” means, with respect to a Net Lease Retail Property and for a given period, an amount equal to (a) the aggregate rentable square footage of all completed space of such Property, times (b) $0.10, times (c) the number of days in such period, divided by (d) 365; provided, however that no Capital Expenditure Reserves shall be required with respect to any portion of a Property which is leased to a third party obligated under such lease to pay all capital expenditures with respect to such portion of such Property.

“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §47.3(b); or (iii) a

“covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §382.2(b).

“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

“First Amendment Date” means September 17, 2019.

“Net Lease Retail Property” means an income producing Property (a) the improvements on which consist of service-oriented retail property, together with any incidental improvements on such Property operated in connection therewith and (b) that is leased to a commercial tenant pursuant to a Triple Net Lease.

“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

(b)The Credit Agreement is hereby amended by restating each of the following definitions in Section 1.1. thereof in its entirety as follows:

“Adjusted EBITDA” means, with respect to a Person for a given period, such Person’s EBITDA for such period determined on a consolidated basis less the sum, without duplication, of (a) any FF&E Reserves to the extent included in EBITDA, (b) the excess, if any, with respect to each Hotel or Hotel Pool (as applicable) of such Person, of (i) 4.0% of total gross room revenues of such Hotel or Hotel Pool for such period over (ii) the FF&E Reserve actually funded during such period or prefunded for such period by the Operator or the Borrower or its Subsidiaries with respect to such Hotel or Hotel Pool pursuant to the applicable Lease, Management Agreement or any related Ancillary Agreement, (c) the excess, if any, with respect to each Travel Center of such Person, of (i) $150,000 per annum for such Travel Center (such amount to be appropriately adjusted if such period is not a year in duration) over (ii) the FF&E Reserve actually funded or prefunded by the Operator or the Borrower during such period with respect to such Property pursuant to the applicable Lease or any related Ancillary Agreement, (d) Capital Expenditure Reserves for such period and (e) to the extent included in EBITDA, replacement reserves for any Other Properties.

“Capitalization Rate” means (a) 7.25% for Hotels located in central business districts of New York, New York, Washington D.C., Chicago, Illinois, Boston, Massachusetts, San Francisco, California, Los Angeles, California, Seattle, Washington, Miami, Florida and San Diego, California, (b) 8.00% for all other Hotels, (c) 7.50% for Net Lease Retail Properties and (d) 8.75% for Travel Centers and Other Properties.

“Other Property” means an income producing Property (a) that is not a Hotel, Travel Center or Net Lease Retail Property, (b) the improvements on which consist of industrial developments, office space and other commercial developments (but excluding residential developments), together with any incidental improvements on such Property operated in connection therewith and (c) that is leased to a commercial tenant pursuant to a Triple Net Lease.

“Total Asset Value” means, on any date of determination, the sum of the following (without duplication) of the Borrower and its Subsidiaries for the four fiscal quarters most

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recently ended: (a)(i) with respect to all Properties owned (or leased pursuant to a Ground Lease) by the Borrower or any Subsidiary for one or more fiscal quarters, Adjusted EBITDA attributable to such Properties for such period divided by (ii) the applicable Capitalization Rate; (b) the purchase price paid for any Property acquired during such period (less any amounts paid as a purchase price adjustment, held in escrow, retained as a contingency reserve, or other similar arrangements but including amounts retained as Operator Deposits and prior to allocations of property purchase prices pursuant to FASB ASC 805 and the like); provided that (x) once any such Property is included in the determination of Total Asset Value pursuant to the preceding clause (a) it may not thereafter be included under this clause (b) and (y) any Property the value of which was determined under clause (a) of this definition in the Existing Credit Agreement may not be valued under this clause (b); (c) the value of the Borrower’s equity Investments in RMR Inc. as of the end of such period, such value determined at Fair Market Value; (d) all cash and cash equivalents as of the end of such period; (e) accounts receivable that are not (i) owing in excess of 90 days as of the end of such period or (ii) being contested in writing by the obligor in respect thereof (in which case only such portion being contested shall be excluded from Total Asset Value); (f) prepaid taxes and operating expenses as of the end of such period; (g) the book value of all Developable Property and Assets Under Development as of the end of such period; (h) the book value of all other tangible assets (excluding land or other real property) as of the end of such period; (i) the book value of all Mortgage Notes as of the end of such period; and (j) the Borrower’s Ownership Share of the preceding items (other than those referred to in clause (c)) of any Unconsolidated Affiliate of the Borrower. For purposes of determining Total Asset Value, to the extent the amount of Total Asset Value attributable to (v) Unconsolidated Affiliates would exceed 10.0% of Total Asset Value, (w) Assets Under Development (determined as the aggregate Construction Budget for all such Assets Under Development) would exceed 15.0% of Total Asset Value, (x) Properties subject to a ground lease would exceed 15.0% of Total Asset Value, (y) Mortgage Receivables would exceed 5.0% of Total Asset Value and (z) Unimproved Land would exceed 5.0% of Total Asset Value, in each case, such excess shall be excluded. For purposes of determining Total Asset Value, to the extent the aggregate value of the items described in the immediately preceding clauses (v), (w), (x), (y) and (z) would account for more than 30% of Total Asset Value, such excess shall be excluded. To the extent that the value of the Borrower’s equity Investments in RMR Inc. would in the aggregate account for more than 3.0% of Total Asset Value, such excess shall be excluded. Notwithstanding the foregoing, for purposes of determining Total Asset Value at any time, (i) the Borrower may, in addition to the Properties referred to in the immediately preceding clause (b), include the purchase price paid for any Property acquired during the period following the end of the fiscal quarter most recently ended through the time of such determination (less any amounts paid as a purchase price adjustment, held in escrow, retained as a contingency reserve, or other similar arrangements at the time of such determination, but including amounts retained as Operator Deposits and prior to allocations of property purchase prices pursuant to FASB ASC 805 and the like, each at the time of such determination); provided, that if the Borrower elects to include the purchase price paid for any Property acquired during the period following the end of the fiscal quarter most recently ended through the time of such determination as permitted by this clause (i), then the Borrower must exclude from the determination of Total Asset Value the Adjusted EBITDA, the purchase price or the book value, as applicable, of any Property disposed of by the Borrower during such period and (ii) for purposes of the immediately preceding clause (d), the amount of cash and cash equivalents shall be calculated as of such date of determination rather than as of the end of the fiscal quarter most recently ended.

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“Unencumbered Asset” means each Property, whether Hotel, Travel Center, Net Lease Retail Property or Other Property, that satisfies all of the following requirements: (a) such Property is (i) owned in fee simple solely by the Borrower or a Wholly Owned Subsidiary or (ii) leased solely by the Borrower or a Wholly Owned Subsidiary pursuant to a Ground Lease; (b) such Property is not an Asset Under Development and is in service; (c) neither such Property, nor any interest of the Borrower or such Wholly Owned Subsidiary therein, is subject to any Lien (other than Permitted Liens of the types described in clauses (a) through (c) and (e) through (j) of the definition thereof) or to any Negative Pledge, other than Negative Pledges permitted pursuant to Section 9.2.(b)(iii) and Section 9.2.(b)(iv); (d) neither such Property, nor if such Property is owned or leased by a Subsidiary, any of the Borrower's direct or indirect ownership interest in such Subsidiary, is subject to (i) any Lien (other than Permitted Liens of the types described in clauses (a) through (c) or (e) through (j) of the definition thereof) or (ii) any Negative Pledge, other than Negative Pledges permitted pursuant to Section 9.2.(b)(iii) and Section 9.2.(b)(iv); (e) if such Property is owned or leased by a Subsidiary, such Subsidiary has not directly or indirectly guarantied or assumed liability for any Indebtedness of any Subsidiary except lessee deposits for which a Subsidiary is responsible; (f) such Property is free of structural defects or major architectural deficiencies, title defects, environmental conditions or other adverse matters which, individually or collectively, materially impair the value of such Property; (g) such Property shall be subject to agreements containing terms and conditions which provide the Borrower or a Subsidiary with substantially the same benefits and risks as Operating Agreements and Ancillary Agreements of Unencumbered Assets as of the Agreement Date, or otherwise on commercially reasonable terms and conditions; (h) the lessee or operator is not more than 60 days past due with respect to any payment obligations under any Lease or Operating Agreement for such Property (after taking into account application of any security deposit); and (i) such Property (i) has been designated by the Borrower as an “Unencumbered Asset” on Item 6.1.(z) of the Borrower Letter or on an Unencumbered Asset Certificate delivered by the Borrower to the Administrative Agent pursuant to Section 8.3. and (ii) has not been removed voluntarily by the Borrower from “Unencumbered Assets”. Notwithstanding the immediately preceding sentence, a Property owned by a Foreign Subsidiary that is a Wholly Owned Subsidiary will be considered to be an Unencumbered Asset so long as: (1) such Property is (i) owned in fee simple (or the legal equivalent in the jurisdiction where such Property is located) by such Foreign Subsidiary or (ii) leased solely by such Foreign Subsidiary pursuant to a long-term lease having terms and conditions reasonably acceptable to the Administrative Agent; (2) all of the issued and outstanding Equity Interests of such Foreign Subsidiary are legally and beneficially owned by one or more of the Borrower and Wholly Owned Subsidiaries; (3) such Foreign Subsidiary has no Indebtedness other than (x) Nonrecourse Indebtedness and (y) other Indebtedness in an aggregate outstanding principal amount of less than 2.0% of the value of the assets of such Foreign Subsidiary (such value to be determined in a manner consistent with the definition of Total Asset Value or, if not contemplated under the definition of Total Asset Value, in a manner acceptable to the Administrative Agent); (4) neither such Property, nor any interest of such Foreign Subsidiary therein, is subject to any Lien (other than Permitted Liens of the types described in clauses (a) through (c) or (e) through (j) of the definition thereof) or to any Negative Pledge, other than Negative Pledges permitted pursuant to Section 9.2.(b)(iii) and Section 9.2.(b)(iv); and (5) such Property satisfies the requirements set forth in the immediately preceding clauses (b), (c), (d), (e), (f), (g), (h) and (i).

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“Unencumbered Asset Value” means, on any date of determination, the sum of: (a) unrestricted cash of the Borrower and its Subsidiaries; (b)(i) Adjusted EBITDA for the four fiscal quarters most recently ended attributable to Unencumbered Assets owned or leased by the Borrower or any Subsidiary for one or more fiscal quarters of the Borrower divided by (ii) the applicable Capitalization Rate; (c) the purchase price paid for any Unencumbered Asset acquired during such period (less any amounts paid as a purchase price adjustment, held in escrow, retained as a contingency reserve, or other similar arrangements); provided that (x) once any such Unencumbered Asset is included in the determination of Unencumbered Asset Value pursuant to the preceding clause (b) it may not thereafter be included under this clause (c) and (y) any Unencumbered Asset the value of which was determined under clause (b) of this definition in the Existing Credit Agreement may not be valued under this clause (c); (d) the book value of all Unencumbered Mortgage Notes of the Borrower and its Subsidiaries (excluding any Unencumbered Mortgage Note (i) where the obligor is more than 30 days past due with respect to any payment obligation or (ii) secured by a Non-Domestic Property); and (e) the value of the Equity Interests in RMR Inc. owned by the Borrower, such value determined at Fair Market Value, so long as such Equity Interests are not subject to any Liens (other than Permitted Liens of the types described in clauses (a) through (c) or clauses (e) through (j) of the definition thereof) or to any Negative Pledge (other than certain Negative Pledges permitted under clause (iv) of Section 9.2(b)). To the extent that (w) the sum of the book value of Unencumbered Mortgage Notes would, in the aggregate, account for more than 10.0% of Unencumbered Asset Value, such excess shall be excluded; (x) Properties leased by the Borrower or a Wholly Owned Subsidiary pursuant to a Ground Lease having a remaining term of less than 30 years (taking into account extensions which may be effected by the lessee without the consent of the lessor) would, in the aggregate, account for more than 10.0% of Unencumbered Asset Value, such excess shall be excluded; (y) Non-Domestic Properties would, in the aggregate, account for more than 20.0% of Unencumbered Asset Value, such excess shall be excluded; and (z) Other Properties would, in the aggregate, account for more than 20.0% of Unencumbered Asset Value, such excess shall be excluded. In addition, to the extent that the value of the Equity Interests of RMR Inc. owned by the Borrower would in the aggregate account for more than 3.0% of Unencumbered Asset Value, such excess shall be excluded. If an Unencumbered Asset or Unencumbered Mortgage Note is not owned as of the last day of a quarter then such asset shall be excluded from the foregoing calculations. Notwithstanding the foregoing, for purposes of determining Unencumbered Asset Value at any time, (i) the Borrower may, in addition to the Unencumbered Assets referred to in the immediately preceding clause (c), include the purchase price paid for any Unencumbered Asset acquired during the period following the end of the fiscal quarter most recently ended through the time of such determination (less any such amounts paid during such period as a purchase price adjustment or held in escrow at the time of such determination, retained as a contingency reserve at the time of such determination, or subject to other similar arrangements, each at the time of such determination); provided, that if the Borrower elects to include the purchase price paid for any Unencumbered Asset acquired during the period following the end of the fiscal quarter most recently ended through the time of such determination as permitted by this clause (i), then the Borrower must exclude from the determination of Unencumbered Asset Value Adjusted EBITDA or the purchase price, as applicable, of any Unencumbered Asset disposed of by the Borrower during such period and (ii) for purposes of the immediately preceding clause (a), the amount of unrestricted cash shall be calculated as of such date of determination rather than as of the end of the fiscal quarter most recently ended.

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(c)     The Credit Agreement is hereby amended by restating Section 6.1.(u) thereof in its entirety to read as follows:

(u)    Business. As of the Agreement Date, the Borrower and its Subsidiaries are engaged substantially in the business of the acquisition, financing, ownership, development, leasing and tenancy (through TRSs) of lodging, service-oriented retail and travel related properties and other businesses activities incidental thereto.

(d)    The Credit Agreement is hereby amended by adding the following Section 6.1.(bb) to read as follows:

(bb)    Beneficial Ownership Certification. As of the First Amendment Date, all information included in the Beneficial Ownership Certification is true and correct to the knowledge of the officer of the Borrower that executes such certification.

(e)    The Credit Agreement is hereby amended by adding the following sentence to the end of Section 7.2. thereof:

The Borrower will (a) notify the Administrative Agent and each Lender that previously received a Beneficial Ownership Certification of any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified therein and (b) promptly upon the reasonable request of the Administrative Agent or any Lender, provide the Administrative Agent or such Lender, as the case may be, any information or documentation requested by it for purposes of complying with the Beneficial Ownership Regulation.

(f)    The Credit Agreement is hereby amended by restating Section 9.1.(b) to read as follows:

(b)    Minimum Fixed Charge Coverage Ratio. The Borrower shall not permit the ratio of (i) Adjusted EBITDA for the fiscal quarter of the Borrower most recently ending and the three immediately preceding fiscal quarters to (ii) Fixed Charges for such period, to be less than 1.50 to 1.00 at any time.

(g)    The Credit Agreement is hereby amended by restating Section 9.1.(e) to read as follows:

(e)    Unencumbered Interest Coverage Ratio. The Borrower shall not permit the ratio of (i) Unencumbered EBITDA for the fiscal quarter of the Borrower most recently ending and the three immediately preceding fiscal quarters to (ii) Unsecured Debt Service for such period, to be less than 1.75 to 1.00 at any time.

(h)    The Credit Agreement is hereby amended by restating Section 10.1.(d)(ii) and Section 10.1.(d)(iii) to read as follows:

(ii)    (x) The maturity of any Material Indebtedness shall have been accelerated in accordance with the provisions of any indenture, contract or instrument evidencing, providing for the creation of or otherwise concerning such Material Indebtedness or (y) any Material Indebtedness shall have been required to be prepaid or repurchased prior to the stated maturity thereof (other than as a result of customary non‑default mandatory

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prepayment requirements associated with asset sales, casualty events or debt or equity issuances); or

(iii)    Any other event shall have occurred and be continuing which, with or without the passage of time, the giving of notice, or otherwise, would permit any holder or holders of any Material Indebtedness, any trustee or agent acting on behalf of such holder or holders or any other Person, to accelerate the maturity of any such Material Indebtedness or require any such Material Indebtedness to be prepaid or repurchased prior to its stated maturity (other than as a result of customary non‑default mandatory prepayment requirements associated with asset sales, casualty events or debt or equity issuances).

(i)    The Credit Agreement is hereby amended by replacing the word “powers” with “Powers” in the first sentence of Section 12.21.

(j)     The Credit Agreement is hereby amended by adding the following Section 12.22. to read as follows:

Section 12.22. Acknowledgement Regarding Any Supported QFCs.

To the extent that the Loan Documents provide support, through a guarantee or otherwise, for a Derivatives Contract or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

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Section 2. Conditions Precedent. The effectiveness of this Amendment is subject to the truth and accuracy of the representations set forth in Section 3 below and receipt by the Administrative Agent of the following, each of which shall be in form and substance satisfactory to the Administrative Agent;

(a)    A counterpart of this Amendment duly executed by the Borrower, the Administrative Agent and the Requisite Lenders;

(b)    A certificate of the Borrower’s chief executive officer, chief legal officer, chief financial officer or chief accounting officer certifying as of the date hereof, and after giving effect to the transactions hereby, that (i) no Default or Event of Default shall be in existence and (ii) the representations and warranties made or deemed made by the Borrower or any other Loan Party in any Loan Document to which such Loan Party is a party shall be true and correct in all material respects (except in the case of a representation or warranty qualified by materiality, in which case such representation or warranty shall be true and correct in all respects) on the date hereof except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects (except in the case of a representation or warranty qualified by materiality, in which case such representation or warranty shall have been true and correct in all respects) on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Credit Agreement;

(c)    Evidence that all fees, expenses and reimbursement amounts due and payable to the Administrative Agent and any of the Lenders in connection with this Amendment have been paid;

(d)    Each Loan Party or Subsidiary thereof that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall have delivered to the Administrative Agent, and any Lender requesting the same, a Beneficial Ownership Certification in relation to such Loan Party or Subsidiary, in each case, at least five (5) Business Days prior to the First Amendment Date; and

(e)     Such other documents, agreements, instruments, certificates or other confirmations as the Administrative Agent may reasonably request.

Section 3. Representations and Warranties. The Borrower represents and warrants to the Administrative Agent and the Lenders that:

(a)    Authorization. The Borrower has the right and power, and has taken all necessary action to authorize it, to execute and deliver this Amendment and to perform its obligations hereunder and under the Amended Credit Agreement in accordance with their respective terms. This Amendment has been duly executed and delivered by a duly authorized officer of the Borrower and each of this Amendment and the Amended Credit Agreement is a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its respective terms except as (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability.

(b)    Compliance with Laws, etc. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of this Amendment and the Amended Credit Agreement in accordance with their respective terms, do not and will not, by the passage of time, the giving of notice or otherwise: (i) require any Governmental Approval or violate any Applicable Law (including Environmental Laws) relating to the Borrower or any other Loan Party; (ii) conflict with, result in a breach of or constitute a default

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under the organizational documents of Borrower or any other Loan Party, or any indenture, agreement or other instrument to which the Borrower or any other Loan Party is a party or by which it or any of its respective properties may be bound; or (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by the Borrower or any other Loan Party other than in favor of the Administrative Agent for its benefit and the benefit of the Lenders and the Issuing Bank.

(c)    No Default. No Default or Event of Default has occurred and is continuing as of the date hereof or will exist immediately after giving effect to this Amendment.

Section 4. Reaffirmation of Representations by Borrower. The Borrower hereby repeats and reaffirms all representations and warranties made by the Borrower and the other Loan Parties to the Administrative Agent and the Lenders in the Credit Agreement and the other Loan Documents on and as of the date hereof with the same force and effect as if such representations and warranties were set forth in this Amendment in full.

Section 5. Certain References. Each reference to the Credit Agreement in any of the Loan Documents shall be deemed to be a reference to the Credit Agreement, as amended by this Amendment. This Amendment is a Loan Document.

Section 6. Costs and Expenses. The Borrower shall reimburse the Administrative Agent for all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by the Administrative Agent in connection with the preparation, negotiation and execution of this Amendment and the other agreements and documents executed and delivered in connection herewith.

Section 7. Benefits. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

Section 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

Section 9. Effect. Except as expressly herein amended, the terms and conditions of the Credit Agreement and the other Loan Documents remain in full force and effect. The amendment contained herein shall be deemed to have prospective application only. The Credit Agreement (as amended hereby) is hereby ratified and confirmed in all respects. Nothing in this Amendment shall limit, impair or constitute a waiver of the rights, powers or remedies available to the Administrative Agent or the Lenders under the Credit Agreement (as amended hereby) or any other Loan Document.

Section 10. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and shall be binding upon all parties, their successors and assigns.

Section 11. Definitions. All capitalized terms not otherwise defined herein are used herein with the respective definitions given them in the Credit Agreement.

[Signatures on Next Page]

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Second Amended and Restated Credit Agreement to be executed as of the date first above written.

HOSPITALITY PROPERTIES TRUST

By: /s/ Brian Donley                                          

Name:Brian Donley                                     

Title: Chief Financial Officer and Treasurer

[Signatures Continued on Next Page]

[Signature Page to First Amendment to Second Amended and Restated Credit Agreement]

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, as Issuing Bank and as a Lender

By: /s/ Anand J. Jobanputra                                 

Name: Anand J. Jobanputra                            

Title: Senior Vice President                            

Hospitality Finance Group                    

Wells Fargo Bank, N.A.                        

EX-10.11

Exhibit 10.11

Execution Version

TRANSACTION AGREEMENT

by and between

SONESTA HOLDCO CORPORATION

and

SERVICE PROPERTIES TRUST

February 27, 2020

TABLE OF CONTENTS

Page

SECTION 1 DEFINITIONS	1
1.1 Definitions	1
SECTION 2 TRANSACTIONS	4
2.1 Transactions	4
2.2 Sale of Sale Properties	5
SECTION 3 CONDITIONS TO RESTRUCTURING TRANSACTIONS	5
3.1 Conditions to Obligations of SVC	5
3.2 Conditions to Obligations of Sonesta Holdco	6
SECTION 4 REPRESENTATIONS AND WARRANTIES	7
4.1 Sonesta Holdco Representations and Warranties	7
4.2 SVC Representations and Warranties	11
SECTION 5 ADDITIONAL AGREEMENTS	12
5.1 Cooperation	12
SECTION 6 MISCELLANEOUS	13
6.1 Dispute Resolution	13
6.2 Confidentiality	15
6.3 Publicity	16
6.4 Notices	16
6.5 Waivers, Etc.	17
6.6 Assignment, Successors and Assigns, Third Party Beneficiaries	17
6.7 Severability	17
6.8 Counterparts, Etc	18
6.9 Governing Law	18
6.10 Expenses	18
6.11 Section and Other Headings; Interpretation	18
6.12 SVC NON-LIABILITY OF TRUSTEES	18

i

6.13 Entire Agreement	18
6.14 Survival	18
6.15 Acknowledgement of Disclaimer of Other Representations and Warranties	19
6.16 Non-Recourse	19
6.17 Further Assurances	19

Exhibits

Exhibit A-1    –    Form of Amended and Restated Management Agreement (Sale Properties)
Exhibit A-2    –    Form of Amended and Restated Management Agreement (Non-Sale        Properties)
Exhibit B    –    Form of Amended and Restated Pooling Agreement
Exhibit C    –    Form of Registration Rights Agreement
Exhibit D    –    Form of Stockholders Agreement

Schedules

Schedule 1    –    Contributed Entities

Schedule 2    –    Existing Properties

Schedule 3    –    Non-Sale Properties Adjusted Invested Capital

Schedule 4    –    Sonesta Holdco Subsidiaries

Schedule 5    –    Sonesta Holdco Disclosure Schedule

ii

TRANSACTION AGREEMENT

THIS TRANSACTION AGREEMENT is made as of February 27, 2020, by and between Sonesta Holdco Corporation, a Maryland corporation (“Sonesta Holdco”), on behalf of itself and its subsidiaries, and Service Properties Trust, a Maryland real estate investment trust (“SVC”), on behalf of itself and its subsidiaries.

PRELIMINARY STATEMENTS

Sonesta Holdco, through its wholly owned subsidiary, Sonesta Hotels International Corporation, a Maryland corporation (“Sonesta”), currently manages certain real properties and improvements owned by SVC through certain of its subsidiaries, which are currently operated as Sonesta branded hotels.

SVC and Sonesta Holdco wish to restructure their existing management relationship as contemplated by this Agreement and enter into certain other agreements and transactions as contemplated by this Agreement subject to the terms and conditions set forth herein.

NOW, THEREFORE, it is agreed:

Section 1DEFINITIONS

1.1    Definitions. Capitalized terms used in this Agreement shall have the meanings set forth below:

(1)    “AAA”: the meaning given in Section 6.1(1).

(2)    “Agreement”: this Transaction Agreement, together with the Schedules and Exhibits hereto, as it or they may be amended in accordance with the terms hereof.

(3)    “Amended and Restated Management Agreements”: the Amended and Restated Management Agreements for the Existing Properties, each in the form attached as Exhibit A-1 with respect to the Sale Properties and Exhibit A-2 with respect to the Non-Sale Properties.

(4)    “Amended and Restated Pooling Agreement”: the Amended and Restated Pooling Agreement in the form attached as Exhibit B.

(5)    “Appellate Rules”: the meaning given in Section 6.1(7).

(6)    “Award”: the meaning given in Section 6.1(5).

(7)    “Business Day”: any day other than Saturday, Sunday, or any other day on which banking institutions in the Commonwealth of Massachusetts are authorized by Law or executive action to close.

(8)    “Code”: the U.S. Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

(9)    “Contributed Entities”: the Entities identified on Schedule 1.

(10)    “Contribution Agreement”: the Contribution Agreement dated as of February 26, 2020 by and among Sonesta Holdco, the Contributors and the Contributed Entities relating to the contribution by the Contributors of their interests in the Contributed Entities to Sonesta Holdco.

(11)    “Contributors”: the owners of certain membership interests in the Contributed Entities immediately prior to the consummation of the transfer of all of their membership interests to Sonesta Holdco pursuant to the Contribution Agreement.

(12)    “Disputes”: the meaning given in Section 6.1(1).

(13)    “Effective Time”: 12:01 a.m. Boston local time on the date on which the conditions set forth in Section 3 are satisfied.

(14)    “Entity”: any corporation, general or limited partnership, limited liability company or partnership, stock company or association, joint venture, association, company, trust, bank, trust company, land trust, business trust, real estate investment trust, cooperative, any government or agency, authority or political subdivision thereof or any other entity.

(15)    “Existing Management Agreements”: the Management Agreements by and between Sonesta or one of its subsidiaries and a subsidiary of SVC, as identified on Schedule 2, as each is in effect immediately prior to the Effective Time.

(16)    “Existing Pooling Agreement”: the Pooling Agreement dated as of April 23, 2012, as amended, by and among Sonesta and certain of its subsidiaries and certain subsidiaries of SVC.

(17)    “Existing Properties”: the real properties and improvements owned by SVC, through its subsidiaries, identified on Schedule 2 and which are managed by Sonesta or one of its subsidiaries under an Existing Management Agreement.

(18)    “Financial Statements”: the meaning given in Section 4.1.8(a).

(19)    “GAAP”: generally accepted accounting principles in the United States applied on a consistent basis.

(20)    “Governmental Authority”: any court, agency, authority, board (including environmental protection, planning and zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi-governmental unit of the United States or any state or any county or any political subdivision of any of the foregoing, whether now or hereafter in existence, having jurisdiction over any SVC Party or Sonesta Party or any Existing Property, or any portion thereof.

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(21)    “Laws”: all laws, ordinances, statutes, codes, rules, regulations, agreements, judgments, orders and decrees now or hereafter enacted, promulgated, or amended, of any Governmental Authority.

(22)    “Material Contract”: any contract, agreement, document or other obligation that is material to Sonesta Holdco and its subsidiaries and their business and operations taken as a whole.

(23)    “Non-Sale Properties”: the Existing Properties identified on Schedule 2 as the “Non-Sale Properties”.

(24)    “Permit”: any governmental permit, license, registration, authorization, accreditation, qualification, certification or approval.

(25)    “Person”: any individual or Entity.

(26)    “Projections”: the meaning given in Section 4.1.8(b).

(27)    “Registration Rights Agreement: the Registration Rights Agreement in the form attached as Exhibit C.

(28)    “Rules”: the meaning given in Section 6.1(1).

(29)    “Sale Properties”: the Existing Properties identified on Schedule 2 as the “Sale Properties”.

(30)    “S Elections”: the meaning given in Section 4.1.11(c).

(31)    “Securities Act”: the Securities Act of 1933, as amended from time to time and the rules and regulations promulgated and issued thereunder.

(32)    “Sonesta”: the meaning given in the Preliminary Statements to this Agreement.

(33)    “Sonesta Holdco”: the meaning given in the preamble to this Agreement.

(34)    “Sonesta Holdco Common Shares”: the meaning given in Section 4.1(2).

(35)    “Sonesta Parties”: Sonesta Holdco, Sonesta, the Contributed Entities and any other direct or indirect subsidiary of Sonesta Holdco.

(36)    “Stockholders Agreement”: the Stockholders Agreement in the form attached as Exhibit D.

(37)    “SVC”: the meaning given in the preamble to this Agreement.

(38)    “SVC Shares”: the meaning given in Section 4.1(2).

(39)    “SVC Parties”: SVC and any other direct or indirect subsidiaries of SVC.

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(40)    “Tax” means any tax, governmental fee or other like assessment or charge of any kind whatsoever (including withholding on amounts paid to or by any Person), whether federal, state, local, foreign or other, together with any interest, penalty, addition to tax or additional amount imposed by any Taxing authority.

(41)    “Tax Return” means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and any amendment thereof.

(42)    “Transactions”: the meaning given in Section 2.1.

(43)    “Transaction Documents”: this Agreement, the Contribution Agreement, the Amended and Restated Management Agreements, the Amended and Restated Pooling Agreement, the Registration Rights Agreement, the Stockholders Agreement and all other documents executed in connection therewith or the transactions contemplated hereunder or thereby.

Section 2
TRANSACTIONS

2.1    Transactions. As of the Effective Time on the date the conditions set forth in Section 3 are satisfied, the following transactions (the “Transactions”) shall occur; provided, that each party hereto shall use its respective commercially reasonable efforts to cause such conditions to be satisfied as promptly as practicable on or following the date hereof:

(1)Amendment of Existing Management Agreements. Each of the Existing Management Agreements for the Existing Properties will be amended and restated to the applicable form of Amended and Restated Management Agreement.

(2)Amendment of the Existing Pooling Agreement. The Existing Pooling Agreement will be amended and restated to the form of the Amended and Restated Pooling Agreement;

(3)Share Issuances. Sonesta Holdco shall have issued to SVC the SVC Shares, subject to the terms and conditions and with the benefits of the Stockholders Agreement and the Registration Rights Agreement;

(4)Release of Documents. All documents delivered in escrow pursuant to Section 3 shall be automatically released from such escrow and deemed delivered to the applicable party or parties thereto; and

(5)Adjustment to Invested Capital. The aggregate “Invested Capital”, under and as defined in the Amended and Restated Management Agreements for the Non-Sale Properties shall be reduced by an aggregate of $375 million, allocated among the Non-Sale Properties as set forth on Schedule 3 and such allocated amounts shall be reflected in the applicable Amended and Restated Management Agreements with respect to the Non-Sale Properties.

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2.2    Sale of Sale Properties. In consideration for the Transactions, SVC shall use commercially reasonable efforts to sell, rebrand or repurpose each of the Sale Properties. The parties acknowledge and agree that upon the sale of each Sale Property, the applicable Amended and Restated Management Agreement in respect of such Sale Property and any fees, payments, amounts due or obligations in respect thereof shall terminate in accordance with its terms and that Sale Property shall thereafter no longer be included in the Amended and Restated Pooling Agreement in all respects.

Section 3
CONDITIONS TO RESTRUCTURING TRANSACTIONS

3.1    Conditions to Obligations of SVC. The obligation of SVC to consummate the Transactions is subject to the satisfaction of the following conditions at or prior to the Effective Time:

(1)    Documents to be Delivered:

(a)    Sonesta or its respective subsidiaries shall have executed and delivered to SVC in escrow an Amended and Restated Management Agreement for each Existing Property in the applicable form;

(b)    Sonesta and its respective subsidiaries shall have executed and delivered to SVC in escrow the Amended and Restated Pooling Agreement;

(c)    Sonesta Holdco shall have delivered to SVC in escrow a certificate in customary form representing the SVC Shares in the name of SVC;

(d)    Sonesta Holdco and each of the Contributors shall have executed and delivered to SVC in escrow the Stockholders Agreement;

(e)    Sonesta Holdco shall have executed and delivered to SVC in escrow the Registration Rights Agreement;

(f)    The transactions contemplated by the Contribution Agreement shall have been consummated on the terms of the Contribution Agreement, without any amendment or waiver thereof except as has been consented to by SVC;

(g)    SVC shall have received evidence reasonably satisfactory to it that each Contributed Entity has good and marketable fee title to the real estate and improvements identified on Schedule 1 as being owned by it, subject to no monetary liens or other liens, encumbrances or restrictions that would reasonably be expected to materially and adversely affect the value or use as currently used of such real estate and improvements; and

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(h)    Sonesta Holdco or its respective subsidiaries shall have executed and delivered to SVC in escrow such other agreements and documents reasonably necessary to give effect to the transactions contemplated by this Agreement or otherwise reasonably requested by SVC.

(2)    Sonesta Holdco Representations and Covenants. The representations and warranties of the Sonesta Parties in this Agreement and in each other Transaction Document shall be true, correct and complete in all material respects (or in all respects to the extent qualified by materiality or material adverse effect); provided that the representations and warranties in Section 4.1(2)(a) and (b) shall be true in all respects on and as of the Effective Time, as if made as of the Effective Time after giving effect to the contribution of the interests of the Contributed Entities to Sonesta Holdco pursuant to the Contribution Agreement (unless such representation and warranty is made as to a specific date in which case it shall be true, correct and complete in all material respects as of such date), and the Sonesta Parties shall have performed in all material respects all covenants and obligations required to be performed by them under this Agreement and such Transaction Documents on or before the Effective Time.

(3)    No Injunctions or Restraints; Illegality. No order, injunction or decree issued by any court or agency of competent jurisdiction or other law preventing or making illegal the consummation of any of the transactions contemplated by this Agreement shall be in effect.

3.2    Conditions to Obligations of Sonesta Holdco. The obligation of Sonesta Holdco to consummate the Transactions is subject to the satisfaction of the following conditions as of the Effective Time:

(1)    Documents to be Delivered:

(a)    SVC or its respective subsidiaries shall have executed and delivered to Sonesta Holdco in escrow an Amended and Restated Management Agreement for each Existing Property in the applicable form;

(b)    SVC and its respective subsidiaries shall have executed and delivered to Sonesta Holdco in escrow the Amended and Restated Pooling Agreement;

(c)    SVC shall have executed and delivered to Sonesta Holdco in escrow the Stockholders Agreement;

(d)    SVC shall have executed and delivered to Sonesta Holdco in escrow the Registration Rights Agreement; and

(e)    SVC or its respective subsidiaries shall have executed and delivered to Sonesta Holdco in escrow such agreements and documents

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reasonably necessary to give effect to the transactions contemplated by this Agreement or otherwise reasonably requested by Sonesta Holdco.

(2)    SVC Representations and Covenants. The representations and warranties of the SVC Parties in this Agreement and in each other Transaction Document shall be true, correct and complete in all material respects (or in all respects to the extent qualified by materiality or material adverse effect) on and as of the Effective Time, as if made as of the Effective Time (unless such representation and warranty is made as to a specific date in which case it shall be true, correct and complete in all material respects as of such date), and the SVC Parties shall have performed in all material respects all covenants and obligations required to be performed by them under this Agreement and such Transaction Documents on or before the Effective Time.

(3)    No Injunctions or Restraints; Illegality. No order, injunction or decree issued by any court or agency of competent jurisdiction or other Laws preventing or making illegal the consummation of any of the transactions contemplated by this Agreement shall be in effect.

Section 4REPRESENTATIONS AND WARRANTIES

4.1    Sonesta Holdco Representations and Warranties. Sonesta Holdco represents and warrants to SVC that:

(1)    Organization. Sonesta Holdco and each of its subsidiaries is duly organized, validly existing and in good standing under the Laws of the state of its jurisdiction of organization or formation. Sonesta Holdco and each of its subsidiaries has the requisite power and authority under the Laws of such state and its organizational or governing documents to conduct its business as it is now being conducted and to own and operate its properties and assets (except where the failure to have such power and authority would not have a material adverse effect on the Sonesta Parties taken as a whole), to execute and deliver the Transaction Documents to which it is a party, to perform its obligations thereunder and to consummate the transactions contemplated by the Transaction Documents to which it is a party. Schedule 4 sets forth each subsidiary of Sonesta Holdco, including its jurisdiction of organization. Except as set forth in Schedule 4 each subsidiary of Sonesta Holdco is wholly owned. Sonesta Holdco is a newly formed entity of the state of Maryland, that has conducted no business other than its ownership of the equity interests of Sonesta and its subsidiaries and the Contributed Entities and the transactions contemplated by this Agreement.

(2)    Capitalization.

(a)    As of the date of this Agreement, the authorized capitalization of Sonesta Holdco is 1,000,000 shares of common stock, $0.01 par value per share (the “Sonesta Holdco Common Shares”), of which, immediately prior to the Effective Time, 261Sonesta Holdco Common Shares are issued and outstanding and held by the

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Contributors, and 134 Sonesta Holdco Common Shares are reserved for issuance to SVC pursuant to this Agreement (the reserved Sonesta Holdco Common Shares, the “SVC Shares”). When issued, the SVC Shares will constitute approximately, but not more than, 34% of the issued and outstanding Sonesta Holdco Common Shares as of such time.

(b)    All of the issued and outstanding Sonesta Holdco Common Shares are, and as of the Effective Time the SVC Shares will be, duly authorized, validly issued, fully paid and non-assessable and, other than pursuant to the Stockholders Agreement, no Person is entitled to preemptive rights in respect of the issuance of the SVC Shares. Upon issuance, the SVC Shares will not be subject to any liens, encumbrances or restrictions (including restrictions on transfer) other than pursuant to applicable securities Laws, the Stockholders Agreement or liens arising out of SVC’s ownership thereof (other than any such liens arising out of any act or omission of any Sonesta Party).

(c)    Except as set forth in the Transaction Documents or as set forth in Schedule 5, there are no outstanding subscriptions, securities, options, restricted stock units, dividend equivalent rights, warrants, call rights, profits interests, stock appreciation rights, phantom shares, convertible securities, rights of first refusal, preemptive rights or other similar rights, agreements, arrangements, undertakings or commitments of any kind to which Sonesta Holdco or any of its subsidiaries is a party or by which any of them is bound obligating Sonesta Holdco or any of its subsidiaries to (i) issue, deliver, transfer, sell or create, or cause to be issued, delivered, transferred, sold or created, additional shares of capital stock or other equity interests, or phantom shares or other contractual rights, the value of which is determined in whole or in part by the value of any equity security of Sonesta Holdco or any of its subsidiaries, or securities convertible into or exchangeable for such shares of capital stock or other equity interests, (ii) issue, grant, extend or enter into any such subscriptions, securities, options, restricted stock units, dividend equivalent rights, warrants, calls, rights, profits interests, stock appreciation rights, phantom shares, convertible securities, rights of first refusal, preemptive rights or other similar rights, agreements, arrangements, undertakings or commitments, or (iii) redeem, repurchase or otherwise acquire any such shares of capital stock or other equity interests of Sonesta Holdco or any subsidiary of Sonesta Holdco.

(d)    Except as set forth in the Registration Rights Agreement, Sonesta Holdco is not under any obligation, contingent or otherwise, by reason of any contract to register the offer and sale or resale of any of its securities under the Securities Act.

(3)    Authorization. The execution and delivery by the Sonesta Parties of the Transaction Documents to which they are a party and the consummation of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary trust, corporate or limited liability company, as applicable, action on the part of the Sonesta Parties. Each of the Transaction Documents, upon execution and delivery by a Sonesta Party, will be duly and validly executed by such Sonesta Party and will constitute its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforcement may be subject to (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar Laws relating to creditors’ rights generally, (b) general principles of equity (whether

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applied in a proceeding at Law or in equity) and (c) any implied covenant of good faith and fair dealing.

(4)    No Violation. The execution and delivery of the Transaction Documents by the Sonesta Parties does not, and the consummation of the transactions contemplated by the Transaction Documents, including the issuance of the SVC Shares, will not, (a) conflict with, or result in any violation of or default under, any provision of any Sonesta Party’s organizational documents, (b) conflict with, or result in any violation of or default under, any Law or judgment applicable to any Sonesta Party or to which any of their properties or assets are subject, or (c) conflict with, or, with or without notice or the lapse of time, result in a breach, termination (or right of termination) or violation of or default under the terms of any agreement, contract, indenture or other instrument to which any Sonesta Party is a party or subject or to which any of their properties or assets are subject, except, with respect to the foregoing clauses (b) and (c), where such conflict, violation, termination or default would not impair or delay the consummation of any of the transactions contemplated by the Transaction Documents or reasonably be expected to have a material adverse effect on the Sonesta Parties taken as a whole.

(5)    Approvals. The execution and delivery by each Sonesta Party of the Transaction Documents to which it is a party and the consummation of the transactions contemplated by the Transaction Documents do not (a) require the consent, approval, order or authorization of any Person under any agreement, contract, indenture or other instrument or applicable Laws to which any Sonesta Party is a party or to which any Sonesta Party or any of their properties or assets are subject or (b) require any declaration, filing or registration with any Governmental Authority, except those that have been obtained and those the failure of which to receive would not impair or delay the consummation of any of the transactions contemplated by the Transaction Documents or reasonably be expected to have a material adverse effect on the Sonesta Parties taken as a whole.

(6)    Litigation. No investigation, action or proceeding is pending and, to Sonesta Holdco’s knowledge, no action or proceeding is threatened in writing, with respect to any Sonesta Party (a) which questions the validity of any of the Transaction Documents or any action taken or to be taken pursuant thereto or would otherwise materially impair or delay the consummation of any of the Transactions or (b) would reasonably be expected to have material adverse effect on the Sonesta Parties taken as a whole.

(7)    Compliance with Laws; Permits. Each Sonesta Party is in compliance in all material respects with all applicable Laws and possesses all material Permits necessary for the conduct of its business as currently conducted and all such material Permits are in full force and effect in all material respects.

(8)    Financial Information.

(a)     The audited consolidated financial statements for the year ended December 31, 2018 and the unaudited consolidated financial statements for the year ended December 31, 2019 with respect to Sonesta and the unaudited financial statements for the years ended December 31, 2019 and December 31, 2018 for each of the

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Contributed Entities (the “Financial Statements”) have been furnished to the SVC Parties or their representatives in connection with the Transactions and such Financial Statements, when furnished, were true, complete and correct in all material respects and fairly presented in all material respects the financial position and results of operations of such Sonesta Parties set forth therein as of their respective dates and for the respective periods presented, and were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved, except in the case of any unaudited financial statements, for the absence of footnotes and subject to customary year-end adjustments.

(b)    All financial information constituting projections, financial estimates, budgets, forecasts or other forward looking statements (“Projections”) with respect to any Sonesta Party furnished to the SVC Parties or their representatives in connection with the Transactions were prepared in good faith based on assumptions that are believed by the Sonesta Parties to have been reasonable at the time furnished (it being understood that such Projections are subject to significant uncertainties and contingencies and that no assurance can be given that any particular Projections will be realized and that actual results may differ from the Projections and that such differences may be material).

(9)    Absence of Certain Changes. Each Sonesta Party has operated its business in the ordinary course consistent with past practice since December 31, 2019, and other than as previously disclosed in writing to SVC, there has not occurred any change, event, occurrence, circumstance, development or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Sonesta Parties taken as a whole.

(10)    Absence of Undisclosed Liabilities; Indebtedness. The Sonesta Parties have no liabilities or obligations of any nature, whether accrued, contingent or otherwise, except for liabilities or obligations (i) reflected in the Financial Statements, (ii) that were incurred in the ordinary course of business, none of which has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Sonesta Parties taken as a whole or (iii) that were incurred in connection with the Transactions.

(11)    Taxes.

(a)    All material Tax Returns required to be filed by or on behalf of each Sonesta Party have been timely filed with the appropriate Governmental Authority (taking into account any extensions of time within which to file such Tax Returns). All such Tax Returns are true, complete, and correct in all material respects. Each Sonesta Party has duly paid (or there has been paid on its behalf), or made adequate provisions in accordance with GAAP for, all material Taxes required to be paid by it, whether or not shown on any Tax Return.

(b)    (i) there are no audits, investigations by any Governmental Authority, or other proceedings pending or threatened in writing with regard to any Taxes or Tax Returns of any Sonesta Party; (ii) no material deficiency for Taxes of any Sonesta Party has been claimed, proposed, or assessed in writing by any Governmental Authority; and

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(iii) no Sonesta Party has waived any statute of limitations with respect to the assessment of material Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency for any open Tax year.

(c)    Giving effect to the principles of Rev. Rul. 2008-18, 2008-1 C.B. 674, Sonesta Holdco and its shareholders made (i) a valid election for Sonesta Holdco to be treated as an “S corporation”, as that term is defined in Section 1361(a) of the Code, for federal income Tax purposes, and (ii) similar valid elections under the Laws of any applicable states or other jurisdictions where any Sonesta Party is, was, or may be subject to Tax, and all such elections will be in effect at the Effective Time (such elections in (i) and (ii) are collectively referred to herein as “S Elections”). Each S Election has been in effect with respect to Sonesta Holdco and any predecessor corporation (within the meaning of Section 1374(c) of the Code) for each taxable year from the date of such S Election and will continue until the Effective Time.

(d)    There are no Tax allocation or sharing agreements or similar arrangements with respect to or involving any Sonesta Party, and after the Effective Time no Sonesta Party shall be bound by any such Tax allocation agreements or similar arrangements or have any liability thereunder for amounts due in respect of periods prior to the Effective Time.

(12)    No Default. No Sonesta Party is in default in any material respect with respect to any of its indebtedness for borrowed money or under any Material Contract.

4.2SVC Representations and Warranties. SVC represents and warrants to Sonesta Holdco that:

(1)Organization. Each SVC Party is duly organized, validly existing and in good standing under the Laws of the state of its jurisdiction of organization or formation and has the requisite power and authority under the Laws of such state and its organizational or governing documents to conduct its business as it is now being conducted and to own, lease and, to the extent applicable, operate its properties and assets (except where the failure to have such power and authority would not have a material adverse effect on the SVC Parties taken as a whole) and to execute and deliver the Transaction Documents to which it is a party and to perform its obligations thereunder and consummate the transactions contemplated by the Transaction Documents.

(2)Authorization. The execution and delivery by the SVC Parties of the Transaction Documents and the consummation of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary trust, corporate or limited liability company, as applicable, action on the part of the SVC Parties. Each of the Transaction Documents, upon execution and delivery by an SVC Party, will be duly and validly executed by such SVC Party and will constitute its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforcement may be subject to (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar Laws relating to creditors’ rights generally, (b) general

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principles of equity (whether applied in a proceeding at Law or in equity) and (c) any implied covenant of good faith and fair dealing.

(3)No Violation. The execution and delivery of the Transaction Documents by the SVC Parties does not, and the consummation of the transactions contemplated by the Transaction Documents will not, (a) conflict with, or result in any violation of or default under, any provision of any SVC Party’s organizational documents, (b) conflict with, or result in any violation of or default under, any Law or judgment applicable to any SVC Party or to which any of their properties or assets are subject, or (c) conflict with, or, with or without notice or the lapse of time, result in a breach, termination (or right of termination) or violation of or default under the terms of any agreement, contract, indenture or other instrument to which any SVC Party is a party or subject or to which any of their properties or assets are subject, except, with respect to the foregoing clauses (b) and (c), where such conflict, violation, termination or default would not impair or delay the consummation of any of the transactions contemplated by the Transaction Documents or reasonably be expected to have a material adverse effect on the SVC Parties taken as a whole.

(4)Approvals. The execution and delivery by the SVC Parties of the Transaction Documents and the consummation of the transactions contemplated by the Transaction Documents do not (a) require the consent, approval, order or authorization of any Person under any agreement, contract, indenture or other instrument or applicable Laws to which any SVC Party is a party or to which any SVC Party or any of their properties or assets are subject or (b) require any declaration, filing or registration with any Governmental Authority except those that have been obtained and those the failure of which to receive would not impair or delay the consummation of any of the transactions contemplated by the Transaction Documents or reasonably be expected to have a material adverse effect on the SVC Parties taken as a whole.

(5)Litigation. No investigation, action or proceeding is pending and, to SVC’s knowledge, no action or proceeding is threatened in writing in respect of SVC or any of its subsidiaries which questions the validity of any of the Transaction Documents or any action taken or to be taken pursuant thereto that impair or delay the consummation of any of the transactions contemplated by the Transaction Documents.

Section 5ADDITIONAL AGREEMENTS

5.1Cooperation. The Sonesta Parties and SVC Parties shall reasonably cooperate with each other to consummate the transactions contemplated by this Agreement.

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Section 6MISCELLANEOUS

6.1Dispute Resolution.

(1)Disputes. Any disputes, claims or controversies arising out of or relating to this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, including any disputes, claims or controversies brought by or on behalf of a party hereto, a direct or indirect parent of a party, or any holder of equity interests (which, for purposes of this Section 6.1, shall mean any holder of record or any beneficial owner of equity interests, or any former holder of record or beneficial owner of equity interests) of a party, either on its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of any equity interests of a party against a party, or any of their respective trustees, directors, members, officers, managers (including The RMR Group LLC or its parent and their respective successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance, application or enforcement of this Agreement, including the agreements set forth in this Section 6.1, or any other Transaction Document, or the governing documents of a party (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (the “AAA”) then in effect, except as those Rules may be modified in this Section 6.1. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those Persons and a party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.

(2)Selection of Arbitrators. There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date the AAA provides such list to select one (1) of the three (3) arbitrators proposed by the AAA.

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If the party (or parties) fail(s) to select the second (2^nd) arbitrator by that time, the party (or parties) who have appointed the first (1^st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by the AAA to be the second (2^nd) arbitrator; and, if they should fail to select the second (2^nd) arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2^nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3^rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2^nd) arbitrator. If the third (3^rd) arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

(3)Location of Arbitration. Any arbitration hearings shall be held in Boston, Massachusetts, unless otherwise agreed by the parties, but the seat of arbitration shall be Maryland.

(4)Scope of Discovery. There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

(5)Arbitration Award. In rendering an award or decision (an “Award”), the arbitrators shall be required to follow the Laws of the State of Maryland, without regard to principles of conflicts of law. Any arbitration proceedings or Award rendered hereunder, and the validity, effect and interpretation of the agreements set forth in this Section 6.1 shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. An Award shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of Law on which it is based. Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Subject to Section 6.1(7), each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as such Award may provide.

(6)Costs. Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, to the maximum extent permitted by Maryland Law, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s Award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3^rd) appointed arbitrator.

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(7)Appeals. Notwithstanding any language to the contrary in this Agreement, any Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 6.1 shall apply to any appeal pursuant to this Section 6.1 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

(8)Final Judgment. Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 6.1(7), an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon an Award may be entered in any court having jurisdiction. To the fullest extent permitted by Law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any Award made, except for actions relating to enforcement of the agreements set forth in this Section 6.1 or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

(9)Intended Beneficiaries. This Section 6.1 is intended to benefit and be enforceable by the parties hereto and their respective shareholders, stockholders, members, beneficial interest owners, direct and indirect parents, trustees, directors, officers, managers (including The RMR Group LLC or its parent and their respective successor), members, agents or employees and their respective successors and assigns and shall be binding on the parties, and such Persons and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such Persons may have by contract or otherwise.

6.2Confidentiality. Each party shall use commercially reasonable efforts to maintain the confidentiality of any information concerning the parties or any subsidiary of another party provided to or discovered by it or its representatives as a result of the transactions contemplated by the Transaction Documents and which is not otherwise available on a nonconfidential basis to such party and shall not (except as may otherwise be appropriate or required under applicable Law or the rules and regulations of the Securities Exchange Commission, The Nasdaq Stock Market LLC or the Financial Industry Regulatory Authority) disclose such information, subject to the provisions of this Section 6.2, to anyone other than those Persons who have a need to know such information in connection with the conduct of such party’s business, including its attorneys, accountants and other representatives and agents or during the course of or in connection with any litigation or other action, arbitration, investigation or other proceeding based upon or in connection with the subject matter of this Agreement or the transactions contemplated hereby.

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6.3Publicity. The parties agree that, except as may be appropriate or required under applicable Law (including, without limitation, the rules and regulations of the Securities Exchange Commission, The Nasdaq Stock Market LLC or the Financial Industry Regulatory Authority), no party shall, with respect to this Agreement and the transactions contemplated hereby, contact or conduct negotiations with public officials, make any public pronouncements, issue press releases or otherwise furnish information regarding this Agreement or the transactions contemplated hereby to any third party without the consent of the other party, which consent shall not be unreasonably withheld or delayed.

6.4Notices.

(1)All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of electronic confirmation of delivery sent by the sender’s computer, in the case of a notice by electronic mail, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

(2)All such notices shall be addressed,

if to any Sonesta Party, to:

Sonesta Holdco Corporation
400 Centre Street
Newton, Massachusetts 02458
Attn: Jennifer B. Clark
E-Mail: jclark@rmrgroup.com

with a copy to:

Skadden Arps Meagher & Flom LLPOne Rodney Square
920 N. King Street
Wilmington, DE 19801Attn: Faiz Ahmad
E-Mail: faiz.ahmad@skadden.com

If to any SVC Party, to:

Service Properties Trust
Two Newton Place, Suite 300
255 Washington Street
Newton, Massachusetts 02458

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Attn: John G. Murray
E-Mail: jmurray@rmrgroup.com

with a copy to:

Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Nicole Rives
E-Mail: nrives@sullivanlaw.com

(3)By notice given as herein provided, the parties and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other Parties of such notice.

6.5Waivers, Etc. No provision of this Agreement may be waived except by a written instrument signed by the party waiving compliance. No waiver by any party hereto of any of the requirements hereof or of any of such party’s rights hereunder shall release the other parties from full performance of their remaining obligations stated herein. No failure to exercise or delay in exercising on the part of any party hereto any right, power or privilege of such party shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege by such party. Except as otherwise provided herein, this Agreement may not be amended, nor shall any waiver, change, modification, consent or discharge be effected, except by an instrument in writing executed by or on behalf of the party against whom enforcement of any amendment, waiver, change, modification, consent or discharge is sought.

6.6Assignment, Successors and Assigns; Third Party Beneficiaries. This Agreement and all rights and obligations hereunder shall not be assignable by any party without the written consent of the other parties, except to a successor to such party by merger or consolidation or an assignee of substantially all of the assets of such party. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Except as specified in Section 6.1, this Agreement is not intended and shall not be construed to create any rights in or to be enforceable in any part by any other Person.

6.7Severability. If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.

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6.8Counterparts, Etc. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

6.9Governing Law. This Agreement shall be interpreted, construed, applied and enforced in accordance with the Laws of State of Maryland applicable to contracts between residents of Maryland which are to be performed entirely within Maryland subject to the provisions of Section 6.1.

6.10Expenses. The SVC Parties and the Sonesta Parties shall each be responsible for their own out of pocket costs, expenses and attorneys’ fees incurred in connection with the consummation of the transactions contemplated by this Agreement, and, in the case of attorneys’ fees, as incurred by any of them in connection with the negotiation, execution and delivery of Transaction Documents. Notwithstanding anything in the Existing Management Agreements, the Amended and Restated Management Agreements, Existing Pooling Agreement or the Amended and Restated Pooling Agreement, out of pocket costs, expenses and attorneys’ fees paid by a Sonesta Party pursuant to this Section 6.10 will not constitute “Invested Capital,” as defined in the Amended and Restated Management Agreements, or “Aggregate Invested Capital,” as defined in the Amended and Restated Pooling Agreement.

6.11Section and Other Headings; Interpretation. The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and Section, subsection, Schedule and Exhibit references are to this Agreement, unless otherwise specified. The singular and plural use of a defined term shall have the correlative meaning. The words “including” and “include” shall be deemed to be followed by the words “without limitation.”

6.12SVC NON-LIABILITY OF TRUSTEES. THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING SVC, DATED AUGUST 21, 1995, AS AMENDED AND SUPPLEMENTED, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SVC SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SVC. ALL PERSONS DEALING WITH SVC IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF SVC FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

6.13Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersedes all previous contracts and understandings between the parties with respect to the subject matter hereof and thereof.

6.14Survival. The representations of Sonesta Holdco in Sections 4.1(1), 4.1(2) and 4.1(3) and of SVC in Section 4.2(1) and 4.2(2) shall survive for the applicable statute of limitations with respect to a claim for breach of such representation, and all other representations and warranties of the parties set forth in this Agreement shall survive for nine (9) months after the Effective Time. All covenants and other

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agreements of the parties in this Agreement shall survive until fully performed or terminated in accordance with their terms.

6.15Acknowledgement of Disclaimer of Other Representations and Warranties. Each of the parties acknowledge and agree that, except for the representations and warranties expressly set forth in Section 4.1, in the case of Sonesta Holdco, and expressly set forth in Section 4.2 in the case of SVC, no party makes, or has made, any representation or warranty relating to itself or its business or otherwise, and SVC is not relying on any representation or warranty by the Sonesta Holdco except for those expressly set forth in Section 4.1 and Sonesta Holdco is not relying on any representation or warranty by SVC except for those expressly set forth in Section 4.2. SVC acknowledges that is has conducted, to its satisfaction, its own independent review and analysis of the businesses, assets, condition, operations and prospects of the Sonesta Parties and whether to proceed with the transactions contemplated by this Agreement.

6.16Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement, or the negotiation, execution or performance of this Agreement, may only be brought against Sonesta Holdco or SVC, then in each case only with respect to the specific obligations set forth herein with respect to such party. No trustee, director, officer, stockholder employee or agent of a Sonesta Party or an SVC Party shall have any liability for any obligations or liabilities of a Sonesta Party on the one hand, or an SVC Party, on the other hand, for any claim based on, in respect of, or by reason of, the transactions contemplated by this Agreement, any failure of the transactions contemplated by this Agreement to be consummated or any breach or failure to perform hereunder.

6.17Further Assurances. The parties shall use all reasonable efforts to take, or cause to be taken, all appropriate action, to do or cause to be done all things necessary, proper or advisable, and to execute and deliver such documents and other papers, as SVC may reasonably deem necessary or desirable, in each case at SVC’s sole expense, to effect the Transactions consistent with the requirements for SVC to maintain its qualification for taxation as a “real estate investment trust” under the Code.

[Signature page follows]

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as a sealed instrument as of the date first above written.

SERVICE PROPERTIES TRUST, on behalf of itself and the other SVC Parties

By:    /s/ John G. Murray                    John G. Murray        President and Chief Executive Officer

SONESTA HOLDCO CORPORATION, on behalf of itself and the other Sonesta Parties

By:    /s/ Carlos R. Flores                    Carlos R. Flores        President and Chief Executive Officer

[Signature Page to Sonesta Transaction Agreement]

EXHIBIT A-1

FORM OF AMENDED AND RESTATED MANAGEMENT AGREEMENT
(SALE PROPERTIES)

Final Form – Sale Properties

[For Sale Properties]

[Property Name]

AMENDED AND RESTATED

MANAGEMENT AGREEMENT

BY AND BETWEEN

SONESTA INTERNATIONAL HOTELS CORPORATION

AS “MANAGER”
AND

[PROPERTY OWNER]

AS “OWNER”

DATED AS OF FEBRUARY 27, 2020

TABLE OF CONTENTS

ARTICLE 1 APPOINTMENT OF MANAGER	1
1.01 Appointment	1
1.02 Management of the Hotel	1
1.03 Services Provided by Manager	4
1.04 Employees	4
1.05 Right to Inspect	5
ARTICLE II TERM	5
2.01 Term	5
2.02 Early Termination	5
ARTICLE III COMPENSATION OR MANAGER; DISBURSEMENTS	6
3.01 Fees	6
A. Base Management Fee;	6
B. Reservation Fee;	6
C. System Fee;	6
D. Procurement and Construction Supervision Fee;	6
E. Loyalty Program Fee;	6
F. Marketing Program Fee; and	6
G. Incentive Management Fee	6
3.02 Disbursements	6
3.03 Timing of Payments	7
ARTICLE IV ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS;	7
WORKING CAPITAL AND OPERATING LOSSES
4.01 Accounting, Interim Payment and Annual Reconciliation	7
4.02 Books and Records	8
4.03 Accounts	9
4.04 Annual Operating Projection	9
4.05 Working Capital	9
4.06 Operating Losses	10

ARTICLE V REPAIRS; MAINTENANCE AND REPLACEMENTS	10
5.01 Manager's Maintenance Obligation	10
5.02 Repairs and Maintenance to be Paid from Gross Revenues	11
5.03 Repairs and Maintenance to be Paid by Owner or Landlord	11
5.04 [Reserved]	11
5.05 Capital Estimate	11
5.06 Additional Requirements	12
5.07 Ownership of Replacements	12
ARTICLE VI INSURANCE, DAMAGE, CONDEMNATION, AND
FORCE MAJEURE	13
6.01 General Insurance Requirements	13
6.02 Waiver of Subrogation	13
6.03 Risk Management	13
6.04 Damage and Repair	13
6.05 Damage Near End of Term	14
6.06 Condemnation	14
6.07 Partial Condemnation	15
6.08 Temporary Condemnation	15
6.09 Allocation of Award	16
6.10 Effect of Condemnation	16
ARTICLE VII TAXES	16
7.01 Real Estate and Personal Property Taxes	16
ARTICLE VIII OWNERSHIP OF THE HOTEL	17
8.01 Ownership of the Hotel	17
8.02 No Covenants, Conditions or Restrictions	17
8.03 Liens; Credit	18
8.04 Financing	18
ARTICLE IX DEFAULTS	19
9.01 Manager Events of Default	19

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9.02 Remedies for Manager Events of Default	20
9.03 Owner Events of Default	22
9.04 Remedies for Owner Events of Default	22
ARTICLE X ASSIGNMENT AND SALE	23
10.01 Assignment	23
10.2 [Reserved]	23
10.03 Amendment of the Lease	23
ARTICLE XI MISCELLANEOUS	24
11.01 Right to Make Agreement	24
11.02 Actions By Manager	25
11.03 Relationship	25
11.04 Applicable Law	25
11.05 Notices	25
11.06 Environmental Matters	26
11.07 Confidentiality	27
11.08 Projections	27
11.09 Actions to be Taken Upon Termination	27
11.10 Trademarks, Trade Names and Service Marks	29
11.11 Waiver	30
11.12 Partial Invalidity	30
11.13 Survival	30
11.14 Negotiation of Agreement	30
11.15 Entire Agreement	30
11.16 Affiliates	30
11.17 Disputes	31
A. Disputes	31
B. Selection of Arbitrators	31
C. Location of Arbitrators	32
D. Scope of Discovery	32
E. Arbitration Award	32
F. Costs	32

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G. Appeals	33
H. Final Judgment	33
I. Intended Beneficiaries	33
11.18 Permitted Contests	33
11.19 Estoppel Certificates	34
11.20 Indemnification	34
11.21 Remedies Cumulative	35
11.22 Amendments and Modifications	35
11.23 Claims; Binding Effect; Time of the Essence; Nonrecourse	35
11.24 Counterparts; Headings	35
11.25 No Political Contributions	35
11.26 REIT Qualifications	36
11.27 Adverse Regulatory Event	36
11.28 Tax Matters	37
11.29 Third Party Beneficiaries	37
ARTICLE XII DEFINITION OF TERMS; CONSTRUCTION	37
12.01 Definition of Terms	37
12.02 Construction	47

Exhibit A    The Site

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THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT (this “Agreement”) is executed as of February 27, 2020 (the “Effective Date”), by [Property Owner], [a Maryland corporation][a Maryland limited liability company] (“Owner”), and Sonesta International Hotels Corporation, a Maryland corporation (“Manager”).

R E C I T A L S:

A.[Property Landlord] (“Landlord”) is the owner of fee title to the real property (the “Site”) described on Exhibit A to this Agreement on which certain improvements have been constructed consisting of a building or buildings containing [ # of Rooms] Guest Rooms, and certain other amenities and related facilities (collectively, the “Building”). The Site and the Building, in addition to certain other rights, improvements, and personal property, are referred to as the “Hotel” and more particularly described in the definition in Section 12.01. Pursuant to the Lease, Landlord has leased the Hotel to Owner.

B.Owner and Manager have previously entered into a Management Agreement, dated as of [Date of Prior Management Agreement] (the “Initial Effective Date”), as amended, pursuant to which Owner engaged Manager to manage and operate the Hotel (the “Prior Management Agreement”). Manager and Owner desire to amend and restate the terms and provisions of the Prior Management Agreement in their entirety and replace them with the terms and provisions of this Agreement effective as of 12:01 a.m. on the Effective Date.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt of which is hereby acknowledged, Owner and Manager agree as follows:

Article I APPOINTMENT OF MANAGER

1.01Appointment. Subject to the provisions of this Agreement, Owner hereby engages Manager to supervise, direct and control the management and operation of the Hotel during the Term. Manager accepts such engagement and agrees to manage and operate the Hotel during the Term in accordance with the terms and conditions of this Agreement. The Hotel shall be known as [Property Name]. All capitalized terms shall have the meaning ascribed to them in Article XII.

1.02Management of the Hotel.

A.The management and operation of the Hotel shall be under the exclusive supervision and control of Manager except as otherwise specifically provided in this Agreement. Manager shall manage and operate the Hotel in an efficient and economical manner consistent with standards prevailing in other hotels in the System, including all activities in connection therewith which are customary and usual to such an operation (provided, however, that if the market area or the physical peculiarities of the Hotel warrant, in the reasonable judgment of Manager, a deviation from such standards shall be permitted (the “Operating Standards”)). Manager shall, in accordance with the System Standards, the Operating Standards and the terms of this Agreement:

1.Recruit, employ, supervise, direct and (when appropriate) discharge the employees at the Hotel.

2.Establish Guest Room rates and prices, rates and charges for services provided in the Hotel.

3.Establish administrative policies and procedures, including policies and procedures for employment, control of revenue and expenditures, maintenance of bank accounts for the purchasing of supplies and services, control of credit, and scheduling of maintenance and verify that the foregoing procedures are operating in a sound manner.

4.Manage expenditures to replenish Inventories and Fixed Asset Supplies, make payments on accounts payable and collect accounts receivable.

5.Arrange for and supervise public relations and advertising and prepare marketing plans.

6.Procure all Inventories and replacement Fixed Asset Supplies.

7.Prepare and deliver Monthly Statements, Annual Operating Statements, Annual Operating Projections, Capital Estimates, Capital Statements and such other information required by this Agreement or as Owner may reasonably request.

8.Plan, execute and supervise repairs, maintenance, alterations and improvements at the Hotel.

9.Provide, or cause to be provided, risk management services relating to the types of insurance required to be obtained or provided by Manager under this Agreement and provide such information related to risk management as Owner may from time to time reasonably request.

10.Obtain and keep in full force and effect, either in its own name or in Owner’s and/or Landlord’s name, as may be required by applicable law, any and all licenses and permits to the extent within the control of Manager (or, if not within the control of Manager, Manager shall use commercially reasonable efforts to obtain and keep same in full force and effect).

11.Reasonably cooperate in a Sale of the Hotel or in obtaining a Mortgage.

12.On behalf of Owner, negotiate, enter into and administer leases, subleases, licenses and concession agreements for all public space at the Hotel (including all retail, office and lobby space and antenna leases on rooftop areas) and administer, comply with and arrange for extensions of any ground lease or common interest realty associations as necessary.

13.On behalf of Owner, negotiate, enter into and administer service contracts and licenses for the operation of the Hotel, including contracts and licenses for health and safety, systems maintenance, electricity, gas, telephone, cleaning, elevator and boiler maintenance, air conditioning maintenance, laundry and dry cleaning, master television service, internet service, use

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of copyrighted materials (such as music and videos), entertainment and other services as Manager deems advisable.

14.Negotiate, enter into and administer contracts for the use of banquet and meeting facilities and Guest Rooms by groups and individuals.

15.Take reasonable action to collect and institute in its own name or in the name of Owner or the Hotel, in each instance as Manager in its reasonable discretion deems appropriate, legal actions or proceedings to collect charges, rent or other income derived from the operation of the Hotel or to oust or dispossess guests, tenants, members or other persons in possession therefrom, or to cancel or terminate any lease, license or concession agreement for the breach thereof or default thereunder by Owner, licensee or concessionaire.

16.Make representatives available to consult with and advise Owner, at Owner’s reasonable request, concerning policies and procedures affecting the conduct of the business of the Hotel.

17.Collect on behalf of Owner and account for and remit to governmental authorities all applicable excise, sales, occupancy and use taxes or similar governmental charges collected by or at the Hotel directly from guests, members or other patrons, or as part of the sales price of any goods, services or displays, such as gross receipts, admission or similar or equivalent taxes, duties, levies or charges.

18.Keep Owner advised of significant events which occur with respect to the Hotel which might reasonably be expected to have a material adverse effect on the financial performance or value of the Hotel.

19.Perform such other tasks with respect to the Hotel as are customary and consistent with the Operating Standards and the System Standards.

B.Manager shall use commercially reasonable efforts to comply with all Legal Requirements and Insurance Requirements pertaining to its operation of the Hotel.

C.Manager shall use commercially reasonable efforts to obtain and maintain all approvals necessary to use and operate the Hotel in accordance with the System Standards, Operating Standards and Legal Requirements. Owner shall cooperate with Manager and shall (or cause Landlord to) execute all applications and consents reasonably required to be executed by Owner in order for Manager to obtain and maintain such approvals.

D.Manager shall not use, and shall exercise commercially reasonable efforts to prevent the use of, the Hotel and Owner’s Personal Property, if any, for any unlawful purpose. Manager shall not commit, and shall use commercially reasonable efforts to prevent the commission of, any waste at the Hotel. Manager shall not use, and shall use commercially reasonable efforts to prevent the use of, the Hotel in such a manner as will constitute an unlawful nuisance. Manager shall use commercially reasonable efforts to prevent the use of the Hotel in such a manner as might reasonably be expected to impair Owner’s or Landlord’s title thereto or any portion thereof or might reasonably be expected to give rise for a claim or claims for adverse

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use or adverse possession by the public, or of implied dedication of the Hotel or any portion thereof.

1.03Services Provided by Manager.

A.Manager shall furnish certain services, from time to time during the Term, which are furnished generally on a central or regional basis to other hotels in the System which are managed by Manager, and which benefit the Hotel as a participant in the System, such as: national sales office services; central operational support for rooms, food and beverage and engineering; central training services; career development; management personnel relocation; central safety and loss prevention services; central advertising and promotion (including direct and image media and advertising administration); consumer affairs to the extent not charged or allocated directly to the Hotel; the national reservations system service and inventory and revenue management services; centralized payroll and accounting services; computer system development, support and operating costs; and central monitoring and management support from “line management” personnel such as area managers.

Other than the charges for the national reservation system services, for which Manager receives the Reservation Fee, the Loyalty Program Fee and the Marketing Program Fee, the charges for the services listed in this Section 1.03.A. shall not be separately compensated and are included in the System Fee.

B.Notwithstanding the foregoing, if after Effective Date it is determined that there are central or regional services which may be furnished for the benefit of hotels in the System or in substitution for services now performed at individual hotels which may be more efficiently or effectively performed on a group basis, Manager shall furnish such services and Owner and Manager shall reasonably agree on the allocation of the costs thereof to the affected Hotels, which agreement shall be reflected in an approved Annual Operating Projection.

1.04Employees.

A.All personnel employed at the Hotel shall at all times be the employees of Manager. Subject to the terms of this Agreement, Manager shall have absolute discretion with respect to all personnel employed at the Hotel, including, without limitation, decisions regarding hiring, promoting, transferring, compensating, supervising, terminating, directing and training all employees at the Hotel, and, generally, establishing and maintaining all policies relating to employment; provided Manager shall not enter into any written employment agreements with any person which purport to bind Owner and/or purport to be effective regardless of a termination, without obtaining Owner’s consent. Manager shall comply with all Legal Requirements regarding labor relations; if either Manager or Owner shall be required, pursuant to any such Legal Requirement, to recognize a labor union or to enter into a collective bargaining with a labor union, the party so required shall promptly notify the other party. Manager shall have the authority to negotiate and settle labor union contracts with union employees and union representatives and Manager is authorized to settle labor disputes and administrative claims as may be routinely necessary in the daily management of the Hotel, provided Owner shall be given prompt notice of any negotiations which could reasonably be expected to result in contracts which would bind

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Owner and shall be provided with any written materials in connection therewith and at least ten (10) days prior to execution of any contract or amendment. Manager shall indemnify Owner and Landlord for all costs and expenses (including reasonable attorneys’ fees) incurred by either of them if either of them are joined in or made party to any suit or cause of action alleging that Manager has failed to comply with all Legal Requirements pertaining to the employment of Manager’s employees at the Hotel.

B.Manager shall have the authority to hire, dismiss or transfer the Hotel’s general manager, provided Manager shall keep Owner reasonably informed with respect to such actions. Upon Owner’s request, Manager will provide the Owner the opportunity to interview general manager candidates before they are hired.

C.Manager shall decide which, if any, of the employees of the Hotel shall reside at the Hotel (provided that Owner’s prior approval shall be obtained if more than two (2) such employees and their immediate families reside at the Hotel), and shall be permitted to provide free accommodations and amenities to its employees and representatives living at or visiting the Hotel in connection with its management or operation consistent with Manager’s usual practices for hotels in the System. No person shall otherwise be given gratuitous accommodations or services without prior approval of Owner and Manager, except in accordance with usual practices of the hotel and travel industry.

1.05Right to Inspect. Manager shall permit Owner and Landlord and their respective authorized representatives to inspect or show the Hotel during usual business hours upon not less than twenty-four (24) hours’ notice and to make such repairs as Owner and Landlord are permitted or required to make pursuant to the terms of the Lease, provided that any inspection or repair by Owner or Landlord or their representatives shall not unreasonably interfere with the use and operation of the Hotel and further provided that in the event of an emergency as determined by Owner or Landlord in its reasonable discretion, prior notice shall not be required.

ARTICLE II TERM

2.01Term.

A.The term of this Agreement (the “Term”) shall begin on the Effective Date and shall continue until January 31, 2037.

2.02Early Termination. Without limiting either party’s right to terminate this Agreement under any other provision of this Agreement:

A.Owner may terminate this Agreement without cause at any time upon sixty (60) days’ notice to Manager and such termination shall otherwise be in accordance with the provisions of Section 11.09.

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ARTICLE III COMPENSATION OF MANAGER; DISBURSEMENTS

3.01Fees. In consideration of the management services to be performed during the Term, Manager shall be paid the sum of the following:

A.Base Management Fee;

B.Reservation Fee;

C.System Fee;

D.Procurement and Construction Supervision Fee;

E.Loyalty Program Fee;

F.Marketing Program Fee; and

G.Incentive Management Fee.

3.02Disbursements. Gross Revenues shall be distributed in the following order of priority:

A.First, to pay all Deductions (excluding the Base Management Fee, the Reservation Fee and the System Fee);

B.Second, to Manager, an amount equal to the Base Management Fee, the Reservation Fee and the System Fee;

C.Third, to Owner, an amount equal to Owner’s Priority;

D.Fourth, pari passu, (i) to Owner, in an amount necessary to reimburse Owner for all Owner Working Capital Advances and Owner Operating Loss Advances (collectively, “Owner Advances”) which have not yet been repaid pursuant to this Section 3.02, and (ii) to Manager, in an amount necessary to reimburse Manager for all Additional Manager Advances which have not yet been repaid pursuant to this Section 3.02. If at any time the amounts available for distribution to Owner and Manager pursuant to this Section 3.02 are insufficient (a) to repay all outstanding Owner Advances, and (b) all outstanding Additional Manager Advances, then Owner and Manager shall be paid from such amounts the amount obtained by multiplying a number equal to the amount of the funds available for distribution by a fraction, the numerator of which is the sum of all outstanding Owner Advances, or all outstanding Additional Manager Advances, as the case may be, and the denominator of which is the sum of all outstanding Owner Advances plus the sum of all outstanding Additional Manager Advances;

E.Fifth, to Manager, an amount equal to the Incentive Management Fee; and

F.Finally, to Owner, the Owner’s Residual Payment.

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3.03Timing of Payments.

A.Payment of the Deductions, excluding the Base Management Fee, the Reservation Fee and the System Fee, shall be made in the ordinary course of business. The Base Management Fee, the Reservation Fee, the System Fee, the Owner’s Priority, the Incentive Management Fee and the Owner’s Residual Payment shall be paid on or before the twentieth (20^th) day after close of each calendar month, based upon Gross Revenues or Gross Room Revenues, as the case may be, as reflected in the Monthly Statement for such month. The Owner’s Priority shall be determined based upon Invested Capital most recently reported to Manager by Owner. If any installment of the Base Management Fee, the Reservation Fee, the System Fee or the Owner’s Priority is not paid when due, it shall accrue interest at the Interest Rate. Calculations and payments of the Incentive Management Fee and/or the Owner’s Residual Payment with respect to each calendar month within a calendar year shall be accounted for cumulatively based upon the year-to-date Operating Profit as reflected in the Monthly Statement for such calendar month and shall be adjusted to reflect distributions for prior calendar months in such year. Additional adjustments to all payments will be made on an annual basis based upon the Annual Operating Statement for the Year and any audit conducted pursuant to Section 4.02.B.

B.Subject to Section 3.03.C, if the portion of Gross Revenues to be distributed to Manager or Owner pursuant to Section 3.02 is insufficient to pay amounts then due in full, any amounts left unpaid shall be paid from and to the extent of Gross Revenues available therefor at the time distributions are made in successive calendar months until such amounts are paid in full, together with interest thereon, if applicable, and such payments shall be made from such available Gross Revenues in the same order of priority as other payments made on account of such items in successive calendar months.

C.Other than with respect to Reimbursable Advances, calculations and payments of the fees and other payments in Section 3.02 and distributions of Gross Revenues within a Year shall be accounted for cumulatively within a Year, but shall not be cumulative from one Year to the next. Calculations and payments of Reimbursable Advances shall be accounted for cumulatively within a Year and shall be cumulative from one Year to the next.

ARTICLE IV ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS; WORKING CAPITAL AND OPERATING LOSSES

4.01Accounting, Interim Payment and Annual Reconciliation.

A.Within fifteen (15) days after the close of each calendar month, Manager shall deliver an accounting (the “Monthly Statement”) to Owner showing Gross Revenues, Gross Room Revenues, occupancy percentage and average daily rate, Deductions, Operating Profit, and applications and distributions thereof for the preceding calendar month and year-to-date.

B.Within forty-five (45) days after the end of each Year, Manager shall deliver to Owner and Landlord a statement (the “Annual Operating Statement”) in reasonable detail summarizing the operations of the Hotel for the immediately preceding Year and an Officer’s

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Certificate setting forth the totals of Gross Revenues, Deductions, and the calculation of the Incentive Management Fee and Owner’s Residual Payment for the preceding Year and certifying that such Annual Operating Statement is true and correct. Manager and Owner shall, within ten (10) Business Days after Owner’s receipt of such statement, make any adjustments, by cash payment, in the amounts paid or retained for such Year as are required because of variances between the Monthly Statements and the Annual Operating Statement. Any payments shall be made together with interest at the Interest Rate from the date such amounts were due or paid, as the case may be, until paid or repaid. The Annual Operating Statement shall be controlling over the Monthly Statements and shall be final, subject to adjustments required as a result of an audit requested by Owner or Landlord pursuant to Section 4.02.B.

C.(%4) In addition, Manager shall provide such information relating to the Hotel and public information relating to Manager and its Affiliates that (a) may be reasonably required in order for Landlord, Owner or SVC, to prepare financial statements in accordance with GAAP or to comply with applicable securities laws and regulations and the SEC’s interpretation thereof, (b) may be reasonably required for Landlord, Owner or SVC, as applicable, to prepare federal, state or local tax returns, or (c) is of the type that Manager customarily prepares for other hotel owners. The foregoing does not constitute an agreement by Manager either to join Landlord, Owner or SVC, as applicable, in a filing with or appearance before the SEC or any other regulatory authority or to take or consent to any other action which would cause Manager to be liable to any third party for any statement or information other than those statements incorporated by reference pursuant to clause (a) above.

1.Owner may at any time, and from time to time, provide copies of any of the statements furnished under this Section 4.01 to any Person which has made or is contemplating making a Mortgage, or a prospective purchaser in connection with a Sale of the Hotel, subject to such Person entering into a confidentiality agreement with Manager as Manager may reasonably require.

2.In addition, Owner or Landlord shall have the right, from time to time at Owner’s or Landlord’s as the case may be, sole cost and expense, upon reasonable notice, during Manager’s customary business hours, to cause Manager’s books and records with respect to the Hotel to be audited by auditors selected by Owner or Landlord, as applicable, at the place or places where such books and records are customarily kept.

4.02Books and Records.

A.Books of control and account pertaining to operations at the Hotel shall be kept on the accrual basis and in all material respects in accordance with the Uniform System of Accounts and with GAAP (provided that, to the extent of a conflict, GAAP shall control over the Uniform System of Accounts), or in accordance with such industry standards or such other standards with which Manager is required to comply from time to time, with the exceptions, if any, provided in this Agreement, to the extent applicable which will accurately record the Gross Revenues and the application thereof. Manager shall retain, for at least three (3) years after the expiration of each Year, reasonably adequate records showing Gross Revenues and the application thereof for such Year. The provisions of this Section 4.02.A shall survive termination.

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B.Owner and Landlord may at reasonable intervals during Manager’s normal business hours, examine such books and records including, without limitation, supporting data and sales and excise tax returns. If Owner or Landlord desires, at its own expense, to audit, examine, or review the Annual Operating Statement, it shall notify Manager in writing within one (1) year after receipt of such statement of its intention to audit and begin such audit within such one (1) year after Manager’s receipt of such notice. Owner or Landlord, as the case may be, shall use commercially reasonable efforts to complete such audit as soon as practicable after the commencement thereof, subject to reasonable extension if Landlord’s or Owner’s accountant’s inability to complete the audit within such time is caused by Manager. If neither Landlord nor Owner makes such an audit, then such statement shall be deemed to be conclusively accepted by Owner as being correct, and neither Landlord nor Owner shall have any right thereafter, except in the event of fraud by Manager, to question or examine the same. If any audit by Owner or Landlord discloses an understatement or overpayment of any net amounts due Owner or Manager, Manager shall promptly after completion of the audit, render a statement to Owner and Landlord setting forth the adjustments required to be made to the distributions under Section 3.02 for such Year as a result of such audit and Owner and Manager, as the case may be, shall make any additional payments required to comply with such revised statement together with interest at the Interest Rate from the date when due or overpaid. Any dispute concerning the correctness of an audit shall be settled by arbitration. Manager shall pay the cost of any audit revealing understatement of Operating Profit by more than three percent (3%), and such amount shall not be a Deduction. The provisions of this Section 4.02.B shall survive termination.

4.03Accounts. All funds derived from the operation of the Hotel shall be deposited by Manager in a bank account(s) in a bank designated by Manager. Withdrawals from such accounts shall be made solely by representatives of Manager whose signatures have been authorized. Reasonable petty cash shall be maintained at the Hotel.

4.04Annual Operating Projection. Manager shall furnish to Owner for its review and comment, at least sixty (60) days prior to the beginning of each Year, a statement of the estimated financial results of the operation of the Hotel for the forthcoming Year (“Annual Operating Projection”). Such projection shall project the estimated Gross Revenues, Deductions, and Operating Profit. Manager agrees to make qualified personnel from Manager’s staff available to explain such Annual Operating Projections, at Owner’s request. Manager will at all times give good faith consideration to Owner’s suggestions regarding any Annual Operating Projection. Manager shall thereafter submit to Owner, by no later than January 2^nd of such Year, a modified Annual Operating Projection if any changes are made following receipt of comments from Owner. Manager shall endeavor to adhere to the Annual Operating Projection. It is understood, however, that the Annual Operating Projection is an estimate only and that unforeseen circumstances including the costs of labor, material, services and supplies, casualty, operation of law, or economic and market conditions may make adherence to the Annual Operating Projection impracticable, and Manager shall be entitled to depart therefrom due to causes of the foregoing nature; provided, however, that nothing herein shall be deemed to authorize Manager to take any action prohibited by this Agreement or to reduce Manager’s other rights or obligations hereunder.

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4.05Working Capital. On the Initial Effective Date, Owner advanced to Manager, as Working Capital, an amount equal to [Full Service: $1,500 ORLimited Service: $750] multiplied by the number of Guest Rooms. Upon notice from Manager, Owner shall have the right, without any obligation and in its sole discretion, to advance additional funds necessary to maintain Working Capital (“Additional Working Capital”) at levels determined by Manager to be reasonably necessary to satisfy the needs of the Hotel as its operation may from time to time require within ten (10) Business Days of such request. Any such request by Manager shall be accompanied by a reasonably detailed explanation of the reasons for the request. If Owner does not advance such Additional Working Capital, Manager shall have the right, without any obligation and in its sole discretion, to fund Additional Working Capital within ten (10) Business Days after such initial ten (10) day period. All such advances shall be Owner Working Capital Advances or Additional Manager Advances, as applicable. If neither party elects to fund Additional Working Capital, Manager may elect, by notice to Owner given within thirty (30) days thereafter, to terminate this Agreement, which termination shall be effective thirty (30) days after the date such notice is given.

4.06Operating Losses. To the extent there is an Operating Loss for any calendar month, Owner shall have the right, without any obligation and in its sole discretion, to fund such Operating Loss within twenty (20) days after Manager has delivered notice thereof to Owner and any Operating Loss funded by Owner shall be a “Owner Operating Loss Advance.” If Owner does not fund such Operating Loss, Manager shall have the right, without any obligation and in its sole discretion, to fund such Operating Loss within twenty (20) days after such initial twenty (20) day period, and any Operating Loss so funded by Manager shall be an Additional Manager Advance. If neither party elects to fund such Operating Loss, Manager may elect, by notice to Owner given within thirty (30) days thereafter, to terminate this Agreement, which termination shall be effective thirty (30) days after the date such notice is given.

ARTICLE V REPAIRS, MAINTENANCE AND REPLACEMENTS

5.01Manager’s Maintenance Obligation. Manager shall maintain the Hotel, including all private roadways, sidewalks and curbs located thereon, in good order and repair, reasonable wear and tear excepted, and in conformity with Legal Requirements, Insurance Requirements, System Standards and any Existing CC&Rs or Future CC&Rs. Manager shall promptly make or cause to be made all necessary and appropriate repairs, replacements, renewals, and additions thereto of every kind and nature, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the commencement of the Term. All repairs, renovations, alterations, improvements, renewals, replacements or additions shall be made in a good, workmanlike manner, consistent with Manager’s and industry standards for like hotels in like locales, in accordance with all applicable federal, state and local statutes, ordinances, by‑laws, codes, rules and regulations relating to any such work. Manager shall not take or omit to take any action, with respect to the Hotel the taking or omission of which would materially and adversely impair the value of the Hotel or any part thereof for its use as a hotel. The cost and expense incurred in connection with Manager’s obligations hereunder shall be paid either from Gross Revenues or Working Capital or from funds provided by Owner or Landlord, as the case may be.

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5.02Repairs and Maintenance to be Paid from Gross Revenues. Manager shall promptly make or cause to be made, such routine maintenance, repairs and minor alterations as it determines are necessary to comply with Manager’s obligations under Section 5.01. The phrase “routine maintenance, repairs, and minor alterations” shall include only those which are normally expensed under GAAP. The cost of such maintenance, repairs and alterations shall be paid from Gross Revenue or Working Capital.

5.03Repairs and Maintenance to be Paid by Owner or Landlord. To the extent funds are provided by Owner or Landlord under Section 5.05, Manager shall promptly make or cause to be made, all of the items listed below as are necessary to comply with Manager’s obligations under Section 5.01:

1.Replacements, renewals and additions related to the FF&E;

2.Routine or non‑major repairs, renovations, renewals, additions, alterations, improvements or replacements and maintenance which are normally capitalized (as opposed to expensed) under GAAP, such as exterior and interior repainting; resurfacing building walls, floors, roofs and parking areas; and replacing folding walls and the like (but which are not major repairs, alterations, improvements, renewals, replacements, or additions to the Hotel’s structure, roof, or exterior façade, or to its mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation systems); and

3.Major repairs, renovations, additions, alterations, improvements, renewals or replacements to the Hotel including, without limitation, with respect to its structure, roof, or exterior façade, and to its mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation systems.

In consideration for Manager’s services under this Section 5.03, Manager shall receive the Procurement and Construction Supervision Fee which shall be paid on the last Business Day of the calendar month following the calendar quarter to which the Procurement and Construction Supervision Fee relates, in arrears, based upon the prior month’s Capital Statement.

5.04[Reserved].

5.05Capital Estimate.

A.Manager shall prepare and deliver to Owner and Landlord for their review and approval, at the same time the Annual Operating Projection is submitted, an estimate for the Hotel of the capital expenditures necessary during the forthcoming Year for replacements, renewals, and additions to the FF&E of the Hotel and repairs, renovations, additions, alterations, improvements, renewals or replacements to the Hotel of the nature described in Section 5.03 (a “Capital Estimate”). Manager agrees to make qualified personnel from Manager’s staff available to explain each Capital Estimate, at Owner’s request. Failure of Owner or Landlord to approve or disapprove a Capital Estimate within twenty (20) Business Days after receipt of all information and materials requested by Owner or Landlord in connection therewith shall be deemed to constitute approval.

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B.If any dispute shall arise with respect to the approval by either Owner or Landlord of a Capital Estimate, Manager shall meet with Owner and Landlord to discuss the objections, and Manager, Owner and Landlord shall attempt in good faith to resolve any disagreement relating to the Capital Estimate. If after sixty (60) days such disagreement has not been resolved, any party may submit the issue to arbitration.

C.Provided that there then exists no Manager Event of Default, and Manager shall otherwise comply with the provisions of Section 5.06, as applicable, Owner shall, within ten (10) Business Days after notice given not more often than monthly, disburse (or cause Landlord to disburse) such funds as are required to fund the capital expenditures in an approved Capital Estimate to Manager.

D.A failure or refusal by Owner or Landlord to provide the additional funds required under an approved Capital Estimate (including after resolution by arbitration, if applicable) shall entitle Manager, at its option, to notify Owner and Landlord that Manager will terminate this Agreement. If Owner or Landlord does not make the funds available within thirty (30) days after receipt of such notice of intent to terminate, Manager may, without obligation and in its sole discretion, fund all or a portion of the amounts required and any amounts funded by Manager shall constitute an Additional Manager Advance, or elect to terminate this Agreement by notice to Owner given within thirty (30) days thereafter and this Agreement shall terminate as of the date that is one hundred eighty (180) days after the date of Owner’s receipt of Manager’s notice.

5.06Additional Requirements.

A.All expenditures from the amounts funded pursuant to the Capital Estimate shall be (as to both the amount of each such expenditure and the timing thereof) both reasonable and necessary given the objective that the Hotel will be maintained and operated to a standard comparable to competitive properties and in accordance with the System Standards.

B.Manager shall provide to Owner and Landlord within twenty (20) days after the end of each calendar month, a statement (“Capital Statement”) setting forth, on a line item basis, expenditures made to date and any variances or anticipated variances and/or amendments from the applicable Capital Estimate.

C.Owner and Landlord may not withhold their approval of a Capital Estimate with respect to such items as are (1) required in order for the Hotel to comply with System Standards, except during the last two (2) years of the Term, during which time approval may be withheld in Owner’s or Landlord’s discretion; or (2) required by reason of or under any Insurance Requirement or Legal Requirement, or otherwise required for the continued safe and orderly operation of the Hotel.

5.07Ownership of Replacements. All repairs, renovations, additions, alterations, improvements, renewals or replacements made pursuant to this Agreement, shall, except as otherwise provided in this Agreement, be the property of Landlord or Owner, as applicable, as provided under the Lease.

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ARTICLE VI INSURANCE, DAMAGE, CONDEMNATION, AND FORCE MAJEURE

6.01General Insurance Requirements.Manager shall, at all times during the Term, keep (or cause to be kept) the Hotel and all property located therein or thereon, insured against the risks, including business interruption, and in such amounts as Owner and Manager shall agree and as may be commercially reasonable. Any disputes regarding such matters not resolved by the parties within ten (10) Business Days (which period may be extended upon mutual agreement of the parties) shall be resolved by arbitration.

6.02Waiver of Subrogation. Owner and Manager agree that (insofar as and to the extent that such agreement may be effective without invalidating or making it impossible to secure insurance coverage from responsible insurance companies doing business in the State) with respect to any property loss which is covered by insurance then being carried by Owner or Manager, the party carrying such insurance and suffering said loss releases the others of and from any and all claims with respect to such loss; and they further agree that their respective insurance companies (and, if Owner or Manager shall self insure in accordance with the terms hereof, Owner or Manager, as the case may be) shall have no right of subrogation against the other on account thereof, even though extra premium may result therefrom. If any extra premium is payable by Manager as a result of this provision, Owner shall not be liable for reimbursement to Manager for such extra premium.

6.03Risk Management. Manager shall be responsible for the provision of risk management oversight at the Hotel.

6.04Damage and Repair.

A.If, during the Term, the Hotel shall be totally or partially destroyed and the Hotel is thereby rendered Unsuitable for Its Permitted Use, (1) Manager may terminate this Agreement by sixty (60) days notice to Owner and Landlord, or (2) Owner may terminate this Agreement by sixty (60) days notice to Manager and Landlord, whereupon, this Agreement, shall terminate and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage.

B.If, during the Term, the Hotel is damaged or destroyed by fire, casualty or other cause but is not rendered Unsuitable for Its Permitted Use, subject to Sections 6.04.C and 6.04.D, Manager shall cause the Hotel to be repaired and restored, in compliance with all Legal Requirements and Insurance Requirements and so that the Hotel shall be, to the extent practicable, substantially equivalent in value and general utility to its general utility and value immediately prior to such damage or destruction and in compliance with System Standards in consideration of the Procurement and Construction Supervision Fee.

C.(1)     If the cost of the repair or restoration of the Hotel is less than the sum of the amount of insurance proceeds received by Owner and Landlord plus the deductible amount, Owner shall (or shall cause Landlord to) make the funds necessary to cause the Hotel to be repaired and restored available to Manager.

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2.If the amount of insurance proceeds received by Landlord and Owner plus the deductible amount, is less than the cost of the repair or restoration of the Hotel, Manager shall give notice to Owner and Landlord setting forth the deficiency in reasonable detail. Owner shall have the right, without any obligation and in its sole discretion, to fund the deficiency and shall give Manager and Landlord notice within twenty (20) days after notice from Manager. If Owner elects not to fund the deficiency, Landlord shall have the right, without obligation and in its sole discretion, to fund the deficiency and shall give Manager and Owner notice within twenty (20) days after notice from Owner. If neither Landlord nor Owner elect to fund the deficiency, this Agreement shall terminate and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage.

D.If Owner is required or if Owner or Landlord elects to make the funds necessary to cause the Hotel to be repaired and restored available to Manager, Owner shall (or shall cause Landlord to) advance the insurance proceeds and any additional amounts payable by Owner or Landlord to Manager regularly during the repair and restoration period. Any such advances shall be made not more frequently than monthly within ten (10) Business Days after Manager submits to Owner a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Owner and Landlord). Owner or Landlord may condition advancement of the insurance proceeds and other amounts on (i) the absence of an event of default under the Lease, (ii) approval of plans and specifications of an architect satisfactory to Landlord and Owner (which approval shall not be unreasonably withheld or delayed), (iii) general contractors’ estimates, (iv) architect’s certificates, (v) unconditional lien waivers of general contractors, if available, (vi) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required and (vii) such other certificates as Landlord and Owner may, from time to time, reasonably require. The Procurement and Construction Supervision Fee shall be paid on the last Business Day of the calendar month following the calendar quarter to which the Procurement and Construction Supervision Fee relates, in arrears, based upon requisitions submitted in such calendar quarter.

E.All business interruption insurance proceeds shall be paid to Manager and included in Gross Revenues. Any casualty which does not result in a termination of this Agreement shall not excuse the payment of sums due to Owner hereunder.

F.Manager hereby waives any statutory rights of termination which may arise by reason of any damage to or destruction of the Hotel.

6.05Damage Near End of Term. Notwithstanding any provisions of Section 6.04 to the contrary, if damage to or destruction of the Hotel occurs during the last twelve (12) months of the Term and if such damage or destruction cannot reasonably be expected to be fully repaired and restored prior to the date that is nine (9) months prior to the end of the Term, the provisions of Section 6.04.A shall apply as if the Hotel had been totally or partially destroyed and rendered Unsuitable for Its Permitted Use.

6.06Condemnation. If, during the Term, either the whole of the Hotel shall be taken by Condemnation, or a partial Condemnation renders the Hotel Unsuitable for Its Permitted Use, this Agreement shall terminate and Owner and Landlord shall seek the Award for their interests in the Hotel as provided in the Lease. In addition, Manager shall have the right to initiate such

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proceedings as it deems advisable to recover any damages to which Manager may be entitled; provided, however, that Manager shall be entitled to retain any Award it may obtain through such proceedings which are conducted separately from those of Owner and Landlord only if such Award does not reduce the Award otherwise available to Owner and Landlord. Any Award received by any Mortgagee under a Mortgage on the Hotel shall be deemed to be an award of compensation received by Landlord.

6.07Partial Condemnation. If, during the Term, there is a partial Condemnation but the Hotel is not rendered Unsuitable for Its Permitted Use, subject to Section 6.07.A and 6.07.B, Manager shall cause the untaken portion of the Hotel to be repaired and restored, in compliance with all Legal Requirements and Insurance Requirements and so that the untaken portion of the Hotel shall constitute a complete architectural unit of the same general character and condition, to the extent practicable, as the Hotel immediately prior to such partial Condemnation and in compliance with System Standards in consideration of the Procurement and Construction Supervision Fee.

A.If the amount of the Award is less than the cost of the repair and restoration of the Hotel, Manager shall give notice to Owner and Landlord setting forth the deficiency in reasonable detail. Owner shall have the right without any obligation and in its sole discretion, to fund the deficiency and shall give Manager and Landlord notice within twenty (20) days after notice from Manager. If Owner elects not to fund the deficiency, Landlord shall have the right without obligation and in its sole discretion, to fund the deficiency and shall give Manager and Owner notice within twenty (20) days after notice from Owner. If neither Landlord nor Owner elect to fund the deficiency, this Agreement shall terminate and Owner and Landlord shall be entitled to retain the Award.

B.If Owner or Landlord elects to make the funds necessary to cause the Hotel to be repaired and restored available to Manager, Owner shall (or shall cause Landlord to) advance the Award and any additional amounts payable by Owner or Landlord to Manager regularly during the repair and restoration period. Any such advances shall be made not more frequently than monthly within ten (10) Business Days after Manager submits to Owner a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Owner and Landlord). Owner or Landlord may condition advancement of the insurance proceeds and other amounts on (i) the absence of an event of default under the Lease, (ii) approval of plans and specifications of an architect satisfactory to Landlord and Owner (which approval shall not be unreasonably withheld or delayed), (iii) general contractors’ estimates, (iv) architect’s certificates, (v) unconditional lien waivers of general contractors, if available, (vi) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required and (vii) such other certificates as Landlord and Owner may, from time to time, reasonably require. The Procurement and Construction Supervision Fee shall be paid on the last Business Day of the calendar month following the calendar quarter to which the Procurement and Construction Supervision Fee relates, in arrears, based upon requisitions submitted in such calendar quarter.

6.08Temporary Condemnation. In the event of any temporary Condemnation of the Hotel or Owner’s interest therein, this Agreement shall continue in full force and effect. The entire amount of any Award made for such temporary Condemnation allocable to the Term,

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whether paid by way of damages, rent or otherwise, shall be paid to Manager and shall constitute Gross Revenues. A Condemnation shall be deemed to be temporary if the period of such Condemnation is not expected to, and does not, exceed twelve (12) months.

6.09Allocation of Award. Except as provided in Sections 6.06, 6.08 and this Section 6.09, the total Award shall be solely the property of and payable to Landlord. Any portion of the Award made for the taking of Owner’s leasehold interest in the Hotel, loss of business, the taking of Owner’s Personal Property, or Owner’s removal and relocation expenses shall be the sole property of, and payable to, Owner. Any portion of the Award made for the taking of Manager’s interest in the Hotel or Manager’s loss of business during the remainder of the Term shall be the sole property of, and payable to, Manager, subject to the provisions of Section 6.06. In any Condemnation proceedings, Landlord, Owner, and Manager shall each seek its own Award in conformity herewith, at its own expense.

6.10Effect of Condemnation. Any Condemnation which does not result in a termination of this Agreement in accordance with its terms with respect to the Hotel shall not excuse the payment of sums due to Owner hereunder with respect to the Hotel and this Agreement shall remain in full force and effect.

ARTICLE VII TAXES

7.01Real Estate and Personal Property Taxes.

A.Subject to Section 11.18 relating to permitted contests, Manager shall pay, from Gross Revenues, all Impositions with respect to the Hotel, before any fine, penalty, interest or cost (other than any opportunity cost as a result of a failure to take advantage of any discount for early payment) may be added for non-payment, such payments to be made directly to the taxing authorities where feasible, and shall promptly, upon request, furnish to Landlord and Owner copies of official receipts or other reasonably satisfactory proof evidencing such payments. If any such Imposition may, at the option of the taxpayer, lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Manager may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay such installments during the Term as the same become due and before any fine, penalty, premium, further interest or cost may be added thereto. Manager shall, upon request, provide such data as is maintained by Manager with respect to the Hotel as may be necessary to prepare any required returns and reports by Owner or Landlord.

Owner shall give, and will use reasonable efforts to cause Landlord to give, copies of official tax bills and assessments which it may receive with respect to the Hotel and prompt notice to Owner and Manager of all Impositions payable by Owner under the Lease of which Owner or Landlord, as the case may be, at any time has knowledge; provided, however, that Landlord’s or Owner’s failure to give any such notice shall in no way diminish Manager’s obligation hereunder to pay such Impositions (except that Owner or Landlord, as applicable, shall be responsible for any interest or penalties incurred as a result of Landlord’s or Owner’s, as applicable, failure promptly to forward the same).

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B.Notwithstanding anything herein to the contrary, each of Owner and Manager shall pay from its own funds (and not from Gross Revenues of the Hotel) any franchise, corporate, estate, inheritance, succession, capital levy or transfer tax imposed on Owner or Manager, as applicable, or any income tax imposed (but not gross receipt or general excise taxes) on any income of Owner or Manager (including distributions pursuant to Article III).

ARTICLE VIII OWNERSHIP OF THE HOTEL

8.01Ownership of the Hotel.

A.Owner and Landlord hereby covenant that neither will hereafter impose or consent to the imposition of any liens, encumbrances or other charges, except as follows:

1.easements or other encumbrances that do not adversely affect the operation of the Hotel by Manager and that are not prohibited pursuant to Section 8.02;

2.Mortgages and related security instruments;

3.liens for taxes, assessments, levies or other public charges not yet due or due but not yet payable; or

4.equipment leases for office equipment, telephone, motor vehicles and other property approved by Manager.

B.Subject to liens permitted by Section 8.01.A, Owner and Landlord covenant that, so long as there then exists no Manager Event of Default, Manager shall quietly hold, occupy and enjoy the Hotel throughout the Term free from hindrance, ejection or molestation by Owner or Landlord or other party claiming under, through or by right of Owner or Landlord. Owner agrees to pay and discharge any payments and charges and, at its expense, to prosecute all appropriate actions, judicial or otherwise, necessary to assure such free and quiet occupation as set forth in the preceding sentence.

8.02No Covenants, Conditions or Restrictions.

A.Owner and Landlord agree that during the Term, any covenants, conditions or restrictions, including reciprocal easement agreements or cost‑sharing arrangements affecting the Site or Hotel (collectively “Future CC&Rs”) which would (i) prohibit or limit Manager from operating the Hotel in accordance with System Standards, including related amenities of the Hotel; (ii) allow the Hotel facilities (for example, parking spaces) to be used by persons other than guests, invitees or employees of the Hotel; (iii) allow the Hotel facilities to be used for specified charges or rates that have not been approved by Manager; or (iv) subject the Hotel to exclusive arrangements regarding food and beverage operation or retail merchandise, will not be entered into unless Manager has given its prior written consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed. Manager hereby consents to any easements, covenants, conditions or restrictions, including without limitation any reciprocal easement

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agreements or cost-sharing agreements, existing as of the Initial Effective Date (collectively, the “Existing CC&Rs”).

B.All financial obligations imposed on Owner or on the Hotel pursuant to any Future CC&Rs for which Manager’s consent was required under Section 8.02.A, but not obtained, shall be paid by Owner.

C.Manager shall manage, operate, maintain and repair the Hotel in compliance with all obligations imposed on Owner, Landlord or the Hotel pursuant to any Existing CC&Rs or Future CC&Rs (unless Manager’s consent was required under Section 8.02.A, but not obtained) to the extent such Existing CC&Rs and Future CC&Rs relate to the management, operation, maintenance and repair of the Hotel.

8.03Liens; Credit. Manager and Owner shall use commercially reasonable efforts to prevent any liens from being filed against the Hotel which arise from any maintenance, repairs, alterations, improvements, renewals or replacements in or to the Hotel. Manager and Owner shall cooperate, and Owner shall cause Landlord to cooperate, in obtaining the release of any such liens. In no event shall any party borrow money in the name of, or pledge the credit of, any other party. Manager shall not allow any lien to exist with respect to its interest in this Agreement.

Subject to encumbrances permitted under Section 8.01, Manager shall not, to the extent funds to pay the same are available or provided on a timely basis as required hereunder, directly or indirectly, create or allow to remain and shall promptly discharge any lien, encumbrance, attachment, title retention agreement or claim upon the Hotel, except (a) existing liens for those taxes of Landlord which Manager is not required to pay hereunder, (b) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet due and payable, or (ii) are being contested in accordance with Section 11.18, (c) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with Section 11.18 and (d) any Mortgages or other liens which are the responsibility of Landlord.

8.04Financing. Landlord shall be entitled to encumber the Hotel with a Mortgage on commercially reasonable terms and in such event, Landlord, Owner and Manager shall be required to execute and Landlord agrees to require Mortgagee to execute and deliver an instrument (a “Subordination Agreement”) which shall be recorded in the jurisdiction where the Hotel is located, which provides:

(i)This Agreement and any extensions, renewals, replacements or modifications thereto, and all right and interest of Manager in and to the Hotel, shall be subject and subordinate to the Mortgage; and

(ii)If there is a foreclosure of the Mortgage in connection with which title or possession of such Hotel is transferred to the Mortgagee (or its designee) or to a purchaser at foreclosure or to a subsequent purchaser from the Mortgagee (or from its designee) (each of the foregoing, a “Subsequent Holder”), Manager shall not be disturbed in its rights under this Agreement, so long as (a) no Manager Event of Default (beyond the applicable notice and cure period, if any) has occurred thereunder which entitles Owner to terminate this Agreement, and (b) the Lease has not been terminated as

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a result of a monetary default which arises from acts or failure to act by Manager pursuant to this Agreement, provided, however, that such Subsequent Holder shall not be (a) liable in any way to Manager for any act or omission, neglect or default of the prior Landlord or Owner (b) responsible for any monies owing or on deposit with any prior Landlord or Owner to the credit of Manager (except to the extent actually paid or delivered to such Subsequent Holder), (c) subject to any counterclaim or setoff which theretofore accrued to Manager against any prior Landlord or Owner, (d) bound by any modification of this Agreement subsequent to such Mortgage which was not approved by the Mortgagee, (e) liable to Manager or beyond such Subsequent Holder’s interest in the Hotel and the rents, income, receipts, revenues, issues and profits issuing from the Hotel, or (f) required to remove any Person occupying the Hotel or any part thereof, except if such person claims by, through or under such Subsequent Holder. If the Lease is terminated as a result of a non-monetary default which was not caused by Manager Event of Default pursuant to the terms of this Agreement or such Subsequent Holder succeeds to the interest of Owner thereunder, the Mortgagee or Subsequent Holder, as applicable, and Manager shall agree that the Hotel will continue to be subject to this Agreement (but neither the Mortgagee nor Subsequent Holder will not be responsible to pay past due amounts hereunder).

ARTICLE IX DEFAULTS

9.01Manager Events of Default. Each of the following shall constitute a “Manager Event of Default”:

A.The filing by Manager of a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law, or the admission by Manager that it is unable to pay its debts as they become due, or the institution of any proceeding by Manager for its dissolution or termination.

B.The consent by Manager to an involuntary petition in bankruptcy or the failure to vacate, within ninety (90) days from the date of entry thereof, any order approving an involuntary petition by Manager.

C.The entering of an order, judgment or decree by any court of competent jurisdiction, on the application of a creditor, adjudicating Manager as bankrupt or insolvent or approving a petition seeking reorganization or appointing a receiver, trustee, or liquidator of all or a substantial part of Manager’s assets, and such order, judgment or decree’s continuing unstayed and in effect for an aggregate of sixty (60) days (whether or not consecutive).

D.At Owner’s election, the failure of Manager to make any payment required to be made in accordance with the terms of this Agreement, on or before the date due which failure continues for five (5) Business Days after notice from Owner.

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E.At Owner’s election, the failure of Manager to perform, keep or fulfill any of the other covenants, undertakings, obligations or conditions set forth in this Agreement, on or before the date required for the same, which failure continues for thirty (30) days after notice from Owner, or, if the Manager Event of Default is susceptible of cure, but such cure cannot be accomplished within such thirty (30) day period, if Manager fails to commence the cure of such Manager Event of Default within fifteen (15) days of such notice or thereafter fails to diligently pursue such efforts to completion, provided in no event shall such additional time exceed ninety (90) days.

F.At Owner’s election, the failure of Manager to maintain insurance coverages required to be maintained by Manager under Article VI, which failure continues for five (5) Business Days after notice from Owner (except that no notice shall be required if any such insurance coverage shall have lapsed).

9.02Remedies for Manager Events of Default.

A.In the event of a Manager Event of Default, Owner shall have the right to: (1) terminate this Agreement by notice to Manager, which termination shall be effective as of the date set forth in the notice, which shall be at least thirty (30) days after the date of the notice; (2) institute any and all proceedings permitted by law or equity, including, without limitation, actions for specific performance and/or damages; or (3) avail itself of any remedy described in this Section 9.02.

B.None of (i) the termination of this Agreement in connection with a Manager Event of Default, (ii) the repossession of the Hotel or any portion thereof, (iii) the failure of Owner to engage a replacement manager, nor (iv) the engagement of any replacement manager for all or any portion of the Hotel, shall relieve Manager of its liability and obligations hereunder, all of which shall survive any such termination, repossession or engagement. In the event of any termination of this Agreement as a result of a Manager Event of Default, Manager shall forthwith pay to Owner all amounts due and payable through and including the date of such termination. Thereafter, Manager shall be liable to Owner for, and shall pay to Owner, as current damages, the amounts which Owner would have received hereunder for the remainder of the Term had such termination not occurred, less the net amounts, if any, received from a replacement manager, after deducting all reasonable expenses in connection with engaging such replacement, including, all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, advertising, expenses of employees, alteration costs and expenses of preparation for such engagement and in the case of Owner’s Priority and Owner’s Residual Payment, calculated based upon the average of each of such payments made in each of the three (3) calendar years ended prior to the date of termination. Manager shall pay such current damages to Owner as soon after the end of each calendar month as practicable to determine the amounts.

C.At any time after such termination, whether or not Owner shall have collected any amounts owing and due up to and including the date of termination of this Agreement, as liquidated final damages and in lieu of Owner’s right to receive any other damages due to the termination of this Agreement, at Owner’s election, Manager shall pay to Owner an amount equal to the present value of the payments which have been made to Owner between the date of termination and the scheduled expiration of the Term as Owner’s Priority and the Owner’s

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Residual Payment if this Agreement had not been terminated, calculated based upon the average of each of such payments made in each of the three (3) calendar years ended prior to the date of termination, discounted at an annual rate equal to the Discount Rate. Nothing contained in this Agreement shall, however, limit or prejudice the right of Owner to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

D.In case of any Manager Event of Default resulting in Manager being obligated to vacate the Hotel, Owner may (i) engage a replacement manager for the Hotel or any part or parts thereof, either in the name of Owner or otherwise, for a term or terms which may at Owner’s option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or other accommodations to the extent that Owner reasonably considers advisable and necessary to engage such replacement manager(s), and (ii) may make such reasonable alterations, repairs and decorations in the Hotel or any portion thereof as Owner, in its sole and absolute discretion, considers advisable and necessary for the purpose of engaging a replacement manager for the Hotel; and the making of such alterations, repairs and decorations shall not operate or be construed to release Manager from liability hereunder. Subject to the last sentence of this paragraph, Owner shall in no event be liable in any way whatsoever for any failure to engage a replacement manager for the Hotel, or, in the event a replacement manager is engaged, for failure to collect amounts due Owner. To the maximum extent permitted by law, Manager hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Manager being evicted or dispossessed, or in the event of Owner obtaining possession of the Hotel, by reason of the occurrence and continuation of a Manager Event of Default hereunder. Owner covenants and agrees, in the event of any termination of this Agreement as a result of a Manager Event of Default, to use reasonable efforts to mitigate its damages.

E.Any payments received by Owner under any of the provisions of this Agreement during the existence or continuance of a Manager Event of Default shall be applied to Manager’s current and past due obligations under this Agreement in such order as Owner may determine or as may be prescribed by applicable law.

F.If a Manager Event of Default shall have occurred and be continuing, Owner, after notice to Manager (which notice shall not be required if Owner shall reasonably determine immediate action is necessary to protect person or property), without waiving or releasing any obligation of Manager and without waiving or releasing any Manager Event of Default, may (but shall not be obligated to), at any time thereafter, make such payment or perform such act for the account and at the expense of Manager, and may, to the maximum extent permitted by law, enter upon the Hotel or any portion thereof for such purpose and take all such action thereon as, in Owner’s sole and absolute discretion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Manager or result in the termination hereof. All reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by Owner in connection therewith, together with interest thereon (to the extent permitted by law) at the Overdue Rate from the date such sums are paid by Owner until repaid, shall be paid by Manager to Owner, on demand.

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9.03Owner Events of Default. Each of the following shall constitute an “Owner Event of Default” to the extent permitted by applicable law:

A.The filing by Owner or SVC of a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law, or the admission by Owner that it is unable to pay its debts as they become due, or the institution of any proceeding by Owner for its dissolution or termination.

B.The consent by Owner or SVC to an involuntary petition in bankruptcy or the failure to vacate, within ninety (90) days from the date of entry thereof, any order approving an involuntary petition by Owner.

C.The entering of an order, judgment or decree by any court of competent jurisdiction, on the application of a creditor, adjudicating Owner or SVC as bankrupt or insolvent or approving a petition seeking reorganization or appointing a receiver, trustee, or liquidator of all or a substantial part of Owner’s or SVC’s assets, and such order, judgment or decree’s continuing unstayed and in effect for an aggregate of sixty (60) days (whether or not consecutive).

D.At Manager’s option, the failure of Owner to make any payment required to be made in accordance with the terms of this Agreement on or before the due date which failure continues for five (5) Business Days after notice from Manager.

E.At Manager’s option, the failure of Owner to perform, keep or fulfill any of the other covenants, undertakings, obligations or conditions set forth in this Agreement which failure continues for thirty (30) days after notice from Manager, or, if the Owner Event of Default is susceptible of cure, but such cure cannot be accomplished within such thirty (30) day period, if Owner fails to commence the cure of such Owner Event of Default within fifteen (15) days of such notice or thereafter fails to diligently pursue such efforts to completion, provided that in no event shall such additional time exceed ninety (90) days.

F.The occurrence of an event of default beyond any applicable notice and cure period under any obligation, agreement, instrument or document which is secured in whole or in part by Owner’s or Landlord’s interest in the Hotel or the acceleration of the indebtedness secured thereby or the commencement of a foreclosure thereunder.

9.04Remedies for Owner Events of Default.

A.In the event of an Owner Event of Default, Manager shall have the right to institute any and all proceedings permitted by law or equity, including, without limitation, actions for specific performance and/or damages, provided except as expressly provided in this Agreement, Manager shall have no right to terminate this Agreement by reason of an Owner Event of Default.

B.Upon the occurrence of an Owner Event of Default pursuant to any of Sections 9.03.A, 9.03.B or 9.03.C, or which arises with respect to a violation by Owner or Landlord of Section 10.02 with respect to a Sale of the Hotel, Manager shall have, in addition to all other rights and remedies provided for herein, the right to terminate this Agreement by notice to

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Owner, which termination shall be effective as of the date set forth in the notice, which shall be at least thirty (30) days after the date of the notice. Nothing contained in this Agreement shall, however, limit or prejudice the right of Manager to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

ARTICLE X ASSIGNMENT AND SALE

10.01Assignment.

A.Except as provided in Section 10.01.B, Manager shall not assign, mortgage, pledge, hypothecate or otherwise transfer its interest in all or any portion of this Agreement or any rights arising under this Agreement or suffer or permit such interests or rights to be assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether voluntarily, involuntarily or by operation of law, or permit the use or operation of the Hotel by anyone other than Manager or Owner. For the purpose of this Section 10.01, and assignment of this Agreement shall be deemed to include a Change of Control.

B.Notwithstanding Section 10.01.A, Manager shall have the right, without Owner’s consent, to:

1.assign this Agreement (whether directly or pursuant to the direct or indirect transfer of interests in Manager) in connection with the sale of all or substantially all of the business and assets of Manager to a third party; provided such third party assumes in writing the obligations of Manager under this Agreement;

2.assign this Agreement as a result of a Change of Control arising as a result of a transfer or issuance of capital stock of Sonesta Holdco permitted by the Stockholders Agreement;

3.assign this Agreement to a Subsidiary of Manager; provided such Subsidiary assumes in writing the obligations of Manager under this Agreement; and

4.sublease or grant concessions or licenses to shops or any other space at the Hotel so long as the terms of any such subleases or concessions do not exceed the Term, provided that (a) such subleases or concessions are for newsstand, gift shop, parking garage, health club, restaurant, bar, commissary, retail, office or rooftop antenna purposes or similar concessions or uses, (b) such subleases are on commercially reasonable terms, and (c) such subleases or concessions will not violate or affect any Legal Requirement or Insurance Requirement, and Manager shall obtain or cause the subtenant to obtain such additional insurance coverage applicable to the activities to be conducted in such subleased space as Landlord and any Mortgagee may reasonably require.

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C.Notwithstanding Section 10.01.B, Manager may not assign, mortgage, pledge, hypothecate or otherwise transfer its interest in all or any portion of this Agreement to any Person (or any Affiliate of any Person) who (a) does not have sufficient experience to fulfill Manager’s obligations with respect to the Hotel under this Agreement, (b) is known in the community as being of bad moral character, or has been convicted of a felony in any state or federal court, or is in control of or controlled by Persons who have been convicted of felonies in any state or federal court; or (c) is, or has an Affiliate that is, a Specially Designated National or Blocked Person.

D.Owner shall not assign or transfer its interest in this Agreement without the prior written consent of Manager; provided, however, that Owner shall have the right, without such consent to (1) Intentionally Omitted, (2) assign its interest hereunder to Landlord or an Affiliate of Landlord under the terms of the Lease, (3) assign its interest hereunder to Manager or an Affiliate of Manager, and (4) assign its interest hereunder to an Affiliate of Owner in a corporate restructuring of Owner or any of its Affiliates, provided such Affiliate satisfies the criteria of Section 10.02.A.

E.If either party consents to an assignment of this Agreement by the other, no further assignment shall be made without the express consent in writing of such party, unless such assignment may otherwise be made without such consent pursuant to the terms of this Agreement. An assignment by Owner of its interest in this Agreement approved or permitted pursuant to the terms hereof shall relieve Owner from its obligations under this Agreement arising from and after the effective date of such assignment. An assignment by Manager of its interest in this Agreement shall not relieve Manager from its obligations under this Agreement unless such assignment occurs in the context of a sale of all or substantially all of the business of Manager and which is otherwise permitted or approved, if required, pursuant to this Agreement, in which event Manager shall be relieved from such obligations arising from and after the effective date of such assignment.

10.02[Reserved].

10.03Amendment of the Lease. The Lease shall not be amended or modified in any way which would materially reduce Manager’s rights hereunder or impose any material cost, expense or obligation on Manager.

ARTICLE XI MISCELLANEOUS

11.01Right to Make Agreement. Each party warrants, with respect to itself, that neither the execution of this Agreement nor the finalization of the transactions contemplated hereby shall violate any provision of law or judgment, writ, injunction, order or decree of any court or governmental authority having jurisdiction over it; result in or constitute a breach or default under any indenture, contract, other commitment or restriction to which it is a party or by which it is bound; or require any consent, vote or approval which has not been taken, or at the time of the transaction involved shall not have been given or taken. Each party covenants that it has and

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will continue to have throughout the Term, the full right to enter into this Agreement and perform its obligations hereunder.

11.02Actions By Manager. Manager covenants and agrees that it shall not take any action which would be binding upon Owner or Landlord except to the extent it is permitted to do so pursuant to the terms of this Agreement.

11.03Relationship. In the performance of this Agreement, Manager shall act solely as an independent contractor. Neither this Agreement nor any agreements, instruments, documents or transactions contemplated hereby shall in any respect be interpreted, deemed or construed as making Manager a partner, joint venturer with, or agent of, Owner. Owner and Manager agree that neither party will make any contrary assertion, claim or counterclaim in any action, suit, arbitration or other legal proceedings involving Owner and Manager. Nothing contained herein is intended to, nor shall be construed as, creating any landlord-tenant relationship between Manager and Owner or between Manager and Landlord. Each of Manager and Owner shall prepare and shall cause their Affiliates to prepare their financial statements and tax returns consistent with the foregoing characterization.

11.04Applicable Law. The Agreement shall be construed under and shall be governed by the laws of the State of Maryland, without regard to its “choice of law” rules.

11.05Notices. Notices, statements and other communications to be given under the terms of the Agreement shall be in writing and delivered by hand against receipt or sent by Express Mail service or by nationally recognized overnight delivery service, addressed to the parties as follows:

To Owner:        [Property Owner]

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attn: President

Phone: (617) 964-8389

Fax: (617) 969-5730

To Manager:        Sonesta International Hotels Corporation

Two Newton Place

255 Washington Street

Newton, Massachusetts 02458

Attn: President

Phone: (617) 421-5400

Fax: (617) 928-1305

or at such other address as is from time to time designated by the party receiving the notice. Any such notice that is given in accordance herewith shall be deemed received when delivery is received or refused, as the case may be. Additionally, notices may be given by facsimile transmission, provided that a hard copy of the transmission shall be delivered to the addressee by nationally recognized overnight delivery service by no later than the second (2^nd) Business Day following such transmission. Facsimiles shall be deemed delivered on the date of such

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transmission, if sent on a Business Day and received during the receiving party’s normal business hours or, if not received during the receiving party’s normal business hours, then on the next succeeding Business Day.

11.06Environmental Matters.

A.Subject to Section 11.06.D, during the Term or at any other time while Manager is in possession of the Hotel, (1) Manager shall not store, spill upon, generate, dispose of or transfer to or from the Hotel any Hazardous Substance, except in compliance with all Legal Requirements, (2) Manager shall maintain the Hotel at all times free of any Hazardous Substance (except in compliance with all Legal Requirements), and (3) Manager (a) upon receipt of notice or knowledge shall promptly notify Owner and Landlord in writing of any material change in the nature or extent of Hazardous Substances at the Hotel, (b) shall file and transmit to Owner and Landlord a copy of any Community Right to Know or similar report or notice which is required to be filed by Manager with respect to the Hotel pursuant to Title III of the Superfund Amendments and Reauthorization Act of 1986 or any other Legal Requirements, (c) shall transmit to Owner and Landlord copies of any citations, orders, notices or other governmental communications received by Manager with respect to Hazardous Substances or environmental compliance (collectively, “Environmental Notice”), which Environmental Notice requires a written response or any action to be taken and/or if such Environmental Notice gives notice of and/or presents a material risk of any material violation of any Legal Requirement and/or presents a material risk of any material cost, expense, loss or damage (an “Environmental Obligation”), (d) shall observe and comply with all Legal Requirements relating to the use, maintenance and disposal of Hazardous Substances and all orders or directives from any official, court or agency of competent jurisdiction relating to the use, maintenance or disposal or requiring the removal, treatment, containment or other disposition of Hazardous Substances, and (e) shall pay or otherwise dispose of any fine, charge or Imposition related thereto, unless Owner or Manager shall contest the same in good faith and by appropriate proceedings and the right to use and the value of the Hotel are not materially and adversely affected thereby.

B.In the event of the discovery of Hazardous Substances other than those maintained in accordance with Legal Requirements on any portion of any Site or in the Hotel during the Term, Manager shall promptly (i) clean up and remove from and about the Hotel all Hazardous Substances thereon in accordance with all applicable Environmental Laws (as defined below), (ii) contain and prevent any further release or threat of release of Hazardous Substances on or about the Hotel, and (iii) use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about the Hotel, and (iv) otherwise effect a remediation of the problem in accordance with all applicable federal, state and local statutes, laws, rules and regulations (now or hereafter in effect) dealing with the use, generation, treatment, storage, release, disposal, remediation or abatement of Hazardous Substances (collectively referred to as “Environmental Laws”).

C.The actual costs incurred or the estimated costs to be incurred with respect to any matter arising under Section 11.06.B together with any costs incurred by Owner with respect to any judgment or settlement approved by Manager (such approval not to be unreasonably withheld, conditioned or delayed with respect to any third-party claims including, without limitation, claims by Landlord arising under the Lease) relating to claims arising from the release or threat of release

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of Hazardous Substances on or about any of the Hotels (including reasonable attorneys’ and consultants’ fees incurred with respect to such matters) are collectively referred to as “Environmental Costs.”

D.All Environmental Costs shall be deemed repairs and maintenance under Section 5.02 or 5.03 and paid as provided therein, as applicable, for the Hotel; provided, however, that if any of the foregoing costs arise as a result of the gross negligence or willful misconduct of Manager or any employee of Manager, such costs shall be paid by Manager at its sole cost and expense and not as a Deduction, and Manager shall indemnify Owner for any loss, cost, claim or expense (including reasonable attorneys’ fees) incurred by Owner in connection therewith. The provisions of this Section 11.06.D shall survive termination.

11.07Confidentiality. The parties hereto agree that the matters set forth in this Agreement are strictly confidential and each party will make every effort to ensure that the information is not disclosed to any outside person or entities (including the press) without the prior written consent of the other party except as may be appropriate or required by law, including the rules and regulations of the SEC or any stock exchange applicable to Owner or its Affiliates, in any report, prospectus or other filing made by Owner or its Affiliates with the SEC or any such stock exchange, or in a press release issued by a party or its Affiliates which is consistent with its investor relations program conducted in the ordinary course, and as may be reasonably necessary to obtain licenses, permits, and other public approvals necessary for the refurbishment or operation of the Hotel, or, subject to Section 4.01.C(2), in connection with financing or proposed financing of the Hotel, a Sale of the Hotel, or a sale of a Controlling Interest in Owner.

11.08Projections. Owner acknowledges that any written or oral projections, pro formas, or other similar information that has been, prior to execution of this Agreement, or will, during the Term, be provided by Manager, or any Affiliate to Owner is for information purposes only and that Manager and any such Affiliate do not guarantee that the Hotel will achieve the results set forth in any such projections, pro formas, or other similar information. Any such projections, pro formas, or other similar information are based on assumptions and estimates, and unanticipated events may occur subsequent to the date of preparation of such projections, pro formas, and other similar information. Therefore, the actual results achieved by the Hotel are likely to vary from the estimates contained in any such projections, pro formas, or other similar information and such variations might be material.

11.09Actions to be Taken Upon Termination. Upon termination of this Agreement:

A.Manager shall, within ninety (90) days after termination of this Agreement, prepare and deliver to Owner a final accounting statement (“Final Statement”) with respect to the Hotel, consistent with the Annual Operating Statement, along with a statement of any sums due Manager as of the date of termination. Within thirty (30) days of the receipt by Owner of such Final Statement, the parties will make any adjustments, by cash payment, in the amounts paid or retained as are needed because of the figures set forth in the Final Statement. Any payments shall be made together with interest at the Interest Rate from the date such amounts were due or paid, as the case may be, until paid or repaid. If any dispute shall arise with respect to the Final Statement which cannot be resolved by the parties within the thirty (30) day period,

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it shall be settled by arbitration, provided however, that any cash adjustments relating to items which are not in dispute shall be made within the thirty (30) day period. The cost of preparing the Final Statement shall be a Deduction, unless the termination occurs as a result of a Manager Event of Default or an Owner Event of Default, in which case the defaulting party shall pay such cost. Manager and Owner acknowledge that there may be certain adjustments for which the information will not be available at the time of the Final Statement and the parties agree to readjust such amounts and make the necessary cash adjustments when such information becomes available, provided, however, that all accounts shall be deemed final as of the second (2^nd) anniversary of the date of termination.

B.Upon a termination, Manager shall disburse to Owner all Working Capital (excluding funds to be held in escrow pursuant to Section 11.09.I) remaining after payment of all Deductions and all amounts then payable to Manager or Owner.

C.Manager shall make available to Owner such books and records respecting the Hotel (including those from prior years, subject to Manager’s reasonable records retention policies) as will be needed by Owner to prepare the accounting statements, in accordance with the Uniform System of Accounts, for the Hotel for the Year in which the termination occurs and for any subsequent Year.

D.Manager shall (to the extent permitted by law) assign to Owner or its designee all operating licenses and permits for the Hotel which have been issued in Manager’s name (including liquor and restaurant licenses, if any).

E.If Owner does not exercise its right under Section 11.09.G and/or a successor Manager is not a franchisee of Manager, Manager shall have the option, to be exercised within thirty (30) days after termination, to purchase at their then book value, any items of Inventories and Fixed Asset Supplies marked with any Trade Name, other trade name, symbol, logo or design. If Manager does not exercise such option, Owner agrees that any such items not so purchased will be used exclusively at the Hotel until they are consumed.

F.Manager shall, at Owner’s sole cost and expense, use commercially reasonable efforts to cooperate with Owner or its designee in connection with the transfer of management of the Hotel including processing of all applications for licenses, operating permits and other governmental authorizations and the assignment of all contracts entered into by Manager with respect to the use and operation of the Hotel as then operated, but excluding all insurance contracts and multi-property contracts not limited in scope to the Hotel (if applicable) and all contracts with Affiliates of Manager.

G.Owner or its designee shall have the right to operate the improvements on the Site without modifying the architectural design, notwithstanding the fact that such design or certain features thereof may be proprietary to Manager and/or protected by trademarks or service marks held by Manager or an Affiliate, provided that such use shall be confined to the Site. Further, provided that the Hotel then satisfies the System Standards, Owner or its designee shall be entitled (but not obligated) to operate the Hotel under the Trade Names for a period of one (1) year following termination in consideration for which Owner or its designee shall pay the then

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standard franchise fees of Manager and its Affiliates and shall comply with the other applicable terms and conditions of the form of franchise agreement then being entered into and Manager will continue to provide services to the Hotel including, reservations and communication services; provided, however, that all such services shall be provided in accordance with the applicable terms and conditions of the form of franchise agreement.

H.Any computer software (including upgrades and replacements) at the Hotel owned by Manager, an Affiliate, or the licensor of any of them is proprietary to Manager, such Affiliate, or the licensor of any of them and shall in all events remain the exclusive property of Manager, the Affiliate or the licensor of any of them, as the case may be, and nothing contained in this Agreement shall confer on Owner the right to use any of such software. Manager shall have the right to remove from the Hotel without compensation to Owner any computer software (including upgrades and replacements), including, without limitation, the System software, owned by Manager, any Affiliate or the licensor of any of them and any computer equipment utilized as part of a centralized reservation system or owned by a party other than Owner.

I.If this Agreement is terminated for any reason, other than by reason of a Manager Event Default, and excluding a termination as a result of the expiration of the Term, an escrow fund shall be established from Gross Revenues to reimburse Manager for all reasonable costs and expenses incurred by Manager in terminating its employees at the Hotel, such as severance pay, unemployment compensation, employment relocation, and other employee liability costs arising out of the termination of employment of such employees. If Gross Revenues are insufficient to meet the requirements of such escrow fund, then Manager shall have the right to withdraw the amount of such expenses from Working Capital or any other funds of Owner with respect to the Hotel held by or under the control of Manager. Owner or its designee shall have the right to offer employment to any employee whom Manager proposes to terminate and Manager shall cooperate with Owner in connection therewith.

J.Manager shall peacefully vacate and surrender the Hotel to Owner.

The provisions of this Section 11.09 shall survive termination.

11.10Trademarks, Trade Names and Service Marks. The names “Sonesta,” “Royal Sonesta,” “Sonesta Suites,” “Sonesta ES Suites” and “Sonesta Resorts” (each of the foregoing names, together with any combination thereof, collectively, the “Trade Names”) when used alone or in connection with another word or words, and the Sonesta trademarks, service marks, other trade names, symbols, logos and designs shall in all events remain the exclusive property of Manager and except as provided in Section 11.09.E and 11.09.G, nothing contained in this Agreement shall confer on Owner the right to use any of the Trade Names, or the Sonesta trademarks, service marks, other trade names, symbols, logos or designs affiliated or used therewith. Except as provided in Section 11.09.E and 11.09.G, upon termination of this Agreement, any use of any of the Trade Names, or any of the Sonesta trademarks, service marks, other trade names, symbols, logos or designs at the Hotel shall cease and Owner shall promptly remove from the Hotel any signs or similar items which contain any of the Trade Names, trademarks, service marks, other trade names, symbols, logos or designs. If Owner has not removed such signs or similar items within ten (10) Business Days, Manager shall have the right to do so. The cost of

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such removal shall be a Deduction. Included under the terms of this Section 11.10 are all trademarks, service marks, trade names, symbols, logos or designs used in conjunction with the Hotel, including restaurant names, lounge names, etc., whether or not the marks contain the “Sonesta” name. The right to use such trademarks, service marks, trade names, symbols, logos or designs belongs exclusively to Manager, and the use thereof inures to the benefit of Manager whether or not the same are registered and regardless of the source of the same. The provisions of this Section 11.10 shall survive termination.

11.11Waiver. The failure of either party to insist upon a strict performance of any of the terms or provisions of the Agreement, or to exercise any option, right or remedy contained in this Agreement, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in full force and effect. No waiver by either party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party.

11.12Partial Invalidity. If any portion of this Agreement shall be declared invalid by order, decree or judgment of a court, or otherwise, this Agreement shall be construed as if such portion had not been so inserted except when such construction would operate as an undue hardship on Manager or Owner or constitute a substantial deviation from the general intent and purpose of the parties as reflected in this Agreement.

11.13Survival. Except as otherwise specifically provided herein, the rights and obligations of the parties herein shall not survive any termination of this Agreement.

11.14Negotiation of Agreement. Each of Manager and Owner is a business entity having substantial experience with the subject matter of this Agreement and has fully participated in the negotiation and drafting of this Agreement. Accordingly, this Agreement shall be construed without regard to the rule that ambiguities in a document are to be construed against the draftsman. No inferences shall be drawn from the fact that the final, duly executed Agreement differs in any respect from any previous draft hereof.

11.15Entire Agreement. This Agreement, together with any other agreements or writings signed by the parties that expressly state they are supplemental to, or supercede any provision of, this Agreement, and together with any instruments to be executed and delivered pursuant to this Agreement, constitutes the entire agreement between the parties as of the Effective Date and supersedes all prior understandings and writings, and may be changed only by a writing signed by the parties hereto. For the avoidance of doubt, the Prior Management Agreement shall continue to govern the rights and obligations of the parties with respect to periods prior to the Effective Date, and this Agreement shall govern the rights and obligations of the parties with respect to periods from and after the Effective Date.

11.16Affiliates. Manager shall be entitled to contract with companies that are Affiliates (or companies in which Manager has an ownership interest if such interest is not sufficient to make such a company an Affiliate) to provide goods and/or services to the Hotel; provided that the prices and/or terms for such goods and/or services are competitive. Additionally, Manager may contract for the purchase of goods and services for the Hotel with third parties that have other contractual relationships with Manager and its Affiliates, so long as the prices and terms are competitive. In

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determining whether such prices and/or terms are competitive, they will be compared to the prices and/or terms which would be available from reputable and qualified parties for goods and/or services of similar quality, and the goods and/or services which are being purchased shall be grouped in reasonable categories, rather than being compared item by item. Any dispute as to whether prices and/or terms are competitive shall be settled by arbitration. The prices paid may include overhead and the allowance of a reasonable return to Manager’s Affiliates (or companies in which Manager has an ownership interest if such interest is not sufficient to make such a company an Affiliate), provided that such prices are competitive. Owner acknowledges and agrees that, with respect to any purchases of goods and/or services pursuant to this Section 11.16, Manager’s Affiliates may retain for their own benefit any allowances, credits, rebates, commissions and discounts received with respect to any such purchases.

11.17Disputes.

A.Disputes. Any disputes, claims or controversies arising out of or relating to this Agreement or the transactions contemplated hereby, including any disputes, claims or controversies brought by or on behalf of a party hereto, a direct or indirect parent of a party, or any holder of equity interests (which, for purposes of this Section 11.17, shall mean any holder of record or any beneficial owner of equity interests, or any former holder of record or beneficial owner of equity interests) of a party, either on its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of any equity interests of a party against a party or any of their respective trustees, directors, members, officers, managers (including The RMR Group LLC or its parent and their respective successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance, application or enforcement of this Agreement, including the agreements set forth in this Section 11.17, or the governing documents of a party (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (the “AAA”) then in effect, except as those Rules may be modified in this Section 11.17. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those Persons and a party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.

B.Selection of Arbitrators. There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial

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and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date the AAA provides such list to select one (1) of the three (3) arbitrators proposed by the AAA. If the party (or parties) fail(s) to select the second (2^nd) arbitrator by that time, the party (or parties) who have appointed the first (1^st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by the AAA to be the second (2^nd) arbitrator; and, if they should fail to select the second (2^nd) arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2^nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3^rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2^nd) arbitrator. If the third (3^rd) arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

C.Location of Arbitration. Any arbitration hearings shall be held in Boston, Massachusetts, unless otherwise agreed by the parties, but the seat of arbitration shall be Maryland.

D.Scope of Discovery. There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

E.Arbitration Award. In rendering an award or decision (an “Arbitration Award”), the arbitrators shall be required to follow the laws of the State of Maryland, without regard to principles of conflicts of law. Any arbitration proceedings or Arbitration Award rendered hereunder, and the validity, effect and interpretation of the agreements set forth in this Section 11.17 shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. An Arbitration Award shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of law on which it is based. Any monetary Arbitration Award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Subject to this Section 11.17, each party against which an Arbitration Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Arbitration Award or such other date as such Arbitration Award may provide.

F.Costs. Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, to the maximum extent permitted by Maryland law, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Arbitration Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s Arbitration Award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3^rd) appointed arbitrator.

G.Appeals. Notwithstanding any language to the contrary in this Agreement, any Arbitration Award, including but not limited to any interim Arbitration Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). An Arbitration Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of an Arbitration Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, the above paragraph relating to costs and expenses shall apply to any appeal pursuant to this Section 11.17 and the appeal tribunal shall not render an Arbitration Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

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H.Final Judgment. Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in the above paragraph, an Arbitration Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon an Arbitration Award may be entered in any court having jurisdiction. To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any Arbitration Award made, except for actions relating to enforcement of the agreements set forth in this Section 11.17 or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

I.Intended Beneficiaries. This Section 11.17 is intended to benefit and be enforceable by the parties hereto and their respective shareholders, stockholders, members, beneficial interest owners, direct and indirect parents, trustees, directors, officers, managers (including The RMR Group LLC or its parent and their respective successor), members, agents or employees and their respective successors and assigns and shall be binding on the parties, and such Persons and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such Persons may have by contract or otherwise.

11.18Permitted Contests. Manager shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy, encumbrance, charge or claim (collectively, “Claims”) as to the Hotel, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) such contest shall not cause Landlord or Owner to be in default under any Mortgage or reasonably be expected to result in a lien attaching to the Hotel, unless such lien is fully bonded or otherwise secured to the reasonable satisfaction of Landlord, (b) no part of the Hotel nor any Gross Revenues therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (c) Manager shall indemnify and hold harmless Owner and Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys’ fees, incurred by Owner or Landlord in connection therewith or as a result thereof. Owner and Landlord shall sign all required applications and otherwise cooperate with Manager in expediting the matter, provided that neither Owner nor Landlord shall thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith), and any such costs or expenses incurred in connection therewith shall be paid as a Deduction. Landlord shall agree to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) and Manager agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord. Any amounts paid under any such indemnity of Manager to Owner or Landlord shall be a Deduction. Any refund of any Claims and such charges and penalties or interest thereon shall be paid to Manager and included in Gross Revenues.

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11.19Estoppel Certificates. Each party to this Agreement shall at any time and from time to time, upon not less than thirty (30) days’ prior notice from the other party, execute, acknowledge and deliver to such other party, or to any third party specified by such other party, a statement in writing: (a) certifying that this Agreement is unmodified and in full force and effect (or if there have been modifications, that the same, as modified, is in full force and effect and stating the modifications); (b) stating whether or not to the best knowledge of the certifying party (i) there is a continuing default by the non-certifying party in the performance or observance of any covenant, agreement or condition contained in this Agreement, or (ii) there shall have occurred any event which, with the giving of notice or passage of time or both, would become such a default, and, if so, specifying each such default or occurrence of which the certifying party may have knowledge; (c) stating the date to which distributions of Operating Profit have been made; and (d) stating such other information as the non-certifying party may reasonably request. Such statement shall be binding upon the certifying party and may be relied upon by the non-certifying party and/or such third party specified by the non-certifying party as aforesaid, including, without limitation its lenders and any prospective purchaser or mortgagee of the Hotel or the leasehold estate created by the Lease. Upon termination, each party shall, on request, within the time period described above, execute and deliver to the non-certifying party and to any such third party a statement certifying that this Agreement has been terminated.

11.20Indemnification. Notwithstanding the existence of any insurance provided for herein and without regard to the policy limits of any such insurance, Manager shall protect, indemnify and hold harmless Owner and Landlord for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys’ fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Owner or Landlord by reason of: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about the Hotel or adjoining sidewalks or rights of way under Manager’s control, (b) any use, misuse, non-use, condition, management, maintenance or repair by Manager or anyone claiming under Manager of the Hotel or Owner’s Personal Property or any litigation, proceeding or claim by governmental entities or other third parties to which Owner or Landlord is made a party or participant relating to the Hotel or Owner’s Personal Property or such use, misuse, non-use, condition, management, maintenance, or repair thereof including, failure to perform obligations (other than Condemnation proceedings) to which Owner or Landlord is made a party, (c) any Impositions that are the obligations of Manager to pay pursuant to the applicable provisions of this Agreement, and (d) infringement and other claims relating to the propriety marks of Manager or its Affiliates; provided, however, that Manager’s obligations hereunder shall not apply to any liability, obligation, claim, damage, penalty, cause of action, cost or expense to the extent the same arises from any negligence or willful misconduct of Owner or Landlord or their respective employees, agents or invitees. Manager, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Owner or Landlord (but shall not be responsible for any duplicative attorneys’ fees incurred by Owner or Landlord) or may compromise or otherwise dispose of the same, with Owner’s or Landlord’s, as appropriate, prior

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written consent (which consent may not be unreasonably withheld or delayed). If Owner or Landlord unreasonably delays or withholds consent, Manager shall not be liable under this Section 11.20 for any incremental increase in costs or expenses resulting therefrom. The obligations of Manager under this Section 11.20 shall not be applicable to Environmental Costs with respect to which a specific indemnity is provided in Section 11.06.D, to the extent addressed therein. The obligations under this Section 11.20 shall survive termination.

11.21Remedies Cumulative. To the maximum extent permitted by law, each legal, equitable or contractual right, power and remedy of Owner or Manager, now or hereafter provided either in this Agreement or by statute or otherwise, shall be cumulative and concurrent and shall be in addition to every other right, power and remedy and the exercise or beginning of the exercise by Owner or Manager of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Owner or Manager of any or all of such rights, powers and remedies.

11.22Amendments and Modifications. This Agreement shall not be modified or amended except in writing signed by Owner and Manager.

11.23Claims; Binding Effect; Time of the Essence; Nonrecourse. Anything contained in this Agreement to the contrary notwithstanding, all claims against, and liabilities of, Manager or Owner arising prior to any date of termination of this Agreement shall survive such termination. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Time is of the essence with respect to the exercise of any rights of Manager, Owner or Landlord under this Agreement. Nothing contained in this Agreement shall be construed to create or impose any liabilities or obligations and no such liabilities or obligations shall be imposed on any of the equityholders, beneficial owners, direct or indirect, officers, directors, trustees, employees or agents of Owner or Landlord or their respective Affiliates or Manager or its Affiliates for the payment or performance of the obligations or liabilities of Owner, Landlord or Manager, as applicable.

11.24Counterparts; Headings. This Agreement may be executed in two (2) or more counterparts, each of which shall constitute an original, but which, when taken together, shall constitute but one instrument and shall become effective as of the date hereof when copies hereof, which, when taken together, bear the signatures of each of the parties hereto shall have been signed. Headings in this Agreement are for purposes of reference only and shall not limit or affect the meaning of the provisions hereof.

11.25No Political Contributions. Notwithstanding any provision in this Agreement to the contrary, no money or property of the Hotel shall be paid or used or offered, nor shall Owner or Manager directly or indirectly use or offer, consent or agree to use or offer, any money or property of the Hotel (i) in aid of any political party, committee or organization, (ii) in aid of any corporation, joint stock or other association organized or maintained for political purposes, (iii) in aid of any candidate for political office or nomination for such office, (iv) in connection with

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any election, (v) for any political purpose whatever, or (vi) for the reimbursement or indemnification of any person for any money or property so used.

11.26REIT Qualification.

A.Manager shall take all commercially reasonable actions reasonably requested by Owner or Landlord for the purpose of qualifying Landlord’s rental income from Owner under the Lease as “rents from real property” pursuant to Sections 856(d)(2), 856(d)(8)(B) and 856(d)(9) of the Code, including but not limited to any action requested to maintain: (1) Manager’s continued qualification as an “eligible independent contractor” (as defined in Section 856(d)(9)(A) of the Code) with respect to SVC and (2) the Hotel’s continued treatment as a “qualified lodging facility” (as defined in Section 856(d)(9)(D) of the Code). Manager shall not be liable if such reasonably requested actions, once implemented, fail to have the desired result of qualifying Landlord’s rental income from Owner under the Lease as “rents from real property” pursuant to Sections 856(d)(2), 856(d)(8)(B) and 856(d)(9) of the Code. This Section 11.26.A shall not apply in situations where an Adverse Regulatory Event has occurred; instead, Section 11.27 shall apply.

B.If Owner or Landlord wish to invoke the terms of Section 11.26.A, Owner or Landlord (as appropriate) shall contact Manager and the parties shall meet with each other to discuss the relevant issues and to develop a mutually-agreed upon plan for implementing such reasonably requested actions.

C.Any additional out-of-pocket costs or expenses incurred by Manager in complying with such a request shall be borne by Owner (and shall not be a Deduction). Owner shall reimburse Manager for such expense or cost promptly, but not later than five (5) Business Days after such expense or cost is incurred.

D.Manager shall not authorize any wagering activities to be conducted at or in connection with the Hotel, and Manager shall use commercially reasonable efforts to achieve the goal of having at least one-half of the guest rooms in the Hotel being used on a transient basis and the goal of having no Hotel amenities and facilities that are not customary for similarly situated properties.

11.27Adverse Regulatory Event. In the event of an Adverse Regulatory Event arising from or in connection with this Agreement, Owner and Manager shall work together in good faith to amend this Agreement to eliminate the impact of such Adverse Regulatory Event. For purposes of this Agreement, the term “Adverse Regulatory Event” means any time that a law, statute, ordinance, code, rule or regulation imposes upon Owner (or could impose upon Owner in Owner’s reasonable opinion), any material threat to either Landlord’s or Landlord’s Affiliate’s status as a “real estate investment trust” under the Code or to the treatment of amounts paid to Landlord as “rents from real property” under Section 856(d) of the Code. Each of Manager and Owner shall inform the other of any Adverse Regulatory Event of which it is aware and which it believes likely to impair compliance of any of the Hotel with respect to the aforementioned sections of the Code.

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11.28Tax Matters. Manager will prepare or cause to be prepared all tax returns required in the operation of the Hotel, which include payroll, sales and use tax returns, personal property tax returns and business, professional and occupational license tax returns. Manager shall timely file or cause to be filed such returns as required by the State; provided that, Owner shall promptly provide all relevant information to Manager upon request, and any late fees or penalties resulting from delays caused by Owner shall be borne by Owner. Manager shall not be responsible for the preparation of Landlord’s or Owner’s federal or state income tax returns, provided Manager shall cooperate fully with Owner and Landlord as may be necessary to enable Owner or Landlord to file such federal or state income tax returns, including by preparing data reasonably requested by Owner or Landlord and submitting it to Owner or Landlord, as applicable, as soon as reasonably practicable following such request.

11.29Third Party Beneficiaries. The terms and conditions of this Agreement shall inure to the benefit of, and be binding upon, the respective successors, heirs, legal representatives or permitted assigns of each of the parties hereto and except for Landlord and SVC, which are intended third party beneficiaries, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

ARTICLE XII DEFINITION OF TERMS; CONSTRUCTION

12.01Definition of Terms.

The following terms when used in this Agreement and the Addenda attached hereto shall have the meanings indicated:

“AAA” has the meaning ascribed to such term in Section 11.17.

“Additional Manager Advances” means advances by Manager under Sections 4.05 and 5.05, together with simple interest at the rate of nine percent (9%) per annum on the outstanding balance thereof from time to time.

“Additional Working Capital” has the meaning ascribed to such term in Section 4.05.

“Adverse Regulatory Event” has the meaning ascribed to such term in Section 11.27.

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. For purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) of a Person means the possession, directly or indirectly, of the power: (i) to vote fifty percent (50%) or more of the voting stock or equity interests of such Person; or (ii) to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting stock or equity interests, by contract or otherwise.

“Agreement” means this Management Agreement.

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“Annual Operating Projection” has the meaning ascribed to such term in Section 4.04.

“Annual Operating Statement” has the meaning ascribed to such term in Section 4.01.B.

“Appellate Rules” has the meaning ascribed to such term in Section 11.17.

“Arbitration Award” has the meaning ascribed to such term in Section 11.17.

“Award” has the meaning ascribed to such term in the Lease.

“Base Management Fee” means an amount equal to [Full Service: three percent (3%) ORLimited Service: five percent (5%)] of Gross Revenues.

“Building” has the meaning ascribed to such term in the Recitals.

“Business Day” means any day other than Saturday, Sunday, or any other day on which banking institutions in the Commonwealth of Massachusetts are authorized by law or executive action to close.

“Capital Estimate” has the meaning ascribed to such term in Section 5.05.A.

“Capital Statement” has the meaning ascribed to such term in Section 5.06.B.

“Change of Control” means, the acquisition by any Person or Persons acting in concert (excluding Persons who are holders, directly or indirectly, of equity interest in Manager as of the Effective Date or Affiliates or Immediate Family Members of such Persons) of beneficial ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of 50% or more, or rights, options or warrants to acquire 50% or more, of the outstanding shares of voting stock or other voting interests of Manager.

“Claims” has the meaning ascribed to such term in Section 11.18.

“Code” means the Internal Revenue Code of 1986.

“Condemnation” means (a) the exercise of any governmental power with respect to the Hotel or any interest therein, whether by legal proceedings or otherwise, by a Condemnor of its power of condemnation, (b) a voluntary sale or transfer of the Hotel or any interest therein, to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending, or (c) a taking or voluntary conveyance of the Hotel or any interest therein, or right accruing thereto or use thereof, as the result or in settlement of any Condemnation or other eminent domain proceeding affecting the Hotel or any interest therein, whether or not the same shall have actually been commenced.

“Condemnor” means any public or quasi‑public authority, or private corporation or individual, having the power of Condemnation.

“Controlling Interest” means (i) if the Person is a corporation, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of such Person (through ownership of such shares or by contract), or (ii) if the Person is not a

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corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the business, management or policies of such Person. “Control”, “Controlling” and “Controlled” have corrective meanings.

“Deduction” has the meaning ascribed to such term in the definition of Operating Profit.

“Discount Rate” means an annual rate of eight percent (8%).

“Disputes” has the meaning ascribed to such term in Section 11.17.

“Effective Date” has the meaning ascribed to such term in the Preamble.

“Environmental Costs” has the meaning ascribed to such term in Section 11.06.C.

“Environmental Laws” has the meaning ascribed to such term in Section 11.06.B.

“Environmental Notice” has the meaning ascribed to such term in Section 11.06.A.

“Environmental Obligation” has the meaning ascribed to such term in Section 11.06.A.

“Existing CC&Rs” has the meaning ascribed to such term in Section 8.02.A.

“FF&E” means furniture, fixtures and equipment, including without limitation: furnishings, fixtures, decorative items, signage, audio‑visual equipment, kitchen equipment and appliances, cabinetry, laundry equipment, housekeeping equipment, telecommunications systems, security systems and front desk and back‑of‑the house computer equipment; provided, however, that the term “FF&E” shall not include Fixed Asset Supplies or software.

“Final Statement” has the meaning ascribed to such term in Section 11.09.A.

“Fixed Asset Supplies” means items included within “Operating Equipment” under the Uniform System of Accounts that may be consumed in the operation of the Hotel or are not capitalized, including linen, china, glassware, tableware, uniforms, and similar items used in the operation of the Hotel.

“Future CC&Rs” has the meaning ascribed to such term in Section 8.02.A.

“GAAP” means generally accepted accounting principles, consistently applied.

“Government Agencies” means any court, agency, authority, board (including, without limitation, environmental protection, planning and zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi-governmental unit of the United States or the State or any county or any political subdivision of any of the foregoing, whether now or hereafter in existence, having jurisdiction over Owner, Landlord or the Hotel.

“Gross Revenues” means for any period, all revenues and receipts of every kind derived from operating the Hotel and all departments and parts thereof during such period, including: income (from both cash and credit transactions) after deductions for bad debts and discounts for prompt cash payments and refunds from rental of Guest Rooms and other spaces at the Hotel,

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telephone charges, stores, offices, exhibit or sales space of every kind; license, lease and concession fees and rentals (not including gross receipts of licensees, lessees and concessionaires); income from vending machines; income from parking; health club membership fees; food and beverage sales; wholesale and retail sales of merchandise; service charges; and proceeds, if any, from business interruption or other loss of income insurance; provided, however, that Gross Revenues shall not include the following: gratuities to employees of the Hotel; federal, state or municipal excise, sales or use taxes or any other taxes collected directly from patrons or guests or included as part of the sales price of any goods or services; proceeds from the sale of FF&E; interest received or accrued with respect to the funds in the operating accounts of the Hotel; any refunds, rebates, discounts and credits of a similar nature, given, paid or returned in the course of obtaining Gross Revenues or components thereof; insurance proceeds (other than proceeds from business interruption or other loss of income insurance); condemnation proceeds (other than for a temporary taking); or any proceeds from any Sale of the Hotel or from the refinancing of any debt encumbering the Hotel but excluding amounts expressly stated in this Agreement not to be included in Gross Revenues.

“Gross Room Revenues” means all Gross Revenues attributable to or payable for rental of Guest Rooms, after deductions for bad debts and discounts for prompt cash payments and refunds from rental of Guest Rooms, including, without limitation, all credit transactions, whether or not collected, but excluding (i) any sales or room taxes collected by Manager for transmittal to the appropriate taxing authority, and (ii) any revenues from sales or rentals of ancillary goods, such as VCR rentals, telephone income and fireplace log sales and sales from in-room service bars. Gross Room Revenues shall also include the proceeds from any business interruption insurance or other loss of income insurance. Gross Room Revenues shall be accounted for in accordance with the Uniform System of Accounts.

“Guest Room” means a lodging unit in the Hotel.

“Hazardous Substances” means any substance:

(i)the presence of which requires or may hereafter require notification, investigation or remediation under any federal, state or local statute, regulation, rule, ordinance, order, action or policy; or

(ii)which is or becomes defined as a “hazardous waste”, “hazardous material”, or “hazardous substance”, “dangerous waster”, “pollutant” or “contaminant” or term of similar import under any present or future federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. etseq.) and the Resource Conservation and Recovery Act (42 U.S.C. section 6901 etseq.) and the regulations promulgated thereunder; or

(iii)which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, any state of the United States, or any political subdivision thereof; or

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(iv)the presence of which at the Hotel causes or materially threatens to cause an unlawful nuisance upon the Hotel or to adjacent properties or poses or materially threatens to pose a hazard to the Hotel or to the health or safety of persons on or about the Hotel; or

(v)without limitation, which is or contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic compounds; or

(vi)without limitation, which is or contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam insulation; or

(vii)without limitation, which contains or emits radioactive particles, waves or material; or

(viii)without limitation, constitutes materials which are now or may hereafter be listed as medical waste pursuant to the Medical Waste Tracking Act of 1988, or analogous state or local laws or regulations or guidelines promulgated thereunder.

“Hotel” means the Site together with the Building and all other improvements constructed or to be constructed on the Site, and all FF&E installed or located on the Site or in the Building, and all easements or other Owner rights thereto owned by Landlord together with, for purposes of this Agreement, all office equipment, telephone equipment, motor vehicles, and other equipment leased by Owner, Fixed Asset Supplies and Inventories at the Hotel.

“Initial Effective Date” has the meaning ascribed to such term in the Recitals.

“Interest Rate” means an annual rate of 9%, but not higher than the highest rate permitted by law.

“Immediate Family Member” of an individual means any lineal descendant of such individual (including descendants by adoption), the spouse of any such lineal descendant, the estate of such individual or of his or her lineal descendants, or a trust for the principal benefit of one or more of such individual or of his or her lineal descendants (including a trust the principal beneficiary of which is another trust for the principal benefit of one or more such Persons).

“Impositions” has the meaning ascribed to such term in the Lease but shall not include:

1.    Special assessments (regardless of when due or whether they are paid as a lump sum or in installments over time) imposed because of facilities which are constructed by or on behalf of the assessing jurisdiction (for example, roads, sidewalks, sewers, culverts, etc.) which directly benefit the Hotel (regardless of whether or not they also benefit other buildings), which assessments shall be treated as capital costs of construction and not as Deductions; and

2.    Impact fees (regardless of when due or whether they are paid as a lump sum or in installments over time) which are required as a condition to the issuance of site plan approval, zoning variances or building permits, which impact fees shall be treated as capital costs of construction and not as Deductions.

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“Incentive Management Fee” means, for each Year or portion thereof, an amount equal to twenty percent (20%) of Operating Profit remaining after deducting amounts paid or payable in respect of Owner’s Priority and Reimbursable Advances for such Year; provided that for purposes of determining the Incentive Management Fee, Operating Profit shall be determined based upon 95% of Gross Revenues.

“Insurance Requirements” means all terms of any insurance policy required by this Agreement and all requirements of the issuer of any such policy and all orders, rules and regulations and any other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) binding upon the Hotel.

“Inventories” means “Inventories” as defined in the Uniform System of Accounts, including provisions in storerooms, refrigerators, pantries and kitchens; beverages in wine cellars and bars; other merchandise intended for sale; fuel; mechanical supplies; stationery; and other expensed supplies and similar items.

“Invested Capital” means an amount equal to [Updated Invested Capital], increased by the sum of any amounts paid after the Effective Date by (a) Landlord pursuant to Sections 5.1.2(b), 10.2.3 or 11.2 of the Lease or, (b) Owner pursuant to Section 5.05 or pursuant to Section 6.04 or Section 6.07 in excess of the insurance proceeds or Award, as the case may be.

“Landlord” has the meaning ascribed to such term in the Recitals or shall mean, as of any date, the landlord under the Lease as of such date.

“Lease” means the Lease Agreement between Landlord and Owner, dated as of [Initial Lease Effective Date], as amended from time to time, and any replacement lease(s) of the Hotel by the fee owner thereof.

“Legal Requirements” means all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Hotel or the maintenance, construction, alteration or operation thereof, whether now or hereafter enacted or in existence, including, without limitation, (a) all permits, licenses, authorizations, certificates and regulations necessary to operate the Hotel, and (b) all covenants, agreements, restrictions and encumbrances contained in any instruments at any time in force affecting the Hotel which either (i) do not require the approval of Manager, or (ii) have been approved by Manager as required hereby, including those which may (A) require material repairs, modifications or alterations in or to the Hotel or (B) in any way materially and adversely affect the use and enjoyment thereof, but excluding any requirements under Sections 11.26, 11.27 or 11.28, and (c) all valid and lawful requirements of Government Agencies or pertaining to reporting, licensing, permitting, investigation, remediation and removal of underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or emissions, discharges, releases or threatened releases of Hazardous Substances, chemical substances, pesticides, petroleum or petroleum products, pollutants, contaminants or hazardous or toxic substances, materials or wastes whether solid, liquid or gaseous in nature, into the environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or pollutants,

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contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid of gaseous in nature.

“Loyalty Program” means the Sonesta Travel Pass loyalty program or such replacement or successor “frequent stay” reward program as Manager may employ in the future for the hotels in the System.

“Loyalty Program Fee” means an amount assessed based on defined costs associated with the Loyalty Program, not greater than one percent (1%) of Gross Revenues or such greater amount otherwise mutually agreed upon between Owner and Manager.

“Manager” has the meaning ascribed to such term in the Preamble hereto or shall mean any successor or permitted assign, as applicable.

“Manager Event of Default” has the meaning ascribed to such term in Section 9.01.

“Marketing Programs” means advertising, marketing, promotional and public relations programs and campaigns including so-called “frequent stay” rewards program which are intended for the benefit of all hotels in the System.

“Marketing Program Fee” means an amount equal to one percent (1%) of Gross Revenues or an amount otherwise mutually agreed upon between Owner and Manager.

“Monthly Statement” has the meaning ascribed to such term in Section 4.01.A.

“Mortgage” means any mortgage indebtedness obtained by Landlord to finance the Hotel, and may take the form of a mortgage, deed of trust or security document customarily in use in the State.

“Mortgagee” means the holder of any Mortgage.

“Officer’s Certificate” means a certificate executed by an officer of Manager which certifies that with respect to the Annual Operating Statement delivered under Section 4.01.B, the accompanying statement has been properly prepared in accordance with GAAP and fairly presents the financial operations of the Hotel.

“Operating Loss” means a negative Operating Profit for the Hotel.

“Operating Profit” means the excess of Gross Revenues over the following expenses incurred by Manager in accordance with the Operating Standards and the terms of this Agreement, on behalf of Owner, in operating the Hotel:

1.the cost of sales, including, without limitation, compensation, fringe benefits, payroll taxes and other costs related to Hotel employees (the foregoing costs shall not include salaries and other employee costs of executive personnel of Manager who do not work at the Hotel on a regular basis; except that the foregoing costs shall include the allocable portion of the salary and other employee costs of any general manager or other supervisory personnel assigned to a “cluster” of hotels which includes the Hotel);

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2.departmental expenses incurred at departments within the Hotel; administrative and general expenses; the cost of marketing incurred by the Hotel; advertising and business promotion incurred by the Hotel;

3.routine repairs, maintenance and minor alterations under Section 5.02;

4.all charges for electricity, power, gas, oil, water and other utilities consumed in the operation of the Hotel;

5.the cost of Inventories and Fixed Asset Supplies consumed in the operation of the Hotel;

6.lease payments for equipment and other personal property reasonably necessary for the operation of the Hotel and any ground lease payments;

7.a reasonable reserve for uncollectible accounts receivable as determined by Manager;

8.all costs and fees of independent professionals or other third parties who are retained by Manager to perform services required or permitted hereunder;

9.all costs and fees of technical consultants and operational experts who are retained or employed by Manager and/or Affiliates of Manager for specialized services (including, without limitation, quality assurance inspectors) and the cost of attendance by employees of the Hotel at training and manpower development programs sponsored by Manager;

10.the Base Management Fee, Reservations Fee and Systems Fee;

11.insurance costs and expenses for coverage required to be maintained under Section 6.01;

12.taxes, if any, payable by or assessed against Manager related to this Agreement or to Manager’s operation of the Hotel (exclusive of Manager’s income taxes) and all Impositions;

13.the Marketing Program Fee and the Loyalty Program Fee;

14.the Hotel’s share of the costs and expenses of participating in programs and activities prescribed for members of the System (including those central or regional services set forth in Section 1.03) to the extent such costs are not paid pursuant to a Marketing Program;

15.the costs of commercially reasonable efforts of causing the Hotel to be in compliance with each and every provision of the Lease (regardless of whether or not such compliance is a requirement of this Agreement);

16.such other costs and expenses incurred by Manager to comply with Legal Requirements and Insurance Requirements or are otherwise reasonably necessary for the proper and efficient operation of the Hotel; and

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17.such other costs and expenses paid to Owner or Landlord pursuant to the Lease or this Agreement, if such costs and expenses would have been a Deduction if paid directly by Manager to a third person in respect of the Hotel, (the items above collectively, “Deductions”).

Deductions shall not include (a) payments with respect to items for which Manager has agreed to be liable at its own cost and expense in this Agreement or under any other agreement between Manager and Owner including indemnities, (b) debt service payments pursuant to any Mortgage, (c) payments pursuant to equipment leases or other forms of financing obtained by Owner for the FF&E located in or connected with the Hotel, both of which shall be paid or caused to be paid by Owner, (d) rent payable under the Lease, (e) any reimbursement to Manager for advances Manager makes with respect to the Hotel as permitted hereunder, (f) the Incentive Management Fee, (g) the Procurement and Construction Supervision Fee or, (h) any item specifically stated not to be a Deduction.

“Operating Standards” has the meaning ascribed to such term in Section 1.02.A.

“Overdue Rate” means an annual rate of 12% but not higher than the highest rate permitted by law.

“Owner” has the meaning ascribed to such term in the Preamble or shall mean any successor or permitted assignee, as applicable.

“Owner Advances” has the meaning ascribed to such term in Section 3.02.D.

“Owner Event of Default” has the meaning ascribed to such term in Section 9.03.

“Owner Operating Loss Advance(s)” has the meaning ascribed to such term in Section 4.06.

“Owner’s Personal Property” means all motor vehicles, consumable inventories and supplies, furniture, furnishings, movable walls and partitions, equipment and machinery and all other tangible personal property of Owner, if any, acquired by Owner on and after the date hereof and located at the Hotel or used in Owner’s business at the Hotel, and all modifications, replacements, alterations and additions to such personal property.

“Owner’s Priority” means, for each Year or portion thereof, an amount equal to eight percent (8%) of Invested Capital.

“Owner’s Residual Payment” with respect to each Year or portion thereof, an amount equal to Operating Profit remaining after deducting amounts paid or payable in respect of Owner’s Priority, Reimbursable Advances and the Incentive Management Fee for such Year.

“Owner Working Capital Advances” means the aggregate of all funds remitted by Owner to Manager as Additional Working Capital.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company partnership or other entity, and the heirs, executors,

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administrators, legal representatives, successors and assigns of such Person where the context so permits.

“Prior Management Agreement” has the meaning ascribed to such term in the Recitals.

“Procurement and Construction Supervision Fee” means an amount equal to three percent (3%) of all third party costs of capital expenditures under Sections 5.05, 6.04 and 6.07.

“Reimbursable Advances” means the amounts paid or payable in respect of Section 3.02.D.

“Reservation Fee” means one and one-half percent (1.5%) of Gross Room Revenues.

“RMR” has the meaning ascribed to such term in Section 11.17.

“Rules” has the meaning ascribed to such term in Section 11.17.

“Sale of the Hotel” means any sale, assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary, of Owner’s leasehold title to the Hotel or Landlord’s fee title to the Hotel, as the case may be. For purposes of this Agreement, a Sale of the Hotel shall also include a lease (or sublease) of all or substantially all of Owner’s leasehold interest in the Hotel and any sale, assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary, in a single transaction or a series of transactions, of the Controlling Interest in Owner or Landlord, but shall not include any conveyance which results in SVC continuing to hold a Controlling Interest in the transferee.

“SEC” means the United States Securities and Exchange Commission.

“Site” has the meaning ascribed to such term in Section A of the Recitals.

“Sonesta” means Sonesta International Hotels Corporation, a Maryland corporation.

“Sonesta Holdco” means Sonesta Holdco Corporation, a Maryland corporation, Sonesta’s parent.

“Specially Designated National or Blocked Person” means (a) a person designated by the U.S. Department of Treasury’s Office of Foreign Assets Control, or other governmental entity, from time to time as a “specially designated national or blocked person” or similar status, (b) a person described in Section 1 of U.S. Executive Order 13224 issued on September 23, 2001, or (c) a person otherwise identified by government or legal authority as a person with whom Manager or its Affiliates are prohibited from transacting business. Currently, a listing of such designations and the text of the Executive Order are published under the internet website address www.ustreas.gov/offices/enforcement/ofac.

“State” means the state in which the Hotel is located.

“Stockholders Agreement” means that certain Stockholders Agreement dated as of February 27, 2020 by and among Sonesta Holdco, SVC and certain other stockholders of Sonesta Holdco.

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“Subordination Agreement” has the meaning ascribed to such term in Section 8.04.

“Subsequent Holder” has the meaning ascribed to such term in Section 8.04.

“SVC” means Service Properties Trust.

“System” means all hotels which are operated under the Trade Names.

“System Fee” mean during any Year, an amount equal to one and one-half percent (1.5%) of Gross Revenues.

“System Standards” means the physical standards (for example, quality of the Building, FF&E, and Fixed Asset Supplies, frequency of FF&E replacements, etc.); each of such standards shall be the standard which is generally prevailing or in the process of being implemented at other hotels in the System, on a fair and consistent basis with other hotels in the System; provided, however, that if the market area or the physical peculiarities of the Hotel warrant, in the reasonable judgment of Manager, a deviation from such standards shall be permitted.

“Term” has the meaning ascribed to such term in Section 2.01.A.

“Trade Names” has the meaning ascribed to such term in Section 11.10.

“Uniform System of Accounts” means the Uniform System of Accounts for the Lodging Industry, Tenth Revised Edition, 2006, as published by the American Hotel & Lodging Educational Institute, as revised from time to time to the extent such revision has been or is in the process of being generally implemented within the System.

“Unsuitable for Its Permitted Use” means a state or condition of the Hotel such that (a) following any damage or destruction involving the Hotel, the Hotel cannot be operated in the good faith judgment of Manager on a commercially practicable basis and it cannot reasonably be expected to be restored to substantially the same condition as existed immediately before such damage or destruction, within nine (9) months following such damage or destruction or such shorter period of time as to which business interruption insurance is available to cover rent and other costs related to the Hotel following such damage or destruction, or (b) as the result of a partial Condemnation, the Hotel cannot be operated, in the good faith judgment of Manager on a commercially practicable basis in light of then existing circumstances.

“Working Capital” means funds that are used in the day‑to‑day operation of the business of the Hotel.

“Year” means the calendar year.

12.02Construction. The definitions of terms herein shall apply equally to the singular, plural, past, present and future forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document shall be construed as referring to such agreement,

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instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in this Agreement shall be construed to refer to this Agreement in its entirety and not to any particular provision thereof, (iv) all references in this Agreement to Articles, Sections and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement, and (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time. Any titles or captions contained in this Agreement are for convenience only and shall not be deemed part of the text of this Agreement.

[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal as of the day and year first written above.

SONESTA INTERNATIONAL HOTELS CORPORATION
	By:
		Carlos R. Flores
		President and Chief Executive Officer

CAMBRIDGE TRS, INC.
	By:
		John G. Murray
		President and Chief Executive Officer

[Signature Page to Sonesta Management Agreement]

Landlord, in consideration of the obligations of Manager and Owner under the within Agreement, joins to evidence its agreement to be bound by the terms of Sections 4.01.C, 4.02.B, 5.05, 5.06.D, Article VI, 8.01, 8.02, 8.04, 10.02, 10.03, 11.07, 11.17, 11.18 and 11.20, to the extent applicable to it.

[Property Landlord]

By:

John G. Murray

President and Chief Executive Officer

[Joinder Page to Management Agreement]

EXHIBIT A

THE SITE

The real property located at [Property Address]

EXHIBIT A-2

FORM OF AMENDED AND RESTATED MANAGEMENT AGREEMENT
(NON-SALE PROPERTIES)

Final Form – Non-Sale Properties

[For Non-Sale Properties]

[Property Name]

AMENDED AND RESTATED

MANAGEMENT AGREEMENT

BY AND BETWEEN

[PROPERTY MANAGER]

AS “MANAGER”
AND

[PROPERTY OWNER]

AS “OWNER”

DATED AS OF FEBRUARY 27, 2020

TABLE OF CONTENTS

ARTICLE I APPOINTMENT OF MANAGER	1
1.01 Appointment	1
1.02 Management of the hotel	1
1.03 Services Provided by Manager	4
1.04 Employees	4
1.05 Right to Inspect	5
ARTICLE II TERM	5
2.01 Term	5
2.02 Early Termination	6
ARTICLE III COMPENSATION OF MANAGER; DISBURSEMENTS	6
3.01 Fees	6
3.02 Disbursements	6
3.03 Timing of Payments	7
ARTICLE IV ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS;
WORKING CAPITAL AND OPERATING LOSSES	8
4.01 Accounting, Interim Payment and Annual Reconciliation	8
4.02 Books and Records	9
4.03 Accounts	10
4.04 Annual Operating Projection	10
4.05 Working Capital	10
4.06 Operating Losses	11
ARTICLE V REPAIRS, MAINTENANCE AND REPLACEMENTS	11
5.01 Manager's Maintenance Obligation	11
5.02 Repairs and Maintenance to be Paid from Gross Revenues	11
5.03 Repairs and Maintenance to be Paid by Owner or Landlord	12
5.04 FF&E Reserve Account	12

5.05 Capital Estimate	13
5.06 Additional Requirements	14
5.07 Ownership of Replacements	14
ARTICLE VI INSURANCE, DAMAGE, CONDEMNATION, AND
FORCE MAJEURE	14
6.01 General Insurance Requirements	14
6.02 Waiver of Subrogation	15
6.03 Risk Management	15
6.04 Damage and Repair	15
6.05 Damage Near End of Term	16
6.06 Condemnation	16
6.07 Partial Condemnation	16
6.08 Temporary Condemnation	17
6.09 Allocation of Award	17
6.10 Effect of Condemnation	17
ARTICLE VII TAXES	18
7.01 Real Estate and Personal Property Taxes	18
ARTICLE VIII OWNERSHIP OF THE HOTEL	18
8.01 Ownership of the Hotel	18
8.02 No Covenants, Conditions of Restrictions	19
8.03 Liens; Credit	19
8.04 Financing	20
ARTICLE IX DEFAULTS	21
9.01 Manager Events of Default	21
9.02 Remedies for Manager Events of Default	21
9.03 Owner Events of Default	23
9.04 Remedies for Owner Events of Default	24
ARTICLE X ASSIGNMENT AND SALE	25
10.01 Assignment	25

ii

10.02 Sale of the Hotel	26
10.03 Amendment of the Lease	27
ARTICLE XI MISCELLANEOUS	27
11.01 Right to Make Agreement	27
11.02 Actions By Manager	27
11.03 Relationship	27
11.04 Applicable Law	27
11.05 Notices	28
11.06 Environmental Matters	28
11.07 Confidentiality	29
11.08 Projections	30
11.09 Actions to be Taken Upon Termination	30
11.10 Trademarks, Trade Names and Service Marks	32
11.11 Waiver	32
11.12 Partial Invalidity	32
11.13 Survival	33
11.14 Negotiation of Agreement	33
11.15 Entire Agreement	33
11.16 Affiliates	33
11.17 Disputes	33
11.18 Permitted Contests	36
11.19 Estoppel Certificates	36
11.20 Indemnification	37
11.21 Remedies Cumulative	37
11.22 Amendments and Modifications	38
11.23 Claims; Binding Effect; Time of the Essence; Nonrecourse	38
11.24 Counterparts; Headings	38
11.25 No Political Contributions	38
11.26 REIT Qualitifications	38
11.27 Adverse Regulatory Event	39
11.28 Tax Matters	39
11.29 Third Party Beneficiaries	39

iii

ARTICLE XII DEFINITION OF TERMS; CONSTRUCTION	40
12.01 Definition of Terms	40
12.02 Construction	51

Exhibit A    The Site

iv

THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT (this “Agreement”) is executed as of February 27, 2020 (the “Effective Date”), by [Property Owner], [a Maryland corporation][a Maryland limited liability company] (“Owner”), and [Property Manager], [a Maryland corporation][a Maryland limited liability company] (“Manager”).

R E C I T A L S:

A.[Property Landlord] (“Landlord”) is the owner of fee title to the real property (the “Site”) described on Exhibit A to this Agreement on which certain improvements have been constructed consisting of a building or buildings containing [ # of Rooms] Guest Rooms, and certain other amenities and related facilities (collectively, the “Building”). The Site and the Building, in addition to certain other rights, improvements, and personal property, are referred to as the “Hotel” and more particularly described in the definition in Section 12.01. Pursuant to the Lease, Landlord has leased the Hotel to Owner.

B.Owner and Manager have previously entered into a Management Agreement, dated as of [Date of Prior Management Agreement] (the “Initial Effective Date”), as amended, pursuant to which Owner engaged Manager to manage and operate the Hotel (the “Prior Management Agreement”). Manager and Owner desire to amend and restate the terms and provisions of the Prior Management Agreement in their entirety and replace them with the terms and provisions of this Agreement effective as of 12:01 a.m. on the Effective Date.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt of which is hereby acknowledged, Owner and Manager agree as follows:

Article I APPOINTMENT OF MANAGER

1.01Appointment. Subject to the provisions of this Agreement, Owner hereby engages Manager to supervise, direct and control the management and operation of the Hotel during the Term. Manager accepts such engagement and agrees to manage and operate the Hotel during the Term in accordance with the terms and conditions of this Agreement. The Hotel shall be known as [Property Name]. All capitalized terms shall have the meaning ascribed to them in Article XII.

1.02Management of the Hotel.

A.The management and operation of the Hotel shall be under the exclusive supervision and control of Manager except as otherwise specifically provided in this Agreement. Manager shall manage and operate the Hotel in an efficient and economical manner consistent with standards prevailing in other hotels in the System, including all activities in connection therewith which are customary and usual to such an operation (provided, however, that if the market area or the physical peculiarities of the Hotel warrant, in the reasonable judgment of Manager, a deviation from such standards shall be permitted (the “Operating Standards”)). Manager shall, in accordance with the System Standards, the Operating Standards and the terms of this Agreement:

1.Recruit, employ, supervise, direct and (when appropriate) discharge the employees at the Hotel.

2.Establish Guest Room rates and prices, rates and charges for services provided in the Hotel.

3.Establish administrative policies and procedures, including policies and procedures for employment, control of revenue and expenditures, maintenance of bank accounts for the purchasing of supplies and services, control of credit, and scheduling of maintenance and verify that the foregoing procedures are operating in a sound manner.

4.Manage expenditures to replenish Inventories and Fixed Asset Supplies, make payments on accounts payable and collect accounts receivable.

5.Arrange for and supervise public relations and advertising and prepare marketing plans.

6.Procure all Inventories and replacement Fixed Asset Supplies.

7.Prepare and deliver Monthly Statements, Annual Operating Statements, Annual Operating Projections, Capital Estimates, Capital Statements and such other information required by this Agreement or as Owner may reasonably request.

8.Plan, execute and supervise repairs, maintenance, alterations and improvements at the Hotel.

9.Provide, or cause to be provided, risk management services relating to the types of insurance required to be obtained or provided by Manager under this Agreement and provide such information related to risk management as Owner may from time to time reasonably request.

10.Obtain and keep in full force and effect, either in its own name or in Owner’s and/or Landlord’s name, as may be required by applicable law, any and all licenses and permits to the extent within the control of Manager (or, if not within the control of Manager, Manager shall use commercially reasonable efforts to obtain and keep same in full force and effect).

11.Reasonably cooperate in a Sale of the Hotel or in obtaining a Mortgage.

12.On behalf of Owner, negotiate, enter into and administer leases, subleases, licenses and concession agreements for all public space at the Hotel (including all retail, office and lobby space and antenna leases on rooftop areas) and administer, comply with and arrange for extensions of any ground lease or common interest realty associations as necessary.

13.On behalf of Owner, negotiate, enter into and administer service contracts and licenses for the operation of the Hotel, including contracts and licenses for health and safety, systems maintenance, electricity, gas, telephone, cleaning, elevator and boiler maintenance, air conditioning maintenance, laundry and dry cleaning, master television service, internet service,

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use of copyrighted materials (such as music and videos), entertainment and other services as Manager deems advisable.

14.Negotiate, enter into and administer contracts for the use of banquet and meeting facilities and Guest Rooms by groups and individuals.

15.Take reasonable action to collect and institute in its own name or in the name of Owner or the Hotel, in each instance as Manager in its reasonable discretion deems appropriate, legal actions or proceedings to collect charges, rent or other income derived from the operation of the Hotel or to oust or dispossess guests, tenants, members or other persons in possession therefrom, or to cancel or terminate any lease, license or concession agreement for the breach thereof or default thereunder by Owner, licensee or concessionaire.

16.Make representatives available to consult with and advise Owner, at Owner’s reasonable request, concerning policies and procedures affecting the conduct of the business of the Hotel.

17.Collect on behalf of Owner and account for and remit to governmental authorities all applicable excise, sales, occupancy and use taxes or similar governmental charges collected by or at the Hotel directly from guests, members or other patrons, or as part of the sales price of any goods, services or displays, such as gross receipts, admission or similar or equivalent taxes, duties, levies or charges.

18.Keep Owner advised of significant events which occur with respect to the Hotel which might reasonably be expected to have a material adverse effect on the financial performance or value of the Hotel.

19.Perform such other tasks with respect to the Hotel as are customary and consistent with the Operating Standards and the System Standards.

B.Manager shall use commercially reasonable efforts to comply with all Legal Requirements and Insurance Requirements pertaining to its operation of the Hotel.

C.Manager shall use commercially reasonable efforts to obtain and maintain all approvals necessary to use and operate the Hotel in accordance with the System Standards, Operating Standards and Legal Requirements. Owner shall cooperate with Manager and shall (or cause Landlord to) execute all applications and consents reasonably required to be executed by Owner in order for Manager to obtain and maintain such approvals.

D.Manager shall not use, and shall exercise commercially reasonable efforts to prevent the use of, the Hotel and Owner’s Personal Property, if any, for any unlawful purpose. Manager shall not commit, and shall use commercially reasonable efforts to prevent the commission of, any waste at the Hotel. Manager shall not use, and shall use commercially reasonable efforts to prevent the use of, the Hotel in such a manner as will constitute an unlawful nuisance. Manager shall use commercially reasonable efforts to prevent the use of the Hotel in such a manner as might reasonably be expected to impair Owner’s or Landlord’s title thereto or any portion thereof or might reasonably be expected to give rise for a claim or claims for adverse

3

use or adverse possession by the public, or of implied dedication of the Hotel or any portion thereof.

1.03Services Provided by Manager.

A.Manager shall furnish certain services, from time to time during the Term, which are furnished generally on a central or regional basis to other hotels in the System which are managed by Manager, and which benefit the Hotel as a participant in the System, such as: national sales office services; central operational support for rooms, food and beverage and engineering; central training services; career development; management personnel relocation; central safety and loss prevention services; central advertising and promotion (including direct and image media and advertising administration); consumer affairs to the extent not charged or allocated directly to the Hotel; the national reservations system service and inventory and revenue management services; centralized payroll and accounting services; computer system development, support and operating costs; and central monitoring and management support from “line management” personnel such as area managers.

Other than the charges for the national reservation system services, for which Manager receives the Reservation Fee, the Loyalty Program Fee and the Marketing Program Fee, the charges for the services listed in this Section 1.03.A. shall not be separately compensated and are included in the System Fee.

