Service Properties Trust Amends Management Agreement with Hyatt

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[{"type":"text","content":"\nAmended Agreement Supported by $30.0 Million Guaranty\n\n NEWTON, Mass.--(BUSINESS WIRE)--\nService Properties Trust (Nasdaq: SVC), or SVC, today announced that it reached an agreement with a subsidiary of Hyatt Hotels Corporation, or Hyatt, to amend their previous management agreement for 22 Hyatt Place hotels owned by subsidiaries of SVC.\n\nUnder the amended agreement, Hyatt will continue to manage 17 of the hotels for a 10-year term effective as of April 1, 2021. Among other terms, the new agreement with Hyatt provides as follows:\n\n\nSVC’s owner’s priority return is set at $12.0 million annually, supported by a $30.0 million guaranty for 75% of the aggregate annual owner’s priority return beginning in 2023.\n\n\nA management fee equal to 5% of gross room revenues payable to Hyatt will be an operating cost paid senior to SVC’s owner’s priority return.\n\n\nFollowing payment of SVC’s owner’s priority return and reimbursement of certain advances, if any, Hyatt may earn a 20% incentive management fee and SVC will receive the remaining cash flow.\n\n\nSVC will fund approximately $50 million for renovations expected to be completed by the end of 2022. 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.\n\n\nJohn Murray, President and Chief Executive Officer of SVC, made the following statement:\n\n“SVC and Hyatt have had a productive business relationship since 2005. The amended agreement extends that relationship at least through 2031, maintains credit support for SVC’s owner’s priority return and provides for renovation activity, which will enhance the portfolio and is expected to result in improved coverage of SVC’s owner’s priority return for the portfolio.”\n\nSVC and Hyatt have transitioned management of five hotels to Sonesta International Hotels Corporation, or Sonesta, under the Sonesta Select brand. SVC also owns approximately 34% of Sonesta.\n\nAbout Service Properties Trust\n\nService Properties Trust is a real estate investment trust which owns a diverse portfolio of hotels and net lease service and necessity-based retail properties across the United States and in Puerto Rico and Canada. SVC is managed by the majority owned operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset man...

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