XML 31 R13.htm IDEA: XBRL DOCUMENT
v3.25.4

Leases and Management Agreements | 12 Months Ended
--- | ---
Dec. 31, 2025
Leases [Abstract] |
Leases and Management Agreements | Note 4. Leases and Management Agreements As of December 31, 2025, we owned 760 service-focused retail properties net leased to 181 tenants, including 175 travel centers leased to TA, our largest tenant, and 94 hotels included in four operating agreements managed by subsidiaries of the following companies: Sonesta (69 hotels), Hyatt (17 hotels), Radisson (seven hotels) and IHG (one hotel). We do not operate any of our properties. Net Lease Portfolio As of December 31, 2025, we owned 760 service-focused retail net lease properties with an aggregate of 13,601,902 square feet with leases requiring annual minimum rents of $390,051 with a weighted (by annual minimum rents) average remaining lease term of 7.4 years. Our net lease properties were 96.6% occupied and leased by 181 tenants operating under 140 brands in 21 distinct industries. TA Leases. As of December 31, 2025, TA is our largest tenant, representing 33.0% of our total historical real estate investments. We lease to TA a total of 175 travel centers under five master leases that expire in 2033, or our TA leases, subject to TA’s right to extend those leases, and require annual minimum rents of $264,262 as of December 31, 2025. TA receives a monthly rent credit totaling $25,000 per year over the ten-year initial term of the TA leases as a result of rent it prepaid. On February 28, 2024, TA acquired the leasehold interest of one of our travel centers from a third party landlord. The aggregate minimum rent due to us under our leases with TA for the remaining 175 travel centers was unchanged as a result of TA’s acquisition of this leasehold interest. As of December 31, 2025, the number of travel centers, the terms and the annual minimum rents owed to us by TA under our TA leases was as follows:
|  | Number of Travel Centers |  | Initial Term End (1) |  | Annual Minimum Rent (2)
TA No. 1 Lease |  | 34 |  | May 14, 2033 |  | $ | 54,065 |
TA No. 2 Lease |  | 36 |  | May 14, 2033 |  | 47,974 |
TA No. 3 Lease |  | 34 |  | May 14, 2033 |  | 46,195 |
TA No. 4 Lease |  | 36 |  | May 14, 2033 |  | 48,923 |
TA No. 5 Lease |  | 35 |  | May 14, 2033 |  | 67,105 |
|  | 175 |  |  |  | $ | 264,262 |
(1)TA has five renewal options of ten years each under each of our TA leases. (2)Annual minimum rent increases by 2% each year through the initial term of ten years and any of the five ten-year extension options that may be exercised. There is no percentage rent due under our TA leases. Our TA leases are “triple net” leases that require TA to pay all costs incurred in the operation of the leased travel centers, including personnel, utility, inventory, customer service and insurance expenses, real estate and personal property taxes, environmental related expenses, underground storage tank maintenance costs and ground lease payments at those travel centers at which we lease the property and sublease it to TA. Our TA leases generally require TA to indemnify us for certain environmental matters and for liabilities that arise during the terms of the leases from ownership or operation of the leased travel centers. TA is required to maintain the leased travel centers, including structural and non-structural components. BP Corporation North America Inc., a subsidiary of BP p.l.c., guarantees payment under each of the TA leases, limited to an aggregate cap which was $3,022,867 as of December 31, 2025. We recognized rental income from our TA leases of $271,334, $271,334 and $266,263 for the years ended December 31, 2025, 2024 and 2023, respectively. Rental income increased by $9,132, $14,272 and $7,932 for the years ended December 31, 2025, 2024 and 2023, respectively, to record the scheduled rent changes on a straight line basis. TA was required to pay us previously deferred rent obligations in quarterly installments of $4,404 through January 31, 2023. TA paid us the final quarterly installment owed to us in January 2023. As of December 31, 2025 and 2024, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $55,157 and $40,097, respectively, included in other assets, net in our consolidated balance sheets. Until May 15, 2023, our TA leases required TA to pay us percentage rent based upon increases in certain sales. We recognized percentage rent due under our TA leases as rental income when all contingencies were met. We recognized percentage rent of $3,507 during the year ended December 31, 2023, under our TA leases. For further information regarding our relationships with TA, including the TA Merger, as defined below, see Notes 5 and 9. Our other net lease agreements generally provide for minimum rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight-line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. We recognized rental income from our net lease properties (excluding TA) of $130,101, $128,889 and $129,566 for the years ended December 31, 2025, 2024 and 2023, respectively, which included $2,090, $4,269 and $5,233, respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight line basis. We continually review receivables related to rent, straight-line rent and property operating expense reimbursements and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes an assessment of whether substantially all of the amounts due under a tenant’s lease are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received. We recognize all changes in the collectability assessment for an operating lease as an adjustment to rental income. We recorded reserves for uncollectable amounts and reduced rental income by $1,858, $2,158 and $4,927 during the years ended December 31, 2025, 2024 and 2023 respectively, based on our assessment of the collectability of rents. We had reserves for uncollectable rents of $3,115 and $5,058 as of December 31, 2025 and 2024, respectively, included in other assets, net in our consolidated balance sheets. Hotel Agreements Sonesta Agreements. As of December 31, 2025, Sonesta managed 39 of our full service hotels, 23 of our extended stay hotels and seven of our select service hotels pursuant to management agreements. The hotels Sonesta managed for us comprised approximately 41.8% of our total historical real estate investments as of December 31, 2025. We previously identified 122 hotels with a total of 15,931 keys managed by Sonesta as of December 31, 2024 for disposition in 2025. As of December 31, 2025, we have sold 112 of these hotels with a total of 14,631 keys for a combined sales price of $858,752, excluding closing costs. From January 1, 2026 through February 23, 2026, we sold one hotel with 133 keys for a sales price of $7,100, excluding closing costs. We are at various stages of selling the remaining nine hotels with a total of 1,167 keys. Additionally, we initiated marketing in January 2026 for seven full service Sonesta hotels with a total of 2,010 keys. Following completion of the hotel sales, we expect to retain 52 hotels managed by Sonesta, or the Retained Hotels. As discussed below, in August 2025, we and Sonesta amended and restated our management agreements for the Retained Hotels and certain other hotels managed by Sonesta and waived any termination fees under the existing Sonesta management agreement associated with the sale of the 122 hotels. Prior to August 1, 2025, all of the hotels managed by Sonesta were managed pursuant to a management agreement that was scheduled to expire on January 31, 2037, or the legacy Sonesta agreement, and provided that we would be paid an annual owner’s priority return if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), were sufficient to do so. The legacy Sonesta agreement further provided that we would be paid an additional return equal to 80% of the operating profits, as defined therein, after paying the owner’s priority return, reimbursing owner or manager advances, funding reserves established for the regular refurbishment of our hotels, or FF&E reserves, and paying Sonesta’s incentive fee, if any. On August 29, 2025, we entered into new management agreements with Sonesta for each of the Retained Hotels and certain other hotels managed by Sonesta, in each case effective August 1, 2025, or the Retained Hotel agreements. Each Retained Hotel agreement expires on July 31, 2040 and includes two 10-year renewal options at Sonesta’s option. Pursuant to the Retained Hotel agreements, 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 Retained Hotel agreements, in excess of the incentive threshold, subject to a cap, commencing with the 2026 calendar year, which has initially been set at $194,248 in the aggregate; (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 per year for full service hotels and $250 per year for extended stay and select service hotels, adjusted annually based on the Consumer Price Index; and (v) a construction management fee of 3.0% of construction and capital expenditures managed by Sonesta. We have the right to terminate the Retained Hotel agreements 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. The Retained Hotel agreements are not subject to any pooling, cross-default or other similar contractual arrangement and the legacy Sonesta agreement will remain subject to a pooling agreement and cross-default provisions until the remainder of the hotels subject to that agreement are sold. Our legacy Sonesta agreement and the Retained Hotel agreements are collectively referred to as our Sonesta agreements. We realized returns under our Sonesta agreements of $135,901, $189,386 and $226,181 during the years ended December 31, 2025, 2024 and 2023, respectively. Our annual return equal to the incentive threshold under our Retained Hotel agreements as of December 31, 2025 was $202,632. Our Sonesta agreements require us to fund capital expenditures made at our hotels. We incurred capital expenditures for hotels included in our Sonesta agreements in an aggregate amount of $225,166 and $258,337 during the years ended December 31, 2025 and 2024, respectively. We owed Sonesta $39,509 and $18,199 for capital expenditures and other reimbursements as of December 31, 2025 and 2024, respectively. Sonesta owed us $241 and $3,911 in returns under our Sonesta agreements and other amounts as of December 31, 2025 and 2024, respectively. Amounts due from Sonesta are included in due from related persons and amounts owed to Sonesta are included in due to related persons in our consolidated balance sheets. Our legacy Sonesta agreement required that 5% of the hotel gross revenues be escrowed for future capital expenditures as FF&E reserves, subject to available cash flows after payment of the owner’s priority returns due to us. No FF&E escrow deposits were required during any of the years ended December 31, 2025, 2024 or 2023. We incurred management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing programs or brand promotion fees, and third-party reservation transmission fees or centralized service fees of $114,485, $119,628 and $118,146 for the years ended December 31, 2025, 2024 and 2023, respectively. These fees and costs are included in hotel operating expenses in our consolidated statements of comprehensive income (loss). In addition, we incurred procurement and construction supervision fees payable to Sonesta pursuant to our legacy Sonesta agreement and construction management fees payable to Sonesta pursuant to our Sonesta agreements of $4,089 and $2,877 for the years ended December 31, 2025 and 2024, respectively, which amounts have been capitalized in our consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets. We are required to maintain minimum working capital for each of our hotels managed by Sonesta and have advanced a fixed amount based on the number of rooms in each hotel to meet the cash needs for hotel operations. As of December 31, 2025 and 2024, we had advanced $31,835 and $46,466, respectively, of initial working capital to Sonesta net of any working capital returned to us on termination of the applicable management agreements in connection with hotels we have sold. These amounts are included in other assets, net and assets of properties held for sale, as applicable, in our consolidated balance sheets. Any remaining working capital would be returned to us upon termination in accordance with the terms of our Sonesta agreements. See Notes 5 and 9 for further information regarding our relationships, agreements and transactions with Sonesta. Hyatt Agreement. As of December 31, 2025, Hyatt managed 17 of our select service hotels pursuant to a portfolio management agreement that expires on March 31, 2031, or our Hyatt agreement, and provides that, as of December 31, 2025, we are to be paid an annual owner’s priority return of $17,400. Any returns we receive from Hyatt are currently limited to the hotels’ available cash flows, if any, after payment of operating expenses. Hyatt has provided us with a $30,000 limited guarantee for 75% of the aggregate annual owner’s priority returns due to us that became effective upon substantial completion of planned renovations of the hotels, which occurred in January 2025. We realized returns under our Hyatt agreement of $12,915, $5,860 and $9,371 during the years ended December 31, 2025, 2024 and 2023, respectively. During the year ended December 31, 2025, the hotels under this agreement generated cash flows that were less than the guaranteed owner’s priority level due to us for this period, and we reduced hotel operating expenses by $3,508, to record the guaranteed amount of the shortfall due from Hyatt. The available balance of the guaranty was $26,492 as of December 31, 2025. In February 2024, we funded $2,300 of additional working capital to Hyatt. We may recover this amount in the future, if cash flows are sufficient to pay our owner’s priority return and other amounts in accordance with our Hyatt agreement. During the years ended December 31, 2025 and 2024, we incurred capital expenditures for certain hotels included in our Hyatt agreement of $2,511 and $31,665, respectively. Radisson Agreement. As of December 31, 2025, Radisson managed seven of our full service hotels pursuant to a portfolio management agreement that expires on July 31, 2031, or our Radisson agreement, and provides that we are to be paid an annual owner’s priority return of $10,911. Radisson has provided us with a $22,000 limited guarantee for 75% of the aggregate annual owner’s priority returns due to us. We realized returns under our Radisson agreement of $7,535, $6,518 and $6,266 for the years ended December 31, 2025, 2024 and 2023, respectively. During the years ended December 31, 2025 and 2023, the hotels under this agreement generated cash flows that were less than the guaranteed owner’s priority level due to us for these periods, and we reduced hotel operating expenses by $4,765 and $650, respectively, to record the guaranteed amount of the