B.Notwithstanding the foregoing, if after Effective Date it is determined that there are central or regional services which may be furnished for the benefit of hotels in the System or in substitution for services now performed at individual hotels which may be more efficiently or effectively performed on a group basis, Manager shall furnish such services and Owner and Manager shall reasonably agree on the allocation of the costs thereof to the affected Hotels, which agreement shall be reflected in an approved Annual Operating Projection.

1.04Employees.

A.All personnel employed at the Hotel shall at all times be the employees of Manager. Subject to the terms of this Agreement, Manager shall have absolute discretion with respect to all personnel employed at the Hotel, including, without limitation, decisions regarding hiring, promoting, transferring, compensating, supervising, terminating, directing and training all employees at the Hotel, and, generally, establishing and maintaining all policies relating to employment; provided Manager shall not enter into any written employment agreements with any person which purport to bind Owner and/or purport to be effective regardless of a termination, without obtaining Owner’s consent. Manager shall comply with all Legal Requirements regarding labor relations; if either Manager or Owner shall be required, pursuant to any such Legal Requirement, to recognize a labor union or to enter into a collective bargaining with a labor union, the party so required shall promptly notify the other party. Manager shall have the authority to negotiate and settle labor union contracts with union employees and union representatives and Manager is authorized to settle labor disputes and administrative claims as may be routinely necessary in the daily management of the Hotel, provided Owner shall be given prompt notice of any negotiations which could reasonably be expected to result in contracts which would bind Owner and shall be provided with any written materials in connection

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therewith and at least ten (10) days prior to execution of any contract or amendment. Manager shall indemnify Owner and Landlord for all costs and expenses (including reasonable attorneys’ fees) incurred by either of them if either of them are joined in or made party to any suit or cause of action alleging that Manager has failed to comply with all Legal Requirements pertaining to the employment of Manager’s employees at the Hotel.

B.Manager shall have the authority to hire, dismiss or transfer the Hotel’s general manager, provided Manager shall keep Owner reasonably informed with respect to such actions. Upon Owner’s request, Manager will provide the Owner the opportunity to interview general manager candidates before they are hired.

C.Manager shall decide which, if any, of the employees of the Hotel shall reside at the Hotel (provided that Owner’s prior approval shall be obtained if more than two (2) such employees and their immediate families reside at the Hotel), and shall be permitted to provide free accommodations and amenities to its employees and representatives living at or visiting the Hotel in connection with its management or operation consistent with Manager’s usual practices for hotels in the System. No person shall otherwise be given gratuitous accommodations or services without prior approval of Owner and Manager, except in accordance with usual practices of the hotel and travel industry.

1.05Right to Inspect. Manager shall permit Owner and Landlord and their respective authorized representatives to inspect or show the Hotel during usual business hours upon not less than twenty-four (24) hours’ notice and to make such repairs as Owner and Landlord are permitted or required to make pursuant to the terms of the Lease, provided that any inspection or repair by Owner or Landlord or their representatives shall not unreasonably interfere with the use and operation of the Hotel and further provided that in the event of an emergency as determined by Owner or Landlord in its reasonable discretion, prior notice shall not be required.

Article II TERM

2.01Term.

A.The term of this Agreement (the “Term”) shall begin on the Effective Date and shall continue until January 31, 2037 (the “Initial Term”) and, provided there exists no Manager Event of Default, the Term shall thereafter automatically be extended for two (2) successive periods of fifteen (15) years each (each, a “Renewal Term”), unless Manager gives notice of Manager’s decision not to extend on or before the date which is at least twenty-four (24) months prior to the date of the expiration of the Initial Term or first Renewal Term, as the case may be, time being of the essence. If Manager does not extend the Initial Term or the first Renewal Term, as the case may be (i) this Agreement shall automatically terminate at the end of the Term then in effect, and Manager shall have no further option to extend the Term and (ii) during the twenty-four (24) month period prior to the date of the expiration of the Initial Term or any Renewal Term, as the case may be, Owner shall have the right to effect an earlier termination of this Agreement by notice to

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Manager, which termination shall be effective as of the date which is set forth in such notice, provided that such date shall be at least ninety (90) days after the date of such notice, and such termination shall be in accordance with the provisions of Section 11.09.

B.Each Renewal Term shall commence on the day succeeding the expiration of the Initial Term or the preceding Renewal Term, as the case may be. All of the terms, covenants and provisions of this Agreement shall apply to each Renewal Term, except that the Term shall not be extended beyond January 31, 2067.

2.02Early Termination. Without limiting either party’s right to terminate this Agreement under any other provision of this Agreement:

A.Owner may terminate this Agreement upon sixty (60) days’ notice to Manager given within thirty (30) days prior to or after January 1 of any Year if the actual amounts paid to Owner as Owner’s Priority during any three (3) Tested Years within the four (4) consecutive Years immediately preceding such January 1 are less than six percent (6%) of Invested Capital, determined annually, in those Tested Years, and such termination shall be in accordance with the provisions of Section 11.09.

Article III COMPENSATION OF MANAGER; DISBURSEMENTS

3.01Fees. In consideration of the management services to be performed during the Term, Manager shall be paid the sum of the following:

A.Base Management Fee;

B.Reservation Fee;

C.System Fee;

D.Procurement and Construction Supervision Fee;

E.Loyalty Program Fee;

F.Marketing Program Fee; and

G.Incentive Management Fee.

3.02Disbursements. Gross Revenues shall be distributed in the following order of priority:

A.First, to pay all Deductions (excluding the Base Management Fee, the Reservation Fee and the System Fee);

B.Second, to Manager, an amount equal to the Base Management Fee, the Reservation Fee and the System Fee;

C.Third, to Owner, an amount equal to Owner’s Priority;

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D.Fourth, pari passu, (i) to Owner, in an amount necessary to reimburse Owner for all Owner Working Capital Advances and Owner Operating Loss Advances (collectively, “Owner Advances”) which have not yet been repaid pursuant to this Section 3.02, and (ii) to Manager, in an amount necessary to reimburse Manager for all Additional Manager Advances which have not yet been repaid pursuant to this Section 3.02. If at any time the amounts available for distribution to Owner and Manager pursuant to this Section 3.02 are insufficient (a) to repay all outstanding Owner Advances, and (b) all outstanding Additional Manager Advances, then Owner and Manager shall be paid from such amounts the amount obtained by multiplying a number equal to the amount of the funds available for distribution by a fraction, the numerator of which is the sum of all outstanding Owner Advances, or all outstanding Additional Manager Advances, as the case may be, and the denominator of which is the sum of all outstanding Owner Advances plus the sum of all outstanding Additional Manager Advances;

E.Fifth, to the FF&E Reserve Account, an amount equal to the FF&E Reserve Deposit;

F.Sixth, to Manager, an amount equal to the Incentive Management Fee; and

G.Finally, to Owner, the Owner’s Residual Payment.

3.03Timing of Payments.

A.Payment of the Deductions, excluding the Base Management Fee, the Reservation Fee and the System Fee, shall be made in the ordinary course of business. The Base Management Fee, the Reservation Fee, the System Fee, the Owner’s Priority, the FF&E Reserve Deposit, the Incentive Management Fee and the Owner’s Residual Payment shall be paid on or before the twentieth (20^th) day after close of each calendar month, based upon Gross Revenues or Gross Room Revenues, as the case may be, as reflected in the Monthly Statement for such month. The Owner’s Priority shall be determined based upon Invested Capital most recently reported to Manager by Owner. If any installment of the Base Management Fee, the Reservation Fee, the System Fee or the Owner’s Priority is not paid when due, it shall accrue interest at the Interest Rate. Calculations and payments of the FF&E Reserve Deposit, the Incentive Management Fee and/or the Owner’s Residual Payment with respect to each calendar month within a calendar year shall be accounted for cumulatively based upon the year-to-date Operating Profit as reflected in the Monthly Statement for such calendar month and shall be adjusted to reflect distributions for prior calendar months in such year. Additional adjustments to all payments will be made on an annual basis based upon the Annual Operating Statement for the Year and any audit conducted pursuant to Section 4.02.B.

B.Subject to Section 3.03.C, if the portion of Gross Revenues to be distributed to Manager or Owner pursuant to Section 3.02 is insufficient to pay amounts then due in full, any amounts left unpaid shall be paid from and to the extent of Gross Revenues available therefor at the time distributions are made in successive calendar months until such amounts are paid in full, together with interest thereon, if applicable, and such payments shall be made from such

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available Gross Revenues in the same order of priority as other payments made on account of such items in successive calendar months.

C.Other than with respect to Reimbursable Advances, calculations and payments of the fees and other payments in Section 3.02 and distributions of Gross Revenues within a Year shall be accounted for cumulatively within a Year, but shall not be cumulative from one Year to the next. Calculations and payments of Reimbursable Advances shall be accounted for cumulatively within a Year and shall be cumulative from one Year to the next.

Article IV ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS; WORKING CAPITAL AND OPERATING LOSSES

4.01Accounting, Interim Payment and Annual Reconciliation.

A.Within fifteen (15) days after the close of each calendar month, Manager shall deliver an accounting (the “Monthly Statement”) to Owner showing Gross Revenues, Gross Room Revenues, occupancy percentage and average daily rate, Deductions, Operating Profit, and applications and distributions thereof for the preceding calendar month and year-to-date.

B.Within forty-five (45) days after the end of each Year, Manager shall deliver to Owner and Landlord a statement (the “Annual Operating Statement”) in reasonable detail summarizing the operations of the Hotel for the immediately preceding Year and an Officer’s Certificate setting forth the totals of Gross Revenues, Deductions, and the calculation of the Incentive Management Fee and Owner’s Residual Payment for the preceding Year and certifying that such Annual Operating Statement is true and correct. Manager and Owner shall, within ten (10) Business Days after Owner’s receipt of such statement, make any adjustments, by cash payment, in the amounts paid or retained for such Year as are required because of variances between the Monthly Statements and the Annual Operating Statement. Any payments shall be made together with interest at the Interest Rate from the date such amounts were due or paid, as the case may be, until paid or repaid. The Annual Operating Statement shall be controlling over the Monthly Statements and shall be final, subject to adjustments required as a result of an audit requested by Owner or Landlord pursuant to Section 4.02.B.

C.1. In addition, Manager shall provide such information relating to the Hotel and public information relating to Manager and its Affiliates that (a) may be reasonably required in order for Landlord, Owner or SVC, to prepare financial statements in accordance with GAAP or to comply with applicable securities laws and regulations and the SEC’s interpretation thereof, (b) may be reasonably required for Landlord, Owner or SVC, as applicable, to prepare federal, state or local tax returns, or (c) is of the type that Manager customarily prepares for other hotel owners. The foregoing does not constitute an agreement by Manager either to join Landlord, Owner or SVC, as applicable, in a filing with or appearance before the SEC or any other regulatory authority or to take or consent to any other action which would cause Manager to be liable to any third party for any statement or information other than those statements incorporated by reference pursuant to clause (a) above.

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2.Owner may at any time, and from time to time, provide copies of any of the statements furnished under this Section 4.01 to any Person which has made or is contemplating making a Mortgage, or a prospective purchaser in connection with a Sale of the Hotel, subject to such Person entering into a confidentiality agreement with Manager as Manager may reasonably require.

3.In addition, Owner or Landlord shall have the right, from time to time at Owner’s or Landlord’s as the case may be, sole cost and expense, upon reasonable notice, during Manager’s customary business hours, to cause Manager’s books and records with respect to the Hotel to be audited by auditors selected by Owner or Landlord, as applicable, at the place or places where such books and records are customarily kept.

4.02Books and Records.

A.Books of control and account pertaining to operations at the Hotel shall be kept on the accrual basis and in all material respects in accordance with the Uniform System of Accounts and with GAAP (provided that, to the extent of a conflict, GAAP shall control over the Uniform System of Accounts), or in accordance with such industry standards or such other standards with which Manager is required to comply from time to time, with the exceptions, if any, provided in this Agreement, to the extent applicable which will accurately record the Gross Revenues and the application thereof. Manager shall retain, for at least three (3) years after the expiration of each Year, reasonably adequate records showing Gross Revenues and the application thereof for such Year. The provisions of this Section 4.02.A shall survive termination.

B.Owner and Landlord may at reasonable intervals during Manager’s normal business hours, examine such books and records including, without limitation, supporting data and sales and excise tax returns. If Owner or Landlord desires, at its own expense, to audit, examine, or review the Annual Operating Statement, it shall notify Manager in writing within one (1) year after receipt of such statement of its intention to audit and begin such audit within such one (1) year after Manager’s receipt of such notice. Owner or Landlord, as the case may be, shall use commercially reasonable efforts to complete such audit as soon as practicable after the commencement thereof, subject to reasonable extension if Landlord’s or Owner’s accountant’s inability to complete the audit within such time is caused by Manager. If neither Landlord nor Owner makes such an audit, then such statement shall be deemed to be conclusively accepted by Owner as being correct, and neither Landlord nor Owner shall have any right thereafter, except in the event of fraud by Manager, to question or examine the same. If any audit by Owner or Landlord discloses an understatement or overpayment of any net amounts due Owner or Manager, Manager shall promptly after completion of the audit, render a statement to Owner and Landlord setting forth the adjustments required to be made to the distributions under Section 3.02 for such Year as a result of such audit and Owner and Manager, as the case may be, shall make any additional payments required to comply with such revised statement together with interest at the Interest Rate from the date when due or overpaid. Any dispute concerning the correctness of an audit shall be settled by arbitration. Manager shall pay the cost of any audit revealing understatement of Operating Profit by more than three percent (3%), and such amount shall not be a Deduction. The provisions of this Section 4.02.B shall survive termination.

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4.03Accounts. All funds derived from the operation of the Hotel shall be deposited by Manager in a bank account(s) in a bank designated by Manager. Withdrawals from such accounts shall be made solely by representatives of Manager whose signatures have been authorized. Reasonable petty cash shall be maintained at the Hotel.

4.04Annual Operating Projection. Manager shall furnish to Owner for its review and comment, at least sixty (60) days prior to the beginning of each Year, a statement of the estimated financial results of the operation of the Hotel for the forthcoming Year (“Annual Operating Projection”). Such projection shall project the estimated Gross Revenues, Deductions, and Operating Profit. Manager agrees to make qualified personnel from Manager’s staff available to explain such Annual Operating Projections, at Owner’s request. Manager will at all times give good faith consideration to Owner’s suggestions regarding any Annual Operating Projection. Manager shall thereafter submit to Owner, by no later than January 2^nd of such Year, a modified Annual Operating Projection if any changes are made following receipt of comments from Owner. Manager shall endeavor to adhere to the Annual Operating Projection. It is understood, however, that the Annual Operating Projection is an estimate only and that unforeseen circumstances including the costs of labor, material, services and supplies, casualty, operation of law, or economic and market conditions may make adherence to the Annual Operating Projection impracticable, and Manager shall be entitled to depart therefrom due to causes of the foregoing nature; provided, however, that nothing herein shall be deemed to authorize Manager to take any action prohibited by this Agreement or to reduce Manager’s other rights or obligations hereunder.

4.05Working Capital. [On the Initial Effective Date, Owner advanced to Manager, as Working Capital, an amount equal to [Full Service: $1,500 ORLimited Service: $750] multiplied by the number of Guest Rooms. On the Effective Date, Owner agrees to advance to Manager, as Working Capital, an additional amount equal to [Full Service: $500 ORLimited Service: $250] multiplied by the number of Guest Rooms.]. Upon notice from Manager, Owner shall have the right, without any obligation and in its sole discretion, to advance additional funds necessary to maintain Working Capital (“Additional Working Capital”) at levels determined by Manager to be reasonably necessary to satisfy the needs of the Hotel as its operation may from time to time require within ten (10) Business Days of such request. Any such request by Manager shall be accompanied by a reasonably detailed explanation of the reasons for the request. If Owner does not advance such Additional Working Capital, Manager shall have the right, without any obligation and in its sole discretion, to fund Additional Working Capital within ten (10) Business Days after such initial ten (10) day period. All such advances shall be Owner Working Capital Advances or Additional Manager Advances, as applicable. If neither party elects to fund Additional Working Capital, Manager may elect, by notice to Owner given within thirty (30) days thereafter, to terminate this Agreement, which termination shall be effective thirty (30) days after the date such notice is given; upon such termination, Owner shall pay Manager the Termination Fee, within sixty (60) days of the effective date of termination, as liquidated damages and in lieu of any other remedy of Manager at law or in equity, and such termination shall otherwise be in accordance with the provisions of Section 11.09.

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4.06Operating Losses. To the extent there is an Operating Loss for any calendar month, Owner shall have the right, without any obligation and in its sole discretion, to fund such Operating Loss within twenty (20) days after Manager has delivered notice thereof to Owner and any Operating Loss funded by Owner shall be a “Owner Operating Loss Advance.” If Owner does not fund such Operating Loss, Manager shall have the right, without any obligation and in its sole discretion, to fund such Operating Loss within twenty (20) days after such initial twenty (20) day period, and any Operating Loss so funded by Manager shall be an Additional Manager Advance. If neither party elects to fund such Operating Loss, Manager may elect, by notice to Owner given within thirty (30) days thereafter, to terminate this Agreement, which termination shall be effective thirty (30) days after the date such notice is given; upon such termination, Owner shall pay Manager the Termination Fee, within sixty (60) days of the effective date of termination, as liquidated damages and in lieu of any other remedy of Manager at law or in equity and such termination shall otherwise be in accordance with the provisions of Section 11.09.

Article V REPAIRS, MAINTENANCE AND REPLACEMENTS

5.01Manager’s Maintenance Obligation. Manager shall maintain the Hotel, including all private roadways, sidewalks and curbs located thereon, in good order and repair, reasonable wear and tear excepted, and in conformity with Legal Requirements, Insurance Requirements, System Standards and any Existing CC&Rs or Future CC&Rs. Manager shall promptly make or cause to be made all necessary and appropriate repairs, replacements, renewals, and additions thereto of every kind and nature, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the commencement of the Term. All repairs, renovations, alterations, improvements, renewals, replacements or additions shall be made in a good, workmanlike manner, consistent with Manager’s and industry standards for like hotels in like locales, in accordance with all applicable federal, state and local statutes, ordinances, by‑laws, codes, rules and regulations relating to any such work. Manager shall not take or omit to take any action, with respect to the Hotel the taking or omission of which would materially and adversely impair the value of the Hotel or any part thereof for its use as a hotel. The cost and expense incurred in connection with Manager’s obligations hereunder shall be paid either from Gross Revenues or Working Capital or from funds provided by Owner or Landlord, as the case may be.

5.02Repairs and Maintenance to be Paid from Gross Revenues. Manager shall promptly make or cause to be made, such routine maintenance, repairs and minor alterations as it determines are necessary to comply with Manager’s obligations under Section 5.01. The phrase “routine maintenance, repairs, and minor alterations” shall include only those which are normally expensed under GAAP. The cost of such maintenance, repairs and alterations shall be paid from Gross Revenue or Working Capital.

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5.03Repairs and Maintenance to be Paid by Owner or Landlord. To the extent funds are available in the FF&E Reserve Account or are provided by Owner or Landlord under Section 5.05, Manager shall promptly make or cause to be made, all of the items listed below as are necessary to comply with Manager’s obligations under Section 5.01:

1.Replacements, renewals and additions related to the FF&E;

2.Routine or non‑major repairs, renovations, renewals, additions, alterations, improvements or replacements and maintenance which are normally capitalized (as opposed to expensed) under GAAP, such as exterior and interior repainting; resurfacing building walls, floors, roofs and parking areas; and replacing folding walls and the like (but which are not major repairs, alterations, improvements, renewals, replacements, or additions to the Hotel’s structure, roof, or exterior façade, or to its mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation systems); and

3.Major repairs, renovations, additions, alterations, improvements, renewals or replacements to the Hotel including, without limitation, with respect to its structure, roof, or exterior façade, and to its mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation systems.

In consideration for Manager’s services under this Section 5.03, Manager shall receive the Procurement and Construction Supervision Fee which shall be included in related draws from the FF&E Reserve as amounts generating such fees are paid. The documentation of draws from the FF&E Reserve shall separately reflect the corresponding Procurement and Construction Supervision Fee.

5.04FF&E Reserve Account.

A.Manager shall establish an interest bearing account, in Owner’s name, in a bank designated by Manager (and approved by Owner, such approval not to be unreasonably withheld), into which all FF&E Reserve Deposits shall be paid (the “FF&E Reserve Account”). Funds on deposit in the FF&E Reserve Account (the “FF&E Reserves”) shall not be commingled with any other funds without Owner’s consent.

B.So long as no Manager Event of Default shall have occurred, the FF&E Reserves may be applied by Manager, without the consent of Owner, only to the payment of any capital expenditure in an approved Capital Estimate; provided, not more than Twenty Five Thousand Dollars ($25,000) may be expended by Manager in a given year for any single item to be charged against any discretionary or contingency line item in a Capital Estimate without the prior written consent of Owner, which consent shall not be unreasonably withheld, conditioned or delayed.

C.In addition to the FF&E Reserve Deposit, other than Owner’s or Manager’s personal property, all materials or FF&E which are scrapped or removed in connection with the making of any major or non-major repairs, renovation, additions, alterations, improvements, removals or replacements shall be disposed of by Manager and the net proceeds thereof shall be deposited into the FF&E Reserve Account and not included in Gross Revenues.

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D.Manager shall be the only Party entitled to withdraw funds from the FF&E Reserve Account unless and until a Manager Event of Default shall occur. Following the occurrence of a Manager Event of Default, Manager shall not have the right to withdraw funds from the FF&E Reserve Account without Owner’s prior written consent.

E.Upon the expiration or earlier termination of the Term, Manager shall disburse to Owner or Landlord, or as Owner or Landlord shall direct, all remaining FF&E Reserves after payments of all expenses on account of capital expenditures incurred by Manager pursuant to an approved Capital Estimate during the Term in accordance with this Agreement.

5.05Capital Estimate.

A.Manager shall prepare and deliver to Owner and Landlord for their review and approval, at the same time the Annual Operating Projection is submitted, an estimate for the Hotel of the capital expenditures necessary during the forthcoming Year for replacements, renewals, and additions to the FF&E of the Hotel and repairs, renovations, additions, alterations, improvements, renewals or replacements to the Hotel of the nature described in Section 5.03 (a “Capital Estimate”). Manager agrees to make qualified personnel from Manager’s staff available to explain each Capital Estimate, at Owner’s request. Failure of Owner or Landlord to approve or disapprove a Capital Estimate within twenty (20) Business Days after receipt of all information and materials requested by Owner or Landlord in connection therewith shall be deemed to constitute approval.

B.If any dispute shall arise with respect to the approval by either Owner or Landlord of a Capital Estimate, Manager shall meet with Owner and Landlord to discuss the objections, and Manager, Owner and Landlord shall attempt in good faith to resolve any disagreement relating to the Capital Estimate. If after sixty (60) days such disagreement has not been resolved, any party may submit the issue to arbitration.

A.If at any time the FF&E Reserves shall be insufficient to fund capital expenditures which are set forth in the approved Capital Estimate, Manager shall give Owner and Landlord written notice thereof, which notice shall not be given more often than monthly and shall set forth, in reasonable detail, the nature of the required expenditure, the estimated cost thereof (including the amount which is in excess of the then FF&E Reserves) and such other information with respect thereof as Owner or Landlord may reasonable require. Provided that no Manager Event of Default then exists, and Manager shall otherwise comply with the provisions of Section 5.06, as applicable, Owner shall, within ten (10) Business Days after such notice is given, deposit (or shall cause Landlord to deposit) into the FF&E Reserve Account such funds as are required to fund the amounts set forth in such notice and necessary to fund such capital expenditures in an approved Capital Estimate. Invested Capital shall be adjusted for funds deposited by Owner or Landlord in the FF&E Reserve Account pursuant to this Section 5.05 effective as of the date such funds are deposited.

C.A failure or refusal by Owner or Landlord to provide the additional funds required under an approved Capital Estimate (including after resolution by arbitration, if applicable) shall entitle Manager, at its option, to notify Owner and Landlord that Manager will terminate this Agreement. If Owner or Landlord does not make the funds available within thirty (30) days after

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receipt of such notice of intent to terminate, Manager may, without obligation and in its sole discretion, fund all or a portion of the amounts required and any amounts funded by Manager shall constitute an Additional Manager Advance, or elect to terminate this Agreement by notice to Owner given within thirty (30) days thereafter and this Agreement shall terminate as of the date that is one hundred eighty (180) days after the date of Owner’s receipt of Manager’s notice; upon such termination, Owner shall pay Manager the Termination Fee, within sixty (60) days of the effective date of termination, as liquidated damages and in lieu of any other remedy of Manager at law or in equity and such termination shall otherwise be in accordance with the provisions of Section 11.09.

5.06Additional Requirements.

A.All expenditures from the FF&E Reserves or other amounts funded pursuant to the Capital Estimate shall be (as to both the amount of each such expenditure and the timing thereof) both reasonable and necessary given the objective that the Hotel will be maintained and operated to a standard comparable to competitive properties and in accordance with the System Standards.

B.Manager shall provide to Owner and Landlord within twenty (20) days after the end of each calendar month, a statement (“Capital Statement”) setting forth, on a line item basis, expenditures made to date and any variances or anticipated variances and/or amendments from the applicable Capital Estimate.

C.Owner and Landlord may not withhold their approval of a Capital Estimate with respect to such items as are (1) required in order for the Hotel to comply with System Standards, except during the last two (2) years of the Term, during which time approval may be withheld in Owner’s or Landlord’s discretion; or (2) required by reason of or under any Insurance Requirement or Legal Requirement, or otherwise required for the continued safe and orderly operation of the Hotel.

5.07Ownership of Replacements. All repairs, renovations, additions, alterations, improvements, renewals or replacements made pursuant to this Agreement and all FF&E Reserves, shall, except as otherwise provided in this Agreement, be the property of Landlord or Owner, as applicable, as provided under the Lease.

Article VI INSURANCE, DAMAGE, CONDEMNATION, AND FORCE MAJEURE

6.01General Insurance Requirements.Manager shall, at all times during the Term, keep (or cause to be kept) the Hotel and all property located therein or thereon, insured against the risks, including business interruption, and in such amounts as Owner and Manager shall agree and as may be commercially reasonable. Any disputes regarding such matters not resolved by the parties within ten (10) Business Days (which period may be extended upon mutual agreement of the parties) shall be resolved by arbitration.

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6.02Waiver of Subrogation. Owner and Manager agree that (insofar as and to the extent that such agreement may be effective without invalidating or making it impossible to secure insurance coverage from responsible insurance companies doing business in the State) with respect to any property loss which is covered by insurance then being carried by Owner or Manager, the party carrying such insurance and suffering said loss releases the others of and from any and all claims with respect to such loss; and they further agree that their respective insurance companies (and, if Owner or Manager shall self insure in accordance with the terms hereof, Owner or Manager, as the case may be) shall have no right of subrogation against the other on account thereof, even though extra premium may result therefrom. If any extra premium is payable by Manager as a result of this provision, Owner shall not be liable for reimbursement to Manager for such extra premium.

6.03Risk Management. Manager shall be responsible for the provision of risk management oversight at the Hotel.

6.04Damage and Repair.

A.If, during the Term, the Hotel shall be totally or partially destroyed and the Hotel is thereby rendered Unsuitable for Its Permitted Use, (1) Manager may terminate this Agreement by sixty (60) days notice to Owner and Landlord, or (2) Owner may terminate this Agreement by sixty (60) days notice to Manager and Landlord, whereupon, this Agreement, shall terminate and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage.

B.If, during the Term, the Hotel is damaged or destroyed by fire, casualty or other cause but is not rendered Unsuitable for Its Permitted Use, subject to Sections 6.04.C and 6.04.D, Manager shall cause the Hotel to be repaired and restored, in compliance with all Legal Requirements and Insurance Requirements and so that the Hotel shall be, to the extent practicable, substantially equivalent in value and general utility to its general utility and value immediately prior to such damage or destruction and in compliance with System Standards in consideration of the Procurement and Construction Supervision Fee.

C.(1)     If the cost of the repair or restoration of the Hotel is less than the sum of the amount of insurance proceeds received by Owner and Landlord plus the deductible amount, Owner shall (or shall cause Landlord to) make the funds necessary to cause the Hotel to be repaired and restored available to Manager.

1.If the amount of insurance proceeds received by Landlord and Owner plus the deductible amount, is less than the cost of the repair or restoration of the Hotel, Manager shall give notice to Owner and Landlord setting forth the deficiency in reasonable detail. Owner shall have the right, without any obligation and in its sole discretion, to fund the deficiency and shall give Manager and Landlord notice within twenty (20) days after notice from Manager. If Owner elects not to fund the deficiency, Landlord shall have the right, without obligation and in its sole discretion, to fund the deficiency and shall give Manager and Owner notice within twenty (20) days after notice from Owner. If neither Landlord nor Owner elect to fund the deficiency, this Agreement shall terminate and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage.

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C.If Owner is required or if Owner or Landlord elects to make the funds necessary to cause the Hotel to be repaired and restored available to Manager, Owner shall (or shall cause Landlord to) advance the insurance proceeds and any additional amounts payable by Owner or Landlord to Manager regularly during the repair and restoration period. Any such advances shall be made not more frequently than monthly within ten (10) Business Days after Manager submits to Owner a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Owner and Landlord). Owner or Landlord may condition advancement of the insurance proceeds and other amounts on (i) the absence of an event of default under the Lease, (ii) approval of plans and specifications of an architect satisfactory to Landlord and Owner (which approval shall not be unreasonably withheld or delayed), (iii) general contractors’ estimates, (iv) architect’s certificates, (v) unconditional lien waivers of general contractors, if available, (vi) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required and (vii) such other certificates as Landlord and Owner may, from time to time, reasonably require.

D.All business interruption insurance proceeds shall be paid to Manager and included in Gross Revenues. Any casualty which does not result in a termination of this Agreement shall not excuse the payment of sums due to Owner hereunder.

E.Manager hereby waives any statutory rights of termination which may arise by reason of any damage to or destruction of the Hotel.

6.05Damage Near End of Term. Notwithstanding any provisions of Section 6.04 to the contrary, if damage to or destruction of the Hotel occurs during the last twelve (12) months of the Term (including any exercised Renewal Term) and if such damage or destruction cannot reasonably be expected to be fully repaired and restored prior to the date that is nine (9) months prior to the end of the Term (including any exercised Renewal Term), the provisions of Section 6.04.A shall apply as if the Hotel had been totally or partially destroyed and rendered Unsuitable for Its Permitted Use.

6.06Condemnation. If, during the Term, either the whole of the Hotel shall be taken by Condemnation, or a partial Condemnation renders the Hotel Unsuitable for Its Permitted Use, this Agreement shall terminate and Owner and Landlord shall seek the Award for their interests in the Hotel as provided in the Lease. In addition, Manager shall have the right to initiate such proceedings as it deems advisable to recover any damages to which Manager may be entitled; provided, however, that Manager shall be entitled to retain any Award it may obtain through such proceedings which are conducted separately from those of Owner and Landlord only if such Award does not reduce the Award otherwise available to Owner and Landlord. Any Award received by any Mortgagee under a Mortgage on the Hotel shall be deemed to be an award of compensation received by Landlord.

6.07Partial Condemnation. If, during the Term, there is a partial Condemnation but the Hotel is not rendered Unsuitable for Its Permitted Use, subject to Section 6.07.A and 6.07.B, Manager shall cause the untaken portion of the Hotel to be repaired and restored, in compliance with all Legal Requirements and Insurance Requirements and so that the untaken portion of the Hotel shall constitute a complete architectural unit of the same general character and condition, to the extent practicable, as the Hotel immediately prior to such partial Condemnation and in

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compliance with System Standards in consideration of the Procurement and Construction Supervision Fee.

A.If the amount of the Award is less than the cost of the repair and restoration of the Hotel, Manager shall give notice to Owner and Landlord setting forth the deficiency in reasonable detail. Owner shall have the right without any obligation and in its sole discretion, to fund the deficiency and shall give Manager and Landlord notice within twenty (20) days after notice from Manager. If Owner elects not to fund the deficiency, Landlord shall have the right without obligation and in its sole discretion, to fund the deficiency and shall give Manager and Owner notice within twenty (20) days after notice from Owner. If neither Landlord nor Owner elect to fund the deficiency, this Agreement shall terminate and Owner and Landlord shall be entitled to retain the Award.

B.If Owner or Landlord elects to make the funds necessary to cause the Hotel to be repaired and restored available to Manager, Owner shall (or shall cause Landlord to) advance the Award and any additional amounts payable by Owner or Landlord to Manager regularly during the repair and restoration period. Any such advances shall be made not more frequently than monthly within ten (10) Business Days after Manager submits to Owner a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Owner and Landlord). Owner or Landlord may condition advancement of the insurance proceeds and other amounts on (i) the absence of an event of default under the Lease, (ii) approval of plans and specifications of an architect satisfactory to Landlord and Owner (which approval shall not be unreasonably withheld or delayed), (iii) general contractors’ estimates, (iv) architect’s certificates, (v) unconditional lien waivers of general contractors, if available, (vi) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required and (vii) such other certificates as Landlord and Owner may, from time to time, reasonably require.

6.08Temporary Condemnation. In the event of any temporary Condemnation of the Hotel or Owner’s interest therein, this Agreement shall continue in full force and effect. The entire amount of any Award made for such temporary Condemnation allocable to the Term, whether paid by way of damages, rent or otherwise, shall be paid to Manager and shall constitute Gross Revenues. A Condemnation shall be deemed to be temporary if the period of such Condemnation is not expected to, and does not, exceed twelve (12) months.

6.09Allocation of Award. Except as provided in Sections 6.06, 6.08 and this Section 6.09, the total Award shall be solely the property of and payable to Landlord. Any portion of the Award made for the taking of Owner’s leasehold interest in the Hotel, loss of business, the taking of Owner’s Personal Property, or Owner’s removal and relocation expenses shall be the sole property of, and payable to, Owner. Any portion of the Award made for the taking of Manager’s interest in the Hotel or Manager’s loss of business during the remainder of the Term shall be the sole property of, and payable to, Manager, subject to the provisions of Section 6.06. In any Condemnation proceedings, Landlord, Owner, and Manager shall each seek its own Award in conformity herewith, at its own expense.

6.10Effect of Condemnation. Any Condemnation which does not result in a termination of this Agreement in accordance with its terms with respect to the Hotel shall not

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excuse the payment of sums due to Owner hereunder with respect to the Hotel and this Agreement shall remain in full force and effect.

Article VII TAXES

7.01Real Estate and Personal Property Taxes.

A.Subject to Section 11.18 relating to permitted contests, Manager shall pay, from Gross Revenues, all Impositions with respect to the Hotel, before any fine, penalty, interest or cost (other than any opportunity cost as a result of a failure to take advantage of any discount for early payment) may be added for non-payment, such payments to be made directly to the taxing authorities where feasible, and shall promptly, upon request, furnish to Landlord and Owner copies of official receipts or other reasonably satisfactory proof evidencing such payments. If any such Imposition may, at the option of the taxpayer, lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Manager may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay such installments during the Term as the same become due and before any fine, penalty, premium, further interest or cost may be added thereto. Manager shall, upon request, provide such data as is maintained by Manager with respect to the Hotel as may be necessary to prepare any required returns and reports by Owner or Landlord.

Owner shall give, and will use reasonable efforts to cause Landlord to give, copies of official tax bills and assessments which it may receive with respect to the Hotel and prompt notice to Owner and Manager of all Impositions payable by Owner under the Lease of which Owner or Landlord, as the case may be, at any time has knowledge; provided, however, that Landlord’s or Owner’s failure to give any such notice shall in no way diminish Manager’s obligation hereunder to pay such Impositions (except that Owner or Landlord, as applicable, shall be responsible for any interest or penalties incurred as a result of Landlord’s or Owner’s, as applicable, failure promptly to forward the same).

B.Notwithstanding anything herein to the contrary, each of Owner and Manager shall pay from its own funds (and not from Gross Revenues of the Hotel) any franchise, corporate, estate, inheritance, succession, capital levy or transfer tax imposed on Owner or Manager, as applicable, or any income tax imposed (but not gross receipt or general excise taxes) on any income of Owner or Manager (including distributions pursuant to Article III).

Article VIII OWNERSHIP OF THE HOTEL

8.01Ownership of the Hotel.

A.Owner and Landlord hereby covenant that neither will hereafter impose or consent to the imposition of any liens, encumbrances or other charges, except as follows:

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1.easements or other encumbrances that do not adversely affect the operation of the Hotel by Manager and that are not prohibited pursuant to Section 8.02;

2.Mortgages and related security instruments;

3.liens for taxes, assessments, levies or other public charges not yet due or due but not yet payable; or

4.equipment leases for office equipment, telephone, motor vehicles and other property approved by Manager.

B.Subject to liens permitted by Section 8.01.A, Owner and Landlord covenant that, so long as there then exists no Manager Event of Default, Manager shall quietly hold, occupy and enjoy the Hotel throughout the Term free from hindrance, ejection or molestation by Owner or Landlord or other party claiming under, through or by right of Owner or Landlord. Owner agrees to pay and discharge any payments and charges and, at its expense, to prosecute all appropriate actions, judicial or otherwise, necessary to assure such free and quiet occupation as set forth in the preceding sentence.

8.02No Covenants, Conditions or Restrictions.

A.Owner and Landlord agree that during the Term, any covenants, conditions or restrictions, including reciprocal easement agreements or cost‑sharing arrangements affecting the Site or Hotel (collectively “Future CC&Rs”) which would (i) prohibit or limit Manager from operating the Hotel in accordance with System Standards, including related amenities of the Hotel; (ii) allow the Hotel facilities (for example, parking spaces) to be used by persons other than guests, invitees or employees of the Hotel; (iii) allow the Hotel facilities to be used for specified charges or rates that have not been approved by Manager; or (iv) subject the Hotel to exclusive arrangements regarding food and beverage operation or retail merchandise, will not be entered into unless Manager has given its prior written consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed. Manager hereby consents to any easements, covenants, conditions or restrictions, including without limitation any reciprocal easement agreements or cost-sharing agreements, existing as of the Initial Effective Date (collectively, the “Existing CC&Rs”).

B.All financial obligations imposed on Owner or on the Hotel pursuant to any Future CC&Rs for which Manager’s consent was required under Section 8.02.A, but not obtained, shall be paid by Owner.

C.Manager shall manage, operate, maintain and repair the Hotel in compliance with all obligations imposed on Owner, Landlord or the Hotel pursuant to any Existing CC&Rs or Future CC&Rs (unless Manager’s consent was required under Section 8.02.A, but not obtained) to the extent such Existing CC&Rs and Future CC&Rs relate to the management, operation, maintenance and repair of the Hotel.

8.03Liens; Credit. Manager and Owner shall use commercially reasonable efforts to prevent any liens from being filed against the Hotel which arise from any maintenance, repairs, alterations, improvements, renewals or replacements in or to the Hotel. Manager and Owner shall

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cooperate, and Owner shall cause Landlord to cooperate, in obtaining the release of any such liens. In no event shall any party borrow money in the name of, or pledge the credit of, any other party. Manager shall not allow any lien to exist with respect to its interest in this Agreement.

Subject to encumbrances permitted under Section 8.01, Manager shall not, to the extent funds to pay the same are available or provided on a timely basis as required hereunder, directly or indirectly, create or allow to remain and shall promptly discharge any lien, encumbrance, attachment, title retention agreement or claim upon the Hotel, except (a) existing liens for those taxes of Landlord which Manager is not required to pay hereunder, (b) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet due and payable, or (ii) are being contested in accordance with Section 11.18, (c) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with Section 11.18 and (d) any Mortgages or other liens which are the responsibility of Landlord.

8.04Financing. Landlord shall be entitled to encumber the Hotel with a Mortgage on commercially reasonable terms and in such event, Landlord, Owner and Manager shall be required to execute and Landlord agrees to require Mortgagee to execute and deliver an instrument (a “Subordination Agreement”) which shall be recorded in the jurisdiction where the Hotel is located, which provides:

(i)This Agreement and any extensions, renewals, replacements or modifications thereto, and all right and interest of Manager in and to the Hotel, shall be subject and subordinate to the Mortgage; and

(ii)If there is a foreclosure of the Mortgage in connection with which title or possession of such Hotel is transferred to the Mortgagee (or its designee) or to a purchaser at foreclosure or to a subsequent purchaser from the Mortgagee (or from its designee) (each of the foregoing, a “Subsequent Holder”), Manager shall not be disturbed in its rights under this Agreement, so long as (a) no Manager Event of Default (beyond the applicable notice and cure period, if any) has occurred thereunder which entitles Owner to terminate this Agreement, and (b) the Lease has not been terminated as a result of a monetary default which arises from acts or failure to act by Manager pursuant to this Agreement, provided, however, that such Subsequent Holder shall not be (a) liable in any way to Manager for any act or omission, neglect or default of the prior Landlord or Owner (b) responsible for any monies owing or on deposit with any prior Landlord or Owner to the credit of Manager (except to the extent actually paid or delivered to such Subsequent Holder), (c) subject to any counterclaim or setoff which theretofore accrued to Manager against any prior Landlord or Owner, (d) bound by any modification of this Agreement subsequent to such Mortgage which was not approved by the Mortgagee, (e) liable to Manager or beyond such Subsequent Holder’s interest in the Hotel and the rents, income, receipts, revenues, issues and profits issuing from the Hotel, or (f) required to remove any Person occupying the Hotel or any part thereof, except if such person claims by, through or under such Subsequent Holder. If the Lease is terminated as a result of a non-monetary default which was not caused by Manager Event of Default pursuant to the terms of this Agreement or such Subsequent Holder succeeds to the interest of Owner thereunder, the Mortgagee or Subsequent Holder, as applicable,

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and Manager shall agree that the Hotel will continue to be subject to this Agreement (but neither the Mortgagee nor Subsequent Holder will not be responsible to pay past due amounts hereunder).

Article IX DEFAULTS

9.01Manager Events of Default. Each of the following shall constitute a “Manager Event of Default”:

A.The filing by Manager of a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law, or the admission by Manager that it is unable to pay its debts as they become due, or the institution of any proceeding by Manager for its dissolution or termination.

B.The consent by Manager to an involuntary petition in bankruptcy or the failure to vacate, within ninety (90) days from the date of entry thereof, any order approving an involuntary petition by Manager.

C.The entering of an order, judgment or decree by any court of competent jurisdiction, on the application of a creditor, adjudicating Manager as bankrupt or insolvent or approving a petition seeking reorganization or appointing a receiver, trustee, or liquidator of all or a substantial part of Manager’s assets, and such order, judgment or decree’s continuing unstayed and in effect for an aggregate of sixty (60) days (whether or not consecutive).

D.At Owner’s election, the failure of Manager to make any payment required to be made in accordance with the terms of this Agreement, on or before the date due which failure continues for five (5) Business Days after notice from Owner.

E.At Owner’s election, the failure of Manager to perform, keep or fulfill any of the other covenants, undertakings, obligations or conditions set forth in this Agreement, on or before the date required for the same, which failure continues for thirty (30) days after notice from Owner, or, if the Manager Event of Default is susceptible of cure, but such cure cannot be accomplished within such thirty (30) day period, if Manager fails to commence the cure of such Manager Event of Default within fifteen (15) days of such notice or thereafter fails to diligently pursue such efforts to completion, provided in no event shall such additional time exceed ninety (90) days.

F.At Owner’s election, the failure of Manager to maintain insurance coverages required to be maintained by Manager under Article VI, which failure continues for five (5) Business Days after notice from Owner (except that no notice shall be required if any such insurance coverage shall have lapsed).

9.02Remedies for Manager Events of Default.

A.In the event of a Manager Event of Default, Owner shall have the right to: (1) terminate this Agreement by notice to Manager, which termination shall be effective as of the

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date set forth in the notice, which shall be at least thirty (30) days after the date of the notice; (2) institute any and all proceedings permitted by law or equity, including, without limitation, actions for specific performance and/or damages; or (3) avail itself of any remedy described in this Section 9.02.

B.None of (i) the termination of this Agreement in connection with a Manager Event of Default, (ii) the repossession of the Hotel or any portion thereof, (iii) the failure of Owner to engage a replacement manager, nor (iv) the engagement of any replacement manager for all or any portion of the Hotel, shall relieve Manager of its liability and obligations hereunder, all of which shall survive any such termination, repossession or engagement. In the event of any termination of this Agreement as a result of a Manager Event of Default, Manager shall forthwith pay to Owner all amounts due and payable through and including the date of such termination. Thereafter, Manager shall be liable to Owner for, and shall pay to Owner, as current damages, the amounts which Owner would have received hereunder for the remainder of the Term (including any Renewal Terms) had such termination not occurred, less the net amounts, if any, received from a replacement manager, after deducting all reasonable expenses in connection with engaging such replacement, including, all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, advertising, expenses of employees, alteration costs and expenses of preparation for such engagement and in the case of Owner’s Priority and Owner’s Residual Payment, calculated based upon the average of each of such payments made in each of the three (3) calendar years ended prior to the date of termination. Manager shall pay such current damages to Owner as soon after the end of each calendar month as practicable to determine the amounts.

C.At any time after such termination, whether or not Owner shall have collected any amounts owing and due up to and including the date of termination of this Agreement, as liquidated final damages and in lieu of Owner’s right to receive any other damages due to the termination of this Agreement, at Owner’s election, Manager shall pay to Owner an amount equal to the present value of the payments which have been made to Owner between the date of termination and the scheduled expiration of the Term (including any Renewal Terms) as Owner’s Priority and the Owner’s Residual Payment if this Agreement had not been terminated, calculated based upon the average of each of such payments made in each of the three (3) calendar years ended prior to the date of termination, discounted at an annual rate equal to the Discount Rate. Nothing contained in this Agreement shall, however, limit or prejudice the right of Owner to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

D.In case of any Manager Event of Default resulting in Manager being obligated to vacate the Hotel, Owner may (i) engage a replacement manager for the Hotel or any part or parts thereof, either in the name of Owner or otherwise, for a term or terms which may at Owner’s option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term (including any Renewal Terms) and may grant concessions or other accommodations to the extent that Owner reasonably considers advisable and necessary to engage such replacement manager(s), and (ii) may make such reasonable alterations, repairs and decorations in the Hotel or any portion thereof as Owner, in its sole and absolute discretion,

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considers advisable and necessary for the purpose of engaging a replacement manager for the Hotel; and the making of such alterations, repairs and decorations shall not operate or be construed to release Manager from liability hereunder. Subject to the last sentence of this paragraph, Owner shall in no event be liable in any way whatsoever for any failure to engage a replacement manager for the Hotel, or, in the event a replacement manager is engaged, for failure to collect amounts due Owner. To the maximum extent permitted by law, Manager hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Manager being evicted or dispossessed, or in the event of Owner obtaining possession of the Hotel, by reason of the occurrence and continuation of a Manager Event of Default hereunder. Owner covenants and agrees, in the event of any termination of this Agreement as a result of a Manager Event of Default, to use reasonable efforts to mitigate its damages.

E.Any payments received by Owner under any of the provisions of this Agreement during the existence or continuance of a Manager Event of Default shall be applied to Manager’s current and past due obligations under this Agreement in such order as Owner may determine or as may be prescribed by applicable law.

F.If a Manager Event of Default shall have occurred and be continuing, Owner, after notice to Manager (which notice shall not be required if Owner shall reasonably determine immediate action is necessary to protect person or property), without waiving or releasing any obligation of Manager and without waiving or releasing any Manager Event of Default, may (but shall not be obligated to), at any time thereafter, make such payment or perform such act for the account and at the expense of Manager, and may, to the maximum extent permitted by law, enter upon the Hotel or any portion thereof for such purpose and take all such action thereon as, in Owner’s sole and absolute discretion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Manager or result in the termination hereof. All reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by Owner in connection therewith, together with interest thereon (to the extent permitted by law) at the Overdue Rate from the date such sums are paid by Owner until repaid, shall be paid by Manager to Owner, on demand.

9.03Owner Events of Default. Each of the following shall constitute an “Owner Event of Default” to the extent permitted by applicable law:

A.The filing by Owner or SVC of a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law, or the admission by Owner that it is unable to pay its debts as they become due, or the institution of any proceeding by Owner for its dissolution or termination.

B.The consent by Owner or SVC to an involuntary petition in bankruptcy or the failure to vacate, within ninety (90) days from the date of entry thereof, any order approving an involuntary petition by Owner.

C.The entering of an order, judgment or decree by any court of competent jurisdiction, on the application of a creditor, adjudicating Owner or SVC as bankrupt or insolvent or approving a petition seeking reorganization or appointing a receiver, trustee, or liquidator of all or a substantial part of Owner’s or SVC’s assets, and such order, judgment or decree’s

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continuing unstayed and in effect for an aggregate of sixty (60) days (whether or not consecutive).

D.At Manager’s option, the failure of Owner to make any payment required to be made in accordance with the terms of this Agreement on or before the due date which failure continues for five (5) Business Days after notice from Manager.

E.At Manager’s option, the failure of Owner to perform, keep or fulfill any of the other covenants, undertakings, obligations or conditions set forth in this Agreement which failure continues for thirty (30) days after notice from Manager, or, if the Owner Event of Default is susceptible of cure, but such cure cannot be accomplished within such thirty (30) day period, if Owner fails to commence the cure of such Owner Event of Default within fifteen (15) days of such notice or thereafter fails to diligently pursue such efforts to completion, provided that in no event shall such additional time exceed ninety (90) days.

F.The occurrence of an event of default beyond any applicable notice and cure period under any obligation, agreement, instrument or document which is secured in whole or in part by Owner’s or Landlord’s interest in the Hotel or the acceleration of the indebtedness secured thereby or the commencement of a foreclosure thereunder.

9.04Remedies for Owner Events of Default.

A.In the event of an Owner Event of Default, Manager shall have the right to institute any and all proceedings permitted by law or equity, including, without limitation, actions for specific performance and/or damages, provided except as expressly provided in this Agreement, Manager shall have no right to terminate this Agreement by reason of an Owner Event of Default.

B.Upon the occurrence of an Owner Event of Default pursuant to any of Sections 9.03.A, 9.03.B or 9.03.C, or which arises with respect to a violation by Owner or Landlord of Section 10.02 with respect to a Sale of the Hotel, Manager shall have, in addition to all other rights and remedies provided for herein, the right to terminate this Agreement by notice to Owner, which termination shall be effective as of the date set forth in the notice, which shall be at least thirty (30) days after the date of the notice. At any time after such termination, whether or not Manager shall have collected any amounts owing and due up to and including the date of termination of this Agreement, as liquidated final damages and in lieu of Manager’s right to receive any other damages due to the termination of this Agreement, at Manager’s election, Owner shall pay to Manager the Termination Fee. Nothing contained in this Agreement shall, however, limit or prejudice the right of Manager to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

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Article X ASSIGNMENT AND SALE

10.01Assignment.

A.Except as provided in Section 10.01.B, Manager shall not assign, mortgage, pledge, hypothecate or otherwise transfer its interest in all or any portion of this Agreement or any rights arising under this Agreement or suffer or permit such interests or rights to be assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether voluntarily, involuntarily or by operation of law, or permit the use or operation of the Hotel by anyone other than Manager or Owner. For the purposes of this Section 10.01, an assignment of this Agreement shall be deemed to include a Change of Control.

B.Notwithstanding Section 10.01.A, Manager shall have the right, without Owner’s consent, to:

1.assign this Agreement (whether directly or pursuant to the direct or indirect transfer of interests in [Sonesta or] Manager) in connection with the sale of all or substantially all of the business and assets of [Sonesta][Manager] to a third party; provided such third party assumes in writing the obligations of Manager under this Agreement;

2.assign this Agreement as a result of a Change of Control arising as a result of a transfer or issuance of capital stock of Sonesta Holdco permitted by the Stockholders Agreement;

3.assign this Agreement to [a][another] Subsidiary of [Sonesta] [Manager]; provided such Subsidiary assumes in writing the obligations of Manager under this Agreement; and

4.sublease or grant concessions or licenses to shops or any other space at the Hotel so long as the terms of any such subleases or concessions do not exceed the Term, provided that (a) such subleases or concessions are for newsstand, gift shop, parking garage, health club, restaurant, bar, commissary, retail, office or rooftop antenna purposes or similar concessions or uses, (b) such subleases are on commercially reasonable terms, and (c) such subleases or concessions will not violate or affect any Legal Requirement or Insurance Requirement, and Manager shall obtain or cause the subtenant to obtain such additional insurance coverage applicable to the activities to be conducted in such subleased space as Landlord and any Mortgagee may reasonably require.

C.Notwithstanding Section 10.01.B, Manager may not assign, mortgage, pledge, hypothecate or otherwise transfer its interest in all or any portion of this Agreement to any Person (or any Affiliate of any Person) who (a) does not have sufficient experience to fulfill Manager’s obligations with respect to the Hotel under this Agreement, (b) is known in the community as being of bad moral character, or has been convicted of a felony in any state or federal court, or is in control of or controlled by Persons who have been convicted of felonies in

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any state or federal court; or (c) is, or has an Affiliate that is, a Specially Designated National or Blocked Person.

D.Owner shall not assign or transfer its interest in this Agreement without the prior written consent of Manager; provided, however, that Owner shall have the right, without such consent to (1) assign its interest in this Agreement in connection with a Sale of the Hotel which complies with the provisions of Section 10.02, (2) assign its interest hereunder to Landlord or an Affiliate of Landlord under the terms of the Lease, (3) assign its interest hereunder to Manager or an Affiliate of Manager, and (4) assign its interest hereunder to an Affiliate of Owner in a corporate restructuring of Owner or any of its Affiliates, provided such Affiliate satisfies the criteria of Section 10.02.A.

E.If either party consents to an assignment of this Agreement by the other, no further assignment shall be made without the express consent in writing of such party, unless such assignment may otherwise be made without such consent pursuant to the terms of this Agreement. An assignment by Owner of its interest in this Agreement approved or permitted pursuant to the terms hereof shall relieve Owner from its obligations under this Agreement arising from and after the effective date of such assignment. An assignment by Manager of its interest in this Agreement shall not relieve Manager from its obligations under this Agreement unless such assignment occurs in the context of a sale of all or substantially all of the business of Manager and which is otherwise permitted or approved, if required, pursuant to this Agreement, in which event Manager shall be relieved from such obligations arising from and after the effective date of such assignment.

10.02Sale of the Hotel.

A.Neither Owner nor Landlord shall enter into any Sale of the Hotel to any Person (or any Affiliate of any Person) who (a) does not have sufficient financial resources and liquidity to fulfill Owner’s obligations with respect to the Hotel under this Agreement, or Landlord’s obligations under the Lease, as the case may be, (b) is known in the community as being of bad moral character, or has been convicted of a felony in any state or federal court, or is in control of or controlled by Persons who have been convicted of felonies in any state or federal court; (c) fails to expressly assume in writing the obligations of Owner hereunder or Landlord obligations under the Lease, as the case may be, or (d) is, or has an Affiliate that is, a Specially Designated National or Blocked Person.

B.In connection with any Sale of a Hotel, Manager and the purchaser or its Owner shall enter into a new management agreement, which new management agreement will be on all of the terms and conditions of this except that the Initial Term and Renewal Term(s) of any such new management agreement shall consist only of the balance of the Initial Term and Renewal Term(s) remaining under this Agreement at the time of execution of such new management agreement. Such new management agreement shall be executed by Manager and such new Owner at the time of closing of a Sale of the Hotel, and a memorandum of such new management agreement shall be executed by the parties and recorded immediately following

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recording of the deed or memorandum of lease or assignment and prior to recordation of any other documents.

10.03Amendment of the Lease. The Lease shall not be amended or modified in any way which would materially reduce Manager’s rights hereunder or impose any material cost, expense or obligation on Manager.

Article XI MISCELLANEOUS

11.01Right to Make Agreement. Each party warrants, with respect to itself, that neither the execution of this Agreement nor the finalization of the transactions contemplated hereby shall violate any provision of law or judgment, writ, injunction, order or decree of any court or governmental authority having jurisdiction over it; result in or constitute a breach or default under any indenture, contract, other commitment or restriction to which it is a party or by which it is bound; or require any consent, vote or approval which has not been taken, or at the time of the transaction involved shall not have been given or taken. Each party covenants that it has and will continue to have throughout the Term, the full right to enter into this Agreement and perform its obligations hereunder.

11.02Actions By Manager. Manager covenants and agrees that it shall not take any action which would be binding upon Owner or Landlord except to the extent it is permitted to do so pursuant to the terms of this Agreement.

11.03Relationship. In the performance of this Agreement, Manager shall act solely as an independent contractor. Neither this Agreement nor any agreements, instruments, documents or transactions contemplated hereby shall in any respect be interpreted, deemed or construed as making Manager a partner, joint venturer with, or agent of, Owner. Owner and Manager agree that neither party will make any contrary assertion, claim or counterclaim in any action, suit, arbitration or other legal proceedings involving Owner and Manager. Nothing contained herein is intended to, nor shall be construed as, creating any landlord-tenant relationship between Manager and Owner or between Manager and Landlord. Each of Manager and Owner shall prepare and shall cause their Affiliates to prepare their financial statements and tax returns consistent with the foregoing characterization.

11.04Applicable Law. The Agreement shall be construed under and shall be governed by the laws of the State of Maryland, without regard to its “choice of law” rules.

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11.05Notices. Notices, statements and other communications to be given under the terms of the Agreement shall be in writing and delivered by hand against receipt or sent by Express Mail service or by nationally recognized overnight delivery service, addressed to the parties as follows:

To Owner:        [Property Owner]

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attn: President

Phone: (617) 964-8389

Fax: (617) 969-5730

To Manager:        [Property Manager]

Two Newton Place

255 Washington Street

Newton, Massachusetts 02458

Attn: President

Phone: (617) 421-5400

Fax: (617) 928-1305

or at such other address as is from time to time designated by the party receiving the notice. Any such notice that is given in accordance herewith shall be deemed received when delivery is received or refused, as the case may be. Additionally, notices may be given by facsimile transmission, provided that a hard copy of the transmission shall be delivered to the addressee by nationally recognized overnight delivery service by no later than the second (2^nd) Business Day following such transmission. Facsimiles shall be deemed delivered on the date of such transmission, if sent on a Business Day and received during the receiving party’s normal business hours or, if not received during the receiving party’s normal business hours, then on the next succeeding Business Day.

11.06Environmental Matters.

A.Subject to Section 11.06.D, during the Term or at any other time while Manager is in possession of the Hotel, (1) Manager shall not store, spill upon, generate, dispose of or transfer to or from the Hotel any Hazardous Substance, except in compliance with all Legal Requirements, (2) Manager shall maintain the Hotel at all times free of any Hazardous Substance (except in compliance with all Legal Requirements), and (3) Manager (a) upon receipt of notice or knowledge shall promptly notify Owner and Landlord in writing of any material change in the nature or extent of Hazardous Substances at the Hotel, (b) shall file and transmit to Owner and Landlord a copy of any Community Right to Know or similar report or notice which is required to be filed by Manager with respect to the Hotel pursuant to Title III of the Superfund Amendments and Reauthorization Act of 1986 or any other Legal Requirements, (c) shall transmit to Owner and Landlord copies of any citations, orders, notices or other governmental communications received by Manager with respect to Hazardous Substances or environmental compliance (collectively, “Environmental Notice”), which Environmental Notice requires a written response or any action to be taken and/or if such Environmental Notice gives notice of

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and/or presents a material risk of any material violation of any Legal Requirement and/or presents a material risk of any material cost, expense, loss or damage (an “Environmental Obligation”), (d) shall observe and comply with all Legal Requirements relating to the use, maintenance and disposal of Hazardous Substances and all orders or directives from any official, court or agency of competent jurisdiction relating to the use, maintenance or disposal or requiring the removal, treatment, containment or other disposition of Hazardous Substances, and (e) shall pay or otherwise dispose of any fine, charge or Imposition related thereto, unless Owner or Manager shall contest the same in good faith and by appropriate proceedings and the right to use and the value of the Hotel are not materially and adversely affected thereby.

B.In the event of the discovery of Hazardous Substances other than those maintained in accordance with Legal Requirements on any portion of any Site or in the Hotel during the Term, Manager shall promptly (i) clean up and remove from and about the Hotel all Hazardous Substances thereon in accordance with all applicable Environmental Laws (as defined below), (ii) contain and prevent any further release or threat of release of Hazardous Substances on or about the Hotel, and (iii) use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about the Hotel, and (iv) otherwise effect a remediation of the problem in accordance with all applicable federal, state and local statutes, laws, rules and regulations (now or hereafter in effect) dealing with the use, generation, treatment, storage, release, disposal, remediation or abatement of Hazardous Substances (collectively referred to as “Environmental Laws”).

C.The actual costs incurred or the estimated costs to be incurred with respect to any matter arising under Section 11.06.B together with any costs incurred by Owner with respect to any judgment or settlement approved by Manager (such approval not to be unreasonably withheld, conditioned or delayed with respect to any third-party claims including, without limitation, claims by Landlord arising under the Lease) relating to claims arising from the release or threat of release of Hazardous Substances on or about any of the Hotels (including reasonable attorneys’ and consultants’ fees incurred with respect to such matters) are collectively referred to as “Environmental Costs.”

D.All Environmental Costs shall be deemed repairs and maintenance under Section 5.02 or 5.03 and paid as provided therein, as applicable, for the Hotel; provided, however, that if any of the foregoing costs arise as a result of the gross negligence or willful misconduct of Manager or any employee of Manager, such costs shall be paid by Manager at its sole cost and expense and not as a Deduction, and Manager shall indemnify Owner for any loss, cost, claim or expense (including reasonable attorneys’ fees) incurred by Owner in connection therewith. The provisions of this Section 11.06.D shall survive termination.

11.07Confidentiality. The parties hereto agree that the matters set forth in this Agreement are strictly confidential and each party will make every effort to ensure that the information is not disclosed to any outside person or entities (including the press) without the prior written consent of the other party except as may be appropriate or required by law, including the rules and regulations of the SEC or any stock exchange applicable to Owner or its Affiliates, in any report, prospectus or other filing made by Owner or its Affiliates with the SEC or any such stock exchange, or in a press release issued by a party or its Affiliates which is consistent with its investor relations program conducted in the ordinary course, and as may be

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reasonably necessary to obtain licenses, permits, and other public approvals necessary for the refurbishment or operation of the Hotel, or, subject to Section 4.01.C(2), in connection with financing or proposed financing of the Hotel, a Sale of the Hotel, or a sale of a Controlling Interest in Owner.

11.08Projections. Owner acknowledges that any written or oral projections, pro formas, or other similar information that has been, prior to execution of this Agreement, or will, during the Term, be provided by Manager, or any Affiliate to Owner is for information purposes only and that Manager and any such Affiliate do not guarantee that the Hotel will achieve the results set forth in any such projections, pro formas, or other similar information. Any such projections, pro formas, or other similar information are based on assumptions and estimates, and unanticipated events may occur subsequent to the date of preparation of such projections, pro formas, and other similar information. Therefore, the actual results achieved by the Hotel are likely to vary from the estimates contained in any such projections, pro formas, or other similar information and such variations might be material.

11.09Actions to be Taken Upon Termination. Upon termination of this Agreement:

A.Manager shall, within ninety (90) days after termination of this Agreement, prepare and deliver to Owner a final accounting statement (“Final Statement”) with respect to the Hotel, consistent with the Annual Operating Statement, along with a statement of any sums due Manager as of the date of termination. Within thirty (30) days of the receipt by Owner of such Final Statement, the parties will make any adjustments, by cash payment, in the amounts paid or retained as are needed because of the figures set forth in the Final Statement. Any payments shall be made together with interest at the Interest Rate from the date such amounts were due or paid, as the case may be, until paid or repaid. If any dispute shall arise with respect to the Final Statement which cannot be resolved by the parties within the thirty (30) day period, it shall be settled by arbitration, provided however, that any cash adjustments relating to items which are not in dispute shall be made within the thirty (30) day period. The cost of preparing the Final Statement shall be a Deduction, unless the termination occurs as a result of a Manager Event of Default or an Owner Event of Default, in which case the defaulting party shall pay such cost. Manager and Owner acknowledge that there may be certain adjustments for which the information will not be available at the time of the Final Statement and the parties agree to readjust such amounts and make the necessary cash adjustments when such information becomes available, provided, however, that all accounts shall be deemed final as of the second (2^nd) anniversary of the date of termination.

B.Upon a termination, Manager shall disburse to Owner all Working Capital (excluding funds to be held in escrow pursuant to Section 11.09.I) remaining after payment of all Deductions and all amounts then payable to Manager or Owner.

C.Manager shall make available to Owner such books and records respecting the Hotel (including those from prior years, subject to Manager’s reasonable records retention policies) as will be needed by Owner to prepare the accounting statements, in accordance with the Uniform System of Accounts, for the Hotel for the Year in which the termination occurs and for any subsequent Year.

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D.Manager shall (to the extent permitted by law) assign to Owner or its designee all operating licenses and permits for the Hotel which have been issued in Manager’s name (including liquor and restaurant licenses, if any).

E.If Owner does not exercise its right under Section 11.09.G and/or a successor Manager is not a franchisee of Manager, Manager shall have the option, to be exercised within thirty (30) days after termination, to purchase at their then book value, any items of Inventories and Fixed Asset Supplies marked with any Trade Name, other trade name, symbol, logo or design. If Manager does not exercise such option, Owner agrees that any such items not so purchased will be used exclusively at the Hotel until they are consumed.

F.Manager shall, at Owner’s sole cost and expense, use commercially reasonable efforts to cooperate with Owner or its designee in connection with the transfer of management of the Hotel including processing of all applications for licenses, operating permits and other governmental authorizations and the assignment of all contracts entered into by Manager with respect to the use and operation of the Hotel as then operated, but excluding all insurance contracts and multi-property contracts not limited in scope to the Hotel (if applicable) and all contracts with Affiliates of Manager.

G.Owner or its designee shall have the right to operate the improvements on the Site without modifying the architectural design, notwithstanding the fact that such design or certain features thereof may be proprietary to Manager and/or protected by trademarks or service marks held by Manager or an Affiliate, provided that such use shall be confined to the Site. Further, provided that the Hotel then satisfies the System Standards, Owner or its designee shall be entitled (but not obligated) to operate the Hotel under the Trade Names for a period of one (1) year following termination in consideration for which Owner or its designee shall pay the then standard franchise fees of Manager and its Affiliates and shall comply with the other applicable terms and conditions of the form of franchise agreement then being entered into and Manager will continue to provide services to the Hotel including, reservations and communication services; provided, however, that all such services shall be provided in accordance with the applicable terms and conditions of the form of franchise agreement.

H.Any computer software (including upgrades and replacements) at the Hotel owned by Manager, an Affiliate, or the licensor of any of them is proprietary to Manager, such Affiliate, or the licensor of any of them and shall in all events remain the exclusive property of Manager, the Affiliate or the licensor of any of them, as the case may be, and nothing contained in this Agreement shall confer on Owner the right to use any of such software. Manager shall have the right to remove from the Hotel without compensation to Owner any computer software (including upgrades and replacements), including, without limitation, the System software, owned by Manager, any Affiliate or the licensor of any of them and any computer equipment utilized as part of a centralized reservation system or owned by a party other than Owner.

I.If this Agreement is terminated for any reason, other than by reason of a Manager Event Default, and excluding a termination as a result of the expiration of the Term, an escrow fund shall be established from Gross Revenues to reimburse Manager for all reasonable costs and expenses incurred by Manager in terminating its employees at the Hotel, such as severance pay, unemployment compensation, employment relocation, and other employee liability costs arising

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out of the termination of employment of such employees. If Gross Revenues are insufficient to meet the requirements of such escrow fund, then Manager shall have the right to withdraw the amount of such expenses from Working Capital or any other funds of Owner with respect to the Hotel held by or under the control of Manager. Owner or its designee shall have the right to offer employment to any employee whom Manager proposes to terminate and Manager shall cooperate with Owner in connection therewith.

J.Manager shall peacefully vacate and surrender the Hotel to Owner.

The provisions of this Section 11.09 shall survive termination.

11.10Trademarks, Trade Names and Service Marks. The names “Sonesta,” “Royal Sonesta,” “Sonesta Suites,” “Sonesta ES Suites” and “Sonesta Resorts” (each of the foregoing names, together with any combination thereof, collectively, the “Trade Names”) when used alone or in connection with another word or words, and the Sonesta trademarks, service marks, other trade names, symbols, logos and designs shall in all events remain the exclusive property of Manager and except as provided in Section 11.09.E and 11.09.G, nothing contained in this Agreement shall confer on Owner the right to use any of the Trade Names, or the Sonesta trademarks, service marks, other trade names, symbols, logos or designs affiliated or used therewith. Except as provided in Section 11.09.E and 11.09.G, upon termination of this Agreement, any use of any of the Trade Names, or any of the Sonesta trademarks, service marks, other trade names, symbols, logos or designs at the Hotel shall cease and Owner shall promptly remove from the Hotel any signs or similar items which contain any of the Trade Names, trademarks, service marks, other trade names, symbols, logos or designs. If Owner has not removed such signs or similar items within ten (10) Business Days, Manager shall have the right to do so. The cost of such removal shall be a Deduction. Included under the terms of this Section 11.10 are all trademarks, service marks, trade names, symbols, logos or designs used in conjunction with the Hotel, including restaurant names, lounge names, etc., whether or not the marks contain the “Sonesta” name. The right to use such trademarks, service marks, trade names, symbols, logos or designs belongs exclusively to Manager, and the use thereof inures to the benefit of Manager whether or not the same are registered and regardless of the source of the same. The provisions of this Section 11.10 shall survive termination.

11.11Waiver. The failure of either party to insist upon a strict performance of any of the terms or provisions of the Agreement, or to exercise any option, right or remedy contained in this Agreement, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in full force and effect. No waiver by either party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party.

11.12Partial Invalidity. If any portion of this Agreement shall be declared invalid by order, decree or judgment of a court, or otherwise, this Agreement shall be construed as if such portion had not been so inserted except when such construction would operate as an undue hardship on Manager or Owner or constitute a substantial deviation from the general intent and purpose of the parties as reflected in this Agreement.

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11.13Survival. Except as otherwise specifically provided herein, the rights and obligations of the parties herein shall not survive any termination of this Agreement.

11.14Negotiation of Agreement. Each of Manager and Owner is a business entity having substantial experience with the subject matter of this Agreement and has fully participated in the negotiation and drafting of this Agreement. Accordingly, this Agreement shall be construed without regard to the rule that ambiguities in a document are to be construed against the draftsman. No inferences shall be drawn from the fact that the final, duly executed Agreement differs in any respect from any previous draft hereof.

11.15Entire Agreement. This Agreement, together with any other agreements or writings signed by the parties that expressly state they are supplemental to, or supercede any provision of, this Agreement, and together with any instruments to be executed and delivered pursuant to this Agreement, constitutes the entire agreement between the parties as of the Effective Date and supersedes all prior understandings and writings, and may be changed only by a writing signed by the parties hereto. For the avoidance of doubt, the Prior Management Agreement shall continue to govern the rights and obligations of the parties with respect to periods prior to the Effective Date, and this Agreement shall govern the rights and obligations of the parties with respect to periods from and after the Effective Date.

11.16Affiliates. Manager shall be entitled to contract with companies that are Affiliates (or companies in which Manager has an ownership interest if such interest is not sufficient to make such a company an Affiliate) to provide goods and/or services to the Hotel; provided that the prices and/or terms for such goods and/or services are competitive. Additionally, Manager may contract for the purchase of goods and services for the Hotel with third parties that have other contractual relationships with Manager and its Affiliates, so long as the prices and terms are competitive. In determining whether such prices and/or terms are competitive, they will be compared to the prices and/or terms which would be available from reputable and qualified parties for goods and/or services of similar quality, and the goods and/or services which are being purchased shall be grouped in reasonable categories, rather than being compared item by item. Any dispute as to whether prices and/or terms are competitive shall be settled by arbitration. The prices paid may include overhead and the allowance of a reasonable return to Manager’s Affiliates (or companies in which Manager has an ownership interest if such interest is not sufficient to make such a company an Affiliate), provided that such prices are competitive. Owner acknowledges and agrees that, with respect to any purchases of goods and/or services pursuant to this Section 11.16, Manager’s Affiliates may retain for their own benefit any allowances, credits, rebates, commissions and discounts received with respect to any such purchases.

11.17Disputes.

A.Disputes. Any disputes, claims or controversies arising out of or relating to this Agreement or the transactions contemplated hereby, including any disputes, claims or controversies brought by or on behalf of a party hereto, a direct or indirect parent of a party, or any holder of equity interests (which, for purposes of this Section 11.17, shall mean any holder of record or any beneficial owner of equity interests, or any former holder of record or beneficial owner of equity interests) of a party, either on its own behalf, on behalf of a party or on behalf of

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any series or class of equity interests of a party or holders of any equity interests of a party against a party or any of their respective trustees, directors, members, officers, managers (including The RMR Group LLC or its parent and their respective successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance, application or enforcement of this Agreement, including the agreements set forth in this Section 11.17, or the governing documents of a party (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (the “AAA”) then in effect, except as those Rules may be modified in this Section 11.17. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those Persons and a party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.

B.Selection of Arbitrators. There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date the AAA provides such list to select one (1) of the three (3) arbitrators proposed by the AAA. If the party (or parties) fail(s) to select the second (2^nd) arbitrator by that time, the party (or parties) who have appointed the first (1^st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by the AAA to be the second (2^nd) arbitrator; and, if they should fail to select the second (2^nd) arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2^nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3^rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2^nd) arbitrator. If the third (3^rd) arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

C.Location of Arbitration. Any arbitration hearings shall be held in Boston, Massachusetts, unless otherwise agreed by the parties, but the seat of arbitration shall be Maryland.

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D.Scope of Discovery. There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

E.Arbitration Award. In rendering an award or decision (an “Arbitration Award”), the arbitrators shall be required to follow the laws of the State of Maryland, without regard to principles of conflicts of law. Any arbitration proceedings or Arbitration Award rendered hereunder, and the validity, effect and interpretation of the agreements set forth in this Section 11.17 shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. An Arbitration Award shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of law on which it is based. Any monetary Arbitration Award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Subject to this Section 11.17, each party against which an Arbitration Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Arbitration Award or such other date as such Arbitration Award may provide.

F.Costs. Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, to the maximum extent permitted by Maryland law, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Arbitration Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s Arbitration Award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3^rd) appointed arbitrator.

G.Appeals. Notwithstanding any language to the contrary in this Agreement, any Arbitration Award, including but not limited to any interim Arbitration Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). An Arbitration Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of an Arbitration Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, the above paragraph relating to costs and expenses shall apply to any appeal pursuant to this Section 11.17 and the appeal tribunal shall not render an Arbitration Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

H.Final Judgment. Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in the above paragraph, an Arbitration Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon an Arbitration Award may be entered in any court having jurisdiction. To the fullest extent permitted by law, no application or appeal

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to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any Arbitration Award made, except for actions relating to enforcement of the agreements set forth in this Section 11.17 or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

I.Intended Beneficiaries. This Section 11.17 is intended to benefit and be enforceable by the parties hereto and their respective shareholders, stockholders, members, beneficial interest owners, direct and indirect parents, trustees, directors, officers, managers (including The RMR Group LLC or its parent and their respective successor), members, agents or employees and their respective successors and assigns and shall be binding on the parties, and such Persons and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such Persons may have by contract or otherwise.

11.18Permitted Contests. Manager shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy, encumbrance, charge or claim (collectively, “Claims”) as to the Hotel, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) such contest shall not cause Landlord or Owner to be in default under any Mortgage or reasonably be expected to result in a lien attaching to the Hotel, unless such lien is fully bonded or otherwise secured to the reasonable satisfaction of Landlord, (b) no part of the Hotel nor any Gross Revenues therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (c) Manager shall indemnify and hold harmless Owner and Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys’ fees, incurred by Owner or Landlord in connection therewith or as a result thereof. Owner and Landlord shall sign all required applications and otherwise cooperate with Manager in expediting the matter, provided that neither Owner nor Landlord shall thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith), and any such costs or expenses incurred in connection therewith shall be paid as a Deduction. Landlord shall agree to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) and Manager agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord. Any amounts paid under any such indemnity of Manager to Owner or Landlord shall be a Deduction. Any refund of any Claims and such charges and penalties or interest thereon shall be paid to Manager and included in Gross Revenues.

11.19Estoppel Certificates. Each party to this Agreement shall at any time and from time to time, upon not less than thirty (30) days’ prior notice from the other party, execute, acknowledge and deliver to such other party, or to any third party specified by such other party, a statement in writing: (a) certifying that this Agreement is unmodified and in full force and effect (or if there have been modifications, that the same, as modified, is in full force and effect and stating the modifications); (b) stating whether or not to the best knowledge of the certifying party (i) there is a continuing default by the non-certifying party in the performance or observance of any covenant, agreement or condition contained in this Agreement, or (ii) there shall have occurred any event which, with the giving of notice or passage of time or both, would become such a default, and, if so, specifying each such default or occurrence of which the certifying

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party may have knowledge; (c) stating the date to which distributions of Operating Profit have been made; and (d) stating such other information as the non-certifying party may reasonably request. Such statement shall be binding upon the certifying party and may be relied upon by the non-certifying party and/or such third party specified by the non-certifying party as aforesaid, including, without limitation its lenders and any prospective purchaser or mortgagee of the Hotel or the leasehold estate created by the Lease. Upon termination, each party shall, on request, within the time period described above, execute and deliver to the non-certifying party and to any such third party a statement certifying that this Agreement has been terminated.

11.20Indemnification. Notwithstanding the existence of any insurance provided for herein and without regard to the policy limits of any such insurance, Manager shall protect, indemnify and hold harmless Owner and Landlord for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys’ fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Owner or Landlord by reason of: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about the Hotel or adjoining sidewalks or rights of way under Manager’s control, (b) any use, misuse, non-use, condition, management, maintenance or repair by Manager or anyone claiming under Manager of the Hotel or Owner’s Personal Property or any litigation, proceeding or claim by governmental entities or other third parties to which Owner or Landlord is made a party or participant relating to the Hotel or Owner’s Personal Property or such use, misuse, non-use, condition, management, maintenance, or repair thereof including, failure to perform obligations (other than Condemnation proceedings) to which Owner or Landlord is made a party, (c) any Impositions that are the obligations of Manager to pay pursuant to the applicable provisions of this Agreement, and (d) infringement and other claims relating to the propriety marks of Manager or its Affiliates; provided, however, that Manager’s obligations hereunder shall not apply to any liability, obligation, claim, damage, penalty, cause of action, cost or expense to the extent the same arises from any negligence or willful misconduct of Owner or Landlord or their respective employees, agents or invitees. Manager, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Owner or Landlord (but shall not be responsible for any duplicative attorneys’ fees incurred by Owner or Landlord) or may compromise or otherwise dispose of the same, with Owner’s or Landlord’s, as appropriate, prior written consent (which consent may not be unreasonably withheld or delayed). If Owner or Landlord unreasonably delays or withholds consent, Manager shall not be liable under this Section 11.20 for any incremental increase in costs or expenses resulting therefrom. The obligations of Manager under this Section 11.20 shall not be applicable to Environmental Costs with respect to which a specific indemnity is provided in Section 11.06.D, to the extent addressed therein. The obligations under this Section 11.20 shall survive termination.

11.21Remedies Cumulative. To the maximum extent permitted by law, each legal, equitable or contractual right, power and remedy of Owner or Manager, now or hereafter provided either in this Agreement or by statute or otherwise, shall be cumulative and concurrent and shall be in addition to every other right, power and remedy and the exercise or beginning of the exercise by Owner or Manager of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Owner or Manager of any or all of such rights, powers and remedies.

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11.22Amendments and Modifications. This Agreement shall not be modified or amended except in writing signed by Owner and Manager.

11.23Claims; Binding Effect; Time of the Essence; Nonrecourse. Anything contained in this Agreement to the contrary notwithstanding, all claims against, and liabilities of, Manager or Owner arising prior to any date of termination of this Agreement shall survive such termination. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Time is of the essence with respect to the exercise of any rights of Manager, Owner or Landlord under this Agreement. Nothing contained in this Agreement shall be construed to create or impose any liabilities or obligations and no such liabilities or obligations shall be imposed on any of the equityholders, beneficial owners, direct or indirect, officers, directors, trustees, employees or agents of Owner or Landlord or their respective Affiliates or Manager or its Affiliates for the payment or performance of the obligations or liabilities of Owner, Landlord or Manager, as applicable.

11.24Counterparts; Headings. This Agreement may be executed in two (2) or more counterparts, each of which shall constitute an original, but which, when taken together, shall constitute but one instrument and shall become effective as of the date hereof when copies hereof, which, when taken together, bear the signatures of each of the parties hereto shall have been signed. Headings in this Agreement are for purposes of reference only and shall not limit or affect the meaning of the provisions hereof.

11.25No Political Contributions. Notwithstanding any provision in this Agreement to the contrary, no money or property of the Hotel shall be paid or used or offered, nor shall Owner or Manager directly or indirectly use or offer, consent or agree to use or offer, any money or property of the Hotel (i) in aid of any political party, committee or organization, (ii) in aid of any corporation, joint stock or other association organized or maintained for political purposes, (iii) in aid of any candidate for political office or nomination for such office, (iv) in connection with any election, (v) for any political purpose whatever, or (vi) for the reimbursement or indemnification of any person for any money or property so used.

11.26REIT Qualification.

A.Manager shall take all commercially reasonable actions reasonably requested by Owner or Landlord for the purpose of qualifying Landlord’s rental income from Owner under the Lease as “rents from real property” pursuant to Sections 856(d)(2), 856(d)(8)(B) and 856(d)(9) of the Code, including but not limited to any action requested to maintain: (1) Manager’s continued qualification as an “eligible independent contractor” (as defined in Section 856(d)(9)(A) of the Code) with respect to SVC and (2) the Hotel’s continued treatment as a “qualified lodging facility” (as defined in Section 856(d)(9)(D) of the Code). Manager shall not be liable if such reasonably requested actions, once implemented, fail to have the desired result of qualifying Landlord’s rental income from Owner under the Lease as “rents from real property” pursuant to Sections 856(d)(2), 856(d)(8)(B) and 856(d)(9) of the Code. This Section 11.26.A shall not apply in situations where an Adverse Regulatory Event has occurred; instead, Section 11.27 shall apply.

B.If Owner or Landlord wish to invoke the terms of Section 11.26.A, Owner or Landlord (as appropriate) shall contact Manager and the parties shall meet with each other to

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discuss the relevant issues and to develop a mutually-agreed upon plan for implementing such reasonably requested actions.

C.Any additional out-of-pocket costs or expenses incurred by Manager in complying with such a request shall be borne by Owner (and shall not be a Deduction). Owner shall reimburse Manager for such expense or cost promptly, but not later than five (5) Business Days after such expense or cost is incurred.

D.Manager shall not authorize any wagering activities to be conducted at or in connection with the Hotel, and Manager shall use commercially reasonable efforts to achieve the goal of having at least one-half of the guest rooms in the Hotel being used on a transient basis and the goal of having no Hotel amenities and facilities that are not customary for similarly situated properties.

11.27Adverse Regulatory Event. In the event of an Adverse Regulatory Event arising from or in connection with this Agreement, Owner and Manager shall work together in good faith to amend this Agreement to eliminate the impact of such Adverse Regulatory Event. For purposes of this Agreement, the term “Adverse Regulatory Event” means any time that a law, statute, ordinance, code, rule or regulation imposes upon Owner (or could impose upon Owner in Owner’s reasonable opinion), any material threat to either Landlord’s or Landlord’s Affiliate’s status as a “real estate investment trust” under the Code or to the treatment of amounts paid to Landlord as “rents from real property” under Section 856(d) of the Code. Each of Manager and Owner shall inform the other of any Adverse Regulatory Event of which it is aware and which it believes likely to impair compliance of any of the Hotel with respect to the aforementioned sections of the Code.

11.28Tax Matters. Manager will prepare or cause to be prepared all tax returns required in the operation of the Hotel, which include payroll, sales and use tax returns, personal property tax returns and business, professional and occupational license tax returns. Manager shall timely file or cause to be filed such returns as required by the State; provided that, Owner shall promptly provide all relevant information to Manager upon request, and any late fees or penalties resulting from delays caused by Owner shall be borne by Owner. Manager shall not be responsible for the preparation of Landlord’s or Owner’s federal or state income tax returns, provided Manager shall cooperate fully with Owner and Landlord as may be necessary to enable Owner or Landlord to file such federal or state income tax returns, including by preparing data reasonably requested by Owner or Landlord and submitting it to Owner or Landlord, as applicable, as soon as reasonably practicable following such request.

11.29Third Party Beneficiaries. The terms and conditions of this Agreement shall inure to the benefit of, and be binding upon, the respective successors, heirs, legal representatives or permitted assigns of each of the parties hereto and except for Landlord and SVC, which are intended third party beneficiaries, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

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Article XII DEFINITION OF TERMS; CONSTRUCTION

12.01Definition of Terms.

The following terms when used in this Agreement and the Addenda attached hereto shall have the meanings indicated:

“AAA” has the meaning ascribed to such term in Section 11.17.

“Additional Manager Advances” means advances by Manager under Sections 4.05 and 5.05, together with simple interest at the rate of nine percent (9%) per annum on the outstanding balance thereof from time to time.

“Additional Working Capital” has the meaning ascribed to such term in Section 4.05.

“Adverse Regulatory Event” has the meaning ascribed to such term in Section 11.27.

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. For purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) of a Person means the possession, directly or indirectly, of the power: (i) to vote fifty percent (50%) or more of the voting stock or equity interests of such Person; or (ii) to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting stock or equity interests, by contract or otherwise.

“Agreement” means this Management Agreement.

“Annual Operating Projection” has the meaning ascribed to such term in Section 4.04.

“Annual Operating Statement” has the meaning ascribed to such term in Section 4.01.B.

“Appellate Rules” has the meaning ascribed to such term in Section 11.17.

“Arbitration Award” has the meaning ascribed to such term in Section 11.17.

“Award” has the meaning ascribed to such term in the Lease.

“Base Management Fee” means an amount equal to [Full Service: three percent (3%) ORLimited Service: five percent (5%)] of Gross Revenues.

“Building” has the meaning ascribed to such term in the Recitals.

“Business Day” means any day other than Saturday, Sunday, or any other day on which banking institutions in the Commonwealth of Massachusetts are authorized by law or executive action to close.

“Capital Estimate” has the meaning ascribed to such term in Section 5.05.A.

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“Capital Statement” has the meaning ascribed to such term in Section 5.06.B.

“Change of Control” means, the acquisition by any Person or Persons acting in concert (excluding Persons who are holders, directly or indirectly, of equity interest in Manager as of the Effective Date or Affiliates or Immediate Family Members of such Persons) of beneficial ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of 50% or more, or rights, options or warrants to acquire 50% or more, of the outstanding shares of voting stock or other voting interests of Manager.

“Claims” has the meaning ascribed to such term in Section 11.18.

“Code” means the Internal Revenue Code of 1986.

“Condemnation” means (a) the exercise of any governmental power with respect to the Hotel or any interest therein, whether by legal proceedings or otherwise, by a Condemnor of its power of condemnation, (b) a voluntary sale or transfer of the Hotel or any interest therein, to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending, or (c) a taking or voluntary conveyance of the Hotel or any interest therein, or right accruing thereto or use thereof, as the result or in settlement of any Condemnation or other eminent domain proceeding affecting the Hotel or any interest therein, whether or not the same shall have actually been commenced.

“Condemnor” means any public or quasi‑public authority, or private corporation or individual, having the power of Condemnation.

“Controlling Interest” means (i) if the Person is a corporation, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of such Person (through ownership of such shares or by contract), or (ii) if the Person is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the business, management or policies of such Person. “Control”, “Controlling” and “Controlled” have corrective meanings.

“Deduction” has the meaning ascribed to such term in the definition of Operating Profit.

“Discount Rate” means an annual rate of eight percent (8%).

“Disputes” has the meaning ascribed to such term in Section 11.17.

“Effective Date” has the meaning ascribed to such term in the Preamble.

“Environmental Costs” has the meaning ascribed to such term in Section 11.06.C.

“Environmental Laws” has the meaning ascribed to such term in Section 11.06.B.

“Environmental Notice” has the meaning ascribed to such term in Section 11.06.A.

“Environmental Obligation” has the meaning ascribed to such term in Section 11.06.A.

“Existing CC&Rs” has the meaning ascribed to such term in Section 8.02.A.

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“FF&E” means furniture, fixtures and equipment, including without limitation: furnishings, fixtures, decorative items, signage, audio‑visual equipment, kitchen equipment and appliances, cabinetry, laundry equipment, housekeeping equipment, telecommunications systems, security systems and front desk and back‑of‑the house computer equipment; provided, however, that the term “FF&E” shall not include Fixed Asset Supplies or software.

“FF&E Reserve Account” has the meaning ascribed to such term in Section 5.04.A.

“FF&E Reserve Deposit” means, for each Year or portion thereof, an amount equal to five percent (5%) of Gross Revenues.

“FF&E Reserves” has the meaning ascribed to such term in Section 5.04.A

“Final Statement” has the meaning ascribed to such term in Section 11.09.A.

“Fixed Asset Supplies” means items included within “Operating Equipment” under the Uniform System of Accounts that may be consumed in the operation of the Hotel or are not capitalized, including linen, china, glassware, tableware, uniforms, and similar items used in the operation of the Hotel.

“Future CC&Rs” has the meaning ascribed to such term in Section 8.02.A.

“GAAP” means generally accepted accounting principles, consistently applied.

“Government Agencies” means any court, agency, authority, board (including, without limitation, environmental protection, planning and zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi-governmental unit of the United States or the State or any county or any political subdivision of any of the foregoing, whether now or hereafter in existence, having jurisdiction over Owner, Landlord or the Hotel.

“Gross Revenues” means for any period, all revenues and receipts of every kind derived from operating the Hotel and all departments and parts thereof during such period, including: income (from both cash and credit transactions) after deductions for bad debts and discounts for prompt cash payments and refunds from rental of Guest Rooms and other spaces at the Hotel, telephone charges, stores, offices, exhibit or sales space of every kind; license, lease and concession fees and rentals (not including gross receipts of licensees, lessees and concessionaires); income from vending machines; income from parking; health club membership fees; food and beverage sales; wholesale and retail sales of merchandise; service charges; and proceeds, if any, from business interruption or other loss of income insurance; provided, however, that Gross Revenues shall not include the following: gratuities to employees of the Hotel; federal, state or municipal excise, sales or use taxes or any other taxes collected directly from patrons or guests or included as part of the sales price of any goods or services; proceeds from the sale of FF&E; interest received or accrued with respect to the funds in the operating accounts of the Hotel; any refunds, rebates, discounts and credits of a similar nature, given, paid or returned in the course of obtaining Gross Revenues or components thereof; insurance proceeds (other than proceeds from business interruption or other loss of income insurance);

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condemnation proceeds (other than for a temporary taking); or any proceeds from any Sale of the Hotel or from the refinancing of any debt encumbering the Hotel but excluding amounts expressly stated in this Agreement not to be included in Gross Revenues.

“Gross Room Revenues” means all Gross Revenues attributable to or payable for rental of Guest Rooms, after deductions for bad debts and discounts for prompt cash payments and refunds from rental of Guest Rooms, including, without limitation, all credit transactions, whether or not collected, but excluding (i) any sales or room taxes collected by Manager for transmittal to the appropriate taxing authority, and (ii) any revenues from sales or rentals of ancillary goods, such as VCR rentals, telephone income and fireplace log sales and sales from in-room service bars. Gross Room Revenues shall also include the proceeds from any business interruption insurance or other loss of income insurance. Gross Room Revenues shall be accounted for in accordance with the Uniform System of Accounts.

“Guest Room” means a lodging unit in the Hotel.

