Sonesta agreement. As of December 31, 2021, Sonesta operated 261 of the 303 hotels we then owned, which comprised approximately 50.9% of our total historical real estate investments, including 42 of our full-service hotels, 156 extended stay hotels, and 63 select service hotels pursuant to management agreements for each of the hotels. We are also party to pooling agreements that combine certain of our management agreements with Sonesta for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and owner's priority returns due to us. See Notes 4 and 9 for further information regarding our relationship, agreements and transactions with Sonesta.

•We and Sonesta agreed to sell, rebrand or repurpose our 39 extended stay hotels then managed by Sonesta. We subsequently decided to suspend pursuing the sale of these 39 hotels based on market conditions; however, as noted below, we and Sonesta decided to sell 68 of our hotels managed by Sonesta, which includes many of these 39 hotels we had previously targeted for sale, rebranding or repurposing; we subsequently sold one of the 68 hotels in December 2021; see Note 4 for further information regarding that sale;

Between September 18, 2020 and December 15, 2020, we transferred the branding and management of 115 hotels previously managed by IHG, Marriott and Wyndham to Sonesta. In February and March 2021, we transitioned the branding and management of 88 hotels to Sonesta from Marriott. We entered into management agreements with Sonesta with respect to these hotels on terms substantially consistent with our legacy management agreements, except that the management agreements for these transitioned hotels were scheduled to expire on December 31, 2021 and automatically renew for successive one year terms unless terminated earlier. We refer to these management agreements as the conversion hotel management and pooling agreements and together with the legacy management agreements and legacy pooling agreements, as applicable, the Sonesta agreements. In June 2021, we transitioned the branding and management of five hotels to Sonesta from Hyatt and on

Our Sonesta agreements provided that we be paid a fixed annual owner’s priority return equal to 8% of our invested capital, as defined therein, 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 agreements further provide that we are paid an additional return equal to 80% of the remaining operating profits, as defined therein, after reimbursement of owner or manager advances, FF&E reserve escrows and Sonesta’s incentive fee, if applicable. We realized returns from our Sonesta hotels of $53,853 during the year ended December 31, 2021. Our Sonesta hotels generated net operating losses of $65,277 during the year ended December 31, 2020. We realized returns from our Sonesta hotels of $67,592 during the year ended December 31, 2019. 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, if any, after payment of operating expenses, including management and related fees.

Our Sonesta agreements provide 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 hotels and 5.0% of gross revenues for our extended stay and select service hotels. Additionally, Sonesta is entitled to a reservation fee equal to 1.5% of gross room revenues, as defined in our Sonesta agreements, 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 managed by Sonesta and an incentive management fee equal to 20.0% of operating profits remaining after reimbursement to us and to Sonesta of certain advances, payment of our owner's priority returns and funding of FF&E reserve escrows. Sonesta’s incentive management fee, but not its other fees, is earned only after our owner's priority returns are paid. Our Sonesta agreements also provide 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 agreements, we incurred management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing program and third-party reservation transmission fees of $84,926, $17,734 and $36,169 for the years ended December 31, 2021, 2020 and 2019, respectively. These fees and costs are included in hotel operating expenses in our consolidated statements of comprehensive income (loss). In addition, we recognized procurement and construction supervision fees of $2,196, $1,571 and $3,320 for the years ended December 31, 2021, 2020 and 2019, respectively, under our Sonesta agreements. These amounts have been capitalized in our consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets.

Our Sonesta agreements require us to fund capital expenditures that we approve at our Sonesta hotels. Commencing February 27, 2020, each of our 14 full-service hotels operated under the legacy management agreements and all the hotels operated under the conversion hotel management agreements managed by Sonesta require that 5% of the hotel gross revenues be escrowed for future capital expenditures as FF&E reserves, subject to available cash flows after payment of the annual owner's priority returns due to us. Our legacy management agreements do not require FF&E escrow deposits for 39 extended stay hotels. No FF&E escrow deposits were required during the years ended December 31, 2021, 2020 and 2019 under our Sonesta agreements. We incurred capital expenditures for certain hotels included in our Sonesta agreements of $93,472, $62,963 and $114,081 during the years ended December 31, 2021, 2020 and 2019, respectively. We owed Sonesta $17,248, $26,096 and $15,537 for 2021 capital expenditure and reimbursements or for a previous overpayment of estimated owner's priority returns advanced at December 31, 2021, 2020 and 2019, respectively. Sonesta owed us $4,592 for 2021 owner’s priority returns as of December 31, 2021. 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.

