SVC 10-K & 10-Q changes, risk factors and insider trading

•unfavorable market and commercial real estate industry conditions due to, among other things, uncertainties surrounding interest rates and inflation, changing tariffs and trade policies and related uncertainty, supply chain disruptions, volatility in the public equity and debt markets and in the commercial real estate markets, generally, pandemics, geopolitical instability and tensions, pandemics, any U.S. government shutdown, economic downturns or a possible recession, labor market conditions and other conditions beyond our control, have had and may continue to have a material adverse effect on our and our tenants’, hotel managers’ and other operators’ and tenants’ results of operations and financial conditions and they may be unable to satisfy their obligations to us;

•we and our managerstenants and tenantsmanagers face significant competition;

•we are subject to risks related to the security of RMR’s or our hotel managers’ information technology and RMR’s use of artificial intelligence, or AIintelligence;

Unfavorable market and industry conditions have had,had and may continue to have,have a material adverse effect on our results of operations, financial condition and ability to pay distributions to our shareholders.

Our business and operations have been and may continue to be adversely affected by market and economic volatility experienced by the U.S. and global economies, the commercial real estate industry and/or the local economies in the markets in which our properties are located. Unfavorable economic and industry conditions may be due to, among other things, uncertainties surrounding interest rates and inflation, changing tariffs and trade policies and related uncertainty, supply chain disruptions, volatility in the public equity and debt markets, pandemics, geopolitical instability and tensions, pandemics, any U.S. government shutdown, economic downturns or a possible recession, labor market conditions, catastrophic events such as natural disasters, adverse weather and climate conditions and other conditions beyond our control. As economic conditions in the United States may affect businessreal estate values, occupancy levels and leisurerents travel,and hotel occupancy,returns, trucking volume and demand for diesel fuel, gasoline, real estate values, occupancy levelsbusiness and returnsleisure and rents,travel, current and future economic conditions in the United States, including slower growth or a possible recession and capital market volatility or disruptions, could have a material adverse impact on our earnings and financial condition. Economic conditions may be affected by numerous factors, including, but not limited to, the pace of economic growth and/or recessionary concerns, inflation, increases in the levels of unemployment, energy prices, uncertainty about government fiscalfiscal, tax and taxtrade policy, geopolitical events, the regulatory environment, the availability of credit and interest rates. Current conditions may negatively impact our ability to pay distributions to our shareholders and these or other conditions may have similar impacts in the future and on our results of operations and financial condition.

As a result of market practices that arose or increased in recent years and the impacts they have had on travel and the broader economy throughout the United States, our hotelsproperties, particularly our hotels, experienced significant declines in operating performance which have had a significant negative effect on our operating results and cash flow. Consumer confidence, changing customer preferences, customer demand, corporate travel and lodging demand have been and will continue to be affected by economic and market conditions, unemployment levels, perceptions of the safety of travel, the continued use of video conferencing technologies rather than in person meetings and broader macroeconomic trends and conditions. These trends, together with increasing labor costs and shortages, uncertainties surrounding interest rates, tax rates, commodity and other price inflationinflation, changing tariffs and trade policies and related uncertainty, and supply chain challenges, may continue to negatively impact our operations, particularly our hotel operations, the operations of our tenants and our financial results and 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 leased space, which could adversely affect our ability to maintain our current tenants or attract new tenants. 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.

We are subject to numerous risks associated with our debt, including our ability to refinance maturing debt and the cost of any refinancing, the risk that our cash flows could be insufficient for us to make required payments and risks associated with highchanging interest rates. There are no limits in our organizational documents on the amount of debt we may incur, and, subject to any limitations in our debt agreements, we may incur additional debt. Our debt may increase our vulnerability to adverse market and economic conditions, limit our flexibility in planning for changes in our business and place us at a disadvantage in relation to competitors that have lower debt levels. Our existing and future debt could limit our ability to incur additional debt and increase our exposure to floating interest rates 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. High interest rates have significantly increased our cost of capital. Although we have an option to extend the maturity date of certain of our debt upon payment of a fee and meeting other conditions, the applicable conditions may not be met, and we may be required to repay or refinance our existing debt with new debt aton less favorable terms. Excessive or expensive debt could reduce the available cash flow to fund, or limit our ability to obtain financing for, working capital, lease obligations, capital expenditures, refinancing, acquisitions, development or redevelopment projects or other purposes and hinder our ability to pay distributions to our shareholders.

Our debt agreements includecontain 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. If any of the covenants in these debt agreements are breached and not cured within anythe applicable cure period, we could be required to repay the debt immediately, even in the absence of a payment default, or be prevented from refinancing maturing debt or issuing new debt. Complying with these covenants may limit our ability to take actions that may be beneficial to us and our security holders.

Our credit agreement and our senior notes indentures and their supplements require us to comply with certain financial and other covenants. These covenants may limit our ability to issue new debt or refinance existing debt, our operational flexibility and acquisition and disposition activity. Our ability to comply with those covenants will depend upon the net rental income and hotel operating returns we receive from our properties, or in the case of our credit agreement, the performance and value of properties securing our revolving credit facility. If our rents or returns decline, or the performance or values of our properties decline, we may be unable to borrow under our revolving credit facility. 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 or otherwise. If we default under our credit agreement, our lenders may demand immediate payment and could seek payment from the subsidiary guarantors under our credit agreement, seek to sell any pledged equity interests of certain subsidiaries or the mortgaged properties owned by such pledged subsidiaries, or 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 paying distributions to our shareholders. Any default under our credit agreement that results in acceleration of our obligations to repay outstanding debt 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.

We have a substantial amount of debt that is secured by properties that we own or by a pledge of the equity interests of certain of our subsidiaries. Secured debt, including mortgage and asset backed debt, increases our risk of asset and property losses because defaults on debt secured by our assets may result in foreclosure actions initiated by lenders and ultimately our loss of the property or other assets securing any loansdebts for which we are in default. Any foreclosure on a mortgaged property or group of properties could have a material adverse effect on the overall value of our portfolio of properties and more generally on us. For tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could materially and adversely affect us.

