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DATE

Thursday, Aug. 6, 2026 at 10:00 a.m. ET

CALL PARTICIPANTS

• Senior Director of Investor Relations - Kevin Barry
• President and Chief Executive Officer - Christopher J. Bilotto
• Vice President - Jesse Abair
• Treasurer and Chief Financial Officer - Brian E. Donley

TAKEAWAYS

• Normalized FFO per share -- $0.43 for the second quarter, matching consensus expectations.
• Retained Hotel RevPAR -- $135, an increase of 6.6% year over year driven by growth in occupancy and ADR.
• Retained Hotel EBITDA -- $57 million, representing a 4.2% increase year over year.
• Property Dispositions -- 20 properties sold for approximately $32 million since the start of the second quarter, including 19 net lease assets and one hotel.
• Debt Redemption -- $550 million in unsecured debt redeemed using proceeds from a $542 million net equity offering completed in April 2026.
• Interest Savings -- $30 million in estimated annual cash interest savings following the redemption of 2027 notes.
• Net Lease Portfolio Occupancy -- 96.6%, remaining unchanged from the prior quarter.
• Cash Basis NOI (Net Lease) -- 2.2% increase quarter over quarter due to acquisitions and contractual rent growth.
• Aggregate Rent Coverage -- 2.09x on a trailing 12-month basis for the net lease portfolio.
• TA Rent Coverage -- 1.34x, an improvement of 10 basis points since the previous quarter and a 12% increase since the fourth quarter of the prior year.
• Total Debt -- $4.7 billion with a weighted average interest rate of 5.66%.
• Capital Expenditures -- $30.5 million invested in the second quarter, primarily for hotel renovations at the Nautilus in Miami and Royal Sonesta properties.
• Full-Year FFO Guidance -- $124 million to $144 million, or $1.20 to $1.35 per share, based on a 105 million weighted average share count.
• Contract Segment Revenue -- 22% increase during the quarter, benefiting from new airline crew business.
• Insurance Costs -- 20% reduction in property insurance premiums effective July 1, 2026.
• Nautilus EBITDA Drag -- $4.5 million expected for the full year due to renovation displacement at the Miami property.
• Retained Hotel EBITDA Margin -- 19.4% for the quarter, compared to negative margins for the exit hotels.
• Annualized Base Rent (Net Lease) -- Approximately $400 million across 745 properties in the net lease portfolio.
• Leasing Volume -- 210,000 square feet executed with a weighted average lease term of seven years.
• YTD Net Lease Acquisitions -- $9 million across four properties in QSR and automotive sectors at a weighted average cash cap rate of 7.9%.

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RISKS

• CFO Donley stated, "we do expect a slowdown in the back half of August and then into Q4," citing seasonal trends in specific geographies.
• CEO Bilotto noted that RevPAR growth was "partially offset by expected displacement related to our active redevelopment and renovation projects," particularly at the Nautilus South Beach property.

SUMMARY

Management reported progress on capital recycling and debt reduction strategies, utilizing equity proceeds to lower interest expenses and enhance financial flexibility. The company is transitioning its focus toward its net lease portfolio while divesting underperforming hotel assets to eliminate negative EBITDA drag. Operational initiatives are centered on optimizing hotel revenue channels and improving labor productivity to drive margin expansion. Strategic priorities for the remainder of the year include completing scheduled hotel dispositions and advancing renovation projects to capture performance upside.

• CEO Bilotto highlighted that the 15 hotels the company is exiting "operated at a negative EBITDA margin" compared to the 19.4% margin of the retained portfolio.
• The company intends to market its final IHG-managed full-service hotel in Atlanta, as the current management agreement is scheduled to expire in early 2027.
• Two net lease franchisees previously in bankruptcy are expected to assign assets to corporate entities, resulting in a credit profile improvement for those locations.
• Abair noted that increased demand in the freight industry is expected to be "persistent throughout 2026," which supports TravelCenters of America performance.
• The renovation of the Nautilus South Beach is scheduled for completion by November 2026 to align with the start of the peak seasonal demand period in Miami.
• CFO Donley indicated the $580 million senior secured notes maturing in 2027 are backed by "very strong collateral," which management believes provides refinancing optionality.