We are required to maintain working capital for each of our hotels managed by Sonesta and have advanced a fixed amount based on the number of rooms in each hotel to meet the cash needs for hotel operations. We had advanced $56,697 and $41,514 of initial working capital to Sonesta as of December 31, 2021 and 2020, respectively. These amounts are included in other assets in our consolidated balance sheets. Any remaining working capital would be returned to us upon termination in accordance with the terms of our Sonesta agreement.

In general, we and Sonesta may terminate a management agreement for a retained hotel for events of default, casualty and condemnation events, although Sonesta may not terminate for certain events of default. We also have the right to terminate a management agreement for a retained hotel if minimum performance thresholds are not met starting in 2023 for any three of four applicable consecutive years. We and Sonesta can terminate a management agreement due to an event of default of the other party, although Sonesta may not terminate for certain events of default. Pursuant to the management agreement, we or Sonesta may be obligated to pay the other party damages if the terminating party terminates a management agreement due to the other party’s event of default.

For the sale hotels, the term was extended to the earlier of December 31, 2022 (or until the applicable hotel has been sold) and the FF&E reserve funding requirement was removed. We can terminate a management agreement due to a Sonesta event of default. Pursuant to the management agreement, Sonesta may be obligated to pay us damages if we terminate a management agreement for a sale hotel due to Sonesta’s event of default. Our owner’s priority return will be reduced by the current owner’s priority return for a sale hotel once sold. The total owner’s priority for all the sale hotels is $84,653. The sale hotels are subject to a pooling agreement that combines the management agreements for the sale hotels for purposes of calculating gross revenues, hotel operating expenses, fees and distributions and the owner’s priority return due to us.

We account for our 34.0% non-controlling interest in Sonesta under the equity method of accounting. Our investment in Sonesta had a carrying value of $62,687 and $36,646 as of December 31, 2021 and 2020, respectively. This amount is included in other assets in our consolidated balance sheets. The cost basis of our investment in Sonesta exceeded our proportionate share of Sonesta’s total shareholders’ equity book value on the date of acquisition, February 27, 2020, by an aggregate of $8,000. As required under GAAP, we are amortizing this difference to equity in earnings of an investee over 31 years, the weighted average remaining useful life of the real estate assets and intangible assets and liabilities owned by Sonesta as of the date of our acquisition. We recorded amortization of the basis difference of $260 and $217 in the years ended December 31, 2021 and 2020, respectively. In March 2021, we funded a $25,443 capital contribution to Sonesta related to its acquisition of Red Lion Hotels Corporation to maintain our pro rata ownership. We recognized losses of $941 and $9,910 related to our investment in Sonesta for the years ended December 31, 2021 and 2020, respectively. These amounts are included in equity in earnings (losses) of an investee in our consolidated statements of comprehensive income.

We recorded a liability of $42,000 for the fair value of our initial investment in Sonesta, as no cash consideration was exchanged related to the modification of our management agreement with, and investment in, Sonesta. This liability for our investment in Sonesta is included in accounts payable and other liabilities in our consolidated balance sheet and is being amortized on a straight-line basis through January 31, 2037, as a reduction to hotel operating expenses in our consolidated statements of comprehensive income (loss). We reduced hotel operating expenses by $2,484 and $2,070 for the year ended December 31, 2021 and 2020, respectively, for amortization of this liability. As of December 31, 2021 and 2020, the unamortized balance of this liability was $37,447 and $39,930, respectively.

Hyatt agreement. On June 7, 2021, we and Hyatt amended our Hyatt agreement. Under our Hyatt agreement, as amended, Hyatt will continue to manage 17 of the hotels we own for a 10 year term effective April 1, 2021. Our amended Hyatt agreement sets our annual owner's priority return at $12,000 and Hyatt provided us with a new $30,000 limited guarantee for 75% of the aggregate annual owner's priority returns due to us beginning in 2023. Under our amended Hyatt agreement, a management fee of 5% of gross room revenues payable to Hyatt will be an operating cost paid senior to our owner's priority return. Hyatt may also earn a 20% incentive management fee after payment of our annual owner's priority returns and reimbursement of certain advances, if any. We also agreed to fund approximately $50,000 of renovations that are expected to be completed by the end of 2022. As described above, we transitioned the branding and management of the remaining five hotels that Hyatt previously managed to Sonesta in June 2021.