shortfalls due from Radisson. During the year ended December 31, 2024, the hotels under this agreement generated cash flows that exceeded the guaranteed owner’s priority level due to us for the period. The available balance of the guaranty was $16,585 as of December 31, 2025. We did not incur any capital expenditures during the year ended December 31, 2025 for the hotels included in our Radisson agreement. During the year ended December 31, 2024, we incurred capital expenditures of $778 for the hotels included in our Radisson agreement, which resulted in an aggregate increase in our contractual owner’s priority returns of $47. IHG Agreement. In December 2025, we exercised the option to extend the term of our management agreement with IHG for one hotel by up to one year to January 31, 2027. We realized returns under our management agreement with IHG of $5,719, $5,051 and $4,800 for the years ended December 31, 2025, 2024 and 2023, respectively. Any returns we receive from IHG are limited to the hotel’s available cash flows, if any, after payment of operating expenses. During the year ended December 31, 2023, we recovered $5,797 of working capital that we previously funded under our IHG agreement and expensed in 2021 to transaction related costs when the amount was not expected to be recovered. The amount recovered is included in transaction related costs in our consolidated statements of comprehensive income (loss). During the years ended December 31, 2025 and 2024, we incurred capital expenditures for our hotel in our IHG agreement of $1,729 and $1,124, respectively. Additional lease information (as lessor). As of December 31, 2025, our leases with parties other than our TRSs, provide for contractual minimum rents to be paid to us during the remaining current terms as follows:
Year |  | Amount
2026 |  | $ | 390,338 |
2027 |  | 387,894 |
2028 |  | 383,010 |
2029 |  | 379,542 |
2030 |  | 376,840 |
Thereafter |  | 1,239,620 |
Total |  | $ | 3,157,244 |
Additional lease information (as lessee). As of December 31, 2025, eight of our hotels were subject to ground leases where we are the lessee. In addition, our hotel operators enter various leases on our behalf in the normal course of business at our hotels, or our hotel operating leases. We calculated right of use assets and lease liabilities as the present value of the remaining lease payment obligations for our operating leases, which include the ground leases and hotel operating leases, over the remaining lease term using our estimated incremental borrowing rate. The right of use assets and related lease liabilities are included within other assets, net and accounts payable and other liabilities, respectively, in our consolidated balance sheets. At December 31, 2025 and 2024, our right of use assets and related lease liabilities each totaled $147,198 and $150,846, respectively, which represented our future obligations under our operating leases and are included in other assets, net and accounts payable and other liabilities, respectively, in our consolidated balance sheets. Our operating leases require minimum fixed rent payments, percentage rent payments based on a percentage of hotel revenues in excess of certain thresholds and rent payments equal to the greater of a minimum fixed rent or percentage rent. Rental expense related to our hotel operating leases of $9,312, $9,476 and $9,618 for the years ended December 31, 2025, 2024 and 2023, respectively, is included in hotel operating expenses within our consolidated statements of comprehensive income (loss). For operating leases related to our net lease properties, our tenants are required to pay the rental expense. As of December 31, 2025, our operating leases provide for contractual minimum rent payments to third parties during the remaining lease terms, as follows:
Year |  | Amount
2026 |  | $ | 14,352 |
2027 |  | 14,363 |
2028 |  | 14,082 |
2029 |  | 14,574 |
2030 |  | 14,833 |
Thereafter |  | 189,946 |
Total lease payments |  | 262,150 |
Less: imputed interest |  | (114,952) |
Present value of lease liabilities (1) |  | $ | 147,198 |
(1) The weighted average discount rate used to calculate the lease liability and the weighted average remaining term for our ground leases (assuming all extension options) and our hotel operating leases are approximately 5.4% and 19 years (range of 8 months to 62 years) and 6.6% and 10 years (range of 20 months to 41 years), respectively. Generally, payments of ground lease obligations are made by our tenants or managers. However, if a tenant or manager did not perform obligations under a ground lease or did not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property.

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for lessor's operating leases. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 30 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-30/tableOfContent + Details
Name: | us-gaap_OperatingLeasesOfLessorDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration