Service Properties Trust Announces New Agreements with Marriott

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[{"type":"text","content":"\nCombines Three Existing Agreements, Extends Term, Increases Credit Support, Provides for Renovation and Sale of Certain Hotels \n\n NEWTON, Mass.--(BUSINESS WIRE)--\nService Properties Trust (Nasdaq: SVC) today announced that it has entered agreements with Marriott International, Inc. (NYSE: MAR), or Marriott, which combine its three existing Marriott operating agreements, historically referred to as the Marriott Nos. 1, 234 and 5 agreements, into a single portfolio for a 16-year term commencing January 1, 2020. The Marriott Nos. 1, 234 and 5 agreements included 122 hotels, provided for aggregate annual owner’s priority returns and rents due to SVC of $192.2 million and were scheduled to expire on December 31, 2024, 2025 and 2019, respectively. Among other terms, the new combined agreements with Marriott provide as follows:\n\n\n\nThat all 122 Marriott hotels will be combined economically so that excess cash flows from any of these hotels are available to pay the aggregate annual owner’s priority returns due to SVC for these hotels, which is $190.6 million (approximately equal to the current aggregate annual owner’s priority returns due to SVC under the Marriott Nos. 1 and 234 agreements and 85% of the rents due to SVC under the Marriott No. 5 agreement (Kauai hotel)). SVC’s taxable REIT subsidiaries will continue to participate in the net cash flows from hotel operations after payment of management fees to Marriott, which base fees will continue to be subordinated to the annual owner’s priority returns due to SVC.\n\n\n\n\nThat the existing security deposit held by SVC for the Marriott No. 234 agreement ($33.6 million estimated as of December 31, 2019) will continue to secure payment of the aggregate annual owner’s priority returns due to SVC under the new combined agreements and may be replenished up to the security deposit cap of $64.7 million from 60% of the cash flows realized from operations of the 122 hotels after payment of the aggregate annual owner’s priority returns due to SVC, Marriott’s base management fees and certain other advances by SVC or Marriott, if any.\n\n\n\n\nThat Marriott will provide a new $30.0 million limited guaranty for 85% of the aggregate annual owner’s priority returns due to SVC through 2026 under the new combined agreements if the security deposit is exhausted.\n\n\n\n\nThat the term of the a...

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