“Hazardous Substances” means any substance:

(i)the presence of which requires or may hereafter require notification, investigation or remediation under any federal, state or local statute, regulation, rule, ordinance, order, action or policy; or

(ii)which is or becomes defined as a “hazardous waste”, “hazardous material”, or “hazardous substance”, “dangerous waster”, “pollutant” or “contaminant” or term of similar import under any present or future federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. etseq.) and the Resource Conservation and Recovery Act (42 U.S.C. section 6901 etseq.) and the regulations promulgated thereunder; or

(iii)which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, any state of the United States, or any political subdivision thereof; or

(iv)the presence of which at the Hotel causes or materially threatens to cause an unlawful nuisance upon the Hotel or to adjacent properties or poses or materially threatens to pose a hazard to the Hotel or to the health or safety of persons on or about the Hotel; or

(v)without limitation, which is or contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic compounds; or

(vi)without limitation, which is or contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam insulation; or

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(vii)without limitation, which contains or emits radioactive particles, waves or material; or

(viii)without limitation, constitutes materials which are now or may hereafter be listed as medical waste pursuant to the Medical Waste Tracking Act of 1988, or analogous state or local laws or regulations or guidelines promulgated thereunder.

“Hotel” means the Site together with the Building and all other improvements constructed or to be constructed on the Site, and all FF&E installed or located on the Site or in the Building, and all easements or other Owner rights thereto owned by Landlord together with, for purposes of this Agreement, all office equipment, telephone equipment, motor vehicles, and other equipment leased by Owner, Fixed Asset Supplies and Inventories at the Hotel.

“Initial Effective Date” has the meaning ascribed to such term in the Recitals.

“Initial Term” has the meaning ascribed to such term in Section 2.01.A.

“Interest Rate” means an annual rate of 9%, but not higher than the highest rate permitted by law.

“Immediate Family Member” of an individual means any lineal descendant of such individual (including descendants by adoption), the spouse of any such lineal descendant, the estate of such individual or of his or her lineal descendants, or a trust for the principal benefit of one or more of such individual or of his or her lineal descendants (including a trust the principal beneficiary of which is another trust for the principal benefit of one or more such Persons).

“Impositions” has the meaning ascribed to such term in the Lease but shall not include:

1.    Special assessments (regardless of when due or whether they are paid as a lump sum or in installments over time) imposed because of facilities which are constructed by or on behalf of the assessing jurisdiction (for example, roads, sidewalks, sewers, culverts, etc.) which directly benefit the Hotel (regardless of whether or not they also benefit other buildings), which assessments shall be treated as capital costs of construction and not as Deductions; and

2.    Impact fees (regardless of when due or whether they are paid as a lump sum or in installments over time) which are required as a condition to the issuance of site plan approval, zoning variances or building permits, which impact fees shall be treated as capital costs of construction and not as Deductions.

“Incentive Management Fee” means, for each Year or portion thereof, an amount equal to twenty percent (20%) of Operating Profit remaining after deducting amounts paid or payable in respect of Owner’s Priority, Reimbursable Advances and the FF&E Reserve Deposit for such Year or portion thereof.

“Insurance Requirements” means all terms of any insurance policy required by this Agreement and all requirements of the issuer of any such policy and all orders, rules and

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regulations and any other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) binding upon the Hotel.

“Inventories” means “Inventories” as defined in the Uniform System of Accounts, including provisions in storerooms, refrigerators, pantries and kitchens; beverages in wine cellars and bars; other merchandise intended for sale; fuel; mechanical supplies; stationery; and other expensed supplies and similar items.

“Invested Capital” means an amount equal to [Updated Invested Capital], increased by the sum of any amounts paid after the Effective Date by (a) Landlord pursuant to Sections 5.1.2(b), 10.2.3 or 11.2 of the Lease or, (b) Owner pursuant to Section 5.05 or pursuant to Section 6.04 or Section 6.07 in excess of the insurance proceeds or Award, as the case may be.

“Landlord” has the meaning ascribed to such term in the Recitals or shall mean, as of any date, the landlord under the Lease as of such date.

“Lease” means the Amended and Restated Lease Agreement between Landlord and Owner, among others, dated as of [Effective Date], as amended from time to time, and any replacement lease(s) of the Hotel by the fee owner thereof.

“Legal Requirements” means all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Hotel or the maintenance, construction, alteration or operation thereof, whether now or hereafter enacted or in existence, including, without limitation, (a) all permits, licenses, authorizations, certificates and regulations necessary to operate the Hotel, and (b) all covenants, agreements, restrictions and encumbrances contained in any instruments at any time in force affecting the Hotel which either (i) do not require the approval of Manager, or (ii) have been approved by Manager as required hereby, including those which may (A) require material repairs, modifications or alterations in or to the Hotel or (B) in any way materially and adversely affect the use and enjoyment thereof, but excluding any requirements under Sections 11.26, 11.27 or 11.28, and (c) all valid and lawful requirements of Government Agencies or pertaining to reporting, licensing, permitting, investigation, remediation and removal of underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or emissions, discharges, releases or threatened releases of Hazardous Substances, chemical substances, pesticides, petroleum or petroleum products, pollutants, contaminants or hazardous or toxic substances, materials or wastes whether solid, liquid or gaseous in nature, into the environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid of gaseous in nature.

“Loyalty Program” means the Sonesta Travel Pass loyalty program or such replacement or successor “frequent stay” reward program as Manager may employ in the future for the hotels in the System.

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“Loyalty Program Fee” means an amount assessed based on defined costs associated with the Loyalty Program, not greater than one percent (1%) of Gross Revenues or such greater amount otherwise mutually agreed upon between Owner and Manager.

“Major Renovation” means a renovation, repair or restoration of the Hotel which impacts guest room availability or the use of public, function and outlet space so significantly that Owner and Manager agree it is a major renovation.

“Manager” has the meaning ascribed to such term in the Preamble hereto or shall mean any successor or permitted assign, as applicable.

“Manager Event of Default” has the meaning ascribed to such term in Section 9.01.

“Marketing Programs” means advertising, marketing, promotional and public relations programs and campaigns including so-called “frequent stay” rewards program which are intended for the benefit of all hotels in the System.

“Marketing Program Fee” means an amount equal to one percent (1%) of Gross Revenues or an amount otherwise mutually agreed upon between Owner and Manager.

“Monthly Statement” has the meaning ascribed to such term in Section 4.01.A.

“Mortgage” means any mortgage indebtedness obtained by Landlord to finance the Hotel, and may take the form of a mortgage, deed of trust or security document customarily in use in the State.

“Mortgagee” means the holder of any Mortgage.

“Officer’s Certificate” means a certificate executed by an officer of Manager which certifies that with respect to the Annual Operating Statement delivered under Section 4.01.B, the accompanying statement has been properly prepared in accordance with GAAP and fairly presents the financial operations of the Hotel.

“Operating Loss” means a negative Operating Profit for the Hotel.

“Operating Profit” means the excess of Gross Revenues over the following expenses incurred by Manager in accordance with the Operating Standards and the terms of this Agreement, on behalf of Owner, in operating the Hotel:

1.the cost of sales, including, without limitation, compensation, fringe benefits, payroll taxes and other costs related to Hotel employees (the foregoing costs shall not include salaries and other employee costs of executive personnel of Manager who do not work at the Hotel on a regular basis; except that the foregoing costs shall include the allocable portion of the salary and other employee costs of any general manager or other supervisory personnel assigned to a “cluster” of hotels which includes the Hotel);

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2.departmental expenses incurred at departments within the Hotel; administrative and general expenses; the cost of marketing incurred by the Hotel; advertising and business promotion incurred by the Hotel;

3.routine repairs, maintenance and minor alterations under Section 5.02;

4.all charges for electricity, power, gas, oil, water and other utilities consumed in the operation of the Hotel;

5.the cost of Inventories and Fixed Asset Supplies consumed in the operation of the Hotel;

6.lease payments for equipment and other personal property reasonably necessary for the operation of the Hotel and any ground lease payments;

7.a reasonable reserve for uncollectible accounts receivable as determined by Manager;

8.all costs and fees of independent professionals or other third parties who are retained by Manager to perform services required or permitted hereunder;

9.all costs and fees of technical consultants and operational experts who are retained or employed by Manager and/or Affiliates of Manager for specialized services (including, without limitation, quality assurance inspectors) and the cost of attendance by employees of the Hotel at training and manpower development programs sponsored by Manager;

10.the Base Management Fee, Reservations Fee and Systems Fee;

11.insurance costs and expenses for coverage required to be maintained under Section 6.01;

12.taxes, if any, payable by or assessed against Manager related to this Agreement or to Manager’s operation of the Hotel (exclusive of Manager’s income taxes) and all Impositions;

13.the Marketing Program Fee and the Loyalty Program Fee;

14.the Hotel’s share of the costs and expenses of participating in programs and activities prescribed for members of the System (including those central or regional services set forth in Section 1.03) to the extent such costs are not paid pursuant to a Marketing Program;

15.the costs of commercially reasonable efforts of causing the Hotel to be in compliance with each and every provision of the Lease (regardless of whether or not such compliance is a requirement of this Agreement);

16.such other costs and expenses incurred by Manager to comply with Legal Requirements and Insurance Requirements or are otherwise reasonably necessary for the proper and efficient operation of the Hotel; and

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17.such other costs and expenses paid to Owner or Landlord pursuant to the Lease or this Agreement, if such costs and expenses would have been a Deduction if paid directly by Manager to a third person in respect of the Hotel, (the items above collectively, “Deductions”).

Deductions shall not include (a) payments with respect to items for which Manager has agreed to be liable at its own cost and expense in this Agreement or under any other agreement between Manager and Owner including indemnities, (b) debt service payments pursuant to any Mortgage, (c) payments pursuant to equipment leases or other forms of financing obtained by Owner for the FF&E located in or connected with the Hotel, both of which shall be paid or caused to be paid by Owner, (d) rent payable under the Lease, (e) any reimbursement to Manager for advances Manager makes with respect to the Hotel as permitted hereunder, (f) the Incentive Management Fee, (g) the Procurement and Construction Supervision Fee or, (h) any item specifically stated not to be a Deduction.

“Operating Standards” has the meaning ascribed to such term in Section 1.02.A.

“Overdue Rate” means an annual rate of 12% but not higher than the highest rate permitted by law.

“Owner” has the meaning ascribed to such term in the Preamble or shall mean any successor or permitted assignee, as applicable.

“Owner Advances” has the meaning ascribed to such term in Section 3.02.D.

“Owner Event of Default” has the meaning ascribed to such term in Section 9.03.

“Owner Operating Loss Advance(s)” has the meaning ascribed to such term in Section 4.06.

“Owner’s Personal Property” means all motor vehicles, consumable inventories and supplies, furniture, furnishings, movable walls and partitions, equipment and machinery and all other tangible personal property of Owner, if any, acquired by Owner on and after the date hereof and located at the Hotel or used in Owner’s business at the Hotel, and all modifications, replacements, alterations and additions to such personal property.

“Owner’s Priority” means, for each Year or portion thereof, an amount equal to eight percent (8%) of Invested Capital.

“Owner’s Residual Payment” with respect to each Year or portion thereof, an amount equal to Operating Profit remaining after deducting amounts paid or payable in respect of Owner’s Priority, Reimbursable Advances, the FF&E Reserve Deposit and the Incentive Management Fee for such Year.

“Owner Working Capital Advances” means the aggregate of all funds remitted by Owner to Manager as Additional Working Capital.

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“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company partnership or other entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so permits.

“Prior Management Agreement” has the meaning ascribed to such term in the Recitals.

“Procurement and Construction Supervision Fee” means an amount equal to three percent (3%) of all third party costs of capital expenditures under Sections 5.05, 6.04 and 6.07.

“Reimbursable Advances” means the amounts paid or payable in respect of Section 3.02.D.

“Renewal Term(s)” has the meaning ascribed to such term in Section 2.01.A.

“Reservation Fee” means one and one-half percent (1.5%) of Gross Room Revenues.

“RMR” has the meaning ascribed to such term in Section 11.17.

“Rules” has the meaning ascribed to such term in Section 11.17.

“Sale of the Hotel” means any sale, assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary, of Owner’s leasehold title to the Hotel or Landlord’s fee title to the Hotel, as the case may be. For purposes of this Agreement, a Sale of the Hotel shall also include a lease (or sublease) of all or substantially all of Owner’s leasehold interest in the Hotel and any sale, assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary, in a single transaction or a series of transactions, of the Controlling Interest in Owner or Landlord, but shall not include any conveyance which results in SVC continuing to hold a Controlling Interest in the transferee.

“SEC” means the United States Securities and Exchange Commission.

“Site” has the meaning ascribed to such term in Section A of the Recitals.

“Sonesta” means Sonesta International Hotels Corporation, a Maryland corporation.

“Sonesta Holdco” means Sonesta Holdco Corporation, a Maryland corporation, Sonesta’s parent.

“Specially Designated National or Blocked Person” means (a) a person designated by the U.S. Department of Treasury’s Office of Foreign Assets Control, or other governmental entity, from time to time as a “specially designated national or blocked person” or similar status, (b) a person described in Section 1 of U.S. Executive Order 13224 issued on September 23, 2001, or (c) a person otherwise identified by government or legal authority as a person with whom Manager or its Affiliates are prohibited from transacting business. Currently, a listing of such designations and the text of the Executive Order are published under the internet website address www.ustreas.gov/offices/enforcement/ofac.

“State” means the state in which the Hotel is located.

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“Stockholders Agreement” means that certain Stockholders Agreement dated as of February 27, 2020 by and among Sonesta Holdco, SVC and certain other stockholders of Sonesta Holdco.

“Subordination Agreement” has the meaning ascribed to such term in Section 8.04.

“Subsequent Holder” has the meaning ascribed to such term in Section 8.04.

“System” means all hotels which are operated under the Trade Names.

“SVC” means Service Properties Trust.

“System Fee” mean during any Year, an amount equal to one and one-half percent (1.5%) of Gross Revenues.

“System Standards” means the physical standards (for example, quality of the Building, FF&E, and Fixed Asset Supplies, frequency of FF&E replacements, etc.); each of such standards shall be the standard which is generally prevailing or in the process of being implemented at other hotels in the System, on a fair and consistent basis with other hotels in the System; provided, however, that if the market area or the physical peculiarities of the Hotel warrant, in the reasonable judgment of Manager, a deviation from such standards shall be permitted.

“Tested Year” means any full Year that commenced at least eighteen (18) months following the Initial Effective Date but excluding any Year in which the Hotel was undergoing Major Renovation and any Year which commenced less than twelve (12) months following substantial completion of such Major Renovation.

“Term” has the meaning ascribed to such term in Section 2.01.A.

“Termination Fee” means, an amount equal to the present value of the payments that would have been made to Manager between the date of termination and the scheduled expiration date of the Term (including any Renewal Terms) as Base Management Fee, Reservation Fee, System Fee and the Incentive Management Fee if this Agreement had not been terminated, calculated based upon the average of each of such fees earned in each of the three (3) calendar years ended prior to the date of termination, discounted at an annual rate equal to the Discount Rate.

“Trade Names” has the meaning ascribed to such term in Section 11.10.

“Uniform System of Accounts” means the Uniform System of Accounts for the Lodging Industry, Tenth Revised Edition, 2006, as published by the American Hotel & Lodging Educational Institute, as revised from time to time to the extent such revision has been or is in the process of being generally implemented within the System.

“Unsuitable for Its Permitted Use” means a state or condition of the Hotel such that (a) following any damage or destruction involving the Hotel, the Hotel cannot be operated in the good faith judgment of Manager on a commercially practicable basis and it cannot reasonably be expected to be restored to substantially the same condition as existed immediately before such

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damage or destruction, within nine (9) months following such damage or destruction or such shorter period of time as to which business interruption insurance is available to cover rent and other costs related to the Hotel following such damage or destruction, or (b) as the result of a partial Condemnation, the Hotel cannot be operated, in the good faith judgment of Manager on a commercially practicable basis in light of then existing circumstances.

“Working Capital” means funds that are used in the day‑to‑day operation of the business of the Hotel.

“Year” means the calendar year.

12.02Construction. The definitions of terms herein shall apply equally to the singular, plural, past, present and future forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in this Agreement shall be construed to refer to this Agreement in its entirety and not to any particular provision thereof, (iv) all references in this Agreement to Articles, Sections and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement, and (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time. Any titles or captions contained in this Agreement are for convenience only and shall not be deemed part of the text of this Agreement.

[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal as of the day and year first written above.

[Property Manager]

By:    

Carlos R. Flores

President and Chief Executive Officer

[Property Owner]

By:    

John G. Murray

President and Chief Executive Officer

[Signature Page to Sonesta Management Agreement]

Landlord, in consideration of the obligations of Manager and Owner under the within Agreement, joins to evidence its agreement to be bound by the terms of Sections 4.01.C, 4.02.B, 5.04, 5.05, 5.06.D, Article VI, 8.01, 8.02, 8.04, 10.02, 10.03, 11.07, 11.17, 11.18 and 11.20, to the extent applicable to it.

[Property Landlord]

By:    

Name: John G. Murray

Title: President and Chief Executive Officer

[Joinder Page to Sonesta Management Agreement]

EXHIBIT A

THE SITE

The real property located at [Property Address].

EXHIBIT B

FORM OF AMENDED AND RESTATED POOLING AGREEMENT

Execution Version

AMENDED AND RESTATED POOLING AGREEMENT

THIS AMENDED AND RESTATED POOLING AGREEMENT (this “Agreement”) is made as of February 27, 2020 (the “Effective Date”), by and among Sonesta International Hotels Corporation, a Maryland corporation, and the parties listed on Schedule A (each a “Manager” and collectively, “Managers”) and the parties listed on Schedule B (each an “Owner” and collectively, “Owners”).

RECITALS:

Contemporaneously with this Agreement, each Owner has entered into an Amended and Restated Management Agreement dated as of the Effective Date with a Manager, as listed on Schedule C (each a “Management Agreement” and collectively, the “Management Agreements”) with respect to the real estate and personal property described in Schedule C opposite such Owner’s name which is operated as a full service or a limited service hotel (each a “Hotel” and collectively, the “Hotels”).

Owners and Managers have previously entered into a Pooling Agreement, dated as of April 23, 2012 (as amended as of the date hereof, the “Prior Pooling Agreement”), pursuant to which the working capital for each of the Hotels and all revenues and reserves from operation of each of the Hotels are pooled for purposes of paying operating expenses of the Hotels, fees and other amounts due to Managers and Owners, and each Manager and each Owner desire to amend and restate the terms and provisions of the Prior Pooling Agreement in their entirety and replace them with the terms and provisions of this Agreement effective as of 12.01 a.m. on the Effective Date.

NOW, THEREFORE,in consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt of which is hereby acknowledged, each Owner and each Manager agree as follows:

ARTICLE IDEFINED TERMS

1.01.                     Definitions.  Capitalized terms used, but not otherwise defined in this Agreement shall have the meanings given to such terms in the Management Agreements. The following capitalized terms as used in this Agreement shall have the meanings set forth below:

“Additional Hotel” is defined in Section 7.01.

“Additional Owner” is defined in Section 7.01.

“Agreement” is defined in the Preamble.

“Aggregate Additional Manager Advances” means the sum of Additional Manager Advances under all Management Agreements.

“Aggregate Annual Operating Statement” is defined in Article IV.

“Aggregate Base Management Fee” means an amount equal to 3% of the Aggregate Gross Revenues attributable to full service Hotels and 5% of the Aggregate Gross Revenues attributable to limited service Hotels.

“Aggregate Deductions” means the sum of Deductions of the Hotels.

“Aggregate FF&E Reserve Deposit” means, with respect to each Year or portion thereof, an amount equal to five percent (5%) of Aggregate Gross Revenues of the Non-Sale Hotels.

“Aggregate Gross Room Revenues” means the sum of Gross Room Revenues of the Hotels.

“Aggregate Gross Revenues” means the sum of Gross Revenues of the Hotels.

“Aggregate Incentive Management Fee” means, with respect to each Year or portion thereof, an amount equal to twenty percent (20%) of Aggregate Operating Profit remaining after deducting amounts paid or payable in respect of Aggregate Owner’s Priority, Aggregate Reimbursable Advances and the Aggregate FF&E Reserve Deposit for such Year or portion thereof.

“Aggregate Invested Capital” means the sum of the Invested Capital for each of the Hotels.

“Aggregate Monthly Statement” is defined in Article IV.

“Aggregate Operating Profit” means an amount equal to Aggregate Gross Revenues less Aggregate Deductions.

“Aggregate Owner Advances” means the sum of Owner Advances under all Management Agreements.

“Aggregate Owner’s Priority” means for each Year or portion thereof an amount equal to eight percent (8%) of Aggregate Invested Capital.

“Aggregate Owner’s Residual Payment” means, with respect to each Year or portion thereof an amount equal to Aggregate Operating Profit remaining after deducting amounts paid or payable in respect of Aggregate Owner’s Priority, Aggregate Reimbursable Advances, the Aggregate FF&E Reserve Deposit and the Aggregate Incentive Management Fee for such Year.

“Aggregate Reservation Fee” means for each Year or portion thereof an amount equal to one and one-half percent (1.5%) of Aggregate Gross Room Revenues.

“Aggregate Reimbursable Advances” means the sum of Reimbursable Advances of the Hotels.

“Aggregate System Fee” means with respect to each Year or portion thereof an amount equal to one and one-half percent (1.5%) of Aggregate Gross Revenues.

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“Effective Date” is defined in the Preamble.

“Hotel” and “Hotels” are defined in the Recitals.

“Landlord(s)” means the owner of the Hotel(s) set forth on Exhibit B.

“Management Agreement” and “Management Agreements” are defined in the Recitals.

“Manager” and “Managers” are defined in the Preamble.

“Non-Sale Hotel” means the Hotels identified on Schedule C as “Non-Sale Hotels” together with any Hotel that becomes subject to this Agreement after the Effective Date.

“Owner” and “Owners” are defined in the Preamble.

“Pooled FF&E Reserves” is defined in Section 6.01.B.

“Pooled FF&E Reserve Account” is defined in Section 6.01.B.

“Prior Pooling Agreement” is defined in the Recitals.

“Sale Hotels” means the Hotels identified on Schedule C as “Sale Hotels”.

“Tested Hotels” means for any Year, all Hotels other than (i) any Sale Hotel, (ii) any Hotel for which a Management Agreement (including any Prior Management Agreement) has not been in effect for at least eighteen (18) months as of January 1 of such Year, (iii) any Hotel undergoing a Major Renovation in such Year, and (iv) any Hotel as to which a Major Renovation was substantially completed less than twelve (12) months prior to January 1 of such Year.

ARTICLE IIGENERAL

The parties agree that so long as a Hotel is subject to this Agreement, all Working Capital and all Gross Revenues of such Hotel shall be pooled pursuant to this Agreement and disbursed to pay all Aggregate Deductions, fees and other amounts due to Managers and Owners (not including amounts due pursuant to Section 11.20 of the Management Agreements) with respect to the Hotels and that the corresponding provisions of each Management Agreement shall be superseded as provided in Section 3.03; provided, however, Working Capital contributed on or after the Effective Date in respect of a Non-Sale Hotel under Section 4.05 of the Management Agreement for such Non-Sale Hotel shall only be used for Working Capital for the Non-Sale Hotels. Furthermore, the Pooled FF&E Reserves shall only be made available to pay amounts that would be payable from the FF&E Reserves for individual Non-Sale Hotels under Section 5.05 of the Management Agreements for the Non-Sale Hotel and shall be applied before payment is made from any Owner’s or Landlord’s other funds in accordance therewith. The parties further agree that if Manager gives a notice of non-renewal of the Term with respect to any Non-

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Sale Hotel, it shall be deemed to be a notice of termination or non-renewal with respect to all Management Agreements.

ARTICLE IIIPRIORITIES FORDISTRIBUTION OF AGGREGATE GROSS REVENUES

3.01.                     Priorities for Distribution of Aggregate Gross Revenues.  Aggregate Gross Revenues shall be distributed in the following order of priority:

A. First, to pay all Aggregate Deductions (excluding the Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee);

B. Second, to Managers, an amount equal to the Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee;

C. Third, to Owners, an amount equal to Aggregate Owner’s Priority;

D. Fourth, pari passu, to (i) Owners, in an amount necessary to reimburse Owners for all Aggregate Owner Advances which have not yet been repaid pursuant to this Section 3.01, and (ii) to Managers, in an amount necessary to reimburse Managers for all Aggregate Additional Manager Advances which have not yet been repaid pursuant to this Section 3.01. If at any time the amounts available for distribution to Owners and Managers pursuant to this Section 3.01 are insufficient (a) to repay all outstanding Aggregate Owner Advances, and (b) all outstanding Aggregate Additional Manager Advances, then Owners and Managers shall be paid from such amounts the amount obtained by multiplying a number equal to the amount of the funds available for distribution by a fraction, the numerator of which is the sum of all outstanding Aggregate Owner Advances, or all outstanding Aggregate Additional Manager Advances, as the case may be, and the denominator of which is the sum of all outstanding Aggregate Owner Advances plus the sum of all outstanding Aggregate Additional Manager Advances;

E. Fifth, to the Pooled FF&E Reserve Account, an amount equal to the Aggregate FF&E Reserve Deposit;

F. Sixth, to Managers, an amount equal to the Aggregate Incentive Management Fee; and

G. Finally, to Owners, the Aggregate Owner’s Residual Payment.

3.02.                     Timing of Payments.

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A.     Payment of the Aggregate Deductions, excluding the Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee, shall be made in the ordinary course of business. The Aggregate Base Management Fee, the Aggregate Reservation Fee, the Aggregate System Fee, the Aggregate Owner’s Priority, the Aggregate FF&E Reserve Deposit, the Aggregate Incentive Management Fee and the Aggregate Owner’s Residual Payment shall be paid on or before the twentieth (20^th) day after the end of each calendar month, based upon Aggregate Gross Revenues or Aggregate Gross Room Revenues, as the case may, be for such month as reflected in the Aggregate Monthly Statement for such month. The Aggregate Owner’s Priority shall be determined based upon Aggregate Invested Capital most recently reported to Managers by Owners. If any installment of the Aggregate Base Management Fee, the Aggregate Reservation Fee, the Aggregate System Fee or the Aggregate Owner Priority is not paid when due, it shall accrue interest at the Interest Rate. Calculations and payments of the Aggregate FF&E Reserve Deposit, the Aggregate Incentive Management Fee and/or the Aggregate Owner’s Residual Payment with respect to each calendar month within a calendar year shall be accounted for cumulatively based upon the year-to-date Aggregate Operating Profit as reflected in the Aggregate Monthly Statement for such calendar month and shall be adjusted to reflect distributions for prior calendar months in such year. Additional adjustments to all payments will be made on an annual basis based upon the Aggregate Annual Operating Statement for the Year and any audit conducted pursuant to Section 4.02 of the Management Agreements.

B.     Subject to Section 3.02.C, if the portion of Aggregate Gross Revenues to be distributed to Managers or Owners pursuant to Section 3.01 is insufficient to pay amounts then due in full, any amounts left unpaid shall be paid from and to the extent of Aggregate Gross Revenues available therefor at the time distributions are made in successive calendar months until such amounts are paid in full, together with interest thereon, if applicable, and such payments shall be made from such available Aggregate Gross Revenues in the same order of priority as other payments made on account of such items in successive calendar months.

C.     Other than with respect to Aggregate Reimbursable Advances, calculations and payments of the fees and other payments in Section 3.01 and distributions of Aggregate Gross Revenues within a Year shall be accounted for cumulatively within a Year, but shall not be cumulative from one Year to the next. Calculations and payments of Aggregate Reimbursable Advances shall be accounted for cumulatively within a Year, and shall be cumulative from one Year to the next.

D.     The Aggregate Owner’s Priority, the Pooled FF&E Reserves and the Aggregate Owner’s Residual Payment shall be allocated among Owners as Owners shall determine in their sole discretion and Managers shall have no responsibility or liability in connection therewith. The Aggregate Incentive Management Fee, Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee shall be allocated among Managers as Managers shall determine in their sole discretion and Owners shall have no responsibility or liability in connection therewith.

3.03.                     Relationship with Management Agreements.  For as long as this Agreement is in effect with respect to a Hotel, the provisions of Section 3.01 and 3.02 shall

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supersede Sections 3.02 and 3.03 of the Management Agreement then in effect with the applicable Hotel.

ARTICLE IVFINANCIAL STATEMENTS

Managers shall prepare and deliver the following financial statements to Owners:

(a)                            Within fifteen (15) days after the close of each calendar month, Managers shall deliver an accounting to Owners showing Aggregate Gross Revenues, Aggregate Gross Room Revenues, occupancy percentage and average daily rate, Aggregate Deductions, Aggregate Operating Profit, and applications and distributions thereof for the preceding calendar month and year-to-date (“Aggregate Monthly Statement”).

(b)                            Within forty-five (45) days after the end of each Year, Managers shall deliver to Owners and Landlords a statement (the “Aggregate Annual Operating Statement”) in reasonable detail summarizing the operations of the Hotels for the immediately preceding Year and an Officer’s Certificate setting forth the totals of Aggregate Gross Revenues, Aggregate Deductions, and the calculation of the Aggregate Incentive Management Fee and Aggregate Owner’s Residual Payment for the preceding Year and certifying that such Aggregate Annual Operating Statement is true and correct. Managers and Owners shall, within ten (10) Business Days after Owner’s receipt of such statement, make any adjustments, by cash payment, in the amounts paid or retained for such Year as are required because of variances between the Aggregate Monthly Statements and the Aggregate Annual Operating Statement. Any payments shall be made together with interest at the Interest Rate from the date such amounts were due or paid, as the case may be, until paid or repaid. The Aggregate Annual Operating Statement shall be controlling over the Aggregate Monthly Statements and shall be final, subject to adjustments required as a result of an audit requested by Owners or Landlords pursuant to Section 4.02.B of the Management Agreements.

(c)                             Managers shall also prepare and deliver such other statements or reports as any Owners may, from time to time, reasonably request.

The financial statements delivered pursuant to this Article IV are in addition to any financial statements required to be prepared and delivered pursuant to the Management Agreements.

ARTICLE VPORTFOLIO PERFORMANCE TEST

 5.01                      Portfolio Performance Test. Notwithstanding the provisions of ARTICLE II of the Management Agreements:

A.     An Owner will not be permitted to exercise its right to terminate a Management Agreement for a Non-Sale Hotel pursuant to Section 2.02.A of the Management Agreement for such Non-Sale Hotel unless the aggregate amount paid to Owners as Aggregate Owner’s Priority pursuant to Section 3.01.C of this Agreement in respect of the Tested Hotels during any three (3)

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of the four (4) consecutive Years immediately preceding the January 1^st referenced in such Section 2.02.A is less than six percent (6%) of Aggregate Invested Capital for the Tested Hotels for such Years, with all such amounts determined annually as if the Tested Hotels for a Year were the only Hotels subject to this Agreement during such Year.

B.     If the condition set forth in Section 5.01(a) is satisfied, only a Non-Sale Hotel that is otherwise subject to termination pursuant to Section 2.02.A of its Management Agreement may be terminated and for the purposes of determining the amount of Owner’s Priority actually paid in respect of a Non-Sale Hotel under Section 3.02.C of a Management Agreement for any Year, the applicable Owner will be deemed to have received the amount that would have been paid to such Owner as the Owner’s Priority in such Year pursuant to Article 3 of such Management Agreement if such Hotel had not been subject to this Agreement.

ARTICLE VIACCOUNTS

6.01.                     Accounts; Pooled FF&E Reserve Account.

A.     Subject to Section 6.01.B, all Working Capital and all Gross Revenues of each of the Hotels may, until applied in accordance with this Agreement and the applicable Management Agreements, be pooled and deposited in one or more bank accounts in the name(s) of Owners designated by Managers, which accounts may, except as required by any Mortgage and related loan documentation or applicable law, be commingled accounts containing other funds owned by or managed by Managers; provided, however, Working Capital contributed on or after the Effective Date in respect of a Non-Sale Hotel under Section 4.05 of the Management Agreement shall only be used for Working Capital of the Non-Sale Hotels.

B.     Managers shall establish an interest-bearing account, in the name of Cambridge TRS, Inc., in a bank designated by Manager (and approved by Owners, such approval not to be unreasonably withheld), into which all FF&E Reserve Deposits and any other amounts to be deposited into an FF&E Reserve Account under a Management Agreement shall be paid (the “Pooled FF&E Reserve Account”). Funds on deposit in the Pooled FF&E Reserve Account (the “Pooled FF&E Reserves”) shall not be commingled with any other funds without Owners’ consent, and the Pooled FF&E Reserves shall be withdrawn from the Pooled FF&E Reserve Account and applied by Managers only to the extent they are permitted to withdraw and apply FF&E Reserves under a Management Agreement for a Non-Sale Hotel.

C.     Managers shall be authorized to access the accounts above without the approval of Owners, subject to (i) any limitation on the maximum amount of any check, if any, established between Managers and Owners as part of the Annual Operating Projections, and (ii) in the case of the Pooled FF&E Reserve Account, such other limitations as maybe set forth in the Management Agreements for the Non-Sale Hotels. One or more Owners shall be a signatory on all accounts maintained with respect to a Hotel, and Owners shall have the right to require that one or more Owners’ signature be required on all checks/withdrawals after the occurrence of a Manager Event of Default. Owners shall provide such instructions to the applicable bank(s) as are necessary to permit Managers to implement Managers’ rights and obligations under this

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Agreement. The failure of any Owner to provide such instructions shall relieve any Manager of its obligations hereunder until such time as such failure is cured.

ARTICLE VIIADDITION AND REMOVAL OF HOTELS

7.01.                     Addition of Hotels.  At any time and from time to time, if a Manager and any Owner or any Affiliate of an Owner (an "Additional Owner") enter into a management agreement for the operation of an additional Hotel (an "Additional Hotel"), the Additional Owner may become a party to this Agreement by signing an accession agreement confirming the applicability of this Agreement to such Additional Hotel, provided if the Additional Owner is then a party to this Agreement, the Additional Hotel may be made subject to this Agreement by such Additional Owner and Manager amending and restating Schedules B and C. If an Additional Hotel is made subject to this Agreement other than on the first day of a calendar month, the parties shall include such prorated amounts of the Gross Revenues and Deductions (and other amounts as may be necessary) applicable to the Additional Hotel for such calendar month, as mutually agreed in their reasonable judgment, in the calculation of Aggregate Gross Revenues and Aggregate Deductions (and other amounts as may be necessary) for the calendar month in which the Additional Hotel became subject to this Agreement and shall make any other prorations, adjustments, allocations and changes required. Additionally, any amounts held as Working Capital for the Additional Hotel or to fund capital expenditures, if any, shall be held by Managers under this Agreement.

7.02.                     Removal of Hotels. From and after the date of termination of any Management Agreement, the Hotel managed thereunder shall no longer be subject to this Agreement. If the termination occurs on a day other than the last day of a calendar month, the parties shall exclude such prorated amounts of the Gross Revenues and Deduction (and other amounts as may be necessary) applicable to such Hotel for such calendar month, as mutually agreed in their reasonable judgment, in the calculation of Aggregate Gross Revenues and Aggregate Deductions (and other amounts as may be necessary) for the calendar month in which the termination occurred. Additionally, Owners and Managers, acting reasonably, shall mutually agree to the portion of the Aggregate Working Capital and Aggregate Gross Revenues allocable to the Hotel being removed from this Agreement and the amount of the Aggregate Working Capital, Aggregate Gross Revenues so allocated and any amounts held to fund capital expenditures, shall be remitted to the relevant Owner and the relevant Owner and relevant Manager shall make any other prorations, adjustments, allocations and changes required.

ARTICLE VIIITERM AND TERMINATION

8.01.                     Term.  This Agreement shall continue and remain in effect indefinitely unless terminated pursuant to Section 8.02.

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8.02.                     Termination.  This Agreement may be terminated as follows:

(a)                            By the mutual consent of Managers and Owners which are parties to this Agreement.

(b)                            Automatically, if all Management Agreements terminate or expire for any reason.

(c)                             By Managers, if any or all Owners do not cure a material breach of this Agreement by any Owner or Landlord within thirty (30) days of written notice of such breach from any Manager and if such breach is not cured, it shall be an Owner Event of Default under the Management Agreements.

(d)                            By Owners, if any or all Managers do not cure a material breach of this Agreement by any Manager within thirty (30) days of written notice of such breach from any Owner and if such breach is not cured, it shall be a Manager Event of Default under the Management Agreements.

8.03.                     Effect of Termination.  Upon the termination of this Agreement, except as otherwise provided in Section 9.04.B. of the Management Agreements, Managers shall be compensated for their services only through the date of termination and all amounts remaining in any accounts maintained by Managers pursuant to Article VI, after payment of such amounts as may be due to Managers hereunder, shall be distributed to Owners. Notwithstanding the foregoing, upon the termination of any single Management Agreement, pooled funds shall be allocated as described in Section 7.02.

8.04.                     Survival.  The following Sections of this Agreement shall survive the termination of this Agreement: Section 8.03 and Article IX.

ARTICLE IXMISCELLANEOUS PROVISIONS

9.01.                     Notices.  All notices, demands, consents, approvals, and requests given by any party to another party hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, upon confirmation of receipt when transmitted by facsimile transmission, or on the next business day if transmitted by nationally recognized overnight courier, to the parties at the following addresses:

To Owners:

Cambridge TRS, Inc.

Two Newton Place

255 Washington Street

Newton, Massachusetts 02458

Attn:  President

Facsimile:

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To Managers:

Sonesta International Hotels Corporation

Two Newton Place

255 Washington Street

Newton, Massachusetts 02458

Attn:  President

Facsimile:

9.02.                     Applicable Law; Arbitration.  This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of the Commonwealth of Massachusetts, with regard to its “choice of law” rules. Any “Dispute” (as such term is defined in the Management Agreements) under this Agreement shall be resolved through final and binding arbitration conducted in accordance with the procedures and with the effect of, arbitration as provided for in the Management Agreements.

9.03.                     Severability.  If any term or provision of this Agreement or the application thereof in any circumstance is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.

9.04.                     Gender and Number.  Whenever the context of this Agreement requires, the gender of all words herein shall include the masculine, feminine, and neuter, and the number of all words herein shall include the singular and plural.

9.05.                     Headings and Interpretation.  The descriptive headings in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. References to “Section” in this Agreement shall be a reference to a Section of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement they shall be deemed to be followed by “without limitation.” The words “hereof,” “herein,” “hereby,” and “hereunder, when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision unless otherwise indicated. The word “or” shall not be exclusive. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting.

9.06.                     Confidentiality of Information.  Any information exchanged between a Manager and each Owner pursuant to the terms and conditions of this Agreement shall be subject to Section 11.07 of the Management Agreements.

9.07.                     Assignment.  Neither any Manager nor any Owner may assign its rights and obligations under this Agreement to any other Person without the prior written consent of the other parties.

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9.08.                     Entire Agreement; Construction; Amendment.  With respect to the subject matter hereof, this Agreement supersedes all previous contracts and understandings between the parties and constitutes the entire Agreement between the parties with respect to the subject matter hereof. Accordingly, in the event of any conflict between the provisions of this Agreement and the Management Agreements, the provisions of this Agreement shall control, and the provisions of the Management Agreements are deemed amended and modified, in each case as required to give effect to the intent of the parties in this Agreement. All other terms and conditions of the Management Agreements shall remain in full force and effect; provided that, to the extent that compliance with this Agreement shall cause a default, breach or other violation of the Management Agreement by one party, the other party waives any right of termination, indemnity, arbitration or otherwise under the Management Agreement related to that specific default, breach or other violations, to the extent caused by compliance with this Agreement. This Agreement may not be modified, altered or amended in any manner except by an amendment in writing, duly executed by the parties hereto.

9.09.                     Third Party Beneficiaries.  The terms and conditions of this Agreement shall inure to the benefit of, and be binding upon, the respective successors, heirs, legal representatives or permitted assigns of each of the parties hereto and except for Landlord(s), which are intended third party beneficiaries, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

9.10.                     Prior Pooling Agreement. For the avoidance of doubt, the Prior Pooling Agreement shall continue to govern the rights and obligations of the parties with respect to periods prior to the Effective Date, and this Agreement shall govern the rights and obligations of the parties with respect to periods from and after the Effective Date.

[Signatures begin on the following page.]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement with the intention of creating an instrument under seal.

Owners:

CAMBRIDGE TRS, INC.
	By:
		John G. Murray
		President and Chief Executive Officer

HPT WACKER DRIVE TRS LLC
	By:
		John G. Murray
		President and Chief Executive Officer

HPT CLIFT TRS LLC
	By:
		John G. Murray
		President and Chief Executive Officer

[Signature Page to the Sonesta Pooling Agreement]

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement with the intention of creating an instrument under seal.

Managers:

SONESTA INTERNATIONAL HOTELS CORPORATION
	By:
		Carlos R. Flores
		President and Chief Executive Officer

SONESTA CHICAGO LLC
	By:
		Carlos R. Flores
		President and Chief Executive Officer

SONESTA CLIFT LLC
	By:
		Carlos R. Flores
		President and Chief Executive Officer

[Signature Page to the Sonesta Pooling Agreement]

Schedule A

Additional Managers

Sonesta Clift LLC, a Maryland limited liability company

Sonesta Chicago LLC, a Maryland limited liability company

Schedule B

Owners

Cambridge TRS, Inc., a Maryland corporation

HPT Clift TRS LLC, a Maryland limited liability company

HPT Wacker Drive TRS LLC,a Maryland limited liability company

Schedule C

Hotels and Management Agreements

NON-SALE HOTELS:
Owner	Hotel	Landlord	Manager
Cambridge TRS, Inc.	Sonesta Hilton Head 130 Shipyard Drive Hilton Head, SC	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Royal Sonesta Cambridge 40 Edwin H. Land Boulevard Cambridge, MA 02142	HPT Cambridge LLC	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Royal Sonesta Harbor Court Baltimore 550 Light Street Baltimore, MD	Harbor Court Associates, LLC	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta Hotel Philadelphia 1800 Market Street Philadelphia, PA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Royal Sonesta Houston Hotel 2222 West Loop South Houston, TX	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Royal Sonesta New Orleans 300 Bourbon Street New Orleans, LA	Royal Sonesta, Inc.	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta Fort Lauderdale  999 North Fort Lauderdale Beach Boulevard  Fort Lauderdale, FL	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta Silicon Valley 1820 Barber Lane Milpitas, CA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Royal Sonesta Chase Park Plaza 212-232 Kingshighway Boulevard St. Louis, MO	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
HPT Clift TRS LLC	The Clift Royal Sonesta Hotel 495 Geary Street San Francisco, CA	HPT Geary Properties Trust	Sonesta Clift LLC
Cambridge TRS, Inc.	The Sonesta Irvine 17941 Von Karman Avenue Irvine, CA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation

HPT Wacker Drive TRS LLC	The Royal Sonesta Chicago 71 East Wacker Drive Chicago, IL	HPT IHG-2 Properties Trust	Sonesta Chicago LLC
Cambridge TRS, Inc.	Sonesta Suites Scottsdale 7300 East Gainey Suites Drive Scottsdale, AZ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Orlando 8480 International Drive Orlando, FL	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation

SALE HOTELS:
Owner	Hotel	Landlord	Manager
Cambridge TRS, Inc.	Sonesta Gwinnett Place 1775 Pleasant Hill Road Duluth, GA	HPT Cambridge LLC	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Atlanta 760 Mt. Vernon Highway N.E. Atlanta, GA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Burlington 11 Old Concord Road Burlington, MA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Andover 4 Technology Drive Andover, MA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Parsippany 61 Interpace Parkway Parsippany, NJ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Somerset 260 Davidson Avenue Somerset, NJ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Princeton 4375 U.S. Route 1 South Princeton, NJ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Malvern 20 Morehall Road Malvern, PA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Dublin 435 Metro Place South Dublin, OH	HPTMI Properties Trust	Sonesta International Hotels Corporation

Cambridge TRS, Inc.	Sonesta ES Suites Flagstaff 3440 Country Club Drive Flagstaff, AZ	HPTMI Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Houston 5190 Hidalgo Street Houston, TX	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Columbia 8844 Columbia 100 Parkway Columbia, MD	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Charlotte 7925 Forest Pine Drive Charlotte, NC	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites St. Louis 1855 Craigshire Road St. Louis, MO	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Tucson 6477 East Speedway Boulevard Tucson, AZ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Colorado Springs 3880 North Academy Boulevard Colorado Springs, CO	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Minneapolis 3040 Eagandale Place Eagan, MN	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Omaha 6990 Dodge Street Omaha, NE	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Princeton 4225 US Highway 1 South Brunswick – Princeton, NJ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Somers Point 900 Mays Landing Road Somers Point, NJ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Cincinnati 2670 Kemper Road Sharonville, OH	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Oklahoma City 4361 West Reno Avenue Oklahoma City, OK	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation

Cambridge TRS, Inc.	Sonesta ES Suites Burlington 35 Hurricane Lane Williston, VT	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Cleveland Airport 17525 Rosbough Drive Middleburg Heights, OH	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Westlake 30100 Clemens Road Westlake, OH	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Birmingham 3 Greenhill Pkwy at U.S. Highway 280 Birmingham, AL	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Montgomery 1200 Hilmar Court Montgomery, AL	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Wilmington – Newark 240 Chapman Road Newark, DE	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Jacksonville 8365 Dix Ellis Trail Jacksonville, FL	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Ann Arbor 800 Victors Way Ann Arbor, MI	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites St. Louis – Chesterfield 15431 Conway Road Chesterfield, MO	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Cincinnati – Blue Ash 11401 Reed Hartman Highway Blue Ash, OH	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Cincinnati – Sharonville West 11689 Chester Road Cincinnati, OH	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Providence – Airport 500 Kilvert Street Warwick, RI	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Memphis 6141 Old Poplar Pike Memphis, TN	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation

Cambridge TRS, Inc.	Sonesta ES Suites Houston – NASA Clear Lake 525 Bay Area Boulevard Houston, TX	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Portland – Vancouver 8005 NE Parkway Drive Vancouver, WA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Atlanta – Perimeter Center East 1901 Savoy Drive Atlanta, GA	HPT IHG-3 Properties LLC	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Chicago – Lombard 2001 South Highland Avenue Lombard, IL	HPT IHG-3 Properties LLC	Sonesta International Hotels Corporation

EXHIBIT C

FORM OF REGISTRATION RIGHTS AGREEMENT

Execution Version

REGISTRATION RIGHTS AGREEMENT

BY AND BETWEEN

SONESTA HOLDCO CORPORATIONa Maryland corporation

AND

SERVICE PROPERTIES TRUST

a Maryland real estate investment trust

Dated as of February 27, 2020

TABLE OF CONTENTS

ARTICLE I DEFINITIONS	3
ARTICLE II REGISTRATION RIGHTS	6
Section 2.1 Piggy-Back Registration	6
ARTICLE III REGISTRATION PROCEDURES	7
Section 3.1 Filings; Information	7
Section 3.2 Shelf Offering	10
Section 3.3 Registration Expense	10
Section 3.4 Information	11
Section 3.5 SVC Obligations	11
Section 3.6 Lock-Up in an Underwritten Public offering	11
ARTICLE IV INDEMNIFICATION	12
Section 4.1 Indemnification by the Company	12
Section 4.2 Indemnification by SVC	12
Section 4.3 Contribution	13
Section 4.4 Certain Limitations, Etc	13
ARTICLE V UNDERWRITING AND DISTRIBUTION	14
Section 5.1 Rule 144	14
ARTICLE VI MISCELLANEOUS	14
Section 6.1 Notice	14
Section 6.2 Assignment; Successors; Third Party Beneficiaries	15
Section 6.3 Prior Negotiations; Entire Agreement	16
Section 6.4 Governing Law; Venue; Arbitration	16
Section 6.5 Severability	19
Section 6.6 Counterparts	19
Section 6.7 Construction	19
Section 6.8 Waivers and Amendments	19
Section 6.9 Specific Performance	20
Section 6.10 Further Assurances	20
Section 6.11 Exculpation	20

REGISTRATION RIGHTS AGREEMENT

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This Registration Rights Agreement (as amended, supplemented or restated from time to time, this “Agreement”) is entered into as of February 27, 2020 by and between Sonesta Holdco Corporation, a Maryland corporation (the “Company”), and Service Properties Trust, a Maryland real estate investment trust (including its successors and permitted assigns, “SVC”).  Company and SVC are each referred to as a “Party” and together as the “Parties”.

RECITALS

WHEREAS, the Parties are entering into this Agreement in connection with the consummation of the transactions contemplated in that certain Transaction Agreement, dated as of the date hereof, by and between the Company and SVC (the “Transaction Agreement”);

WHEREAS, the consummation of the transactions contemplated by the Transaction Agreement on the terms set forth therein is a condition and material inducement to SVC’s entry into this Agreement; and

WHEREAS, SVC has acquired and currently holds shares of common stock, par value $0.01 per share, of the Company (“Common Shares”);

NOW, THEREFORE, in consideration of the foregoing recitals and of the representations, warranties, covenants and agreements contained herein, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:

Article IDEFINITIONS

As used in this Agreement, the following terms shall have the following meanings:

“AAA” is defined in Section 6.4(c)(i).

“Award” is defined in Section 6.4(c)(v).

“Agreement” is defined in the preamble.

“Block Trade” means an underwritten registered offering not involving a “roadshow,” commonly known as a “block trade” or a “bought deal”.

“Business Day” means a day, other than Saturday, Sunday or other day on which banks located in Boston, Massachusetts or Baltimore, Maryland are authorized or required by Law to close.

“Chosen Courts” is defined in Section 6.4(b).

“Company” is defined in the preamble.

“Company Indemnified Parties” is defined in Section 4.2.

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“Common Shares” is defined in the recitals.

“control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

“Covered Liabilities” is defined in Section 4.1.

“Disputes” is defined in Section 6.4(c)(i).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

“Governmental Entity” means (a) the United States of America, (b) any other sovereign nation, (c) any state, province, district, territory or other political subdivision of (a) or (b) of this definition, including any county, municipal or other local subdivision of the foregoing, or (d) any entity exercising executive, legislative, judicial, regulatory or administrative functions of government on behalf of (a), (b) or (c) of this definition.

“Law” means any law, statute, ordinance, rule, regulation, directive, code or order enacted, issued, promulgated, enforced or entered by any Governmental Entity.

“Maximum Number of Shares” is defined in Section 2.1(b).

“Party” is defined in the preamble.

“Person”means an individual or any corporation, partnership, limited liability company, trust, unincorporated organization, association, joint venture or any other organization or entity, whether or not a legal entity.

“Piggy-Back Registration” is defined in Section 2.1.

“Proceeding” means any suit, action, proceeding, arbitration, mediation, audit, hearing, inquiry or, to the knowledge of the Person in question, investigation (in each case, whether civil, criminal, administrative, investigative, formal or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity.

“Prospectus” means a prospectus or prospectus supplement included in a Registration Statement, as amended or supplemented, including all materials incorporated by reference in such prospectus or prospectus supplement.

“register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document under the Securities Act and such registration statement becoming effective.

“Registration Period” means the period (a) beginning on the date hereof and (b) ending on the date and time at which SVC (including its successors and permitted assigns) no longer holds any Registrable Securities.

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“Registration Statement” means any registration statement filed by the Company with the SEC in compliance with the Securities Act for a public offering and sale of Common Shares (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity), as amended or supplemented, including all materials incorporated by reference in such registration statement.

“Registrable Securities” mean all of the Common Shares owned by SVC (including any equity securities issued in respect thereof as a result of any stock split, stock dividend, share exchange, merger, consolidation or similar recapitalization); provided, however, that Common Shares shall cease to be Registrable Securities hereunder, as of any date, when: (i) a Registration Statement with respect to the sale of such Registrable Securities shall have become effective under the Securities Act and such Registrable Securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (ii) such Registrable Securities shall have been otherwise sold pursuant to Rule 144 under the Securities Act (or any similar provisions thereunder, but not Rule 144A) and new certificates (or notations in book-entry form) for them not bearing a legend restricting further transfer shall have been delivered by the Company or its transfer agent and subsequent public distribution of them shall not require registration under the Securities Act; (iii) such Registrable Securities are saleable immediately in their entirety without condition or limitation pursuant to Rule 144 under the Securities Act; or (iv) such Registrable Securities shall have ceased to be outstanding.

“Rules” is defined in Section 6.4(c)(i).

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

“Shelf Offering” is defined in Section 3.2.

“Shelf Registration” is defined in Section 3.2

“Stockholders Agreement” means that certain Stockholders Agreement, dated as of the date hereof, by and among the Company, SVC, Adam D. Portnoy and Diane Portnoy, as Trustee of the Diane Portnoy 2019 Revocable Trust, as in effect from time to time.

“SVC” is defined in the preamble.

“SVC Indemnified Parties” is defined in Section 4.1.

“Transaction Agreement” is defined in the recitals.

“Underwriter” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering.

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Article IIREGISTRATION RIGHTS

Section 2.1Piggy-Back Registration.

(a)Piggy-Back Rights. If, at any time during the Registration Period, the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of Common Shares, or securities or other obligations exercisable or exchangeable for, or convertible into, Common Shares, by the Company for its own account or for any other stockholder of the Company for such stockholder’s account, other than a Registration Statement (i) filed in connection with any employee benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) for an offering of debt securities convertible into equity securities of the Company, (iv) for a dividend reinvestment plan, (v) for a Block Trade or (vi) filed on Form S-4 (or successor form), then the Company shall (x) give written notice of such proposed filing to SVC as soon as practicable but in no event less than ten (10) Business Days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter(s), if any, of the offering and (y) offer to SVC in such notice the opportunity to register the sale of such number of its Registrable Securities as SVC may request in writing within five (5) Business Days following receipt of such notice (a “Piggy-Back Registration”). If SVC so requests to register the sale of some of its Registrable Securities, the Company shall cause such Registrable Securities to be included in the Registration Statement and shall use commercially reasonable efforts to cause the managing Underwriter(s) of the proposed underwritten offering to permit the Registrable Securities requested to be included in the Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company and other stockholders of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. If the Piggy-Back Registration involves one or more Underwriters, SVC shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Piggy-Back Registration by the Company, complete and execute any questionnaires, powers of attorney, indemnities, lock-up agreements, securities escrow agreements and other documents reasonably required or which are otherwise customary under the terms of such underwriting agreement and furnish to the Company such information as the Company may reasonably request in writing for inclusion in the Registration Statement or such information that is otherwise customary.

(b)Reduction of Offering. If the managing Underwriter(s) for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities that the dollar amount or number of Common Shares or other securities which the Company desires to sell, taken together with Common Shares or other securities, if any, as to which registration has been requested pursuant to written contractual arrangements with SVC and other Persons, the Registrable Securities as to which registration has been requested under this Section 2.1, and the Common Shares or other securities, if any, as to which registration has been requested pursuant to the written contractual demand or piggy-back registration rights of other stockholders of the Company, exceeds the maximum dollar amount or maximum number of Common Shares or other securities that can be sold in such offering without adversely affecting the

6

proposed offering price, the timing, the distribution method or the probability of success of such offering (such maximum dollar amount or maximum number of Common Shares or other securities, as applicable, the “Maximum Number of Shares”), then the Company shall include in any such registration: (x) first, the shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; and (y) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (x), the shares or other securities, if any, including the Registrable Securities, as to which registration has been requested pursuant to written contractual piggy-back registration rights of security holders (pro rata in accordance with the number of Common Shares or other securities which each such person has actually requested to be included in such registration, regardless of the number of shares or other securities with respect to which such persons have the right to request such inclusion) that can be sold without exceeding the Maximum Number of Shares.

(c)Withdrawal. SVC may elect to withdraw its request for inclusion of its Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw no later than the time at which the public offering price and underwriters’ discount are determined with the Underwriter(s). The Company may also elect to withdraw from a registration at any time no later than the time at which the public offering price and underwriters’ discount are determined with the Underwriter(s). If SVC’s withdrawal is based on (i) the Company’s failure to comply with its obligations under this Agreement or (ii) a reduction pursuant to Section 2.1(b) of twenty-five percent (25%) or more of the number of Registrable Securities which SVC has requested be included in the Piggy-Back Registration, the Company shall pay or reimburse all expenses otherwise payable or reimbursable by SVC in connection with such Piggy-Back Registration pursuant to Section 3.3.

Article IIIREGISTRATION PROCEDURES

Section 3.1Filings; Information. Whenever the Company is required to effect the registration of any Registrable Securities owned by SVC pursuant to Article II, the Company shall use commercially reasonable efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection with any such request:

(a)Copies. If SVC has included Registrable Securities in a registration, the Company shall, prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish to SVC and its counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case, including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as SVC or counsel for SVC may reasonably request in order to facilitate the disposition of the Registrable Securities included in such registration.

(b)Amendments and Supplements. If SVC has included Registrable Securities in a registration, the Company shall prepare and file with the SEC such amendments,

7

including post-effective amendments, and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act until the earlier of the time that (i) all Registrable Securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement (which period shall not exceed the sum of one hundred eighty (180) days, plus any period during which any such disposition is interfered with by any stop order or injunction of the SEC or any Governmental Entity), (ii) the applicable offering has been terminated or withdrawn, (iii) such securities have been withdrawn or (iv) such securities have ceased to be Registrable Securities.

(c)Notification. If SVC has included Registrable Securities in a registration, after the filing of the Registration Statement, the Company shall promptly, and in no event more than two (2) Business Days after such filing, notify SVC of such filing, and shall further notify SVC promptly and confirm such notification in writing in all events within two (2) Business Days of the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the SEC of any stop order (and the Company shall use reasonable best efforts to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the SEC for any amendment or supplement to such Registration Statement or any Prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein (in the light of the circumstances under which they were made) not misleading, and promptly make available to SVC any such supplement or amendment; except that before filing with the SEC a Registration Statement or Prospectus or any amendment or supplement thereto, not including Exchange Act filings or any documents or filings incorporated by reference, the Company shall furnish to SVC and to its counsel, copies of all such documents proposed to be filed sufficiently in advance of filing to provide SVC and its counsel with a reasonable opportunity to review such documents and comment thereon, and the Company shall not file any Registration Statement or Prospectus or amendment or supplement thereto, including documents incorporated by reference, to which SVC or its counsel shall reasonably object.

(d)State Securities Laws Compliance. If SVC has included Registrable Securities in a registration, the Company shall use commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” Laws of such jurisdictions in the United States as SVC (in light of the intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other federal or state authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable SVC to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3.1(d) or subject itself to taxation in any such jurisdiction.

8

(e)Agreements for Disposition. If SVC has included Registrable Securities in a registration, (i) the Company shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and use commercially reasonable efforts to take such other actions as are required in order to expedite or facilitate the disposition of such Registrable Securities and (ii) the representations, warranties and covenants of the Company in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of SVC. For the avoidance of doubt, SVC may not require the Company to accept terms, conditions or provisions in any such agreement which the Company determines are not reasonably acceptable to the Company, notwithstanding any agreement to the contrary herein. SVC shall not be required to make any representations or warranties in the underwriting agreement except as reasonably requested by the Underwriters or the Company and, if applicable, with respect to SVC’s organization, good standing, authority, title to Registrable Securities, lack of conflict of such sale with SVC’s material agreements and organizational documents, and with respect to written information relating to SVC that SVC has furnished in writing expressly for inclusion in such Registration Statement, in each case, as applicable to SVC. SVC, however, shall agree to such covenants and indemnification and contribution obligations for selling stockholders as are reasonable and customarily contained in agreements of that type.

(f)Cooperation. The Company shall reasonably cooperate in any offering of Registrable Securities under this Agreement, which cooperation shall include, without limitation, the preparation of the Registration Statement with respect to such offering and all other offering materials and related documents, and participation in meetings with Underwriters, attorneys, accountants and potential investors. SVC shall reasonably cooperate in the preparation of the Registration Statement and other documents relating to any offering in which it includes securities pursuant to this Agreement. If SVC has included, or made a request to include, Registrable Securities in a registration, SVC shall also furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method(s) of disposition of such securities as the Company and/or its counsel shall reasonably request in order to assure full compliance with applicable provisions of the Securities Act and the Exchange Act in connection with the registration of the Registrable Securities.

(g)Records. If SVC has included Registrable Securities in a registration, upon reasonable notice and during normal business hours, subject to the Company receiving any customary confidentiality undertakings or agreements, the Company shall make available for inspection by SVC, any Underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other professional retained by SVC or any Underwriter, all relevant financial and other records, pertinent corporate documents and properties of the Company as shall be necessary to enable them to exercise their due diligence responsibility, and shall cause the Company’s officers, directors and employees to supply all information reasonably requested by SVC in connection with such Registration Statement.

(h)Opinions and Comfort Letters. If SVC has included Registrable Securities in a registration, the Company shall use commercially reasonable efforts to furnish to SVC executed copies of (i) any opinion of counsel to the Company delivered to any Underwriter and (ii) any comfort letter from the Company’s independent public accountants delivered to any

9

Underwriter; provided, however, that counsel to the Underwriter shall have exclusive authority to negotiate the terms thereof. In the event no legal opinion is delivered to any Underwriter, the Company shall furnish to SVC, at any time that SVC elects to use a Prospectus in connection with an offering of SVC’s Registrable Securities, an opinion of counsel to the Company to the effect that the Registration Statement containing such Prospectus has been declared effective, that no stop order is in effect, and such other matters as the Persons holding a majority of the Registrable Securities subject to the registration may reasonably request as would customarily have been addressed in an opinion of counsel to the Company delivered to an Underwriter.

(i)Earning Statement. The Company shall comply with all applicable rules and regulations of the SEC and the Securities Act, and make generally available to SVC, as soon as practicable, an earning statement satisfying the provisions of Section 11(a) of the Securities Act, provided that the Company will be deemed to have complied with this Section 3.1(i) if the earning statement satisfies the provisions of Rule 158 under the Securities Act.

(j)Listing. The Company shall use commercially reasonable efforts to cause all Registrable Securities of SVC included in any registration to be listed on such exchange or otherwise designated for trading in the same manner as the similar shares of the Company are then listed or designated or, if no such similar securities are then listed or designated, in a manner satisfactory to SVC.

Section 3.2Shelf Offering. In the event that a Registration Statement with respect to a Registration Statement on Form S-3 to sell securities in a secondary offering on a delayed or continuous basis in accordance with Rule 415 under the Securities Act (a “Shelf Registration”) is effective, SVC may make a written request to sell pursuant to an offering (including an underwritten offering) its Registrable Securities available for sale pursuant to such Registration Statement (a “Shelf Offering”) so long as such Registration Statement remains in effect and to the extent permitted under the Securities Act. Any written request for a Shelf Offering shall specify the number of Registrable Securities owned by SVC proposed to be sold and the intended method(s) of distribution thereof. Upon receipt of a written request of SVC for a Shelf Offering, the Company shall, as expeditiously as possible, use its commercially reasonable efforts to facilitate such Shelf Offering.

Section 3.3Registration Expenses. Except to the extent expressly provided by Section 2.1(c) or in connection with a Piggy-Back Registration relating to a registration by the Company on its own initiative (and not as a result of any other Person’s right to cause the Company to file, cause and effect a registration of Company securities) and for the Company’s own account (in which case the Company will pay all customary costs and expenses of registration), if SVC has included Registrable Securities in a registration, SVC shall pay, or promptly reimburse the Company for, its pro rata share of all customary costs and expenses incurred in connection with any Piggy-Back Registration pursuant to Section 2.1, such pro rata share to be in proportion to the number of shares SVC is selling, after giving effect to any reduction pursuant to Section 2.1(b), in such Piggy-Back Registration relative to the total number of shares being sold in the registration, of all customary costs and expenses incurred in connection with such registration, in each case whether or not the Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees; (ii) fees and expenses of compliance with securities or “blue sky” Laws (including fees and

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disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) fees imposed by the Financial Industry Regulatory Authority, Inc.; and (v) fees and disbursements of counsel for the Company and fees and expenses for independent registered public accountants retained by the Company (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 3.1(h)). The Company shall have no obligation to pay for the fees and expenses of counsel representing SVC in any Piggy-Back Registration. The Company shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by SVC, which underwriting discounts or selling commissions shall be borne solely by SVC. For the avoidance of doubt, SVC shall have no obligation to pay any underwriting discounts or selling commissions attributable to the shares being sold by any other Person. Additionally, in an underwritten offering, SVC, the Company and any other Person whose Common Shares or other securities are included in the offering shall bear the expenses of the Underwriter(s) pro rata in proportion to the respective amount of shares each is selling in such offering. For the avoidance of doubt, SVC shall have no obligation to pay, and the Company shall bear, all internal expenses of the Company (including, without limitation, all fees, salaries and expenses of its officers, employees and management) incurred in connection with performing or complying with the Company’s obligations under this Agreement.

Section 3.4Information. SVC shall provide such information as may reasonably be requested by the Company, or the managing Underwriter, if any, in connection with the preparation of any Registration Statement or Prospectus, including amendments and supplements thereto, in order to effect the registration of any of its Registrable Securities under the Securities Act pursuant to this Agreement and in connection with the Company’s obligation to comply with federal and applicable state securities Laws.

Section 3.5SVC Obligations. SVC may not participate in any underwritten offering pursuant to this Agreement unless SVC (i) agrees to only sell Registrable Securities on the basis reasonably provided in any underwriting agreement and (ii) completes, executes and delivers any and all questionnaires, lock-up agreements, powers of attorney, custody agreements, indemnities, underwriting agreements and other documents reasonably or customarily required by or under the terms of any underwriting agreement or as reasonably requested by the Company or the Underwriter(s) for such underwritten offering.

Section 3.6Lock-Up in an Underwritten Public Offering. If requested by the Underwriter(s) of a registered underwritten public offering of securities of the Company, SVC will enter into a lock-up agreement in customary form pursuant to which it shall agree not to offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer, dispose of or hedge, directly or indirectly, or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of any Common Shares or other securities of the Company or any securities convertible into or exercisable or exchangeable for Common Shares or other securities of the Company or take such other action with respect to the Common Shares as specified in such lock-up agreement (except as part of such registered underwritten public offering or as otherwise permitted by the terms of such lock-up agreement) for a lock-up period that is customary for such an offering.

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Article IVINDEMNIFICATION

Section 4.1Indemnification by the Company. The Company shall, to the extent permitted by applicable Law, indemnify and hold harmless SVC, its subsidiaries, their trustees, directors, officers, employees, representatives and agents in their capacity as such and each Person, if any, who controls SVC within the meaning of the Securities Act or the Exchange Act, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “SVC Indemnified Parties”) from and against any and all damages, claims, losses, expenses, costs, obligations and liabilities, including liabilities for all reasonable attorneys’, accountants’, and experts’ fees and expenses (collectively, “Covered Liabilities”), suffered, directly or indirectly, by any SVC Indemnified Party by reason of or arising out of any untrue statement or alleged untrue statement of any material fact contained or incorporated by reference in the Registration Statement under which the sale of Registrable Securities owned by SVC was registered under the Securities Act (or any amendment thereto), or any Prospectus, preliminary Prospectus, or free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) relating to such Registration Statement, or any amendment thereof or supplement thereto, or by reason of or arising out of the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or any amendment or supplement thereto, in the light of the circumstances under which they were made), not misleading; provided, however, that (i) the Company will not be liable in any such case to the extent that any such Covered Liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made or incorporated by reference in such Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus, amendment or supplement in reliance upon and in conformity with information furnished to the Company by or on behalf of SVC expressly for use in such document or documents and (ii) the indemnity agreement contained in this Section 4.1 shall not apply to amounts paid in settlement of any such Covered Liability if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld). The indemnity in this Section 4.1shall remain in full force and effect regardless of any investigation made by or on behalf of any SVC Indemnified Person. For the avoidance of doubt, the Company and its subsidiaries are not “SVC Indemnified Parties.”

Section 4.2Indemnification by SVC. SVC shall, to the extent permitted by applicable Law, indemnify and hold harmless the Company, its subsidiaries, each of their respective directors, trustees, officers, employees, representatives and agents, in their capacity as such and each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act, and the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Company Indemnified Parties”) from and against any and all Covered Liabilities suffered, directly or indirectly, by any Company Indemnified Party by reason of or arising out of any untrue statement or alleged untrue statement or omission or alleged omission contained or incorporated by reference in the Registration Statement under which the sale of Registrable Securities owned by SVC was registered under the Securities Act (or any amendment thereto), or any Prospectus, preliminary Prospectus, or free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) related to such Registration Statement or any amendment thereof or supplement thereto, in reliance upon and in conformity with information furnished to the Company by SVC

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expressly for use therein; provided, however, that (i) the indemnity agreement contained in this Section 4.2shall not apply to amounts paid in settlement of any such Covered Liability if such settlement is effected without the consent of SVC (which consent shall not be unreasonably withheld), and (ii) in no event shall the total amounts payable in indemnity by SVC under this Section 4.2exceed the proceeds (less underwriting discounts, fees and selling commissions, if any, if an underwritten offering) received by SVC in the registered offering out of which such Covered Liability arises. The indemnity in this Section 4.2shall remain in full force and effect regardless of any investigation made by or on behalf of any the Company Indemnified Person. For the avoidance of doubt, SVC is not a “Company Indemnified Party.”

Section 4.3Contribution. If the indemnification provided for in Section 4.1or Section 4.2is unavailable, because it is prohibited or restricted by applicable Law, to an indemnified party under either such Section in respect of any Covered Liabilities referred to therein, then in order to provide for just and equitable contribution in such circumstances, each party that would have been an indemnifying party thereunder shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such Covered Liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and such indemnified party on the other in connection with the untrue statement or omission, or alleged untrue statement or omission, which resulted in such Covered Liabilities, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or such indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and SVC agree that it would not be just and equitable if contribution pursuant to this Section 4.3 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 4.3. For the avoidance of doubt, the amount paid or payable by an indemnified party as a result of the Covered Liabilities referred to in this Section 4.3 shall include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing or defending, settling or satisfying any such Covered Liability. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

Section 4.4Certain Limitations, Etc. The amount of any Covered Liabilities for which indemnification is provided under this Agreement shall be net of (i) any amounts actually recovered or recoverable by the indemnified parties under insurance policies and (ii) other amounts actually recovered by the indemnified party from third parties, in the case of (i) and (ii), with respect to such Covered Liabilities. Any indemnifying party hereunder shall be subrogated to the rights of the indemnified party upon payment in full of the amount of the relevant indemnifiable loss. An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provision hereof, have any subrogation rights with respect thereto. If any indemnified party recovers an amount from a third party in respect of an indemnifiable loss for which indemnification is provided in this Agreement after the full amount of such indemnifiable loss has been paid by an indemnifying party or after an indemnifying party has made a partial payment of such indemnifiable loss and the amount received from the third

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party exceeds the remaining unpaid balance of such indemnifiable loss, then the indemnified party shall promptly remit to the indemnifying party the excess of (i) the sum of the amount theretofore paid by such indemnifying party in respect of such indemnifiable loss plus the amount received from the third party in respect thereof, less (ii) the full amount of such Covered Liabilities.

Article VUNDERWRITING AND DISTRIBUTION

Section 5.1Rule 144. Following such time as the Company is required to file reports under the Exchange Act, the Company covenants that it shall file all reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as SVC may reasonably request, all to the extent required from time to time to enable SVC to sell its Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, or any similar provision thereto, but not Rule 144A.

Article VIMISCELLANEOUS

Section 6.1Notices.  All notices and other communications in connection with this Agreement shall be in writing and shall be considered given if given in the manner, and be deemed given at times, as follows:  (i) on the date delivered, if personally delivered; (ii) on the date sent by email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (iii) on the next Business Day after being sent by recognized overnight mail service specifying next Business Day delivery, in each case with delivery charges pre-paid and addressed to the following addresses:

(a)If to SVC, to:

Service Properties TrustTwo Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attention: John G. Murray

President and Chief Executive Officer

Email: jmurrray@svcreit.com

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with a copy (which shall not constitute notice) to:

Sullivan & Worcester LLP     

One Post Office Square

Boston, MA 02109

Attention: Lindsey A. Getz

Email: lgetz@sullivanlaw.com

(b)If to the Company, to:

Sonesta Holdco Corporation

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attention: Jennifer B. Clark

Secretary

Email:      jclark@rmrgroup.com

with copies (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square
Wilmington, Delaware 19899
Attention: Faiz AhmadEmail: faiz.ahmad@skadden.com

Section 6.2Assignment; Successors; Third Party Beneficiaries.  Except as set forth in this Section 6.2, this Agreement and the rights, interests and obligations of the Parties hereunder may not be assigned, transferred or delegated.  This Agreement and the rights, interests and obligations of a Party hereunder may be assigned, transferred or delegated by the Party to a Person who succeeds to all or substantially all the assets of the Party, which successor or Person agrees in a writing delivered to the other Party to be subject to and bound by all interests and obligations set forth in this Agreement.  This Agreement and the rights, interests and obligations of SVC and its Permitted Transferees (as defined in the Stockholders Agreement) hereunder may be assigned, transferred or delegated by such Persons to a Person who acquires all or any portion of the Registrable Securities owned by such Persons; provided, that (i) such assignment, transfer or delegation relates to at least ten percent (10%) of the Registrable Securities then owned by SVC and its Permitted Transferees, (ii) such assignment, transfer or delegation is in compliance with the terms and conditions of the Stockholders Agreement, if applicable, and applicable securities laws, and (iii) such Person agrees in a writing delivered to the Company to be subject to and bound by all interests and obligations set forth in this Agreement. This Agreement shall bind and inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.  Except as expressly provided in Article IV and Section 6.4(c), this Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any Person other than the Parties any rights or remedies under this Agreement.

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Section 6.3Prior Negotiations; Entire Agreement.  This Agreement and the Transaction Agreement (including the documents and instruments referred to in this Agreement or the Transaction Agreement or entered into in connection therewith) constitute the entire agreement of the Parties and supersede all prior agreements, arrangements or understandings, whether written or oral, between the Parties with respect to the subject matter of this Agreement.

Section 6.4Governing Law; Venue; Arbitration.

(a)Governing Law.  This Agreement and any Dispute, whether in contract, tort or otherwise, shall be governed by and construed in accordance with the Laws of the State of Maryland without regard to principles of conflicts of law.

(b)Venue.  Each Party agrees that it shall bring any Proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated hereby exclusively in the courts of the State of Maryland and the Federal courts of the United States, in each case, located in the City of Baltimore (the “Chosen Courts”).  Solely in connection with claims arising under this Agreement or the transactions contemplated hereby, each Party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of the Chosen Courts, (ii) agrees not to commence any such Proceeding except in such courts, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the Chosen Courts, (iv) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such Proceeding and (v) agrees that service of process upon such Party in any such Proceeding shall be effective if notice is given in accordance with Section 6.1.  Nothing in this Agreement will affect the right of any Party to serve process in any other manner permitted by Law.  A final judgment in any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.  EACH PARTY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute is made pursuant to Section 6.4(c), this Section 6.4(b) shall not pre-empt resolution of the Dispute pursuant to Section 6.4(c).

(c)Dispute Resolution.

(i)Disputes.Any disputes, claims or controversies arising out of or relating to this Agreement or the transactions contemplated hereby, including any disputes, claims or controversies brought by or on behalf of a Party hereto, a direct or indirect parent of a party, or any holder of equity interests (which, for purposes of this Section 6.4(c), shall mean any holder of record or any beneficial owner of equity interests, or any former holder of record or beneficial owner of equity interests) of a Party, either on its own behalf, on behalf of a Party or on behalf of any series or class of equity interests of a Party or holders of any equity interests of a Party against a Party or any of their respective trustees, directors, members, officers, managers (including The RMR Group LLC or its parent and their respective successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance, application or enforcement of this Agreement, including the agreements set forth in this Section 6.4(c), or the governing documents of a Party (all of which are referred to as “Disputes”), or relating

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in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (the “AAA”) then in effect, except as those Rules may be modified in this Section 6.4(c).  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a Party and class actions by a holder of equity interests against those Persons and a Party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. 

(ii)Selection of Arbitrators. There shall be three (3) arbitrators.  If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of such parties.  If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date the AAA provides such list to select one (1) of the three (3) arbitrators proposed by the AAA.  If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by the AAA to be the second (2nd) arbitrator; and, if they should fail to select the second (2nd) arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator.  The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator.  If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

(iii)Location of Arbitration. Any arbitration hearings shall be held in Boston, Massachusetts, unless otherwise agreed by the parties, but the seat of arbitration shall be Maryland. 

(iv)Scope of Discovery. There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.  For the avoidance of doubt, it is intended that there shall be no depositions and

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no other discovery other than limited documentary discovery as described in the preceding sentence.

(v)Arbitration Award.    In rendering an award or decision (an “Award”), the arbitrators shall be required to follow the Laws of the State of Maryland, without regard to principles of conflicts of law.  Any arbitration proceedings or Award rendered hereunder, and the validity, effect and interpretation of the agreements set forth in thisSection 6.4(c)shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  An Award shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of Law on which it is based.  Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Subject to Section 6.4(c)(vii), each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as such Award may provide.

(vi)Costs.     Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, to the maximum extent permitted by Maryland Law, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s Award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.

(vii)Appeals. Notwithstanding any language to the contrary in this Agreement, any Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”).  An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired.  Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof.  For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 6.4(c)(vi) shall apply to any appeal pursuant to this Section 6.4(c) and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

(viii)Final Judgment. Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 6.4(c)(vii), an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon an Award may be entered in any court having jurisdiction.  To the fullest extent permitted by Law, no application or appeal to any court of competent jurisdiction may be made in connection with

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any question of law arising in the course of arbitration or with respect to any Award made, except for actions relating to enforcement of the agreements set forth in this Section 6.4(c) or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

(ix)Intended Beneficiaries. This Section 6.4(c)is intended to benefit and be enforceable by the Parties hereto and their respective shareholders, stockholders, members, beneficial interest owners, direct and indirect parents, trustees, directors, officers, managers (including The RMR Group LLC or its parent and their respective successor), members, agents or employees and their respective successors and assigns and shall be binding on the Parties, and such Persons and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such Persons may have by contract or otherwise.

Section 6.5Severability.  This Agreement shall be interpreted in such manner as to be effective and valid under applicable Law. If at any time subsequent to the date hereof, any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of Law or public policy in any respect, such provision will be enforced to the maximum extent possible given the intent of the Parties.

Section 6.6Counterparts.  This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Party (including via facsimile or other electronic transmission), it being understood that each Party need not sign the same counterpart.

Section 6.7Construction.  Unless the context otherwise requires, as used in this Agreement:  (i) “or” is not exclusive; (ii) “including” and its variants mean “including, without limitation” and its variants; (iii) words defined in the singular have the parallel meaning in the plural and vice versa; (iv) references to “written,” “in writing” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (v) words of one gender shall be construed to apply to each gender; (vi) all pronouns and any variations thereof refer to the masculine, feminine or neuter as the context may require; (vii) “Articles” and “Sections,” refer to Articles and Sections of this Agreement unless otherwise specified; (viii) “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (ix) “dollars” and “$” mean United States Dollars; and (x) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends and such phrase shall not mean simply “if.”

Section 6.8Waivers and Amendments.  This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by the Parties or, in the case of a waiver, by the Party waiving compliance.  No delay on the part of any Party in exercising any right, power or privilege pursuant to this Agreement shall operate as a waiver thereof, nor shall any waiver of the part of any Party of any right, power or privilege pursuant to this Agreement, nor shall any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any

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other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement.  The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any Party otherwise may have at Law or in equity.

Section 6.9Specific Performance.  The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that, in addition to any other applicable remedies at Law or equity, the Parties shall be entitled to an injunction or injunctions, without proof of damages, to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement.

Section 6.10Further Assurances.  At any time or from time to time after the date hereof, the Parties agree to cooperate with each other, and at the request of any other Party, to execute and deliver any further instruments or documents and to take all such further action as the other Party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the Parties hereunder.

Section 6.11Exculpation.  NO TRUSTEE, OFFICER, DIRECTOR, SHAREHOLDER, MEMBER, EMPLOYEE OR AGENT OF ANY PARTY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SUCH PARTY.  ALL PERSONS DEALING WITH SUCH PARTY IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SUCH PARTY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

[Signature page follows]

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IN WITNESS WHEREOF, the Parties have executed this Registration Rights Agreement as of the date first written above.

SONESTA HOLDCO CORPORATION

By:        Carlos R. Flores    President and Chief Executive Officer

SERVICE PROPERTIES TRUST

By:        John G. Murray    President and Chief Executive Officer

[Signature Page to the Sonesta Registration Rights Agreement]

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EXHIBIT D

FORM OF STOCKHOLDERS AGREEMENT

Execution Version

STOCKHOLDERS AGREEMENT

by and among

SONESTA HOLDCO CORPORATIONa Maryland corporation,

SERVICE PROPERTIES TRUSTa Maryland real estate investment trust,

ADAM D. PORTNOYan Individual,

and

DIANE PORTNOY, AS TRUSTEE OF
THE DIANE PORTNOY 2019 REVOCABLE TRUST
a New Hampshire Trust

dated as of

February 27, 2020

TABLE OF CONTENTS

ARTICLE I DEFINITIONS	1
ARTICLE II MANAGEMENT AND OPERATION OF THEC OMPANY	9
Section 2.01 Voting Arrangements	9
Section 2.02 Related Party Redemptions	9
ARTICLE III TRANSFER OF INTERESTS	9
Section 3.01 General Restrictions on Transfer	9
Section 3.02 Right of First Offer	11
Section 3.03 Drag-along Rights	13
Section 3.04 Tag-along Rights	16
Section 3.05 Multiple Classes of Shares	18
Section 3.06 Call Rights	19
Section 3.07 Put Rights	21
ARTICLE IV OTHER ACTIVITIES; RELATED PARTY TRANSACTIONS
CONFIDENTIALITY; PRE-EMPTIVE RIGHTS; REIT
COMPLIANCE	23
Section 4.01 Other Business Activities	23
Section 4.02 Confidentiality	23
Section 4.03 Certain Pre-emptive Rights for Additional Equity	24
Section 4.04 REIT Compliance	27
ARTICLE V FINANCIAL INFORMATION; ACCESS RIGHTS	27
Section 5.01 Termination	27
Section 5.02 Access Rights	28
ARTICLE VI REPRESENTATIONS AND WARRANTIES	28
Section 6.01 Representations and Warranties	28
ARTICLE VII TERM AND TERMINATION	29
Section 7.01 Termination	29
Section 7.02 Effect of Termination	30
ARTICLE VIII MISCELLANEOUS	30
Section 8.01 Expenses	30
Section 8.02 Release of Liability; Waiver of Fiduciary Duties	30
Section 8.03 Notices	31
Section 8.04 Interpretation	31
Section 8.05 Headings	31
Section 8.06 Severability	31

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Section 8.07 Entire Agreement	32
Section 8.08 Assignment; Successors	32
Section 8.09 No Third Party Beneficiaries	32
Section 8.10 Amendment and Modification; Waiver	32
Section 8.11 Governing Law	32
Section 8.12 Venue	33
Section 8.13 Dispute Resolution	33
Section 8.14 Further Assurances	36
Section 8.15 Counterparts	36
Section 8.16 No Liabilty	36

EXHIBITS

Exhibit A–    Notice Addresses

Exhibit B–    Form of Joinder Agreement

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STOCKHOLDERS AGREEMENT

This Stockholders Agreement (this “Agreement”), dated as of February 27, 2020, is entered into by and among Sonesta Holdco Corporation, a Maryland corporation (the “Company”), Service Properties Trust, a Maryland real estate investment trust (“SVC”), Diane Portnoy, as trustee of the Diane Portnoy 2019 Revocable Trust under agreement dated May 28, 2019 (the “Diane Trust”), Adam D. Portnoy, an individual residing in Boston, Massachusetts (“Adam”; the Diane Trust and Adam together, the “Initial Stockholders”) and the Permitted Transferees of the Initial Stockholders and SVC who after the date hereof acquire Company Shares (such Persons, collectively with the Initial Stockholders and SVC, the “Stockholders”).

RECITALS

WHEREAS, pursuant to that certain Transaction Agreement by and among the Company, and SVC, dated as of February 27, 2020, SVC acquired one hundred and thirty-four (134) newly issued shares of common stock, par value $0.01 per share, of the Company (“Company Common Stock”);

WHEREAS, prior to SVC’s acquisition of Company Common Stock, all of the outstanding shares of the Company Common Stock were owned by the Initial Stockholders;

WHEREAS, the Stockholders and the Company deem it in their best interests to set forth in this Agreement their respective rights and obligations in connection with certain matters related to the ownership, governance and operation of the Company;

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE IDEFINITIONS

Capitalized terms used in this Agreement and not otherwise defined shall have the meanings set forth in this Article 1.

“AAA” has the meaning set forth in Section 8.13(a).

“Adam” has the meaning set forth in the preamble.

“Additional Company Shares” has the meaning set forth in Section 4.03(a).

“Adverse Regulatory Event” has the meeting set forth in Section 4.03(a).

“Affiliate” means with respect to any Person, any other Person who, directly or indirectly (including through one or more intermediaries), controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control,” when used with respect to any specified Person, shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or

partnership or other ownership interests, by contract or otherwise; and the terms “controlling” and “controlled” shall have correlative meanings.

“Agreement” has the meaning set forth in the preamble.

“Appellate Rules” has the meaning set forth in Section 8.13(g).

“Applicable Law” means all applicable provisions of (a) constitutions, treaties, statutes, laws (including the common law), rules, regulations, decrees, ordinances, codes, proclamations, declarations or orders of any Governmental Authority, (b) any consents or approvals of any Governmental Authority and (c) any orders, decisions, advisory or interpretative opinions, injunctions, judgments, awards, decrees of, or agreements with, any Governmental Authority.

“Award” has the meaning set forth in Section 8.13(e).

“Business Day” means any day other than Saturday, Sunday, or any other day on which banking institutions in The Commonwealth of Massachusetts are authorized by Applicable Law or executive action to close.

“Bylaws” means the bylaws of the Company as amended, modified, supplemented or restated from time to time in accordance with Applicable Law or the Charter.

“Call Acceptance Notice” has the meaning set forth in Section 3.06(b).

“Call Alternative Value” has the meaning set forth in Section 3.06(b).

“Call Alternative Value Notice” has the meaning set forth in Section 3.06(b).

“Call Exercise Period” has the meaning set forth in Section 3.06(b).

“Call Notice” has the meaning set forth in Section 3.06(a).

“Call Shares” has the meaning set forth in Section 3.06(a).

“Call Price” has the meaning set forth in Section 3.06(a).

“Call Right” has the meaning set forth in Section 3.06(a).

“Call Withdrawal Period” has the meaning set forth in Section 3.06(d)(iv).

“Change of Control” means any transaction or series of related transactions (as a result of a tender offer, merger, consolidation or otherwise) that results in, or that is in connection with, (a) any Third Party Purchaser or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) of Third Party Purchasers acquiring beneficial ownership, directly or indirectly, of a majority of the then issued and outstanding voting Company Shares of the Company or (b) the sale, lease, exchange, conveyance, transfer or other disposition (for cash, equity, securities or other consideration) of all or substantially all of the property and assets of the Company and its respective Subsidiaries (if any) on a consolidated basis (including any liquidation, dissolution or

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winding up of the affairs of the Company, or any other distribution made in connection therewith), to any Third Party Purchaser or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) of Third Party Purchasers.

“Charter” means the articles of incorporation of the Company as amended, modified, supplemented or restated from time to time in accordance with Applicable Law.

“Chosen Courts” has the meaning set forth in Section 8.12.

“Company” has the meaning set forth in the preamble.

“Company Common Stock” has the meaning set forth in the recitals.

“Company Put Valuation Firm” has the meaning set forth in Section 3.07(d)(i).

“Company Shares” means the Company Common Stock, preferred stock and all other capital stock of a Company, whether voting or nonvoting, and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or similar reorganization.

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

“Determined Call Price” has the meaning set forth in Section 3.06(d)(iii).

“Determined Put Price” has the meaning set forth in Section 3.07(d)(iii).

“Determined ROFO Price” has the meaning set forth in Section 3.02(f)(iii).

“Diane Trust” has the meaning set forth in the preamble.

“Director” means each director of the Company.

“Disputes” has the meaning set forth in Section 8.13(a).

“Drag-along Notice” has the meaning set forth in Section 3.03(b).

“Drag-along Participating Stockholders” has the meaning set forth in Section 3.03(a).

“Drag-along Sale” has the meaning set forth in Section 3.03(a).

“Drag-along Stockholder” has the meaning set forth in Section 3.03(a).

“Dragging Stockholders” has the meaning set forth in Section 3.03(a).

“Electing Put Party” has the meaning set forth in Section 3.07(a).

“Electing SVC Parties” has the meaning set forth in Section 3.02(a).

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“Equityholders Agreement” means that certain Equityholders Agreement, dated as of June 3, 2019, as amended February 27, 2020, among the Initial Stockholders and the other companies named therein, as such agreement may be further amended, modified, supplemented or restated in accordance with its terms.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect at the time.

“Excluded Shares”means any: (a) Company Shares issued or sold in connection with (i) a grant to any existing or prospective consultants, employees, officers or Directors pursuant to any stock option, employee stock purchase or similar equity-based plans or other compensation agreement maintained by the Company and approved by the Directors or (ii) the exercise or conversion of options to purchase Company Shares, or Company Shares issued to any existing or prospective consultants, employees, officers or Directors pursuant to any stock option, employee stock purchase or similar equity-based plans or any other compensation agreement; provided, however, that after giving effect to any grant pursuant to this clause (a), the aggregate amount of Company Shares issued, on a fully diluted basis, pursuant to this clause (a) shall not be more than fifteen percent (15%) of the outstanding Company Shares (by vote or value) on a fully diluted basis at the time of the issuance of such Company Shares; and (b) Company Shares or any equity of a Subsidiary of the Company issued or sold in connection with (i) any bona fide acquisition from a Third Party Purchaser on arms’ length terms of such Third Party Purchaser’s stock, assets, properties or business (whether by merger, acquisition of equity securities, acquisition of assets or otherwise) approved by the Directors; (ii) a Public Offering; (iii) a bona fide leasing or debt financing arrangements with a Third Party Purchaser; or (iv) a bona fide strategic alliance or transaction with any Third Party Purchaser on arms’ length terms at the time the Company Shares were issued or the right or option to acquire such Company Shares were granted.

“Exercising Pre-emptive Stockholder” has the meaning set forth in Section 4.03(d).

“FinalPrice” has the meaning set forth in Section 3.07(e).

“Fiscal Year” means for financial accounting purposes, the fiscal year employed from time to time by the Company.

“GAAP” means United States generally accepted accounting principles in effect from time to time.

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Applicable Law), or any arbitrator, court or tribunal of competent jurisdiction.

“Immediate Family Member” means Adam, Diane Portnoy or any lineal descendant of Adam or Diane Portnoy (including descendants by adoption), the spouse of any lineal descendant of Adam or Diane Portnoy, the estate of any such Person, or a trust for the principal benefit of one

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or more such Persons (including a trust the principal beneficiary of which is another trust for the principal benefit of one or more such Persons).

“Information” has the meaning set forth in Section 4.02(a).

“Initial ROFO Exercise Period” has the meaning set forth inSection 3.02(d).

“Initial Stockholders” has the meaning set forth in the preamble.

“Initial Stockholder Parties” means the Initial Stockholders and their Permitted Transferees who acquire Company Shares.

“Issuance Notice” has the meaning set forth in Section 4.03(b).

“Joinder Agreement” means the joinder agreement in the form and substance of Exhibit B attached hereto.

“Joint Valuation Firm” means a mutually acceptable Third Party Valuation Firm.

“Non-Exercising Pre-emptive Stockholder” has the meaning set forth in Section 4.03(b).

“Offered Shares” has the meaning set forth in Section 3.02(c).

“Organizational Documents” means the Charter, Bylaws and any written agreement between or among any Stockholders.

“Over-allotment Exercise Period” has the meaning set forth in Section 4.03(d).

“Over-allotment Notice” has the meaning set forth in Section 4.03(d).

“Permitted Transfer” means any of the following:

(a)the Transfer of any Company Shares by a Stockholder to one or more of its Permitted Transferees; or

(b)a pledge of any Company Shares by SVC that creates a security interest in the pledged Company Shares pursuant to a bona fide loan or indebtedness transaction, in each case, with a third party lender that makes the loan in the ordinary course of its business, so long as SVC or one or more of its Permitted Transferees, as the case may be, continues to exercise exclusive voting control over the pledged Company Shares; provided, however, that a foreclosure on the pledged Company Shares or other action that would result in a Transfer of the pledged Company Shares to the pledgee shall not be a “Permitted Transfer” within the meaning of this paragraph (b) of this definition unless the pledgee is a Permitted Transferee.

“Permitted Transferee” means any of the following:

(a)with respect to SVC:

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(i)any Affiliate of SVC, which is controlled, directly or indirectly, by SVC; provided, however, that such Affiliate shall only remain a Permitted Transferee for as long as such entity is controlled, directly or indirectly, by SVC;

(ii)any other Stockholder; or

(iii)any entity to which The RMR Group LLC or its Subsidiaries provide management services at the time of the Permitted Transfer; and

(b)with respect to the Initial Stockholders, any Immediate Family Member.

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

“Pre-emptive Acceptance Notice” has the meaning set forth in Section 4.03(c).

“Pre-emptive Exercise Period” has the meaning set forth in Section 4.03(c).

“Pre-emptive Purchaser” has the meaning set forth in Section 4.03(b).

“Pre-emptive Stockholder” has the meaning set forth in Section 4.03(a).

“Proceeding” means any suit, action, proceeding, arbitration, mediation, audit, hearing, inquiry or, to the knowledge of the Person in question, investigation (in each case, whether civil, criminal, administrative, investigative, formal or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority.

“Proposed Transferee” has the meaning set forth in Section 3.04(a).

“Public Offering” means the sale of Company Common Stock by the Company to the public pursuant to a registration statement (other than a pursuant to a registration statement on Form S-4 or Form S-8 or any successor form) declared effective under the Securities Act.

“Put Alternative Value” has the meaning set forth in Section 3.07(c).

“Put Alternative Value Notice” has the meaning set forth in Section 3.07(c).

“Put Event” means a breach by the Company or any Initial Stockholder Party of Section 4.04(b) has occurred.

“Put Exercise Period” has the meaning set forth in Section 3.07(c).

“Put Notice” has the meaning set forth in Section 3.07(a).

“Put Price” has the meaning set forth in Section 3.07(a).

“Put Right” has the meaning set forth in Section 3.07(a).

“Put Shares” has the meaning set forth in Section 3.07(a).

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“Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company and SVC, as such agreement may be amended, modified, supplemented or restated in accordance with its terms.

“REIT” means a Person that is an entity intending in good faith to qualify as a real estate investment trust under the Code.

“REIT Party” means each of (i) SVC together with its Subsidiaries and (ii) any Permitted Transferee of SVC that is, or is a Subsidiary of, a REIT, together with all Subsidiaries of the applicable REIT.

“Related Party Agreement” means any agreement, arrangement or understanding between the Company and its Subsidiaries, on the one hand, and any Stockholder or any Affiliate of a Stockholder (other than SVC or its Subsidiaries) or any Director, officer or employee of the Company, on the other hand, as such agreement may be amended, modified, supplemented or restated in accordance with the terms of this Agreement.

“Related Party Transaction” means any transaction between the Company and any Stockholder or any Affiliate of a Stockholder (other than SVC or its Subsidiaries) or any Director, officer or employee of the Company.

“ROFO Acceptance Notice” has the meaning set forth in Section 3.02(d).

“ROFO Alternative Value” has the meaning set forth inSection 3.02(d).

“ROFO Alternative Value Notice” has the meaning set forth inSection 3.02(d).

“ROFO Process” has the meaning set forth in Section 3.06(g).

“Rules” has the meaning set forth in Section 8.13(a).

“Sale Notice” has the meaning set forth in Section 3.04(b).

“Second ROFO Exercise Period” has the meaning set forth in Section 3.02(f)(iv).

“Securities Act” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect at the time.

“Selling Stockholder” has the meaning set forth in Section 3.04(a).

“Subsidiary” means with respect to any Person, any other Person of which a majority of the outstanding equity interests having the power to vote for directors or managers, or comparable Persons charged with governance authority, are owned, directly or indirectly, by the first Person.

“Stockholders” has the meaning set forth in the preamble.

“SVC” has the meaning set forth in the preamble.

“SVC Offer Notice” has the meaning set forth in Section 3.02(b).

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“SVC Parties” means SVC and its Permitted Transferees who acquire Company Shares.

“SVC ROFO Price” has the meaning set forth in Section 3.02(c).

“SVC Valuation Firm” has the meaning set forth in Section 3.06(d)(i).

“Tag-along Notice” has the meaning set forth in Section 3.04(c).

“Tag-along Participating Stockholders” has the meaning set forth in Section 3.04(a).

“Tag-along Period” has the meaning set forth in Section 3.04(a).

“Tag-along Sale” has the meaning set forth in Section 3.04(a).

“Tag-along Stockholder” has the meaning set forth in Section 3.04(a).

“Termination Event” means the termination by SVC of all of SVC’s or its Subsidiaries’ management agreements with Sonesta International Hotels Corporation, a Maryland corporation, or any of its Subsidiaries.

“Third Party Purchaser” means any Person who, immediately prior to the contemplated transaction with respect to the Company, (a) does not directly or indirectly own or have the right to acquire any outstanding Company Shares or (b) is not a Person who is or would qualify as a Permitted Transferee of any Person who directly or indirectly owns or has the right to acquire any Company Shares.

“Third Party Valuation Firm” means any independent investment bank or valuation firm with a national, established reputation for the valuation of securities.

“Transfer” means to, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any Company Shares owned by a Person or any interest (including a beneficial interest) in any Company Shares owned by a Person.

“Waived ROFO Transfer Period”has the meaning set forth in Section 3.02(h).

“Waived Call Transfer Period” has the meaning set forth in Section 3.06(f).

“Withdrawal Period” has the meaning set forth in Section 3.02(f)(iv).

ARTICLE IIMANAGEMENT AND OPERATION OF THE COMPANY

Section 2.01    Voting Arrangements. In addition to any vote or consent of the Directors or Stockholders required by Applicable Law, without the approval of SVC the Company shall not,

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and shall not enter into any commitment to, and shall not permit any of its Subsidiaries to, or enter into any commitment to:

(a)amend, modify or waive any provision of the Charter or Bylaws or the governing documents of such Subsidiary or enter into, amend, modify or waive any provision of any written agreement among the Company and any of its stockholders or such Subsidiary and any of its equityholders (other than this Agreement which can only be amended pursuant to Section 8.10, in each case, in a manner (i) disproportionately adverse to the SVC Parties as compared to all other stockholders of the Company holding the same class of Company Shares as the SVC Parties or (ii) materially adverse to the SVC Parties (it being understood the amendment, modification, or waiver of any provision of the Charter or Bylaws or any such governing documents or the entering into, or amendment, modification or waiver of any provision of, any such agreements to permit the authorization and effect the issuance of Company Shares with preferences or priorities over the Company Common Stock shall not be deemed adverse to the SVC Parties in their capacity as holders of Company Common Stock; provided, that any amendment, modification, or waiver of any provision of the Charter or Bylaws or the governing documents of a Subsidiary or the entering into, or amendment, modification or waiver of any provision of, any agreements among the Company and any of its stockholders or a Subsidiary and any of its equityholders that would cause the Company to be in breach of, or be otherwise unable to comply with its obligations under, this Agreement or the Registration Rights Agreement shall be deemed materially adverse to the SVC Parties); or

(b)subject to Section 2.02, enter into, amend in any material respect, waive or terminate any Related Party Agreement or Related Party Transaction other than on terms that are on an arm’s length basis and no less favorable to the Company or the relevant Subsidiary than could be obtained from an unaffiliated third party.

Section 2.02    Related Party Redemptions. The Company shall give SVC prior notice of any redemption of any Company Shares or any equity interests of any Subsidiary from any Initial Stockholder or any Immediate Family Member, which notice shall specify the proposed redemption price and any other material terms related to such proposed redemption and a current valuation of the Company Shares or equity interests proposed to be redeemed, together with reasonable supporting documentation.

ARTICLE IIITRANSFER OF INTERESTS

Section 3.01    General Restrictions on Transfer.

(a)Except for Permitted Transfers or in accordance with the procedures described in Section 3.02, Section 3.03,Section 3.04, Section 3.06 or Section 3.07, each Stockholder agrees that it will not, directly or indirectly, voluntarily or involuntarily Transfer any of its Company Shares. Any Company Shares transferred to a Third Party Purchaser pursuant to Section 3.02, Section 3.03,Section 3.04, Section 3.06 or Section 3.07 shall cease to be subject to this Agreement.

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(b)In addition to any legends required by Applicable Law and any legends set forth in the Organizational Documents, any certificate representing the Company Shares held by a Stockholder shall bear a legend substantially in the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT (A COPY OF WHICH IS ON FILE WITH THE COMPANY). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH AGREEMENT AND (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT.”

(c)Each Stockholder shall give notice to the Company and the other Stockholders prior to any proposed Transfer (whether or not a Permitted Transfer) of any of its Company Shares. In connection with the consummation of any Transfer by a Stockholder of any of its Company Shares (including by operation of law) to a Permitted Transferee, such Permitted Transferee shall be required to execute and deliver to the Company and each other Stockholder, a Joinder Agreement; it being understood that such Permitted Transferee shall automatically be deemed to be a party to, and shall be bound by, all of the terms and conditions of this Agreement, whether or not such Permitted Transferee has executed and delivered a Joinder Agreement.

(d)Notwithstanding any other provision of this Agreement, but subject to Section 4.04(b), each Stockholder agrees that it will not, directly or indirectly, Transfer any of its Company Shares (i) if it would cause a violation of the Securities Act or other applicable federal or state securities laws (it being understood that, upon request by the Company, there must be delivered to the Company an opinion of counsel in form and substance satisfactory to the Company to the effect that such Transfer may be effected without registration under the Securities Act), (ii) if it would cause the Company or any of its Subsidiaries to be required to register as an investment company under the Investment Company Act of 1940, as amended or (iii) if it would cause the assets of the Company or any of its Subsidiaries to be deemed plan assets as defined under the Employee Retirement Income Security Act of 1974 or its accompanying regulations or result in any “prohibited transaction” thereunder involving the Company.

(e)Any Transfer or attempted Transfer of any Company Shares in violation of this Agreement shall be null and void, no such Transfer shall be recorded on the Company’s books and the purported transferee in any such Transfer shall not be treated (and the purported transferor shall continue be treated) as the owner of the Company Shares for all purposes of this Agreement.

Section 3.02    Right of First Offer.

(a)Subject to Section 3.06(g), one or more SVC Parties (the “Electing SVC Parties”) may Transfer all or any portion of their Company Shares to a Third Party Purchaser in compliance with this Section 3.02; provided, however, the SVC Parties may only initiate a Transfer pursuant to this Section 3.02 once in any calendar year.

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(b)Prior to Transferring their Company Shares to any Third Party Purchaser, the Electing SVC Parties shall provide the Company with notice (an “SVC Offer Notice”) of their desire to Transfer some or all of their Company Shares.

(c)The SVC Offer Notice shall specify the number of Company Shares that the Electing SVC Parties desire to Transfer (such Company Shares, the “Offered Shares”) and shall include a valuation (without any reduction for minority interests) of the Offered Shares from a Third Party Valuation Firm (the “SVC ROFO Price”), together with reasonable supporting information. Upon request of the Electing SVC Parties, the Company shall provide the Third Party Valuation Firm appointed by the Electing SVC Parties to determine the SVC ROFO Price with such information related to the Offered Shares and the Company as such Third Party Valuation Firm may reasonably request in connection with its determination. Except as provided in Section 3.06(g), the Electing SVC Parties shall bear the costs of such Third Party Valuation Firm.

(d)Upon receipt of the SVC Offer Notice, the Company shall have ten (10) Business Days (the “Initial ROFO Exercise Period”) to elect, by delivering notice to the Electing SVC Parties, that the Company will (i) purchase all, but not less than all, of the Offered Shares at the SVC ROFO Price (a “ROFO Acceptance Notice”) or (ii) provide the Electing SVC Parties with a valuation of the Offered Shares (without any reduction for minority interests) from an alternative Third Party Valuation Firm (a “ROFO Alternative Value”), together with reasonable supporting information, within forty-five (45) days after the end of the Initial ROFO Exercise Period (such notice, a “ROFO Alternative Value Notice”). Any ROFO Acceptance Notice shall be binding upon delivery and irrevocable by the Company.

(e)If the Company delivers a ROFO Acceptance Notice during the Initial ROFO Exercise Period, the Electing SVC Parties shall sell, and the Company shall purchase, all, but not less than all, of the Offered Shares at the SVC ROFO Price. If the Company does not deliver a ROFO Acceptance Notice or a ROFO Alternative Value Notice during the Initial ROFO Exercise Period, or if it delivers a ROFO Alternative Value Notice but does not thereafter provide the ROFO Alternative Value when and as required by Section 3.02(f)(i), then the Company shall be deemed to have waived its rights to purchase the Offered Shares under this Section 3.02 with respect to such SVC Offer Notice.

(f)If the Company provides a ROFO Alternative Value Notice during the Initial ROFO Exercise Period, the following provisions shall apply:

(i)the ROFO Alternative Value Notice shall specify the Third Party Valuation Firm selected by the Company to provide the ROFO Alternative Value, which Third Party Valuation Firm shall be required to deliver to the Electing SVC Parties and the Company within forty-five (45) days after the end of the Initial ROFO Exercise Period its determination of the ROFO Alternative Value, together with reasonable supporting information. The Company shall bear the costs of the Third Party Valuation Firm appointed by it.

(ii)If the ROFO Alternative Value is at least ninety percent (90%) and not more than one hundred and ten percent (110%) of the SVC ROFO Price, then the Company shall have the right, to be exercised within three (3) Business Days of the date of the delivery of the ROFO Alternative Value, to again send a ROFO Acceptance Notice and if the Company sends a ROFO

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Acceptance Notice, the Company shall purchase, and the Electing SVC Parties shall sell, all, but not less than all, of the Offered Shares to the Company at the average of the SVC ROFO Price and the ROFO Alternative Value.

(iii)If the ROFO Alternative Value is greater than one hundred and ten percent (110%) of the SVC ROFO Price or less than ninety percent (90%) of the SVC ROFO Price, then the Company and the Electing SVC Parties shall jointly appoint a Joint Valuation Firm to determine the value of the Offered Shares, which shall be instructed to provide the Electing SVC Parties and the Company with its determination of the value of the Offered Shares (without any reduction for minority interests) (the “Determined ROFO Price”), together with reasonable supporting information, within thirty (30) days of its appointment. The Joint Valuation Firm shall be provided with the prior valuations of the Offered Shares obtained by the Electing SVC Parties and the Company, but shall not be obligated to base its determination on such valuations. The Company shall also provide the Joint Valuation Firm such additional information related to the Offered Shares and the Company as the Joint Valuation Firm may reasonably request in connection with its determination. Except as provided in Section 3.06(g), the cost of the Joint Valuation Firm will be borne fifty percent (50%) by the Electing SVC Parties and fifty percent (50%) by the Company or as they may otherwise agree. The Joint Valuation Firm shall act as an expert and not an arbitrator and the decision of the Joint Valuation Firm as to the Determined ROFO Price, absent manifest error, shall be final and non-appealable.

(iv)If the Determined ROFO Price is greater than one hundred and ten percent (110%) of the SVC ROFO Price or less than ninety percent (90%) of the SVC ROFO Price, the Electing SVC Parties shall have ten (10) days following delivery of the Determined ROFO Price (the “Withdrawal Period”) to provide the Company with notice of their withdrawal of the SVC Offer Notice, in which event, the Electing SVC Parties shall not be permitted to sell the Offered Shares to a Third Party Purchaser without sending a new SVC Offer Notice in accordance with, and otherwise complying with, this Section 3.02. If the SVC Parties do not send notice of their withdrawal of the SVC Offer Notice during the Withdrawal Period, then the Company shall have ten (10) days following the end of the Withdrawal Period (the “Second ROFO Exercise Period”) to again deliver a ROFO Acceptance Notice to the Electing SVC Parties and in such event the Electing SVC Parties shall sell, and the Company shall purchase all, but not less than all, of the Offered Shares at the Determined ROFO Price. If the Company does not deliver a ROFO Acceptance Notice during the Second ROFO Exercise Period, it shall be deemed to have waived its rights to purchase the Offered Shares under this Section 3.02 with respect to such SVC Offer Notice.

(g)The closing of the purchase and sale of the Offered Shares to the Company pursuant to this Section 3.02 shall occur on a date that is not later than seventy-five (75) days after the date on which the Company delivers a ROFO Acceptance Notice pursuant to this Section 3.02, or as otherwise agreed in writing by the Electing SVC Parties and the Company. At the closing of the purchase and sale of the Offered Shares to the Company pursuant to this Section 3.02, the Company shall deliver to the Electing SVC Parties the purchase price for the Offered Shares as determined pursuant to this Section 3.02 by wire transfer of immediately available funds and the Electing SVC Parties shall deliver to the Company the certificate(s) representing the Offered Shares, if any, (or an affidavit of loss with respect to such certificate(s)) accompanied by stock powers and all necessary stock transfer taxes paid and stamps affixed, if necessary.

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(h)If the Company does not deliver a ROFO Acceptance Notice or a ROFO Alternative Value Notice during the Initial ROFO Exercise Period or a ROFO Acceptance Notice during the Second ROFO Exercise Period, or has otherwise waived or been deemed to have waived its rights to purchase the Offered Shares, the Electing SVC Parties may, during the one hundred and twenty (120) day period immediately following the later of the expiration of the Initial ROFO Exercise Period or the Second ROFO Exercise Period, as applicable (the “Waived ROFO Transfer Period”), Transfer all of the Offered Shares to a Third Party Purchaser at a price not less than ninety-eight percent (98%) of the lesser of the SVC ROFO Price, the average of the SVC ROFO Price and the ROFO Alternative Value or the Determined ROFO Price. If the Electing SVC Parties do not Transfer the Offered Shares within the Waived ROFO Transfer Period, the Electing SVC Parties may not Transfer the Offered Shares unless the Electing SVC Parties send a new SVC Offer Notice in accordance with, and otherwise comply with, this Section 3.02.

(i)Each Stockholder shall take all actions as may be reasonably necessary to consummate the Transfer contemplated by this Section 3.02, including entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate.

(j)During the Waived ROFO Transfer Period, neither the Company nor any Initial Stockholder Party shall engage in any marketing for sale or sale of the Company or any of its Subsidiaries (whether by merger, consolidation or sale of all or substantially all of the assets of the Company or its Subsidiaries) or any Company Shares (including by way of issuance of Company Shares, but other than the Offered Shares on behalf of the Electing SVC Parties) and the Company shall provide the Electing SVC Parties with reasonable assistance and cooperation at the Electing SVC Parties’ expense in connection with their marketing and sale of their Offered Shares.

(k)The Company’s rights under this Section 3.02 to acquire the Offered Shares may be assigned in whole or in part to any Stockholder.

Section 3.03    Drag-along Rights.

(a)Drag-along Rights. For so long as the Initial Stockholder Parties own, or hold voting control over, in aggregate at least a majority of the issued and outstanding Company Shares on a fully diluted basis, if such Stockholders (the “Dragging Stockholders”) receive a bona fide offer from a Third Party Purchaser to consummate, in one transaction or a series of related transactions, a Change of Control with respect to the Company (a “Drag-along Sale”), and if the Dragging Stockholders have delivered a copy of such bona fide offer from such Third Party Purchaser to the Company and each SVC Party and each other Stockholder, then the Dragging Stockholders shall have the right to require that each SVC Party and other Stockholder (each, a “Drag-along Stockholder” and the Drag-along Stockholders, the Dragging Stockholders, and any other stockholders of the Company participating in the Drag-along Sale, the “Drag-along Participating Stockholders”) participate in such Transfer in the manner set forth in this Section 3.03. Notwithstanding anything to the contrary in this Agreement, but subject to Section 4.04(b), each Dragging Stockholder and each Drag-along Stockholder shall vote in favor of the Transfer and take all actions to approve such transaction and to waive any dissenters, appraisal or other similar rights.

(b)Exercise. The Dragging Stockholders shall exercise their rights pursuant to this Section 3.03 by delivering a notice (the “Drag-along Notice”) to each Drag-along Stockholder no later than

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thirty (30) days prior to the closing date of such Drag-along Sale. The Drag-along Notice shall set forth:

(i)the total number of Company Shares to be sold in the Drag-along Sale to the Third Party Purchaser if the Drag-along Sale is structured as a Transfer of Company Shares and the percentage of the outstanding Company Shares represented by such Company Shares;

(ii)the identity of the Third Party Purchaser;

(iii)the proposed date and time of the closing, if known, of the Drag-along Sale;

(iv)the per Company Share purchase price and the other material terms and conditions of the Transfer, including a description of any non-cash consideration in sufficient detail to permit the valuation thereof; and

(v)a copy of any form of agreement proposed to be executed in connection therewith.

(c)Amount of Company Shares Transferred. If the Drag-along Sale is structured as a Transfer of Company Shares, then, subject to Section 3.03(d) and Section 3.05, each Drag-along Participating Stockholder shall Transfer the amount of Company Shares equal to the product of (i) the total amount of Company Shares to be sold to the Third Party Purchaser as stated in the Drag-along Notice, and (ii) a fraction (1) the numerator of which is equal to the amount of Company Shares then held by such Drag-along Participating Stockholder, and (2) the denominator of which is equal to the amount of Company Shares then held in aggregate by the Drag-along Participating Stockholders.

(d)Consideration; Representations. Subject to the provisions of this Section 3.03(d)and Section 3.05, the consideration to be received by each Drag-along Participating Stockholder in the Drag-along Sale shall be the same form and amount of consideration per Company Share (or, if Third Party Purchaser gives any Drag-along Participating Stockholder an option as to the form and amount of consideration to be received, the same option shall be given to each Drag-along Participating Stockholder) and the terms and conditions of such Transfer shall be the same for all Drag-along Participating Stockholders. However, notwithstanding anything in this Agreement to the contrary, in no event shall any Drag-along Stockholder be required to: (i) accept any consideration in a Drag-along Sale other than cash or freely marketable publicly traded securities; (ii) enter into any non-compete, non-solicitation or similar agreements in connection with such Drag-along Sale; or (iii) make any representations, warranties or indemnities other than with respect to such Drag-along Stockholder’s ownership of its Company Shares and its power and right to enter into and consummate such Drag-along Sale; provided, however, that each Drag-along Stockholder may be required to participate in any indemnities with respect to representations related to the Company made to the Third Party Purchaser on a pro rata basis with the other Drag-along Participating Stockholders based on the aggregate consideration received by such Drag-along Participating Stockholder (except with respect to representations and warranties or covenants or indemnities as to any specific Drag-along Participating Stockholder for which only such Drag-along Participating Stockholder shall be responsible), so long as the aggregate indemnification obligations and liability for fraud or intentional misrepresentation on the part of the Company of any Drag-along Stockholder in connection with such

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Drag-along Sale do not exceed the actual amount of proceeds received by such Drag-along Stockholder in such Drag-along Sale and in no event shall any Drag-along Participating Stockholder be liable to a Third Party Purchaser for any fraud or intentional misrepresentation on the part of any other Drag-along Participating Stockholder.

(e)Expenses. The fees and expenses of each Dragging Stockholder incurred in connection with a Drag-along Sale and for the benefit of all Drag-along Participating Stockholders (it being understood that costs incurred by or on behalf of a Dragging Stockholder for its sole benefit will not be considered to be for the benefit of all Drag-along Participating Stockholders), to the extent not paid or reimbursed by the Company or the Third Party Purchaser, shall be shared on a pro rata basis by each Drag-along Participating Stockholder based on the aggregate consideration received by such Drag-along Participating Stockholder in the Drag-along Sale; provided, that no Drag-along Stockholder shall be obligated to make or reimburse any out-of-pocket expenditure prior to the consummation of the Drag-along Sale.

(f)Cooperation. Each Stockholder shall take all actions as may be reasonably necessary to consummate the Drag-along Sale, including entering into agreements and delivering certificates, assignments and instruments, in each case, consistent with the agreements being entered into and the certificates, as applicable, being delivered by each Dragging Stockholder and the terms of this Section 3.03.

(g)Timing of Closing. The Dragging Stockholders shall have one hundred and eighty (180) days following the date of the Drag-along Notice in which to consummate the Drag-along Sale, on the terms set forth in the Drag-along Notice and the terms of this Section 3.03 (which one hundred and eighty (180) day period may be extended for a reasonable time not to exceed an additional ninety (90) days to the extent reasonably necessary to obtain any required approvals or consents). If at the end of such period the Dragging Stockholders have not completed the Drag-along Sale, then the Dragging Stockholders may not thereafter effect a Transfer of Company Shares pursuant to this Section 3.03 without again sending a new Drag-along Notice and complying with the provisions of this Section 3.03.

Section 3.04    Tag-along Rights.

(a)Tag-along Rights. If at any time one or more Initial Stockholder Parties (the “Selling Stockholders”) propose to Transfer any of their Company Shares to a Third Party Purchaser (the “Proposed Transferee”), and if such Selling Stockholders cannot or have not elected to exercise the rights of Dragging Stockholders set forth in Section 3.03 in connection with such Transfer (a “Tag-along Sale”), then each SVC Party and each other Stockholder (each, a “Tag-along Stockholder” and the Selling Stockholders, the Tag-along Stockholders and any other stockholders of the Company participating in such Tag-along Sale, collectively, the “Tag-along Participating Stockholders”) shall be permitted to participate in such Tag-along Sale with respect to the Company Shares owned by such Tag-along Stockholder on the terms and conditions set forth in this Section 3.04.

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(b)Notice. The Selling Stockholders shall deliver to the Company and each Tag-along Stockholder a notice (a “Sale Notice”) of the proposed Tag-along Sale no later than twenty (20) Business Days prior to the closing date of such Tag-along Sale. The Sale Notice shall set forth:

(i)the total number of Company Shares the Proposed Transferee has offered to acquire and the percentage of the outstanding Company Shares represented by such Company Shares;

(ii)the number of Company Shares that the Selling Stockholders propose to Transfer in the Tag-along Sale and the percentage of the outstanding Company Shares owned by the Selling Stockholders represented by such Company Shares;

(iii)the identity of the Proposed Transferee;

(iv)the proposed date and time of the closing, if known, of the Tag-along Sale;

(v)the per Company Share purchase price and the other material terms and conditions of the Transfer, including a description of any non-cash consideration in sufficient detail to permit the valuation thereof; and

(vi)a copy of any form of agreement proposed to be executed in connection therewith.

(c)Exercise. Each Tag-along Stockholder shall exercise its right to participate in a Tag-along Sale by delivering to the Selling Stockholders a notice (a “Tag-along Notice”) stating its election to do so and specifying the number of its Company Shares it desires to Transfer in such Tag-along Sale (up to the maximum number it is permitted to Transfer pursuant to this Section 3.04) no later than twenty (20) days after receipt of the Sale Notice (the “Tag-along Period”). The election by a Tag-along Stockholder set forth in its Tag-along Notice shall be irrevocable except as provided in this Section 3.04(c), and such Tag-along Stockholder shall be bound and obligated, and entitled, to Transfer such Company Shares in the proposed Tag-along Sale on and subject to the terms and conditions set forth in this Section 3.04. Each Tag-along Stockholder shall have the right to Transfer in a Tag-along Sale up to the same percentage of its Company Shares as the percentage of the Company Shares held by the Selling Stockholders being Transferred in such Tag-along Sale. For the avoidance of doubt, if the aggregate number of Company Shares that the Tag-along Participating Stockholders have elected to Transfer in the Tag-along Sale exceeds the number of Company Shares that the Proposed Transferee is willing to acquire, then the number of Company Shares that each Tag-along Participating Stockholder will Transfer in the Tag-along Sale shall be proportionately reduced until the aggregate number of Company Shares that the Tag-along Participating Stockholders will Transfer in such Tag-along Sale equals the number of Company Shares that the Proposed Transferee is willing to acquire; provided, that in no event will the number of Company Shares that the Tag-along Stockholder is permitted to sell in the Tag-along Sale be reduced to less than the same percentage of such Tag-along Stockholder’s Company Shares as the percentage of the Company Shares held by the Selling Stockholders being Transferred in such Tag-along Sale. Notwithstanding the foregoing, if the terms of, or agreements for, a Tag-along Sale materially change from those provided in the Sale Notice or if the percentage of the Company Shares owned by the Selling Stockholders to be Transferred in the Tag-along Sale shall change from the percentage set forth in

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the Sale Notice, the Selling Stockholders shall deliver to each Tag-along Stockholder (whether or not such Tag-along Stockholder has previously sent a timely Tag-along Notice) an updated Sale Notice reflecting such changes and each Tag-along Stockholder shall have the right, exercisable within ten (10) Business Days, to elect to participate in, change its participation in or withdraw its participation in such Tag-along Sale.

(d)Transfer. A Tag-along Stockholder who does not deliver a timely Tag-along Notice in compliance with Section 3.04(c) shall be deemed to have waived its rights to participate in such Transfer and the Selling Stockholders shall (subject to the rights of any other Tag-along Stockholders who have provided a timely Tag-along Notice) thereafter be free to Transfer to the Proposed Transferee its Company Shares at a per Company Share price that is not greater than one hundred and two percent (102%) of the per Company Share price set forth in the Sale Notice and on other terms and conditions which are not materially more favorable in the aggregate to the Selling Stockholders than those set forth in the Sale Notice without any further obligation to the non-accepting Tag-along Stockholders.

(e)Consideration; Representations. Subject to the provisions of this Section 3.04(e)and Section 3.05, the consideration to be received by a Tag-along Stockholder in the Tag-along Sale shall be the same form and amount of consideration per Company Share to be received by the Selling Stockholders (or, if the Selling Stockholders are given an option as to the form and amount of consideration to be received, the same option shall be given to each Tag-along Stockholder) and the terms and conditions of such Transfer shall be the same as those upon which each Selling Stockholder Transfers its Company Shares. Each Tag-along Stockholder shall make or provide the same representations, warranties, covenants, indemnities and agreements as each Selling Stockholder makes or provides in connection with the Tag-along Sale (except that in the case of representations, warranties, covenants, indemnities and agreements pertaining specifically to the Selling Stockholders or any other Tag-along Participating Stockholder, a Tag-along Stockholder shall only make the comparable representations, warranties, covenants, indemnities and agreements pertaining specifically to itself); provided,that (i) the Selling Stockholders shall use commercially reasonable efforts to cause all representations, warranties, covenants and indemnities to be made by each Tag-along Participating Stockholder to be several and not joint obligations of the Tag-along Participating Stockholders and (ii) unless otherwise agreed by each Tag-along Stockholder, any indemnification obligation in respect of breaches of representations, warranties and covenants (other than those that pertain to an individual Tag-along Participating Stockholder, which shall be the sole obligation of such Tag-along Participating Stockholder) shall be borne on a pro rata basis by each Tag-along Participating Stockholder based on the aggregate consideration received by such Tag-along Participating Stockholder in such Tag-along Sale; provided, that in no event shall (x) the amount of the indemnification obligation and liability for fraud or intentional misrepresentation on the part of the Company of a Tag-along Stockholder exceed the aggregate proceeds received by such Tag-along Stockholder in such Tag-along Sale; (y) any Tag-along Stockholder be required to enter into any non-compete, non-solicitation or similar agreements in connection with such Tag-along Sale and (z) in no event shall any Tag-along Stockholder be liable for any fraud or intentional misrepresentation by any other stockholder of the Company.

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(f)Expenses. The fees and expenses of the Selling Stockholders incurred in connection with a Tag-along Sale and for the benefit of all Tag-along Participating Stockholders (it being understood that costs incurred by or on behalf of the Selling Stockholders for their sole benefit will not be considered to be for the benefit of all Tag-along Participating Stockholders), to the extent not paid or reimbursed by the Company or the Proposed Transferee, shall be shared by each Tag-along Participating Stockholder on a pro rata basis, based on the aggregate consideration received by such Tag-along Participating Stockholder; provided, that no Tag-along Stockholder shall be obligated to make or reimburse any out-of-pocket expenditure prior to the consummation of the Tag-along Sale.

(g)Cooperation. Each Tag-along Stockholder shall take all actions as may be reasonably necessary to consummate the Tag-along Sale, including entering into agreements and delivering certificates, assignments, and instruments, in each case consistent with the agreements being entered into and the certificates, as applicable, being delivered by the Selling Stockholders and the terms of this Section 3.04.

(h)Timing of Closing. The Selling Stockholders shall have ninety (90) days following the expiration of the Tag-along Period in which to consummate such Tag-along Sale to the Proposed Transferee, on and subject to the terms and conditions set forth in the Sale Notice and this Section 3.04(which ninety (90) day period may be extended for a reasonable time not to exceed an additional ninety (90) days to the extent reasonably necessary to obtain any required approvals and consents). If at the end of such period the Selling Stockholders have not completed such Transfer, then the Selling Stockholders may not thereafter effect a Transfer of Company Shares subject to this Section 3.04 without again fully complying with the provisions of this Section 3.04.

Section 3.05    Multiple Classes of Shares. If at any time the Company has more than one class of Company Shares which may impact the application of the provisions of Section 3.03orSection 3.04 in connection with a Drag-along Sale or a Tag-along Sale, respectively, including in connection with the consideration to be paid by the Third Party Purchaser for any class of Company Shares, the Directors and the Drag-along Participating Stockholders and Tag-along Participating Stockholders shall use reasonable best efforts to cooperate to apply Section 3.03orSection 3.04, as applicable, in good faith in a reasonable and equitable manner in consideration of the capital structure of the Company, in order to carry out the intent of such provisions; provided, thatthere shall be no minority or other similar discount for less than a controlling interest or for nonvoting Company Shares, and no premium for voting Company Shares or a controlling interest, in the Company.

Section 3.06    Call Rights.

(a)Subject to Section 3.06(g), the Company shall have the right (a “Call Right”), exercised by notice (the “Call Notice”) given to the SVC Parties at any time prior to the one year anniversary of a Termination Event, to purchase all, but not less than all, of the Company Shares then owned by the SVC Parties (the “Call Shares”). The Call Notice shall include a valuation (without any reduction for minority interests) of the Call Shares as of the date of the Termination Event from a Third Party Valuation Firm (the “Call Price”), together with reasonable supporting information.

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(b)Upon receipt of the Call Notice, the SVC Parties shall have ten (10) Business Days (the “Call Exercise Period”), to elect, by delivering notice to the Company, that the SVC Parties will (i) sell the Call Shares at the Call Price (the “Call Acceptance Notice”) or (ii) provide the Company with a valuation of the Call Shares (without any reduction for minority interests) as of the date of the Termination Event from an alternate Third Party Valuation Firm (a “Call Alternative Value”), together with reasonable supporting information, within thirty (30) days after the end of the Call Exercise Period (such notice, a “Call Alternative Value Notice”).

(c)If the SVC Parties provide a Call Acceptance Notice during the Call Exercise Period, the SVC Parties shall sell, and the Company shall purchase, all, but not less than all, of the Call Shares at the Call Price. If the SVC Parties fail to provide a Call Acceptance Notice or a Call Alternative Value Notice during the Call Exercise Period, or if they deliver a Call Alternative Value Notice but do not thereafter provide the Call Alternative Value when and as required by Section 3.06(d)(i), then they will be deemed to have delivered a Call Acceptance Notice.

(d)If the SVC Parties provide a Call Alternative Value Notice during the Call Exercise Period, the following provisions will apply:

(i)The Call Alternative Value Notice shall specify the Third Party Valuation Firm (the “SVC Valuation Firm”) selected by the SVC Parties to provide the Call Alternative Value, which Third Party Valuation Firm shall be required to deliver to the SVC Parties and the Company within thirty (30) days after the end of the Call Exercise Period its determination of the Call Alternative Value, together with reasonable supporting information. The Company shall provide the SVC Valuation Firm such additional information related to the Call Shares and the Company as the SVC Valuation Firm may reasonably request in connection with its determination. The SVC Parties shall bear the costs of the SVC Valuation Firm.

(ii)If the Call Alternative Value is at least ninety percent (90%) and not more than one hundred and ten percent (110%) of the Call Price, then the SVC Parties shall be deemed to have delivered a Call Acceptance Notice and the SVC Parties shall sell, and the Company shall purchase, all, but not less than all, of the Call Shares at the average of the Call Price and the Call Alternative Value.

(iii)If the Call Alternative Value is less than ninety percent (90%) or greater than one hundred and ten percent (110%) of the Call Price, then the Company and the SVC Parties shall jointly appoint a Joint Valuation Firm to determine the value of the Call Shares, which shall be instructed to provide the SVC Parties and the Company with its determination of the value of the Call Shares (without any reduction for minority interests) as of the date of the Termination Event (the “Determined Call Price”), together with reasonable supporting information, within thirty (30) days of its appointment. The Joint Valuation Firm shall be provided with the prior valuations of the Call Shares obtained by the SVC Parties and the Company, but shall not be obligated to base its determination on such valuations. The Company shall also provide the Joint Valuation Firm such additional information related to the Call Shares and the Company as the Joint Valuation Firm may reasonably request in connection with its determination. The cost of the Joint Valuation Firm will be borne fifty percent (50%) by the SVC Parties and fifty percent (50%) by the Company or as they

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may otherwise agree. The Joint Valuation Firm shall act as an expert and not an arbitrator and the decision of the Joint Valuation Firm as to the Determined Call Price, absent manifest error, shall be final and non-appealable. Upon delivery of the Determined Call Price, the Company shall purchase, and the SVC Parties shall sell, all, but not less than all, of the Call Shares at the Determined Call Price, subject to Section 3.06(d)(iv).

(iv)If the Determined Call Price is more than one hundred and ten percent (110%) of the Call Price, the Company shall have ten (10) days following delivery of the Determined Call Price (the “Call Withdrawal Period”) to withdraw the Call Notice by notice given to the SVC Parties; provided, that the Company shall reimburse the Electing SVC Parties for the costs of the SVC Valuation Firm and Joint Valuation Firm incurred by them in connection with any ROFO Process that was terminated as provided in Section 3.06(g)(iii). If the Company does not withdraw the Call Notice in such ten (10) day period, then the Company shall purchase, and the SVC Parties shall sell, all, but not less than all, of the Call Shares at the Determined Call Price.

(e)The closing of the purchase and sale of the Call Shares pursuant to this Section 3.06 shall occur on a date that is not later than ninety (90) days after the purchase price for the Call Shares has been finally determined pursuant to this Section 3.06 or as otherwise agreed in writing by the SVC Parties and the Company. At the closing of the purchase and sale of the Call Shares to the Company pursuant to this Section 3.06, the Company shall deliver to the SVC Parties the purchase price for the Call Shares as determined pursuant to this Section 3.06 by wire transfer of immediately available funds and the SVC Parties shall deliver to the Company the certificate(s) representing the Call Shares, if any, (or an affidavit of loss with respect to such certificates) accompanied by stock powers and all necessary stock transfer taxes paid and stamps affixed, if necessary.

(f)If the Company withdraws the Call Notice in accordance with Section 3.06(d)(iv),the SVC Parties may during the one hundred and twenty (120) day period immediately following the date that they receive the notice from the Company that it is withdrawing the Call Notice (the “Waived Call Transfer Period”), Transfer all of the Call Shares to any Third Party Purchaser at a price not less than ninety eight percent (98%) of the lesser of the Call Price, the average of the Call Price and the Call Alternative Value or the Determined Call Price and the provisions of Section 3.02(i) and Section 3.02(j) shall apply mutatis mutandis during the Waived Call Transfer Period.

(g)Notwithstanding anything in this Agreement to the contrary, but subject to Section 4.04(b), (i) the Company may not exercise the Call Right at any time during the pendency of a Drag-along Sale, a Tag-along Sale or a transaction which is reasonably likely to result in a Change of Control; (ii) if a Termination Event has occurred, the SVC Parties may not thereafter send an SVC Offer Notice until a date that is not less than ninety (90) days following the date of the Termination Event or after such ninety (90) day period if the Company has then delivered a Call Notice pursuant to this Section 3.06 unless and until such Call Notice is withdrawn pursuant to Section 3.06(d)(iv); (iii) if as of the date a Termination Event occurs, the process with respect to an outstanding SVC Offer Notice is then pending pursuant to Section 3.02 (a “ROFO Process”), then (A) the ROFO Process shall be suspended for ninety (90) days following the Termination Event, and terminated if the Company sends a Call Notice within such ninety (90) day period; (B) if the Company fails to send a Call Notice in such ninety (90) day period, then as of the ninety-first (91st) day following

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the Termination Event, at the Electing SVC Parties’ option, the ROFO Process shall resume with any applicable time periods extended to reflect such suspension; and (C) if the Company sends a Call Notice within such ninety (90) period following the Termination Event and thereafter withdraws the Call Notice in accordance with Section 3.06(d)(iv), the SVC Parties shall have the right following such withdrawal to send another SVC Offer Notice to the Company even if the SVC Parties have previously sent an SVC Offer Notice in that calendar year; and (iv) if a ROFO Process is reinstated pursuant to clause (iii) of this Section 3.06(g) or the SVC Parties send an SVC Offer Notice permitted by clause (ii) of this Section 3.06(g), the Company shall not thereafter have the right to send a Call Notice unless and until the applicable ROFO Process has been completed in accordance with Section 3.02 and the Call Right will only be exercisable with respect to the remaining Company Shares owned by the SVC Parties after the ROFO Process has been completed. For the avoidance of doubt, nothing in this Section 3.06 limits the right of the SVC Parties to Transfer any or all of their Call Shares at any time pursuant to Section 3.03 or Section 3.04.

(h)The Company may assign the Call Right in whole or in part to any Stockholder.

Section 3.07    Put Rights.

(a)At any time that a Put Event then exists, each REIT Party shall have the right (a “Put Right”) exercised by notice to the Company (the “Put Notice”) to require the Company to purchase from such REIT Party (the “Electing Put Party”), such number of the Company Shares owned by such REIT Party as is necessary to cause the Company Shares owned by such REIT Party to not exceed the Company Shares that such REIT Party may own pursuant to the limit in Section 4.04(b) (such number of Company Shares to be purchased, the “Put Shares”) and shall include a valuation (without any reduction for minority interests) of the Put Shares as of the date of the Put Notice from a Third Party Valuation Firm (the “Put Price”), together with reasonable supporting information. Upon request of the Electing Put Party, the Company shall provide the Third Party Valuation Firm appointed by the Electing Put Party to determine the Put Price with such information related to the Put Shares and the Company as such Third Party Valuation Firm may reasonably request in connection with its determination. The Electing Put Party shall bear the costs of such Third Party Valuation Firm.

(b)Upon receipt of the Put Notice, the Company shall within three (3) Business Days purchase all of the Put Shares at the Put Price, subject to the remaining provisions of this Section 3.07.

(c)Without limiting the obligation of the Company to purchase the Put Shares pursuant to Section 3.07(b), the Company shall have ten (10) Business Days following receipt of the Put Notice (the “Put Exercise Period”), to elect, by delivering notice to the Electing Put Party, that the Company will provide the Electing Put Party with a valuation of the Put Shares (without any reduction for minority interests) as of the date of the Put Notice from an alternate Third Party Valuation Firm (a “Put Alternative Value”), together with reasonable supporting information, within thirty (30) days after the end of the Put Exercise Period (such notice, a “Put Alternative Value Notice”).

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(d)If the Company provides a Put Alternative Value Notice during the Put Exercise Period, the following provisions will apply:

(i)The Put Alternative Value Notice shall specify the Third Party Valuation Firm (the “Company Put Valuation Firm”) selected by the Company to provide the Put Alternative Value, which Third Party Valuation Firm shall be required to deliver to the Electing Put Party and the Company within thirty (30) days after the end of the Put Exercise Period its determination of the Put Alternative Value, together with reasonable supporting information. The Company shall provide the Company Put Valuation Firm such additional information related to the Put Shares and the Company as the Company Put Valuation Firm may reasonably request in connection with its determination. The Company shall bear the costs of the Company Put Valuation Firm.

(ii)If the Put Alternative Value is at least ninety percent (90%) and not more than one hundred and ten percent (110%) of the Put Price, then the purchase price for the Put Shares shall be adjusted to the average of the Put Price and the Put Alternative Value.

(iii)If the Put Alternative Value is less than ninety percent (90%) or greater than one hundred and ten percent (110%) of the Put Price, then the Company and the Electing Put Party shall jointly appoint a Joint Valuation Firm to determine the value of the Put Shares, which shall be instructed to provide the Electing Put Party and the Company with its determination of the value of the Put Shares (without any reduction for minority interests) as of the date of the Put Notice (the “Determined Put Price”), together with reasonable supporting information, within thirty (30) days of its appointment. The Joint Valuation Firm shall be provided with the prior valuations of the Put Shares obtained by the Electing Put Party and the Company, but shall not be obligated to base its determination on such valuations. The Company shall also provide the Joint Valuation Firm such additional information related to the Put Shares and the Company as the Joint Valuation Firm may reasonably request in connection with its determination. The cost of the Joint Valuation Firm will be borne fifty percent (50%) by the Electing Put Party and fifty percent (50%) by the Company or as they may otherwise agree. The Joint Valuation Firm shall act as an expert and not an arbitrator and the decision of the Joint Valuation Firm as to the Determined Put Price, absent manifest error, shall be final and non-appealable. Upon delivery of the Determined Put Price, the purchase price for the Put Shares shall be adjusted to the Determined Put Price.

(e)If the final purchase price determined for the Put Shares pursuant to this Section 3.07 (the “Final Price”) is greater than the Put Price, the Company shall promptly, and in any event within ten (10) Business Days, pay to the Electing Put Party the difference between the Put Price and the Final Price by wire transfer of immediately available funds. If the Final Price is less than the Put Price, the Electing Put Party shall promptly, and in any event within ten (10) Business Days, pay to the Company the difference between the Final Price and the Put Price by wire transfer of immediately available funds.

(f)At the closing of the purchase and sale of the Put Shares pursuant to this Section 3.07, the Company shall deliver to the Electing Put Party the purchase price for the Put Shares as determined pursuant to this Section 3.07 by wire transfer of immediately available funds and the Electing Put Party shall deliver to the Company the certificate(s) representing the Put Shares, if

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any, (or an affidavit of loss with respect to such certificates) accompanied by stock powers and all necessary stock transfer taxes paid and stamps affixed, if necessary.

(g)For the avoidance of doubt, the rights of the REIT Parties under this Section 3.07are in addition to any other rights or remedies of the REIT Parties at equity or under Applicable Law as a result of the occurrence of a Put Event.

(h)The Company may assign its right (but not its obligation) to purchase the Put Shares, in whole or in part, to any Stockholder.

ARTICLE IVOTHER ACTIVITIES; RELATED PARTY TRANSACTIONS; CONFIDENTIALITY; PRE-EMPTIVE RIGHTS; REIT COMPLIANCE

Section 4.01    Other Business Activities. Each Stockholder may engage independently or with others in other business ventures of every nature and description including the ownership, operation, management, syndication and development of a business which is competitive with the Company or any of its Subsidiaries or their respective businesses, and neither the Stockholders nor the Company or its Subsidiaries shall have any rights in and to such independent ventures or the income or profits derived therefrom.

Section 4.02    Confidentiality.

(a)Confidentiality. Each SVC Party shall use commercially reasonable efforts to keep confidential any information (including any budgets, business plans and analyses) concerning the Company or its Subsidiaries, including their assets, business, operations, financial condition or prospects (“Information”) received by it solely in its capacity as a Stockholder; provided,that nothing herein shall prevent such SVC Party from disclosing such Information: (i) upon the order of any court or administrative agency or the request or demand of any regulatory agency or authority having jurisdiction over such Stockholder; (ii) to the extent compelled by legal process or required or requested pursuant to subpoena, interrogatories or other discovery requests; (iii) as may be appropriate or required under Applicable Law, including the rules and regulations of the U.S. Securities and Exchange Commission, The Nasdaq Stock Market LLC or the Financial Industry Regulatory Authority Inc.; (iv) subject to the provisions of this Section 4.02,to those Persons who have a need to know such Information in connection with the conduct of such SVC Party’s business, including its officers, trustees, directors, attorneys, accountants, and other representatives and agents; (v)in connection with any Proceeding based upon or in connection with the subject matter of this Agreement or the transactions contemplated hereby; (vi) to any other Stockholder; or (vii) to any potential Third Party Purchaser in connection with a proposed Transfer of Company Shares by such SVC Party as long as such Third Party Purchaser agrees to be bound by the provisions of this Section 4.02 as if an SVC Party; provided, that in the case of clauses (i) or (ii) of this Section 4.02 such SVC Party provides prior notice to the Company of the proposed disclosure as far in advance of such disclosure as practicable and uses reasonable efforts to insure that any Information so disclosed is accorded confidential treatment to the extent requested by the Company at the Company’s expense.

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(b)Exceptions. The restrictions of Section 4.02(a) shall not apply to Information that: (i) is or becomes generally available to the public other than as a result of a disclosure by an SVC Party in violation of this Agreement; (ii) is or becomes available to an SVC Party on a nonconfidential basis prior to its disclosure to the receiving Person; (iii) is or has been independently developed or conceived by an SVC Party without use of any Information; or (iv) becomes available to the receiving Person on a nonconfidential basis from a source other than an SVC Party; provided,that such source is not known by the receiving Person to be bound by a confidentiality agreement with the Company or such Subsidiary.

Section 4.03    Certain Pre-emptive Rights for Additional Equity.

(a)Issuance of Additional Company Shares. The Company hereby grants to each Stockholder (each, a “Pre-emptive Stockholder”) the right to purchase a pro rata portion of any Company Shares (other than Excluded Shares) proposed to be issued or sold after the date hereof by the Company to any Person (“Additional Company Shares”). The Company shall not permit any Subsidiary to not be a wholly-owned Subsidiary of the Company, except as a result of the issuance or sale by such Subsidiary of Excluded Shares.

(b)Additional Issuance Notices. If the Company desires to issue Additional Company Shares, the Company shall give notice (an “Issuance Notice”) of the proposed issuance or sale to each Pre-emptive Stockholder within seven (7) days following any meeting of the Directors at which any such issuance or sale is approved. The Issuance Notice shall be accompanied by a written offer to purchase such Additional Company Shares from each prospective purchaser of such Additional Company Shares (each, a “Pre-emptive Purchaser”) and shall set forth the material terms and conditions of the proposed issuance or sale, including:

(i)The identity of each Pre-emptive Purchaser, if known, and the aggregate amount and a description of the Additional Company Shares proposed to be issued and the percentage of the Company Shares that such issuance would represent;

(ii)the proposed issuance date, which subject to Section 4.03(g), shall be at least thirty (30) days from the date of the Issuance Notice;

(iii)the proposed purchase price per Company Share of the Additional Company Shares and the form of such purchase price if other than cash; and

(iv)if the consideration to be paid by any Pre-emptive Purchaser includes non-cash consideration, the Directors’ good faith determination of the fair market value thereof.

The Issuance Notice shall also be accompanied by a statement of the Company Shares ownership of each stockholder of the Company and a calculation in reasonable detail as to each Pre-emptive Stockholder’s pro rata share of the Additional Company Shares.

(c)Exercise of Pre-emptive Rights. Each Pre-emptive Stockholder shall for a period of twenty (20) days following the receipt of an Issuance Notice (the “Pre-emptiveExercise Period”) have

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the right to elect irrevocably to purchase all or any portion of its pro rata share of the Additional Company Shares, at the purchase price set forth in the Issuance Notice, by delivering notice to the Company (a “Pre-emptive Acceptance Notice”) specifying the number of Additional Company Shares it desires to purchase. The delivery of a Pre-emptive Acceptance Notice by a Pre-emptive Stockholder shall be a binding and irrevocable subscription by such Pre-emptive Stockholder for the number of Additional Company Shares described in its Pre-emptive Acceptance Notice in accordance with the terms of this Section 4.03. The failure of a Pre-emptive Stockholder to deliver an Acceptance Notice by the end of the Pre-emptive Exercise Period shall constitute a waiver of its rights under this Section 4.03 with respect to the purchase of such Additional Company Shares, but shall not affect its rights with respect to any future issuances or sales of Additional Company Shares.

(d)Over-allotment. No later than seven (7) days following the expiration of the Pre-emptive Exercise Period, the Company shall notify each Pre-emptive Stockholder in writing of the number of Additional Company Shares that each Pre-emptive Stockholder has agreed to purchase (including, for the avoidance of doubt, where such number is zero) (the “Over-allotment Notice”). Each Pre-emptive Stockholder exercising its rights to purchase its pro rata share of the Additional Company Shares in full (an “Exercising Pre-emptive Stockholder”) shall have a right of over-allotment such that if any other Pre-emptive Stockholder has failed to exercise its right under this Section 4.03,or any other stockholder of the Company having pre-emptive rights to purchase Company Shares in such transaction has failed, to purchase its pro rata share of the Additional Company Shares in full (each, a “Non-Exercising Pre-emptive Stockholder”), such Exercising Pre-emptive Stockholder may purchase its pro rata share (computed on the basis of the Exercising Pre-emptive Stockholders and other stockholders of the Company who choose to purchase in the over-allotment in proportion to their pro rata share of the Additional Company Shares, and otherwise so that one hundred percent (100%) of the over-allotment may be subscribed for and purchased by the Exercising Pre-emptive Stockholders and such other stockholders) of such Non-Exercising Pre-emptive Stockholders’ unsubscribed for allotment, by giving notice to the Company within ten (10) Business Days of receipt of the Over-allotment Notice (the “Over-allotment Exercise Period”).

(e)Sale of Additional Shares. Any Additional Company Shares not subscribed for by a Pre-emptive Stockholder pursuant to Section 4.03(c) and Section 4.03(d)may be sold by the Company following the expiration of the Pre-emptive Exercise Period and, if applicable, the Over-allotment Exercise Period, to the Pre-emptive Purchasers on terms no less favorable to the Company than those set forth in the Issuance Notice and, for the avoidance of doubt, at a price at least equal to or higher than the purchase price described in the Issuance Notice; provided, such sale is completed no later than sixty (60) days following the expiration of the Pre-emptive Exercise Period and, if applicable, the Over-allotment Exercise Period (subject to the extension of such sixty (60) day period for a reasonable time not to exceed an additional sixty (60) days to the extent reasonably necessary to obtain any third party approvals). If the Company has not sold all of the remaining Additional Company Shares to the Pre-emptive Purchasers by such date, the Company shall not thereafter issue or sell any such Additional Company Shares without first again offering such Additional Company Shares to the Pre-emptive Stockholders in accordance with the procedures set forth in this Section 4.03and no Pre-emptive Stockholder shall be obligated to complete the purchase of the Additional Company Shares that it subscribed for pursuant to Section 4.03(c) and Section 4.03(d).

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(f)Additional Company Shares SaleClosing. Except as provided in Section 4.03(g), the closing of any purchase by any Pre-emptive Stockholder shall be consummated substantially contemporaneously with the consummation of the sale to the Pre-emptive Purchasers. The Company shall deliver the Additional Company Shares to be purchased by a Pre-emptive Stockholder in accordance with this Section 4.03 free and clear of any liens (other than those arising hereunder and those attributable to the actions of the purchasers thereof), and the Company shall represent and warrant to such Pre-emptive Stockholder that such Additional Company Shares shall be, upon issuance thereof to such Pre-emptive Stockholder and after payment therefor, duly authorized, validly issued, fully paid and non-assessable. The Company, in the discretion of its Directors, may deliver to each purchasing Pre-emptive Stockholder certificates evidencing the Additional Company Shares. Each purchasing Pre-emptive Stockholder shall deliver to the Company the purchase price for the Additional Company Shares purchased by it by wire transfer of immediately available funds. Each party to the purchase and sale of Additional Company Shares pursuant to this Section 4.03shall take all such other actions as may be reasonably necessary to consummate the purchase and sale including, without limitation, entering into such additional agreements as may be necessary or appropriate. Notwithstanding anything to the contrary contained in this Agreement, the Directors in their discretion may at any time prior to the closing of the issuance and sale of any Additional Company Shares, upon five (5) Business Days’ notice to the Pre-emptive Stockholders, cancel the issuance and sale of such Additional Company Shares in their entirety, in which event the Company shall not thereafter issue any Additional Company Shares without first again offering such Additional Company Shares to the Pre-emptive Stockholders in accordance with the procedures set forth in this Section 4.03.

(g)Delay. Notwithstanding anything to the contrary set forth in this Section 4.03, if approved by the Directors, the Company may, in lieu of concurrently offering any Additional Company Shares to all Stockholders, initially offer, sell and issue Additional Company Shares to only certain Stockholders so long as promptly, but in any event, within five (5) Business Days thereafter, the Company provides an Issue Notice (which Issue Notice shall include the material details of the prior issuance of Additional Company Shares pursuant to this Section 4.03) to each Pre-emptive Stockholder and complies with the provisions of this Section 4.03(g) with respect to all Pre-emptive Stockholders by offering to such Pre-emptive Stockholders their share of such Additional Company Shares (as otherwise determined pursuant to Section 4.03(a) prior to any sales and issuances permitted by this Section 4.03(g)); provided, that (i) prior to the Company complying with the provisions of this Section 4.03(g), no Additional Company Shares issued pursuant to this Section 4.03(g) shall be entitled to vote on any matter presented to the stockholders of the Company and the Company shall not declare or pay any dividends or other distributions with respect to the Additional Company Shares issued to the Stockholders pursuant to this Section 4.03(g) and (ii) in no event shall any Pre-emptive Stockholder be required to acquire any Additional Company Shares from any other Stockholder in connection with its exercise of its rights under this Section 4.03.

Section 4.04    REIT Compliance.

(a)Adverse Regulatory Event. In the event of an Adverse Regulatory Event arising from or in connection with this Agreement or a REIT Party’s ownership of Company Shares, the Company and the Stockholders shall work together in good faith to eliminate the impact of such Adverse Regulatory Event, including entering into such amendments to this Agreement as may be necessary or appropriate or to permit such REIT Party to effect the Transfer of its Company Shares.

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For purposes of this Agreement, the term “Adverse Regulatory Event” means any time that an Applicable Law imposes upon a REIT Party (or could impose upon a REIT Party in its reasonable opinion) any material threat to such REIT Party’s or any of its Affiliates’ status as a “real estate investment trust” under the Code.

(b)Ownership of Company Shares. Notwithstanding anything in this Agreement to the contrary, neither the Company nor any Stockholder shall have any authority to take, and none shall take, any action which shall cause any REIT Party to own (directly, indirectly, or constructively) at any time more than thirty-four percent (34%) in aggregate of the vote or value of the then outstanding Company Shares (as determined under each of Sections 856(d)(3) (inclusive of Section 856(d)(5)), 856(d)(9)(F), and 856(l)(2) of the Code).

ARTICLE VFINANCIAL INFORMATION; ACCESS RIGHTS

Section 5.01    Financial Information. In addition to, and without limiting any rights that the SVC Parties may have with respect to the inspection of the books and records of the Company under Applicable Law, the Company shall furnish to each SVC Party, the following information:

(a)as soon as available, and in any event within forty-five (45) days following the end of each Fiscal Year, the audited consolidated balance sheet of the Company and its Subsidiaries as at the end of each such Fiscal Year and the audited consolidated statements of income, cash flows and changes in stockholders’ equity of the Company and its Subsidiaries for such Fiscal Year, accompanied by the certification of independent certified public accountants of recognized national standing selected by the Directors, to the effect that, except as set forth therein, such financial statements have been prepared in accordance with GAAP, applied on a basis consistent with prior years and fairly present in all material respects the consolidated financial condition of the Company and its Subsidiaries as of the dates thereof and the results of its operations and changes in its cash flows and stockholders’ equity for the periods covered thereby;

(b)as soon as available, and in any event within thirty (30) days following the end of each fiscal quarter, the unaudited consolidated balance sheet of the Company and its Subsidiaries at the end of such quarter and the unaudited consolidated statements of income, cash flows and changes in stockholders’ equity of the Company and its Subsidiaries for such quarter, all in reasonable detail and all prepared in accordance with GAAP, consistently applied and certified by the Company’s Chief Financial Officer;

(c)draft financial statements related to the Fiscal Year and each fiscal quarter shall be provided within thirty (30) days and twenty (20) days, respectively, following the end of the period in question; and

(d)to the extent the Company or any of its Subsidiaries is required by Applicable Law or pursuant to the terms of any outstanding indebtedness of the Company to prepare such reports, any

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annual reports, quarterly reports and other periodic reports actually prepared by the Company or Subsidiary promptly following filing or submission thereof.

Section 5.02    Access Rights.

(b)The Company shall: (i) afford to the SVC Parties and their officers, trustees, directors, employees, attorneys, accountants and other representatives and agents, during normal business hours and upon reasonable notice, reasonable access to its officers, employees, auditors, and books and records; and (ii) afford such SVC Parties and other Persons the opportunity to consult with its officers and senior management from time to time regarding the Company’s affairs, finances and accounts as the SVC Parties, or such other Persons on behalf of the SVC Parties, may reasonably request upon reasonable notice, including presenting to such SVC Parties and such other Persons customary management presentations regarding the Company’s affairs, finances, accounts and related matters at the request of SVC.

(c)The rights set forth in Section 5.02(a) above shall not and are not intended to limit any rights which the SVC Parties may have to inspect or audit the books and records of the Company, or to inspect its properties or discuss its affairs, finances and accounts, under Applicable Law or any other agreement to which SVC or any of its Affiliates on the one hand, and the Company or any of its Affiliates on the other hand, are a party.

(d)Notwithstanding anything to the contrary herein, the information and access rights provided to the SVC Parties shall be expressly subject to the confidentiality and use restrictions set forth in Section 4.02.

ARTICLE VIREPRESENTATIONS AND WARRANTIES

Section 6.01    Representations and Warranties. Each Stockholder and the Company, severally and not jointly, represent and warrant to each other party that:

(a)It has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the other agreements and documents contemplated hereby, the performance of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite action of such Stockholder or the Company, as applicable. It has duly executed and delivered this Agreement.

(b)This Agreement constitutes the legal, valid and binding obligation of such party enforceable against such party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, require no action by or in respect of, or filing with, any Governmental Authority.

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(c)The Company and the Initial Stockholders represent and warrant that the execution, delivery and performance by each of them of this Agreement and the consummation of the transactions contemplated hereby do not (i) conflict with or result in any violation or breach of any provision of the Organizational Documents or the governing documents of any of the Company’s Subsidiaries or of any Initial Stockholder, (ii) conflict with or result in any violation or breach of any provision of any Applicable Law applicable to them, or (iii) require any consent or other action by any Person under any provision of any material agreement or other instrument to which any of them is a party or is otherwise bound other than those which have been obtained, except, with respect to the foregoing clauses (ii) and (iii), where such conflict, violation, default or failure to obtain consent would not reasonably be expected to have a material adverse effect on the Company or its Subsidiaries, taken as a whole.

(d)SVC represents and warrants that the execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated hereby do not (i) conflict with or result in any violation or breach of any provision of its governing documents, (ii) conflict with or result in any violation or breach of any provision of any Applicable Law applicable to it, or (iii) require any consent or other action by any Person under any provision of any material agreement or other instrument to which such party is a party or is otherwise bound other than those which have been obtained, except, with respect to the foregoing clauses (ii) and (iii), where such conflict, violation, default or failure to obtain consent would not reasonably be expected to have a material adverse effect on SVC or its Subsidiaries, taken as a whole.

(e)Except for this Agreement, the Registration Rights Agreement and the Organizational Documents, such party has not entered into or agreed to be bound by any other agreements or arrangements of any kind with any party with respect to the Company Shares, including agreements or arrangements with respect to the acquisition or disposition of the Company Shares or any interest therein or the voting of the Company Shares (whether or not such agreements and arrangements are with the Company or any other stockholder of the Company).

ARTICLE VIITERM AND TERMINATION

Section 7.01    Termination. This Agreement shall terminate upon the earliest of:

(a)the consummation of a Public Offering resulting in a market value of the Company Common Stock held by public stockholders who are otherwise Third Party Purchasers of at least twenty million ($20,000,000) dollars;

(b)the consummation of a Change of Control;

(c)the date on which the SVC Parties no longer hold any Company Shares;

(d)the dissolution, liquidation, or winding up of the Company; or

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(e)upon the unanimous written consent of all SVC Parties and the Company.

Section 7.02    Effect of Termination.

(a)The termination of this Agreement shall terminate all further rights and obligations of the Stockholders under this Agreement, except that such termination shall not affect:

(i)the existence of the Company;

(ii)the obligation of any party to pay any amounts arising on or prior to the date of termination, or as a result of or in connection with such termination;

(iii)the rights which any Stockholder may have by operation of Applicable Law as a stockholder of the Company; or

(iv)provisions of this Agreement which by their terms are intended or are stated to survive termination of this Agreement.

(b)The following provisions shall survive the termination of this Agreement:

(i)Section 4.02, Section 7.02 andArticle VIII; and

(ii)Section 3.07 and Section 4.04, but only so long as a REIT Party owns Company Shares; provided, that the obligations of an Initial Stockholder Party under such Sections shall terminate at such time as such Initial Stockholder Party neither owns or controls any Company Shares.

ARTICLE VIIIMISCELLANEOUS

Section 8.01    Expenses. Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement or the transactions and matters contemplated by this Agreement shall be paid by the party incurring such costs and expenses.

Section 8.02    Release of Liability; Waiver of Fiduciary Duties. Subject to Section.7.02, if any Stockholder shall Transfer all of the Company Shares held by such Stockholder in compliance with the provisions of this Agreement without retaining any interest therein, then such Stockholder shall cease to be a party to this Agreement in its capacity as a Stockholder and shall be relieved and have no further liability arising hereunder in its capacity as a Stockholder for events occurring from and after the date of such Transfer. To the maximum extent permitted by Applicable Law, each Stockholder and its successors and assigns and, as applicable, its shareholders, stockholders, beneficial interest owners, members, partners, trustees, directors, officers, employees and agents, waives any and all fiduciary duties any Stockholder may now or in the future have to any other

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Stockholder, in each case in its capacity as a stockholder of the Company, in connection with this Agreement or the transactions and matters contemplated by this Agreement.

Section 8.03    Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) when received if mailed by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses set forth on Exhibit Ahereto (or at such other address in the United States for a party as shall be specified in a notice given in accordance with this Section 8.03).

Section 8.04    Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. The definitions given for any defined terms in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Unless the context otherwise requires, references herein: (i) to Articles, Sections and Exhibits mean the Articles and Sections of, and the Exhibits attached to, this Agreement; (ii) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (iii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

Section 8.05    Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 8.06    Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 8.07    Entire Agreement. This Agreement, the Registration Rights Agreement and the Organizational Documents constitute the sole and entire agreement of the parties with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the

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event of any inconsistency or conflict between this Agreement and the Organizational Documents, the Stockholders and the Company shall, to the extent permitted by Applicable Law, amend, consent to or waive provisions of each such Organizational Document to comply with the terms of this Agreement. Notwithstanding anything herein to the contrary, the parties acknowledge and agree that neither the Company nor any SVC Party is a party to the Equityholders Agreement or has any obligations or rights under the Equityholders Agreement and that the provisions of this Agreement shall supersede in their entirety any inconsistent provisions contained in the Organizational Documents, including the Equityholders Agreement, as it relates to the Company and the SVC Parties and their rights and obligations hereunder.

Section 8.08    Assignment; Successors. Except as expressly set forth in this Agreement, this Agreement and the rights, interests and obligations of the parties hereunder may not be assigned, transferred or delegated. This Agreement and the rights, interests and obligations of a party hereunder may be assigned, transferred or delegated by the party to a Person who succeeds to all or substantially all the assets of such party, which successor or Person agrees in a writing delivered to the other parties hereto to be subject to and bound by all interests and obligations set forth in this Agreement. This Agreement shall bind and inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns, including Permitted Transferees who acquire Company Shares in accordance with the terms of this Agreement.

Section 8.09    No Third Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and, except as expressly set forth in this Agreement, nothing herein is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 8.10    Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

Section 8.11    Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Maryland without giving effect to any choice or conflict of law provision or rule (whether of the State of Maryland or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than those of the State of Maryland.

Section 8.12    Venue. Each party hereto agrees that it shall bring any Proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated hereby exclusively in the courts of the State of Maryland and the Federal courts of the United States, in each case, located in the City of Baltimore (the “Chosen Courts”). Solely in connection with claims arising under this Agreement or the transactions contemplated hereby, each party hereto irrevocably and unconditionally (i) submits to the exclusive jurisdiction of the Chosen Courts, (ii) agrees not to commence any such Proceeding except in such courts, (iii) waives, to the fullest extent

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it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the Chosen Courts, (iv) waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such Proceeding and (v) agrees that service of process upon such party in any such Proceeding shall be effective if notice is given in accordance with Section 8.03. Nothing in this Agreement will affect the right of any party to serve process in any other manner permitted by Applicable Law. A final judgment in any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute is made pursuant to Section 8.13, this Section 8.12 shall not pre-empt resolution of the Dispute pursuant to Section 8.13.

Section 8.13    Dispute Resolution.

(a)Disputes. Any disputes, claims or controversies arising out of or relating to this Agreement, the Organizational Documents or the transactions contemplated hereby, including any disputes, claims or controversies brought by or on behalf of a party hereto, a direct or indirect parent of a party, or any holder of equity interests (which, for purposes of this Section 8.13, shall mean any holder of record or any beneficial owner of equity interests, or any former holder of record or beneficial owner of equity interests) of a party, either on its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of any equity interests of a party against a party or any of their respective trustees, directors, members, officers, managers (including The RMR Group LLC or its parent and their respective successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance, application or enforcement of this Agreement, including the agreements set forth in this Section 8.13, or the governing documents of a party (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (the “AAA”) then in effect, except as those Rules may be modified in this Section 8.13. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those Persons and a party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.

(b)Selection of Arbitrators. There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to

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timely select an arbitrator, then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date the AAA provides such list to select one (1) of the three (3) arbitrators proposed by the AAA. If the party (or parties) fail(s) to select the second (2^nd)arbitrator by that time, the party (or parties) who have appointed the first (1^st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by the AAA to be the second (2^nd) arbitrator; and, if they should fail to select the second (2^nd) arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2^nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3^rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2^nd) arbitrator. If the third (3^rd) arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

(c)Location of Arbitration. Any arbitration hearing shall be held in Boston, Massachusetts, unless otherwise agreed by the parties, but the seat of arbitration shall be Maryland.

(d)Scope of Discovery. There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

(e)Arbitration Award. In rendering an award or decision (an “Award”), the arbitrators shall be required to follow the laws of the State of Maryland, without regard to principles of conflicts of law. Any arbitration proceedings or Award rendered hereunder, and the validity, effect and interpretation of the agreements set forth in this Section 8.13 shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. An Award shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of the law on which it is based. Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Subject to Section 8.13(f), each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as such Award may provide.

(f)Costs. Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, to the maximum extent permitted by Applicable Law of the State of Maryland, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s Award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3^rd) appointed arbitrator.

34

(g)Appeals. Notwithstanding any language to the contrary in this Agreement, any Award, including, but not limited to, any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 8.13(g) shall apply to any appeal pursuant to this Section 8.13 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

(h)Final Judgment. Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 8.13(g), an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon an Award may be entered in any court having jurisdiction. To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any Award made, except for actions relating to enforcement of the agreements set forth in this Section 8.13 or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

(i)Intended Beneficiaries. This Section 8.13 is intended to benefit and be enforceable by the parties hereto and their respective shareholders, stockholders, members, beneficial interest owners, direct and indirect parents, trustees, directors, officers, managers (including The RMR Group LLC or its parent and their respective successor), members, agents or employees and their respective successors and assigns and shall be binding on the parties, and such Persons and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such Persons may have by contract or otherwise.

Section 8.14    Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each Stockholder, the Company and each transferee of Company Shares agrees, at the request of the Company or any Stockholder, to execute and deliver such additional documents, instruments, conveyances and assurances and to take such further actions as may be required to carry out the provisions hereof and give effect to the transactions contemplated hereby.

Section 8.15    Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

Section 8.16    No Liability. NO TRUSTEE, OFFICER, DIRECTOR, SHAREHOLDER, MEMBER, EMPLOYEE OR AGENT OF ANY PARTY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SUCH PARTY. ALL PERSONS DEALING WITH SUCH PARTY IN ANY WAY, SHALL LOOK

35

ONLY TO THE ASSETS OF SUCH PARTY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by, as applicable, their respective officers thereunto duly authorized.

THE COMPANY:

Sonesta Holdco Corporation

By:        Carlos R. Flores    President and Chief Executive OfficerSVC:

Service Properties Trust

By:        John G. Murray    President and Chief Executive Officer

THE INITIAL STOCKHOLDERS:

Adam D. Portnoy

Diane Portnoy 2019 Revocable Trust    By: Diane Portnoy, Trustee

By:
Adam D. Portnoy, as her Attorney-In-Fact

36

Exhibit ANOTICE ADDRESSES

If to Sonesta Holdco Corporation:             Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attention:  Jennifer B. Clark, Secretary

Email: jclark@rmrgroup.com

with a copy to (which shall not constitute notice): Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square
Wilmington, Delaware 19899
Attention: Faiz Ahmad
Email: faiz.ahmad@skadden.com

If to Service Properties Trust:             Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458-1632

Attention:  Jennifer B. Clark, Secretary

Email: jclark@rmrgroup.com

If to Adam D. Portnoy:                 Adam D. Portnoy

198 Commonwealth Avenue

Boston, Massachusetts 02116

Email: aportnoy@rmrgroup.com

If to the Diane Portnoy 2019 Revocable Trust:     Diane Portnoy

c/o Sullivan & Worcester LLP

One Post Office Square

Boston, MA 02109

Attention: Warren M. Heilbronner                                    Email: wheilbronner@sullivanlaw.com

with a copy to (which shall not constitute notice):     Sullivan & Worcester LLP

One Post Office Square

Boston, MA 02109

Attention: Lindsey A. Getz                                Email: lgetz@sullivanlaw.com

A-1

EXHIBIT B

FORM OF JOINDER AGREEMENT

This JOINDER AGREEMENT (the “Joinder Agreement”), dated as of __________, is entered into by _________________, [a ___________ organized under the laws of _____________ ] / [an individual residing at ] (the “New Stockholder”). All capitalized terms not defined in this Joinder Agreement shall have the meaning ascribed to such terms in that certain Stockholders Agreement dated as of February 27, 2020 by and among the individuals and entities named and listed therein as “Stockholders” and Sonesta Holdco Corporation, a Maryland corporation (the “Company”), as it may be amended from time to time (the “Stockholders Agreement”).

WHEREAS, the New Stockholder desires to acquire Company Shares [in a Transfer from [SVC / an Initial Stockholder]] and in connection therewith become a party to the Stockholders Agreement; and

WHEREAS, the New Stockholder shall become a party to the Stockholders Agreement, and in furtherance of the foregoing, the New Stockholder shall execute and deliver this Joinder Agreement to the Company and each Stockholder.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the New Stockholder hereby agrees as follows:

1.Agreement to be Bound. The New Stockholder hereby agrees that, upon execution of this Joinder Agreement, the New Stockholder shall become a party to the Stockholders Agreement as [an SVC Party / Initial Stockholder Party], and shall be fully bound by, subject to, and have all of the benefits and burdens of all of the covenants, terms and conditions of the Stockholders Agreement as [an SVC Party / Initial Stockholder Party] thereunder.

2.Successors and Assigns. This Joinder Agreement shall bind and inure to the benefit of and be enforceable by the Company and each Stockholder, and their respective permitted successors, heirs and assigns.

3.Counterparts. This Joinder Agreement may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement.

4.Notices. All notices, demands or other communications to the New Stockholder shall be directed to the respective United States address set forth next to the New Stockholder’s name on the signature page hereto.

5.Governing Law. This Joinder Agreement shall be governed by and construed in accordance with the law (other than the law governing conflict of law questions) of the State of Maryland.

6.Descriptive Headings. The descriptive headings of this Joinder Agreement are for convenience of reference only and do not constitute a part of this Joinder Agreement.

IN WITNESS WHEREOF, the New Stockholder has executed this Joinder Agreement as of the date first above written.

[____________________]

B-1

[By:                        ]     [Name]
    [Title]

Address:

_____________________________

_____________________________

_____________________________

Accepted and agreed to:

THE COMPANY:

Sonesta Holdco Corporation

By:
Name:
Title:

B-2

SCHEDULE 1

CONTRIBUTED ENTITIES

Entity Name	Property
Auburn Hills Suites LLC,a Maryland limited liability company	Sonesta ES Suites Auburn Hills Detroit 2050 Featherstone Road Auburn Hills, MI
HillCountryGalleria Hotel LLC,a Texas limited liability company	Sonesta Bee Cave Austin Hotel 12525 Bee Cave Parkway Bee Cave, TX
SchaumburgSuites LLC,a Maryland limited liability company	Sonesta ES Suites Chicago – Schaumburg 901 East Woodfield Office Ct Schaumburg, IL

SCHEDULE 2

EXISTING PROPERTIES

NON-SALE PROPERTIES:
Owner	Hotel	Landlord	Manager
Cambridge TRS, Inc.	Sonesta Hilton Head 130 Shipyard Drive Hilton Head, SC	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Royal Sonesta Cambridge 40 Edwin H. Land Boulevard Cambridge, MA 02142	HPT Cambridge LLC	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Royal Sonesta Harbor Court Baltimore 550 Light Street Baltimore, MD	Harbor Court Associates, LLC	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta Hotel Philadelphia 1800 Market Street Philadelphia, PA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Royal Sonesta Houston Hotel 2222 West Loop South Houston, TX	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Royal Sonesta New Orleans 300 Bourbon Street New Orleans, LA	Royal Sonesta, Inc.	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta Fort Lauderdale  999 North Fort Lauderdale Beach Boulevard  Fort Lauderdale, FL	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta Silicon Valley 1820 Barber Lane Milpitas, CA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Royal Sonesta Chase Park Plaza 212-232 Kingshighway Boulevard St. Louis, MO	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
HPT Clift TRS LLC	The Clift Royal Sonesta Hotel 495 Geary Street San Francisco, CA	HPT Geary Properties Trust	Sonesta Clift LLC
Cambridge TRS, Inc.	The Sonesta Irvine 17941 Von Karman Avenue Irvine, CA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
HPT Wacker Drive TRS LLC	The Royal Sonesta Chicago 71 East Wacker Drive Chicago, IL	HPT IHG-2 Properties Trust	Sonesta Chicago LLC
Cambridge TRS, Inc.	Sonesta Suites Scottsdale 7300 East Gainey Suites Drive Scottsdale, AZ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Orlando 8480 International Drive Orlando, FL	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation

SALE PROPERTIES:
Owner	Hotel	Landlord	Manager
Cambridge TRS, Inc.	Sonesta Gwinnett Place 1775 Pleasant Hill Road Duluth, GA	HPT Cambridge LLC	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Atlanta 760 Mt. Vernon Highway N.E. Atlanta, GA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Burlington 11 Old Concord Road Burlington, MA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Andover 4 Technology Drive Andover, MA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Parsippany 61 Interpace Parkway Parsippany, NJ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Somerset 260 Davidson Avenue Somerset, NJ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Princeton 4375 U.S. Route 1 South Princeton, NJ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Malvern 20 Morehall Road Malvern, PA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Dublin 435 Metro Place South Dublin, OH	HPTMI Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Flagstaff 3440 Country Club Drive Flagstaff, AZ	HPTMI Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Houston 5190 Hidalgo Street Houston, TX	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Columbia 8844 Columbia 100 Parkway Columbia, MD	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Charlotte 7925 Forest Pine Drive Charlotte, NC	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites St. Louis 1855 Craigshire Road St. Louis, MO	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Tucson 6477 East Speedway Boulevard Tucson, AZ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Colorado Springs 3880 North Academy Boulevard Colorado Springs, CO	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Minneapolis 3040 Eagandale Place Eagan, MN	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation

Cambridge TRS, Inc.	Sonesta ES Suites Omaha 6990 Dodge Street Omaha, NE	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Princeton 4225 US Highway 1 South Brunswick – Princeton, NJ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Somers Point 900 Mays Landing Road Somers Point, NJ	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Cincinnati 2670 Kemper Road Sharonville, OH	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Oklahoma City 4361 West Reno Avenue Oklahoma City, OK	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Burlington 35 Hurricane Lane Williston, VT	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Cleveland Airport 17525 Rosbough Drive Middleburg Heights, OH	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Westlake 30100 Clemens Road Westlake, OH	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Birmingham 3 Greenhill Pkwy at U.S. Highway 280 Birmingham, AL	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Montgomery 1200 Hilmar Court Montgomery, AL	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Wilmington – Newark 240 Chapman Road Newark, DE	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Jacksonville 8365 Dix Ellis Trail Jacksonville, FL	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Ann Arbor 800 Victors Way Ann Arbor, MI	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites St. Louis – Chesterfield 15431 Conway Road Chesterfield, MO	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Cincinnati – Blue Ash 11401 Reed Hartman Highway Blue Ash, OH	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Cincinnati – Sharonville West 11689 Chester Road Cincinnati, OH	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation

Cambridge TRS, Inc.	Sonesta ES Suites Providence – Airport 500 Kilvert Street Warwick, RI	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Memphis 6141 Old Poplar Pike Memphis, TN	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Houston – NASA Clear Lake 525 Bay Area Boulevard Houston, TX	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Portland – Vancouver 8005 NE Parkway Drive Vancouver, WA	HPT IHG-2 Properties Trust	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Atlanta – Perimeter Center East 1901 Savoy Drive Atlanta, GA	HPT IHG-3 Properties LLC	Sonesta International Hotels Corporation
Cambridge TRS, Inc.	Sonesta ES Suites Chicago – Lombard 2001 South Highland Avenue Lombard, IL	HPT IHG-3 Properties LLC	Sonesta International Hotels Corporation

SCHEDULE 3

ADJUSTED INVESTED CAPITAL

Owner	Hotel	Invested Capital as of the Effective Time
Cambridge TRS, Inc.	Sonesta Hilton Head 130 Shipyard Drive Hilton Head, SC	$49,183,633
Cambridge TRS, Inc.	Royal Sonesta Cambridge 40 Edwin H. Land Boulevard Cambridge, MA 02142	$126,959,764
Cambridge TRS, Inc.	Royal Sonesta Harbor Court Baltimore 550 Light Street Baltimore, MD	$19,055,410
Cambridge TRS, Inc.	Sonesta Hotel Philadelphia 1800 Market Street Philadelphia, PA	$53,048,590
Cambridge TRS, Inc.	Royal Sonesta Houston Hotel 2222 West Loop South Houston, TX	$32,995,868
Cambridge TRS, Inc.	Royal Sonesta New Orleans 300 Bourbon Street New Orleans, LA	$175,587,184
Cambridge TRS, Inc.	Sonesta Fort Lauderdale  999 North Fort Lauderdale Beach Boulevard  Fort Lauderdale, FL	$42,173,235
Cambridge TRS, Inc.	Sonesta Silicon Valley 1820 Barber Lane Milpitas, CA	$44,911,454
Cambridge TRS, Inc.	Royal Sonesta Chase Park Plaza 212-232 Kingshighway Boulevard St. Louis, MO	$64,693,612
HPT Clift TRS LLC	The Clift Royal Sonesta Hotel 495 Geary Street San Francisco, CA	$129,855,252
Cambridge TRS, Inc.	The Sonesta Irvine 17941 Von Karman Avenue Irvine, CA	$28,949,774
HPT Wacker Drive TRS LLC	The Royal Sonesta Chicago 71 East Wacker Drive Chicago, IL	$49,663,055
Cambridge TRS, Inc.	Sonesta Suites Scottsdale 7300 East Gainey Suites Drive Scottsdale, AZ	$23,500,000
Cambridge TRS, Inc.	Sonesta ES Suites Orlando 8480 International Drive Orlando, FL	$22,083,200

SCHEDULE 4

SONESTA HOLDCO SUBSIDIARIES

(See attached organizational chart)

SCHEDULE 5

SONESTA HOLDCO DISCLOSURE SCHEDULE

Section 4.1(2)(c): Capitalization

• Equityholders Agreement, dated as of June 3, 2019, among the stockholders and companies named therein.

EX-21.1

Exhibit 21.1

SERVICE PROPERTIES TRUST

SUBSIDIARIES OF THE REGISTRANT

Name	State of Formation,Organization or Incorporation
Banner NewCo LLC	Delaware
Cambridge TRS, Inc.	Maryland
Candlewood Jersey City-Urban Renewal, L.L.C.	New Jersey
Harbor Court Associates, LLC	Maryland
Highway Ventures LLC	Delaware
Highway Ventures Borrower LLC	Delaware
Highway Ventures Properties LLC	Maryland
Highway Ventures Properties Trust	Maryland
HPT Cambridge LLC	Massachusetts
HPT Clift TRS LLC	Maryland
HPT CW MA Realty Trust (Nominee Trust)	Massachusetts
HPT CY TRS, Inc.	Maryland
HPT Geary ABC Holdings LLC	Maryland
HPT Geary Properties Trust	Maryland
HPT IHG Canada Corporation	New Brunswick
HPT IHG Canada Properties Trust	Delaware
HPT IHG Chicago Property LLC	Maryland
HPT IHG GA Properties LLC	Maryland
HPT IHG PR, Inc.	Puerto Rico
HPT IHG-2 Properties Trust	Maryland
HPT IHG-3 Properties LLC	Maryland
HPT SN Holding, Inc.	New York
HPT State Street TRS LLC	Maryland
HPT Suite Properties Trust	Maryland
HPT TA Properties LLC	Maryland
HPT TA Properties Trust	Maryland
HPT TRS IHG-2, Inc.	Maryland
HPT TRS Inc.	Maryland
HPT TRS MRP, Inc.	Maryland
HPT TRS SPES II, Inc.	Maryland
HPT TRS WYN, Inc.	Maryland
HPT Wacker Drive TRS LLC	Maryland
HPTCY Properties Trust	Maryland
HPTMI Hawaii, Inc.	Delaware
HPTMI Properties Trust	Maryland
HPTWN Properties Trust	Maryland
Royal Sonesta, Inc.	Louisiana
SVC Holdings LLC	Maryland
SVCN 1 LLC	Delaware
SVCN 2 LLC	Delaware
SVCN 3 LLC	Delaware
SVCN 4 LLC	Delaware
SVCN 5 LLC	Delaware

Exhibit 21.1

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-226944) of Service Properties Trust and the Registration Statement (Form S-8 No. 333-191096) pertaining to the 2012 Equity Compensation Plan of Service Properties Trust of our reports dated February 28, 2020, with respect to the consolidated financial statements and schedule of Service Properties Trust and the effectiveness of internal control over financial reporting of Service Properties Trust included in this Annual Report (Form 10-K) of Service Properties Trust for the year ended December 31, 2019.

/s/ Ernst & Young LLP

Boston, Massachusetts

February 28, 2020

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, John G. Murray, certify that:

1. I have reviewed this Annual Report on Form 10-K of Service Properties Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 28, 2020	/s/ John G. Murray
	John G. Murray
	Managing Trustee, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Brian E. Donley, certify that:

1. I have reviewed this Annual Report on Form 10-K of Service Properties Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 28, 2020	/s/ Brian E. Donley
	Brian E. Donley
	Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Sec. 1350

_______________________________________________

In connection with the filing by Service Properties Trust (the “Company”) of the Annual Report on Form 10-K for the period ended December 31, 2019 (the “Report”), each of the undersigned hereby certifies, to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John G. Murray	/s/ Brian E. Donley
John G. Murray	Brian E. Donley
Managing Trustee, President and	Chief Financial Officer and Treasurer
Chief Executive Officer
Date: February 28, 2020

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Shareholders' Equity - Schedule of AOCI (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Rollforward]
Balance	$ 2,597,431	$ 2,755,422	$ 3,129,389
Current year other comprehensive loss	91	(68)	39,775
Balance	2,505,878	2,597,431	2,755,422
Unrealized Gain (Loss) on Investment Securities, net
Accumulated Other Comprehensive Income (Loss) [Rollforward]
Balance	0	78,715
Amounts reclassified from cumulative other comprehensive income to retained earnings	0	(78,715)
Current year other comprehensive loss	0	0
Balance	0	0	78,715
Equity in Unrealized Gain (Loss) of Investees
Accumulated Other Comprehensive Income (Loss) [Rollforward]
Balance	(266)	643
Amounts reclassified from cumulative other comprehensive income to retained earnings	175	(841)
Current year other comprehensive loss	91	(68)
Balance	0	(266)	643
Cumulative Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss) [Rollforward]
Balance	(266)	79,358	39,583
Amounts reclassified from cumulative other comprehensive income to retained earnings	175	(79,556)
Current year other comprehensive loss		(68)
Balance	$ 0	$ (266)	$ 79,358

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Concentration - Minimum Return and Rents (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) tenant travel_center retail_property hotel property	Sep. 20, 2019 tenant
Concentration Risk
Number of Properties | retail_property	816
Annual Minimum Returns/Rents	$ 381,679
Number of tenants | tenant	194	279
Credit concentration
Concentration Risk
Number of Properties | property	1,145
Number of tenants | tenant	193
Credit concentration | Minimum return / minimum rent
Concentration Risk
Annual Minimum Returns/Rents	$ 998,837
% of Total	100.00%
Credit concentration | Investment
Concentration Risk
% of Total	100.00%
Investment	$ 12,286,138
Hotel operating revenues
Concentration Risk
Number of Properties | hotel	329
Ground rent due	$ 260
Hotel operating revenues | IHG
Concentration Risk
Annual Minimum Returns/Rents	$ 216,239
Hotel operating revenues | IHG | Puerto Rico
Concentration Risk
Number of Properties | hotel	1
Annual Minimum Returns/Rents	$ 7,908
Hotel operating revenues | Marriott contracts
Concentration Risk
Number of Properties | hotel	122
Annual Minimum Returns/Rents	$ 190,600
Hotel operating revenues | Sonesta
Concentration Risk
Annual Minimum Returns/Rents	$ 146,800
Hotel operating revenues | Hyatt
Concentration Risk
Number of Properties | hotel	22
Annual Minimum Returns/Rents	$ 22,037
Hotel operating revenues | Radisson
Concentration Risk
Number of Properties | hotel	9
Annual Minimum Returns/Rents	$ 20,443
Hotel operating revenues | Credit concentration
Concentration Risk
Number of Properties | hotel	329
Hotel operating revenues | Credit concentration | IHG
Concentration Risk
Number of Properties | hotel	103
Hotel operating revenues | Credit concentration | Marriott contracts
Concentration Risk
Number of Properties | property	122
Hotel operating revenues | Credit concentration | Hyatt
Concentration Risk
Number of Properties | hotel	22
Hotel operating revenues | Credit concentration | Radisson
Concentration Risk
Number of Properties | hotel	9
Hotel operating revenues | Credit concentration | Wyndham
Concentration Risk
Number of Properties | hotel	20
Hotel operating revenues | Credit concentration | Minimum return / minimum rent
Concentration Risk
Annual Minimum Returns/Rents	$ 617,158
% of Total	61.70%
Hotel operating revenues | Credit concentration | Minimum return / minimum rent | IHG
Concentration Risk
Annual Minimum Returns/Rents	$ 216,239
% of Total	21.60%
Hotel operating revenues | Credit concentration | Minimum return / minimum rent | Marriott contracts
Concentration Risk
Annual Minimum Returns/Rents	$ 192,774
% of Total	19.30%
Hotel operating revenues | Credit concentration | Minimum return / minimum rent | Sonesta
Concentration Risk
Annual Minimum Returns/Rents	$ 146,800
% of Total	14.70%
Hotel operating revenues | Credit concentration | Minimum return / minimum rent | Hyatt
Concentration Risk
Annual Minimum Returns/Rents	$ 22,037
% of Total	2.20%
Hotel operating revenues | Credit concentration | Minimum return / minimum rent | Radisson
Concentration Risk
Annual Minimum Returns/Rents	$ 20,442
% of Total	2.00%
Hotel operating revenues | Credit concentration | Minimum return / minimum rent | Wyndham
Concentration Risk
Annual Minimum Returns/Rents	$ 18,866
% of Total	1.90%
Hotel operating revenues | Credit concentration | Investment
Concentration Risk
% of Total	57.20%
Investment	$ 7,009,999
Hotel operating revenues | Credit concentration | Investment | IHG
Concentration Risk
% of Total	19.40%
Investment	$ 2,377,821
Hotel operating revenues | Credit concentration | Investment | Marriott contracts
Concentration Risk
% of Total	15.10%
Investment	$ 1,859,836
Hotel operating revenues | Credit concentration | Investment | Sonesta
Concentration Risk
% of Total	16.00%
Investment	$ 1,963,497
Hotel operating revenues | Credit concentration | Investment | Hyatt
Concentration Risk
% of Total	2.50%
Investment	$ 301,942
Hotel operating revenues | Credit concentration | Investment | Radisson
Concentration Risk
% of Total	2.40%
Investment	$ 289,139
Hotel operating revenues | Credit concentration | Investment | Wyndham
Concentration Risk
% of Total	1.80%
Investment	$ 217,764
Travel centers
Concentration Risk
Number of Properties | travel_center	179
Vacation units | Wyndham
Concentration Risk
Annual Minimum Returns/Rents	$ 1,537
Marriott (No. 1) | Hotel operating revenues | Credit concentration
Concentration Risk
Number of Properties | property	53
Marriott (No. 1) | Hotel operating revenues | Credit concentration | Minimum return / minimum rent
Concentration Risk
Annual Minimum Returns/Rents	$ 71,872
% of Total	7.20%
Marriott (No. 1) | Hotel operating revenues | Credit concentration | Investment
Concentration Risk
% of Total	5.90%
Investment	$ 723,663
Marriott (No. 234) | Hotel operating revenues | Credit concentration
Concentration Risk
Number of Properties | property	68
Marriott (No. 234) | Hotel operating revenues | Credit concentration | Minimum return / minimum rent
Concentration Risk
Annual Minimum Returns/Rents	$ 110,384
% of Total	11.10%
Marriott (No. 234) | Hotel operating revenues | Credit concentration | Investment
Concentration Risk
% of Total	8.50%
Investment	$ 1,046,094
Marriott (No. 5) | Hotel operating revenues
Concentration Risk
Number of Properties | hotel	1
Annual Minimum Returns/Rents	$ 10,518
Marriott (No. 5) | Hotel operating revenues | Credit concentration
Concentration Risk
Number of Properties | property	1
Marriott (No. 5) | Hotel operating revenues | Credit concentration | Minimum return / minimum rent
Concentration Risk
Annual Minimum Returns/Rents	$ 10,518
% of Total	1.10%
Marriott (No. 5) | Hotel operating revenues | Credit concentration | Investment
Concentration Risk
% of Total	0.70%
Investment	$ 90,079
Travel Centers of America LLC | Travel centers | Credit concentration
Concentration Risk
Number of Properties | property	179
Travel Centers of America LLC | Travel centers | Credit concentration | Minimum return / minimum rent
Concentration Risk
Annual Minimum Returns/Rents	$ 246,088
% of Total	24.60%
Travel Centers of America LLC | Travel centers | Credit concentration | Investment
Concentration Risk
% of Total	26.90%
Investment	$ 3,302,815
TA No. 4 Lease
Concentration Risk
Ground rent due	$ 2,175
Other Net Leases | Credit concentration
Concentration Risk
Number of Properties | property	637
Other Net Leases | Credit concentration | Minimum return / minimum rent
Concentration Risk
Annual Minimum Returns/Rents	$ 135,591
% of Total	13.70%
Other Net Leases | Credit concentration | Investment
Concentration Risk
% of Total	15.90%
Investment	$ 1,973,324
Subtotal Net Lease | Credit concentration
Concentration Risk
Number of Properties | property	816
Subtotal Net Lease | Credit concentration | Minimum return / minimum rent
Concentration Risk
Annual Minimum Returns/Rents	$ 381,679
% of Total	38.30%
Subtotal Net Lease | Credit concentration | Investment
Concentration Risk
% of Total	42.80%
Investment	$ 5,276,139

XML

Fair Value of Assets and Liabilities - Fair Value of Additional Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Senior Unsecured Notes, due 2021 at 4.25%
Fair Value of Assets and Liabilities
Interest rate stated percentage	4.25%
Senior Unsecured Notes, due 2022 at 5.00%
Fair Value of Assets and Liabilities
Interest rate stated percentage	5.00%
Senior Unsecured Notes, due 2023 at 4.50%
Fair Value of Assets and Liabilities
Interest rate stated percentage	4.50%
Senior Unsecured Notes, due 2024 at 4.65%
Fair Value of Assets and Liabilities
Interest rate stated percentage	4.65%
Senior Unsecured Notes, due 2024 at 4.35%
Fair Value of Assets and Liabilities
Interest rate stated percentage	4.35%
Senior Unsecured Notes, due 2025 at 4.50%
Fair Value of Assets and Liabilities
Interest rate stated percentage	4.50%
Senior Unsecured Notes, due 2026 at 5.25%
Fair Value of Assets and Liabilities
Interest rate stated percentage	5.25%
Senior Unsecured Notes, due 2026 at 4.75%
Fair Value of Assets and Liabilities
Interest rate stated percentage	4.75%
Senior Unsecured Notes, due 2027 at 4.95%
Fair Value of Assets and Liabilities
Interest rate stated percentage	4.95%
Senior Unsecured Notes, due 2028 at 3.95%
Fair Value of Assets and Liabilities
Interest rate stated percentage	3.95%
Senior Unsecured Notes, due 2029 at 4.95%
Fair Value of Assets and Liabilities
Interest rate stated percentage	4.95%
Senior Unsecured Notes, due 2030 at 4.375%
Fair Value of Assets and Liabilities
Interest rate stated percentage	4.375%
Carrying amount
Fair Value of Assets and Liabilities
Total financial liabilities	$ 5,287,658	$ 3,598,295
Carrying amount | Senior Unsecured Notes, due 2021 at 4.25%
Fair Value of Assets and Liabilities
Total financial liabilities	398,379	396,938
Carrying amount | Senior Unsecured Notes, due 2022 at 5.00%
Fair Value of Assets and Liabilities
Total financial liabilities	496,821	495,609
Carrying amount | Senior Unsecured Notes, due 2023 at 4.50%
Fair Value of Assets and Liabilities
Total financial liabilities	499,432	499,268
Carrying amount | Senior Unsecured Notes, due 2024 at 4.65%
Fair Value of Assets and Liabilities
Total financial liabilities	348,295	347,890
Carrying amount | Senior Unsecured Notes, due 2024 at 4.35%
Fair Value of Assets and Liabilities
Total financial liabilities	818,075	0
Carrying amount | Senior Unsecured Notes, due 2025 at 4.50%
Fair Value of Assets and Liabilities
Total financial liabilities	346,431	345,743
Carrying amount | Senior Unsecured Notes, due 2026 at 5.25%
Fair Value of Assets and Liabilities
Total financial liabilities	343,083	341,955
Carrying amount | Senior Unsecured Notes, due 2026 at 4.75%
Fair Value of Assets and Liabilities
Total financial liabilities	445,905	0
Carrying amount | Senior Unsecured Notes, due 2027 at 4.95%
Fair Value of Assets and Liabilities
Total financial liabilities	394,649	393,893
Carrying amount | Senior Unsecured Notes, due 2028 at 3.95%
Fair Value of Assets and Liabilities
Total financial liabilities	390,759	389,610
Carrying amount | Senior Unsecured Notes, due 2029 at 4.95%
Fair Value of Assets and Liabilities
Total financial liabilities	417,307	0
Carrying amount | Senior Unsecured Notes, due 2030 at 4.375%
Fair Value of Assets and Liabilities
Total financial liabilities	388,522	387,389
Fair value
Fair Value of Assets and Liabilities
Total financial liabilities	5,499,211	3,583,452
Fair value | Senior Unsecured Notes, due 2021 at 4.25%
Fair Value of Assets and Liabilities
Total financial liabilities	406,838	404,582
Fair value | Senior Unsecured Notes, due 2022 at 5.00%
Fair Value of Assets and Liabilities
Total financial liabilities	526,500	510,658
Fair value | Senior Unsecured Notes, due 2023 at 4.50%
Fair Value of Assets and Liabilities
Total financial liabilities	520,478	503,295
Fair value | Senior Unsecured Notes, due 2024 at 4.65%
Fair Value of Assets and Liabilities
Total financial liabilities	364,277	349,741
Fair value | Senior Unsecured Notes, due 2024 at 4.35%
Fair Value of Assets and Liabilities
Total financial liabilities	848,847	0
Fair value | Senior Unsecured Notes, due 2025 at 4.50%
Fair Value of Assets and Liabilities
Total financial liabilities	361,783	341,114
Fair value | Senior Unsecured Notes, due 2026 at 5.25%
Fair Value of Assets and Liabilities
Total financial liabilities	369,185	354,060
Fair value | Senior Unsecured Notes, due 2026 at 4.75%
Fair Value of Assets and Liabilities
Total financial liabilities	464,315	0
Fair value | Senior Unsecured Notes, due 2027 at 4.95%
Fair Value of Assets and Liabilities
Total financial liabilities	414,012	391,660
Fair value | Senior Unsecured Notes, due 2028 at 3.95%
Fair Value of Assets and Liabilities
Total financial liabilities	393,940	361,232
Fair value | Senior Unsecured Notes, due 2029 at 4.95%
Fair Value of Assets and Liabilities
Total financial liabilities	434,248	0
Fair value | Senior Unsecured Notes, due 2030 at 4.375%
Fair Value of Assets and Liabilities
Total financial liabilities	$ 394,788	$ 367,110

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Related Person Transactions - Sonesta and AIC (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) retail_property hotel property	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jun. 30, 2017 USD ($)
Related Party Transaction [Line Items]
Number of properties | retail_property	816
Distributions in excess of earnings from Affiliates Insurance Company	$ 9,000
Capital distribution	6,577		$ 0		$ 0
Earnings (losses) recognized related to equity investments	393		515		607
Affiliates Insurance Company
Related Party Transaction [Line Items]
Aggregate annual premium		$ 5,738		$ 6,387		$ 4,004
Equity method investments, carrying value	298		8,639		8,192
Earnings (losses) recognized related to equity investments	393		515		607
Other comprehensive income, other, net of tax	$ (175)		$ (68)		$ 460
Annual premium payable service fee	3.00%
Credit concentration
Related Party Transaction [Line Items]
Number of properties | property	1,145
Hotel operating revenues
Related Party Transaction [Line Items]
Number of properties | hotel	329
Hotel operating revenues | Credit concentration
Related Party Transaction [Line Items]
Number of properties | hotel	329
Hotel operating revenues | Credit concentration | Sonesta International Hotels Corporation
Related Party Transaction [Line Items]
Number of properties | hotel	53

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Income Taxes - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Income taxes
Net deferred tax assets prior to valuation allowance	$ 47,897	$ 65,265
Consolidated TRS
Income taxes
Net deferred tax assets prior to valuation allowance	$ 42,434	$ 59,892
Valuation allowance provided (as a percent)	100.00%	100.00%
Net operating loss carryforwards for federal income tax purpose, subject to expiration	$ 167,780

XML

Management Agreements and Leases - Hyatt Agreement (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) retail_property hotel	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Management Agreements and Leases [Line Items]
Number of properties | retail_property	816
Annual minimum returns and rents	$ 381,679
Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	329
Guarantee provided to the entity, maximum	$ 30,000
Hyatt | Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	22
Annual minimum returns and rents	$ 22,037
Realized returns and rents	22,037	$ 22,037	$ 22,037
Guarantee provided to the entity, maximum	50,000
Increase in guarantee	(2,260)
Guarantee provided to the entity, remaining amount	$ 19,655

XML

Management Agreements and Leases - Marriott No. 234 (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) retail_property hotel	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Management Agreements and Leases [Line Items]
Number of properties | retail_property	816
Annual minimum returns and rents	$ 381,679
Security deposit balance	109,403	$ 132,816
Capital improvements from leased facilities, funded	$ 150,531	182,862	$ 131,120
Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	329
Marriott (No. 234) | Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	68
Annual minimum returns and rents	$ 110,383
Realized returns and rents	108,564	106,978	$ 106,405
Replenishment (utilization) of security deposit	$ 734
Percentage of aggregate minimum return due	90.00%
Capital improvements from leased facilities, funded	$ 33,700	$ 9,030

XML

Segment Information (Tables)

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Schedule of segment information

	For the Year Ended December 31, 2019
	Hotels		Net Lease		Corporate			Consolidated
Hotel operating revenues	$	1,989,173	$	—	$	—		$	1,989,173
Rental income	20,985		301,251		—			322,236
FF&E reserve income	4,739		—		—			4,739
Total revenues	2,014,897		301,251		—			2,316,148
Hotel operating expenses	1,410,927		—		—			1,410,927
Other operating expenses	—		8,357		—			8,357
Depreciation and amortization	268,088		160,360		—			428,448
General and administrative	—		—		54,639			54,639
Acquisition and other transaction related costs	—		—		1,795			1,795
Loss on asset impairment	28,371		10,925		—			39,296
Total expenses	1,707,386		179,642		56,434			1,943,462
Gain on sale of real estate	—		159,535		—			159,535
Dividend income	—		—		1,752			1,752
Unrealized losses on equity securities	—		—		(40,461		)	(40,461		)
Interest income	795		—		1,420			2,215
Interest expense	—		—		(225,126		)	(225,126		)
Loss on early extinguishment of debt	—		—		(8,451		)	(8,451		)
Income (loss) before income taxes and equity in earnings of an investee	308,306		281,144		(327,300		)	262,150
Income tax expense	—		—		(2,793		)	(2,793		)
Equity in earnings of an investee	—		—		393			393
Net income (loss)	$	308,306	$	281,144	$	(329,700	)	$	259,750

	As of December 31, 2019
	Hotels		Net Lease		Corporate		Consolidated
Total assets	$	4,866,549	$	4,042,831	$	124,587	$	9,033,967

	For the Year Ended December 31, 2018
	Hotels		Net Lease		Corporate			Consolidated
Hotel operating revenues	$	1,958,598	$	—	$	—		$	1,958,598
Rental income	28,644		302,162		—			330,806
FF&E reserve income	5,132		—		—			5,132
Total revenues	1,992,374		302,162		—			2,294,536
Hotel operating expenses	1,387,065		—		—			1,387,065
Other operating expenses	—		5,290		—			5,290
Depreciation and amortization	255,759		147,318		—			403,077
General and administrative	—		—		104,862			104,862
Acquisition and other transaction related costs	—		—		—			—
Loss on asset impairment	—		—		—			—
Total expenses	1,642,824		152,608		104,862			1,900,294
Dividend income	—		—		2,754			2,754
Unrealized losses on equity securities	—		—		(16,737		)	(16,737		)
Interest income	990		—		538			1,528
Interest expense	—		—		(195,213		)	(195,213		)
Loss on early extinguishment of debt	—		—		(160		)	(160		)
Income (loss) before income taxes and equity in earnings of an investee	350,540		149,554		(313,680		)	186,414
Income tax expense	—		—		(1,195		)	(1,195		)
Equity in earnings of an investee	—		—		515			515
Net income (loss)	$	350,540	$	149,554	$	(314,360	)	$	185,734

	As of December 31, 2018
	Hotels		Net Lease		Corporate		Consolidated
Total assets	$	4,586,709	$	2,398,118	$	192,252	$	7,177,079

	For the Year Ended December 31, 2017
	Hotels		Net Lease		Corporate			Consolidated
Hotel operating revenues	$	1,840,829	$	—	$	—		$	1,840,829
Rental income	33,162		293,274		—			326,436
FF&E reserve income	4,670		—		—			4,670
Total revenues	1,878,661		293,274		—			2,171,935
Hotel operating expenses	1,274,642		—		—			1,274,642
Other operating expenses	—		4,905		—			4,905
Depreciation and amortization	242,829		143,830		—			386,659
General and administrative	—		—		125,402			125,402
Total expenses	1,517,471		148,735		125,402			1,791,608
Gain on sale of real estate	—		—		9,348			9,348
Dividend income	—		—		2,504			2,504
Interest income	401		—		397			798
Interest expense	—		—		(181,579		)	(181,579		)
Loss on early extinguishment of debt	—		—		(146		)	(146		)
Income (loss) before income taxes and equity in earnings of an investee	361,591		144,539		(294,878		)	211,252
Income tax benefit	—		—		3,284			3,284
Equity in earnings of an investee	—		—		607			607
Net income (loss)	$	361,591	$	144,539	$	(290,987	)	$	215,143

	As of December 31, 2017
	Hotels		Net Lease		Corporate		Consolidated
Total assets	$	4,477,512	$	2,476,073	$	196,800	$	7,150,385

XML

Summary of Significant Accounting Policies - Intangibles (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Intangible Assets and Liabilities
Acquired real estate leases and other intangibles	$ 378,218	$ 105,749
Intangible assets, net	378,546	105,749
Intangible liabilities, net	$ 4,509	1,301
Amortization period of intangible liabilities	3 years
Amortization period of intangible assets	6 years
Amortization relating to intangible assets	$ 1,757	2,542	$ 2,814
Amortization relating to intangible liabilities	441	455	$ 455
Tradenames and trademarks
Intangible Assets and Liabilities
Intangible assets, indefinite	89,375	89,375
Above market operating leases, net of accumulated amortization of $15,748
Intangible Assets and Liabilities
Acquired real estate leases and other intangibles	275,814	0
Intangible assets, accumulated amortization	15,748	0
Below market ground leases, net of accumulated amortization of $21,125 and $21,985, respectively
Intangible Assets and Liabilities
Acquired real estate leases and other intangibles	10,034	12,698
Intangible assets, accumulated amortization	21,125	21,985
Other, net of accumulated amortization of $1,803 and $1,451, respectively
Intangible Assets and Liabilities
Acquired real estate leases and other intangibles	3,323	3,676
Intangible assets, accumulated amortization	1,803	1,451
Below market operating leases, net of accumulated amortization of $367
Intangible Assets and Liabilities
Intangible liabilities, accumulated amortization	367	0
Intangible liabilities, net	3,653	0
Above market ground leases, net of accumulated amortization of $5,886 and $5,441, respectively
Intangible Assets and Liabilities
Intangible liabilities, accumulated amortization	5,886	5,441
Intangible liabilities, net	$ 856	$ 1,301
Above Market Leases
Intangible Assets and Liabilities
Amortization period of above and below market leases	10 years 2 months 12 days
Below Market Leases
Intangible Assets and Liabilities
Amortization period of above and below market leases	5 years

XML

Concentration

12 Months Ended

Dec. 31, 2019

Risks and Uncertainties [Abstract]

Concentration

Note 11. Concentration

Geographic Concentration

At December 31, 2019, our 1,145 properties were located in 47 states in the United States, plus Washington, DC, Ontario, Canada and Puerto Rico. Between 6% and 10% of our properties, by investment, were located in each of California, Texas, Georgia and Illinois. Our two hotels in Ontario, Canada and our hotel in Puerto Rico represent 2% of our hotels, by investment, in the aggregate at December 31, 2019.

Credit Concentration

All of our managers and tenants are subsidiaries of other companies. The percentage of our annual minimum returns and rents, for each management or lease agreement is shown below, as of December 31, 2019.

Agreement Reference Name	Number of Properties	Annual Minimum Returns/Rents		% of Total		Investment(1)		% of Total
IHG (2)	103	$	216,239	21.6	%	$	2,377,821	19.4	%
Marriott (No. 1)	53	71,872		7.2	%	723,663		5.9	%
Marriott (No. 234)	68	110,384		11.1	%	1,046,094		8.5	%
Marriott (No. 5)	1	10,518		1.1	%	90,079		0.7	%
Subtotal Marriott	122	192,774		19.3	%	1,859,836		15.1	%
Sonesta	53	146,800		14.7	%	1,963,497		16.0	%
Hyatt	22	22,037		2.2	%	301,942		2.5	%
Radisson	9	20,442		2.0	%	289,139		2.4	%
Wyndham (3)	20	18,866		1.9	%	217,764		1.8	%
Subtotal Hotels	329	617,158		61.7	%	7,009,999		57.2	%
TravelCenters of America Inc. (4)	179	246,088		24.6	%	3,302,815		26.9	%
Other Net Leases (5)	637	135,591		13.7	%	1,973,324		15.9	%
Subtotal Net Lease	816	381,679		38.3	%	5,276,139		42.8	%
Total	1,145	$	998,837	100.0	%	$	12,286,138	100.0	%

(1) Hotel investments represent historical cost of our properties plus capital improvements funded by us less impairment writedowns, if any, and excludes capital improvements made from FF&E reserves funded from hotel operations which do not result in increases to minimum returns or rents. Net lease investments represents historical cost of our properties plus capital improvements funded by us less impairment write-downs, if any.

(2) The annual minimum return/minimum rent amount presented includes $7,908 of rent related to our lease with IHG for one hotel in Puerto Rico.

(3) The annual minimum return/minimum rent amount presented includes $1,537 of rent related to our lease with Destinations for 48 vacation units in one hotel.

(4) The annual minimum rent amount for our TA No. 4 lease includes approximately $2,175 of ground rent paid by TA for a property we lease and sublease to TA.

(5) Represents 193 individual tenants. No other tenant represents more than 1% of our annual minimum returns or rents.

Minimum return and minimum rent payments due to us under some of these hotel management agreements and leases are supported by guarantees. As of January 1, 2020 the guaranty provided by Marriott with respect to the 122 hotels managed by Marriott under our Marriott Agreement is limited to $30,000 and expires on December 31, 2026. The guaranty provided by Hyatt with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($19,655  remaining at December 31, 2019). The guaranty provided by Radisson with respect to the nine hotels managed by Radisson is limited to $47,523 ( $41,216 remaining at December 31, 2019). These guarantees may be replenished by future cash flows from the hotels in excess of our minimum returns. The guaranty provided by Destinations is unlimited.

Security deposits support minimum return and minimum rent payments that may be due to us under some of our management agreements and leases. As of December 31, 2019, we hold security deposits for our 103 hotels managed or leased by IHG ($75,717) and for the 122 hotels included in our Marriott Agreement ($33,445). These deposits may be replenished further in the future from available cash flows.

Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $96,744, $50,203 and $31,477 less than the minimum returns due to us for the years ended December 31, 2019, 2018, and 2017, respectively. When managers of these hotels are required to fund the shortfalls under the terms of our management agreements or their guarantees, we reflect such fundings (including security deposit applications) in our consolidated statements of comprehensive income as a reduction of hotel operating expenses. The reduction to hotel operating expenses was $29,897, $5,569 and $4,673 in the years ended December 31, 2019, 2018 and 2017, respectively. When we reduce the amounts of the security deposits we hold for any of our operating agreements for payment deficiencies, it does not result in additional cash flows to us of the deficiency amounts, but reduces the refunds due to the respective tenants or managers who have provided us with these deposits upon expiration of the respective operating agreement. The security deposits are non-interest bearing and are not held in escrow. We had shortfalls at certain of our managed hotel portfolios not funded by the managers of these hotels under the terms of our management agreements of $69,929 and $44,634 during the years ended December 31, 2019 and 2018, respectively, which represents the unguaranteed portion of our minimum returns from our Sonesta and Wyndham agreements and shortfalls of $26,804 during the year ended December 31, 2017, which represents the unguaranteed portion of our minimum returns from our Sonesta agreement.

Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $10,702, $35,464 and $68,338 more than the minimum returns due to us during the years ended December 31, 2019, 2018 and 2017, respectively. Certain of our guarantees and our security deposits may be replenished by a share of future cash flows from the applicable hotel operations in excess of the minimum returns due to us pursuant to the terms of the respective agreements. When our guarantees and security deposits are replenished by cash flows from hotel operations, we reflect such replenishments in our consolidated statements of comprehensive income as an increase to hotel operating expenses. We had $734, $10,743 and $25,419 of guaranty and security deposit replenishments during the years ended December 31, 2019, 2018 and 2017, respectively.

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Shareholders' Equity

12 Months Ended

Dec. 31, 2019

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Note 7. Shareholders' Equity

Common Share Awards

We have common shares available for issuance under the terms of our 2012 Equity Compensation Plan, or our Share Award Plan. During the years ended December 31, 2019, 2018 and 2017, we granted 140,100 of our common shares with an aggregate market value of $3,507, 97,000 of our common shares with an aggregate market value of $2,810 and 85,000 of our common shares with an aggregate market value of $2,387, respectively, to our officers and certain other employees of our manager, RMR LLC, pursuant to the Share Award Plan. The value of the share grants was based upon the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the date of the grant. See Note 9 for a further discussion of the grants we made to our officers and certain other employees of RMR LLC. On April 12, 2018, we granted 3,000 of our common shares with an aggregate market value of $75 to one of our Managing Trustees who was elected as a Managing Trustee that day. In addition, we granted each of our then Trustees 3,000 of our common shares in each of 2019 and 2018 and 2017 with an aggregate market value of $370 ($74 per trustee), $427 ($85 per trustee) and $452 ($90 per trustee), respectively, as part of their annual compensation. The values of the share grants were based upon the closing price of our common shares on Nasdaq on the dates of the grants. The shares granted to our Trustees vest immediately. The shares granted to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of grant. Share grants are expensed ratably over the vesting period and the value of such share grants are included in general and administrative expense in our consolidated statements of comprehensive income.

A summary of shares granted, vested, forfeited and unvested under the terms of the Share Award Plan for the years ended December 31, 2019, 2018 and 2017 is as follows:

	2019				2018				2017
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested shares, beginning of year	164,000		$	28.39	146,605		$	27.93	148,535		$	29.40
Shares granted	155,100		25.00		115,000		28.80		100,000		28.39
Shares vested	(122,010	)	25.09		(96,375	)	28.73		(101,930	)	28.52
Shares forfeited	(2,550	)	27.49		(1,230	)	—		—		—
Unvested shares, end of year	194,540		$	26.59	164,000		$	28.39	146,605		$	27.93

The 194,540 unvested shares as of December 31, 2019 are scheduled to vest as follows: 67,290 shares in 2020, 55,930 shares in 2021, 43,600 shares in 2022 and 27,720 shares in 2023. As of December 31, 2019, the estimated future compensation expense for the unvested shares was $4,652. The weighted average period over which the compensation expense will be recorded is approximately 23 months. During the years ended December 31, 2019, 2018 and 2017, we recorded $2,849, $3,187 and $2,759, respectively, of compensation expense related to the Share Award Plan.

At December 31, 2019, 2,290,692 of our common shares remain reserved for issuance under our current Share Award Plan.

Stock Repurchases

During 2019, we purchased an aggregate of 31,225 of our common shares valued at a weighted average price per common share of $25.61, based on the closing price of our common shares on Nasdaq, on the date of repurchase, from certain of our officers and certain current or former employees of RMR LLC, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

During 2018, we purchased an aggregate of 21,202 of our common shares valued at a weighted average price per common share of $28.59, based on the closing price of our common shares on Nasdaq, on the date of repurchase, from certain of our officers and certain current or former employees of RMR LLC, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

During 2017, we purchased an aggregate of 19,058 of our common shares valued at a weighted average price per common share of $28.01, based on the closing price of our common shares on Nasdaq, on the dates of repurchase, from certain of our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

Distributions

During the years ended December 31, 2019, 2018 and 2017, we paid distributions on our common shares as follows:

	Annual Per Share Distribution	Total Distribution	Characterization of Distribution
Year			Ordinary Income	Capital Gain	Return of Capital	Qualified Dividend
2019	$2.15	$353,620	44.50%	37.93%	17.57%	0.50%
2018	$2.11	$346,832	100.00%	—	—	—
2017	$2.07	$340,084	94.69%	—	4.39%	0.92%

On January 16, 2020, we declared a distribution of $0.54 per common share, or $88,864, which we paid on February 20, 2020, to shareholders of record on January 27, 2020.

On February 10, 2017, we redeemed all 11,600,000 of our outstanding 7.125% Series D cumulative redeemable preferred shares at the stated liquidation preference of $25.00 per share plus accrued and unpaid dividends to the date of redemption (an aggregate of $291,435). We reduced net income available for common shareholders in 2017 by $9,893, which represents the amount by which the liquidation preference for our Series D cumulative redeemable preferred shares that were redeemed exceeded our carrying amount for those preferred shares as of the date of redemption.

Cumulative Other Comprehensive Income (Loss)

Cumulative other comprehensive income (loss), as of December 31, 2019, represents our share of the comprehensive loss of AIC. See Note 9 for further information regarding this investment.

The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the year ended December 31, 2019:

	Unrealized Gain			Equity in
	(Loss) on Investment			Unrealized Gain
	Securities, net			(Loss) of Investees			Total
Balance at December 31, 2017	$	78,715		$	643		$	79,358
Amounts reclassified from cumulative other comprehensive income to retained earnings	(78,715		)	(841		)	(79,556		)
Current year other comprehensive income	—			(68		)	(68		)
Balance at December 31, 2018	—			(266		)	(266		)
Current year other comprehensive loss	—			91			91
Amounts reclassified from cumulative other comprehensive income to net income	—			175			175
Balance at December 31, 2019	$	—		$	—		$	—

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Weighted Average Common Shares

12 Months Ended

Dec. 31, 2019

Earnings Per Share, Basic and Diluted [Abstract]

Weighted Average Common Shares

Note 3. Weighted Average Common Shares

The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share:

	For the Year Ended December 31,
	2019	2018	2017
	(in thousands)
Weighted average common shares for basic earnings per share	164,312	164,229	164,146
Effect of dilutive securities: Unvested share awards	28	29	29
Weighted average common shares for diluted earnings per share	164,340	164,258	164,175

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Real Estate Properties (Tables)

12 Months Ended

Dec. 31, 2019

Real Estate [Abstract]

Schedule of allocation of purchase prices by location

Our allocation of the purchase price of each of our acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.

Properties acquired during the year ended December 31, 2019 (1)
Acquisition Date	Location	Type	Purchase Price		Land		Land Improvements		Building and Improvements		Furniture, Fixtures and Equipment		Held For Sale		Intangible Assets
2/22/2019	Washington, D.C. (2)	Hotel	$	143,742	$	44,972	$	151	$	93,412	$	5,207	$	—	$	—
5/7/2019	Milwaukee, WI (3)	Hotel	30,235		3,442		1,053		25,132		608		—		—
8/1/2019	Southington, CT (4)	Land	66		66		—		—		—		—		—
9/20/2019	Various (5)	Net Lease	2,482,382		388,057		—		1,201,922		—		604,989		287,414
10/9/2019	Chicago, IL (6)	Hotel	55,560		7,723		—		45,059		2,778		—		—
			$	2,711,985	$	444,260	$	1,204	$	1,365,525	$	8,593	$	604,989	$	287,414
Properties acquired during the year ended December 31, 2018 (1)
6/15/2018	Minneapolis, MN (7)	Hotel	$	75,576	$	2,196	$	—	$	68,388	$	4,992	$	—	$	—
6/15/2018	Baton Rouge, LA (8)	Hotel	16,022		2,242		173		12,842		765		—		—
10/30/2018	Scottsdale, AZ (9)	Hotel	35,999		6,450		833		25,898		2,818		—		—
			$	127,597	$	10,888	$	1,006	$	107,128	$	8,575	$	—	$	—
Properties acquired during the year ended December 31, 2017 (1)
2/1/2017	Chicago, IL (10)	Hotel	$	86,201	$	13,609	$	40	$	58,929	$	11,926	$	—	$	1,697
3/31/2017	Seattle, WA (11)	Hotel	73,041		24,562		30		47,103		898		—		448
5/3/2017	Columbia, SC (12)	Net Lease	27,604		4,040		7,172		16,392		—		—		—
6/2/2017	St. Louis, MO (13)	Hotel	88,080		4,250		161		79,737		3,394		—		538
6/29/2017	Atlanta, GA (14)	Hotel	88,748		16,612		483		68,864		2,789		—		—
8/1/2017	Columbus, OH (15)	Hotel	49,188		6,100		49		40,678		2,361		—		—
8/23/2017	Charlotte, NC (16)	Hotel	44,000		2,684		1,012		35,288		5,016		—		—
9/8/2017	Atlanta, GA (17)	Land	940		940		—		—		—		—		—
9/26/2017	Various (18)	Hotels	139,923		30,720		6,392		93,899		8,912		—		—
9/28/2017	Sayre, OK (19)	Net Lease	8,672		1,031		—		7,641		—		—		—
			$	606,397	$	104,548	$	15,339	$	448,531	$	35,296	$	—	$	2,683

(1) We accounted for these transactions as acquisitions of assets.

(2) On February 22, 2019, we acquired the 335 room Hotel Palomar located in Washington, D.C. for a purchase price of $143,742, including capitalized acquisition costs of $2,292. We added this Kimpton^® branded hotel to our management agreement with IHG.

(3) On May 7, 2019, we acquired the 198 room Crowne Plaza Milwaukee West hotel in Milwaukee, WI for a purchase price of $30,235, including capitalized acquisition costs of $235. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(4) On August 1, 2019, we acquired a land parcel adjacent to our travel center located in Southington, CT for a purchase price of $66, including capitalized acquisition costs of $6. This land parcel has been added to the TA lease for that travel center.

(5) On September 20, 2019, we completed the SMTA Transaction for total consideration of $2,482,382. See below for further information regarding the SMTA Transaction.

(6) On October 9, 2019, we acquired the 261-room Kimpton Palomar Hotel located in Chicago, IL for a purchase price of $55,560, including acquisition related costs of $560. We added this Kimpton® branded hotel to our management agreement with IHG.

(7) On June 15, 2018, we acquired the 360 room Radisson Blu^® hotel in Minneapolis, MN for a purchase price of $75,576, including capitalized acquisition costs of $576. We added this hotel to our management agreement with Radisson.

(8) On June 15, 2018, we acquired the 117 suite Staybridge Suites^® at Louisiana State University in Baton Rouge, LA for a purchase price of $16,022, including capitalized acquisition costs of $272. We added this hotel to our management agreement with IHG.

(9) On October 30, 2018, we acquired a hotel with 164 suites in Scottsdale, AZ for a purchase price of $35,999, including capitalized acquisition costs of $114. We converted this hotel to the Sonesta Suites^® brand and entered into a management agreement for this hotel with Sonesta.

(10) On February 1, 2017, we acquired the 483 room Hotel Allegro in Chicago, IL for a purchase price of $86,201, including capitalized acquisition costs of $707. We added this Kimpton^® branded hotel to our management agreement with IHG.

(11) On March 31, 2017, we acquired the 121 room Hotel Alexis in Seattle, WA for a purchase price of $73,041, including capitalized acquisition costs of $1,416. We added this Kimpton^® branded hotel to our management agreement with IHG.

(12) On May 3, 2017, we acquired a travel center from TA for $27,604 pursuant to a transaction agreement we entered with TA in 2015. Simultaneously with this acquisition, we leased the travel center back to TA.

(13) On June 2, 2017, we acquired the 389 room Chase Park Plaza Hotel in St. Louis, MO for a purchase price of $88,080, including capitalized acquisition costs of $466. We converted this hotel to the Royal Sonesta^® hotel brand and entered into a management agreement for this hotel with Sonesta.

(14) On June 29, 2017, we acquired the 495 room Crowne Plaza Ravinia hotel located in Atlanta, GA for a purchase price of $88,748, including capitalized acquisition costs of $144. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(15) On August 1, 2017, we acquired the 419 room Crowne Plaza & Lofts hotel in Columbus, OH for a purchase price of $49,188, including capitalized acquisition costs of $198. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(16) On August 23, 2017, we acquired the 300 room Crowne Plaza hotel in Charlotte, NC for a purchase price of $44,000, including capitalized acquisition costs of $143. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(17) On September 8, 2017, we acquired a land parcel adjacent to our Crowne Plaza hotel located in Atlanta, GA for a purchase price of $940, including capitalized acquisition costs of $40.

(18) On September 26, 2017, we acquired 14 extended stay hotels with 1,653 suites located in 12 states for a purchase price of $139,923, including capitalized acquisition costs of $1,923. In connection with this acquisition, we converted these hotels to the Sonesta ES Suites^® brand and entered into management agreements for these hotels with Sonesta.

(19)

On September 28, 2017, we acquired land and certain improvements at a travel center located in Sayre, OK that we previously leased from a third party and subleased to TA for a purchase price of $8,672, including capitalized acquisition costs of $72. We now directly lease this land and these improvements to TA under our TA No. 4 lease.

Schedule of sale of properties

The sales of these properties, as presented in the table below, do not represent significant dispositions individually or in the aggregate nor do they represent a strategic shift. As a result, the results of operations of these properties are included in continuing operations through the date of sale in our consolidated statements of income.

Date of Sale	Number of Properties	Location	Tenant	Square Feet	Gross Sales Price
1/16/2019	20	Various (1)	TravelCenters	541,483	$	308,200
10/22/2019	1	4726 Mall Drive, Hermantown, MN (2)	HOM Furniture	103,631	6,250
10/29/2019	1	1505 South Pavilion Center Drive Las Vegas, NV (2)	Station Casino	138,558	57,000
11/14/2019	1	1855 S. Range Avenue, Colby, KS (2)	Vacant	6,900	590
11/25/2019	123	Various (2)	Various	2,429,333	435,104
12/16/2019	1	4740 Radio Road, Naples, FL 34110 (2)	Rick Johnson Auto & Tire	4,480	1,112
12/16/2019	1	996 Central Avenue, Naples, FL 34102 (2)	Rick Johnson Auto & Tire	4,500	706
12/30/2019	2	9032 & 9080 Harry Hines Boulevard, Dallas, TX (2)	Pine Creek Medical Center	85,839	12,250
	150			3,314,724	$	821,212

(1) In January 2019, in a series of transactions, we sold 20 travel centers in 15 states to TA for $308,200. We recorded a gain of $159,535 in 2019 as a result of these sales.

(2)

During 2019, we sold 130 net lease properties that we acquired in the SMTA Transaction in 28 states with 2,773,241 square feet and annual minimum rent of $43,180 for $513,012.

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SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION

12 Months Ended

Dec. 31, 2019

SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract]

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION

Service Properties Trust

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2019

(dollars in millions)

	Initial Cost to Company				Costs Capitalized Subsequent to Acquisition								Gross Amount at which Carried at Close of Period
	Land		Building & Improvements		Improvements		Impairment			Cost Basis Adjustment(1)			Land		Building & Improvements		Total(2)
Hotel Properties
71 Courtyards	$	125	$	643	$	257	$	(8	)	$	(10	)	$	125	$	882	$	1,007
7 Royal Sonesta	106		518		179		(16		)	(9		)	106		672		778
35 Residence Inns	68		326		145		(3		)	(3		)	68		465		533
11 Crowne Plaza	72		374		129		—			—			72		503		575
39 Sonesta ES Suites	80		297		203		(35		)	(27		)	80		438		518
61 Candlewood Hotels	71		383		77		(14		)	(7		)	71		439		510
20 Staybridge Suites	53		224		33		—			—			53		257		310
7 Sonesta Hotels & Resorts	65		198		113		(15		)	(5		)	65		291		356
5 Kimpton Hotels	98		347		11		—			—			98		358		456
4 Wyndham	12		90		42		(66		)	(8		)	9		61		70
22 Hyatt Place	24		185		16		—			—			24		201		225
3 InterContinental	14		100		128		—			—			14		228		242
6 Radisson	10		165		43		—			—			10		208		218
2 Marriott Full Service	10		69		53		—			—			10		122		132
12 TownePlace Suites	17		78		24		(15		)	(18		)	17		69		86
3 Holiday Inn	7		33		30		—			—			7		63		70
3 Country Inn and Suites	3		35		4		—			—			3		39		42
16 Hawthorn Suites	14		77		19		(33		)	(18		)	14		45		59
2 SpringHill Suites	3		15		6		—			—			3		21		24
Net Lease Properties
134 TravelCenters of America	568		939		683		—			(2		)	568		1,620		2,188
45 Petro Stopping Centers	260		522		25		—			—			260		547		807
14 AMC Theatres	37		69		1		—			—			37		70		107
14 The Great Escape	19		63		—		—			—			19		63		82
3 Life Time Fitness	17		55		—		—			—			17		55		72
5 Buehler's Fresh Foods	10		49		—		—			—			10		49		59
62 Pizza Hut	16		37		—		—			—			16		37		53
59 Heartland Dental	11		36		—		—			—			11		36		47
10 Norms	22		24		—		—			—			22		24		46
23 Express Oil Change	5		36		—		—			—			5		36		41
6 Regal Cinemas	9		25		—		—			—			9		25		34
3 Flying J Travel Plaza	6		32		—		—			—			6		32		38
4 Courthouse Athletic Club	5		28		—		—			—			5		28		33
1 Mills Fleet Farm	3		27		—		—			—			3		27		30
45 Church's Chicken	7		25		—		—			—			7		25		32
2 Big Al's	3		28		—		—			—			3		28		31
4 B&B Theatres	12		15		—		—			—			12		15		27
6 America's Auto Auction	7		23		—		—			—			7		23		30
21 Burger King	9		22		—		—			—			9		22		31
19 Hardee's	4		24		—		—			—			4		24		28
16 Martin's	7		20		—		—			—			7		20		27
3 Mealey's Furniture	4		27		—		—			—			4		27		31
20 Popeye's Chicken & Biscuits	8		18		—		—			—			8		18		26
19 Arby's	7		19		—		—			—			7		19		26
4 Creme de la Creme	7		18		—		—			—			7		18		25
5 Mister Car Wash	2		19		—		—			—			2		19		21
6 United Supermarkets	4		17		—		—			—			4		17		21
6 Golden Corral	6		16		—		—			—			6		16		22
2 Gold's Gym	3		17		—		—			—			3		17		20
28 Uncle Ed's Oil Shoppe	6		12		—		—			—			6		12		18

	Initial Cost to Company		Costs Capitalized Subsequent to Acquisition			Gross Amount at which Carried at Close of Period
	Land	Building & Improvements	Improvements	Impairment	Cost Basis Adjustment(1)	Land	Building & Improvements	Total(2)
1 CarMax	5	13	—	—	—	5	13	18
1 Dave & Buster's	3	11	—	—	—	3	11	14
5 Pike Nursery	8	6	—	—	—	8	6	14
6 Rite Aid	4	10	—	—	—	4	10	14
2 HHI-Formtech	3	10	—	—	—	3	10	13
3 Max & Erma's	3	9	—	—	—	3	9	12
4 Bonfire and Axels	2	12	—	—	—	2	12	14
10 Taco Bell	3	10	—	—	—	3	10	13
1 Baptist Emergency Hospital	2	8	—	—	—	2	8	10
5 Fuddruckers	4	6	—	—	—	4	6	10
2 YouFit	3	7	—	—	—	3	7	10
1 Cermak Fresh Market	2	7	—	—	—	2	7	9
5 Lerner and Rowe	1	8	—	—	—	1	8	9
1 Kohl's	2	6	—	—	—	2	6	8
2 Eddie Merlot's	2	8	—	—	—	2	8	10
1 Columbus Preparatory Academy	1	8	—	—	—	1	8	9
1 LA Fitness	1	7	—	—	—	1	7	8
2 Sanford's Grub & Pub	1	10	—	—	—	1	10	11
1 HOM Furniture	1	8	—	—	—	1	8	9
13 Core & Main	4	5	—	—	—	4	5	9
1 Austin's Park n' Pizza	—	8	—	—	—	—	8	8
1 Columbus Arts & Tech Academy	1	6	—	—	—	1	6	7
1 Marcus Theaters	3	5	1	—	—	3	6	9
4 Meineke Car Care Center	3	6	—	—	—	3	6	9
1 Academy Sports + Outdoors	1	6	—	—	—	1	6	7
2 Diagnostic Health	1	6	—	—	—	1	6	7
2 Blue Rhino	3	4	—	—	—	3	4	7
2 Walgreens	1	6	—	—	—	1	6	7
3 Oregano's Pizza Bistro	1	6	—	—	—	1	6	7
5 Brookshire Brothers	1	5	—	—	—	1	5	6
3 Krispy Kreme	2	5	—	—	—	2	5	7
9 Sonic Drive-In	3	4	—	—	—	3	4	7
2 10 Box	2	3	—	—	—	2	3	5
1 RGB Eye Associates	1	4	—	—	—	1	4	5
3 Jack's Family Restaurant	2	4	—	—	—	2	4	6
2 Texas Roadhouse	3	4	—	—	—	3	4	7
2 Flying Star Cafe	1	5	—	—	—	1	5	6
1 Adult & Pediatric Orthopedics	1	4	—	—	—	1	4	5
1 Jack Stack Barbeque	1	5	—	—	—	1	5	6
1 Multi-Tenant	1	4	—	—	—	1	4	5
3 Wendy's	1	5	—	—	—	1	5	6
2 Bricktown Brewery	1	4	—	—	—	1	4	5
2 Bondcote	1	5	—	—	—	1	5	6
1 ConForm Automotive	2	3	—	—	—	2	3	5
1 Planet Fitness	1	4	—	—	—	1	4	5
3 Focus Child Development Center	1	3	—	—	—	1	3	4
7 Hughes Supply	2	4	—	—	—	2	4	6
6 Long John Silver's	2	3	—	—	—	2	3	5
1 Boozman-Hof	2	2	—	—	—	2	2	4
2 Gerber Collision & Glass	1	4	—	—	—	1	4	5
1 Humperdinks	1	4	—	—	—	1	4	5
2 HD Supply White Cap	2	3	—	—	—	2	3	5
2 Famous Dave's	1	3	—	—	—	1	3	4
1 Caldwell Country Chevrolet	—	4	—	—	—	—	4	4
1 Sportsman's Warehouse	1	3	—	—	—	1	3	4

	Initial Cost to Company				Costs Capitalized Subsequent to Acquisition								Gross Amount at which Carried at Close of Period
	Land		Building & Improvements		Improvements		Impairment			Cost Basis Adjustment(1)			Land		Building & Improvements		Total(2)
1 Renn Kirby Chevrolet Buick	1		3		—		—			—			1		3		4
1 Ashley Furniture	1		3		—		—			—			1		3		4
1 Metaldyne BSM	—		4		—		—			—			—		4		4
3 Anixter	1		3		—		—			—			1		3		4
2 Primanti Bros.	1		3		—		—			—			1		3		4
1 Rainbow Kids Clinic	1		3		—		—			—			1		3		4
1 Joe's Crab Shack	1		3		—		—			—			1		3		4
1 Applebee's	1		2		—		—			—			1		2		3
1 Tractor Supply	—		3		—		—			—			—		3		3
2 Orscheln Farm and Home	1		2		—		—			—			1		2		3
1 Providence Athletic Club	1		3		—		—			—			1		3		4
17 Vacant	—		3		—		—			—			—		3		3
1 Sunbelt Supply LP	—		3		—		—			—			—		3		3
1 Ojos Locos Sports Cantina	1		2		—		—			—			1		2		3
1 Black Angus Steakhouse	1		2		—		—			—			1		2		3
2 Hooters	1		1		—		—			—			1		1		2
1 Bridgestone Tire	1		1		—		—			—			1		1		2
1 Kerry's Car Care	1		2		—		—			—			1		2		3
1 Buffalo Wild Wings	1		2		—		—			—			1		2		3
2 KFC	—		2		—		—			—			—		2		2
1 What the Buck	—		3		—		—			—			—		3		3
2 Taco Bueno	1		1		—		—			—			1		1		2
1 Slim Chickens	1		2		—		—			—			1		2		3
2 Rick Johnson Auto & Tire	1		2		—		—			—			1		2		3
2 Monterey's Tex Mex	1		2		—		—			—			1		2		3
2 Affordable Care, Inc.	1		1		—		—			—			1		1		2
2 Dollar General	—		2		—		—			—			—		2		2
1 Red Robin Gourmet Burgers	1		1		—		—			—			1		1		2
3 Rally's	1		1		—		—			—			1		1		2
1 Pier1 Imports	1		1		—		—			—			1		1		2
1 SRS Distribution	—		1		—		—			—			—		1		1
1 The Atlanta Center for Foot & Ankle Surgery	—		1		—		—			—			—		1		1
1 Bru Burger Bar	—		1		—		—			—			—		1		1
1 Old Mexico Cantina	—		1		—		—			—			—		1		1
1 Touchstone Imaging	—		1		—		—			—			—		1		1
1 Solea Mexican Grill	1		1		—		—			—			1		1		2
1 Harbor Court	2		7		—		—			—			2		7		9
1 O'Reilly Auto Parts	—		1		—		—			—			—		1		1
1 Aggregate Industries	1		—		—		—			—			1		—		1
1 NAPA Auto Parts	—		1		—		—			—			—		1		1
1 Jack in the Box	—		1		—		—			—			—		1		1
1 Off the Hook Seafood & More	—		—		—		—			—			—		—		—
1 Consolidated Pipe	—		—		—		—			—			—		—		—
1 Family Dollar Stores	—		—		—		—			—			—		—		—
	2,069		6,824		2,222		(205		)	(107		)	2,066		8,737		10,803
Assets Held for Sale
17 Net lease properties																	(87		)
Total (1,145 properties)	$	2,069	$	6,824	$	2,222	$	(205	)	$	(107	)	$	2,066	$	8,737	$	10,716

(1) Represents reclassifications between accumulated depreciation and building & improvements made to record certain properties at fair value in accordance with GAAP.

(2) Excludes $588 of personal property classified in our consolidated balance sheets as furniture, fixtures and equipment.

Service Properties Trust

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2019

(dollars in millions)

	Accumulated Depreciation(1)			Date of Construction	Date Acquired	Life on which Depreciation in Latest Income Statement is Computed
Hotel Properties
71 Courtyards	$	(448	)	1987 through 2000	1995 through 2003	10 - 40 Years
35 Residence Inns	(227		)	1989 through 2002	1996 through 2005	10 - 40 Years
61 Candlewood Hotels	(205		)	1996 through 2000	1997 through 2003	10 - 40 Years
20 Staybridge Suites	(113		)	1989 through 2009	1996 through 2018	10 - 40 Years
22 Hyatt Place	(105		)	1992 through 2000	1997 through 2002	10 - 40 Years
7 Royal Sonesta	(122		)	1913 through 1987	2005 through 2017	10 - 40 Years
11 Crowne Plaza	(98		)	1971 through 1988	2006 and 2017	10 - 40 Years
39 Sonesta ES Suites	(88		)	1984 through 2000	1996 through 2017	10 - 40 Years
3 InterContinental	(76		)	1924 through 1989	2006	10 - 40 Years
2 Marriott Full Service	(61		)	1972 through 1995	1998 through 2001	10 - 40 Years
5 Radisson	(64		)	1987 through 1990	1996 through 2018	10 - 40 Years
4 Wyndham Hotels and Resorts	(9		)	1960 through 1988	2006 through 2013	10 - 40 Years
7 Sonesta Hotels and Resorts	(51		)	1924 through 1999	2005 through 2018	10 - 40 Years
4 Country Inn and Suites	(17		)	1987 through 1997	1996 and 2005	10 - 40 Years
12 TownePlace Suites	(26		)	1997 through 2000	1998 through 2001	10 - 40 Years
3 Holiday Inn	(15		)	1984 through 2001	2006	10 - 40 Years
16 Hawthorn Suites	(14		)	1996 through 2000	1997 through 2006	10 - 40 Years
3 Kimpton Hotels	(20		)	1901 through 1927	2016 through 2019	10 - 40 Years
2 SpringHill Suites	(9		)	1997 through 2000	2000 through 2001	10 - 40 Years
Net Lease Properties
134 TravelCenters of America	(745		)	1962 through 2017	2007 through 2017	10 - 40 Years
45 Petro Stopping Centers	(321		)	1975 through 2017	2007 through 2017	10 - 40 Years
14 AMC Theatres	(1		)	1993 through 2008	2019	10 - 40 Years
14 The Great Escape	(1		)	1986 through 2007	2019	10 - 40 Years
3 Life Time Fitness	(1		)	1987 through 2012	2019	10 - 40 Years
5 Buehler's Fresh Foods	(1		)	1985 through 2000	2019	10 - 40 Years
62 Pizza Hut	(1		)	1972 through 2006	2019	10 - 40 Years
59 Heartland Dental	(1		)	1920 through 2005	2019	10 - 40 Years
10 Norms	(1		)	1957 through 2014	2019	10 - 40 Years
23 Express Oil Change	(1		)	1970 through 2001	2019	10 - 40 Years
6 Regal Cinemas	(1		)	2005 through 2010	2019	10 - 40 Years
3 Flying J Travel Plaza	(1		)	2001	2019	10 - 40 Years
4 Courthouse Athletic Club	(1		)	1997 through 2001	2019	10 - 40 Years
1 Mills Fleet Farm	(1		)	1979	2019	10 - 40 Years
45 Church's Chicken	(1		)	1968 through 1985	2019	10 - 40 Years
2 Big Al's	(1		)	2006 through 2010	2019	10 - 40 Years
4 B&B Theatres	(1		)	1998 through 2004	2019	10 - 40 Years
6 America's Auto Auction	(1		)	1965 through 2005	2019	10 - 40 Years
21 Burger King	(1		)	1977 through 2004	2019	10 - 40 Years
19 Hardee's	—			1969 through 1994	2019	10 - 40 Years
16 Martin's	—			1962 through 2003	2019	10 - 40 Years
3 Mealey's Furniture	—			1987 through 2004	2019	10 - 40 Years

	Accumulated Depreciation(1)	Date of Construction	Date Acquired	Life on which Depreciation in Latest Income Statement is Computed
20 Popeye's Chicken & Biscuits	—	1968 through 2004	2019	10 - 40 Years
19 Arby's	—	1969 through 2005	2019	10 - 40 Years
4 Creme de la Creme	—	1999 through 2008	2019	10 - 40 Years
5 Mister Car Wash	—	1960 through 2002	2019	10 - 40 Years
6 United Supermarkets	—	1979 through 1997	2019	10 - 40 Years
6 Golden Corral	—	1993 through 2000	2019	10 - 40 Years
2 Gold's Gym	—	1983 through 2007	2019	10 - 40 Years
28 Uncle Ed's Oil Shoppe	—	1959 through 1999	2019	10 - 40 Years
1 CarMax	—	2005	2019	10 - 40 Years
1 Dave & Buster's	—	1992	2019	10 - 40 Years
5 Pike Nursery	—	1970 through 1996	2019	10 - 40 Years
6 Rite Aid	—	1901 through 2000	2019	10 - 40 Years
2 HHI-Formtech	—	1952	2019	10 - 40 Years
3 Max & Erma's	—	1990 through 1997	2019	10 - 40 Years
4 Bonfire and Axels	—	1995 through 1996	2019	10 - 40 Years
10 Taco Bell	—	1982 through 2010	2019	10 - 40 Years
1 Baptist Emergency Hospital	—	2013	2019	10 - 40 Years
5 Fuddruckers	—	1994 through 1995	2019	10 - 40 Years
2 YouFit	—	2007 through 2008	2019	10 - 40 Years
1 Cermak Fresh Market	—	1989	2019	10 - 40 Years
5 Lerner and Rowe	—	1973 through 2007	2019	10 - 40 Years
1 Kohl's	—	1986	2019	10 - 40 Years
2 Eddie Merlot's	—	1997 through 2003	2019	10 - 40 Years
1 Columbus Preparatory Academy	—	2004	2019	10 - 40 Years
1 LA Fitness	—	2012	2019	10 - 40 Years
2 Sanford's Grub & Pub	—	1928 through 2003	2019	10 - 40 Years
1 HOM Furniture	—	1003	2019	10 - 40 Years
13 Core & Main	—	1972 through 2001	2019	10 - 40 Years
1 Austin's Park n' Pizza	—	2003	2019	10 - 40 Years
1 Columbus Arts & Tech Academy	—	1980	2019	10 - 40 Years
1 Marcus Theaters	—	1999	2019	10 - 40 Years
4 Meineke Car Care Center	—	1999 through 2000	2019	10 - 40 Years
1 Academy Sports + Outdoors	—	2016	2019	10 - 40 Years
2 Diagnostic Health	—	1985 through 1997	2019	10 - 40 Years
2 Blue Rhino	—	2004	2019	10 - 40 Years
2 Walgreens	—	1999 through 2000	2019	10 - 40 Years
3 Oregano's Pizza Bistro	—	1964 through 2006	2019	10 - 40 Years
5 Brookshire Brothers	—	1990 through 1999	2019	10 - 40 Years
3 Krispy Kreme	—	2000 through 2004	2019	10 - 40 Years
9 Sonic Drive-In	—	1987 through 2010	2019	10 - 40 Years
2 10 Box	—	1994	2019	10 - 40 Years
1 RGB Eye Associates	—	2013	2019	10 - 40 Years
3 Jack's Family Restaurant	—	2008 through 2016	2019	10 - 40 Years
2 Texas Roadhouse	—	2003 through 2005	2019	10 - 40 Years
2 Flying Star Cafe	—	1994 through 1999	2019	10 - 40 Years
1 Adult & Pediatric Orthopedics	—	1991	2019	10 - 40 Years
1 Jack Stack Barbeque	—	1983	2019	10 - 40 Years

	Accumulated Depreciation(1)	Date of Construction	Date Acquired	Life on which Depreciation in Latest Income Statement is Computed
1 Multi-Tenant	—	2001	2019	10 - 40 Years
3 Wendy's	—	1984 through 1989	2019	10 - 40 Years
2 Bricktown Brewery	—	1904 through 1984	2019	10 - 40 Years
2 Bondcote	—	1967 through 1985	2019	10 - 40 Years
1 ConForm Automotive	—	1987	2019	10 - 40 Years
1 Planet Fitness	—	2007	2019	10 - 40 Years
3 Focus Child Development Center	—	1965 through 1998	2019	10 - 40 Years
7 Hughes Supply	—	1993	2019	10 - 40 Years
6 Long John Silver's	—	1972 through 1987	2019	10 - 40 Years
1 Boozman-Hof	—	1988	2019	10 - 40 Years
2 Gerber Collision & Glass	—	2001 through 2002	2019	10 - 40 Years
1 Humperdinks	—	1995	2019	10 - 40 Years
2 HD Supply White Cap	—	1990 through 2001	2019	10 - 40 Years
2 Famous Dave's	—	1997 through 1999	2019	10 - 40 Years
1 Caldwell Country Chevrolet	—	2000	2019	10 - 40 Years
1 Sportsman's Warehouse	—	1983	2019	10 - 40 Years
1 Renn Kirby Chevrolet Buick	—	2005	2019	10 - 40 Years
1 Ashley Furniture	—	1973	2019	10 - 40 Years
1 Metaldyne BSM	—	1960	2019	10 - 40 Years
3 Anixter	—	1984 through 1999	2019	10 - 40 Years
2 Primanti Bros.	—	2014	2019	10 - 40 Years
1 Rainbow Kids Clinic	—	2011	2019	10 - 40 Years
1 Joe's Crab Shack	—	1997	2019	10 - 40 Years
1 Applebee's	—	1996	2019	10 - 40 Years
1 Tractor Supply	—	2007	2019	10 - 40 Years
2 Orscheln Farm and Home	—	1977 through 1986	2019	10 - 40 Years
1 Providence Athletic Club	—	1980	2019	10 - 40 Years
17 Vacant	—	1962 through 2007	2019	10 - 40 Years
1 Sunbelt Supply LP	—	1984	2019	10 - 40 Years
1 Ojos Locos Sports Cantina	—	1993	2019	10 - 40 Years
1 Black Angus Steakhouse	—	1996	2019	10 - 40 Years
2 Hooters	—	1977 through1994	2019	10 - 40 Years
1 Bridgestone Tire	—	1998	2019	10 - 40 Years
1 Kerry's Car Care	—	2015	2019	10 - 40 Years
1 Buffalo Wild Wings	—	2014	2019	10 - 40 Years
2 KFC	—	1977 through 2006	2019	10 - 40 Years
1 What the Buck	—	1958	2019	10 - 40 Years
2 Taco Bueno	—	1991 through 2003	2019	10 - 40 Years
1 Slim Chickens	—	2013	2019	10 - 40 Years
2 Monterey's Tex Mex	—	1979 through 1997	2019	10 - 40 Years
2 Affordable Care, Inc.	—	2008 through 2010	2019	10 - 40 Years
2 Dollar General	—	2012 through 2015	2019	10 - 40 Years
1 Red Robin Gourmet Burgers	—	1995	2019	10 - 40 Years
3 Rally's	—	1990 through 1992	2019	10 - 40 Years
1 Pier1 Imports	—	1996	2019	10 - 40 Years
1 SRS Distribution	—	1975	2019	10 - 40 Years
1 The Atlanta Center for Foot & Ankle Surgery	—	1963	2019	10 - 40 Years

	Accumulated Depreciation(1)			Date of Construction	Date Acquired	Life on which Depreciation in Latest Income Statement is Computed
1 Bru Burger Bar	—			1996	2019	10 - 40 Years
1 Old Mexico Cantina	—			2007	2019	10 - 40 Years
1 Touchstone Imaging	—			1992	2019	10 - 40 Years
1 Solea Mexican Grill	—			1993	2019	10 - 40 Years
1 Harbor Court	—			1986	2019	10 - 40 Years
1 O'Reilly Auto Parts	—			2006	2019	10 - 40 Years
1 Aggregate Industries	—			1930	2019	10 - 40 Years
1 NAPA Auto Parts	—			2001	2019	10 - 40 Years
1 Jack in the Box	—			1992	2019	10 - 40 Years
1 Off the Hook Seafood & More	—			2007	2019	10 - 40 Years
1 Consolidated Pipe	—			1987	2019	10 - 40 Years
1 Family Dollar Stores	—			1988	2019	10 - 40 Years
1 Fazoli's	—			1982	2019	10 - 40 Years
	(2,851		)
Assets Held for Sale
17 Net Lease Properties	—
Total (1,145 properties)	$	(2,851	)

(1)

Excludes accumulated depreciation of $276 related to personal property classified in our consolidated balance sheets as furniture, fixtures and equipment.

SERVICE PROPERTIES TRUST

NOTES TO SCHEDULE III

December 31, 2019

(dollars in thousands)

(A) The change in total cost of properties for the period from January 1, 2017 to December 31, 2019 is as follows:

	2019			2018			2017
Balance at beginning of year	$	8,820,346		$	8,778,907		$	8,100,844
Additions: acquisitions and capital expenditures	1,983,380			324,227			743,340
Dispositions	—			(62,923		)	(71,054		)
Reclassification of properties held for sale	(87,493		)	(219,865		)	5,777
Balance at close of year	$	10,716,233		$	8,820,346		$	8,778,907

(B) The change in accumulated depreciation for the period from January 1, 2017 to December 31, 2019 is as follows:

	2019			2018			2017
Balance at beginning of year	$	2,574,297		$	2,409,416		$	2,176,537
Additions: depreciation expense	305,441			304,224			278,353
Dispositions	(28,617		)	(62,923		)	(45,474		)
Reclassification of properties held for sale	—			(76,420		)	—
Balance at close of year	$	2,851,121		$	2,574,297		$	2,409,416

(C)

The aggregate cost tax basis for federal income tax purposes of our real estate properties was $8,414,576 on December 31, 2019.

XML

Stockholders' Equity - Stock Repurchases (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Stockholders' Equity Note [Abstract]
Common share repurchases (in shares)	31,225	21,202	19,058
Treasury stock repurchased (in dollars per share)	$ 25.61	$ 28.59	$ 28.01

XML

Indebtedness - Narrative (Details)								12 Months Ended
	Sep. 18, 2019 USD ($)	Feb. 02, 2018 USD ($)	Oct. 29, 2017 USD ($)	Oct. 26, 2017 USD ($)	Apr. 24, 2017 USD ($)	Mar. 15, 2017 USD ($)	Jan. 13, 2017 USD ($)	Dec. 31, 2019 USD ($) extension	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Feb. 27, 2020 USD ($)	Sep. 20, 2019 USD ($)
Debt Instrument [Line Items]
Unsecured revolving credit facility								$ 377,000,000	$ 177,000,000
Unsecured term loan, net								397,889,000	397,292,000
Senior unsecured notes, net								5,287,658,000	3,598,295,000
Proceeds from issuance of senior unsecured notes, after discounts and premiums								1,693,879,000	389,976,000	$ 989,890,000
Repurchase of convertible senior unsecured notes								0	0	8,478,000
Loss on early extinguishment of debt								$ 8,451,000	$ 160,000	$ 146,000
Senior Unsecured Notes, due 2027 at 4.95%
Debt Instrument [Line Items]
Interest rate stated percentage								4.95%
Senior Unsecured Notes, due 2028 at 3.95%
Debt Instrument [Line Items]
Interest rate stated percentage								3.95%
Senior Unsecured Notes, due 2030 at 4.375%
Debt Instrument [Line Items]
Interest rate stated percentage								4.375%
Revolving credit facility
Debt Instrument [Line Items]
Unsecured revolving credit facility								$ 377,000,000
Unsecured revolving credit facility maximum borrowing capacity								$ 1,000,000,000
Number of extension options | extension								2
Extension term								6 months
Credit facility fee percentage								0.25%
Interest rate (as a percent)								2.80%	3.14%
Weighted average interest rate for borrowings (as a percent)								3.21%	3.06%	2.24%
Remaining borrowing capacity								$ 623,000,000
Revolving credit facility | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis points								1.20%
Revolving credit facility | Subsequent event
Debt Instrument [Line Items]
Unsecured revolving credit facility											$ 437,000,000
Remaining borrowing capacity											$ 563,000,000
Unsecured debt
Debt Instrument [Line Items]
Unsecured term loan, net								$ 400,000,000
Interest rate (as a percent)								3.04%	3.45%
Weighted average interest rate for borrowings (as a percent)								3.43%	3.12%	2.27%
Unsecured term loan facility, borrowing capacity												$ 2,000,000,000
Unsecured debt | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis points								1.35%
Senior notes
Debt Instrument [Line Items]
Senior unsecured notes, net								$ 5,350,000,000
Principal amount							$ 600,000,000
Proceeds from issuance of senior unsecured notes, after discounts and premiums							593,228,000
Proceeds from debt	$ 1,680,461,000
Senior notes | Senior Notes, due 2023 at 4.5%
Debt Instrument [Line Items]
Principal amount							$ 200,000,000
Interest rate stated percentage							4.50%
Senior notes | Senior Unsecured Notes, due 2027 at 4.95%
Debt Instrument [Line Items]
Principal amount							$ 400,000,000
Interest rate stated percentage							4.95%
Senior notes | Convertible senior notes, due 2027 at 3.8%
Debt Instrument [Line Items]
Interest rate stated percentage						3.80%
Repurchase of convertible senior unsecured notes					$ 47,000	$ 8,431,000
Senior notes | Senior Unsecured Notes, due 2028 at 3.95%
Debt Instrument [Line Items]
Principal amount				$ 400,000,000
Interest rate stated percentage				3.95%
Proceeds from issuance of senior unsecured notes, after discounts and premiums				$ 388,244,000
Senior notes | Senior Notes, due 2018 at 6.7%
Debt Instrument [Line Items]
Interest rate stated percentage			6.70%
Repurchased face amount			$ 350,000,000
Debt redeemed			$ 356,774,000
Loss on early extinguishment of debt										$ 146,000
Senior notes | Senior Unsecured Notes, due 2030 at 4.375%
Debt Instrument [Line Items]
Principal amount		$ 400,000,000
Interest rate stated percentage		4.375%
Proceeds from issuance of senior unsecured notes, after discounts and premiums		$ 386,400,000
Senior notes | Unsecured senior notes due 2024
Debt Instrument [Line Items]
Principal amount	$ 825,000,000
Interest rate stated percentage	4.35%
Senior notes | Unsecured senior notes due 2026
Debt Instrument [Line Items]
Principal amount	$ 450,000,000
Interest rate stated percentage	4.75%
Senior notes | Unsecured senior notes due 2029
Debt Instrument [Line Items]
Principal amount	$ 425,000,000
Interest rate stated percentage	4.95%
Unsecured revolving credit facility and term loan
Debt Instrument [Line Items]
Accordion feature, increase borrowing limit								$ 2,300,000,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net income	$ 259,750	$ 185,734	$ 215,143
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	428,448	403,077	386,659
Amortization of debt issuance costs and debt discounts and premiums as interest	11,117	10,177	8,871
Straight line rental income	10,719	(12,509)	(12,378)
Security deposits received or replenished	(23,549)	6,740	36,743
Loss on early extinguishment of debt	8,451	160	146
Loss on asset impairment	39,296	0	0
Unrealized losses on equity securities	40,461	16,737	0
Equity in earnings of an investee	(393)	(515)	(607)
Distribution of earnings from Affiliates Insurance Company	2,423	0	0
Gain on sale of real estate	(159,535)	0	(9,348)
Deferred income taxes	(127)	(1,047)	(236)
Other non-cash (income) expense, net	(614)	(2,713)	(3,233)
Changes in assets and liabilities:
Due from related persons	3,272	(572)	(1,215)
Other assets	(11,385)	6,200	(13,117)
Accounts payable and other liabilities	60,484	5,824	(572)
Due to related persons	(51,096)	(20,340)	21,639
Net cash provided by operating activities	617,722	596,953	628,495
Cash flows from investing activities:
Real estate acquisitions and deposits	(2,713,191)	(127,703)	(594,693)
Real estate improvements	(150,531)	(182,862)	(131,120)
Hotel managers’ purchases with restricted cash	(208,241)	(135,177)	(92,733)
Hotel manager’s deposit of insurance proceeds into restricted cash	25,000	18,000	0
Net proceeds from sale of real estate	816,450	0	23,438
Net proceeds from sale of equity securities	93,892	0	0
Distributions in excess of earnings from Affiliates Insurance Company	6,577	0	0
Net cash used in investing activities	(2,130,044)	(427,742)	(795,108)
Cash flows from financing activities:
Proceeds from issuance of senior unsecured notes, after discounts and premiums	1,693,879	389,976	989,890
Repayment of senior unsecured notes	0	0	(350,000)
Redemption of preferred shares	0	0	(290,000)
Repurchase of convertible senior notes	0	0	(8,478)
Borrowings under unsecured revolving credit facility	1,124,000	517,000	1,102,000
Repayments of unsecured revolving credit facility	(924,000)	(738,000)	(895,000)
Deferred financing costs	(21,882)	(12,242)	(8,437)
Repurchase of common shares	(800)	(606)	(533)
Distributions to preferred shareholders	0	0	(6,601)
Distributions to common shareholders	(353,619)	(346,832)	(340,084)
Net cash provided by (used in) financing activities	1,517,578	(190,704)	192,757
Increase (decrease) in cash and cash equivalents and restricted cash	5,256	(21,493)	26,144
Cash and cash equivalents and restricted cash at beginning of year	76,003	97,496	71,352
Cash and cash equivalents and restricted cash at end of year	81,259	76,003	97,496
Supplemental disclosure of cash and cash equivalents and restricted cash:
Total cash and cash equivalents and restricted cash	76,003	76,003	71,352
Supplemental cash flow information:
Cash paid for interest	191,155	174,158	172,558
Cash paid for income taxes	$ 2,927	$ 3,218	$ 2,827

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common shares, par value (in dollars per share)	$ 0.01	$ 0.01
Common shares, shares authorized (in shares)	200,000,000	200,000,000
Common shares, shares issued (in shares)	164,563,034	164,441,709
Common shares, shares outstanding (in shares)	164,563,034	164,441,709

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Management Agreements and Leases - TA Leases (Details) $ in Thousands		1 Months Ended	3 Months Ended								12 Months Ended
	Jan. 16, 2019 USD ($) travel_center quarterly_installment	Jan. 31, 2019 USD ($) option	Dec. 31, 2019 USD ($) travel_center retail_property hotel agreement	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) travel_center retail_property hotel property agreement	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2020
Management Agreements and Leases [Line Items]
Number of properties sold | property											150
Amount of consideration received											$ 816,450	$ 0	$ 23,438
Annual Minimum Rent											$ 381,679
Number of properties | retail_property			816								816
Number of leases | agreement			6								6
Revenues			$ 580,906	$ 599,772	$ 610,562	$ 524,908	$ 550,799	$ 603,153	$ 611,951	$ 528,633	$ 2,316,148	2,294,536	2,171,935
Straight line rent adjustments											(10,719)	12,509	12,378
Capital improvements from leased facilities, funded											150,531	182,862	131,120
Rental income
Management Agreements and Leases [Line Items]
Revenues											$ 322,236	330,806	326,436
Travel Centers of America LLC | Travel Center Nos 1, 2, 3, and 4 [Member]
Management Agreements and Leases [Line Items]
Percentage increase in non-fuel gross revenue to be paid by lessee			3.00%								3.00%
Travel Centers of America LLC | TA No. 5 Lease
Management Agreements and Leases [Line Items]
Percentage increase in non-fuel gross revenue to be paid by lessee			3.00%								3.00%
Travel centers
Management Agreements and Leases [Line Items]
Number of properties | travel_center			179								179
Travel centers | Travel Centers of America LLC
Management Agreements and Leases [Line Items]
Number of properties sold | travel_center	20
Amount of consideration received	$ 308,200
Gain from sale		$ 159,535
Increase (decrease) in annual minimum returns and rents	$ (43,148)
Number of quarterly installments | quarterly_installment	16
Quarterly payments to deferred rent receivable	$ 4,404										$ 13,200
Aggregate payment to deferred rent receivable	$ 70,458
Number of Travel Centers | travel_center	179		179								179
Annual Minimum Rent											$ 246,088
Deferred Rent			$ 57,247								$ 57,247
Extended term of contract	3 years
Number of properties | travel_center			179								179
Increase (decrease) in annual minimum returns and rents												4,789	7,194
Number of renewal options available | option		2
Term of renewal options		15 years
Straight line rent adjustments											$ (11,894)	12,127	11,966
Accruals for unpaid rent, including deferred rents			$ 68,653				$ 91,212				68,653	91,212
Amount of percentage rent from TA that was recognized											$ 4,075	3,548	2,106
Increase (decrease) operating leases annual rent fixed interest rate											8.50%
Increase (decrease) operating leases annual rent basis spread on variable rate			3.50%								3.50%
Capital improvements from leased facilities, funded												56,346	84,632
Travel centers | Travel Centers of America LLC | Rental income
Management Agreements and Leases [Line Items]
Revenues											$ 262,038	$ 302,309	$ 293,273
Travel centers | Travel Centers of America LLC | TA No. 1 Lease
Management Agreements and Leases [Line Items]
Number of Travel Centers | travel_center			36								36
Annual Minimum Rent											$ 49,707
Deferred Rent			$ 15,148								$ 15,148
Travel centers | Travel Centers of America LLC | TA No. 2 Lease
Management Agreements and Leases [Line Items]
Number of Travel Centers | travel_center			36								36
Annual Minimum Rent											$ 44,077
Deferred Rent			$ 14,068								$ 14,068
Travel centers | Travel Centers of America LLC | TA No. 3 Lease
Management Agreements and Leases [Line Items]
Number of Travel Centers | travel_center			35								35
Annual Minimum Rent											$ 42,409
Deferred Rent			$ 13,870								$ 13,870
Travel centers | Travel Centers of America LLC | TA No. 4 Lease
Management Agreements and Leases [Line Items]
Number of Travel Centers | travel_center			37								37
Annual Minimum Rent											$ 48,241
Deferred Rent			$ 14,161								$ 14,161
Travel centers | Travel Centers of America LLC | TA No. 5 Lease
Management Agreements and Leases [Line Items]
Number of Travel Centers | travel_center			35								35
Annual Minimum Rent											$ 61,654
Deferred Rent			$ 0								$ 0
Travel centers | Travel Centers of America LLC | Operating Lease, Expense | Customer Concentration Risk
Management Agreements and Leases [Line Items]
Concentration risk percentage											24.60%
Travel centers | Travel Centers of America LLC | Forecast
Management Agreements and Leases [Line Items]
Additional percentage														0.50%
Hotel
Management Agreements and Leases [Line Items]
Number of properties | hotel			329								329
Number of leases | agreement			8								8

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Weighted Average Common Shares (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share, Basic and Diluted [Abstract]
Weighted average common shares for basic earnings per share (in shares)	164,312	164,229	164,146
Effect of dilutive securities: Unvested share awards (in shares)	28	29	29
Weighted average common shares for diluted earnings per share (in shares)	164,340	164,258	164,175

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Real Estate Properties - Dispositions (Details) $ in Thousands				1 Months Ended	2 Months Ended	12 Months Ended
	Sep. 22, 2017 USD ($) room	Aug. 31, 2017 USD ($) room	Aug. 01, 2017 USD ($) room	Dec. 31, 2017 USD ($)	Feb. 28, 2020 USD ($) property	Dec. 31, 2019 USD ($) ft² retail_property hotel state property	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($) hotel	Feb. 20, 2020 state	Jan. 01, 2020 ft² state	Sep. 20, 2019 state
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | retail_property						816
Area of real estate | ft²						14,900,000
Net proceeds from sale of real estate						$ 816,450	$ 0	$ 23,438
Number of properties sold | property						150
Gain on sale of real estate						$ 159,535	$ 0	$ 9,348
Number of real estate properties to be sold or rebranded | property						19
Aggregate undepreciated carrying value of real estate						$ 11,472,529
Number of states in which property is located | state						12					45
Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | property						150
Area of real estate | ft²						3,314,724
Net proceeds from sale of real estate						$ 821,212
Subsequent event
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of states in which property is located | state									2
Subsequent event | Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Area of real estate | ft²										160,434
Net proceeds from sale of real estate					$ 5,010
Number of properties sold | property					4
Number of states in which property is located | state										3
Non-recurring | Carrying amount
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Investment securities						$ 87,493
Hotel
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | hotel						329
Chandler, AZ | Hotel
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of rooms sold | room			159
Proceeds from sale of property held-for-sale			$ 9,085
Naperville, IL | Hotel
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of rooms sold | room		143
Proceeds from sale of property held-for-sale		$ 6,313
Travel Center In Roanoke Va | TA No. 1 Lease
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds received from eminent domain proceedings				$ 1,030
Radisson Hotels | Chandler, AZ, Bloomington, MN, and Naperville, IL | Hotel
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties sold | hotel								3
Gain on sale of real estate								$ 9,348
Radisson Hotels | Bloomington, MN | Hotel
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of rooms sold | room	209
Proceeds from sale of property held-for-sale	$ 8,030
Wyndham agreement | Hotel
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of real estate properties to be sold or rebranded | hotel						20
Aggregate undepreciated carrying value of real estate						$ 111,271
Marriott contracts | Hotel
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | hotel						122
Number of real estate properties to be sold or rebranded | hotel						33
Aggregate undepreciated carrying value of real estate						$ 224,895

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Management Agreements and Leases (Tables)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Schedule of minimum rents to be received

As of December 31, 2019, our leases with parties other than our TRSs provide for contractual minimum rents to be paid to us during the remaining current terms as follows:

2019	$	406,518
2020	402,000
2021	390,585
2022	372,440
2023	364,541
Thereafter	2,718,281
Total	$	4,654,365

The number of travel centers, the terms, the annual minimum rent and the deferred rent balances owed to us by TA under our TA leases as of December 31, 2019, were as follows:

	Number of Travel Centers	Initial Term End (1)	Annual Minimum Rent		Deferred Rent (2) (3)
TA No. 1 Lease	36	December 31, 2032	$	49,707	$	15,148
TA No. 2 Lease	36	December 31, 2031	44,077		14,068
TA No. 3 Lease	35	December 31, 2029	42,409		13,870
TA No. 4 Lease	37	December 31, 2033	48,241		14,161
TA No. 5 Lease	35	June 30, 2035	61,654		—
	179		$	246,088	$	57,247

(1) TA has two renewal options of 15 years each under each of our TA leases.

(2) Commencing April 1, 2019, TA is required to pay us $70,458 in 16 quarterly installments of $4,404 each for deferred rent TA owes us.

(3)

Represents the balance as of December 31, 2019.

Schedule of minimum rent payments

As of December 31, 2019, our operating leases provide for contractual minimum rent payments to third parties during the remaining lease terms, as follows:

2020	$	7,052
2021	6,424
2022	5,877
2023	5,761
2024	5,762
Thereafter	150,826
Total lease payments	181,702
Less: imputed interest	(106,662		)
Present value of lease liabilities (1)	$	75,040

(1)

The weighted average discount rate used to calculate the lease liability and the weighted average remaining term for our ground leases (assuming all extension options) and our hotel operating leases are approximately 5.50% and 31 years (range of 12 years to 68 years) and 5.53% and 31 years (range of 1 month to 54 years), respectively.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation. These consolidated financial statements include our accounts and the accounts of our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.

We have determined that each of our wholly owned taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification^™, or the Codification. We have concluded that we must consolidate each of our wholly owned TRSs because we are the entity with the power to direct the activities that most significantly impact such VIEs’ performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE and are, therefore, the primary beneficiary of each VIE. The assets of our TRSs were $31,920 and $31,917 as of December 31, 2019 and 2018, respectively, and consist primarily of amounts due from and working capital advances to certain of our hotel managers. The liabilities of our TRSs were $138,708 and $148,459 as of December 31, 2019 and 2018, respectively, and consist primarily of security deposits they hold and amounts payable to certain of our hotel managers. The assets of our TRSs are available to satisfy our TRSs’ obligations and we have guaranteed certain obligations of our TRSs.

Real Estate Properties

Real Estate Properties. We record real estate properties at cost less impairments, if any. We record the cost of real estate acquired at the relative fair value of building, land, furniture, fixtures and equipment, and, if applicable, acquired in place leases, above or below market leases and customer relationships. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill. We depreciate real estate properties on a straight line basis over estimated useful lives of up to 40 years for buildings and improvements and up to 12 years for personal property and we amortize finite lived intangible assets over the shorter of their useful lives or the term of the associated lease. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determination of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives.

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of our real estate properties. These indicators may include weak or declining operating profitability, cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life or market or industry changes that could permanently reduce the value of our investments. If there is an indication that the carrying value of a property is not recoverable, we estimate the projected undiscounted cash flows of the asset to determine if an impairment loss should be recognized. We determine the amount of an impairment loss by comparing the historical carrying value of the property to its estimated fair value. We estimate fair value by evaluating recent financial performance and projecting discounted cash flows of properties using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our real estate properties. If we change estimated lives, we depreciate or amortize the carrying values of affected assets over the revised remaining lives.

Intangible Assets and Liabilities

Intangible Assets and Liabilities. Intangible assets consist primarily of trademarks and tradenames, acquired above market operating leases where we are the lessor and below market ground leases for which we are the tenant or lessee. Intangible liabilities consist of acquired below market operating leases where we are the lessor and acquired above market ground leases for which we are the tenant or lessee. We include intangible assets in acquired real estate leases and other intangibles and intangible liabilities in accounts payable and other liabilities in our consolidated balance sheets.

At December 31, 2019 and 2018, our intangible assets and liabilities were as follows:

	As of December 31,
	2019		2018
Assets:
Tradenames and trademarks	$	89,375	$	89,375
Above market operating leases, net of accumulated amortization of $15,748	275,814		—
Below market ground leases, net of accumulated amortization of $21,125 and $21,985, respectively	10,034		12,698
Other, net of accumulated amortization of $1,803 and $1,451, respectively	3,323		3,676
	$	378,546	$	105,749
Liabilities:
Below market operating leases, net of accumulated amortization of $367	$	3,653	$	—
Above market ground leases, net of accumulated amortization of $5,886 and $5,441, respectively	856		1,301
	$	4,509	$	1,301

We amortize above and below market leases on a straight line basis over the term of the associated lease (three and six years on a weighted average basis for intangible liabilities and assets, respectively). For the years ended December 31, 2019, 2018 and 2017 amortization relating to intangible assets was $1,757, $2,542 and $2,814, respectively, and amortization relating to intangible liabilities was $441 for the year ended December 31, 2019 and $455 for each of the years ended December 31, 2018 and 2017. As of December 31, 2019, the weighted average amortization period for capitalized above market leases and below market lease values were 10.2 years and 5.0 years, respectively. As of December 31, 2019, we estimate future amortization relating to intangible assets and liabilities as follows:

	Above Market Operating Leases		Below Market Ground Leases & Other		Below Market Operating Leases			Above Market Ground Leases & Other
2020	$	51,392	$	1,398	$	(1,262	)	$	(441	)
2021	40,945		1,375		(1,163		)	(369		)
2022	30,436		1,366		(306		)	(21		)
2023	27,138		1,355		(192		)	(18		)
2024	24,404		1,137		(185		)	(7		)
Thereafter	101,499		6,726		(545		)	—
	$	275,814	$	13,357	$	(3,653	)	$	(856	)

We do not amortize our indefinite lived trademarks and tradenames, but we review the assets at least annually for impairment and reassess their classification as indefinite lived assets. In addition, we regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in value. We determine the amount of an impairment loss, if any, by comparing the carrying value of the intangible asset to its estimated fair value.

Cash and Cash Equivalents

Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents.

Restricted Cash

Restricted Cash. Restricted cash, or FF&E reserve escrows, consists of amounts escrowed pursuant to the terms of our management agreements and leases to fund periodic renovations and improvements at our hotels.

Debt Issuance Costs

Debt Issuance Costs. Debt issuance costs consist of capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective debt. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets, net in our consolidated balance sheets. As of December 31, 2019 and 2018, debt issuance costs for our revolving credit facility were $4,212 and $6,822, respectively, and accumulated amortization of debt issuance costs for our revolving credit facility were $2,610 and $1,005, respectively. Debt issuance costs, net of accumulated amortization, for our term loan and senior notes are presented as a direct deduction from the associated debt liability in our consolidated balance sheets.

Equity Method Investments

Equity Method Investments. We account for our investment in Affiliates Insurance Company, or AIC, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us and AIC. One of our Managing Trustees, Adam D. Portnoy, is the sole trustee of ABP Trust, which is the controlling shareholder of The RMR Group Inc., or RMR Inc. Mr. Portnoy is also a managing director and president and chief executive officer of RMR Inc. and an officer and employee of The RMR Group LLC, or RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, is also an officer and employee of RMR LLC. RMR LLC also provides management and administrative services to AIC, and each of our Trustees (other than Mr. Murray) is a director of AIC.

Equity Securities

Equity Securities. We record our equity securities at fair value based on their quoted market price at the end of each reporting period. Changes in the fair value of our equity securities are recorded through earnings in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to January 1, 2018, unrealized gains and losses on equity securities were recorded as a component of cumulative comprehensive income (loss) in shareholders’ equity.

Revenue Recognition

Revenue Recognition. We report hotel operating revenues for managed hotels in our consolidated statements of comprehensive income. We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when goods and services are provided.

We report rental income for leased properties in our consolidated statements of comprehensive income. We recognize rental income from operating leases on a straight line basis over the term of the lease agreements. We reduced rental income during the year ended December 31, 2019 by $10,719 and increased rental income by $12,509, and $12,378 during the years ended December 31, 2018 and 2017, respectively, to record scheduled rent changes under certain of our leases, the deferred rent obligations payable to us under our leases with TA and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks at our travel centers on a straight line basis. See Notes 4, 5 and 9 for further information regarding our TA leases. Due from related persons includes $47,057 and $66,347 and other assets, net, includes $1,897 and $3,073 of straight line rent receivables at December 31, 2019 and 2018, respectively.

Certain of our lease agreements require additional percentage rent if gross revenues of our properties exceed certain thresholds defined in our lease agreements. We may determine percentage rent due to us under our leases monthly, quarterly or annually, depending on the specific lease terms, and recognize it when all contingencies are met and the rent is earned. We earned percentage rental income of $4,238, $3,695 and $2,106 in 2019, 2018 and 2017, respectively.

We own all the FF&E reserve escrows for our hotels. We report deposits by our third party tenants into the escrow accounts as FF&E reserve income. We do not report the amounts which are escrowed as reserves established for the regular refurbishment of our hotels, or FF&E reserves, for our managed hotels as FF&E reserve income.

Per Common Share Amounts

Per Common Share Amounts. We calculate basic earnings per common share by dividing allocable net income available for common shareholders by the weighted average number of common shares outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares and the related impact on earnings are considered when calculating diluted earnings per share.

Use of Estimates

Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of real estate and impairment of long lived assets.

Segment Information

Segment Information. As of December 31, 2019, we had two reportable segments: hotel investments and net lease investments.

Income Taxes

Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, as such, are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements. We are subject to income tax in Canada, Puerto Rico and certain states despite our qualification for taxation as a REIT. Further, we lease our managed hotels to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated tax return and are subject to federal, state and foreign income taxes. Our consolidated income tax provision (or benefit) includes the income tax provision (or benefit) related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our qualification for taxation as a REIT.

The Income Taxes Topic of the Codification prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Tax benefits are recognized to the extent that it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized upon settlement. Our tax returns filed for the 2016 through 2019 tax years are subject to examination by taxing authorities. We classify interest and penalties related to uncertain tax positions, if any, in our consolidated statements of comprehensive income as a component of general and administrative expense.

New Accounting Pronouncements

New Accounting Pronouncements. In February 2016, the FASB issued ASU No. 2016-02, Leases. Additional guidance and targeted improvements to ASU No. 2016-02 were made through the issuance of supplemental ASUs in July 2018, December 2018 and March 2019, or collectively with ASU No. 2016-02, the Lease Standard. We adopted the Lease Standard on January 1, 2019. The Lease Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The Lease Standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. Upon adoption, we applied the package of practical expedients that allowed us not to reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases, (iii) initial direct costs for any expired or existing leases and (iv) the option to initially apply the Lease Standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption, although we did not have such an adjustment. Additionally, our leases met the criteria not to separate non-lease components from the related lease component.

As a lessor. We are required to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. Adoption of the Lease Standard did not have a material impact in our consolidated financial statements for our leases where we are the lessor.

As a lessee. We are required to record right of use assets and lease liabilities in our consolidated balance sheets for leases with terms greater than 12 months, where we are the lessee. We recorded right of use assets and related lease liabilities of $77,010 upon implementation of the Lease Standard. Adoption of the Lease Standard did not have a material effect in our consolidated statements of comprehensive income or consolidated statements of cash flows for our leases where we are the lessee.

See Note 5 for further information regarding our leases and the adoption of the Lease Standard.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Lease related receivables are governed by the Lease Standard referred to above and are not subject to ASU No. 2016-13. We have adopted ASU No. 2016-13 using the modified retrospective approach and this standard did not have a material impact in our consolidated financial statements.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Preferred Shares Series D Preferred Shares	Cumulative Preferred Distributions	Common Shares	Cumulative Common Distributions	Additional Paid in Capital	Cumulative Net Income	Cumulative Other Comprehensive Income (Loss)
Balance at Dec. 31, 2016	$ 3,129,389	$ 280,107	$ (341,977)	$ 1,643	$ (4,494,407)	$ 4,539,673	$ 3,104,767	$ 39,583
Balance (in shares) at Dec. 31, 2016		11,600,000		164,268,199
Increase (Decrease) in Shareholders' Equity
Net income	215,143						215,143
Unrealized gain on investment in available for sale securities	39,315							39,315
Equity in unrealized gains of investees	460							460
Redemption of preferred shares, net	(280,107)	$ (280,107)
Redemption of preferred shares, net (in shares)		(11,600,000)
Common share grants	3,169			$ 1		3,168
Common share grants (in shares)				100,000
Common share repurchases and forfeitures	$ (535)			$ (1)		(534)
Common share repurchases (in shares)	(19,058)			(19,058)
Excess of liquidation preference over carrying value of preferred shares redeemed	$ (9,893)						(9,893)
Distributions	(341,519)		(1,435)		(340,084)
Balance at Dec. 31, 2017	2,755,422	$ 0	(343,412)	$ 1,643	(4,834,491)	4,542,307	3,310,017	79,358
Balance (in shares) at Dec. 31, 2017		0		164,349,141
Increase (Decrease) in Shareholders' Equity
Net income	185,734						185,734
Unrealized gain on investment in available for sale securities	0
Equity in unrealized gains of investees	(68)							(68)
Common share grants	3,781			$ 1		3,780
Common share grants (in shares)				115,000
Common share repurchases and forfeitures	$ (606)			$ 0		(606)
Common share repurchases (in shares)	(21,202)			(22,432)
Distributions	$ (346,832)				(346,832)
Balance at Dec. 31, 2018	2,597,431	$ 0	(343,412)	$ 1,644	(5,181,323)	4,545,481	3,575,307	(266)
Balance (in shares) at Dec. 31, 2018		0		164,441,709
Increase (Decrease) in Shareholders' Equity
Net income	259,750						259,750
Unrealized gain on investment in available for sale securities	0
Equity in unrealized gains of investees	91							91
Amounts reclassified from cumulative other comprehensive income to net income	175							175
Common share grants	$ 2,857			$ 2		2,855
Common share grants (in shares)				155,100
Common share repurchases (in shares)	(31,225)
Common share repurchases and forfeitures	$ (807)					(807)
Common share repurchases and forfeitures (in shares)				(33,775)
Distributions	(353,619)				(353,619)
Balance at Dec. 31, 2019	$ 2,505,878	$ 0	$ (343,412)	$ 1,646	$ (5,534,942)	$ 4,547,529	$ 3,835,057	$ 0
Balance (in shares) at Dec. 31, 2019		0		164,563,034

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Indebtedness - Principal Repayment (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Required principal payments under outstanding debt
2020	$ 0
2021	400,000
2022	877,000
2023	900,000
2024	1,175,000
Thereafter	2,775,000
Total principal payments	$ 6,127,000

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Management Agreements and Leases Management Agreements and Leases - Other Net Lease Agreements (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019 USD ($) travel_center lease_agreement	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) travel_center lease_agreement	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Lessee, Lease, Description [Line Items]
Revenues	$ 580,906	$ 599,772	$ 610,562	$ 524,908	$ 550,799	$ 603,153	$ 611,951	$ 528,633	$ 2,316,148	$ 2,294,536	$ 2,171,935
Straight line rent adjustments									(10,719)	12,509	12,378
Right of use asset	75,040								75,040
Lease liability	$ 75,040								75,040
Hotel operating revenues
Lessee, Lease, Description [Line Items]
Rental expense related to operating leases									$ 13,892
Number of properties on leased land | lease_agreement	14								14
Travel centers
Lessee, Lease, Description [Line Items]
Number of properties on leased land | travel_center	17								17
Travel centers | Land
Lessee, Lease, Description [Line Items]
Rental expense related to operating leases									$ 508
Lease term	12 years								12 years
Travel centers | Minimum | Land
Lessee, Lease, Description [Line Items]
Lease term	2 years								2 years
Travel centers | Maximum | Land
Lessee, Lease, Description [Line Items]
Lease term	31 years								31 years
SMTA Transaction
Lessee, Lease, Description [Line Items]
Straight line rent adjustments						$ 2,160
Rental income
Lessee, Lease, Description [Line Items]
Revenues									$ 322,236	$ 330,806	$ 326,436
Rental income | SMTA Transaction
Lessee, Lease, Description [Line Items]
Revenues		$ 46,861

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Real estate properties:
Land	$ 2,066,602	$ 1,626,239
Buildings, improvements and equipment	9,318,434	7,896,734
Total real estate properties, gross	11,385,036	9,522,973
Accumulated depreciation	(3,120,761)	(2,973,384)
Total real estate properties, net	8,264,275	6,549,589
Acquired real estate leases and other intangibles	378,218	105,749
Assets held for sale	87,493	144,008
Cash and cash equivalents	27,633	25,966
Restricted cash	53,626	50,037
Due from related persons	68,653	91,212
Other assets, net	154,069	210,518
Total assets	9,033,967	7,177,079
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility	377,000	177,000
Unsecured term loan, net	397,889	397,292
Senior unsecured notes, net	5,287,658	3,598,295
Security deposits	109,403	132,816
Accounts payable and other liabilities	335,696	211,332
Due to related persons	20,443	62,913
Total liabilities	6,528,089	4,579,648
Commitments and contingencies
Shareholders’ equity:
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 164,563,034 and 164,441,709 shares issued and outstanding, respectively	1,646	1,644
Additional paid in capital	4,547,529	4,545,481
Cumulative other comprehensive income (loss)	0	(266)
Cumulative net income available for common shareholders	3,491,645	3,231,895
Cumulative common distributions	(5,534,942)	(5,181,323)
Total shareholders’ equity	2,505,878	2,597,431
Total liabilities and shareholders’ equity	$ 9,033,967	$ 7,177,079

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Shareholders' Equity - Preferred Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		12 Months Ended
	Feb. 10, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Net reduction to net income available for common shareholders		$ 0	$ 0	$ 9,893
Series D Preferred Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares redeemed (in shares)	11,600
Dividend rate percentage	7.125%
Liquidation preference (in dollars per share)	$ 25.00
Dividends payable	$ 291,435,000
Net reduction to net income available for common shareholders				$ 9,893

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Summary of Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right of use asset	$ 75,040
Lease liability	$ 75,040
Accounting Standards Update 2018-11
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right of use asset		$ 77,010
Lease liability		$ 77,010

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Real Estate Properties Real Estate Properties - SMTA Transaction and Other Acquisition Agreements (Details) $ in Thousands			12 Months Ended
	Feb. 20, 2020 USD ($) ft² retail_property state	Sep. 20, 2019 USD ($) ft² tenant retail_property state brand industry	Dec. 31, 2019 USD ($) tenant state brand industry	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Real Estate Properties [Line Items]
Number of properties acquired | retail_property		767
Rentable square feet | ft²		12,400,000
Number of states in which property is located | state		45	12
Transaction value		$ 2,482,382	$ 2,711,985	$ 127,597	$ 606,397
Cash consideration		2,384,577
Prepayment penalties		82,069
Acquisition costs capitalized		$ 15,736
Number of tenants | tenant		279	194
Number of industries | industry		23	23
Number of brands | brand		163	131
Unspent leasing related obligations assumed			$ 5,346
Annual minimum returns and rents			$ 381,679
Subsequent event
Real Estate Properties [Line Items]
Number of properties acquired | retail_property	3
Rentable square feet | ft²	6,696
Number of states in which property is located | state	2
Transaction value	$ 7,000
Annual minimum returns and rents	$ 387

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Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Tax credits	$ 0	$ 0
Tax loss carryforwards	44,285	62,436
Other	3,612	2,829
Deferred tax assets, gross	47,897	65,265
Valuation allowance	(47,897)	(65,265)
Deferred income tax assets, net	0	0
Deferred tax liabilities:
Property basis difference	(6,996)	(7,174)
Net deferred tax liabilities	$ (6,996)	$ (7,174)

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Shareholders' Equity - Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended								12 Months Ended
	Feb. 20, 2020	Jan. 16, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Common Share Distributions
Annual Per Share Distribution (in dollars per share)			$ 0.54	$ 0.54	$ 0.54	$ 0.53	$ 0.53	$ 0.53	$ 0.53	$ 0.52	$ 2.15	$ 2.11	$ 2.07
Total Distribution											$ 353,620	$ 346,832	$ 340,084
Ordinary Income											44.50%	100.00%	94.69%
Capital Gain											37.93%	0.00%	0.00%
Return of Capital											17.57%	0.00%	4.39%
Qualified Dividend											0.50%	0.00%	0.92%
Subsequent event
Common Share Distributions
Annual Per Share Distribution (in dollars per share)	$ 0.54
Total Distribution		$ 88,864
Cash distributions paid or payable (in dollars per share)		$ 0.54

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Concentration - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) retail_property hotel state property	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Concentration Risk
Number of properties | retail_property	816
Security deposits	$ 109,403	$ 132,816
Hotel operating revenues
Concentration Risk
Number of properties | hotel	329
Guarantee provided to the entity, maximum	$ 30,000
Reduction of hotel operating expenses	29,897	5,569	$ 4,673
Shortfalls due to unguaranteed portions of minimum returns	69,929	44,634	26,804
Security deposits replenished and increased	$ 734	10,743	25,419
Hotel operating revenues | Marriott contracts
Concentration Risk
Number of properties | hotel	122
Guarantee provided to the entity, remaining amount	$ 30,000
Security deposits	$ 33,445
Hotel operating revenues | Hyatt
Concentration Risk
Number of properties | hotel	22
Guarantee provided to the entity, maximum	$ 50,000
Guarantee provided to the entity, remaining amount	$ 19,655
Hotel operating revenues | Radisson
Concentration Risk
Number of properties | hotel	9
Guarantee provided to the entity, maximum	$ 47,523
Guarantee provided to the entity, remaining amount	41,216
Hotel operating revenues | IHG Agreement
Concentration Risk
Security deposits	75,717
Amount by which the cash flow available to pay the entity's minimum rent or return was more than the minimum amount	$ 100,000
Minimum | Hotel operating revenues
Concentration Risk
Number of real estate properties leased or managed | property	1
Amount by which the cash flow available to pay the entity's minimum rent or return was less than the minimum amount	$ 96,744	50,203	31,477
Maximum | Hotel operating revenues
Concentration Risk
Number of real estate properties leased or managed | hotel	103
Amount by which the cash flow available to pay the entity's minimum rent or return was more than the minimum amount	$ 10,702	$ 35,464	$ 68,338
Geographic distribution, foreign | Hotel operating revenues
Concentration Risk
Concentration risk percentage	2.00%
North America
Concentration Risk
Number of states in which properties are located | state	47
Various States, USA | Geographic distribution, domestic | Minimum
Concentration Risk
Concentration risk percentage	6.00%
Various States, USA | Geographic distribution, domestic | Maximum
Concentration Risk
Concentration risk percentage	10.00%
Ontario, Canada | Hotel operating revenues
Concentration Risk
Number of properties | property	2
Credit concentration
Concentration Risk
Number of properties | property	1,145
Credit concentration | Hotel operating revenues
Concentration Risk
Number of properties | hotel	329
Credit concentration | Hotel operating revenues | Marriott contracts
Concentration Risk
Number of properties | property	122
Credit concentration | Hotel operating revenues | Hyatt
Concentration Risk
Number of properties | hotel	22
Credit concentration | Hotel operating revenues | Radisson
Concentration Risk
Number of properties | hotel	9
Credit concentration | Hotel operating revenues | IHG Agreement
Concentration Risk
Number of properties | hotel	103

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Fair Value of Assets and Liabilities (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) retail_property state property shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 20, 2019 state
Fair Value of Assets and Liabilities
Number of real estate properties to be sold or rebranded | property	19
Number of properties | retail_property	816
Number of states in which property is located | state	12			45
Loss on asset impairment	$ 39,296	$ 0	$ 0
Investment in TA
Fair Value of Assets and Liabilities
Unrealized gain (loss) on equity securities	$ (1,129)
Quoted Prices in Active Markets for Identical Assets (Level 1) | Investment in TA
Fair Value of Assets and Liabilities
Shares included in investment securities (in shares) | shares	684,000
Historical cost of securities	$ 17,407
Recurring | Carrying amount | Investment in TA
Fair Value of Assets and Liabilities
Investment securities	11,731
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Investment in TA
Fair Value of Assets and Liabilities
Investment securities	11,731
Recurring | Significant Other Observable Inputs (Level 2) | Investment in TA
Fair Value of Assets and Liabilities
Investment securities	0
Recurring | Significant Unobservable Inputs (Level 3) | Investment in TA
Fair Value of Assets and Liabilities
Investment securities	0
Non-recurring
Fair Value of Assets and Liabilities
Loss on asset impairment	10,925
Non-recurring | Carrying amount
Fair Value of Assets and Liabilities
Investment securities	87,493
Non-recurring | Held and used
Fair Value of Assets and Liabilities
Loss on asset impairment	28,371
Non-recurring | Held and used | Carrying amount
Fair Value of Assets and Liabilities
Investment securities	38,000
Non-recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value of Assets and Liabilities
Investment securities	0
Non-recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Held and used
Fair Value of Assets and Liabilities
Investment securities	0
Non-recurring | Significant Other Observable Inputs (Level 2)
Fair Value of Assets and Liabilities
Investment securities	0
Non-recurring | Significant Other Observable Inputs (Level 2) | Held and used
Fair Value of Assets and Liabilities
Investment securities	0
Non-recurring | Significant Unobservable Inputs (Level 3)
Fair Value of Assets and Liabilities
Investment securities	90,122
Non-recurring | Significant Unobservable Inputs (Level 3) | Held and used
Fair Value of Assets and Liabilities
Investment securities	$ 38,000

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Related Person Transactions - TA Transaction Agreement (Details)	Dec. 31, 2019 shares
Travel Centers of America LLC | RMR LLC
Related Party Transaction [Line Items]
Number of common shares owned (in shares)	298,538
Percentage of ownership	3.60%
Travel Centers of America LLC
Related Party Transaction [Line Items]
Ownership percentage formerly held in subsidiary	100.00%
Percentage of gross carrying value of real estate	27.00%
Number of common shares owned (in shares)	684,000
Percentage of total shares outstanding	8.20%
Share ownership restrictions maximum percentage of equity shares that can be acquired without approval	9.80%

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Management Agreements and Leases - Radisson Agreement (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) retail_property hotel	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Management Agreements and Leases [Line Items]
Number of properties | retail_property	816
Annual minimum returns and rents	$ 381,679
Capital improvements from leased facilities, funded	$ 150,531	$ 182,862	$ 131,120
Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	329
Guarantee provided to the entity, maximum	$ 30,000
Radisson | Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	9
Annual minimum returns and rents	$ 20,443
Realized returns and rents	20,056	$ 16,183	$ 12,920
Increase in guaranty, maximum	1,523
Guarantee provided to the entity, maximum	47,523
Increase in guarantee	(1,343)
Guarantee provided to the entity, remaining amount	41,216
Capital improvements from leased facilities, funded	$ 19,034

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Management Agreements and Leases - Marriott No. 5 (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) retail_property hotel	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Management Agreements and Leases [Line Items]
Number of properties | retail_property	816
Annual minimum returns and rents	$ 381,679
Security deposits	$ 109,403	$ 132,816
Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	329
Hotel operating revenues | Marriott (No. 5)
Management Agreements and Leases [Line Items]
Number of properties | hotel	1
Annual minimum returns and rents	$ 10,518
Realized returns and rents	$ 10,518	$ 10,321	$ 10,159

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Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Selected quarterly financial data (unaudited)

	2019
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Revenues	$	524,908	$	610,562	$	599,772	$	580,906
Net income (loss)	225,787		8,782		40,074		(14,893		)
Net income (loss) per share (basic and diluted)(1)	1.37		0.05		0.24		(0.09		)
Distributions per common share(2)	0.53		0.54		0.54		0.54

	2018
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Revenues	$	528,633	$	611,951	$	603,153	$	550,799
Net income (loss)	80,206		97,289		117,099		(108,860		)
Net income (loss) per share (basic and diluted)(1)	0.49		0.59		0.71		(0.66		)
Distributions per common share(2)	0.52		0.53		0.53		0.53

(1) The sum of per common share amounts for the four quarters differs from annual per share amounts due to the required method of computing weighted average number of shares in interim periods and rounding.

(2)

Amounts represent distributions paid in the periods shown.

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Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Ownership interest in subsidiaries (as a percent)	100.00%
Assets of TRSs	$ 31,920	$ 31,917
Liabilities of TRSs	$ 138,708	$ 148,459
Buildings and Improvements | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	40 years
Personal Property | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	12 years

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Business and Property Management Agreements with RMR LLC

12 Months Ended

Dec. 31, 2019

Real Estate [Abstract]

Business and Property Management Agreements with RMR LLC

Note 8. Business and Property Management Agreements with RMR LLC

We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which currently relates to our property level operations of our net lease portfolio, excluding properties leased to TA, and the office building component of one of our hotels. See Note 9 for further information regarding our relationship, agreements and transactions with RMR LLC.

Management Agreements with RMR LLC. Our management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:

• Base Management Fee. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of:

◦ the sum of (a) 0.7% of the average aggregate historical cost of our real estate investments up to $250,000, plus (b) 0.5% of the average aggregate historical cost of our real estate investments exceeding $250,000; and

◦ the sum of (a) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded, during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (b) 0.5% of our Average Market Capitalization exceeding $250,000.

The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves.

• Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows:

◦ An amount, subject to a cap based on the value of our common shares outstanding, equal to 12% of the product of:

- our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and

- the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the SNL U.S. REIT Hotel Index, or the benchmark return per share, for the relevant measurement period.

For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.

◦ The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if additional common shares are issued, or if we repurchase our common shares during the measurement period.

◦ No incentive management fee is payable by us unless our total return per share during the measurement period is positive.

◦ The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated.

◦ If our total return per share exceeds 12% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the SNL U.S. REIT Hotel Index for such measurement period and 12% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the SNL U.S. REIT Hotel Index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the SNL U.S. REIT Hotel Index.

◦ The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period.

◦ Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements.

Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $41,607, $39,942 and $40,694 for the years ended December 31, 2019, 2018 and 2017, respectively. The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income for these periods. The net business management fees we recognized for each of the years ended December 31, 2019, 2018 and 2017 reflect a reduction of $3,585 for each of those years for the amortization of the liability we recorded in connection with our prior investment in RMR Inc., as further described in Note 9.

Pursuant to our business management agreement, in January 2019 and 2018, we paid RMR LLC an incentive management fee of $53,635 and $74,753 for the years ended December 31, 2018 and 2017, respectively. We did not incur an incentive management fee payable to RMR LLC for the year ended December 31, 2019. In calculating the incentive management fee payable by us, our total shareholder return per share was adjusted in accordance with the business management agreement to reflect aggregate net increases in the number of our common shares outstanding as a result of certain share issuances and repurchases by us during the three year measurement period. In addition, the calculation of our benchmark return per share was also adjusted for these issuances and repurchases in accordance with the business management agreement.

• Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0% of construction costs for our net lease portfolio, excluding properties leased to TA, and the office building component of one of our hotels that are subject to our property management agreement with RMR LLC.

Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $1,399, $64 and $45 for the years ended December 31, 2019, 2018 and 2017, respectively. These amounts are included in hotel operating expenses in our consolidated statements of comprehensive income.

• Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC employees assigned to work exclusively or partly at our net lease properties (excluding properties leased to TA), and the office building component of one of our hotels, our share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function, and as otherwise agreed. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $620, $399 and $482 for these expenses and costs for the years ended December 31, 2019, 2018 and 2017, respectively. We included these amounts in other operating expenses and selling, general and administrative expense, as applicable, for these periods.

• Term. Our management agreements with RMR LLC have terms that end on December 31, 2039, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension.

• Termination Rights. We have the right to terminate one or both of our management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein.

• Termination Fee. If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC.

• Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable.

• Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC or its subsidiaries provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers.

•

Investment Opportunities. Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC.

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Real Estate Properties

12 Months Ended

Dec. 31, 2019

Real Estate [Abstract]

Real Estate Properties

Note 4. Real Estate Properties

As of December 31, 2019, we owned 329 hotels with 51,349 rooms or suites and 816 service-oriented retail properties with approximately 14.9 million square feet that are primarily subject to “triple net” leases, or net leases where the tenant is generally responsible for payment of operating expenses and capital expenditures of the property during the lease term. Our properties had an aggregate undepreciated carrying value of $11,472,529, including $87,493 classified as held for sale as of December 31, 2019.

Our real estate properties, at cost after impairments, consisted of land of $2,066,602, buildings and improvements of $8,731,002 and furniture, fixtures and equipment of $587,432, as of December 31, 2019; and land of $1,626,239, buildings and improvements of $7,194,758 and furniture, fixtures and equipment of $701,976, as of December 31, 2018.

During 2019, 2018 and 2017, we funded $242,571, $200,044 and $162,482, respectively, for improvements to certain of our properties, which, pursuant to the terms of our management and lease agreements with our managers and tenants, resulted in increases in our contractual annual minimum returns and rents of $18,432, $14,888 and $10,274 in 2019, 2018 and 2017, respectively. See Note 5 for further information about our management and lease agreements and our fundings of improvements to certain of our properties.

At December 31, 2019, 14 of our hotels were on land we leased partially or entirely from unrelated third parties. The average remaining term of the ground leases (including renewal options) is approximately 37 years (range of 15 to 68 years). Ground rent payable under nine of the ground leases is generally calculated as a percentage of hotel revenues. Twelve (12) of the 14 ground leases require annual minimum rents averaging $260 per year; future rents under two ground leases have been prepaid. Seventeen (17) of our net lease properties are on land we leased partially or entirely from unrelated third parties. The remaining terms on the leases range from one year to 31 years with rents averaging $508 per year. Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant does not perform obligations under a ground lease or does not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property. Any pledge, sale or transfer of our interests in a ground lease may require the consent of the applicable ground lessor and its lenders.

Acquisitions

Our allocation of the purchase price of each of our acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.

Properties acquired during the year ended December 31, 2019 (1)
Acquisition Date	Location	Type	Purchase Price		Land		Land Improvements		Building and Improvements		Furniture, Fixtures and Equipment		Held For Sale		Intangible Assets
2/22/2019	Washington, D.C. (2)	Hotel	$	143,742	$	44,972	$	151	$	93,412	$	5,207	$	—	$	—
5/7/2019	Milwaukee, WI (3)	Hotel	30,235		3,442		1,053		25,132		608		—		—
8/1/2019	Southington, CT (4)	Land	66		66		—		—		—		—		—
9/20/2019	Various (5)	Net Lease	2,482,382		388,057		—		1,201,922		—		604,989		287,414
10/9/2019	Chicago, IL (6)	Hotel	55,560		7,723		—		45,059		2,778		—		—
			$	2,711,985	$	444,260	$	1,204	$	1,365,525	$	8,593	$	604,989	$	287,414
Properties acquired during the year ended December 31, 2018 (1)
6/15/2018	Minneapolis, MN (7)	Hotel	$	75,576	$	2,196	$	—	$	68,388	$	4,992	$	—	$	—
6/15/2018	Baton Rouge, LA (8)	Hotel	16,022		2,242		173		12,842		765		—		—
10/30/2018	Scottsdale, AZ (9)	Hotel	35,999		6,450		833		25,898		2,818		—		—
			$	127,597	$	10,888	$	1,006	$	107,128	$	8,575	$	—	$	—
Properties acquired during the year ended December 31, 2017 (1)
2/1/2017	Chicago, IL (10)	Hotel	$	86,201	$	13,609	$	40	$	58,929	$	11,926	$	—	$	1,697
3/31/2017	Seattle, WA (11)	Hotel	73,041		24,562		30		47,103		898		—		448
5/3/2017	Columbia, SC (12)	Net Lease	27,604		4,040		7,172		16,392		—		—		—
6/2/2017	St. Louis, MO (13)	Hotel	88,080		4,250		161		79,737		3,394		—		538
6/29/2017	Atlanta, GA (14)	Hotel	88,748		16,612		483		68,864		2,789		—		—
8/1/2017	Columbus, OH (15)	Hotel	49,188		6,100		49		40,678		2,361		—		—
8/23/2017	Charlotte, NC (16)	Hotel	44,000		2,684		1,012		35,288		5,016		—		—
9/8/2017	Atlanta, GA (17)	Land	940		940		—		—		—		—		—
9/26/2017	Various (18)	Hotels	139,923		30,720		6,392		93,899		8,912		—		—
9/28/2017	Sayre, OK (19)	Net Lease	8,672		1,031		—		7,641		—		—		—
			$	606,397	$	104,548	$	15,339	$	448,531	$	35,296	$	—	$	2,683

(1) We accounted for these transactions as acquisitions of assets.

(2) On February 22, 2019, we acquired the 335 room Hotel Palomar located in Washington, D.C. for a purchase price of $143,742, including capitalized acquisition costs of $2,292. We added this Kimpton^® branded hotel to our management agreement with IHG.

(3) On May 7, 2019, we acquired the 198 room Crowne Plaza Milwaukee West hotel in Milwaukee, WI for a purchase price of $30,235, including capitalized acquisition costs of $235. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(4) On August 1, 2019, we acquired a land parcel adjacent to our travel center located in Southington, CT for a purchase price of $66, including capitalized acquisition costs of $6. This land parcel has been added to the TA lease for that travel center.

(5) On September 20, 2019, we completed the SMTA Transaction for total consideration of $2,482,382. See below for further information regarding the SMTA Transaction.

(6) On October 9, 2019, we acquired the 261-room Kimpton Palomar Hotel located in Chicago, IL for a purchase price of $55,560, including acquisition related costs of $560. We added this Kimpton® branded hotel to our management agreement with IHG.

(7) On June 15, 2018, we acquired the 360 room Radisson Blu^® hotel in Minneapolis, MN for a purchase price of $75,576, including capitalized acquisition costs of $576. We added this hotel to our management agreement with Radisson.

(8) On June 15, 2018, we acquired the 117 suite Staybridge Suites^® at Louisiana State University in Baton Rouge, LA for a purchase price of $16,022, including capitalized acquisition costs of $272. We added this hotel to our management agreement with IHG.

(9) On October 30, 2018, we acquired a hotel with 164 suites in Scottsdale, AZ for a purchase price of $35,999, including capitalized acquisition costs of $114. We converted this hotel to the Sonesta Suites^® brand and entered into a management agreement for this hotel with Sonesta.

(10) On February 1, 2017, we acquired the 483 room Hotel Allegro in Chicago, IL for a purchase price of $86,201, including capitalized acquisition costs of $707. We added this Kimpton^® branded hotel to our management agreement with IHG.

(11) On March 31, 2017, we acquired the 121 room Hotel Alexis in Seattle, WA for a purchase price of $73,041, including capitalized acquisition costs of $1,416. We added this Kimpton^® branded hotel to our management agreement with IHG.

(12) On May 3, 2017, we acquired a travel center from TA for $27,604 pursuant to a transaction agreement we entered with TA in 2015. Simultaneously with this acquisition, we leased the travel center back to TA.

(13) On June 2, 2017, we acquired the 389 room Chase Park Plaza Hotel in St. Louis, MO for a purchase price of $88,080, including capitalized acquisition costs of $466. We converted this hotel to the Royal Sonesta^® hotel brand and entered into a management agreement for this hotel with Sonesta.

(14) On June 29, 2017, we acquired the 495 room Crowne Plaza Ravinia hotel located in Atlanta, GA for a purchase price of $88,748, including capitalized acquisition costs of $144. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(15) On August 1, 2017, we acquired the 419 room Crowne Plaza & Lofts hotel in Columbus, OH for a purchase price of $49,188, including capitalized acquisition costs of $198. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(16) On August 23, 2017, we acquired the 300 room Crowne Plaza hotel in Charlotte, NC for a purchase price of $44,000, including capitalized acquisition costs of $143. We added this Crowne Plaza^® branded hotel to our management agreement with IHG.

(17) On September 8, 2017, we acquired a land parcel adjacent to our Crowne Plaza hotel located in Atlanta, GA for a purchase price of $940, including capitalized acquisition costs of $40.

(18) On September 26, 2017, we acquired 14 extended stay hotels with 1,653 suites located in 12 states for a purchase price of $139,923, including capitalized acquisition costs of $1,923. In connection with this acquisition, we converted these hotels to the Sonesta ES Suites^® brand and entered into management agreements for these hotels with Sonesta.

(19) On September 28, 2017, we acquired land and certain improvements at a travel center located in Sayre, OK that we previously leased from a third party and subleased to TA for a purchase price of $8,672, including capitalized acquisition costs of $72. We now directly lease this land and these improvements to TA under our TA No. 4 lease.

See Note 5 for further information regarding our IHG and Radisson agreements. See Note 5 and 9 for further information regarding our relationship, agreements and transactions with Sonesta and TA.

SMTA Transaction

On September 20, 2019, we acquired a 767 property net lease portfolio with 12.4 million rentable square feet from Spirit MTA REIT, a Maryland REIT, (NYSE: SMTA), or SMTA, located in 45 states, or the SMTA Transaction. The aggregate transaction value of the SMTA Transaction was $2,482,382, including $2,384,577 in cash consideration, $82,069 of prepayment penalties related to SMTA’s extinguishment of the mortgage debt on the portfolio and $15,736 of other capitalized acquisition costs. The properties included in the portfolio were net leased to 279 tenants operating in 23 distinct industries and 163 brands that include quick service and casual dining restaurants, movie theaters, health and fitness, automotive parts and services and other service-oriented and necessity-based industries across 45 states. We financed the SMTA Transaction with borrowings under our revolving credit facility and with cash on hand, including net proceeds from our public offerings of senior unsecured notes, as described further in Note 6. As of December 31, 2019, we had $5,346 of unspent leasing related obligations assumed as a part of the SMTA Transaction.

Other Acquisition Agreements

In February 2020, we entered into an agreement to acquire three net lease properties with approximately 6,696 square feet in two states with leases requiring an aggregate of $387 of annual minimum rent for an aggregate sales price of $7,000, excluding closing costs.

Dispositions

During the year ended December 31, 2019, we sold 150 net lease properties with an aggregate of 3,314,724 rentable square feet for an aggregate purchase price of $821,212, excluding closing costs, in eight separate transactions. The sales of these properties, as presented in the table below, do not represent significant dispositions individually or in the aggregate nor do they represent a strategic shift. As a result, the results of operations of these properties are included in continuing operations through the date of sale in our consolidated statements of income.

Date of Sale	Number of Properties	Location	Tenant	Square Feet	Gross Sales Price
1/16/2019	20	Various (1)	TravelCenters	541,483	$	308,200
10/22/2019	1	4726 Mall Drive, Hermantown, MN (2)	HOM Furniture	103,631	6,250
10/29/2019	1	1505 South Pavilion Center Drive Las Vegas, NV (2)	Station Casino	138,558	57,000
11/14/2019	1	1855 S. Range Avenue, Colby, KS (2)	Vacant	6,900	590
11/25/2019	123	Various (2)	Various	2,429,333	435,104
12/16/2019	1	4740 Radio Road, Naples, FL 34110 (2)	Rick Johnson Auto & Tire	4,480	1,112
12/16/2019	1	996 Central Avenue, Naples, FL 34102 (2)	Rick Johnson Auto & Tire	4,500	706
12/30/2019	2	9032 & 9080 Harry Hines Boulevard, Dallas, TX (2)	Pine Creek Medical Center	85,839	12,250
	150			3,314,724	$	821,212

(1) In January 2019, in a series of transactions, we sold 20 travel centers in 15 states to TA for $308,200. We recorded a gain of $159,535 in 2019 as a result of these sales.

(2) During 2019, we sold 130 net lease properties that we acquired in the SMTA Transaction in 28 states with 2,773,241 square feet and annual minimum rent of $43,180 for $513,012.

During the year ended December 31, 2017, we sold three of our Radisson branded hotels. On August 1, 2017, we sold our 159 room Radisson hotel located in Chandler, AZ for net proceeds of $9,085. On August 31, 2017, we sold our 143 room Country Inn & Suites hotel located in Naperville, IL for net proceeds of $6,313. On September 22, 2017, we sold our 209 room Park Plaza hotel located in Bloomington, MN for net proceeds of $8,030. As a result of these sales, we recorded a $9,348 gain on sale of real estate in the year ended December 31, 2017. Also in 2017, we received, net of expenses, $1,030 as the final payment with respect to a travel center we previously owned in Roanoke, VA that we leased to TA and which was taken by eminent domain proceedings brought by the Virginia Department of Transportation in 2014. This final payment was allocated to TA as set forth in the lease.

We are currently marketing for sale or rebranding 20 Wyndham-branded hotels with a net carrying value of $111,271, 33 Marriott hotels with a net carrying value of $224,895 and 19 net lease properties with a net carrying value of $87,493 we have classified as held for sale. See Notes 5 and 14 for further information on these disposition activities.

Since January 1, 2020, we have sold four vacant net lease properties with approximately 160,434 square feet in three states for an aggregate sales price of $5,010, excluding closing costs.

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Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Selected Quarterly Financial Data (Unaudited)

Note 12. Selected Quarterly Financial Data (Unaudited)

	2019
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Revenues	$	524,908	$	610,562	$	599,772	$	580,906
Net income (loss)	225,787		8,782		40,074		(14,893		)
Net income (loss) per share (basic and diluted)(1)	1.37		0.05		0.24		(0.09		)
Distributions per common share(2)	0.53		0.54		0.54		0.54

	2018
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Revenues	$	528,633	$	611,951	$	603,153	$	550,799
Net income (loss)	80,206		97,289		117,099		(108,860		)
Net income (loss) per share (basic and diluted)(1)	0.49		0.59		0.71		(0.66		)
Distributions per common share(2)	0.52		0.53		0.53		0.53

(1) The sum of per common share amounts for the four quarters differs from annual per share amounts due to the required method of computing weighted average number of shares in interim periods and rounding.

(2)

Amounts represent distributions paid in the periods shown.

XML

Label	Element	Value
Accounting Standards Update 2016-01 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 0
Accounting Standards Update 2016-01 [Member] | AOCI Attributable to Parent [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(79,556,000)
Accounting Standards Update 2016-01 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 79,556,000

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Shareholders' Equity (Tables)

12 Months Ended

Dec. 31, 2019

Stockholders' Equity Note [Abstract]

Summary of shares granted,vested, forfeited and unvested

A summary of shares granted, vested, forfeited and unvested under the terms of the Share Award Plan for the years ended December 31, 2019, 2018 and 2017 is as follows:

	2019				2018				2017
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested shares, beginning of year	164,000		$	28.39	146,605		$	27.93	148,535		$	29.40
Shares granted	155,100		25.00		115,000		28.80		100,000		28.39
Shares vested	(122,010	)	25.09		(96,375	)	28.73		(101,930	)	28.52
Shares forfeited	(2,550	)	27.49		(1,230	)	—		—		—
Unvested shares, end of year	194,540		$	26.59	164,000		$	28.39	146,605		$	27.93

Schedule of distributions paid

During the years ended December 31, 2019, 2018 and 2017, we paid distributions on our common shares as follows:

	Annual Per Share Distribution	Total Distribution	Characterization of Distribution
Year			Ordinary Income	Capital Gain	Return of Capital	Qualified Dividend
2019	$2.15	$353,620	44.50%	37.93%	17.57%	0.50%
2018	$2.11	$346,832	100.00%	—	—	—
2017	$2.07	$340,084	94.69%	—	4.39%	0.92%

Schedule of amounts recognized in cumulative other comprehensive income (loss)

The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the year ended December 31, 2019:

	Unrealized Gain			Equity in
	(Loss) on Investment			Unrealized Gain
	Securities, net			(Loss) of Investees			Total
Balance at December 31, 2017	$	78,715		$	643		$	79,358
Amounts reclassified from cumulative other comprehensive income to retained earnings	(78,715		)	(841		)	(79,556		)
Current year other comprehensive income	—			(68		)	(68		)
Balance at December 31, 2018	—			(266		)	(266		)
Current year other comprehensive loss	—			91			91
Amounts reclassified from cumulative other comprehensive income to net income	—			175			175
Balance at December 31, 2019	$	—		$	—		$	—

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Weighted Average Common Shares (Tables)

12 Months Ended

Dec. 31, 2019

Earnings Per Share, Basic and Diluted [Abstract]

Schedule of reconciliation weighted average common shares to calculate basic and diluted earnings per share

The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share:

	For the Year Ended December 31,
	2019	2018	2017
	(in thousands)
Weighted average common shares for basic earnings per share	164,312	164,229	164,146
Effect of dilutive securities: Unvested share awards	28	29	29
Weighted average common shares for diluted earnings per share	164,340	164,258	164,175

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Fair Value of Assets and Liabilities

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

Note 14. Fair Value of Assets and Liabilities

The table below presents certain of our assets carried at fair value at December 31, 2019, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

			Fair Value at Reporting Date Using
Description	Carrying Value at December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Fair Value Measurement Assets:
Investment in TA(1)	$	11,731	$	11,731	$	—	$	—
Non-recurring Fair Value Measurement Assets
Assets of properties held for sale (2)	87,493		—		—		90,122
Assets of properties held and used (3)	38,000		—		—		38,000

(1) Our 684,000 common shares of TA, which are included in other assets in our consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $17,407 as of December 31, 2019. During the year ended December 31, 2019, we recorded unrealized losses of $1,129 to adjust the carrying value of our investment in TA shares to their fair value as of December 31, 2019.

(2) As of December 31, 2019, we owned 19 net lease properties located in 12 states classified as held for sale of $87,493. These properties are recorded at their estimated fair value less costs to sell based on information derived from third party appraisals (Level 3 inputs as defined in the fair value hierarchy under GAAP). We recorded a $10,925 loss on asset impairment in 2019 to reduce the carrying value of these properties to their estimated fair value less costs to sell.

(3) We recorded a $28,371 loss on asset impairment in 2019 to reduce the carrying value of two hotels to their estimated fair value of $38,000 based on discounted cash flow analyses (Level 3 inputs).

In addition to the investment securities included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, term loan, senior notes and security deposits. At December 31, 2019 and December 31, 2018, the fair values of these additional financial instruments approximated their carrying values in our consolidated balance sheets due to their short term nature or floating interest rates, except as follows:

	December 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
	Amount (1)		Value		Amount (1)		Value
Senior Unsecured Notes, due 2021 at 4.25%	$	398,379	$	406,838	$	396,938	$	404,582
Senior Unsecured Notes, due 2022 at 5.00%	496,821		526,500		495,609		510,658
Senior Unsecured Notes, due 2023 at 4.50%	499,432		520,478		499,268		503,295
Senior Unsecured Notes, due 2024 at 4.65%	348,295		364,277		347,890		349,741
Senior Unsecured Notes, due 2024 at 4.35%	818,075		848,847		—		—
Senior Unsecured Notes, due 2025 at 4.50%	346,431		361,783		345,743		341,114
Senior Unsecured Notes, due 2026 at 5.25%	343,083		369,185		341,955		354,060
Senior Unsecured Notes, due 2026 at 4.75%	445,905		464,315		—		—
Senior Unsecured Notes, due 2027 at 4.95%	394,649		414,012		393,893		391,660
Senior Unsecured Notes, due 2028 at 3.95%	390,759		393,940		389,610		361,232
Senior Unsecured Notes, due 2029 at 4.95%	417,307		434,248		—		—
Senior Unsecured Notes, due 2030 at 4.375%	388,522		394,788		387,389		367,110
Total financial liabilities	$	5,287,658	$	5,499,211	$	3,598,295	$	3,583,452

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

At December 31, 2019 and 2018, we estimated the fair values of our senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 2 inputs).

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Summary of Significant Accounting Policies - Equity Securities (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) shares
Debt and Equity Securities, FV-NI [Line Items]
Distributions in excess of earnings from Affiliates Insurance Company | $	$ 9,000
Travel Centers of America LLC
Debt and Equity Securities, FV-NI [Line Items]
Number of common shares owned (in shares)	684,000
Travel Centers of America LLC | Quoted Prices in Active Markets for Identical Assets (Level 1)
Debt and Equity Securities, FV-NI [Line Items]
Number of common shares owned (in shares)	684,000

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Real Estate Properties (Details) $ in Thousands, ft² in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) ft² travel_center retail_property hotel room lease_agreement	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Real Estate Properties [Line Items]
Number of properties | retail_property	816
Area of real estate | ft²	14.9
Aggregate undepreciated carrying value of real estate	$ 11,472,529
Carrying value of net lease properties held for sale	87,493
Land	2,066,602	$ 1,626,239
Building and improvements	8,731,002	7,194,758
Furniture, fixtures and equipment	587,432	701,976
Capital improvements from leased facilities, funded	150,531	182,862	$ 131,120
Hotels and travel centers
Real Estate Properties [Line Items]
Capital improvements from leased facilities, funded	242,571	200,044	162,482
Increase (decrease) in annual minimum returns and rents	$ 18,432	14,888	10,274
Hotel operating revenues
Real Estate Properties [Line Items]
Number of properties | hotel	329
Number of rooms/suites | room	51,349
Number of properties on leased land | lease_agreement	14
Ground lease remaining term	37 years
Number of ground leases | lease_agreement	9
Number of ground leases requiring specified minimum annual rents | lease_agreement	12
Average ground lease annual rents	$ 260
Number of ground leases with future rents prepaid | lease_agreement	2
Rental expense related to operating leases	$ 13,892
Hotel operating revenues | Wyndham agreement
Real Estate Properties [Line Items]
Aggregate undepreciated carrying value of real estate	111,271
Capital improvements from leased facilities, funded	$ 3,040	$ 2,883	$ 1,449
Hotel operating revenues | Marriott contracts
Real Estate Properties [Line Items]
Number of properties | hotel	122
Aggregate undepreciated carrying value of real estate	$ 224,895
Hotel operating revenues | Minimum
Real Estate Properties [Line Items]
Ground lease remaining term	15 years
Hotel operating revenues | Maximum
Real Estate Properties [Line Items]
Ground lease remaining term	68 years
Travel centers
Real Estate Properties [Line Items]
Number of properties | travel_center	179
Number of properties on leased land | travel_center	17
Travel centers | Land
Real Estate Properties [Line Items]
Rental expense related to operating leases	$ 508
Travel centers | Minimum
Real Estate Properties [Line Items]
Ground lease remaining term	1 year
Travel centers | Maximum
Real Estate Properties [Line Items]
Ground lease remaining term	31 years

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Real Estate Properties Real Estate Properties - Sale of Properties (Details) $ in Thousands								1 Months Ended	12 Months Ended
	Dec. 30, 2019 USD ($) ft² property	Dec. 16, 2019 USD ($) ft² property	Nov. 25, 2019 USD ($) ft² property	Nov. 14, 2019 USD ($) ft² property	Oct. 29, 2019 USD ($) ft² property	Oct. 22, 2019 USD ($) ft² property	Jan. 16, 2019 USD ($) ft² travel_center	Jan. 31, 2019 USD ($) state	Dec. 31, 2019 USD ($) ft² travel_center retail_property state property	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 20, 2019 state
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | property									150
Square Feet | ft²									14,900,000
Annual minimum returns and rents									$ 381,679
Gross Sales Price									$ 816,450	$ 0	$ 23,438
Number of states in which property is located | state									12			45
Number of properties | retail_property									816
Gain on sale of real estate									$ 159,535	$ 0	$ 9,348
Travel centers
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | travel_center									179
Travel centers | Travel Centers of America LLC
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | travel_center							20
Annual minimum returns and rents									$ 246,088
Gross Sales Price							$ 308,200
Gain from sale								$ 159,535
Number of states in which property is located | state								15
Number of properties | travel_center									179
Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Square Feet | ft²									3,314,724
Gross Sales Price									$ 821,212
Number of properties | property									150
Disposed of by sale | SMTA Transaction
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | property									130
Square Feet | ft²									2,773,241
Annual minimum returns and rents									$ 43,180
Gross Sales Price									$ 513,012
Number of states in which property is located | state									28
Various
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | property			123
Various | Travel centers | Travel Centers of America LLC
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | travel_center							20
Square Feet | ft²							541,483
Gross Sales Price							$ 308,200
Various | Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Square Feet | ft²			2,429,333
Gross Sales Price			$ 435,104
Hermantown, MN
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | property						1
Hermantown, MN | Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Square Feet | ft²						103,631
Gross Sales Price						$ 6,250
Las Vegas, NV
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | property					1
Las Vegas, NV | Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Square Feet | ft²					138,558
Gross Sales Price					$ 57,000
Colby, KS
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | property				1
Colby, KS | Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Square Feet | ft²				6,900
Gross Sales Price				$ 590
Naples, FL 34110
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | property		1
Naples, FL 34110 | Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Square Feet | ft²		4,480
Gross Sales Price		$ 1,112
Naples, FL 34102
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | property		1
Naples, FL 34102 | Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Square Feet | ft²		4,500
Gross Sales Price		$ 706
Dallas, TX
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Properties | property	2
Dallas, TX | Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Square Feet | ft²	85,839
Gross Sales Price	$ 12,250

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Shareholders' Equity - Share-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Apr. 12, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share Award Plan
Unvested shares, scheduled to vest
Shares reserved for issuance (in shares)		2,290,692
Award Plans
Number of Shares
Unvested shares, beginning of year (in shares)		164,000	146,605	148,535
Shares granted (in shares)		155,100	115,000	100,000
Shares vested (in shares)		(122,010)	(96,375)	(101,930)
Shares forfeited (in shares)		(2,550)	(1,230)	0
Unvested shares, end of year (in shares)		194,540	164,000	146,605
Weighted Average Grant Date Fair Value
Unvested shares, beginning of year (in dollars per share)		$ 28.39	$ 27.93	$ 29.40
Shares granted (in dollars per share)		25.00	28.80	28.39
Shares vested (in dollars per share)		25.09	28.73	28.52
Shares forfeited (in dollars per share)		27.49	0	0
Unvested shares, end of year (in dollars per share)		$ 26.59	$ 28.39	$ 27.93
Unvested shares, scheduled to vest
2020 (in shares)		67,290
2021 (in shares)		55,930
2022 (in shares)		43,600
2023 (in shares)		27,720
Estimated future compensation expense		$ 4,652
Weighted average period over which the compensation expense will be recorded		23 months
Compensation expense		$ 2,849	$ 3,187	$ 2,759
Common Shares | Trustees
Number of Shares
Shares granted (in shares)	3,000	3,000	3,000	3,000

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues:
Total revenues	$ 2,316,148	$ 2,294,536	$ 2,171,935
Expenses:
Hotel operating expenses	1,410,927	1,387,065	1,274,642
Other operating expenses	8,357	5,290	4,905
Depreciation and amortization	428,448	403,077	386,659
General and administrative	54,639	104,862	125,402
Acquisition and transaction related costs	1,795	0	0
Loss on asset impairment	39,296	0	0
Total expenses	1,943,462	1,900,294	1,791,608
Gain on sale of real estate	159,535	0	9,348
Dividend income	1,752	2,754	2,504
Unrealized losses on equity securities	(40,461)	(16,737)	0
Interest income	2,215	1,528	798
Interest expense (including amortization of debt issuance costs and debt discounts and premiums of $11,117, $10,177 and $8,871, respectively)	(225,126)	(195,213)	(181,579)
Loss on early extinguishment of debt	(8,451)	(160)	(146)
Income before income taxes and equity in earnings of an investee	262,150	186,414	211,252
Income tax benefit (expense)	(2,793)	(1,195)	3,284
Equity in earnings of an investee	393	515	607
Net income	259,750	185,734	215,143
Other comprehensive income (loss):
Unrealized gain on investment in available for sale securities	0	0	39,315
Equity interest in investee’s unrealized gains (losses)	91	(68)	460
Other comprehensive income (loss)	91	(68)	39,775
Comprehensive income	259,841	185,666	254,918
Preferred distributions	0	0	(1,435)
Excess of liquidation preference over carrying value of preferred shares redeemed	0	0	(9,893)
Net income available for common shareholders	$ 259,750	$ 185,734	$ 203,815
Weighted average common shares outstanding (basic) (in shares)	164,312	164,229	164,146
Weighted average common shares outstanding (diluted) (in shares)	164,340	164,258	164,175
Net income available for common shareholders per common share: Basic and diluted (in dollars per share)	$ 1.58	$ 1.13	$ 1.24
Hotel operating revenues
Revenues:
Total revenues	$ 1,989,173	$ 1,958,598	$ 1,840,829
Rental income
Revenues:
Total revenues	322,236	330,806	326,436
FF&E reserve income
Revenues:
Total revenues	$ 4,739	$ 5,132	$ 4,670

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Management Agreements and Leases Management Agreements and Leases - Schedule of Minimum Rent Payments (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Lessee, Lease, Description [Line Items]
2020	$ 7,052
2021	6,424
2022	5,877
2023	5,761
2024	5,762
Thereafter	150,826
Total lease payments	181,702
Less: imputed interest	(106,662)
Present value of lease liabilities	$ 75,040
Land
Lessee, Lease, Description [Line Items]
Weighted average discount rate used to calculate lease liability	5.50%
Lease term	31 years
Land | Minimum
Lessee, Lease, Description [Line Items]
Lease term	12 years
Land | Maximum
Lessee, Lease, Description [Line Items]
Lease term	68 years
Hotel Operating Leases
Lessee, Lease, Description [Line Items]
Weighted average discount rate used to calculate lease liability	5.53%
Lease term	31 years
Hotel Operating Leases | Minimum
Lessee, Lease, Description [Line Items]
Lease term	1 month
Hotel Operating Leases | Maximum
Lessee, Lease, Description [Line Items]
Lease term	54 years

XML

Organization

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Note 1. Organization

Service Properties Trust (formerly known as Hospitality Properties Trust), or we, us or our, is a real estate investment trust, or REIT, organized on February 7, 1995 under the laws of the State of Maryland, which invests in hotels and net lease service-oriented retail properties. At December 31, 2019, we owned, directly and through subsidiaries, 329 hotels and 816 net lease properties.

At December 31, 2019, our 329 hotels were leased, managed or operated by subsidiaries of the following companies: InterContinental Hotels Group, plc, or IHG, Marriott International, Inc., or Marriott, Sonesta International Hotels Corporation, or Sonesta (used to refer to subsidiaries of Sonesta Holdco Corporation as of February 27, 2020), Hyatt Hotels Corporation, or Hyatt, Radisson Hospitality, Inc., or Radisson, and Wyndham Hotels & Resorts, Inc., or Wyndham. We also owned, as of December 31, 2019, 816 net lease properties with 194 tenants, including 179 travel centers leased to TravelCenters of America Inc., or TA, our largest tenant. Hereinafter these companies are sometimes referred to as managers and/or tenants or, collectively, operators.

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Management Agreements and Leases Mangament Agreements and Leases - Net Lease Portfolio (Details) $ in Thousands, ft² in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) ft² tenant retail_property brand industry	Sep. 20, 2019 tenant brand industry
Leases [Abstract]
Number of properties | retail_property	816
Area of real estate | ft²	14.9
Annual minimum returns and rents | $	$ 381,679
Weighted average lease term	8 years 7 months 6 days
Percentage of portfolio leased by tenants	98.00%
Number of tenants | tenant	194	279
Number of brands | brand	131	163
Number of industries | industry	23	23

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Management Agreements and Leases - Sonesta and Wyndham Agreement (Details) $ in Thousands			12 Months Ended
	Feb. 27, 2020 USD ($) hotel	Feb. 20, 2020 USD ($)	Dec. 31, 2019 USD ($) hotel property option unit	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Feb. 26, 2020 USD ($)
Management Agreements and Leases [Line Items]
Annual minimum returns and rents			$ 381,679
Capital improvements from leased facilities, funded			$ 150,531	$ 182,862	$ 131,120
Number of real estate properties to be sold or rebranded | property			19
Aggregate undepreciated carrying value of real estate			$ 11,472,529
Straight line rent adjustments			$ (10,719)	12,509	12,378
Subsequent event
Management Agreements and Leases [Line Items]
Annual minimum returns and rents		$ 387
Sonesta | Subsequent event
Management Agreements and Leases [Line Items]
Equity interests	34.00%
Percentage of gross revenues from hotel operations placed into escrow	5.00%
Hotel operating revenues | Sonesta
Management Agreements and Leases [Line Items]
Percentage increase in minimum returns after funding for capital improvements			8.00%
Annual minimum returns and rents			$ 146,800
Realized returns and rents			$ 67,592	78,076	70,576
Percentage of reservation fee			1.50%
Percentage of system fee for centralized services			1.50%
Percentage of procurement and construction supervision fee			3.00%
Percentage of incentive fee			20.00%
Related party transaction, management, marketing and reservation system fees			$ 36,169	34,821	28,238
Procurement and construction supervisory fees			3,320	2,374	1,080
Capital improvements from leased facilities, funded			$ 114,082	82,329	34,933
Number of renewal options available | option			2
Renewal period			15 years
Minimum agreement period before right to terminate agreement without cause			3 years
Maximum agreement period before right to terminate agreement without cause			4 years
Minimum return or termination			6.00%
Hotel operating revenues | Sonesta ES Suites | Sonesta | Subsequent event
Management Agreements and Leases [Line Items]
Annual minimum returns and rents	$ 49,467
Number of real estate properties to be sold or rebranded | hotel	39
Aggregate undepreciated carrying value of real estate	$ 480,547
Hotel operating revenues | Sonesta International Hotels Corporation
Management Agreements and Leases [Line Items]
Due to related party, reimbursement of capital expenditures and other			$ 15,537	5,703
Vacation units | Wyndham destinations agreement
Management Agreements and Leases [Line Items]
Annual minimum returns and rents			1,537
Realized returns and rents			$ 503	1,456	1,414
Number of units leased | unit			48
Straight line rent adjustments			$ (997)	$ 358	$ 400
Full service hotels | Hotel operating revenues | Sonesta
Management Agreements and Leases [Line Items]
Property management fees, percentage of gross revenue			3.00%
Full service hotels | Hotel operating revenues | Sonesta | Subsequent event
Management Agreements and Leases [Line Items]
Number of real estate properties leased or managed	69,013					99,013
Full service hotels | Hotel operating revenues | Sonesta International Hotels Corporation
Management Agreements and Leases [Line Items]
Number of real estate properties leased or managed | hotel			14
Limited services hotels | Hotel operating revenues | Sonesta
Management Agreements and Leases [Line Items]
Property management fees, percentage of gross revenue			5.00%
Limited services hotels | Hotel operating revenues | Sonesta International Hotels Corporation
Management Agreements and Leases [Line Items]
Number of real estate properties leased or managed | hotel			39

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Management Agreements and Leases - Marriott No. 1 (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) retail_property hotel	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Management Agreements and Leases [Line Items]
Number of properties | retail_property	816
Annual minimum returns and rents	$ 381,679
Capital improvements from leased facilities, funded	$ 150,531	$ 182,862	$ 131,120
Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	329
Marriott Agreement No. 1 | Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	53
Annual minimum returns and rents	$ 71,872
Realized returns and rents	71,410	69,325	68,944
Additional returns realized	2,052	4,457	$ 6,180
Capital improvements from leased facilities, funded	$ 17,356	$ 9,050

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Business and Property Management Agreements with RMR LLC (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) employee agreement	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Real Estate Properties [Line Items]
Entity number of employees | employee	0
RMR LLC
Real Estate Properties [Line Items]
Property management fees percentage of gross collected rents	3.00%
Construction supervision fees as percentage of construction costs	5.00%
RMR LLC | Up C Transaction
Real Estate Properties [Line Items]
Recognized amortization of liability		$ 3,585	$ 3,585
RMR LLC | RMR Inc.
Real Estate Properties [Line Items]
Recognized amortization of liability	$ 3,585	3,585	3,585
Amended and restated business management agreement | RMR LLC
Real Estate Properties [Line Items]
Number of management agreements | agreement	2
Base management fee payable as a percentage of average historical cost of the real estate investments, excluding transferred assets for investments up to a specific amount	0.70%
Base management fee payable as percentage of aggregate book value of real estate assets or transferred assets	$ 250,000
Base management fee payable as percentage of average historical cost of real estate investments excluding transferred assets for investments exceeding specified amount	0.50%
Base management fee payable as percentage of average closing stock price on stock exchange	0.70%
Base management fee payable as percentage of average market capitalization exceeding specified amount	0.50%
Incentive fee as percentage of product of weighted average common shares outstanding	12.00%
Incentive fee, consecutive trading days for share price multiplier	10 days
Incentive fee, final trading days of relevant measurement period	30 days
Percentage of shares issued in payment of incentive management fees	1.50%
Business management fees	$ 41,607	39,942	40,694
Incentive fee paid		53,635	74,753
Construction supervision fees	1,399	64	45
Related party reimbursement expense	$ 620	$ 399	$ 482
Amended and restated business management agreement | RMR LLC | Up C Transaction
Real Estate Properties [Line Items]
Window for providing notice of termination of property management agreement for performance by the related party	60 days
Window providing notice of termination of property management agreement after change of control by related party	12 months
Termination fee remaining term assumption	10 years
Period over which transition services will be provided by the related party after termination of the agreement	120 days
Amended and restated business management agreement | RMR LLC | Maximum
Real Estate Properties [Line Items]
Base management fee payable, average market capitalization	$ 250,000
Base management fee payable, threshold amount of other real estate investments	$ 250,000
Incentive management fee reduction	0.0500
Amended and restated business management agreement | RMR LLC | Maximum | Up C Transaction
Real Estate Properties [Line Items]
Termination fee term	20 years
Amended and restated business management agreement | RMR LLC | Minimum
Real Estate Properties [Line Items]
Incentive management fee reduction	0.0200
Amended and restated business management agreement | RMR LLC | Minimum | Up C Transaction
Real Estate Properties [Line Items]
Termination fee term	19 years

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Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Quarterly Financial Information Disclosure [Abstract]
Revenues	$ 580,906	$ 599,772	$ 610,562	$ 524,908	$ 550,799	$ 603,153	$ 611,951	$ 528,633	$ 2,316,148	$ 2,294,536	$ 2,171,935
Net income (loss)	$ (14,893)	$ 40,074	$ 8,782	$ 225,787	$ (108,860)	$ 117,099	$ 97,289	$ 80,206	$ 259,750	$ 185,734	$ 215,143
Net income (loss) per share (basic and diluted) (in dollars per share)	$ (0.09)	$ 0.24	$ 0.05	$ 1.37	$ (0.66)	$ 0.71	$ 0.59	$ 0.49	$ 1.58	$ 1.13	$ 1.24
Distributions per common share (in dollars per share)	$ 0.54	$ 0.54	$ 0.54	$ 0.53	$ 0.53	$ 0.53	$ 0.53	$ 0.52	$ 2.15	$ 2.11	$ 2.07

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SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) retail_property property	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Initial Cost to Company
Land	$ 2,069,000
Building & Improvements	6,824,000
Costs Capitalized Subsequent to Acquisition
Improvements	2,222,000
Impairment	(205,000)
Cost Basis Adjustment	(107,000)
Gross Amount at which Carried at Close of Period
Land	2,066,000
Building & Improvements	8,737,000
Total	10,803,000	$ 8,820,346	$ 8,778,907	$ 8,100,844
Accumulated depreciation	(2,851,000)	(2,574,297)	(2,409,416)	$ (2,176,537)
Personal property excluded from real estate gross	588
Accumulated depreciation related to personal property excluded from real estate gross	$ (276)
Number of properties | retail_property	816
Assets Held for Sale
Gross Amount at which Carried at Close of Period
Total	$ 87,000
Accumulated depreciation	0
Courtyard Hotels
Initial Cost to Company
Land	125,000
Building & Improvements	643,000
Costs Capitalized Subsequent to Acquisition
Improvements	257,000
Impairment	(8,000)
Cost Basis Adjustment	(10,000)
Gross Amount at which Carried at Close of Period
Land	125,000
Building & Improvements	882,000
Total	1,007,000
Accumulated depreciation	$ (448,000)
Number of properties | property	71
Courtyard Hotels | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Courtyard Hotels | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Royal Sonesta
Initial Cost to Company
Land	$ 106,000
Building & Improvements	518,000
Costs Capitalized Subsequent to Acquisition
Improvements	179,000
Impairment	(16,000)
Cost Basis Adjustment	(9,000)
Gross Amount at which Carried at Close of Period
Land	106,000
Building & Improvements	672,000
Total	778,000
Accumulated depreciation	$ (122,000)
Number of properties | property	7
Royal Sonesta | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Royal Sonesta | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Residence Inns
Initial Cost to Company
Land	$ 68,000
Building & Improvements	326,000
Costs Capitalized Subsequent to Acquisition
Improvements	145,000
Impairment	(3,000)
Cost Basis Adjustment	(3,000)
Gross Amount at which Carried at Close of Period
Land	68,000
Building & Improvements	465,000
Total	533,000
Accumulated depreciation	$ (227,000)
Number of properties | property	35
Residence Inns | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Residence Inns | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Crowne Plaza Hotels
Initial Cost to Company
Land	$ 72,000
Building & Improvements	374,000
Costs Capitalized Subsequent to Acquisition
Improvements	129,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	72,000
Building & Improvements	503,000
Total	575,000
Accumulated depreciation	$ (98,000)
Number of properties | property	10
Crowne Plaza Hotels | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Crowne Plaza Hotels | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Sonesta ES Suites
Initial Cost to Company
Land	$ 80,000
Building & Improvements	297,000
Costs Capitalized Subsequent to Acquisition
Improvements	203,000
Impairment	(35,000)
Cost Basis Adjustment	(27,000)
Gross Amount at which Carried at Close of Period
Land	80,000
Building & Improvements	438,000
Total	518,000
Accumulated depreciation	$ (88,000)
Number of properties | property	39
Sonesta ES Suites | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Sonesta ES Suites | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Candlewood Hotels
Initial Cost to Company
Land	$ 71,000
Building & Improvements	383,000
Costs Capitalized Subsequent to Acquisition
Improvements	77,000
Impairment	(14,000)
Cost Basis Adjustment	(7,000)
Gross Amount at which Carried at Close of Period
Land	71,000
Building & Improvements	439,000
Total	510,000
Accumulated depreciation	$ (205,000)
Number of properties | property	61
Candlewood Hotels | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Candlewood Hotels | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Staybridge Suites
Initial Cost to Company
Land	$ 53,000
Building & Improvements	224,000
Costs Capitalized Subsequent to Acquisition
Improvements	33,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	53,000
Building & Improvements	257,000
Total	310,000
Accumulated depreciation	$ (113,000)
Number of properties | property	20
Staybridge Suites | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Staybridge Suites | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Sonesta Hotels and Resorts
Initial Cost to Company
Land	$ 65,000
Building & Improvements	198,000
Costs Capitalized Subsequent to Acquisition
Improvements	113,000
Impairment	(15,000)
Cost Basis Adjustment	(5,000)
Gross Amount at which Carried at Close of Period
Land	65,000
Building & Improvements	291,000
Total	356,000
Accumulated depreciation	$ (51,000)
Number of properties | property	7
Sonesta Hotels and Resorts | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Sonesta Hotels and Resorts | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Kimpton
Initial Cost to Company
Land	$ 98,000
Building & Improvements	347,000
Costs Capitalized Subsequent to Acquisition
Improvements	11,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	98,000
Building & Improvements	358,000
Total	456,000
Accumulated depreciation	$ (20,000)
Number of properties | property	3
Kimpton | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Kimpton | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Wyndham
Initial Cost to Company
Land	$ 12,000
Building & Improvements	90,000
Costs Capitalized Subsequent to Acquisition
Improvements	42,000
Impairment	(66,000)
Cost Basis Adjustment	(8,000)
Gross Amount at which Carried at Close of Period
Land	9,000
Building & Improvements	61,000
Total	70,000
Accumulated depreciation	$ (9,000)
Number of properties | property	4
Wyndham | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Wyndham | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Hyatt Place
Initial Cost to Company
Land	$ 24,000
Building & Improvements	185,000
Costs Capitalized Subsequent to Acquisition
Improvements	16,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	24,000
Building & Improvements	201,000
Total	225,000
Accumulated depreciation	$ (105,000)
Number of properties | property	22
Hyatt Place | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Hyatt Place | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Inter Continental Hotels
Initial Cost to Company
Land	$ 14,000
Building & Improvements	100,000
Costs Capitalized Subsequent to Acquisition
Improvements	128,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	14,000
Building & Improvements	228,000
Total	242,000
Accumulated depreciation	$ (76,000)
Number of properties | property	3
Inter Continental Hotels | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Inter Continental Hotels | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Radisson Hotels
Initial Cost to Company
Land	$ 10,000
Building & Improvements	165,000
Costs Capitalized Subsequent to Acquisition
Improvements	43,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	10,000
Building & Improvements	208,000
Total	218,000
Accumulated depreciation	$ (64,000)
Number of properties | property	5
Radisson Hotels | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Radisson Hotels | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Marriott Full Service
Initial Cost to Company
Land	$ 10,000
Building & Improvements	69,000
Costs Capitalized Subsequent to Acquisition
Improvements	53,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	10,000
Building & Improvements	122,000
Total	132,000
Accumulated depreciation	$ (61,000)
Number of properties | property	2
Marriott Full Service | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Marriott Full Service | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Towne Place Suites
Initial Cost to Company
Land	$ 17,000
Building & Improvements	78,000
Costs Capitalized Subsequent to Acquisition
Improvements	24,000
Impairment	(15,000)
Cost Basis Adjustment	(18,000)
Gross Amount at which Carried at Close of Period
Land	17,000
Building & Improvements	69,000
Total	86,000
Accumulated depreciation	$ (26,000)
Number of properties | property	12
Towne Place Suites | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Towne Place Suites | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Holiday Inns
Initial Cost to Company
Land	$ 7,000
Building & Improvements	33,000
Costs Capitalized Subsequent to Acquisition
Improvements	30,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	7,000
Building & Improvements	63,000
Total	70,000
Accumulated depreciation	$ (15,000)
Number of properties | property	3
Holiday Inns | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Holiday Inns | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Country Inn & Suites
Initial Cost to Company
Land	$ 3,000
Building & Improvements	35,000
Costs Capitalized Subsequent to Acquisition
Improvements	4,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	39,000
Total	42,000
Accumulated depreciation	$ (17,000)
Number of properties | property	4
Country Inn & Suites | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Country Inn & Suites | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Hawthorn Suites
Initial Cost to Company
Land	$ 14,000
Building & Improvements	77,000
Costs Capitalized Subsequent to Acquisition
Improvements	19,000
Impairment	(33,000)
Cost Basis Adjustment	(18,000)
Gross Amount at which Carried at Close of Period
Land	14,000
Building & Improvements	45,000
Total	59,000
Accumulated depreciation	$ (14,000)
Number of properties | property	16
Hawthorn Suites | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Hawthorn Suites | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
SpringHill Suites
Initial Cost to Company
Land	$ 3,000
Building & Improvements	15,000
Costs Capitalized Subsequent to Acquisition
Improvements	6,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	21,000
Total	24,000
Accumulated depreciation	(9,000)
Travel Centers of America LLC
Initial Cost to Company
Land	568,000
Building & Improvements	939,000
Costs Capitalized Subsequent to Acquisition
Improvements	683,000
Impairment	0
Cost Basis Adjustment	(2,000)
Gross Amount at which Carried at Close of Period
Land	568,000
Building & Improvements	1,620,000
Total	2,188,000
Accumulated depreciation	$ (745,000)
Number of properties | property	134
Travel Centers of America LLC | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Travel Centers of America LLC | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Petro Stopping Centers
Initial Cost to Company
Land	$ 260,000
Building & Improvements	522,000
Costs Capitalized Subsequent to Acquisition
Improvements	25,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	260,000
Building & Improvements	547,000
Total	807,000
Accumulated depreciation	$ (321,000)
Number of properties | property	45
Petro Stopping Centers | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Petro Stopping Centers | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
AMC Theatres
Initial Cost to Company
Land	$ 37,000
Building & Improvements	69,000
Costs Capitalized Subsequent to Acquisition
Improvements	1,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	37,000
Building & Improvements	70,000
Total	107,000
Accumulated depreciation	$ (1,000)
Number of properties | property	14
AMC Theatres | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
AMC Theatres | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
The Great Escape
Initial Cost to Company
Land	$ 19,000
Building & Improvements	63,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	19,000
Building & Improvements	63,000
Total	82,000
Accumulated depreciation	$ (1,000)
Number of properties | property	14
The Great Escape | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
The Great Escape | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Life Time Fitness
Initial Cost to Company
Land	$ 17,000
Building & Improvements	55,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	17,000
Building & Improvements	55,000
Total	72,000
Accumulated depreciation	$ (1,000)
Number of properties | property	3
Life Time Fitness | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Life Time Fitness | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Buehler's Fresh Foods
Initial Cost to Company
Land	$ 10,000
Building & Improvements	49,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	10,000
Building & Improvements	49,000
Total	59,000
Accumulated depreciation	$ (1,000)
Number of properties | property	5
Buehler's Fresh Foods | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Buehler's Fresh Foods | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Pizza Hut
Initial Cost to Company
Land	$ 16,000
Building & Improvements	37,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	16,000
Building & Improvements	37,000
Total	53,000
Accumulated depreciation	$ (1,000)
Number of properties | property	62
Pizza Hut | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Pizza Hut | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Heartland Dental
Initial Cost to Company
Land	$ 11,000
Building & Improvements	36,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	11,000
Building & Improvements	36,000
Total	47,000
Accumulated depreciation	$ (1,000)
Number of properties | property	59
Heartland Dental | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Heartland Dental | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Norms
Initial Cost to Company
Land	$ 22,000
Building & Improvements	24,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	22,000
Building & Improvements	24,000
Total	46,000
Accumulated depreciation	$ (1,000)
Number of properties | property	10
Norms | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Norms | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Express Oil Change
Initial Cost to Company
Land	$ 5,000
Building & Improvements	36,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	5,000
Building & Improvements	36,000
Total	41,000
Accumulated depreciation	$ (1,000)
Number of properties | property	23
Express Oil Change | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Express Oil Change | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Regal Cinemas
Initial Cost to Company
Land	$ 9,000
Building & Improvements	25,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	9,000
Building & Improvements	25,000
Total	34,000
Accumulated depreciation	$ (1,000)
Number of properties | property	6
Regal Cinemas | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Regal Cinemas | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Flying J Travel Pizza
Initial Cost to Company
Land	$ 6,000
Building & Improvements	32,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	6,000
Building & Improvements	32,000
Total	38,000
Accumulated depreciation	$ (1,000)
Number of properties | property	3
Flying J Travel Pizza | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Flying J Travel Pizza | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Courthouse Athletic Club
Initial Cost to Company
Land	$ 5,000
Building & Improvements	28,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	5,000
Building & Improvements	28,000
Total	33,000
Accumulated depreciation	$ (1,000)
Number of properties | property	4
Courthouse Athletic Club | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Courthouse Athletic Club | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Mills Fleet Farm
Initial Cost to Company
Land	$ 3,000
Building & Improvements	27,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	27,000
Total	30,000
Accumulated depreciation	$ (1,000)
Number of properties | property	1
Mills Fleet Farm | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Mills Fleet Farm | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Church's Chicken
Initial Cost to Company
Land	$ 7,000
Building & Improvements	25,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	7,000
Building & Improvements	25,000
Total	32,000
Accumulated depreciation	$ (1,000)
Number of properties | property	45
Church's Chicken | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Church's Chicken | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Big Al's
Initial Cost to Company
Land	$ 3,000
Building & Improvements	28,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	28,000
Total	31,000
Accumulated depreciation	$ (1,000)
Number of properties | property	2
Big Al's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Big Al's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
B&B Theatres
Initial Cost to Company
Land	$ 12,000
Building & Improvements	15,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	12,000
Building & Improvements	15,000
Total	27,000
Accumulated depreciation	$ (1,000)
Number of properties | property	4
B&B Theatres | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
B&B Theatres | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
America's Auto Auction
Initial Cost to Company
Land	$ 7,000
Building & Improvements	23,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	7,000
Building & Improvements	23,000
Total	30,000
Accumulated depreciation	$ (1,000)
Number of properties | property	6
America's Auto Auction | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
America's Auto Auction | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Burger King
Initial Cost to Company
Land	$ 9,000
Building & Improvements	22,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	9,000
Building & Improvements	22,000
Total	31,000
Accumulated depreciation	$ (1,000)
Number of properties | property	21
Burger King | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Burger King | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Hardee's
Initial Cost to Company
Land	$ 4,000
Building & Improvements	24,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	4,000
Building & Improvements	24,000
Total	28,000
Accumulated depreciation	$ 0
Number of properties | property	19
Hardee's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Hardee's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Martin's
Initial Cost to Company
Land	$ 7,000
Building & Improvements	20,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	7,000
Building & Improvements	20,000
Total	27,000
Accumulated depreciation	$ 0
Number of properties | property	16
Martin's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Martin's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Mealey's Furniture
Initial Cost to Company
Land	$ 4,000
Building & Improvements	27,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	4,000
Building & Improvements	27,000
Total	31,000
Accumulated depreciation	$ 0
Number of properties | property	3
Mealey's Furniture | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Mealey's Furniture | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Popeye's Chicken & Biscuits
Initial Cost to Company
Land	$ 8,000
Building & Improvements	18,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	8,000
Building & Improvements	18,000
Total	26,000
Accumulated depreciation	$ 0
Number of properties | property	20
Popeye's Chicken & Biscuits | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Popeye's Chicken & Biscuits | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Arby's
Initial Cost to Company
Land	$ 7,000
Building & Improvements	19,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	7,000
Building & Improvements	19,000
Total	26,000
Accumulated depreciation	$ 0
Number of properties | property	19
Arby's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Arby's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Creme de la Creme
Initial Cost to Company
Land	$ 7,000
Building & Improvements	18,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	7,000
Building & Improvements	18,000
Total	25,000
Accumulated depreciation	$ 0
Number of properties | property	4
Creme de la Creme | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Creme de la Creme | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Mister Car Wash
Initial Cost to Company
Land	$ 2,000
Building & Improvements	19,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	19,000
Total	21,000
Accumulated depreciation	$ 0
Number of properties | property	5
Mister Car Wash | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Mister Car Wash | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
United Supermarkets
Initial Cost to Company
Land	$ 4,000
Building & Improvements	17,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	4,000
Building & Improvements	17,000
Total	21,000
Accumulated depreciation	$ 0
Number of properties | property	6
United Supermarkets | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
United Supermarkets | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Golden Corral
Initial Cost to Company
Land	$ 6,000
Building & Improvements	16,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	6,000
Building & Improvements	16,000
Total	22,000
Accumulated depreciation	$ 0
Number of properties | property	6
Golden Corral | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Golden Corral | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Gold's Gym
Initial Cost to Company
Land	$ 3,000
Building & Improvements	17,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	17,000
Total	20,000
Accumulated depreciation	$ 0
Number of properties | property	2
Gold's Gym | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Gold's Gym | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Uncle Ed's Oil Shoppe
Initial Cost to Company
Land	$ 6,000
Building & Improvements	12,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	6,000
Building & Improvements	12,000
Total	18,000
Accumulated depreciation	$ 0
Number of properties | property	28
Uncle Ed's Oil Shoppe | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Uncle Ed's Oil Shoppe | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
CarMax
Initial Cost to Company
Land	$ 5,000
Building & Improvements	13,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	5,000
Building & Improvements	13,000
Total	18,000
Accumulated depreciation	$ 0
Number of properties | property	1
CarMax | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
CarMax | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Dave & Buster's
Initial Cost to Company
Land	$ 3,000
Building & Improvements	11,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	11,000
Total	14,000
Accumulated depreciation	$ 0
Number of properties | property	1
Dave & Buster's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Dave & Buster's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Pike Nursery
Initial Cost to Company
Land	$ 8,000
Building & Improvements	6,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	8,000
Building & Improvements	6,000
Total	14,000
Accumulated depreciation	$ 0
Number of properties | property	5
Pike Nursery | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Pike Nursery | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Rite Aid
Initial Cost to Company
Land	$ 4,000
Building & Improvements	10,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	4,000
Building & Improvements	10,000
Total	14,000
Accumulated depreciation	$ 0
Number of properties | property	6
Rite Aid | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Rite Aid | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
HHI-Formtech
Initial Cost to Company
Land	$ 3,000
Building & Improvements	10,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	10,000
Total	13,000
Accumulated depreciation	$ 0
Number of properties | property	2
HHI-Formtech | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
HHI-Formtech | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Max & Erma's
Initial Cost to Company
Land	$ 3,000
Building & Improvements	9,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	9,000
Total	12,000
Accumulated depreciation	$ 0
Number of properties | property	3
Max & Erma's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Max & Erma's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Bonfire And Axels
Initial Cost to Company
Land	$ 2,000
Building & Improvements	12,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	12,000
Total	14,000
Accumulated depreciation	$ 0
Number of properties | property	4
Bonfire And Axels | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Bonfire And Axels | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Taco Bell
Initial Cost to Company
Land	$ 3,000
Building & Improvements	10,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	10,000
Total	13,000
Accumulated depreciation	$ 0
Number of properties | property	10
Taco Bell | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Taco Bell | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Baptist Emergency Hospital
Initial Cost to Company
Land	$ 2,000
Building & Improvements	8,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	8,000
Total	10,000
Accumulated depreciation	$ 0
Number of properties | property	1
Baptist Emergency Hospital | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Baptist Emergency Hospital | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Fuddruckers
Initial Cost to Company
Land	$ 4,000
Building & Improvements	6,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	4,000
Building & Improvements	6,000
Total	10,000
Accumulated depreciation	$ 0
Number of properties | property	5
Fuddruckers | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Fuddruckers | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
YouFit
Initial Cost to Company
Land	$ 3,000
Building & Improvements	7,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	7,000
Total	10,000
Accumulated depreciation	$ 0
Number of properties | property	2
YouFit | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
YouFit | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Cermak Fresh Market
Initial Cost to Company
Land	$ 2,000
Building & Improvements	7,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	7,000
Total	9,000
Accumulated depreciation	$ 0
Number of properties | property	1
Cermak Fresh Market | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Cermak Fresh Market | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Lerner And Rowe
Initial Cost to Company
Land	$ 1,000
Building & Improvements	8,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	8,000
Total	9,000
Accumulated depreciation	$ 0
Number of properties | property	5
Lerner And Rowe | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Lerner And Rowe | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Kohl's
Initial Cost to Company
Land	$ 2,000
Building & Improvements	6,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	6,000
Total	8,000
Accumulated depreciation	$ 0
Number of properties | property	1
Kohl's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Kohl's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Eddie Merlot's
Initial Cost to Company
Land	$ 2,000
Building & Improvements	8,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	8,000
Total	10,000
Accumulated depreciation	$ 0
Number of properties | property	2
Eddie Merlot's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Eddie Merlot's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Columbus Preparatory Academy
Initial Cost to Company
Land	$ 1,000
Building & Improvements	8,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	8,000
Total	9,000
Accumulated depreciation	$ 0
Number of properties | property	1
Columbus Preparatory Academy | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Columbus Preparatory Academy | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
LA Fitness
Initial Cost to Company
Land	$ 1,000
Building & Improvements	7,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	7,000
Total	8,000
Accumulated depreciation	$ 0
Number of properties | property	1
LA Fitness | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
LA Fitness | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Sandford's Grub & Pub
Initial Cost to Company
Land	$ 1,000
Building & Improvements	10,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	10,000
Total	11,000
Accumulated depreciation	$ 0
Number of properties | property	2
Sandford's Grub & Pub | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Sandford's Grub & Pub | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
HOM Furniture
Initial Cost to Company
Land	$ 1,000
Building & Improvements	8,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	8,000
Total	9,000
Accumulated depreciation	$ 0
Number of properties | property	1
HOM Furniture | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
HOM Furniture | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Core & Main
Initial Cost to Company
Land	$ 4,000
Building & Improvements	5,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	4,000
Building & Improvements	5,000
Total	9,000
Accumulated depreciation	$ 0
Number of properties | property	13
Core & Main | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Core & Main | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Austin's Park n' Pizza
Initial Cost to Company
Land	$ 0
Building & Improvements	8,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	8,000
Total	8,000
Accumulated depreciation	$ 0
Number of properties | property	1
Austin's Park n' Pizza | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Austin's Park n' Pizza | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Columbus Arts & Tech Academy
Initial Cost to Company
Land	$ 1,000
Building & Improvements	6,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	6,000
Total	7,000
Accumulated depreciation	$ 0
Number of properties | property	1
Columbus Arts & Tech Academy | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Columbus Arts & Tech Academy | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Marcus Theaters
Initial Cost to Company
Land	$ 3,000
Building & Improvements	5,000
Costs Capitalized Subsequent to Acquisition
Improvements	1,000
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	6,000
Total	9,000
Accumulated depreciation	$ 0
Number of properties | property	1
Marcus Theaters | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Marcus Theaters | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Meineke Car Care Center
Initial Cost to Company
Land	$ 3,000
Building & Improvements	6,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	6,000
Total	9,000
Accumulated depreciation	$ 0
Number of properties | property	4
Meineke Car Care Center | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Meineke Car Care Center | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Academy Sports Plus Outdoors
Initial Cost to Company
Land	$ 1,000
Building & Improvements	6,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	6,000
Total	7,000
Accumulated depreciation	$ 0
Number of properties | property	1
Academy Sports Plus Outdoors | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Academy Sports Plus Outdoors | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Diagnostic Health
Initial Cost to Company
Land	$ 1,000
Building & Improvements	6,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	6,000
Total	7,000
Accumulated depreciation	$ 0
Number of properties | property	2
Diagnostic Health | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Diagnostic Health | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Blue Rhino
Initial Cost to Company
Land	$ 3,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	4,000
Total	7,000
Accumulated depreciation	$ 0
Number of properties | property	2
Blue Rhino | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Blue Rhino | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Walgreens
Initial Cost to Company
Land	$ 1,000
Building & Improvements	6,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	6,000
Total	7,000
Accumulated depreciation	$ 0
Number of properties | property	2
Walgreens | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Walgreens | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Oregano's Pizza Bistro
Initial Cost to Company
Land	$ 1,000
Building & Improvements	6,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	6,000
Total	7,000
Accumulated depreciation	$ 0
Number of properties | property	3
Oregano's Pizza Bistro | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Oregano's Pizza Bistro | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Brookshire Brothers
Initial Cost to Company
Land	$ 1,000
Building & Improvements	5,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	5,000
Total	6,000
Accumulated depreciation	$ 0
Number of properties | property	5
Brookshire Brothers | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Brookshire Brothers | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Krispy Kreme
Initial Cost to Company
Land	$ 2,000
Building & Improvements	5,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	5,000
Total	7,000
Accumulated depreciation	$ 0
Number of properties | property	3
Krispy Kreme | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Krispy Kreme | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Sonic Drive-In
Initial Cost to Company
Land	$ 3,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	4,000
Total	7,000
Accumulated depreciation	$ 0
Number of properties | property	9
Sonic Drive-In | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Sonic Drive-In | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Ten Box
Initial Cost to Company
Land	$ 2,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	3,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	2
Ten Box | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Ten Box | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
RGB Eye Associates
Initial Cost to Company
Land	$ 1,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	4,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	1
RGB Eye Associates | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
RGB Eye Associates | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Jack's Family Restaurant
Initial Cost to Company
Land	$ 2,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	4,000
Total	6,000
Accumulated depreciation	$ 0
Number of properties | property	3
Jack's Family Restaurant | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Jack's Family Restaurant | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Texas Roadhouse
Initial Cost to Company
Land	$ 3,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	3,000
Building & Improvements	4,000
Total	7,000
Accumulated depreciation	$ 0
Number of properties | property	2
Texas Roadhouse | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Texas Roadhouse | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Flying Star Cafe
Initial Cost to Company
Land	$ 1,000
Building & Improvements	5,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	5,000
Total	6,000
Accumulated depreciation	$ 0
Number of properties | property	2
Flying Star Cafe | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Flying Star Cafe | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Adult & Pediatric Orthopedics
Initial Cost to Company
Land	$ 1,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	4,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	1
Adult & Pediatric Orthopedics | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Adult & Pediatric Orthopedics | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Jack Stack Barbeque
Initial Cost to Company
Land	$ 1,000
Building & Improvements	5,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	5,000
Total	6,000
Accumulated depreciation	$ 0
Number of properties | property	1
Jack Stack Barbeque | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Jack Stack Barbeque | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Multi-Tenant
Initial Cost to Company
Land	$ 1,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	4,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	1
Multi-Tenant | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Multi-Tenant | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Wendy's
Initial Cost to Company
Land	$ 1,000
Building & Improvements	5,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	5,000
Total	6,000
Accumulated depreciation	$ 0
Number of properties | property	3
Wendy's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Wendy's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Bricktown Brewery
Initial Cost to Company
Land	$ 1,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	4,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	2
Bricktown Brewery | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Bricktown Brewery | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Bondcote
Initial Cost to Company
Land	$ 1,000
Building & Improvements	5,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	5,000
Total	6,000
Accumulated depreciation	$ 0
Number of properties | property	2
Bondcote | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Bondcote | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
ConForm Automotive
Initial Cost to Company
Land	$ 2,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	3,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	1
ConForm Automotive | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
ConForm Automotive | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Planet Fitness
Initial Cost to Company
Land	$ 1,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	4,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	1
Planet Fitness | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Planet Fitness | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Focus Child Development Center
Initial Cost to Company
Land	$ 1,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	3,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	3
Focus Child Development Center | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Focus Child Development Center | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Hughes Supply
Initial Cost to Company
Land	$ 2,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	4,000
Total	6,000
Accumulated depreciation	$ 0
Number of properties | property	7
Hughes Supply | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Hughes Supply | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Long John Silver's
Initial Cost to Company
Land	$ 2,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	3,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	6
Long John Silver's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Long John Silver's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Boozman-Hof
Initial Cost to Company
Land	$ 2,000
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	2,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	1
Boozman-Hof | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Boozman-Hof | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Gerber Collision & Glass
Initial Cost to Company
Land	$ 1,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	4,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	2
Gerber Collision & Glass | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Gerber Collision & Glass | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Humperdinks
Initial Cost to Company
Land	$ 1,000
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	4,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	1
Humperdinks | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Humperdinks | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
HD Supply White Cap
Initial Cost to Company
Land	$ 2,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	3,000
Total	5,000
Accumulated depreciation	$ 0
Number of properties | property	2
HD Supply White Cap | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
HD Supply White Cap | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Famous Dave's
Initial Cost to Company
Land	$ 1,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	3,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	2
Famous Dave's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Famous Dave's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Caldwell Country Chevrolet
Initial Cost to Company
Land	$ 0
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	4,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	1
Caldwell Country Chevrolet | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Caldwell Country Chevrolet | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Sportsman's Warehouse
Initial Cost to Company
Land	$ 1,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	3,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	1
Sportsman's Warehouse | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Sportsman's Warehouse | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Renn Kirby Chevrolet Bank
Initial Cost to Company
Land	$ 1,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	3,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	1
Renn Kirby Chevrolet Bank | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Renn Kirby Chevrolet Bank | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Ashley Furniture
Initial Cost to Company
Land	$ 1,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	3,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	1
Ashley Furniture | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Ashley Furniture | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Metaldyne BSM
Initial Cost to Company
Land	$ 0
Building & Improvements	4,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	4,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	1
Metaldyne BSM | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Metaldyne BSM | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Anixter
Initial Cost to Company
Land	$ 1,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	3,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	3
Anixter | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Anixter | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Primanti Bros.
Initial Cost to Company
Land	$ 1,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	3,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	2
Primanti Bros. | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Primanti Bros. | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Rainbow Kids Clinic
Initial Cost to Company
Land	$ 1,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	3,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	1
Rainbow Kids Clinic | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Rainbow Kids Clinic | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Joe's Crab Shack
Initial Cost to Company
Land	$ 1,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	3,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	1
Joe's Crab Shack | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Joe's Crab Shack | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Applebee's
Initial Cost to Company
Land	$ 1,000
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	2,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	1
Applebee's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Applebee's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Tractor Supply
Initial Cost to Company
Land	$ 0
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	3,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	1
Tractor Supply | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Tractor Supply | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Orscheln Farm And Home
Initial Cost to Company
Land	$ 1,000
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	2,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	2
Orscheln Farm And Home | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Orscheln Farm And Home | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Providence Athletic Club
Initial Cost to Company
Land	$ 1,000
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	3,000
Total	4,000
Accumulated depreciation	$ 0
Number of properties | property	1
Providence Athletic Club | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Providence Athletic Club | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Vacant
Initial Cost to Company
Land	$ 0
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	3,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	17
Vacant | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Vacant | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Sunbelt Supply LP
Initial Cost to Company
Land	$ 0
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	3,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	1
Sunbelt Supply LP | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Sunbelt Supply LP | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Ojos Locos Sports Cantina
Initial Cost to Company
Land	$ 1,000
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	2,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	1
Ojos Locos Sports Cantina | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Ojos Locos Sports Cantina | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Black Angus Steakhouse
Initial Cost to Company
Land	$ 1,000
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	2,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	1
Black Angus Steakhouse | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Black Angus Steakhouse | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Hooters
Initial Cost to Company
Land	$ 1,000
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	1,000
Total	2,000
Accumulated depreciation	$ 0
Number of properties | property	2
Hooters | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Hooters | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Bridgestone Tire
Initial Cost to Company
Land	$ 1,000
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	1,000
Total	2,000
Accumulated depreciation	$ 0
Number of properties | property	1
Bridgestone Tire | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Bridgestone Tire | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Kerry's Car Care
Initial Cost to Company
Land	$ 1,000
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	2,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	1
Kerry's Car Care | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Kerry's Car Care | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Buffalo Wild Wings
Initial Cost to Company
Land	$ 1,000
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	2,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	1
Buffalo Wild Wings | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Buffalo Wild Wings | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
KFC
Initial Cost to Company
Land	$ 0
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	2,000
Total	2,000
Accumulated depreciation	$ 0
Number of properties | property	2
KFC | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
KFC | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
What The Buck
Initial Cost to Company
Land	$ 0
Building & Improvements	3,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	3,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	1
What The Buck | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
What The Buck | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Taco Bueno
Initial Cost to Company
Land	$ 1,000
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	1,000
Total	2,000
Accumulated depreciation	$ 0
Number of properties | property	2
Taco Bueno | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Taco Bueno | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Slim Chickens
Initial Cost to Company
Land	$ 1,000
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	2,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	1
Slim Chickens | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Slim Chickens | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Rick Johnson Auto & Tire
Initial Cost to Company
Land	$ 1,000
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	2,000
Total	3,000
Monterey's Tex Mex
Initial Cost to Company
Land	1,000
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	2,000
Total	3,000
Accumulated depreciation	$ 0
Number of properties | property	2
Monterey's Tex Mex | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Monterey's Tex Mex | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Affordable Care, Inc.
Initial Cost to Company
Land	$ 1,000
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	1,000
Total	2,000
Accumulated depreciation	$ 0
Number of properties | property	2
Affordable Care, Inc. | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Affordable Care, Inc. | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Dollar General
Initial Cost to Company
Land	$ 0
Building & Improvements	2,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	2,000
Total	2,000
Accumulated depreciation	$ 0
Number of properties | property	2
Dollar General | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Dollar General | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Red Robin Gourmet Burgers
Initial Cost to Company
Land	$ 1,000
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	1,000
Total	2,000
Accumulated depreciation	$ 0
Number of properties | property	1
Red Robin Gourmet Burgers | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Red Robin Gourmet Burgers | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Rally's
Initial Cost to Company
Land	$ 1,000
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	1,000
Total	2,000
Accumulated depreciation	$ 0
Number of properties | property	3
Rally's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Rally's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Pier1 Imports
Initial Cost to Company
Land	$ 1,000
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	1,000
Total	2,000
Accumulated depreciation	$ 0
Number of properties | property	1
Pier1 Imports | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Pier1 Imports | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
SRS Distribution
Initial Cost to Company
Land	$ 0
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	1,000
Total	1,000
Accumulated depreciation	$ 0
Number of properties | property	1
SRS Distribution | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
SRS Distribution | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
The Atlanta Center For Foot & Ankle Surgery
Initial Cost to Company
Land	$ 0
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	1,000
Total	1,000
Accumulated depreciation	$ 0
Number of properties | property	1
The Atlanta Center For Foot & Ankle Surgery | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
The Atlanta Center For Foot & Ankle Surgery | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Bru Burger Bar
Initial Cost to Company
Land	$ 0
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	1,000
Total	1,000
Accumulated depreciation	$ 0
Number of properties | property	1
Bru Burger Bar | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Bru Burger Bar | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Old Mexico Cantina
Initial Cost to Company
Land	$ 0
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	1,000
Total	1,000
Accumulated depreciation	$ 0
Number of properties | property	1
Old Mexico Cantina | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Old Mexico Cantina | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Touchstone Imaging
Initial Cost to Company
Land	$ 0
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	1,000
Total	1,000
Accumulated depreciation	$ 0
Number of properties | property	1
Touchstone Imaging | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Touchstone Imaging | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Solea Mexican Grill
Initial Cost to Company
Land	$ 1,000
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	1,000
Total	2,000
Accumulated depreciation	$ 0
Number of properties | property	1
Solea Mexican Grill | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Solea Mexican Grill | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Harbor Court
Initial Cost to Company
Land	$ 2,000
Building & Improvements	7,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	2,000
Building & Improvements	7,000
Total	9,000
Accumulated depreciation	$ 0
Number of properties | property	1
Harbor Court | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Harbor Court | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
O'Reilly Auto Parts
Initial Cost to Company
Land	$ 0
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	1,000
Total	1,000
Accumulated depreciation	$ 0
Number of properties | property	1
O'Reilly Auto Parts | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
O'Reilly Auto Parts | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Aggregate Industries
Initial Cost to Company
Land	$ 1,000
Building & Improvements	0
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	1,000
Building & Improvements	0
Total	1,000
Accumulated depreciation	$ 0
Number of properties | property	1
Aggregate Industries | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Aggregate Industries | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
NAPA Auto Parts
Initial Cost to Company
Land	$ 0
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	1,000
Total	1,000
Accumulated depreciation	$ 0
Number of properties | property	1
NAPA Auto Parts | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
NAPA Auto Parts | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Jack In The Box
Initial Cost to Company
Land	$ 0
Building & Improvements	1,000
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	1,000
Total	1,000
Accumulated depreciation	$ 0
Number of properties | property	1
Jack In The Box | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Jack In The Box | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Off The Hook Seafood & More
Initial Cost to Company
Land	$ 0
Building & Improvements	0
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	0
Total	0
Accumulated depreciation	$ 0
Number of properties | property	1
Off The Hook Seafood & More | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Off The Hook Seafood & More | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Consolidated Pipe
Initial Cost to Company
Land	$ 0
Building & Improvements	0
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	0
Total	0
Accumulated depreciation	$ 0
Number of properties | property	1
Consolidated Pipe | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Consolidated Pipe | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Family Dollar Stores
Initial Cost to Company
Land	$ 0
Building & Improvements	0
Costs Capitalized Subsequent to Acquisition
Improvements	0
Impairment	0
Cost Basis Adjustment	0
Gross Amount at which Carried at Close of Period
Land	0
Building & Improvements	0
Total	0
Accumulated depreciation	$ 0
Number of properties | property	1
Family Dollar Stores | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Family Dollar Stores | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
Fazoli's
Gross Amount at which Carried at Close of Period
Accumulated depreciation	$ 0
Number of properties | property	1
Fazoli's | Minimum
Gross Amount at which Carried at Close of Period
Life used for depreciation	10 years
Fazoli's | Maximum
Gross Amount at which Carried at Close of Period
Life used for depreciation	40 years
All Properties Excluding Properties Held For Sale
Initial Cost to Company
Land	$ 2,069,000
Building & Improvements	6,824,000
Costs Capitalized Subsequent to Acquisition
Improvements	2,222,000
Impairment	(205,000)
Cost Basis Adjustment	(107,000)
Gross Amount at which Carried at Close of Period
Land	2,066,000
Building & Improvements	8,737,000
Total	10,716,233	8,820,346	8,778,907
Accumulated depreciation	$ (2,851,121)	$ (2,574,297)	$ (2,409,416)

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Related Person Transactions - Directors' and Officers' Liability Insurance (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
RMR LLC
Related Party Transaction [Line Items]
Premium paid for combined directors' and officers' liability insurance policy	$ 201	$ 247	$ 253

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Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note 10. Income Taxes

Our provision (benefit) for income taxes consists of the following:

	For the Year Ended December 31,
	2019			2018			2017
Current:
Federal (1)	$	—		$	—		$	(5,431	)
State	2,327			1,575			1,713
Foreign	593			667			670
	2,920			2,242			(3,048		)
Deferred:
Foreign	(127		)	(1,047		)	(236		)
	(127		)	(1,047		)	(236		)
	$	2,793		$	1,195		$	(3,284	)

(1) We realized a $5,431 tax benefit in 2017 related to the enactment of the Tax Cuts and Jobs Act, or the Tax Act.