INDUSTRY GLOSSARY

• ADR: Average Daily Rate; a measure of the average rate paid for rooms sold.
• EBITDAre: Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate.
• FFO: Funds From Operations; a measure used by REITs to define cash flow from their operations.
• GOP: Gross Operating Profit; hotel revenue minus departmental and undistributed operating expenses.
• NOI: Net Operating Income; a figure used to calculate the profitability of income-producing real estate.
• OTA: Online Travel Agency; third-party websites used for consumer travel bookings.
• QSR: Quick Service Restaurant; establishments that prioritize speed of service and convenience.
• REIT: Real Estate Investment Trust; a company that owns, operates, or finances income-producing real estate.
• RevPAR: Revenue Per Available Room; a performance metric calculated by multiplying a hotel's ADR by its occupancy rate.
• TA: TravelCenters of America; a major operator of highway travel centers and a primary tenant of SVC.
• WALT: Weighted Average Lease Term; the average remaining time on a portfolio of leases.

Full Conference Call Transcript

Operator: Good day, and welcome to the Service Properties Trust Second Quarter 26 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask. Please note this event is being recorded. I would now like to hand the call over to Kevin Barry, Senior Director of Investor Relations. Please go ahead.

Kevin Barry: Good morning. Thank you for joining us today. With me on the call are Christopher J. Bilotto, President and Chief Executive Officer Jesse Abair, Vice President and Brian E. Donley, Treasurer and Chief Financial Officer. In just a moment, they will provide details about our business and our performance for the second quarter of 2026. Followed by a question and answer session with sell side analysts. I would like to note that the recording and retransmission of today's conference call is prohibited. Without the prior written consent of the company. Also note that today's conference call contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 2000 and other securities laws.

Forward looking statements are based on SVC's beliefs and expectations as of today, August 6, 2026, actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission which can be accessed from our website at svcreit.com or the SEC's website. Investors are cautioned not to place undue reliance upon any forward looking statements. In addition, this call may contain non GAAP financial measures, including normalized funds from operations or normalized FFO and adjusted EBITDAre.

A reconciliation of these non GAAP figures to net income is available in SVC's earnings release and presentation that we issued last night, which can be found on our website. Lastly, we will be providing guidance on this call including estimated 2026 normalized FFO, hotel EBITDA, net operating income or NOI, adjusted EBITDAre. We are not providing a reconciliation of these non GAAP measures as part of our guidance, because certain information required for such reconciliation is not available without unreasonable efforts or at all. I will now turn the call over to Christopher.

Christopher J. Bilotto: Thank you, Kevin. Good morning, everyone, and thank you for joining the call today. I will begin today's call with an update on our strategic priorities, and highlights from our hotel portfolio performance during the second quarter. Jesse will then discuss our net lease business, and Brian will conclude with a review of our financial results, balance sheet and outlook. Last night, we reported second quarter results that reflect continued momentum advancing SVC's strategic priorities strengthening the company's financial profile. Our net lease portfolio delivered steady NOI growth, providing a highly predictable cash flow stream that anchors our portfolio And within our hotel segment, RevPAR outperformed the industry benchmark for the seventh consecutive quarter.

Overall, normalized FFO per share of $0.43 was in line with consensus expectations, and we are maintaining our full year earnings guidance. Starting with our strategic priorities. We remain focused on enhancing our net lease portfolio, improving the cash flows and operating performance of our retained hotel portfolio and further enhancing our balance sheet through disciplined capital allocation. Since the beginning of the second quarter, we have sold 20 properties for approximately $32 million including 19 net lease assets and 1 hotel. A portion of these proceeds combined with over $540 million of net proceeds from SVC's successful equity offering in April was used to redeem $550 million of unsecured debt reducing our leverage profile and decreasing annual interest expense.

While providing the company with enhanced flexibility to focus on operational execution and cash flow growth. Turning to hotel performance. Our retained hotel portfolio, excluding the 15 sales hotels, delivered another quarter of improved operating results. RevPAR increased 6.6% year over year with balanced growth in occupancy and ADR. And relative strength in full service and upper upscale hotels. RevPAR growth was partially offset by expected displacement related to our active redevelopment and renovation projects most notably, the Nautilus South Beach. Excluding the Nautilus short term disruption, underlying RevPAR growth across the balance of the portfolio was meaningfully stronger at 9% reinforcing our confidence in the improved fundamentals in our portfolio.