We realized returns of $9,388 during the year ended December 31, 2021 and $22,037 for each of the years ended December 31, 2020 and 2019, respectively, under this agreement. Hyatt had previously provided us with a guaranty, which was limited to $50,000 under the previous agreement. During the year ended December 31, 2020, the hotels under this agreement generated cash flows that were less than the minimum rents due to us for the period and we exhausted the remaining $19,120 limited guaranty available to us to cover the shortfall. Any returns we receive from Hyatt are currently limited to the hotels’ available cash flows, if any, after payment of operating expenses. During the year ended December 31, 2021, we expensed $3,700 of working capital we previously funded under our Hyatt agreement because the amount is no longer expected to be recoverable. This amount is included in transaction related costs in our consolidated statement of income (loss).

Radisson agreement. On November 1, 2021, we amended our Radisson agreement. Under our Radisson agreement, as amended, Radisson will continue to manage eight of the hotels we own for a 10 year term effective August 1, 2021. Our amended Radisson agreement sets our annual owner's priority returns at $10,200 and Radisson provided us with a new $22,000 limited guarantee for 75% of the aggregate annual owner's priority returns due to us beginning in 2023. Under our amended Radisson agreement, a management fee of 5% of gross room revenues for each hotel operated under the Country Inn & Suites brand and a management fee of 3% of gross room revenues for each hotel managed under the Radisson Hotel brand payable to Radisson will be an operating cost paid senior to our owner's priority returns. Radisson may also earn a 20% incentive management fee after payment of our annual owner's priority returns and reimbursement of certain advances, if any. We also agreed to fund approximately $12,000 of renovations that are expected to be completed by the end of 2022. As described above, we transitioned the management and branding of the ninth hotel that Radisson previously managed to Sonesta on November 1, 2021.

We realized returns of $11,364, $20,456 and $20,056 during the years ended December 31, 2021, 2020 and 2019, respectively, under this agreement. Radisson had previously provided us with a guaranty, which was limited to $47,523. During the year ended December 31, 2021, the hotels under our Radisson agreement generated cash flows that were less than the minimum returns due to us and Radisson made $13,238 of guaranty payments to cover part of the shortfall and the Radisson guaranty was exhausted.

Marriott agreement. As of January 1, 2021, Marriott managed 105 of our hotels under agreements we had terminated in 2020 for Marriott’s failure to pay the cumulative shortfall between the payments we had received and 80% of the cumulative priority returns due to us in accordance with the agreement. We transitioned the branding and management of 88 Marriott managed hotels to Sonesta in February and March 2021. We sold one hotel that Marriott managed in April 2021 (see Note 4 for further information regarding this sale). As of December 31, 2021, Marriott managed 16 of our hotels. We were previously in arbitration proceedings with Marriott regarding, among other things, the timing and characterization of certain payments made to us, and the validity of the timing of the termination of the Marriott agreements, including an exit hotel agreement which, if not terminated, would require us to sell the 16 hotels encumbered with a Marriott brand. We were also seeking repayment of certain working capital advances we made to Marriott during 2020. We entered an agreement with Marriott regarding the 16 hotels noted above, pursuant to which we agreed to have these hotels remain Marriott branded hotels until the arbitration was resolved. On January 18, 2022, the arbitration panel declined to award us the $19,920 we had sought relating to certain working capital advances we made to Marriott under the applicable management agreements, but awarded us approximately $1,084 in connection with a related claim and determined we would own the remaining 16 hotels unencumbered by Marriott contracts. As a result, during the year ended December 31, 2021, we expensed $18,035 of working capital we previously funded under our Marriott agreement because the amount is no longer expected to be recoverable. This amount is included in transaction related costs in our consolidated statement of income (loss). We expect to sell or transition the branding and management of the remaining 16 Marriott branded hotels to Sonesta in the second quarter of 2022.