A reconciliation of our effective tax rate and the current U.S. Federal statutory income tax rate is as follows:

	For the Year Ended December 31,
	2019		2018		2017
Taxes at statutory U.S. federal income tax rate	21.0	%	21.0	%	35.0	%
Nontaxable income of SVC	(21.0	)%	(21.0	)%	(35.0	)%
Minimum tax credit refund	0.0	%	0.0	%	(2.6	)%
State and local income taxes, net of federal tax benefit	0.7	%	0.8	%	0.8	%
Foreign taxes	0.1	%	(0.2	)%	0.2	%
Tax Act adjustment	0.0	%	0.0	%	21.8	%
Change in valuation allowance	0.0	%	0.0	%	(21.8	)%
Other differences, net	0.0	%	0.0	%	0.0	%
Effective tax rate	0.8	%	0.6	%	(1.6	)%

Deferred income tax balances generally reflect the net tax effects of temporary differences between the carrying amounts of certain of our assets and liabilities in our consolidated balance sheets and the amounts used for income tax purposes and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. Significant components of our deferred tax assets and liabilities are as follows:

	As of December 31,
	2019			2018
Deferred tax assets:
Tax credits	$	—		$	—
Tax loss carryforwards	44,285			62,436
Other	3,612			2,829
	47,897			65,265
Valuation allowance	(47,897		)	(65,265		)
	—			—
Deferred tax liabilities:
Property basis difference	(6,996		)	(7,174		)
Net deferred tax liabilities	$	(6,996	)	$	(7,174	)

Net deferred tax liabilities are included in accounts payable and other liabilities in the accompanying consolidated balance sheets.

At December 31, 2019 and 2018, our consolidated TRS had a net deferred tax asset, prior to any valuation allowance, of $42,434 and $59,892 respectively, which consists primarily of the tax benefit of net operating loss carryforwards and tax credits. Because of the uncertainty surrounding our ability to realize the future benefit of these assets, we have provided a 100% valuation allowance as of December 31, 2019 and 2018. As of December 31, 2019, our consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $167,780 which begin to expire in 2023 if unused.

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Indebtedness

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Indebtedness

Note 6. Indebtedness

Our principal debt obligations at December 31, 2019 were: (1) $377,000 of outstanding borrowings under our $1,000,000 unsecured revolving credit facility; (2) our $400,000 unsecured term loan; and (3) $5,350,000 aggregate outstanding principal amount of senior unsecured notes. Our revolving credit facility and our term loan are governed by a credit agreement with a syndicate of institutional lenders.

Our $1,000,000 revolving credit facility is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is July 15, 2022, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to extend the maturity date of the facility for two additional six-month periods. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. We are required to pay interest at the rate of LIBOR plus a premium, which was 120 basis points per annum as of December 31, 2019, on the amount outstanding under our revolving credit facility. We also have to pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum as of December 31, 2019. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings.

As of December 31, 2019 and 2018, the annual interest rate payable on borrowings under our revolving credit facility was 2.80% and 3.14%, respectively. The weighted average annual interest rate for borrowings under our revolving credit facility was 3.21%, 3.06% and 2.24% for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, we had $377,000 outstanding and $623,000 available under our revolving credit facility. As of February 27, 2020, we had $437,000 outstanding and $563,000 available to borrow under our revolving credit facility.

Our $400,000 term loan, which matures on July 15, 2023, is prepayable without penalty at any time. We are required to pay interest on the amount outstanding under our term loan at the rate of LIBOR plus a premium, which was 135 basis points per annum at December 31, 2019. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2019 and 2018, the annual interest rate for the amount outstanding under our term loan was 3.04% and 3.45%, respectively. The weighted average annual interest rate for borrowings under our term loan was 3.43%, 3.12% and 2.27% for the years ended December 31, 2019, 2018 and 2017, respectively.

Our credit agreement also includes a feature under which maximum aggregate borrowings may be increased to up to $2,300,000 on a combined basis in certain circumstances. Our credit agreement and our 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 LLC ceasing to act as our business manager. Our credit agreement and our unsecured senior notes indentures and their supplements also contain covenants, including those that restrict our ability to incur debts or to make distributions under certain circumstances and generally require us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of our credit agreement and our unsecured senior notes indentures and their supplements at December 31, 2019.

On January 13, 2017, we issued $600,000 aggregate principal amount of senior notes in public offerings, which included $200,000 aggregate principal amount of 4.500% senior notes due 2023 and $400,000 aggregate principal amount 4.950% senior notes due 2027. Net proceeds from these offerings were $593,228 after discounts, premiums and expenses.

On March 15, 2017, we repurchased at par plus accrued interest $8,431 of the outstanding principal amount of our 3.80% convertible senior notes due 2027, which were tendered by the holders of these notes for repurchase by us. On April 24, 2017, we redeemed at par plus accrued interest the remaining $47 of the outstanding principal amount of these notes.

On October 26, 2017, we issued $400,000 principal amount of 3.950% senior notes due 2028 in a public offering. Net proceeds from this offering were $388,244 after discounts and expenses.

On October 29, 2017, we redeemed at par all of our outstanding 6.700% senior notes due 2018 for a redemption price equal to the principal amount of $350,000, plus accrued and unpaid interest (an aggregate of $356,774). As a result of the redemption, we recorded a loss on early extinguishment of debt of $146 in the year ended December 31, 2017, which represented the unamortized discounts and issuance costs of these notes.

On February 2, 2018, we issued $400,000 principal amount of 4.375% senior notes due 2030 in a public offering. Net proceeds from this offering were $386,400 after discounts and expenses.

On September 18, 2019, we issued $825,000 aggregate principal amount of our 4.350% unsecured senior notes due 2024, $450,000 aggregate principal amount of our 4.750% unsecured senior notes due 2026 and $425,000 aggregate principal amount of our 4.950% unsecured senior notes due 2029. The aggregate net proceeds from these offerings were $1,680,461, after underwriting discounts and other offering expenses.

In connection with the SMTA Transaction, a syndicate of lenders committed to provide us with a one year unsecured term loan facility, under which we would be able to borrow up to 2,000,000. We terminated these commitments in September 2019 and recorded a loss on early extinguishment of debt of $8,451 during the year ended December 31, 2019 to write off unamortized issuance costs. See Note 4 for further information about the SMTA Transaction.

All of our senior notes are prepayable at any time prior to their maturity date at par plus accrued interest plus a premium equal to a make whole amount, as defined, generally designed to preserve a stated yield to the noteholder. Interest on all of our senior notes is payable semi-annually in arrears.

None of our debt obligations require sinking fund payments prior to their maturity dates.

The required principal payments due during the next five years and thereafter under all our outstanding debt at December 31, 2019 are as follows:

2020	$	—
2021	400,000
2022	877,000
2023	900,000
2024	1,175,000
Thereafter	2,775,000
	$	6,127,000

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of components of provision for income taxes

Our provision (benefit) for income taxes consists of the following:

	For the Year Ended December 31,
	2019			2018			2017
Current:
Federal (1)	$	—		$	—		$	(5,431	)
State	2,327			1,575			1,713
Foreign	593			667			670
	2,920			2,242			(3,048		)
Deferred:
Foreign	(127		)	(1,047		)	(236		)
	(127		)	(1,047		)	(236		)
	$	2,793		$	1,195		$	(3,284	)

(1)

We realized a $5,431 tax benefit in 2017 related to the enactment of the Tax Cuts and Jobs Act, or the Tax Act.

Schedule of reconciliation of effective tax rate and the U.S. Federal statutory income tax rate

A reconciliation of our effective tax rate and the current U.S. Federal statutory income tax rate is as follows:

	For the Year Ended December 31,
	2019		2018		2017
Taxes at statutory U.S. federal income tax rate	21.0	%	21.0	%	35.0	%
Nontaxable income of SVC	(21.0	)%	(21.0	)%	(35.0	)%
Minimum tax credit refund	0.0	%	0.0	%	(2.6	)%
State and local income taxes, net of federal tax benefit	0.7	%	0.8	%	0.8	%
Foreign taxes	0.1	%	(0.2	)%	0.2	%
Tax Act adjustment	0.0	%	0.0	%	21.8	%
Change in valuation allowance	0.0	%	0.0	%	(21.8	)%
Other differences, net	0.0	%	0.0	%	0.0	%
Effective tax rate	0.8	%	0.6	%	(1.6	)%

Schedule of significant components of deferred tax assets and liabilities

Significant components of our deferred tax assets and liabilities are as follows:

	As of December 31,
	2019			2018
Deferred tax assets:
Tax credits	$	—		$	—
Tax loss carryforwards	44,285			62,436
Other	3,612			2,829
	47,897			65,265
Valuation allowance	(47,897		)	(65,265		)
	—			—
Deferred tax liabilities:
Property basis difference	(6,996		)	(7,174		)
Net deferred tax liabilities	$	(6,996	)	$	(7,174	)

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Fair Value of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of certain of the entity's assets carried at fair value, categorized by the level of inputs used in the valuation of each asset

The table below presents certain of our assets carried at fair value at December 31, 2019, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

			Fair Value at Reporting Date Using
Description	Carrying Value at December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Fair Value Measurement Assets:
Investment in TA(1)	$	11,731	$	11,731	$	—	$	—
Non-recurring Fair Value Measurement Assets
Assets of properties held for sale (2)	87,493		—		—		90,122
Assets of properties held and used (3)	38,000		—		—		38,000

(1) Our 684,000 common shares of TA, which are included in other assets in our consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $17,407 as of December 31, 2019. During the year ended December 31, 2019, we recorded unrealized losses of $1,129 to adjust the carrying value of our investment in TA shares to their fair value as of December 31, 2019.

(2) As of December 31, 2019, we owned 19 net lease properties located in 12 states classified as held for sale of $87,493. These properties are recorded at their estimated fair value less costs to sell based on information derived from third party appraisals (Level 3 inputs as defined in the fair value hierarchy under GAAP). We recorded a $10,925 loss on asset impairment in 2019 to reduce the carrying value of these properties to their estimated fair value less costs to sell.

(3)

We recorded a $28,371 loss on asset impairment in 2019 to reduce the carrying value of two hotels to their estimated fair value of $38,000 based on discounted cash flow analyses (Level 3 inputs).

Schedule of fair value of additional financial instruments

At December 31, 2019 and December 31, 2018, the fair values of these additional financial instruments approximated their carrying values in our consolidated balance sheets due to their short term nature or floating interest rates, except as follows:

	December 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
	Amount (1)		Value		Amount (1)		Value
Senior Unsecured Notes, due 2021 at 4.25%	$	398,379	$	406,838	$	396,938	$	404,582
Senior Unsecured Notes, due 2022 at 5.00%	496,821		526,500		495,609		510,658
Senior Unsecured Notes, due 2023 at 4.50%	499,432		520,478		499,268		503,295
Senior Unsecured Notes, due 2024 at 4.65%	348,295		364,277		347,890		349,741
Senior Unsecured Notes, due 2024 at 4.35%	818,075		848,847		—		—
Senior Unsecured Notes, due 2025 at 4.50%	346,431		361,783		345,743		341,114
Senior Unsecured Notes, due 2026 at 5.25%	343,083		369,185		341,955		354,060
Senior Unsecured Notes, due 2026 at 4.75%	445,905		464,315		—		—
Senior Unsecured Notes, due 2027 at 4.95%	394,649		414,012		393,893		391,660
Senior Unsecured Notes, due 2028 at 3.95%	390,759		393,940		389,610		361,232
Senior Unsecured Notes, due 2029 at 4.95%	417,307		434,248		—		—
Senior Unsecured Notes, due 2030 at 4.375%	388,522		394,788		387,389		367,110
Total financial liabilities	$	5,287,658	$	5,499,211	$	3,598,295	$	3,583,452

(1)

Carrying value includes unamortized discounts and premiums and certain issuance costs.

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Summary of Significant Accounting Policies - Future Amortization of Intangibles (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule of Finite-Lived Intangible Assets and Liabilities [Line Items]
Total future amortization, intangible assets	$ 378,218	$ 105,749
Total future amortization, intangible liabilities	(4,509)	(1,301)
Above Market Operating Leases
Schedule of Finite-Lived Intangible Assets and Liabilities [Line Items]
2020, intangible assets	51,392
2021, intangible assets	40,945
2022, intangible assets	30,436
2023, intangible assets	27,138
2024, intangible assets	24,404
Thereafter, intangible assets	101,499
Total future amortization, intangible assets	275,814	0
Below Market Ground Leases & Other
Schedule of Finite-Lived Intangible Assets and Liabilities [Line Items]
2020, intangible assets	1,398
2021, intangible assets	1,375
2022, intangible assets	1,366
2023, intangible assets	1,355
2024, intangible assets	1,137
Thereafter, intangible assets	6,726
Total future amortization, intangible assets	13,357
Below Market Operating Leases
Schedule of Finite-Lived Intangible Assets and Liabilities [Line Items]
2020, intangible liabilities	(1,262)
2021, intangible liabilities	(1,163)
2022, intangible liabilities	(306)
2023, intangible liabilities	(192)
2024, intangible liabilities	(185)
Thereafter, intangible liabilities	(545)
Total future amortization, intangible liabilities	(3,653)	0
Above Market Ground Leases & Other
Schedule of Finite-Lived Intangible Assets and Liabilities [Line Items]
2020, intangible liabilities	(441)
2021, intangible liabilities	(369)
2022, intangible liabilities	(21)
2023, intangible liabilities	(18)
2024, intangible liabilities	(7)
Thereafter, intangible liabilities	0
Total future amortization, intangible liabilities	$ (856)	$ (1,301)

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Management Agreements and Leases Management Agreements and Leases - Combined Marriott Agreement (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) retail_property hotel property renewal_term	Dec. 31, 2018 USD ($)
Management Agreements and Leases [Line Items]
Number of properties | retail_property	816
Annual minimum returns and rents	$ 381,679
Security deposits	$ 109,403	$ 132,816
Number of real estate properties to be sold or rebranded | property	19
Minimum
Management Agreements and Leases [Line Items]
Percentage of gross revenues from hotel operations placed into escrow	5.50%
Maximum
Management Agreements and Leases [Line Items]
Percentage of gross revenues from hotel operations placed into escrow	6.50%
Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	329
Marriott contracts
Management Agreements and Leases [Line Items]
Lease term	16 years
Number of renewal options | renewal_term	2
Renewal term	10 years
Marriott contracts | Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties | hotel	122
Annual minimum returns and rents	$ 190,600
Security deposits	33,445
Security deposits replenished and increased	$ 64,700
Percent of cash flows realized from operations	60.00%
Guarantee provided to the entity, remaining amount	$ 30,000
Percentage of aggregate minimum return due	85.00%
Number of real estate properties to be sold or rebranded | hotel	33

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Management Agreements and Leases - IHG Agreement (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) hotel	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Management Agreements and Leases [Line Items]
Annual minimum returns and rents	$ 381,679
Security deposit balance	109,403	$ 132,816
Capital improvements from leased facilities, funded	150,531	182,862	$ 131,120
Hotel operating revenues | IHG Agreement
Management Agreements and Leases [Line Items]
Annual minimum returns and rents	216,239
Realized returns and rents	205,941	189,981	178,883
Additional returns realized	0	0	12,250
Security deposit balance required to be maintained with entity	37,000
Amount by which the cash flow available to pay the entity's minimum rent or return was more than the minimum amount	100,000
Security deposit balance	75,717
Capital improvements from leased facilities, funded	$ 55,359	39,668
Maximum | Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of real estate properties leased or managed | hotel	103
Amount by which the cash flow available to pay the entity's minimum rent or return was more than the minimum amount	$ 10,702	$ 35,464	$ 68,338

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Management Agreements and Leases - Wyndham Agreements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Management Agreements and Leases [Line Items]
Capital improvements from leased facilities, funded	$ 150,531	$ 182,862	$ 131,120
Hotel operating revenues
Management Agreements and Leases [Line Items]
Guarantee provided to the entity, maximum	30,000
Wyndham destinations agreement | Vacation units
Management Agreements and Leases [Line Items]
Realized returns and rents	503	1,456	1,414
Wyndham agreement | Hotel operating revenues
Management Agreements and Leases [Line Items]
Realized returns and rents	20,023	23,562	27,452
Guarantee provided to the entity, maximum	35,656
Annual guarantee provided to the entity, maximum	17,828
Capital improvements from leased facilities, funded	$ 3,040	$ 2,883	$ 1,449

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Related Person Transactions - Management Agreements (Details) $ / shares in Units, $ in Thousands		3 Months Ended								12 Months Ended
	Jul. 01, 2019 USD ($) $ / shares	Dec. 31, 2019 USD ($) retail_property agreement	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) retail_property agreement	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jun. 05, 2015 USD ($) shares
Related Party Transaction [Line Items]
Number of properties | retail_property		816								816
Revenues		$ 580,906	$ 599,772	$ 610,562	$ 524,908	$ 550,799	$ 603,153	$ 611,951	$ 528,633	$ 2,316,148	$ 2,294,536	$ 2,171,935
First Anniversary Vesting Percentage
Related Party Transaction [Line Items]
Vesting percentage										20.00%
Second Anniversary Vesting Percentage
Related Party Transaction [Line Items]
Vesting percentage										20.00%
Third Anniversary Vesting Percentage
Related Party Transaction [Line Items]
Vesting percentage										20.00%
Fourth Anniversary Vesting Percentage
Related Party Transaction [Line Items]
Vesting percentage										20.00%
Fifth Anniversary Vesting Percentage
Related Party Transaction [Line Items]
Vesting percentage										20.00%
Rental income
Related Party Transaction [Line Items]
Revenues										$ 322,236	330,806	326,436
RMR LLC | Rental income
Related Party Transaction [Line Items]
Revenues										35	35	35
RMR LLC | RMR Inc.
Related Party Transaction [Line Items]
Cash and share consideration													$ 55,922
Recognized amortization of liability										3,585	$ 3,585	$ 3,585
Remaining unamortized amount of liability		57,421								57,421
Future amortization of liability, 2020		3,585								3,585
Future amortization of liability, 2021		3,585								3,585
Future amortization of liability, 2022		3,585								3,585
Future amortization of liability, 2023		3,585								3,585
Future amortization of liability, 2024		3,585								3,585
Future amortization of liability, thereafter		$ 39,496								$ 39,496
Amended and restated business management agreement | RMR LLC
Related Party Transaction [Line Items]
Number of management agreements | agreement		2								2
Class A common shares | RMR Inc.
Related Party Transaction [Line Items]
Public offering price (in dollars per share) | $ / shares	$ 40.00
Proceeds from sale	$ 93,568
Class A common shares | RMR LLC | RMR Inc.
Related Party Transaction [Line Items]
Number of common shares owned (in shares) | shares													2,503,777

XML

Segment Information (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) segment	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Segment Information
Number of reportable segments | segment									2
Total revenues	$ 580,906	$ 599,772	$ 610,562	$ 524,908	$ 550,799	$ 603,153	$ 611,951	$ 528,633	$ 2,316,148	$ 2,294,536	$ 2,171,935
Hotel operating expenses									1,410,927	1,387,065	1,274,642
Other operating expenses									8,357	5,290	4,905
Depreciation and amortization									428,448	403,077	386,659
General and administrative									54,639	104,862	125,402
Acquisition and transaction related costs									1,795	0	0
Loss on asset impairment									39,296	0	0
Total expenses									1,943,462	1,900,294	1,791,608
Gain on sale of real estate									159,535	0	9,348
Dividend income									1,752	2,754	2,504
Unrealized losses on equity securities									(40,461)	(16,737)	0
Interest income									2,215	1,528	798
Interest expense									(225,126)	(195,213)	(181,579)
Loss on early extinguishment of debt									(8,451)	(160)	(146)
Income before income taxes and equity in earnings of an investee									262,150	186,414	211,252
Income tax benefit (expense)									(2,793)	(1,195)	3,284
Equity in earnings of an investee									393	515	607
Net income	(14,893)	$ 40,074	$ 8,782	$ 225,787	(108,860)	$ 117,099	$ 97,289	$ 80,206	259,750	185,734	215,143
Total assets	9,033,967				7,177,079				9,033,967	7,177,079	7,150,385
Corporate
Segment Information
Total revenues									0	0	0
Hotel operating expenses									0	0	0
Other operating expenses									0	0	0
Depreciation and amortization									0	0	0
General and administrative									54,639	104,862	125,402
Acquisition and transaction related costs									1,795	0
Loss on asset impairment									0	0
Total expenses									56,434	104,862	125,402
Gain on sale of real estate									0		9,348
Dividend income									1,752	2,754	2,504
Unrealized losses on equity securities									(40,461)	(16,737)
Interest income									1,420	538	397
Interest expense									(225,126)	(195,213)	(181,579)
Loss on early extinguishment of debt									(8,451)	(160)	(146)
Income before income taxes and equity in earnings of an investee									(327,300)	(313,680)	(294,878)
Income tax benefit (expense)									(2,793)	(1,195)	3,284
Equity in earnings of an investee									393	515	607
Net income									(329,700)	(314,360)	(290,987)
Total assets	124,587				192,252				124,587	192,252	196,800
Hotels | Operating segments
Segment Information
Total revenues									2,014,897	1,992,374	1,878,661
Hotel operating expenses									1,410,927	1,387,065	1,274,642
Other operating expenses									0	0	0
Depreciation and amortization									268,088	255,759	242,829
General and administrative									0	0	0
Acquisition and transaction related costs									0	0
Loss on asset impairment									28,371	0
Total expenses									1,707,386	1,642,824	1,517,471
Gain on sale of real estate									0		0
Dividend income									0	0	0
Unrealized losses on equity securities									0	0
Interest income									795	990	401
Interest expense									0	0
Loss on early extinguishment of debt									0	0	0
Income before income taxes and equity in earnings of an investee									308,306	350,540	361,591
Income tax benefit (expense)									0	0	0
Equity in earnings of an investee									0	0	0
Net income									308,306	350,540	361,591
Total assets	4,866,549				4,586,709				4,866,549	4,586,709	4,477,512
Net Lease | Operating segments
Segment Information
Total revenues									301,251	302,162	293,274
Hotel operating expenses									0	0	0
Other operating expenses									8,357	5,290	4,905
Depreciation and amortization									160,360	147,318	143,830
General and administrative									0		0
Acquisition and transaction related costs										0
Loss on asset impairment									10,925	0
Total expenses									179,642	152,608	148,735
Gain on sale of real estate									159,535		0
Dividend income									0	0	0
Unrealized losses on equity securities									0	0
Interest income									0	0	0
Interest expense									0	0	0
Loss on early extinguishment of debt									0	0	0
Income before income taxes and equity in earnings of an investee									281,144	149,554	144,539
Income tax benefit (expense)									0	0	0
Equity in earnings of an investee									0	0	0
Net income									281,144	149,554	144,539
Total assets	$ 4,042,831				$ 2,398,118				4,042,831	2,398,118	2,476,073
Hotel operating revenues
Segment Information
Total revenues									1,989,173	1,958,598	1,840,829
Hotel operating revenues | Corporate
Segment Information
Total revenues									0	0	0
Hotel operating revenues | Hotels | Operating segments
Segment Information
Total revenues									1,989,173	1,958,598	1,840,829
Hotel operating revenues | Net Lease | Operating segments
Segment Information
Total revenues									0	0	0
Rental income
Segment Information
Total revenues									322,236	330,806	326,436
Rental income | Corporate
Segment Information
Total revenues									0	0	0
Rental income | Hotels | Operating segments
Segment Information
Total revenues									20,985	28,644	33,162
Rental income | Net Lease | Operating segments
Segment Information
Total revenues									301,251	302,162	293,274
FF&E reserve income
Segment Information
Total revenues									4,739	5,132	4,670
FF&E reserve income | Corporate
Segment Information
Total revenues									0	0	0
FF&E reserve income | Hotels | Operating segments
Segment Information
Total revenues									4,739	5,132	4,670
FF&E reserve income | Net Lease | Operating segments
Segment Information
Total revenues									$ 0	$ 0	$ 0

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SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION - Notes to Schedule III (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Change in total cost of properties
Balance at beginning of year	$ 8,820,346	$ 8,778,907	$ 8,100,844
Additions: acquisitions and capital expenditures	1,983,380	324,227	743,340
Dispositions	0	(62,923)	(71,054)
Reclassification of properties held for sale	(87,493)	(219,865)	5,777
Balance at close of year	10,803,000	8,820,346	8,778,907
Change in accumulated depreciation
Balance at beginning of year	2,574,297	2,409,416	2,176,537
Additions: depreciation expense	305,441	304,224	278,353
Dispositions	(28,617)	(62,923)	(45,474)
Reclassification of properties held for sale	0	(76,420)	0
Balance at close of year	2,851,000	2,574,297	2,409,416
Tax basis for federal income tax purpose	8,414,576
All Properties Excluding Properties Held For Sale
Change in total cost of properties
Balance at beginning of year	8,820,346	8,778,907
Balance at close of year	10,716,233	8,820,346	8,778,907
Change in accumulated depreciation
Balance at beginning of year	2,574,297	2,409,416
Balance at close of year	$ 2,851,121	$ 2,574,297	$ 2,409,416

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Income Taxes - Provision and Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current:
Federal	$ 0	$ 0	$ (5,431)
State	2,327	1,575	1,713
Foreign	593	667	670
Current tax	2,920	2,242	(3,048)
Deferred:
Foreign	(127)	(1,047)	(236)
Deferred tax	(127)	(1,047)	(236)
Income tax provision (benefit)	$ 2,793	$ 1,195	(3,284)
Tax Cuts and Jobs Act of 2017, provisional income tax benefit			$ 5,431
Effective Income Tax Rate Reconciliation, Percent [Abstract]
Taxes at statutory U.S. federal income tax rate	21.00%	21.00%	35.00%
Nontaxable income of SVC	(21.00%)	(21.00%)	(35.00%)
Minimum tax credit refund	(0.00%)	(0.00%)	(2.60%)
State and local income taxes, net of federal tax benefit	0.70%	0.80%	0.80%
Foreign taxes	0.10%	(0.20%)	0.20%
Tax Act adjustment	0.000	0.000	0.218
Change in valuation allowance	0.00%	0.00%	(21.80%)
Other differences, net	0.00%	0.00%	0.00%
Effective tax rate	0.80%	0.60%	(1.60%)

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Related Person Transactions

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

Related Person Transactions

Note 9. Related Person Transactions

We have relationships and historical and continuing transactions with TA, Sonesta, RMR LLC, RMR Inc. and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR Inc. is the managing member of RMR LLC. One of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, and each of our other officers is also an officer and employee of RMR LLC, including Ethan S. Bornstein, the brother-in-law of Adam Portnoy, Brian E. Donley, our Chief Financial Officer and Treasurer, and Todd Hargreaves, our Vice President. Certain of TA’s and Sonesta’s executive officers are officers and employees of RMR LLC. Some of our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as the chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these companies and other officers of RMR LLC serve as managing trustees or managing directors of certain of these companies. In addition, officers of RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services.

Our Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations of certain net lease properties and the office building component of one of our hotels. See Note 8 for further information regarding our management agreements with RMR LLC.

Lease With RMR LLC. We lease office space to RMR LLC in the office building component of one of our hotels. We recognized rental income from RMR LLC for leased office space of $35 for each of the years ended December 31, 2019, 2018 and 2017. Our office space lease with RMR LLC is terminable by RMR LLC if our management agreements with RMR LLC are terminated.

Share Awards to RMR LLC Employees. As described in Note 7, we award shares to our officers and other employees of RMR LLC annually. Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next four anniversaries of the grant dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR LLC. These awards to RMR LLC employees are in addition to the share awards to our Managing Trustees, as Trustee compensation, and the fees we paid to RMR LLC. See Note 7 for information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligation on vesting share awards.

RMR Inc. We initially acquired 2,503,777 shares of class A common stock of RMR Inc. on June 5, 2015 for cash and share consideration of $55,922. We concluded, for accounting purposes, that the consideration we paid for our investment in these shares represented a discount to the fair value of these shares and we recorded a liability for the amount by which the estimated fair value of these shares exceeded the price we paid for these shares. This liability is included in accounts payable and other liabilities in our consolidated balance sheets and is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to our business management and property management fee expense. We amortized $3,585 of this liability during each of the years ended December 31, 2019, 2018 and 2017. As of December 31, 2019, the remaining unamortized amount of this liability was $57,421. Future amortization of this liability as of December 31, 2019, is estimated to be $3,585 for each of the years 2020 through 2024 and $39,496 thereafter.

On July 1, 2019, we sold all the 2,503,777 shares of class A common stock of RMR Inc. we owned in an underwritten public offering at a price to the public of $40.00 per share pursuant to an underwriting agreement among us, RMR Inc., certain other REITs managed by RMR LLC that also sold their class A common stock of RMR Inc. in the offering, and the underwriters named therein. We received net proceeds of $93,568 from this sale, after deducting the underwriting discounts and commissions and before other offering expenses.

TA. TA was our 100% owned subsidiary until we distributed its common shares to our shareholders in 2007. TA is our largest tenant and property operator, leasing 27% of our gross carrying value of real estate properties as of December 31, 2019. We are TA’s largest shareholder; as of December 31, 2019, we owned 684,000 common shares, representing approximately 8.2% of TA’s outstanding common shares. One of our Managing Trustees, Adam Portnoy, is a managing director of TA. TA’s chief executive officer, president and chief operating officer, executive vice president, chief financial officer and treasurer and executive vice president and general counsel are also officers and employees of RMR LLC, and TA’s two most recent former chief executive officers were also officers of RMR LLC until they resigned those positions in 2017 and 2019, respectively. RMR LLC provides management services to both us and TA. As of December 31, 2019, RMR LLC owned 298,538 common shares, representing approximately 3.6% of TA’s outstanding common shares.

Spin-Off of TA. In connection with TA’s spin-off, we entered a transaction agreement with TA and RMR LLC, pursuant to which TA granted us a right of first refusal to purchase, lease, mortgage or otherwise finance any interest TA owns in a travel center before it sells, leases, mortgages or otherwise finances that travel center to or with another party, and TA also granted us and any other company managed by RMR LLC a right of first refusal to acquire or finance any real estate of the types in which we or they invest before TA does. TA also agreed that for so long as TA is a tenant of ours it will not permit: the acquisition by any person or group of beneficial ownership of 9.8% or more of the voting shares or the power to direct the management and policies of TA or any of its subsidiary tenants or guarantors under its leases with us; the sale of a material part of the assets of TA or any such tenant or guarantor; or the cessation of certain continuing directors constituting a majority of the board of directors of TA or any such tenant or guarantor. TA also agreed not to take any action that might reasonably be expected to have a material adverse impact on our ability to qualify as a REIT and to indemnify us for any liabilities we may incur relating to TA’s assets and business.

Lease Arrangements with TA. We lease 179 of our travel centers to TA under the TA leases.

See Notes 4 and 5 for further information regarding our relationships, agreements and transactions with TA.

Sonesta. Sonesta is a private company majority owned by Adam Portnoy, who also serves as Sonesta’s director. One of Sonesta’s other directors is our other Managing Trustee, President and Chief Executive Officer and Sonesta’s other director serves as RMR Inc.’s executive vice president, general counsel and secretary and as our Secretary. Sonesta’s chief executive officer and chief financial officer are officers of RMR LLC. Certain other officers and employees of Sonesta are former employees of RMR LLC. RMR LLC also provides certain services to Sonesta. As of December 31, 2019, Sonesta managed 53 of our hotels pursuant to our Sonesta agreement. See Notes 4 and 5 for further information regarding our relationships, agreements and transactions with Sonesta including our recent restructuring of our business arrangements with Sonesta.

AIC. We, ABP Trust, TA and four other companies to which RMR LLC provides management services currently own AIC, an Indiana insurance company, in equal amounts. Certain of our Trustees and certain directors or trustees of the other AIC shareholders currently serve on the board of directors of AIC.

We and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC. The policies under that program expired on June 30, 2019, and we and the other AIC shareholders elected not to renew the AIC property insurance program; we have instead purchased standalone property insurance coverage with unrelated third party insurance providers. We paid aggregate annual premiums, including taxes and fees, of $5,738, $6,387 and $4,004 in connection with this insurance program for the policy years ending June 30, 2019, 2018, and 2017 respectively.

On February 13, 2020, AIC was dissolved and in connection with its dissolution, we and each other AIC shareholder received an initial liquidating distribution of $9,000 from AIC in December 2019.

As of December 31, 2019, 2018 and 2017, our investment in AIC had a carrying value of $298, $8,639 and $8,192, respectively. These amounts are included in other assets in our consolidated balance sheets. We recognized income of $393, $515 and $607 related to our investment in AIC for the years ended December 31, 2019, 2018 and 2017, respectively. These amounts are presented as equity in earnings of an investee in our consolidated statements of comprehensive income. Our other comprehensive income (loss) includes our proportionate part of unrealized gains (losses) on securities which are owned and held for sale by AIC of $(175), $(68) and $460 related to our investment in AIC for the years ended December 31, 2019, 2018 and 2017, respectively.

RMR LLC historically provided management and administrative services to AIC for a fee equal to 3.0% of the total premiums paid for insurance arranged by AIC. As a result of the property insurance program having been discontinued, AIC has not incurred fees payable to RMR LLC since that time.

Directors’ and Officers’ Liability Insurance. We, RMR Inc., RMR LLC and certain other companies to which RMR LLC or its subsidiaries provide management services, including TA, participate in a combined directors’ and officers’ liability insurance policy. The current combined policy expires in September 2020. We paid aggregate premiums of $201, $247 and $253 in 2019, 2018 and 2017, respectively, for these policies.

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Management Agreements and Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Management Agreements and Leases

Note 5. Management Agreements and Leases

As of December 31, 2019, we owned 329 hotels included in six operating agreements and 816 service-oriented retail properties net leased to 194 tenants. We do not operate any of our properties.

Hotel agreements

As of December 31, 2019, 327 of our hotels were leased to our TRSs and managed by independent hotel operating companies and two hotels are leased to third parties. As of December 31, 2019, our hotel properties were managed by or leased to separate subsidiaries of Marriott, IHG, Sonesta, Wyndham, Hyatt and Radisson under eight agreements. These hotel agreements had initial terms expiring between 2019 and 2038. Each of these agreements is for between one and 103 of our hotels. In general, the agreements contain renewal options for all, but not less than all, of the affected properties included in each agreement, and the renewal terms range between 15 to 60 years. Most of these agreements require the third party manager or tenant to: (1) make payments to us of minimum returns or minimum rents; (2) deposit a percentage of total hotel sales into FF&E reserves; and (3) for our managed hotels, make payments to our TRSs of additional returns to the extent of available cash flows after payment of operating expenses, funding of the FF&E reserves, payment of our minimum returns, payment of certain management fees and replenishment of security deposits or guarantees. Some of our managers or tenants or their affiliates have provided deposits or guarantees to secure their obligations to pay us.

IHG agreement. Our management agreement with IHG for 103 hotels, or our IHG agreement, which expires in 2036, provides that, as of December 31, 2019, we are to be paid annual minimum returns and rents of $216,239. We realized minimum returns and rents of $205,941, $189,981 and $178,883 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. We also realized additional returns under this agreement $12,250 during the year ended December 31, 2017 from our share of hotel cash flows in excess of the minimum returns and rents due to us for those years. There were no additional returns realized under this agreement during the years ended December 31, 2019 and 2018 .

Pursuant to our IHG agreement, IHG has provided us with a security deposit to cover minimum payment shortfalls, if any. Under this agreement, IHG is required to maintain a minimum security deposit of $37,000 and this security deposit may be replenished and increased up to $100,000 from a share of future cash flows from the hotels in excess of our minimum returns and rents. The available balance of the IHG security deposit was $75,717 as of December 31, 2019.

We funded $55,359 and $39,668 for capital improvements to certain of the hotels included in our IHG agreement during the years ended December 31, 2019 and 2018, respectively.

Marriott No. 1 agreement. Our management agreement with Marriott for 53 hotels, or our Marriott No. 1 agreement, provided that, as of December 31, 2019, we were to be paid an annual minimum return of $71,872 to the extent that gross revenues of the hotels, after payment of hotel operating expenses and funding of the FF&E reserve, were sufficient to do so. Marriott’s base and incentive management fees were only earned after we received our minimum returns. We realized minimum returns of $71,410, $69,325 and $68,944 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. We also realized additional returns of $2,052, $4,457 and $6,180 during the years ended December 31, 2019, 2018 and 2017, respectively, which represented our share of hotel cash flows in excess of the minimum returns due to us for those years. We did not have any security deposits or guarantees for our minimum returns from the 53 hotels included in our Marriott No. 1 agreement. Accordingly, the minimum returns we received from these hotels managed by Marriott were limited to the hotels’ available cash flows after payment of operating expenses and funding of the FF&E reserve.

We funded $17,356 and $9,050 for capital improvements to certain of the hotels included in our Marriott No. 1 agreement during the years ended December 31, 2019 and 2018.

Marriott No. 234 agreement. Our management agreement with Marriott for 68 hotels, or our Marriott No. 234 agreement, provided that, as of December 31, 2019, we were to be paid an annual minimum return of $110,383. We realized minimum returns of $108,564, $106,978 and $106,405 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. Pursuant to our Marriott No. 234 agreement, Marriott had provided us with a security deposit to cover minimum return payment shortfalls, if any. Under this agreement, this security deposit may have been replenished and increased up to $64,700 from a share of hotel cash flows in excess of the minimum returns due to us. Marriott’s base and incentive management fees were only earned after we received our minimum returns. During the year ended December 31, 2019, our available security deposit was replenished by $734 from a share of hotel cash flows in excess of the minimum returns due to us for the year. The available balance of this deposit was $33,445 as of December 31, 2019. Pursuant to our Marriott No. 234 agreement, Marriott had also provided us with a limited guaranty for shortfalls up to 90% of our minimum returns, if and after the available security deposit had been depleted. This guaranty expired on December 31, 2019.

We funded $33,700 and $9,030 for capital improvements to certain of the hotels included in our Marriott No. 234 agreement during the years ended December 31, 2019 and 2018.

Marriott No. 5 agreement. We leased one hotel in Kauai, HI to Marriott which required that, as of December 31, 2019, we were paid annual minimum rents of $10,518. This lease was guaranteed by Marriott and we realized $10,518, $10,321 and $10,159 of rent for this hotel during the years ended December 31, 2019, 2018 and 2017, respectively. This lease expired on December 31, 2019.

On December 31, 2019, we entered into agreements with Marriott, which combined our Marriott Nos. 1, 234 and 5 agreements into a single portfolio for a 16-year term commencing January 1, 2020, or the Marriott Agreement. Among other terms, the new combined agreements with Marriott provide as follows:

• That all 122 Marriott hotels will be combined economically so that excess cash flows from any of these hotels are available to pay the aggregate annual minimum returns due to SVC for these hotels, which was initially $190,600. Our TRS subsidiaries will continue to participate in the net cash flows from hotel operations after payment of management fees to Marriott and these base fees will continue to be subordinated to the annual minimum return due to us.

• That the existing security deposit we held for the Marriott No. 234 agreement ($33,445 as of December 31, 2019) will continue to secure payment of the aggregate annual minimum returns due to us under the new combined agreements and may be replenished up to the security deposit cap of $64,700 from 60% of the cash flows realized from operations of the 122 hotels after payment of the aggregate annual minimum return due to us, Marriott’s base management fees and certain other advances by us or Marriott, if any.

• That Marriott will provide a new $30,000 limited guaranty for 85% of the aggregate annual minimum return due to us through 2026 under the new combined agreements if the security deposit is exhausted.

• That the term of the agreements will be extended through 2035, with Marriott having the option to renew for two consecutive 10-year terms on an all or none basis.

• That 5.5%-6.5% of gross revenues from hotel operations will continue to be placed in escrow for hotel maintenance and periodic renovations, or an FF&E reserve.

We and Marriott identified 33 of the 122 hotels covered by the Marriott Agreement that will be sold or rebranded, at which time we would retain the proceeds of any such sale and the aggregate annual minimum returns due to us would decrease by the amount allocated to the applicable hotel.

Sonesta agreement. As of December 31, 2019, Sonesta managed 14 of our full service hotels and 39 of our limited service hotels pursuant to management agreements for each of the hotels, which we refer to collectively as our Sonesta agreement, and a pooling agreement, which combines those management agreements for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us. See Notes 4 and 9 for further information regarding our relationship, agreements and transactions with Sonesta.

As of December 31, 2019, our Sonesta agreement provided that we are paid a fixed annual minimum return equal to 8% of our invested capital, as defined therein, which was $146,800, as of December 31, 2019, if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so. Our Sonesta agreement further provided that we are paid an additional return based upon operating profits, as defined therein, after payment of Sonesta’s incentive fee, if applicable. We realized returns of $67,592, $78,076 and $70,576 during the years ended December 31, 2019, 2018 and 2017, respectively, under our Sonesta agreement. We do not have any security deposits or guarantees for our Sonesta hotels. Accordingly, the returns we receive from our Sonesta hotels are limited to the hotels’ available cash flows after payment of operating expenses including management and related fees.

As of December 31, 2019 our Sonesta agreement provided that Sonesta is entitled to receive, after payment of hotel operating expenses, a base management fee equal to 3.0% of gross revenues for our full service Sonesta hotels and 5.0% of gross revenues for our limited service Sonesta hotels. Additionally, Sonesta is entitled to a reservation fee equal to 1.5% of gross room revenues, as defined in the Sonesta agreement, a system fee for centralized services of 1.5% of gross revenues, a procurement and construction supervision fee equal to 3.0% of third party costs of capital expenditures and an incentive management fee equal to 20.0% of operating profits remaining after reimbursement to us and to Sonesta of certain advances and payment of our minimum returns. Sonesta’s incentive management fee, but not its other fees, is earned only after our minimum returns are paid. Our Sonesta agreement also provided that the costs incurred by Sonesta for advertising, marketing, promotional and public relations programs and campaigns, including “frequent stay” rewards programs, for the benefit of our Sonesta hotels are subject to reimbursement by us or are otherwise treated as hotel operating expenses, subject to our approval.

Pursuant to our Sonesta agreement, as of December 31, 2019, we incurred base management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing program and third party reservation transmission fees of $36,169, $34,821 and $28,238 for the years ended December 31, 2019, 2018 and 2017, respectively, under our Sonesta agreement. In addition, as of December 31, 2019, we recognized procurement and construction supervision fees of $3,320, $2,374 and $1,080 for the years ended December 31, 2019, 2018 and 2017, respectively, under our Sonesta agreement. These amounts are included in hotel operating expenses or have been capitalized, as appropriate, in our consolidated financial statements.

As of December 31, 2019 our Sonesta agreement did not require FF&E escrow deposits, but did require us to fund capital expenditures that we approved at our Sonesta hotels. We funded $114,082, $82,329 and $34,933 for renovations and other capital improvements to hotels included in our Sonesta agreement during the years ended December 31, 2019, 2018 and 2017, respectively. We owed Sonesta $15,537 and $5,703 for capital expenditure reimbursements and for a previously estimated overpayment of minimum returns advanced at December 31, 2019 and 2018, respectively. Amounts due from Sonesta are included in due from related persons and amounts owed to Sonesta are included in due to related persons in our consolidated balance sheets, respectively.

Our Sonesta agreement expires in January 2037, and will be extended automatically for up to two successive 15 year renewal terms unless Sonesta elects not to renew any such agreement. Under the pooling agreement, if Sonesta elects not to renew a management agreement, that will be deemed to be a notice of non-renewal for all our management agreements with Sonesta. We generally have the right to terminate a management agreement with Sonesta after three to four years without cause upon payment of a termination fee. We also have the right to terminate a management agreement with Sonesta without a termination fee if our minimum return is less than 6% of our invested capital during any three of four applicable consecutive years. Both we and Sonesta have the right to terminate any management agreement included in our Sonesta agreement upon a change in control, as defined therein, of the other party, and under certain other circumstances that, in the case of termination by Sonesta, may require that we pay a termination fee to Sonesta. Under the pooling agreement, if we terminate or Sonesta terminates a management agreement following a change of control, that will be deemed a termination of all of our management agreements with Sonesta. Under our Sonesta agreement, if we terminate without cause, or if Sonesta terminates under certain circumstances, the termination fee is an amount equal to the present value of the payments that would have been made to Sonesta as a base management fee, reservation fee, system fee and incentive management fee, each as defined therein, between the date of termination of the applicable agreement and the scheduled expiration date of the term that was remaining prior to such termination, which present value is calculated based upon the average of each of such fees earned in each of the three years ended prior to the date of termination, discounted at an annual rate equal to 8%. We may designate a hotel as “non-economic” under the pooling agreement, in which case the hotel would be subject to sale and the applicable Sonesta management agreement would be terminated, and we have an early termination right under each of the management agreements included in our Sonesta agreement if the applicable hotel does not meet certain criteria for the stipulated measurement period. These stipulated measurement periods begin on the later of January 1, 2017 and January 1st of the year beginning at least 18 months following the effective date of the applicable management agreement.

On November 1, 2019, we rebranded two full service hotels previously managed by Wyndham (Chicago, IL and Irvine, CA) to the Sonesta brands under short term agreements with Sonesta that expire on December 31, 2020.

We also lease 48 vacation units in the Chicago, IL Sonesta hotel to a subsidiary of Wyndham Destinations, Inc. (NYSE: WYND), or Destinations, which requires that, as of December 31, 2019, we are paid annual minimum rents of $1,537. The guaranty provided by Destinations with respect to the Destinations lease for part of one hotel is unlimited. We recognized rental income of $503 during the year ended December 31, 2019 and $1,456 and $1,414 during the years ended December 31, 2018 and 2017, respectively, under our Destinations agreement. We reduced rental income by $997 for the year ended December 31, 2019 and increased rental income by $358 and $400 for the years ended December 31, 2018 and 2017, respectively, to record adjustments necessary to record rent on a straight line basis. We have amended the lease of the 48 Destinations units at the Chicago hotel so the term of the lease expires on March 31, 2020, at which time Destinations will vacate the leased space.

See Note 4 for information regarding the effects of certain of our property acquisitions on our management agreements with Sonesta.

On February 27, 2020, we entered into a transaction agreement with Sonesta and its newly formed parent company, Sonesta Holdco Corporation, or Holdco, pursuant to which we and Sonesta restructured our existing business arrangements as follows:

• We amended and restated our existing management agreements with Sonesta for each of our hotels currently manage by Sonesta, which we refer to collectively as our Sonesta agreement, and our existing pooling agreement with Sonesta, which combines our management agreements with Sonesta for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us, as further described below;

• We and Sonesta agreed to sell, rebrand or repurpose our 39 extended stay hotels currently managed by Sonesta with an aggregate carrying value of $480,547 and which currently require aggregate minimum returns of $49,467. As the hotels are sold, rebranded or repurposed, the management agreement for the applicable hotel(s) will terminate witout our being required to pay Sonesta a termination fee and our annual minimum returns due to us under our Sonesta agreement will decrease by the amount allocated to the applicable hotel(s);

• Sonesta will continue to manage 14 of our full-service hotels that Sonesta currently manages and the annual minimum returns due for these hotels will be reduced from $99,013 to $69,013;

• Holdco issued to us a number of its shares of common stock representing approximately (but not more than) 34% of its outstanding shares of common stock (post-issuance);

• We modified our Sonesta agreement and pooling agreement so that 5% of the hotel gross revenues of each of our 14 full-service hotels managed by Sonesta will be escrowed for future capital expenditures as “FF&E reserves,” subject to available cash flow after payment of the annual minimum returns due to us under the Sonesta agreement;

• We modified our Sonesta agreement and pooling agreement so that (1) our termination rights under those agreements for our 14 full-service hotels managed by Sonesta are generally limited to performance and for “cause,” casualty and condemnation events, (2) a portfolio wide performance test now applies for determining whether the management agreement for any of our full service hotels managed by Sonesta may be terminated for performance reasons, and (3) the provisions included in our historical pooling agreement that allowed either us or Sonesta to require the marketing for sale of non-economic hotels were removed; and

• We extended the initial expiration date of the management agreements for our full service hotels located in Chicago, IL and Irvine, CA that are managed by Sonesta to January 2037 to align with the initial expiration date for our other full-service hotels managed by Sonesta.

Except as described above, the economic terms of our amended and restated Sonesta agreement and amended and restated pooling agreement are consistent with the historical Sonesta agreement and pooling agreement.

Hyatt agreement. Our management agreement with Hyatt for 22 hotels, or our Hyatt agreement, which expires in 2030, provides that, as of December 31, 2019, we are to be paid an annual minimum return of $22,037. We realized minimum returns of $22,037 during each of the years ended December 31, 2019, 2018 and 2017 under this agreement. Pursuant to our Hyatt agreement, Hyatt has provided us with a guaranty, which is limited to $50,000. During the year ended December 31, 2019, the hotels under this agreement generated cash flows that were less than the minimum rents due to us for the period and Hyatt made $2,260 guarantee payments to cover the shortfall. The available balance of the guaranty was $19,655 as of December 31, 2019.

Radisson agreement. Our management agreement with Radisson for nine hotels, or our Radisson agreement, which expires in 2035, provides that, as of December 31, 2019, we are to be paid an annual minimum return of $20,443. We realized minimum returns of $20,056, $16,183 and $12,920 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. Pursuant to our Radisson agreement, Radisson has provided us with a limited guaranty which, as a result of capital improvement amounts funded by us during the year ended December 31, 2019, increased by $1,523 to a total of $47,523. During the year ended December 31, 2019, the hotels under this agreement generated cash flows that were less than the minimum returns due to us for the period, and Radisson made $1,343 of guaranty payments to cover the shortfall. The available balance of the guarantee was $41,216 at December 31, 2019. We funded $19,034 for capital improvements at certain of the hotels included in our Radisson agreement during the year ended December 31, 2019.

Wyndham agreements. In October 2019, we amended our agreement with Wyndham whereby the term of the management agreement will expire on September 30, 2020 unless sooner terminated with respect to any hotels that are sold or rebranded. Under the amendment, Wyndham will pay us all cash flows of the hotels after payment of hotel operating costs. Wyndham will not be entitled to any base management fees for the remainder of the agreement term. We realized returns of $20,023, $23,562 and $27,452 during the years ended December 31, 2019, 2018 and 2017, respectively. Wyndham had provided us with a guaranty, which was limited to $35,656, subject to an annual payment limit of $17,828 which was depleted during 2017. To avoid default, Wyndham was required to pay 85% of the minimum returns due to us. Our Wyndham agreement requires FF&E escrow deposits equal to 5% of total hotel sales for all hotels included in the agreement subject to available cash flows after payment of our minimum return. No FF&E escrow deposits were made during the year ended December 31, 2019. We funded $3,040, $2,883 and $1,449 for capital improvements to certain of the hotels included in our Wyndham agreement during the years ended December 31, 2019, 2018 and 2017, respectively.

Net lease portfolio

As of December 31, 2019, we owned 816 net lease service-oriented retail properties with 14.9 million square feet with annual minimum rent of $381,679 with a weighted (by annual minimum rents) average lease term of 8.6 years. The portfolio was 98% leased by 194 tenants operating under 131 brands in 23 distinct industries.

TA Leases

On January 16, 2019, we entered agreements with TA pursuant to which:

• We sold to TA 20 travel center properties that TA previously leased from us for a total purchase price of $308,200. We recorded a gain of $159,535 as a result of these sales. 

• Upon completing these sales, these travel center properties were removed from the TA leases and TA’s annual minimum rent payable to us decreased by $43,148.

• Commencing on April 1, 2019, TA paid us the first of the 16 quarterly installments of approximately $4,404 each (an aggregate of $70,458) to fully satisfy and discharge its $150,000 deferred rent obligation to us that otherwise would have become due in five installments between 2024 and 2030. TA paid to us $13,200 in respect of such obligation for the year ended December 31, 2019.

• Commencing with the year ending December 31, 2020, TA will be obligated to pay to us an additional amount of percentage rent equal to one-half percent (0.5%) of the excess of its annual nonfuel revenues at leased sites over the nonfuel revenues for each respective site for the year ending December 31, 2019.

• The term of each TA lease was extended by three years.

• Certain of the 179 travel center properties that TA continues to lease from us were reallocated among the TA leases.

TA is our largest tenant. As of December 31, 2019, we leased to TA a total of 179 travel centers under five leases that expire between 2029 and 2035 and require annual minimum returns of $246,088 which represents approximately 24.6% of our total annual minimum rents as of December 31, 2019. The number of travel centers, the terms, the annual minimum rent and the deferred rent balances owed to us by TA under our TA leases as of December 31, 2019, were as follows:

	Number of Travel Centers	Initial Term End (1)	Annual Minimum Rent		Deferred Rent (2) (3)
TA No. 1 Lease	36	December 31, 2032	$	49,707	$	15,148
TA No. 2 Lease	36	December 31, 2031	44,077		14,068
TA No. 3 Lease	35	December 31, 2029	42,409		13,870
TA No. 4 Lease	37	December 31, 2033	48,241		14,161
TA No. 5 Lease	35	June 30, 2035	61,654		—
	179		$	246,088	$	57,247

(1) TA has two renewal options of 15 years each under each of our TA leases.

(2) Commencing April 1, 2019, TA is required to pay us $70,458 in 16 quarterly installments of $4,404 each for deferred rent TA owes us.

(3) Represents the balance as of December 31, 2019.

Our TA leases are “triple net” leases that require TA to pay all costs incurred in the operation of the leased travel centers, including personnel, utility, inventory, customer service and insurance expenses, real estate and personal property taxes, environmental related expenses, underground storage tank removal costs and ground lease payments at those travel centers at which we lease the property and sublease it to TA. Our TA leases generally require TA to indemnify us for certain environmental matters and for liabilities that arise during the terms of the leases from ownership or operation of the leased travel centers. In addition, TA is obligated to pay us at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks on the leased properties. Our TA leases do not require FF&E escrow deposits. However, TA is required to maintain the leased travel centers, including structural and non-structural components. Under our TA leases, TA generally cannot own, franchise, finance, operate, lease or manage any travel center or similar property that is not owned by us within 75 miles in either direction along the primary interstate on which a travel center owned by us is located without our consent.

We recognized rental income from TA of $262,038, $302,309 and $293,273 for the years ended December 31, 2019, 2018 and 2017 respectively. We reduced rental income by $11,894 for the year ended December 31, 2019 and increased rental income of $12,127 and $11,966 for the years ended December 31, 2018 and 2017, respectively, to record the deferred rent obligations under our TA leases and the estimated future payments to us by TA for the cost of removing underground storage tanks on a straight line basis. As of December 31, 2019 and 2018, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $68,653 and $91,212, respectively. These amounts are included in due from related persons in our consolidated balance sheets. For the years ended December 31, 2018 and 2017, we recognized the deferred rent obligations under our TA leases as rental income on a straight line basis over the then in-place lease terms. Beginning in January 2019, our recognition of the amended deferred rent obligations are recorded on a straight line basis over the new lease terms of our TA leases.

In addition to the payment of annual minimum rent, our TA Nos. 1, 2, 3 and 4 leases provide for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2015 non-fuel revenues, and, beginning with the year ending December 31, 2020, an additional half percent (0.5%) of non-fuel revenues above 2019 non-fuel revenues) and our TA No. 5 lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2012 non-fuel revenues, and, beginning with the year ending December 31, 2020, an additional 0.5% of non-fuel revenues above 2019 non-fuel revenues). The total amount of percentage rent from TA that we recognized was $4,075, $3,548 and $2,106 during the years ended December 31, 2019, 2018 and 2017, respectively.

Under our TA leases, TA may request that we fund capital improvements in return for increases in TA’s annual minimum rent according to the following formula: the annual minimum rent is increased by an amount equal to the amount funded by us multiplied by the greater of (1) 8.5% or (2) a benchmark U.S. Treasury interest rate plus 3.5%. TA is not obligated to request and we are not obligated to fund any such improvements. We funded $56,346 and $84,632 during the years ended December 31, 2018 and 2017, respectively, for capital improvements to our travel center properties and, as a result, TA’s annual minimum rent payable to us increased by $4,789 and $7,194, respectively. We did not fund any improvements under these leases during 2019.

See Notes 4 and 9 for further information regarding our relationship with TA.

Other net lease agreements

We recognized rental income from the net lease properties we acquired under the SMTA Transaction of $46,861 during the year ended December 31, 2019, which includes $2,160 of adjustments to record scheduled rent changes under certain of our leases on a straight line basis.

Additional lease information (as lessor). As of December 31, 2019, our leases with parties other than our TRSs provide for contractual minimum rents to be paid to us during the remaining current terms as follows:

2019	$	406,518
2020	402,000
2021	390,585
2022	372,440
2023	364,541
Thereafter	2,718,281
Total	$	4,654,365

Additional lease information (as lessee). As of December 31, 2019, 14 of our hotels were subject to ground leases where we are the lessee. In addition, our hotel operators enter various leases on our behalf in the normal course of business at our hotels, or our hotel operating leases. We calculated right of use assets and lease liabilities as the present value of the remaining lease payment obligations for our operating leases, which include the ground leases and hotel operating leases, over the remaining lease term using our estimated incremental borrowing rate. The right of use assets and related lease liabilities are included within other assets, net and accounts payable and other liabilities, respectively, in our consolidated balance sheets.

At December 31, 2019, our right of use assets and related lease liabilities totaled $75,040 and $75,040, respectively, which represented our future obligations under our operating leases and are included in other assets and other liabilities, respectively, in our consolidated balance sheets. Our operating leases require minimum fixed rent payments, percentage rent payments based on a percentage of hotel revenues in excess of certain thresholds, or rent payments equal to the greater of a minimum fixed rent or percentage rent. Rental expense related to our operating leases of $13,892 for year ended December 31, 2019, is included in hotel operating expenses within our consolidated statements of comprehensive income. As of December 31, 2019, our operating leases provide for contractual minimum rent payments to third parties during the remaining lease terms, as follows:

2020	$	7,052
2021	6,424
2022	5,877
2023	5,761
2024	5,762
Thereafter	150,826
Total lease payments	181,702
Less: imputed interest	(106,662		)
Present value of lease liabilities (1)	$	75,040

(1) The weighted average discount rate used to calculate the lease liability and the weighted average remaining term for our ground leases (assuming all extension options) and our hotel operating leases are approximately 5.50% and 31 years (range of 12 years to 68 years) and 5.53% and 31 years (range of 1 month to 54 years), respectively.

As of December 31, 2019, 17 of our net lease properties are on land we leased partially or entirely from unrelated third parties. We are not required to record right of use assets and lease liabilities for these properties as we are not the primary obligor under the leases. The average remaining term of these 17 ground leases was 12 years (range of two to 31 years) with rents averaging $508 per year.

Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant did not perform obligations under a ground lease or did not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property.

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Summary of Significant Accounting Policies - Debt Issuance Costs (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Debt issuance costs for revolving credit facility	$ 4,212	$ 6,822
Accumulated amortization of debt issuance costs for revolving credit facility	2,610	1,005
Debt issuance costs, net	31,065	$ 22,243
Future amortization of debt issuance costs, 2020	7,727
Future amortization of debt issuance costs, 2021	7,173
Future amortization of debt issuance costs, 2022	6,335
Future amortization of debt issuance costs, 2023	4,529
Future amortization of debt issuance costs, 2024	3,369
Future amortization of debt issuance costs, thereafter	6,144
Future amortization of debt issuance costs, total	$ 35,277

XML

Concentration (Tables)

12 Months Ended

Dec. 31, 2019

Risks and Uncertainties [Abstract]

Schedule of minimum return payments and minimum rents, for each management or lease agreement

The percentage of our annual minimum returns and rents, for each management or lease agreement is shown below, as of December 31, 2019.

Agreement Reference Name	Number of Properties	Annual Minimum Returns/Rents		% of Total		Investment(1)		% of Total
IHG (2)	103	$	216,239	21.6	%	$	2,377,821	19.4	%
Marriott (No. 1)	53	71,872		7.2	%	723,663		5.9	%
Marriott (No. 234)	68	110,384		11.1	%	1,046,094		8.5	%
Marriott (No. 5)	1	10,518		1.1	%	90,079		0.7	%
Subtotal Marriott	122	192,774		19.3	%	1,859,836		15.1	%
Sonesta	53	146,800		14.7	%	1,963,497		16.0	%
Hyatt	22	22,037		2.2	%	301,942		2.5	%
Radisson	9	20,442		2.0	%	289,139		2.4	%
Wyndham (3)	20	18,866		1.9	%	217,764		1.8	%
Subtotal Hotels	329	617,158		61.7	%	7,009,999		57.2	%
TravelCenters of America Inc. (4)	179	246,088		24.6	%	3,302,815		26.9	%
Other Net Leases (5)	637	135,591		13.7	%	1,973,324		15.9	%
Subtotal Net Lease	816	381,679		38.3	%	5,276,139		42.8	%
Total	1,145	$	998,837	100.0	%	$	12,286,138	100.0	%

(1) Hotel investments represent historical cost of our properties plus capital improvements funded by us less impairment writedowns, if any, and excludes capital improvements made from FF&E reserves funded from hotel operations which do not result in increases to minimum returns or rents. Net lease investments represents historical cost of our properties plus capital improvements funded by us less impairment write-downs, if any.

(2) The annual minimum return/minimum rent amount presented includes $7,908 of rent related to our lease with IHG for one hotel in Puerto Rico.

(3) The annual minimum return/minimum rent amount presented includes $1,537 of rent related to our lease with Destinations for 48 vacation units in one hotel.

(4) The annual minimum rent amount for our TA No. 4 lease includes approximately $2,175 of ground rent paid by TA for a property we lease and sublease to TA.

(5)

Represents 193 individual tenants. No other tenant represents more than 1% of our annual minimum returns or rents.

XML

Organization (Details)	Dec. 31, 2019 tenant travel_center retail_property hotel	Sep. 20, 2019 tenant
Real Estate Properties [Line Items]
Number of properties | retail_property	816
Number of tenants | tenant	194	279
Hotel operating revenues
Real Estate Properties [Line Items]
Number of properties | hotel	329
Travel centers
Real Estate Properties [Line Items]
Number of properties | travel_center	179

XML

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Schedule of intangible assets and liabilities

At December 31, 2019 and 2018, our intangible assets and liabilities were as follows:

	As of December 31,
	2019		2018
Assets:
Tradenames and trademarks	$	89,375	$	89,375
Above market operating leases, net of accumulated amortization of $15,748	275,814		—
Below market ground leases, net of accumulated amortization of $21,125 and $21,985, respectively	10,034		12,698
Other, net of accumulated amortization of $1,803 and $1,451, respectively	3,323		3,676
	$	378,546	$	105,749
Liabilities:
Below market operating leases, net of accumulated amortization of $367	$	3,653	$	—
Above market ground leases, net of accumulated amortization of $5,886 and $5,441, respectively	856		1,301
	$	4,509	$	1,301

Schedule of projected future amortization expense relating to intangible assets and liabilities

As of December 31, 2019, we estimate future amortization relating to intangible assets and liabilities as follows:

	Above Market Operating Leases		Below Market Ground Leases & Other		Below Market Operating Leases			Above Market Ground Leases & Other
2020	$	51,392	$	1,398	$	(1,262	)	$	(441	)
2021	40,945		1,375		(1,163		)	(369		)
2022	30,436		1,366		(306		)	(21		)
2023	27,138		1,355		(192		)	(18		)
2024	24,404		1,137		(185		)	(7		)
Thereafter	101,499		6,726		(545		)	—
	$	275,814	$	13,357	$	(3,653	)	$	(856	)

Schedule of future amortization of debt issuance costs to be recognized

Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, term loan and senior notes as of December 31, 2019, are as follows:

	Future Amortization of Deferred Finance Fees
2020	$	7,727
2021	7,173
2022	6,335
2023	4,529
2024	3,369
Thereafter	6,144
	$	35,277

XML

Segment Information

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Segment Information

Note 13. Segment Information

We aggregate our hotels and net lease portfolio into two reportable segments, hotel investments and net lease investments (previously named travel centers), based on their similar operating and economic characteristics.

	For the Year Ended December 31, 2019
	Hotels		Net Lease		Corporate			Consolidated
Hotel operating revenues	$	1,989,173	$	—	$	—		$	1,989,173
Rental income	20,985		301,251		—			322,236
FF&E reserve income	4,739		—		—			4,739
Total revenues	2,014,897		301,251		—			2,316,148
Hotel operating expenses	1,410,927		—		—			1,410,927
Other operating expenses	—		8,357		—			8,357
Depreciation and amortization	268,088		160,360		—			428,448
General and administrative	—		—		54,639			54,639
Acquisition and other transaction related costs	—		—		1,795			1,795
Loss on asset impairment	28,371		10,925		—			39,296
Total expenses	1,707,386		179,642		56,434			1,943,462
Gain on sale of real estate	—		159,535		—			159,535
Dividend income	—		—		1,752			1,752
Unrealized losses on equity securities	—		—		(40,461		)	(40,461		)
Interest income	795		—		1,420			2,215
Interest expense	—		—		(225,126		)	(225,126		)
Loss on early extinguishment of debt	—		—		(8,451		)	(8,451		)
Income (loss) before income taxes and equity in earnings of an investee	308,306		281,144		(327,300		)	262,150
Income tax expense	—		—		(2,793		)	(2,793		)
Equity in earnings of an investee	—		—		393			393
Net income (loss)	$	308,306	$	281,144	$	(329,700	)	$	259,750

	As of December 31, 2019
	Hotels		Net Lease		Corporate		Consolidated
Total assets	$	4,866,549	$	4,042,831	$	124,587	$	9,033,967

	For the Year Ended December 31, 2018
	Hotels		Net Lease		Corporate			Consolidated
Hotel operating revenues	$	1,958,598	$	—	$	—		$	1,958,598
Rental income	28,644		302,162		—			330,806
FF&E reserve income	5,132		—		—			5,132
Total revenues	1,992,374		302,162		—			2,294,536
Hotel operating expenses	1,387,065		—		—			1,387,065
Other operating expenses	—		5,290		—			5,290
Depreciation and amortization	255,759		147,318		—			403,077
General and administrative	—		—		104,862			104,862
Acquisition and other transaction related costs	—		—		—			—
Loss on asset impairment	—		—		—			—
Total expenses	1,642,824		152,608		104,862			1,900,294
Dividend income	—		—		2,754			2,754
Unrealized losses on equity securities	—		—		(16,737		)	(16,737		)
Interest income	990		—		538			1,528
Interest expense	—		—		(195,213		)	(195,213		)
Loss on early extinguishment of debt	—		—		(160		)	(160		)
Income (loss) before income taxes and equity in earnings of an investee	350,540		149,554		(313,680		)	186,414
Income tax expense	—		—		(1,195		)	(1,195		)
Equity in earnings of an investee	—		—		515			515
Net income (loss)	$	350,540	$	149,554	$	(314,360	)	$	185,734

	As of December 31, 2018
	Hotels		Net Lease		Corporate		Consolidated
Total assets	$	4,586,709	$	2,398,118	$	192,252	$	7,177,079

	For the Year Ended December 31, 2017
	Hotels		Net Lease		Corporate			Consolidated
Hotel operating revenues	$	1,840,829	$	—	$	—		$	1,840,829
Rental income	33,162		293,274		—			326,436
FF&E reserve income	4,670		—		—			4,670
Total revenues	1,878,661		293,274		—			2,171,935
Hotel operating expenses	1,274,642		—		—			1,274,642
Other operating expenses	—		4,905		—			4,905
Depreciation and amortization	242,829		143,830		—			386,659
General and administrative	—		—		125,402			125,402
Total expenses	1,517,471		148,735		125,402			1,791,608
Gain on sale of real estate	—		—		9,348			9,348
Dividend income	—		—		2,504			2,504
Interest income	401		—		397			798
Interest expense	—		—		(181,579		)	(181,579		)
Loss on early extinguishment of debt	—		—		(146		)	(146		)
Income (loss) before income taxes and equity in earnings of an investee	361,591		144,539		(294,878		)	211,252
Income tax benefit	—		—		3,284			3,284
Equity in earnings of an investee	—		—		607			607
Net income (loss)	$	361,591	$	144,539	$	(290,987	)	$	215,143

	As of December 31, 2017
	Hotels		Net Lease		Corporate		Consolidated
Total assets	$	4,477,512	$	2,476,073	$	196,800	$	7,150,385

XML

Indebtedness (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Required principal payments during the next five years and thereafter

The required principal payments due during the next five years and thereafter under all our outstanding debt at December 31, 2019 are as follows:

2020	$	—
2021	400,000
2022	877,000
2023	900,000
2024	1,175,000
Thereafter	2,775,000
	$	6,127,000

XML

Management Agreements and Leases (Details)	12 Months Ended
	Dec. 31, 2019 tenant retail_property hotel property agreement	Sep. 20, 2019 tenant
Management Agreements and Leases [Line Items]
Number of properties | retail_property	816
Number of operating agreements | agreement	6
Number of tenants | tenant	194	279
Hotel operating revenues
Management Agreements and Leases [Line Items]
Number of properties	329
Number of operating agreements | agreement	8
Number of properties leased to taxable REIT subsidiaries	327
Number of properties leased to third parties	2
Hotel operating revenues | Minimum
Management Agreements and Leases [Line Items]
Number of real estate properties leased or managed | property	1
Hotel management agreements and leases, renewal period	15 years
Hotel operating revenues | Maximum
Management Agreements and Leases [Line Items]
Number of real estate properties leased or managed	103
Hotel management agreements and leases, renewal period	60 years

XML

Summary of Significant Accounting Policies - Revenue Recognition and Segment Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) segment	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Accounting Policies [Abstract]
Straight line rent adjustments	$ (10,719)	$ 12,509	$ 12,378
Straight line rent receivable	$ 1,897	3,073
Number of reportable segments | segment	2
Affiliated Entity
Related Party Transaction [Line Items]
Straight line rent receivables, due from related parties	$ 47,057	66,347
Deferred percentage rental income	$ 4,238	$ 3,695	$ 2,106

XML

Real Estate Properties - Allocation of Purchase Price (Details) $ in Thousands																		12 Months Ended
	Oct. 09, 2019 USD ($) room	Sep. 20, 2019 USD ($) retail_property state	Aug. 01, 2019 USD ($)	May 07, 2019 USD ($) room	Feb. 22, 2019 USD ($) room	Oct. 30, 2018 USD ($) suite	Jun. 15, 2018 USD ($) room suite	Sep. 28, 2017 USD ($)	Sep. 26, 2017 USD ($) hotel state suite	Sep. 08, 2017 USD ($)	Aug. 23, 2017 USD ($) room	Aug. 01, 2017 USD ($) room	Jun. 29, 2017 USD ($) room	Jun. 02, 2017 USD ($) room	May 03, 2017 USD ($)	Mar. 31, 2017 USD ($) room	Feb. 01, 2017 USD ($) room	Dec. 31, 2019 USD ($) state room	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jan. 31, 2019 state
Real Estate Properties [Line Items]
Purchase Price		$ 2,482,382																$ 2,711,985	$ 127,597	$ 606,397
Land																		444,260	10,888	104,548
Land Improvements																		1,204	1,006	15,339
Building and Improvements																		1,365,525	107,128	448,531
Furniture, Fixtures and Equipment																		8,593	8,575	35,296
Held For Sale																		604,989	0	0
Intangible Assets																		$ 287,414	$ 0	$ 2,683
Acquisition costs capitalized		$ 15,736
Number of properties acquired | retail_property		767
Number of states in which property is located | state		45																12
Hotel
Real Estate Properties [Line Items]
Number of rooms/suites | room																		51,349
Net Lease | Travel Centers of America LLC
Real Estate Properties [Line Items]
Number of states in which property is located | state																					15
Washington, DC | Hotel Palomar | Hotel
Real Estate Properties [Line Items]
Purchase Price					$ 143,742
Land					44,972
Land Improvements					151
Building and Improvements					93,412
Furniture, Fixtures and Equipment					5,207
Held For Sale					0
Intangible Assets					$ 0
Number of rooms/suites | room					335,000
Acquisition costs capitalized					$ 2,292
Milwaukee, WI | Crowne Plaza Hotels | Hotel
Real Estate Properties [Line Items]
Purchase Price				$ 30,235
Land				3,442
Land Improvements				1,053
Building and Improvements				25,132
Furniture, Fixtures and Equipment				608
Held For Sale				0
Intangible Assets				$ 0
Number of rooms/suites | room				198,000
Acquisition costs capitalized				$ 235
Southington, CT | Travel Centers of America LLC
Real Estate Properties [Line Items]
Purchase Price			$ 66
Land			66
Land Improvements			0
Building and Improvements			0
Furniture, Fixtures and Equipment			0
Held For Sale			0
Intangible Assets			0
Acquisition costs capitalized			$ 6
Various | Net Lease
Real Estate Properties [Line Items]
Purchase Price		$ 2,482,382
Land		388,057
Land Improvements		0
Building and Improvements		1,201,922
Furniture, Fixtures and Equipment		0
Held For Sale		604,989
Intangible Assets		$ 287,414
Various | Sonesta ES Suites | Hotel
Real Estate Properties [Line Items]
Purchase Price									$ 139,923
Land									30,720
Land Improvements									6,392
Building and Improvements									93,899
Furniture, Fixtures and Equipment									8,912
Held For Sale									0
Intangible Assets									$ 0
Number of rooms/suites | suite									1,653
Acquisition costs capitalized									$ 1,923
Number of properties acquired | hotel									14
Number of states in which property is located | state									12
Minneapolis, MN | Radisson Blu Hotel | Hotel
Real Estate Properties [Line Items]
Purchase Price							$ 75,576
Land							2,196
Land Improvements							0
Building and Improvements							68,388
Furniture, Fixtures and Equipment							4,992
Held For Sale							0
Intangible Assets							$ 0
Number of rooms/suites | room							360
Acquisition costs capitalized							$ 576
Baton Rouge, LA | Staybridge Suites | Hotel
Real Estate Properties [Line Items]
Purchase Price							16,022
Land							2,242
Land Improvements							173
Building and Improvements							12,842
Furniture, Fixtures and Equipment							765
Held For Sale							0
Intangible Assets							$ 0
Number of rooms/suites | suite							117
Acquisition costs capitalized							$ 272
Scottsdale, AZ | Hotel
Real Estate Properties [Line Items]
Purchase Price						$ 35,999
Land						6,450
Land Improvements						833
Building and Improvements						25,898
Furniture, Fixtures and Equipment						2,818
Held For Sale						0
Intangible Assets						$ 0
Number of rooms/suites | suite						164
Acquisition costs capitalized						$ 114
Chicago, IL | Hotel Palomar | Hotel
Real Estate Properties [Line Items]
Purchase Price	$ 55,560
Land	7,723
Land Improvements	0
Building and Improvements	45,059
Furniture, Fixtures and Equipment	2,778
Held For Sale	0
Intangible Assets	$ 0
Number of rooms/suites | room	261,000
Acquisition costs capitalized	$ 560
Chicago, IL | Hotel Allegro | Hotel
Real Estate Properties [Line Items]
Purchase Price																	$ 86,201
Land																	13,609
Land Improvements																	40
Building and Improvements																	58,929
Furniture, Fixtures and Equipment																	11,926
Held For Sale																	0
Intangible Assets																	$ 1,697
Number of rooms/suites | room																	483
Acquisition costs capitalized																	$ 707
Seattle, WA | Hotel Alexis | Hotel
Real Estate Properties [Line Items]
Purchase Price																$ 73,041
Land																24,562
Land Improvements																30
Building and Improvements																47,103
Furniture, Fixtures and Equipment																898
Held For Sale																0
Intangible Assets																$ 448
Number of rooms/suites | room																121
Acquisition costs capitalized																$ 1,416
Columbia, SC | Net Lease | Travel Centers of America LLC
Real Estate Properties [Line Items]
Purchase Price															$ 27,604
Land															4,040
Land Improvements															7,172
Building and Improvements															16,392
Furniture, Fixtures and Equipment															0
Held For Sale															0
Intangible Assets															$ 0
St. Louis, MO | Chase Park Plaza Hotel | Hotel | Sonesta
Real Estate Properties [Line Items]
Purchase Price														$ 88,080
Land														4,250
Land Improvements														161
Building and Improvements														79,737
Furniture, Fixtures and Equipment														3,394
Held For Sale														0
Intangible Assets														$ 538
Number of rooms/suites | room														389
Acquisition costs capitalized														$ 466
Atlanta, GA | Crowne Plaza Hotels
Real Estate Properties [Line Items]
Purchase Price										$ 940
Land										940
Land Improvements										0
Building and Improvements										0
Furniture, Fixtures and Equipment										0
Held For Sale										0
Intangible Assets										0
Acquisition costs capitalized										$ 40
Atlanta, GA | Crowne Plaza Ravinia | Hotel
Real Estate Properties [Line Items]
Purchase Price													$ 88,748
Land													16,612
Land Improvements													483
Building and Improvements													68,864
Furniture, Fixtures and Equipment													2,789
Held For Sale													0
Intangible Assets													$ 0
Number of rooms/suites | room													495
Acquisition costs capitalized													$ 144
Columbus, OH | Crowne Plaza & Lofts Hotel | Hotel
Real Estate Properties [Line Items]
Purchase Price												$ 49,188
Land												6,100
Land Improvements												49
Building and Improvements												40,678
Furniture, Fixtures and Equipment												2,361
Held For Sale												0
Intangible Assets												$ 0
Number of rooms/suites | room												419
Acquisition costs capitalized												$ 198
Charlotte, NC | Crowne Plaza Hotels | Hotel
Real Estate Properties [Line Items]
Purchase Price											$ 44,000
Land											2,684
Land Improvements											1,012
Building and Improvements											35,288
Furniture, Fixtures and Equipment											5,016
Held For Sale											0
Intangible Assets											$ 0
Number of rooms/suites | room											300
Acquisition costs capitalized											$ 143
Sayre, OK | Net Lease | Travel Centers of America LLC
Real Estate Properties [Line Items]
Purchase Price								$ 8,672
Land								1,031
Land Improvements								0
Building and Improvements								7,641
Furniture, Fixtures and Equipment								0
Held For Sale								0
Intangible Assets								0
Acquisition costs capitalized								$ 72

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Basis of Presentation. These consolidated financial statements include our accounts and the accounts of our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.

We have determined that each of our wholly owned taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification^™, or the Codification. We have concluded that we must consolidate each of our wholly owned TRSs because we are the entity with the power to direct the activities that most significantly impact such VIEs’ performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE and are, therefore, the primary beneficiary of each VIE. The assets of our TRSs were $31,920 and $31,917 as of December 31, 2019 and 2018, respectively, and consist primarily of amounts due from and working capital advances to certain of our hotel managers. The liabilities of our TRSs were $138,708 and $148,459 as of December 31, 2019 and 2018, respectively, and consist primarily of security deposits they hold and amounts payable to certain of our hotel managers. The assets of our TRSs are available to satisfy our TRSs’ obligations and we have guaranteed certain obligations of our TRSs.

Real Estate Properties. We record real estate properties at cost less impairments, if any. We record the cost of real estate acquired at the relative fair value of building, land, furniture, fixtures and equipment, and, if applicable, acquired in place leases, above or below market leases and customer relationships. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill. We depreciate real estate properties on a straight line basis over estimated useful lives of up to 40 years for buildings and improvements and up to 12 years for personal property and we amortize finite lived intangible assets over the shorter of their useful lives or the term of the associated lease. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determination of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives.

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of our real estate properties. These indicators may include weak or declining operating profitability, cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life or market or industry changes that could permanently reduce the value of our investments. If there is an indication that the carrying value of a property is not recoverable, we estimate the projected undiscounted cash flows of the asset to determine if an impairment loss should be recognized. We determine the amount of an impairment loss by comparing the historical carrying value of the property to its estimated fair value. We estimate fair value by evaluating recent financial performance and projecting discounted cash flows of properties using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our real estate properties. If we change estimated lives, we depreciate or amortize the carrying values of affected assets over the revised remaining lives.

Intangible Assets and Liabilities. Intangible assets consist primarily of trademarks and tradenames, acquired above market operating leases where we are the lessor and below market ground leases for which we are the tenant or lessee. Intangible liabilities consist of acquired below market operating leases where we are the lessor and acquired above market ground leases for which we are the tenant or lessee. We include intangible assets in acquired real estate leases and other intangibles and intangible liabilities in accounts payable and other liabilities in our consolidated balance sheets.

At December 31, 2019 and 2018, our intangible assets and liabilities were as follows:

	As of December 31,
	2019		2018
Assets:
Tradenames and trademarks	$	89,375	$	89,375
Above market operating leases, net of accumulated amortization of $15,748	275,814		—
Below market ground leases, net of accumulated amortization of $21,125 and $21,985, respectively	10,034		12,698
Other, net of accumulated amortization of $1,803 and $1,451, respectively	3,323		3,676
	$	378,546	$	105,749
Liabilities:
Below market operating leases, net of accumulated amortization of $367	$	3,653	$	—
Above market ground leases, net of accumulated amortization of $5,886 and $5,441, respectively	856		1,301
	$	4,509	$	1,301

We amortize above and below market leases on a straight line basis over the term of the associated lease (three and six years on a weighted average basis for intangible liabilities and assets, respectively). For the years ended December 31, 2019, 2018 and 2017 amortization relating to intangible assets was $1,757, $2,542 and $2,814, respectively, and amortization relating to intangible liabilities was $441 for the year ended December 31, 2019 and $455 for each of the years ended December 31, 2018 and 2017. As of December 31, 2019, the weighted average amortization period for capitalized above market leases and below market lease values were 10.2 years and 5.0 years, respectively. As of December 31, 2019, we estimate future amortization relating to intangible assets and liabilities as follows:

	Above Market Operating Leases		Below Market Ground Leases & Other		Below Market Operating Leases			Above Market Ground Leases & Other
2020	$	51,392	$	1,398	$	(1,262	)	$	(441	)
2021	40,945		1,375		(1,163		)	(369		)
2022	30,436		1,366		(306		)	(21		)
2023	27,138		1,355		(192		)	(18		)
2024	24,404		1,137		(185		)	(7		)
Thereafter	101,499		6,726		(545		)	—
	$	275,814	$	13,357	$	(3,653	)	$	(856	)

We do not amortize our indefinite lived trademarks and tradenames, but we review the assets at least annually for impairment and reassess their classification as indefinite lived assets. In addition, we regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in value. We determine the amount of an impairment loss, if any, by comparing the carrying value of the intangible asset to its estimated fair value.

Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents.

Restricted Cash. Restricted cash, or FF&E reserve escrows, consists of amounts escrowed pursuant to the terms of our management agreements and leases to fund periodic renovations and improvements at our hotels.

Debt Issuance Costs. Debt issuance costs consist of capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective debt. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets, net in our consolidated balance sheets. As of December 31, 2019 and 2018, debt issuance costs for our revolving credit facility were $4,212 and $6,822, respectively, and accumulated amortization of debt issuance costs for our revolving credit facility were $2,610 and $1,005, respectively. Debt issuance costs, net of accumulated amortization, for our term loan and senior notes are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2019 and 2018, debt issuance costs, net of accumulated amortization, for our term loan and senior notes were $31,065 and $22,243, respectively. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, term loan and senior notes as of December 31, 2019, are as follows:

	Future Amortization of Deferred Finance Fees
2020	$	7,727
2021	7,173
2022	6,335
2023	4,529
2024	3,369
Thereafter	6,144
	$	35,277

Equity Method Investments. We account for our investment in Affiliates Insurance Company, or AIC, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us and AIC. One of our Managing Trustees, Adam D. Portnoy, is the sole trustee of ABP Trust, which is the controlling shareholder of The RMR Group Inc., or RMR Inc. Mr. Portnoy is also a managing director and president and chief executive officer of RMR Inc. and an officer and employee of The RMR Group LLC, or RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, is also an officer and employee of RMR LLC. RMR LLC also provides management and administrative services to AIC, and each of our Trustees (other than Mr. Murray) is a director of AIC. In 2019, AIC began the process of dissolving, pursuant to which we received a distribution of $9,000 on December 27, 2019. See Note 9 for a further discussion of our relationships and transactions with RMR Inc. and RMR LLC and our investment in AIC.

Equity Securities. We record our equity securities at fair value based on their quoted market price at the end of each reporting period. Changes in the fair value of our equity securities are recorded through earnings in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to January 1, 2018, unrealized gains and losses on equity securities were recorded as a component of cumulative comprehensive income (loss) in shareholders’ equity. As of December 31, 2019, we owned 684,000 common shares of TA. On July 1, 2019, we sold all the shares of class A common stock of RMR Inc. that we previously owned. See Notes 9 and 14 for further information on these investments.

Revenue Recognition. We report hotel operating revenues for managed hotels in our consolidated statements of comprehensive income. We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when goods and services are provided.

We report rental income for leased properties in our consolidated statements of comprehensive income. We recognize rental income from operating leases on a straight line basis over the term of the lease agreements. We reduced rental income during the year ended December 31, 2019 by $10,719 and increased rental income by $12,509, and $12,378 during the years ended December 31, 2018 and 2017, respectively, to record scheduled rent changes under certain of our leases, the deferred rent obligations payable to us under our leases with TA and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks at our travel centers on a straight line basis. See Notes 4, 5 and 9 for further information regarding our TA leases. Due from related persons includes $47,057 and $66,347 and other assets, net, includes $1,897 and $3,073 of straight line rent receivables at December 31, 2019 and 2018, respectively.

Certain of our lease agreements require additional percentage rent if gross revenues of our properties exceed certain thresholds defined in our lease agreements. We may determine percentage rent due to us under our leases monthly, quarterly or annually, depending on the specific lease terms, and recognize it when all contingencies are met and the rent is earned. We earned percentage rental income of $4,238, $3,695 and $2,106 in 2019, 2018 and 2017, respectively.

We own all the FF&E reserve escrows for our hotels. We report deposits by our third party tenants into the escrow accounts as FF&E reserve income. We do not report the amounts which are escrowed as reserves established for the regular refurbishment of our hotels, or FF&E reserves, for our managed hotels as FF&E reserve income.

Per Common Share Amounts. We calculate basic earnings per common share by dividing allocable net income available for common shareholders by the weighted average number of common shares outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares and the related impact on earnings are considered when calculating diluted earnings per share.

Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of real estate and impairment of long lived assets.

Segment Information. As of December 31, 2019, we had two reportable segments: hotel investments and net lease investments.

Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, as such, are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements. We are subject to income tax in Canada, Puerto Rico and certain states despite our qualification for taxation as a REIT. Further, we lease our managed hotels to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated tax return and are subject to federal, state and foreign income taxes. Our consolidated income tax provision (or benefit) includes the income tax provision (or benefit) related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our qualification for taxation as a REIT.

The Income Taxes Topic of the Codification prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Tax benefits are recognized to the extent that it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized upon settlement. Our tax returns filed for the 2016 through 2019 tax years are subject to examination by taxing authorities. We classify interest and penalties related to uncertain tax positions, if any, in our consolidated statements of comprehensive income as a component of general and administrative expense.

New Accounting Pronouncements. In February 2016, the FASB issued ASU No. 2016-02, Leases. Additional guidance and targeted improvements to ASU No. 2016-02 were made through the issuance of supplemental ASUs in July 2018, December 2018 and March 2019, or collectively with ASU No. 2016-02, the Lease Standard. We adopted the Lease Standard on January 1, 2019. The Lease Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The Lease Standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. Upon adoption, we applied the package of practical expedients that allowed us not to reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases, (iii) initial direct costs for any expired or existing leases and (iv) the option to initially apply the Lease Standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption, although we did not have such an adjustment. Additionally, our leases met the criteria not to separate non-lease components from the related lease component.

As a lessor. We are required to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. Adoption of the Lease Standard did not have a material impact in our consolidated financial statements for our leases where we are the lessor.

As a lessee. We are required to record right of use assets and lease liabilities in our consolidated balance sheets for leases with terms greater than 12 months, where we are the lessee. We recorded right of use assets and related lease liabilities of $77,010 upon implementation of the Lease Standard. Adoption of the Lease Standard did not have a material effect in our consolidated statements of comprehensive income or consolidated statements of cash flows for our leases where we are the lessee.

See Note 5 for further information regarding our leases and the adoption of the Lease Standard.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Lease related receivables are governed by the Lease Standard referred to above and are not subject to ASU No. 2016-13. We have adopted ASU No. 2016-13 using the modified retrospective approach and this standard did not have a material impact in our consolidated financial statements.

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Interest expense, amortization of debt issuance costs and debt discounts and premiums	$ 11,117	$ 10,177	$ 8,871

XML

Shareholders' Equity (Details) - USD ($) $ in Thousands		12 Months Ended
	Apr. 12, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Officers and employees of RMR
Common Share Issuances
Common shares granted under equity compensation plan (in shares)		140,100	97,000	85,000
Stock granted value		$ 3,507	$ 2,810	$ 2,387
Trustees | Common Shares
Common Share Issuances
Common shares granted under equity compensation plan (in shares)	3,000	3,000	3,000	3,000
Stock granted value	$ 75	$ 370	$ 427	$ 452
Stock granted value per trustee		$ 74	$ 85	$ 90

XML

Management Agreements and Leases Management Agreements and Leases - Schedule of Minimum Rents to be Received (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Leases [Abstract]
2019	$ 406,518
2020	402,000
2021	390,585
2022	372,440
2023	364,541
Thereafter	2,718,281
Total	$ 4,654,365

XML

Cover Page - USD ($)
$ in Billions

12 Months Ended

Dec. 31, 2019

Feb. 27, 2020

Jun. 28, 2019

Cover page.

Document Type

10-K

Document Annual Report

true

Document Period End Date

Dec. 31, 2019

Document Transition Report

false

Entity File Number

1-11527

Entity Registrant Name

SERVICE PROPERTIES TRUST

Entity Incorporation, State or Country Code

MD

Entity Tax Identification Number

04-3262075

Entity Address, Address Line One

Two Newton Place

Entity Address, Address Line Two

255 Washington Street

Entity Address, Address Line Three

Suite 300

Entity Address, City or Town

Newton

Entity Address, State or Province

MA

Entity Address, Postal Zip Code

02458-1634

City Area Code

617

Local Phone Number

964-8389

Title of 12(b) Security

Common Shares of Beneficial Interest

Trading Symbol

SVC

Security Exchange Name

NASDAQ

Entity Well-known Seasoned Issuer

Yes

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Filer Category

Large Accelerated Filer

Entity Emerging Growth Company

false

Entity Small Business

false

Entity Shell Company

false

Entity Public Float

$ 4.1

Entity Common Stock, Shares Outstanding

164,561,654

Documents Incorporated by Reference

Certain information required by Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated by reference to our definitive Proxy Statement for the 2020 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days after the fiscal year ended December 31, 2019.

Entity Central Index Key

0000945394

Amendment Flag

false

Current Fiscal Year End Date

--12-31

Document Fiscal Year Focus

2019

Document Fiscal Period Focus

FY