The portfolio continued to benefit from completed renovations a 22% lift in contract segment revenue as well as rate driven demand related to World Cup and select host cities. Importantly, this positive momentum has carried into the third quarter with preliminary July RevPAR for our retained hotel portfolio of 7.1% year over year. Retained hotel EBITDA increased 4.2% this quarter, with notable strength at the Sonesta properties in Hilton Head and Miami Airport as well as Radisson in Salt Lake City. To put this performance into context, our retained hotel portfolio generated a quarterly adjusted hotel EBITDA margin of approximately 19.4%. By comparison, the 15 hotels we are exiting operated at a negative EBITDA margin over that same period.

This gap is the core economic logic behind our capital recycling strategy. Rather than continuing to dedicate capital and management attention to a cohort of assets, with structurally negative returns, we are redirecting those resources toward a retained portfolio that is already demonstrating clear trajectory of margin improvement. Building on this, we see significant additional opportunities for improved profitability across our retained hotel portfolio. Our asset management group continues to work with our operators on several opportunities to expand hotel EBITDA margins both at Sonesta and our other operators. These efforts are initially centered on 3 primary pillars.

The first pillar relates to revenue optimization, targeting customer acquisition costs by driving more business to the direct and most profitable channels like brand.com and therefore reliance on higher cost OTAs. This also includes a continued focus on driving contract and group base, along with ancillary revenue streams such as food and beverage and parking. Second, in support of improved labor efficiency, our operators are implementing a leaner and more dynamic labor model to better align staffing with demand and reduce reliance on costly contract labor. Within the quarter, we are already seeing the benefits of this with Senesler, Radisson and IHG all improving labor productivity year over year.

The third pillar relates to capitalizing on operating leverage with anticipated savings from benefits plans property insurance, and diligent controls over energy and utility costs As our renovated hotels stabilize and occupancy grows, this will provide enhanced pricing power and position the property to capture additional event driven which in turn will absorb fixed costs more effectively, ultimately driving profitability. While early in the process, initial benefits are starting to materialize, including the positive trend with labor productivity a recent 20% reduction in property insurance cost for our portfolio, which noted a 22% lift from contract revenue. Largely from new airline crew business and the adoption of certain technologies and processes that will drive margin improvement.

As these initiatives progress, we provide further updates on targeted revenue and expense benefits. Beyond these initiatives, SBC is positioned to capture meaningful performance upside from the elimination of approximately $15 million of negative EBITDA drag from our exit hotels. The gradual burn off of displacement and corresponding performance growth from our hotel renovations most notably the ongoing redevelopment of the Nautilus in Miami Beach. While these benefits will be realized over time, they provide a road map for improvement in hotel EBITDA and cash flow generation complementing our top line initiatives focused on driving market share across the portfolio. Turning to our hotel dispositions.

We remain on track to sell the previously disclosed 15 hotels which included the sale of a 133-key hotel in July for $18.4 million. To date, we are under a purchase and sale agreement or letter of intent with 13 hotels and are marketing 1 hotel. We expect the majority of the remaining dispositions to be mostly completed over the balance of 2026 with proceeds continuing to support debt reduction to further improve our financial flexibility. As part of this process, we also intend to bring to market our remaining IHG managed full service hotel of 495-key property located in the Atlanta perimeter submarket.

As some may recall, we removed this asset from the marketing process last year while we evaluated varying strategies with the in place agreement and capital outlook. This followed a comprehensive hold versus sell analyses undertaken as the hotel's management agreement approached its scheduled expiration. While the property has performed well operationally, we believe a sale represents the more attractive path to unlocking value for shareholders relative to continuing to own and reinvest in the asset. We expect marketing to commence in Q3 and look forward to providing future updates. Before I conclude, I would also like to briefly touch on corporate governance. As we previously announced, our Board continues to actively evaluate candidates for an additional independent trustee.

The search remains focused on identifying an individual with meaningful hospitality industry experience, who can further complement the board's experience and support SBC's ongoing strategic evolution. Looking ahead, our priorities remain clear. Translate the operating momentum in our retained portfolio into sustained margin and cash flow improvement, while completing the exit of our non core hotels to further strengthen SVC's financial profile. With a stronger balance sheet and the initiatives we have underway to further enhance performance, we believe SVC is well positioned to unlock value across the portfolio to drive long-term shareholder returns. I will now turn it over to Jesse to discuss the net lease portfolio in more detail.

Jesse Abair: Thank you, and good morning. Our net lease assets continue to serve as a dependable source of cash flow for us with minimal capital requirements, long-duration leases and a diversified tenant base. The portfolio exhibited strong performance in the second quarter, led by meaningful NOI growth, sustained leasing momentum and continued improvement in the performance of our travel centers. Highlights from the quarter include an increase of 2.2% in cash basis NOI quarter over quarter as a result of contributions from recent acquisitions, contractual rent growth from our existing leases and a reduction in our credit reserves.

Occupancy was unchanged from the prior quarter at 96.6% although we expect to see incremental growth in occupancy throughout the remainder of the year given the current state of our leasing pipeline, and our asset management team's dedicated efforts to efficiently dispose of vacant properties and cycle in new brands. Optimizing our portfolio and developing new operator relationships will be an ongoing focus for our team as we continue to transition SBC towards the net lease side of the business. The aggregate rent coverage of our portfolio improved to 2.09x on a trailing 12-month basis. The improvement was driven primarily by our 10 basis points to 1.34x.

This is the second straight quarter of coverage growth for TA and represents a 12% increase since the fourth quarter of last year. For the balance of the portfolio, rent coverage again came in north of 3.5x as tenant credit quality and operating performance remained stable. On the leasing front, our asset management team executed deals totaling 210 thousand square feet with a weighted average lease term of roughly 7 years. With just 1% of annualized base rent scheduled to expire through year end, and 3.8% rolling through the end of 27 our near term expiration schedule remains very manageable, our asset management team has been proactively engaging with tenants that have upcoming expirations to negotiate renewals.

Turning to capital recycling. We continue to execute our measured growth strategy. On the acquisition side, year to date, we have invested approximately $9 million across 4 properties operating in the QSR and automotive services industries. These acquisitions were completed at weighted average cash and GAAP cap rates of 7.9% and 8.8% respectively. And carried weighted average lease terms of approximately 15 years. We are under agreement on another 5 properties, a mix of dollar stores and casual dining concepts, for a total of $14.2 million which we expect to close in the third quarter. These transactions funded through capital recycling put us well ahead of schedule for our target of $25 million of annual acquisition activity.

Since the beginning of the year, we have sold 21 properties for $15 million and we expect a similar level of dispositions during the second half of 2026. The net lease portfolio now consists of 745 properties with annualized base rent of nearly $400 million and a tenant roster that includes 185 businesses, operating in our more than 140 brands, across a diverse range of industries led by travel centers, quick service restaurants, fitness centers, and grocery stores. More than 95% of our annualized base rent is derived from leases that contain contractual rent increases or percentage rent provisions. Providing embedded NOI growth and inflation protection over time.

As we work to reposition SBC toward a more net lease oriented company, our focus will be on enhancing portfolio quality, maintaining strong occupancy and credit metrics, extending our WALT and generating durable cash flow growth. We believe our disciplined asset management and capital allocation strategies will ensure SVC's measured transition to a primarily net lease platform. And with that, I will turn the call over to Brian to discuss our financial results.

Brian E. Donley: Thank you, Jesse, and good morning. As we previously announced, SVC affected a 1-for-5 reverse share split in early July and all share information on our earnings report and 10 Q have been retroactively adjusted. Additionally, given SVC's recent equity issuance comparing per share data to prior period is not meaningful. Starting with our consolidated financial results for the second quarter of 2026, normalized FFO was $55 million, down $2.6 million or 4.5% compared to the prior-year quarter.

Normalized FFO this quarter as compared to the prior quarter were primarily impacted by a $20 million decline in hotel results largely from our hotel disposition activity partially offset by a $15 million decline in interest expense and a $2.3 million increase in performance from our retained hotels and a $1.3 million increase in NOI from the net lease portfolio. Turning to our hotel portfolio performance. For our 93 comparable hotels this quarter, RevPAR increased by 6.5%, gross operating profit margin percentage declined by 60 basis points to 28.7%. Below the GOP line costs at our comparable hotels increased by $3.5 million from the prior year driven primarily by higher insurance costs.

Our 93 comparable hotels generated adjusted hotel EBITDA of $55 million during the quarter. Which was relatively flat compared to the prior-year quarter. The 78 hotels in our retained portfolio generated RevPAR of $135 an increase of 6.6% year-over-year. Adjusted hotel EBITDA of $57 million during the quarter representing an increase of 4.2% year-over-year. Excluding the 3 hotels under renovation, hotel EBITDA increased $6.5 million or 13.4%. The Sonesta exit hotels, which we sold are continuing to market for sale produced losses of $1.9 million during this quarter. A decline in profitability of $2.2 million year-over-year.

NOI from our net lease portfolio increased $1.3 million over the year over the prior year as a result of our acquisition and leasing activity partially offset by vacancies and credit losses. Turning to the balance sheet. We have been active in the capital markets and took steps to further strengthen our balance sheet, improve our debt maturity profile and our cash flow. During the quarter, we raised net proceeds of $542 million from our equity offering and redeemed all $450 million of our outstanding 5.5% senior guaranteed unsecured notes due 2027 and the remaining $100 million of outstanding 4.95% senior unsecured notes due 2027. This activity resulted in additional annual cash interest savings of $30 million.

We currently have $4.7 billion of debt with a weighted average interest rate of 5.66%. As of today, there are no amounts outstanding on our $650 million revolving credit facility. This credit facility matures in June 2027, and we have a 1-year extension option available to us. Our $580 million of zero coupons senior secured notes mature in September 2027 and they are supported by strong net lease collateral, which we believe provides refinancing optionality. Turning to our capital expenditure activity. During the second quarter, we reinvested $30.5 million in capital improvements continue to be driven by the renovation of the Nautilus in Miami as well as projects at the Royal Sonestas in Boston, New Orleans and Columbus.

Turning to our annual guidance. We are reaffirming our full year outlook for hotel EBITDA, net lease NOI and consolidated adjusted EBITDA. We are maintaining our normalized FFO range of $124 million to $144 million or $1.20 to $1.35 per share. The per share amounts assume a weighted average share count of 105 million shares. This full year guidance assumes midpoint expense of $360 million and G&A expense of $40 million. This guidance does not reflect the impact of completing the remaining Sonesta hotels planned for disposition and it continues to assume $25 million of capital recycling on our net lease portfolio.

We continue to expect total CapEx for the year of $120 million to $140 million Cash flow available for distribution was $42.5 million for the quarter and we continue to expect to generate positive CAD for the full year 2026. Operator, that concludes our prepared remarks. We are ready to open the line for questions.

Operator: We will now begin the question and answer session. And our first question will come from Tyler Batory of Oppenheimer. Please go ahead.

Tyler Anton Batory: Hey, good morning. Thanks for taking my questions. A few on the hotel portfolio first, and I am really focused on the retained hotels. Talk a little bit more about the renovation activity that, I believe, was impacting margin in Q2. And you talked about a number of initiatives to improve the margin performance at the retained hotels? Just talk through a little bit in terms of the time line on when some of those initiatives might start to show up? In the performance of the margin side of things? And then just remind us again where you would like to go in terms of moving margin in the retained hotel portfolio?

Brian E. Donley: Hey, good morning, Tyler. This is Brian. I will start and Christopher will jump in with some of the more forward looking stuff. Yes, for the 3 hotels, we earmarked as under renovation. I mean those hotels I mean the biggest 1 is obviously the South Beach property. We have been talking about. But those hotels, you know, generated $1 million of revenue this quarter, but it was a $3.3 million decline year-over-year. 1 of the 3 is an exit property, so it is a little bit of noise on both fronts. But Nautilus is projected to be completed by the end of October and early November.

With some phased completions with rooms and public space. that is our biggest project for the year. it is got a lot of financial impacts on both the RevPAR top line and bottom line. And this Q1, Q2 is the high season for Miami. So that was a particular drag in our results. But as we look forward to Q4, we should see a positive uplift from that property amongst others. Some of the other properties under renovation or that recently completed renovation have also started ramping up Simply Suites in Las Vegas, for example, You know, we are doing Royal Sonesta Market Cambridge, I mentioned, in New Orleans. there is still a bit of noise and moving pieces. Yeah.

Operator: I would just add, and kind of to the back half of your question, you know, with respect to kind of some of the initiatives.

Christopher J. Bilotto: Look, it is iterative. Right? This is a broader strategy, kind of in line with we have talked about coming into the year and over, you know, even into Q1, I think, you know, some of kind of the small wins, you know, we have you know, reduced our property insurance by 20%, effective 7/1. So that is a fiscal year. And there is also some benefits that come with that with reduced deductible, and so we would expect there to be kinda just less overall cost. Just the insurance premium alone is a couple million dollars. For the for the fiscal year.

You know, we are starting to kind of see the inflow of, you know, other types of ancillary alongside contract business. So those are all kinda near term initiatives. I think kind of the bigger piece is much more of the work being done with our operators and so that is just a big piece of that. You know, as you recall, there is a new management team that started there effective August 1. And I think it goes without saying, kinda giving them room and runway to really kinda dig in and unpacked opportunities in the portfolio is something that they have been focused on in many of strategies are kinda tied to.

And so we would for more of that to flow through towards the end of the year. And predominantly like some of the bigger things, like benefits, in Q1 of next year. And I think the idea is that we will provide kind of more specific numbers tied to these levers after we have given them kind of the needed time to vet through that. So, you know, potentially as early as this next Q3. Other thing I would highlight, which I think kind of goes without saying is, selling these assets, you get rid of negative $15 million of EBITDA drag, that is the addition by subtraction.

In our guidance, we have $12 million of this displacement occurring with these renovations. And so getting that money back gets you to zero, let alone the uplift that is gonna come when performance turns around and so when you start to add up, you know, these numbers, they become very material. And I think all those will just kind of continue to fold in and ramp up specifically as we get into 2027.

Tyler Anton Batory: Okay. Great. And to follow-up on the RevPAR, side of things, we thought Q2 was really strong. strong, but you kept the full year guidance range. So just talk about the outlook for the rest of the year. I am not sure if that is renovation activity or anything else is impacting that outlook. But curious if there is any extra conservatism in terms of what you are providing for what is implied for the second half of the year?

Brian E. Donley: Sure, Tyler. Thank you. And I think from our standpoint, Q2 was definitely strong We have seen our preliminary July results, which gives us some optimism going into the third quarter. But if you look at our portfolio and the seasonality of it, we do expect a slowdown in the back half of August and then into Q4. it is just the way our portfolio trends in some of our geographies. But we feel comfortable with the guidance range as we sit here today. And there is a lot of different things and moving pieces in motion as we look to the back half of the year.

As Chris outlined, and throwing some of the disposition activity and the potential timing of some of that could affect our numbers and hopefully to the upside.

Tyler Anton Batory: Okay. And then last question from me on the asset sales. Remind us of the time line there, I think, prepared remarks, you said by the end of 2026, but any sort of execution risk in terms of getting those completed? And then a bigger picture, question, just talk a little bit about the market overall for asset sales and help us think through any updated thoughts in terms of future assets that might be on the market for sale. I know you are now marketing that asset in Atlanta. I am not sure if there is anything in the portfolio that might make sense. Down the road here.

Christopher J. Bilotto: Yeah. So I think first and foremost, you know, with respect to the 15 properties that we been active with, you know, given where we are with those groups, again, mostly under contract. it is really kind of a Q3, Q4-type of execution. I would say, you know, of the quantum, which is just shy of $100 million representing kind of that bucket of under contract. You know, maybe between $20 million and $30 million might transact in Q3 with the balance in Q4. there is 1 that we are marketing that might you know, might find its way into kind of the early part of 2027.

And then certainly, I think with respect to the Atlanta perimeter just given where we are in the process, I think it is fair to say that, you know, an early 2027 is a reasonable expectation, depending on where pricing comes in. And so, you know, to your to your broader question, look, you know, our plan, has been and continues to be to really kinda dig into each hotel and figure out where we can optimize for performance. And we have contemplated and communicated that is a multi-year journey.

I think what we are selling this year and then even the introduction of this hotel in Atlanta is a testament to how we think about, you know, when the timing is right. We are ready to come to market, but I think, you know, more importantly, would set the expectation that, driving performance to drive value is a big part of our business, and that is something that we will adhere to I think that the last question you had about the broader market is, it is mixed. I think for focused service hotels, I think we have continued to see some level of strength just kind of given where that price point is.

And then for more luxury hotels, there seems to be capital chasing, you know, those types of concepts. And then in between, depending on that price point, you know, the $50 to $100 million price point, it is a little bit softer. And so it does not mean that there is not an ability to transact, but I think most of the transactions are coming from more kind of stabilized hotels versus kind of the journey where we are on is kind of turning around performance to kind of get us to that point.

Tyler Anton Batory: Great. Very helpful. that is all for me. Thank you.

Operator: The next question Our next question will come from Jack Armstrong of Wells Fargo. Please go ahead.

Jackson Armstrong: Hey, good morning and thanks for taking the question. Can you provide us with your updated thoughts on the ramp for the Nautilus When you expect it to open? What the EBITDA drag is in the third and fourth quarters? And then where you expect the asset to stabilize and the pathway to get there?

Brian E. Donley: Sure, Jack. The Nautilus project is underway today. We expect delivery by November. Just ahead of where the season starts ramping up for that market. I think from a cash drag standpoint, for the full year, it is around $4.5 million for that property. Yes. So it is a significant swing in our expectations going forward as it ramps up. You know, we will obviously give more color we get into next year's guidance. But know, the property did around $5 million or $6 million before renovation on an annual run rate. We expect that to significantly increase going forward.

Between that property and some of the others that are still ramping, we are we are optimistic we will continue to see the right results.

Jackson Armstrong: Helpful color there. Can you touch on what percentage of your bookings were through the OTAs in Q2 and then maybe where that is been historically and then what the goal is there going forward, that being some of the initiatives you talked about?

Christopher J. Bilotto: Yeah. I mean, you know, the bookings across the OTA have kind of hovered in the mid-20 percent. You know, where that bogey needs to be, I think it is still TBD. I mean, certainly, we want that to come down closer to 20%. But I think that is a there is a lot of work that needs to go in to do that. So between 20 and 25 is probably kind of a healthy expectation in the medium term.

And then, again, I think that is gonna come through the things that I referenced with respect to kind of just changing some of the channels, you know, kind of allocating more resources to growing kind of loyalty programs and driving business to loyalty programs. And I think as we bolster other areas within the business, whether it is group or contract business, let alone transient, that in itself will kind of just truncate, you know, where that percentage comes from. But to answer your question, it is kind of getting closer down to that 20% mark.

Jackson Armstrong: And then maybe 1 on the net lease. Side. Can you give us your updated thoughts on credit losses in the back half of the year? Maybe provide an update on where the 2 franchisee bankruptcies stand and any changes to your kind of watch list in the first quarter?

Jesse Abair: Yes, Jack. This is Jesse. I will take that 1. With respect to the 2 bankruptcies we announced last quarter, think good news on both of those fronts. The Popeyes franchisee will be emerging from bankruptcy in Q3. We have got a deal in place to assign those assets back to corporate, so there will be a credit bump there. All remaining economics of those existing master lease will stay the same. So they are already back to a rent paying status. So probably net, that is a good story, a positive story. And then with respect to the other franchisee that you get, it was just another QSR.

We similar story; we expect all of those to remain open and get assigned to corporate, so we will see that credit bump as well. Still negotiating the deal terms. With respect to exactly how it is going to play out in terms of the rent going forward. I would say that the big story on the net lease side of things for us relates to the TA coverage piece and this is now the second straight quarter. We have seen a pretty meaningful bump. You know, as best as we can tell, we think that is probably a function of a few things.

You know, we are seeing double digit growth both in terms of freight pricing as well as diesel margins. Right? Those are 2 pretty big indicators of how that business is going to go. The diesel margins being a little more transitory and related to the Middle East conflict, but I think they are thinking across the board in the freight industry is that increase in demand is probably something that we expect to be persistent throughout 2026. So again, a really good indicator for that business. And again, maybe the third piece to that is we may be seeing some early fruits of the business improvement plan that BP has implemented with respect to those TA assets.

So they have now had several quarters of new management and the opportunity to execute on that plan. So multifactorial certainly, but I think the big news in terms of how we think of the net lease portfolio was driven by the increased performance in TA.

Jackson Armstrong: Really helpful. that is it for me. Thanks.

Operator: The next question comes from Floris Van Dijkum of Ladenburg Thalmann. Please go ahead.

Analyst: Hey, good morning. it is it is [Inaudible] on for Floris. Thank you for taking the questions. Can you walk us through your current thinking on addressing the remaining 2020 debt maturities, especially around the timing for debt? Thanks.

Brian E. Donley: Sure. From our standpoint, we have got $45 million in that lease mortgage notes, a variable funding note coming up in January. We expect to take that out with asset sale proceeds. I mentioned the revolver is up in June. We do have a 1-year extension option. So we are planning and thinking around that in the coming months, what to do there. And then the zero coupon senior secured notes mature in September of 2027. Again, back half of this year, early next year is probably when we will consider transacting, depending on market conditions. Those notes are back by 2 of our travel center lease pools, so very strong collateral.

So we think we have flexibility in refinancing those notes. Then whether or not we pay some of it down with asset proceeds remains to be seen. Depending on the quantum But that is our shorter term thinking as far as what is upcoming on the balance sheet.

Analyst: Thank you. Thank you.

Operator: The next question comes from John Massocca of B. Riley. Please go ahead.

John James Massocca: Good morning. Maybe sticking with the balance sheet question and the zero coupon bonds in particular, I mean, you think where you sit today after the equity raise you are in a good enough position from a covenant perspective to refinance those with a more kind of traditional secured debt? Or would you still need to probably for covenant related reasons, go with a more unique angle like you did with the last debt raising?

Brian E. Donley: John, thanks for the question and good morning. Our current thinking is that it probably most likely be a regular way type debt instrument. The zero coupon was sort of a temporary need from a covenant standpoint, as you outlined. Pre equity raise. I think we do as we sit here today and how those bonds have traded, I think we will be in pretty good position to be able to do that. And absorb the cash interest that would be expected with such a refinancing. Yes. Again, those bonds in the market have traded very well. The collateral is very strong, and I think that sets us up in a good spot.

John James Massocca: Okay. And then on the hotel front, with the 2 assets that you are kind of marketing but do not have pricing agreed to or under contract on, are there kind of brackets proceeds you are looking for? I know it might be a little bit specific given it is only 2 assets, just kind of curious if there is like a range of proceeds we might expect from those dispositions.

Christopher J. Bilotto: Yeah. We will provide more color as time progresses. I think where we stand, we want to let the process play out a little bit, let that guide kind of overall expectations.

John James Massocca: Okay. And then with the asset in Atlanta, you would kind of previously marketed it Was it the kind of operational position of the property that made it attractive to take it back for sale? Or I mean, it seems like it did pretty well last quarter. Has there been kind of a change in overall performance that now might make it more attractive to buyers? Just kind of curious why that specific asset, why take that back into the market today?

Christopher J. Bilotto: Yeah. Last year, when we took it to market, you know, there was a couple different factors. 1 was just on kind of unpacking a little bit more around the kind of the capital needs and the overall with the with the brand. That, you know, I think where we were seeing offers with the fact as part of that as we wanted to rethink it. As we sit here today, what is attractive about where we are at with that asset is you know, that agreement expires at the beginning of next year. And so, it provides optionality with the buyer pool whether or not they wanna purchase that with or without the brand.

And again, just gives general flexibility on kind of execution of whatever business plan is associated with their capital needs. And so I think from a, you know, from a timing standpoint and kind of timing the market relative to just kind of some of those time frames. It just our view, is a is a much more attractive candidate for a buyer.

John James Massocca: Okay. And then, like, bigger picture as we look into 2027, should we kind of expect hotel sales to be 1-off-ish in nature You know, I know it is early days, but any outlook for that versus maybe a more kind of portfolio driven or kind of more structured disposition program next year?

Christopher J. Bilotto: it is early days, John. I think, as I have you know, the real focus is around performance improvement. You know, that is a that is a journey that we have kinda talked about. We will let that guide, how we think about dispositions. And so you know, as we kind of get through the year and more specifically into 2027, I think we will have more color on what that could look like.

John James Massocca: Okay. And then 1 last 1 on the hotel front. Just a quick clarification. The 7.1% July RevPAR growth, that for the total portfolio or just the retained assets?

Brian E. Donley: That was just the retained assets. Okay.

John James Massocca: Then lastly, 1 on the net lease side. How should we think about lease expirations here over the remainder of the year? Is the outlook that those are strong candidates for renewal? Or how are you kind of thinking about those assets? Typically?

Jesse Abair: Yes. We do not have a ton of expirations in the back half of the year. We have got our arms around most of them. We expect to be reviewing the vast majority of them; there may be 1 or 2 that go dark, but, you know, even that would be somewhat of a surprise for us. So I think we are in good shape for the balance of 2026 and now we are kind of trying to get ahead of the 2027 as well at this point with the team.

John James Massocca: Okay. that is it for me. You very much.

Operator: This concludes our question and answer session. I would like turn the call over to Christopher J. Bilotto, President and Chief Executive Officer for any closing any closing remarks.

Christopher J. Bilotto: Thank you for joining today's call. Please reach out to our Investor Relations if you are interested in scheduling a meeting with SBC.

Operator: That concludes our call. The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.