We realized returns of $2,830 during the year ended December 31, 2021 under our Marriott agreement. Any returns we receive from Marriott are limited to the hotels’ available cash flows, if any, after payment of operating expenses. Marriott managed 122 of our hotels during years ended December 31, 2020 and 2019. We realized returns of $93,593 and $190,492 during the years ended December 31, 2020 and 2019, respectively, under our agreement with Marriott. Marriott had previously provided a limited guaranty and security deposit, which were both exhausted in 2020 to cover shortfalls between cash flows from our hotels and our minimum returns. We incurred capital expenditures for certain hotels included in our Marriott agreement of $7,394, $65,840 and $51,056 during the years ended December 31, 2021, 2020 and 2019, respectively.

Other. Our management agreement with IHG for one hotel expires on January 31, 2026. Our IHG hotel generated net operating cash flow of $337 during the year ended December 31, 2021. Any returns we receive from IHG are limited to the hotels’ available cash flows, if any, after payment of operating expenses. IHG managed or leased 103 of our hotels during most of 2020. We terminated our agreement with IHG for failure to pay minimum returns and rents due to us during 2020 upon exhausting the security deposit we held to cover shortfalls between cash flow from our hotels and our minimum returns. We transferred the branding and management of 102 of our 103 IHG hotels to Sonesta in December 2020. We realized returns and rents of $107,888 and $205,941 during the years ended December 31, 2020 and 2019, respectively, under our then agreement with IHG. During the year ended December 31, 2021, we expensed $16,711 of working capital we previously funded under our IHG agreement because the amount is no longer expected to be recoverable. This amount is included in transaction related costs in our consolidated statement of income (loss).

As a result of the COVID-19 pandemic, some of our tenants requested rent assistance. During the year ended December 31, 2021, we entered into a rent deferral agreement for $2,792 of rent with four net lease tenants. As of December 31, 2021, we had $7,554 of deferred rents outstanding related to seven tenants we granted rent relief to pursuant to such requests who represented approximately 2.0% of our annualized rental income of our net lease retail portfolio as of December 31, 2021. These deferred rents are included in other assets, net in our consolidated balance sheets. These tenants are obligated to pay, in most cases, the deferred rent over a 24 month period. We have elected to use the FASB relief package regarding the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic and account for lease concessions resulting from the COVID-19 pandemic outside of the existing lease modification guidance as the resulting cash flows from the modified lease are substantially the same as or less than the original lease. The deferred amounts did not impact our operating results for the year ended December 31, 2021.

We continually review receivables related to rent, straight-line rent and property operating expense reimbursements and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes an assessment of whether substantially all of the amounts due under a tenant’s lease are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received. We recognize all changes in the collectability assessment for an operating lease as an adjustment to rental income. We reduced reserves for uncollectible amounts by $9 during the year ended December 31, 2021 and recorded reserves for uncollectible amounts of $9,892 during the year ended December 31, 2020, We had reserves for uncollectible rents of $15,519 and $18,230 as of December 31, 2021 and 2020, respectively, included in other assets in our consolidated balance sheets.

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 $248,291, $250,573 and $262,038 for the years ended December 31, 2021, 2020 and 2019, respectively. Rental income for the years ended December 31, 2021, 2020 and 2019 includes $13,237, $13,156 and $11,894, respectively, of adjustments 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, 2021 and 2020, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $48,168 and $55,530, respectively. These amounts are included in due from related persons in our consolidated balance sheets. Beginning in January 2019, our recognition of the deferred rent obligations are recorded on a straight line basis over the new lease terms of our TA leases. 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 $17,616 in respect of such obligation for each of the years ended December 31, 2021 and 2020, respectively and $13,200 for the year ended December 31, 2019.

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, 2021, 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 $7,085, $2,764 and $4,075 during the years ended December 31, 2021, 2020 and 2019, 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 8.5% or 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 did not fund any improvements under these leases during the years ended December 31, 2021, 2020 or 2019.

Our net lease agreements generally provide for minimum rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight-line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. We recognized rental income from our other net lease properties (excluding TA) of $140,803, $137,111 and $46,861 for the years ended December 31, 2021, 2020 and 2019 respectively, which included $10,616, $14,345 and $2,160 respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight-line basis.

Additional lease information (as lessee). As of December 31, 2021, 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, 2021 and 2020, our right of use assets and related lease liabilities each totaled $177,346 and $84,924, 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 $12,182 for the year ended December 31, 2021 is included in hotel operating expenses within our consolidated statements of comprehensive income (loss). As of December 31, 2021, our operating leases provide for contractual minimum rent payments to third parties during the remaining lease terms, as follows: