Service Properties Trust
09/02/2025 | Press release | Distributed by Public on 09/02/2025 06:10
Material Agreement (Form 8-K)
| Item 1.01. | Entry into a Material Definitive Agreement. |
On August 29, 2025, we entered into a new management agreement with Sonesta International Hotels Corporation and certain of its subsidiaries, or Sonesta, effective August 1, 2025, for each of our 59 hotels managed by Sonesta that we expect to retain, or the retained hotels. The new management agreements are not subject to any pooling, cross-default or other similar contractual arrangement. Each new management agreement provides for an initial 15-year term expiring on July 31, 2040, subject to two 10-year renewal options by Sonesta. The new management agreements also provide for the following, among other things:
| · | We will pay Sonesta, after payment of hotel operating expenses, a base management fee equal to 3.0% of gross revenues for full service hotels and 5.0% for extended stay and select service hotels. Additionally, we are required to pay (i) an incentive fee equal to 20% of EBITDA, as defined in the management agreement, in excess of the incentive threshold, subject to a cap, commencing with the 2026 calendar year; (ii) a brand promotion fee of 3.5% of gross room revenues; (iii) a loyalty fee of the greater of (x) 1.0% of gross room revenues or (y) 4.5% of qualified room revenue, in the case of full service hotels, 2.5%, in the case of extended stay hotels, and 3.0%, in the case of select service hotels, (iv) a centralized service fee equal to $1,100,000 per year for full service hotels and $250,000 per year for extended stay and select service hotels, adjusted annually based on the Consumer Price Index, and (v) a construction management fee of 3% of construction and capital expenditures managed by Sonesta. |
| · | We are required to fund capital expenditures at our hotels. We are also required to maintain minimum working capital under the management agreement based on the number of rooms in the hotel to meet the cash needs for hotel operations. |
| · | We have the right to terminate the management agreement for certain events of default, casualty and condemnation events, and if minimum performance thresholds are not met for two consecutive calendar years beginning with the measurement period commencing with the 2028 calendar year. |
We previously identified 122 of our other hotels managed by Sonesta for disposition in 2025, or the sale hotels. As of August 29, 2025, we have sold 10 sale hotels, and entered into agreements to sell 111 sale hotels and are marketing one sale hotel. Sonesta has agreed to waive any termination fees under the management agreements for the sale hotels.
The foregoing description of the new management agreements with Sonesta is not complete and is subject to and qualified in its entirety by reference to the representative form of the new management agreement with Sonesta, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Information Regarding Certain Relationships and Related Person Transactions
We have relationships and historical and continuing transactions with Sonesta and others related to them. For further information about these and other such relationships and related person transactions, please see our Annual Report on Form 10-K for the year ended December 31, 2024, or our Annual Report, our definitive Proxy Statement for our 2025 Annual Meeting of Shareholders, or our Proxy Statement, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, or our Quarterly Report, and our other filings with the Securities and Exchange Commission, or the SEC, including Notes 4, 5 and 9 to the Consolidated Financial Statements included in our Annual Report, the sections captioned "Business", "Management's Discussion and Analysis of Financial Condition and Results of Operations-Related Person Transactions" and "Warning Concerning Forward-Looking Statements" of our Annual Report, the section captioned "Related Person Transactions" and the information regarding our Trustees and executive officers in our Proxy Statement, Notes 6, 7 and 11 to the Condensed Consolidated Financial Statements included in our Quarterly Report and the sections captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations-Related Person Transactions" and "Warning Concerning Forward-Looking Statements" of our Quarterly Report. In addition, please see the section captioned "Risk Factors" of our Annual Report for a description of risks that may arise from these transactions and relationships. Our filings with the SEC, including our Annual Report, our Proxy Statement and our Quarterly Report, are available at the SEC's website at www.sec.gov. Copies of certain of our agreements with these related parties are publicly available as exhibits to our public filings with the SEC and accessible at the SEC's website.
Service Properties Trust published this content on September 02, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on September 02, 2025 at 12:10 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]