We face challenges from uncertainties regarding interest ratesrates, and high interest rates have significantly increased our interest expense and may otherwise materially and negatively affect us.

•one of the factors that investors typically consider important in deciding whether to buy or sell our common shares is the distribution rate on our common shares relative to prevailing interest rates, and our quarterly cash distribution rate on our common shares is currently $0.01 per common share in order to enhance our liquidity until our leverage profile otherwise improves. AtIf currentmarket interest rate levels,levels increase, 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 with higher distribution rates. Sales of our common shares may cause a decline in the market price of our common shares;

•property values are often determined, in part, based upon a capitalization of rental income formula. When interest rates are high, such as they are currently, real estate transaction volumes slow due to increased borrowing costs and property investors often demand higher capitalization rates, which causes property values to decline. High interest rates could therefore lower the value of our properties and cause the value of our securities to decline.

We have a high concentration of properties that are operatedleased by Sonesta orto TA.

As of December 31, 2024, Sonesta operated 181 of our 206 hotels, which constituted 50.0% of our historical real estate investments, and2025, we leased 175 travel centers to TA, which constituted approximately 28.7%33.0% of our total historical real estate investments. If either Sonesta or TA were to fail to successfully operate our properties or meet their obligations under our agreements, our income from these properties may be adversely affected. Further, if we were required to replace Sonesta or TA, 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.

For these reasons, among others, Sonesta may be unable to pay amounts due to us under the terms of our management agreements with Sonesta. For further information about our management agreements with Sonesta, see Notes 4, 5 and 9 to our consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K.

We may be unable to fund capital improvements at our properties and our investments may cost more andmore, take longer to complete than expected.expected or not result in improved financial performance.

SomeOur of ourhotel management agreements and certain of our lease arrangements require us to fund capital improvements at certain of our properties. Hotels in particular require us to expend significant amounts to maintain them and to meet brand standards. We may not have the funds necessary to make necessary or desired improvements to our properties 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 operator may terminate the applicable management or lease agreement and hold us liable for damages. Planned capital investments could cost more and take longer to complete than expected as a result of labor costs and shortages and commodity and other price inflation due to changing tariffs and trade policies and related uncertainty and supply chain challenges, among other things.

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 in the past 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. Some of our retail tenants compete with online retailers or service providers. We also compete for tenants at our retail net lease properties. Our retail net lease properties 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 retail net lease portfolio, we compete for tenants based on a number of factors, including location, rental rates and flexibility. Our hotels compete with other hotels operated in our markets, and the hotel industry has in the past experienced significant growth in supply from construction in certain markets where we own hotels. 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.

We also 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.investors. 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. BecauseDue ofto 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.

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. Our underwriting and credit analysis may not adequately assess the risk of a tenants’ financial health. In addition, the periodic financial information we receive from our tenants may be insufficient to identify the risk of tenant defaults.

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, 2024,2025, leases representing approximately 2.2% of our annualized minimum net lease rents will expire during 2025.2026. As of December 31, 2024,2025, 3.9%5.5% of the leasable square footage of our net lease properties was vacant. Current tenantstenants’ performance may decline, or they 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, or renew for less space, 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. Unfavorable market and industry conditions, including uncertainties surrounding interest rates and inflation, changing tariffs and trade policies and related uncertainty, supply chain challenges, economic downturns or a possible recession and labor market conditions, may increase these risks. We may experience significant costs in connection with renewing, leasing or re-leasing our properties, which could materially and adversely affect us.

The occurrence of a tenant bankruptcy could reduce the rent we receive from that tenant, and the current economic conditions, such as uncertainties surrounding interest rates and inflation, changing tariffs and trade policies and related uncertainty, supply chain disruptions, economic downturns or a possible recession and labor market conditions, may increase the risk of our tenants or hotel managers filing for bankruptcy. If a tenant files for bankruptcy, federal law may prohibit us from evicting that tenant based solely upon its bankruptcy, and 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. If any of our tenants or hotel managers files for bankruptcy, we may experience delays in enforcing our rights, we may be limited in our ability to replace the tenant or hotel manager and we may incur substantial costs in protecting our investment and re-leasing or finding a replacement tenant or hotel manager.

RMR and our hotel managers rely on information technology and systems, including the Internet and cloud-based infrastructures and services, commercially available software and their respective 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, tenants and guarantors and lease data. If we or our third party vendors experience material security or other failures, inadequacies or interruptions in our or their information technology systems, we could incur material costs and losses and our operations could be disrupted. RMR and our hotel managers take various actions, and incur significant costs, to maintain and protect the operation and security of information technology and systems, including the data maintained in those systems. However, these measures may not prevent the systems’ improper functioning or a compromise in securitysecurity, 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 have created and can create significant system disruptions, shutdowns, fraudulent transfer of assets or unauthorized disclosure of confidential information. The risk of a security breach or disruption, particularly through cyberattack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the intensity and sophistication of attempted attacks and intrusions from around the world have increased. The cybersecurity risks to us or our 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, including cyberattacks, email or wire fraud and other attacks exploiting security vulnerabilities in RMR’s, our hotel managers’ or other third parties’ information technology networks and systems or operations. Although muchmost of RMR’s and Sonesta’s staff work from their respective offices for a majority of the work week, flexible working arrangements have resulted in increased remote working. This and other possible changing work practices have adversely impacted, and may in the future adversely impact, RMR’s, our hotel managers’ or other third parties’ abilities to maintain the security, proper function and availability of their respective information technology and systems since remote working by their employees could strain their respective technology resources and introduce operational risk, including heightened cybersecurity risk. Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that have sought, and may seek, to exploit remote working environments. In addition, RMR’s, our hotel managers’ or other third parties’ data security, data privacy, investor reporting and business continuity processes could be impacted by a third party’s inability to perform in a remote work environment or by the failure of, or attack on, their information systems and technology.

The SEC has adopted rules requiring publicPublic companies are required to disclose material cybersecurity incidents on Form 8-K and periodic disclosure of a registrant’s cybersecurity risk management, strategy and governance in annual reports. With the SECSEC’s particularlycontinued focusedfocus on cybersecurity, we expect increased scrutiny of RMR’s policies and systems designed to manage our cybersecurity risks and our related disclosures. In addition, the SEC has indicated that one of its examination priorities for the Office of Compliance Inspections and Examinations is to continue to examine cybersecurity procedures and controls, including testing the implementation of these procedures and controls.

Any failure by RMR, our hotel managers or other third party vendors to maintain the security, proper function and availability of their respective information technology and systems,systems or to adequately protect personal data, or any failure by RMR, our hotel managers or other third party vendors to provide the appropriate regulatory and other notifications in a timely manner could result in financial losses, interrupt our operations, damage our reputation, cause us to be in default of material contracts and subject us to liability claims or regulatory penalties, any of which could materially and adversely affect our business and the value of our securities.

RMR isincorporates incorporatingartificial AIintelligence into some of its business workflows and processes, and challenges with properly managing its use could result in reputational harm, competitive harm, legal liability, and increased regulatory costs and could adversely affect our results of operations.

RMR hasuses begungenerative usingartificial AIintelligence and/or machine learning technologiestechnologies, or collectively, AI Technologies, to enhance certain workflows and processes used in its business, and its research into and continued deployment of such capabilities remain ongoing. AI isTechnologies stillare in its early stages,evolving, and the introduction and incorporation of AI technologiesTechnologies may result in unintended consequences or other new or expanded risks and liabilities and RMR may not be able to anticipate, prevent, mitigate or remediate all potential risks and liabilities. If the content, analyses or recommendations that AI Technologies applications assist in producing are, or are alleged to be, deficient, inaccurate or biased, such as due to limitations in AI Technologies algorithms, insufficient or biased base data or flawed training methodologies, our business, financial condition, results of operations and reputation may be adversely affected. Additionally, AI technologyTechnologies isare continuously evolving, and RMR may adopt and deploy AI technologiesTechnologies that could become obsolete earlier than expected, and there can be no assurance that we will realize the desired or anticipated benefits from AI.AI Technologies. Also, our competitors or other third parties may incorporate AI Technologies into their products and services more quickly or more successfully than RMR, which could impair our ability to compete effectively and adversely affect our results of operations.

The use of AI Technologies applications to support business processes carries inherent risks related to data privacy and security, such as unintended or inadvertent transmission of proprietary or sensitive information, including personal data. AI presentsTechnologies present emerging ethical issues, and RMR may be unsuccessful in identifying and resolving these issues before they arise. If RMR’s use of AI Technologies becomes controversial, it may experience brand or reputational harm, competitive harm, or legal liability. There is uncertainty in the legal and regulatory landscape for AI,AI Technologies, which is not fully developed, and any laws, regulations or industry standards adopted in response to the emergence of AI Technologies may be burdensome, could entail significant costs, and may restrict or impede RMR’s ability to successfully develop, adopt and deploy AI technologiesTechnologies efficiently and effectively.

There remains a continued focus from regulators, investors, tenants and other stakeholders concerning corporate sustainability. ForWe example,are, theand SECexpect hasto continue to be, subject to various proposed, new and evolving sustainability laws and requirements adopted climate change related regulations andby certain states haveand enactedregulators, climateincluding focusedboth voluntary and mandatory disclosure lawsrequirements that may impact how we conduct business, and we may incur significant costs in compliance with such rules if and when such regulations become effective. Some investors may use ESG factors to guide their investment strategies and, in some cases, may choose not to invest in us, or otherwise do business with us, if they believe our or RMR’s policies relating to corporate sustainability are inadequate.not aligned with their own policies. Third party providers of corporate sustainability ratings and reports on companies have increased in number, resulting in varied and, in some cases, inconsistent standards. In addition, the criteria by which companies’ corporate sustainability practices are assessed are evolving, which could result in greater expectations of us and RMR and cause us and RMR to undertake costly initiatives to satisfy such new criteria. Alternatively, ifIf we or RMR elect not to or are unable to satisfy such newthe criteria by which companies’ corporate responsibility practices are assessed or do not meet the criteria of a specific third party provider, some investors may conclude that our or RMR’s policies with respect to corporate sustainability are inadequate. Pursuant to RMR’s zero emissions goal, RMR has pledged to reduce its Scope 1 and 2 emissions to net zero by 2050 with a 50% reduction commitment by 2029 from a 2019 baseline. We and RMR may face reputational damage in the event that our or their corporate sustainability procedures or standards do not meet the goals that we or RMR have set or the standards set by various constituencies. IfIn weaddition, there are efforts by some stakeholders and governmental authorities to reduce companies’ efforts regarding ESG, including human capital management-related matters, and anti-ESG or anti-diversity, equity and inclusion, or DEI, sentiment has gained momentum across the United States, with several states and governmental authorities enacting or proposing anti-ESG or anti-DEI policies or legislation and filing suits alleging that ESG or DEI measures or initiatives violate law. Additionally, in January 2025, President Trump signed a number of executive orders focused on DEI, which indicate continued scrutiny of DEI initiatives and potential related investigations of certain private entities with respect to DEI initiatives, including publicly traded companies. If our, RMR and/or our operators’ practices and programs are deemed to be in contradiction of such initiatives, we, RMR and/or our operators could be subject to government investigations or lawsuits that could negatively impact us, RMR and our operators and affect our business, financial condition or reputation. Increasingly, different stakeholder groups and government authorities have divergent views on ESG matters, which increases the risk that any action or lack thereof with respect to ESG matters will be perceived negatively by at least some stakeholders or governmental authorities and adversely impact our reputation and business. If we, RMR and our operators fail to comply with ESG and anti-ESG related regulations and to satisfy the expectations of investors and our tenantsoperators and other stakeholders or our or RMR’s announced goals and other initiatives are not executed as planned, our and RMR’s reputation could be adversely affected, and our revenues, results of operations and ability to grow our business may be negatively impacted. In addition, we may incur significant costs in attempting to comply with regulatory requirements, ESG and anti-ESG policies or third party expectations or demands.

Our manager, RMR, 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 investmentsinvestments, but it does not review or approve each decision made by RMR on our behalf. In addition, in conducting periodic reviews, our Board of Trustees relies primarily on information provided to it by RMR. RMR may exercise its discretion in a manner that results in investment returns that are substantially below expectations or that results in losses.

RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR. RMR or its subsidiaries also act as the manager to certain other Nasdaq listed companies and private companies, and Mr. Portnoy serves as a managing trustee, director or trustee, as applicable, of those companies, and as chair of the board of trustees of those Nasdaq listed companies.

JohnChristopher Murray,Bilotto, our other Managing Trustee,Trustee Todd Hargreaves, ourand President and Chief InvestmentExecutive Officer, Brian Donley, our Chief Financial Officer and Treasurer, and Jesse Abair, our Vice President, are also officers and employees of RMR. Mr. MurrayBilotto is also a directormanaging trustee and the president and chief executive officer of Sonesta,Diversified Healthcare Trust, or DHC, and Mr. Donley is also the chief financial officer and treasurer of Office Properties Income Trust, or OPI, anotherboth REITof which are REITs managed by RMR. Messrs. Portnoy, Murray, Hargreaves,Bilotto, Donley and Abair have duties to RMR, Mr. MurrayBilotto has duties to SonestaDHC and Mr. Donley has duties to OPI, as well as to us, and we do not have their undivided attention. They and other RMR personnel may have conflicts in allocating their time and resources between us and RMR and other companies to which RMR or its subsidiaries provide services. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services.

Sonesta managed 18169 of our hotels as of December 31, 2024.2025. Sonesta is controlled by Adam D. Portnoy. Mr. Portnoy,Portnoy Mr.is Murraythe andsole Jennifer Clark, our Secretary, are directorsdirector of Sonesta, and Mr.John MurrayG. Murray, an officer and employee of RMR, is also Sonesta’s president and chief executive officer. Mr. Murray will resign from his positions with Sonesta and RMR, effective March 31, 2026. Jeffrey C. Leer has been appointed a co-chief executive officer of Sonesta, effective April 1, 2026. Other officers and employees of Sonesta are former employees of RMR. We own 34% of Sonesta’s outstanding common stock.

We own 34% of Sonesta’s outstanding common stock. 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 common stock. In addition, Sonesta is a private company that is controlled by Adam D. Portnoy, one of our Managing Trustees. We have a minority ownership interest in Sonesta, and are therefore 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 is limited. Further, any attempt we may make to sell our Sonesta common stock may be unsuccessful and any price that we may be able to realize for our Sonesta common stock may be at a discount due to the minority ownership interest the stock represents and the absence of a trading market for Sonesta’s common stock. 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 incur.

We are party to transactions with related parties, including with entities controlled by Adam D. Portnoy or to which RMR 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. Our shareholders or the shareholders of RMR Inc. or other related parties may challenge any such related party transactions. If any challenges to related party transactions 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.

Our declaration of trust and bylaws prohibit any shareholder, other than RMR 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 restrictions in our declaration of trust and bylaws are intended to, among other purposes, assist with our REIT compliance under the IRC. Further, our bylaws contain provisions that generally prohibit shareholders from owning more than 5% (in value or in number of shares, whichever is more restrictive) of any class or series of our outstanding shares, including our common shares. This ownership limitation in our bylaws is intended to help us preserve our ability to use our net operating losses and other tax benefits to reduce our future taxable income. We also believe these restrictions in our declaration of trust and bylaws promote good orderly governance. However, these restrictions 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:

Consumer confidence, corporate travel and lodging demand will continue to be affected by economic and market conditions, inflationary pressures, uncertainties surrounding interest rates, unemployment levels, work from home policies, use of technologies and broader economic trends. Increased labor costs and other price inflation may continue to negatively impact our hotel operations and the operations of our tenants. Further, recent announcements regarding tariffs on a wide variety of imports could impact the cost of products our operators use, such as furniture, equipment, materials and supplies sourced from outside the United States. An economic recession or continued or intensified disruptions in the financial markets could adversely affect our financial condition, operations at our hotels, our tenants and their ability or willingness to renew our leases or pay rent to us, may restrict our ability to obtain new or replacement financing, would likely increase our cost of capital, and may cause the values of our properties to decline.

Management AgreementsLeases and Leases.Management Agreements. At December 31, 2024,2025, we owned 206760 service-focused retail properties leased to 181 tenants subject to “triple net” leases, where the tenants are generally responsible for the payment of operating expenses and capital expenditures. At December 31, 2025, we also owned 94 hotels operatedmanaged underby four agreements.operators. We leased all of these hotels to our wholly owned TRSs that are managed by hotel operating companies as of that date. At December 31, 2024, we also owned 742 service-focused retail properties leased to 177 tenants subject to “triple net” leases, where the tenants are generally responsible for the payment of operating expenses and capital expenditures. Our consolidated statements of comprehensive income (loss) include hotel operating revenues and hotel operating expenses of our managed hotels and rental income and net lease operating expenses from our net lease properties.properties and hotel operating revenues and hotel operating expenses of our managed hotels.

Hotel Portfolio. As of December 31, 2024,2025, we owned 20694 hotels. InDuring 2024,the year ended December 31, 2025, the U.S. hotel industry generally realized increases in average daily rate, or ADR, and decreases in revenue per available room, or RevPAR, compared to the corresponding 2023 periods.2024. Our comparable hotels produced year over year declinesincreases in ADR and RevPAR, which we believe is partially a result of disruption and displacement at certain of our hotels undergoing renovation and decreased business activitydisruption in areas where some of our hotels are located.2024.

Additional details of our hotelnet operatinglease agreements and our nethotel leaseoperating agreements are set forth in Note 4 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the year ended December 31, 20242025, compared to the year ended December 31, 2023.2024. For a comparison of consolidated results for the year ended December 31, 20232024, compared to the year ended December 31, 2022,2023, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 inof our Annual Report on Form 10-K for the year ended December 31, 2023.2024.

Hotel operating revenues. The increasedecrease in hotel operating revenues is primarily a result of higher occupancies and average rates at certain of our hotels in 2024 ($21,096) and a hotel acquisition in June 2023 ($16,396), partially offset by the salesales of certain hotels since January 1, 20232024 ($18,821$99,857), partially offset by increases in occupancy and average rates at certain hotels in 2025 ($16,555). Additional operating statistics of our hotels are included in the tables beginning on page 66.

Rental income. The increase in rental income is primarily a result of theour TAacquisitions leases that were amended in May 2023 ($5,071) and higher rental income recognized atof certain net lease properties in 20242025 ($302$2,775), partially offset by thedecreases salein rental income resulting from our sales of certain net lease properties since January 1, 20232024 ($979$1,154) and lower rental income recognized at certain of our net lease properties in 2025 ($409).

Net leaseHotel operating expenses. The increasedecrease in net leasehotel operating expenses is primarily thea result of increasedour propertysales managementof feescertain hotels since January 1, 2024 ($2,335$92,047), partially offset by increases in room expenses ($16,381), food and beverage expenses ($7,216) and other operating expenses ($2,019$20,839) in 2024, partially offset by our sale of certain net lease properties since January 1, 2023 ($2,200).2025.

Depreciation and amortization - net lease properties.hotels. The decrease in depreciation and amortization - net lease properties—hotels is primarily a result of our sale of certain net lease propertieshotels since January 1, 20232024 ($7,727$56,698) and certain of our depreciable assets becoming fully depreciated since January 1, 20232024 ($9,611$12,665), partially offset by depreciation and amortization related to capital expenditures made since January 1, 2024 ($22,327).

General and administrative. The decreaseincrease in general and administrative costs in 20242025 is primarily due to increases in other professional fees ($1,325) and franchise taxes ($634), partially offset by decreases in business management fees ($3,699) and other professional fees ($1,459$1,531).

Loss on asset impairment,impairment. net.We recorded an $81,889 loss on asset impairment in 2025 to reduce the carrying value of 28 hotels and four net lease properties to their estimated fair value less costs to sell. We recorded a $56,212 loss on asset impairment, netimpairment in 2024 to reduce the carrying value of ten hotels and ten net lease properties to their estimated fair value or estimated fair value less costs to sell. We recorded a $9,544 loss on asset impairment, net in 2023 to reduce the carrying value of one hotel and 16 net lease properties to their estimated fair value less costs to sell.

Gain on sale of real estate, net. We recorded an $84,218 net gain on sale of real estate in 2025 in connection with the sales of 112 hotels and 11 net lease properties, and a $6,269 net gain on sale of real estate in 2024 in connection with the sales of 15 hotels and ten net lease properties, and a $43,239 net gain on sale of real estate in 2023 in connection with the sales of 18 hotels and 13 net lease properties.

Interest income. The decreaseincrease in interest income is due to lowerhigher average cash balances invested during 20242025 compared to 2023.2024.

Interest expense. The increase in interest expense is primarily due to higher outstanding borrowings and weighted average interest rates during 20242025 compared to 2023.2024.

Income tax benefit (expense) benefit.. The change infrom income tax (expense) in 2024 to income tax benefit in 2025 is primarily adue result ofto increases in our foreign tax expensebenefit ($1,863$11,808) and decreases in our state income tax expense ($1,037$311) in 2024.. See Note 10 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for further information.

Net loss. Our net loss and our net loss per common share (basic and diluted) each increaseddecreased in 20242025 compared to 20232024 primarily due to the revenue and expense changes discussed above.

As of December 31, 2024, all 206 of2025, our 760 service-focused retail net lease properties were leased to 181 tenants and our 94 hotels were managed and operated by four hotel operating companies and our 742 service-focused retail net lease properties were leased to 177 tenants.companies. The costs of operating and maintaining our properties are generally paid by our tenants for their own account or by the hotel managers as agents for usus. or by ourOur tenants for their own account. Ourand hotel managers and tenants derive their funding for property operating expenses and for returnsrents and rentsreturns due to us generally from property operating revenues and, to the extent these parties themselves fund rents and our owner’s priority returns and rents,returns, from their separate resources. As of December 31, 2024, our hotel managers included Sonesta (181 hotels), Hyatt (17 hotels), Radisson (seven hotels) and IHG (one hotel).2025, TA is our largest tenant (175 travel centers). and Sonesta (69 hotels) is our largest hotel manager.

Our principal sources of funds to meet operating and capital expenses, debt service obligations and distributions to our shareholders are owner’s priority returns from our hotels, rents from our net lease portfolioportfolio, returns generated from our hotels and borrowings under our revolving credit facility.facility and VFN. We receive owner’s priority returnsrents and rentshotel returns from our managerstenants and tenantsmanagers monthly. We may receive additional returns, percentage rents and our share of the operating profits of our managed hotels after payment of management fees and other deductions, if any, either monthly or quarterly, and these amounts are usually subject to annual reconciliations. We believe these sources of funds will be sufficient to meet our operating expenses and capital expenditures, pay debt service obligations and make distributions to our shareholders for the next twelve12 months and for the foreseeable future thereafter. However, as a result of economic conditions, including if the U.S. enters an economic recession, or otherwise, our managerstenants and tenantsmanagers may become unable or unwilling to pay owner’s priority returns and rents to us when due, and, as a result, our cash flows and net income would decline.

The decrease in cash flow provided by operating activities in the 20242025 period is primarily due to $188,000the sale of prepaidcertain renthotels receivedand lower returns from TAour hotel portfolio in the 2023 period, higher interest expense and lower hotel returns in the 20242025 period. The increasechange infrom cash flow used in investing activities in the 2024 periodto cash flow provided by investing activities in 2025 is primarily due to proceeds from the sale of TA common shares and higher proceeds from the sale of real estate in the 2023 period and increaseddecreased real estate improvements during the 2024 period,2025, partially offset by real estate acquisitions inand thedeposits 2023during period.2025. The change from cash flow used in financing activities in the 2023 period to cash flow provided by financing activities in the 2024 periodto cash flow used in financing activities during 2025 is primarily due to higher net borrowingsrepayments, inpartially theoffset 2024by period.lower distributions to common shareholders during 2025.

Our Investment and Financing Liquidity and Capital Resources Our hotel operating agreements generally provide that, if necessary, we may provide our managers with funding for capital improvements to our hotels in excess of amounts otherwise available in escrowed FF&E reserves or when no FF&E reserves are available. During the year ended December 31, 2024,2025, we funded $291,192$229,389 for capital improvements in excess of FF&E reserves available to our hotels. We currently expect to fund $250,000between approximately $120,000 to $140,000 during 20252026 for capital improvements to certain hotels using cash on hand and borrowings under our revolving credit facility.hand.

During the year ended December 31, 2024,2025, we sold 15112 hotels with an aggregate of 1,910 rooms for ana aggregatecombined sales price of $97,315,$858,752, excluding closing costs, and ten11 net lease properties with an aggregate of 96,929 square feet for ana aggregatecombined sales price of $8,547,$19,591, excluding closing costs. From January 1, 20252026 through February 24,23, 2025,2026, we sold one hotel with 149133 keys for a sales price of $4,000,$7,100, excluding closing costs, and twoone net lease propertiesproperty with an aggregate of 49,0812,510 square feet for an aggregatea sales price of $1,300,$610, excluding closing costs. We haveare alsoat enteredvarious intostages agreementsof toselling sell fivenine hotels with ana aggregatetotal of 6231,167 keys for an aggregate sales price of $28,500, excluding closing costs, and twohave netinitiated lease properties with an aggregate of 155,559 square feetmarketing for anseven aggregatefull salesservice price of $5,800, excluding closing costs. These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales, that these sales will not be delayed or that the terms will not change. We continue to market twoSonesta hotels with ana aggregatetotal of 2342,010 keys and six net lease properties with an aggregate of 80,249 square feet for sale.keys. We believe it is probable that the sales of these properties will be completed within one year. We expect to use the net sales proceeds from these sales for general business purposes.purposes, including to repay debt.

In order to meet cash needs that may result from our desire or need to make distributions or pay operating or capital expenses, we maintain a $650,000 secured revolving credit facility which is governed by a credit agreement. This revolving credit facility is available for general business purposes, including acquisitions. We can borrow, subject to meeting certain financial covenants, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayments are due until maturity. Availability of borrowings under our credit agreement is subject to ongoing minimum performance and market values of the collateral properties, satisfying certain financial covenants and other credit facility conditions. The maturity date of our revolving credit facility is June 29, 2027, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date of the facility by two additional six-month periods.

Interest payable on drawings under our revolving credit facility is based on SOFR plus a margin ranging from 1.50% to 3.00% based on our leverage ratio, as defined in our credit agreement, which was 2.50%2.75% as of December 31, 2024. As collateral for all loans and other obligations under the facility, certain of our subsidiaries pledged all of their respective equity interests in certain of our direct and indirect property owning subsidiaries, and our pledged subsidiaries provided first mortgage liens on 69 properties, including 66 hotels and three net lease properties, with an aggregate undepreciated carrying value of $1,717,254 as of December 31, 2024. During the year ended December 31, 2024, we sold three hotels that served as collateral under our revolving credit facility. In connection with the sales of these hotels, the hotels were released from the collateral pool in accordance with the terms of our revolving credit facility.2025. We also pay unused commitment fees of 20 to 30 basis points per annum on the total amount of lending commitments under our revolving credit facility based on amounts outstanding. As of December 31, 20242025 and 2023,2024, the annual interest rate payable on borrowings under our revolving credit facility was 6.99%6.37% and 7.88%,6.99%, respectively. As of December 31, 20242025 and February 24,23, 2025,2026, we had $150,000no and $50,000, respectively,borrowings outstanding under our revolving credit facility and $500,000 and $600,000, respectively,$650,000 available for borrowing.

In February 2025, we and our lenders furtheramended amendedthe agreement governing our revolving credit facility to reduce the requiredminimum debtfixed servicecharge coverage ratio covenant from 1.50 times1.50x to 1.30 times1.30x effective with respect to the fourth quarter of 2024 and continuing through the end of the loan term. In order to exercise the first extension option, we would beare required to maintain thea 1.501.50x timesminimum debtfixed servicecharge coverage ratio level as of and for the duration of the extension period. We also agreed to change the required collateral property debt yield to 10% effective with respect to the first quarter of 2025 and continuing through the end of the loan term and to swap collateral properties as follows: 4947 hotels with an aggregate of 8,1977,981 keys and an aggregate undepreciated carrying value of $1,402,307 will bewere released from the collateral pool and 35 travel centers leased to TA, which travel centers we refer to as ourTA TALease No. 55, lease, with an aggregate undepreciated carrying value of $601,684, will bewere added as collateral to our revolving credit facility. Of the 47 hotels being released from the collateral pool, 3836 hotels with an aggregate of 5,0784,862 keys and an aggregate undepreciated carryingbook value of $689,592$650,093 areat the time of the amendment were part of our hotel disposition plan. The corresponding equity pledges will be swapped as well. We expect to complete this collateral swap bywas thecompleted endin May 2025. As of theDecember second31, quarter2025, our revolving credit facility was secured by 55 properties, including 38 net lease properties and 17 hotels, with an aggregate undepreciated book value of 2025.$890,424.

Senior Guaranteed UnsecuredSecured Notes Issuance and Repayment of 2025 Maturities

On January 27, 2025, our wholly owned, special purpose bankruptcy remote, indirect subsidiary, SVC ABS LLC, or the Initial Issuer, issued athe variable funding note, or VFN,VFN secured by the 315314 net lease properties that also secure our existing $606,611$604,654 of net lease mortgage notes. The VFN permits borrowings on a revolving basis up to $45,000 and the Initial Issuer can borrow, repay and reborrow funds available until maturity. The maturity date of the VFN is January 27, 2027, and, subject to the payment of an extension fee and meeting certain other conditions, can be extended by one year at the Initial Issuer’s option. The VFN requires interest payments only on drawings under the VFN based on SOFR plus a margin of 1.75%, and an unused commitment fee of 50 basis points per annum paid on undrawn amounts. WeAs borrowedof $45,000December for31, general2025, businessthe purposesannual interest rate payable on borrowings under the VFN uponwas closing.5.62%. The weighted average annual interest rate for borrowings under the VFN was 5.93% for the year ended December 31, 2025. As of both December 31, 2025 and February 23, 2026, we had $45,000 outstanding under the VFN.

We currently expect to use cash on hand, the cash flows from our operations, borrowings available under our revolving credit facilityfacility, if any, or VFN, net proceeds from any asset sales and net proceeds of offerings of equity or the incurrence of debt to fund our operations, capital expenditures, investments, future debt maturities, distributions to our shareholders and other general business purposes.

Our debt obligations at December 31, 20242025 consisted of $150,000 of borrowings outstanding under our $650,000 revolving credit facility, $5,075,000$4,855,155 aggregate principal amounts of senior notesnotes, and $606,611$604,654 aggregate principal amounts of net lease mortgage notes securedand by$45,000 315of netborrowings leaseoutstanding retailunder properties.the VFN. For further information regarding our indebtedness, see Note 6 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

We are a REIT organized under the laws of the State of Maryland. As of MarchJune 31,30, 2026, we owned 854838 properties in 46 states, the District of Columbia, Canada and Puerto Rico. Our strategy continues to focus on reducing debt, transitioning to a company with the majority of our properties being service-focused retail net lease properties through the growth of our net lease portfolio and improving the performance of the hotels we expect to retain.

Leases and Management Agreements. At MarchJune 31,30, 2026, we owned 761745 service-focused retail properties with an aggregate of 13,605,97813,553,509 square feet leased to 185 tenants subject to “triple net” leases, where the tenants are generally responsible for the payment of operating expenses and capital expenditures. At MarchJune 31,30, 2026, we also owned 93 hotels managed by four operators. We leased all of these hotels to our wholly owned TRSs that are managed by hotel operating companies as of that date. Our condensed consolidated statements of comprehensive income (loss) include rental income and net lease operating expenses from our net lease properties and hotel operating revenues and hotel operating expenses of our managed hotels.

WeSignificant Events. During 2025, we sold 112 hotels withcontaining a total of 14,631 keys for a combined sales price of $858,752, excluding closing costs, during 2025.costs. During the threesix months ended MarchJune 31,30, 2026, we sold one hotel withcontaining 133 keys for agross sales priceproceeds of $7,100, excluding closing costs,costs. andWe sold one additional hotel containing 133 keys for gross proceeds of $18,350 in July 2026. As of August 3, 2026, we were under agreement to sell 12 hotels with a total of 2,328 keys for a combined sales price of $77,350, excluding closing costs. We are also at various stages of sellingnegotiating 15or marketing the sale of two additional hotels withcontaining 3,022a total of 561 keys.

(1) Exit Hotels represents 15one hotel sold in July 2026 and 14 hotels managed by Sonesta that are currently under agreement or being marketed for sale.

Comparable Hotels Data. We present occupancy, ADR and RevPAR for the periods presented on a comparable basis to facilitate comparisons between periods. We define comparable hotels as those that were owned by us and were open and operating for the entirety of the periods being compared. The following table provides a summary of these revenue metrics for the periods presented.

Three Months Ended MarchJune 31,30, 2026, Compared to Three Months Ended MarchJune 31,30, 2025

References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Hotel operating revenues. The decrease in hotel operating revenues is primarily a result of our sales of certain hotels since JanuaryApril 1, 2025 ($84,440$98,615), partially offset by increases in occupancy and average rates at certain hotels during the 2026 period ($14,052$14,281). Additional operating statistics of our hotels are included in the tables beginning on page 34.38.

Rental income. The decreaseincrease in rental income is primarily a result of lowerour rentalacquisitions incomeof certain net lease properties since April 1, 2025 ($1,553), increases from our net leasing activity ($505) and credit losses recognized at certain of our net lease properties in the 20262025 period ($2,000) and certain sales of our net lease properties since January 1, 2025 ($248$478), partially offset by our acquisitionssales of certain net lease properties since JanuaryApril 1, 2025 ($1,908$664).

Hotel operating expenses. The decrease in hotel operating expenses is primarily a result of our sales of certain hotels since JanuaryApril 1, 2025 ($82,018$80,507), partially offset by increases in marketing and sales expense ($4,261), insurance expense ($4,060$1,571), room expenses ($2,801$1,030), food and beverage expenses ($758$555) and other operating expenses ($11,203$8,831) in the 2026 period.

Net lease operating expenses. The increase in net lease operating expenses is primarily the result of our acquisition activity ($1,382$55) and increases of property management fees ($684$668) and other operating expenses ($148$127) in the 2026 period, partially offset by decreases resulting from the sale of certain net lease properties since JanuaryApril 1, 2025 ($402$243).

Depreciation and amortization - hotels. The decreaseincrease in depreciation and amortization - hotels is primarily a result of depreciation and amortization related to capital expenditures made since April 1, 2025 ($8,445), partially offset by our sales of certain hotels since JanuaryApril 1, 2025 ($14,050$229) and certain of our depreciable assets becoming fully depreciated or classified as held for sale since JanuaryApril 1, 2025 ($3,248), partially offset by depreciation and amortization related to capital expenditures made since January 1, 2025 ($6,461$2,952).

Depreciation and amortization - net lease properties. The decrease in depreciation and amortization - net lease properties is primarily a result of certain of our depreciable assets becoming fully depreciated since JanuaryApril 1, 2025 ($3,088$3,267) and our sale of certain net lease properties since JanuaryApril 1, 2025 ($355$696), partially offset by depreciation and amortization related to capital expenditures made since JanuaryApril 1, 2025 ($1,023$752).

General and administrative. The decreaseincrease in general and administrative costs is primarily due to increases in legal and other professional fees ($966) and other general and administrative expenses due to trustee share grants ($291), partially offset by a decrease in business management fees since April 1, 2025 ($749$382) in the 2026 period..

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

Loss on asset impairment. We recorded a $28,095$189,097 loss on asset impairment during the 2026 period to reduce the carrying value of sevensix hotels and 21one net lease propertiesproperty to their estimated fair value less costs to sell. We recorded a $37,067$17,654 loss on asset impairment during the 2025 period to reduce the carrying value of 1617 hotels and two net lease properties to their estimated fair value less costs to sell.

GainLoss on sale of real estate, net. We recorded a $1,355$383 net gainloss on sale of real estate during the 2026 period in connection with the sales of one hotel and two17 net lease properties. We recorded a $746$156 net gainloss on sale of real estate during the 2025 period in connection with the sales of fourtwo hotels and threefour net lease properties.

Interest income. The decreaseincrease in interest income is due to lowerhigher average cash balances invested and lower average interest rates during the 2026 period compared to the 2025 period.

Income tax expense.benefit (expense). The increase in income tax benefit (expense) is due to increases in foreign tax expensebenefit ($205$381) and state tax expensebenefit ($133$208) during the 2026 period.

Net loss. Our net loss and our net loss per common share (basic and diluted) each increased in the 2026 period compared to the 2025 period primarily due to the revenue and expense changes discussed above.

As of MarchJune 31,30, 2026, our 761745 service-focused retail net lease properties were leased to 185 tenants and our 93 hotels were managed and operated by four hotel operating companies. The costs of operating and maintaining our properties are generally paid by our tenants for their own account or by the hotel managers as agents for us. Our tenants and hotel managers derive their funding for property operating expenses and for rents and returns due to us generally from property operating revenues and, to the extent these parties themselves fund rents and our owner’s priority returns, from their separate resources. As of MarchJune 31,30, 2026, TA is our largest tenant (175 travel centers) and Sonesta (68 hotels) is our largest hotel manager.

We recorded reserves for uncollectable amounts and reduced rental income by $2,235$635 and $235$2,870 for the three and six months ended MarchJune 31,30, 20262026, respectively, based on our assessment of the collectability of rents. We recorded reserves for uncollectable amounts and reduced rental income by $1,142 and $1,377 for the three and six months ended June 30, 2025, respectively, based on our assessment of the collectability of rents. We had reserves for uncollectable rents of $5,349$5,567 and $3,115 as of MarchJune 31,30, 2026 and December 31, 2025, respectively, included in other assets, net in our condensed consolidated balance sheets.

We define net lease rent coverage as earnings before interest, taxes, depreciation, amortization and rent, or EBITDAR, divided by the annual minimum rent due to us weighted by the minimum rent of the property to total minimum rents of the net lease portfolio. Tenants with no minimum rent required under the lease are excluded. EBITDAR amounts used to determine rent coverage are generally for the latest twelve-month period, based on the most recent operating information, if any, furnished by our tenants. Operating statements furnished by our tenants often are unaudited and, in certain cases, may not have been prepared in accordance with GAAP and are not independently verified by us. In instances where we do not have tenant financial information, we calculate an implied coverage ratio for the period based on other tenants with available financial statements operating the same brand or within the same industry. As a result, we believe using this implied coverage metric provides a more reasonable estimated representation of recent operating results and the financial condition for those tenants. Our net lease properties generated rent coverage of 2.01x2.09x and 2.07x2.04x as of MarchJune 31,30, 2026 and 2025, respectively.

The decreaseincrease in cash flow provided by operating activities in the 2026 period is primarily due to lowerdecreases returnsin frominterest our hotel portfoliopaid in the 2026 period.period resulting from our repayments of debt, partially offset by the decreases in net operating cash flows from hotel sales between the periods. The increasedecrease in cash flow used in investing activities in the 2026 period is primarily due to lower net proceeds from sales of real estate properties and higher acquisitions in the 2026 period, partially offset by a decrease in real estate improvements in the 2026 period. The increase in cash flow used in financing activities in the 2026 period is primarily due to higher net debt repayments in the 2026 period, partially offset by debt and equity issuances during 2026.

Our Investment and Financing Liquidity and Capital Resources Tenants in our net lease portfolio are generally required to maintain the leased properties, including structural and non-structural components under their respective leases. We may provide tenant improvement allowances to tenants in certain cases or may develop sites with the intent to lease them. During the threesix months ended MarchJune 31,30, 2026, we funded $580$1,860 for capital improvements to our net lease properties. As of MarchJune 31,30, 2026, we had $8,297$9,745 of unspent leasing-related obligations related to certain of our net lease tenants.

Our hotel operating agreements generally provide that, if necessary, we may provide our managers with funding for capital improvements to our hotels in excess of amounts otherwise available in escrowed FF&E reserves or when no FF&E reserves are available. During the threesix months ended MarchJune 31,30, 2026, we funded $19,161$45,656 for capital improvements in excess of FF&E reserves available to our hotels. We currently expect to fund between approximately $100,000$70,000 and $120,000$90,000 during the last ninesix months of 2026 for capital improvements to certain properties using cash on hand.

Various percentages of total sales at some of our hotels are escrowed as FF&E reserves to fund future capital improvements. We own all the FF&E escrows for our hotels. During the threesix months ended MarchJune 31,30, 2026, certain of our hotel managers deposited $786$2,545 to these accounts and spent $1,845$3,870 from the FF&E reserve escrow accounts to renovate and refurbish our hotels. As of MarchJune 31,30, 2026, there was $5,704$5,439 on deposit in these escrow accounts, which was held directly by us and is reflected in our condensed consolidated balance sheets as restricted cash.