Sale of 68 Sonesta Hotels Expected to be Substantially Complete in First Quarter 2022

Provides Update on Hotel Operating Performance ThroughNovember 2021

NEWTON, Mass.--(BUSINESS WIRE)-- Service Properties Trust (Nasdaq: SVC), or SVC, today announced that it reached an agreement with Sonesta International Hotels Corporation, or Sonesta, to amend their existing management agreements effective January 1, 2022. SVC currently owns 262 hotels that are managed by Sonesta and 68 of these hotels are expected to be sold, or the sale hotels. Among other terms, the changes to the agreements between SVC and Sonesta for 194 hotels, or the retained hotels, are as follows:

• The term for the retained hotels will expire on January 31, 2037 and includes two 15-year renewal options.
• All retained hotels are subject to a pooling agreement that combines the management agreements for the retained hotels for purposes of calculating gross revenues, hotel operating expenses, fees and distributions and the owner’s priority return due to SVC.
• The owner’s priority return for the retained hotels is set at $325.2 million annually. Although SVC continues to own 34% of Sonesta, SVC will have the right to terminate Sonesta’s management of specific SVC owned hotels if minimum performance thresholds are not met starting in 2023.
• SVC will renovate the retained hotels to comply with agreed upon brand standards. As such funding is advanced by SVC, the aggregate annual owner's priority return due to SVC under the amended agreement will increase by 6% of the amounts funded. SVC currently expects to complete these renovations over the next three years at an estimated cost of $600.0 million.
• Trade area restrictions by hotel brand have been added to define boundaries to protect SVC owned hotels in response to Sonesta increasing its franchising and third-party management activities.

For the sale hotels, the term will be extended to the earlier of December 31, 2022 or until the hotels are sold and the FF&E reserve funding requirement will be removed. Following the sale of these 68 Sonesta hotels, SVC’s owner’s priority return will be reduced by the current owner’s priority return for these assets, or $85.5 million.

Update on Sonesta hotel asset sales

SVC continues to make progress in its efforts to sell 68 Sonesta hotels with 8,760 keys and an aggregate net carrying value of $579.0 million. SVC is currently negotiating purchase and sale agreements or in the final stages of the buyer selection process for these hotels. SVC currently expects to be substantially complete with the sale of these hotels during the first quarter of 2022.

Recent hotel operating performance

John Murray, President and Chief Executive Officer of SVC, made the following statement:

“Between our amended management agreements with Sonesta and the expected sale of 68 Sonesta hotels, we believe we are taking important steps to create a stronger hotel portfolio with improved coverage of our owner’s priority return. The changes announced today to the Sonesta management agreements are substantially similar to the changes recently announced with the Hyatt and Radisson agreements and our 2019 Sonesta amendment. The Sonesta hotel sales process is going well, we have strong interest in these hotels from a deep pool of buyers and we believe that the proceeds will significantly enhance SVC’s liquidity position as it enters 2022.”

About Service Properties Trust

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust, or REIT, with more than $12 billion invested in two asset categories: hotels and service-focused retail net lease properties. SVC owns more than 300 hotels with over 48,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. SVC owns nearly 800 retail service focused net lease properties totaling over 13 million square feet throughout United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading alternative asset management company with more than $32 billion in assets under management and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA. For more information, visit svcreit.com.

Warning Concerning Forward-Looking Statements

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever SVC uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, SVC is making forward-looking statements. These forward-looking statements are based upon SVC’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by SVC’s forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond SVC’s control. For example:

• This press release states that SVC expects to fund renovations estimated at $600.0 million and that such renovations are expected to be completed over the next three years. These renovations may cost more than currently projected, may be delayed or may not occur.

• This press release states that the amended agreement will enhance the portfolio of hotels managed by Sonesta and is expected to result in improved coverage of SVC’s owner’s priority return for the portfolio. SVC cannot provide any assurance that coverage of SVC’s owner’s priority return for this portfolio will improve.

• This press release states that SVC believes it is taking important steps to create a stronger hotel portfolio with improved coverage of its owner’s priority return. Further, this press release states that the sales process is going well, that SVC has strong interest in these hotel assets from a deep pool of buyers and that it believes that the proceeds will significantly enhance SVC’s liquidity position as it enters 2022. However, the steps SVC is taking may not improve coverage and SVC’s owner’s priority return, the sales of the sale hotels may not be completed on the terms SVC currently expects or at all and SVC’s liquidity position may not be enhanced.

• SVC is marketing for sale 68 hotels with an aggregate net book value of $579.0 million and expects to complete the majority of these sales by the end of the first quarter of 2022. The sales of SVC’s properties are subject to conditions; accordingly, SVC cannot provide any assurance that it will sell any of these properties and the sales may be delayed, may not occur or their terms may change.

The information contained in SVC’s filings with the Securities and Exchange Commission, or SEC, including under the caption “Risk Factors” in SVC’s periodic reports, or incorporated therein, identifies other important factors that could cause differences from SVC’s forward-looking statements. SVC’s filings with the SEC are available on the SEC's website at www.sec.gov.

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

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

A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq. No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.

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Kristin Brown, Director, Investor Relations (617) 796-8232

Source: Service Properties Trust