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• Hotel Property Ownership and Leasing: SVC owns a portfolio of hotel properties that it leases to various hotel operating companies, generating rental income from these agreements.
• Net Lease Property Ownership and Leasing: SVC owns and leases a diverse portfolio of net lease properties, including service-oriented retail and industrial sites, to tenants under long-term agreements where tenants typically bear property operating expenses.

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Service Properties Trust (SVC) primarily sells to other companies through its hotel management agreements and property leases. Its major customers, in the context of its direct business relationships and revenue generation, are:

• Sonesta International Hotels Corporation: Sonesta manages all 167 hotels owned by Service Properties Trust. While the ultimate guests of these hotels are individuals, SVC's substantial revenue from its hotel segment (which constitutes the majority of its total revenue) is generated through its strategic management agreement with Sonesta. Sonesta International Hotels Corporation is a private company and does not have a public stock symbol.
• TravelCenters of America LLC (TA): This is the largest tenant in SVC's net lease portfolio. As of December 31, 2023, TravelCenters of America accounted for 15.6% of SVC's annual minimum rental revenues from its net lease properties. TravelCenters of America LLC was acquired by and is now a subsidiary of BP p.l.c. (NYSE: BP).

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• The RMR Group (NASDAQ: RMR)
• Sonesta International Hotels Corporation

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Christopher J. Bilotto, President and Chief Executive Officer

Mr. Bilotto was appointed President and Chief Executive Officer of Service Properties Trust in March 2025. He also serves as a Managing Trustee of the company. Since October 2023, Mr. Bilotto has been an Executive Vice President at The RMR Group LLC, the company's manager, where he is responsible for the acquisition platform, asset management of hotel and senior living properties, and property development across the United States. Prior to joining RMR in 2011, he held various management positions at General Growth Properties. Additionally, since January 2024, Mr. Bilotto has served as President and Chief Executive Officer of Diversified Healthcare Trust.

Brian Donley, Treasurer and Chief Financial Officer

Mr. Donley has served as Chief Financial Officer and Treasurer of Service Properties Trust since 2019. He is also a Senior Vice President of The RMR Group and Chief Financial Officer and Treasurer of Office Properties Income Trust. Mr. Donley has over 25 years of commercial real estate experience, including expertise in corporate finance, mergers and acquisitions, and capital market transactions. He has held various finance and accounting leadership roles at RMR since 1997 and previously served as Chief Financial Officer and Treasurer of Industrial Logistics Properties Trust. Mr. Donley is a Certified Public Accountant.

Adam D. Portnoy, Chair of the Board of Trustees

Mr. Portnoy has been a Managing Trustee of Service Properties Trust since 2007 and Chair of the Board since 2019. He is also the President and Chief Executive Officer of The RMR Group, which manages Service Properties Trust and several other publicly owned REITs. He serves as Chair of the Boards for other RMR client companies, including Diversified Healthcare Trust, Office Properties Income Trust, and Industrial Logistics Properties Trust. Before joining RMR in 2003, Mr. Portnoy worked in the finance industry as a banker at Donaldson, Lufkin & Jenrette and ABN AMRO, in private equity at the International Finance Corporation and DLJ Merchant Banking Partners, and was CEO of a telecommunications company.

Jesse Abair, Vice President

Mr. Abair serves as a Vice President of Service Properties Trust.

Jennifer B. Clark, Secretary

Ms. Clark holds the position of Secretary at Service Properties Trust.

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Key Risks to Service Properties Trust (SVC)

1. High Debt Load and Refinancing Risk: Service Properties Trust faces a significant debt burden, with over $5.5 billion outstanding and upcoming maturities that need to be refinanced at considerably higher interest rates. The company's debt-to-equity ratio has been noted as extremely high, signaling substantial leverage. This heavy debt, coupled with rising interest expenses, is increasing financial pressure and poses a major risk to the company's long-term viability and cash flow.
2. Dependence on Hospitality and Retail Sectors and Profitability Concerns: SVC's revenue is heavily dependent on the performance of the hospitality and retail sectors, which are highly sensitive to economic fluctuations. The company has reported significant net losses and negative profit margins, with analysts not forecasting profitability in the near term. This vulnerability is compounded by rising operating costs and subdued demand in its hotel portfolio, further squeezing margins and impacting earnings growth.
3. Tight Covenant Headroom and Liquidity Issues: The company's ability to incur additional debt is limited due to a tightened debt service incurrence covenant headroom. A breach of this covenant could severely restrict SVC's financial flexibility, exacerbating liquidity and refinancing risks. This situation suggests a constrained capacity to manage its financial obligations and adapt to changing market conditions.

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• Persistent structural decline in business travel demand: The widespread and sustained adoption of remote and hybrid work models has led to a structural reduction in business travel, particularly for routine meetings and corporate gatherings. This directly impacts the demand for SVC's extensive portfolio of full-service hotels, potentially leading to lower occupancy rates, depressed average daily rates (ADR), and reduced profitability compared to pre-pandemic levels. Unlike cyclical downturns, this represents a fundamental shift in corporate behavior, similar to how Netflix altered viewing habits.
• Prolonged elevated interest rate environment: Central banks maintaining a "higher for longer" interest rate policy fundamentally alters the economic landscape for capital-intensive real estate investment trusts (REITs) like SVC. This translates to increased borrowing costs for refinancing existing debt and for future acquisitions, putting pressure on SVC's net interest expense and potentially constraining growth. Furthermore, higher interest rates tend to depress commercial real estate valuations as cap rates expand, impacting SVC's asset values and potentially making it more challenging for some of its net lease retail tenants to sustain operations or find affordable financing for their own businesses, increasing default risk.

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Service Properties Trust (SVC) primarily operates in two main segments: hotel investments and service-focused retail net lease properties. Their portfolio is largely concentrated in the United States, with some properties also in Puerto Rico and Canada.

Hotel Investments (Extended Stay Hotels)

The addressable market for extended stay hotels in the United States is estimated at approximately $19.6 billion in 2025. Globally, the extended stay hotel market is projected to be around $62.8 billion in 2025, with North America holding over 40% of this global revenue. The U.S. extended stay hotel market is expected to grow at a compound annual growth rate (CAGR) of 9.5% from 2024 to 2030.

Net Lease Retail Properties

For service-focused and necessity-based retail net lease properties, the U.S. single-tenant net-lease retail sector recorded approximately $5.7 billion in sales volume during the first half of 2025. In the first quarter of 2025, the retail segment of the U.S. net lease market saw a transaction volume of approximately $3.12 billion.

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Here are 3 expected drivers of future revenue growth for Service Properties Trust (SVC) over the next 2-3 years:

1. Expansion of the Net Lease Portfolio: Service Properties Trust is undergoing a strategic transformation to become a predominantly net lease Real Estate Investment Trust (REIT). The company is actively acquiring net lease properties to enhance tenant and geographic diversity, extend weighted average lease terms, and expand annual minimum rents, which are expected to generate stable and predictable income streams.
2. Revenue Enhancement from Renovated Hotel Properties: SVC is investing in capital improvement projects across its retained hotel portfolio. Recently renovated hotels have demonstrated double-digit revenue growth, serving as catalysts to drive future performance and improve the quality of these assets.
3. Optimization of the Streamlined Hotel Portfolio: Through its ongoing hotel disposition program, SVC is selling non-core hotel assets to enhance its portfolio composition. The company aims to focus on a higher-quality, retained set of hotels that have shown stronger Revenue Per Available Room (RevPAR) performance and improved operating efficiency, contributing to overall revenue growth from this optimized portfolio.

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Outbound Investments

• Service Properties Trust is actively acquiring net lease properties as part of its strategic shift to become a predominantly net lease REIT. In the third quarter of 2025, the company acquired 13 net lease properties for $24.8 million, bringing year-to-date investments to $70.6 million.
• These acquisitions focus on a balanced mix of quick-service and casual dining restaurants, automotive services, fitness centers, and value retailers.
• The company is on track to sell 121 hotels in 2025 for estimated gross proceeds of approximately $959 million, with 46 sales completed through the third quarter of 2025 for about $325 million. Proceeds from these sales are intended to strengthen the balance sheet, repay debt, and fund net lease acquisitions and capital spending on hotels.

Capital Expenditures

• Service Properties Trust's capital expenditure guidance for 2025 was initially set at approximately $250 million, and later reduced to $200 million, with maintenance capital expected to be between $120 million and $140 million and the remainder allocated for renovation and redevelopment initiatives.
• For 2026, capital expenditures are expected to significantly decrease to approximately $150 million, with $64 million designated for discretionary renovations and the remaining for maintenance.
• The primary focus of recent capital expenditures has been advancing capital improvement projects across its hotel portfolio, including the completion of renovations at 17 Hyatt Place hotels in the first quarter of 2025, aimed at enhancing properties and driving EBITDA growth.