v3.26.1
Related Person Transactions
 6 Months Ended
Jun. 30, 2026
Related Party Transactions [Abstract]  
Related Person Transactions Related Person Transactions
We have relationships and historical and continuing transactions with RMR, RMR Inc. and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. Prior to the Effective Date, Adam Portnoy served as the Chair of our Board of Trustees and one of our Managing Trustees, and as of the Effective Date, he was elected a Trustee of our Board of Trustees. Mr. Portnoy is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Yael Duffy, our President and Chief Executive Officer, is also an executive vice president of RMR Inc. and an officer and employee of RMR and, prior to the Effective Date, she served as our other Managing Trustee. Each of our other officers is also an officer and employee of RMR. Mr. Portnoy serves as chair of the boards and as a managing trustee of other public companies to which RMR or its subsidiaries provide management services and one of our other Trustees serves as an independent trustee of certain of these public companies. Other officers of RMR, including Ms. Duffy, serve as managing trustees or officers of certain of these public companies.
Our Manager, RMR. We have two agreements with RMR to provide management services to us, each of which was amended and restated in connection with our emergence from the Chapter 11 Cases on the Effective Date. Pursuant to the Amended Business Management Agreement (i) we issued to RMR 439,072 common shares, which is equal to 2.0% of our outstanding common shares on the Effective Date, and (ii) we may issue to RMR common shares equal to up to an additional
8.0% of our outstanding common shares upon the satisfaction of certain financial and/or performance metrics to be determined by our Board of Trustees. RMR also provides management services to our unconsolidated joint venture. See Note 10 for more information regarding the Amended RMR Management Agreements and our unconsolidated joint venture’s management agreement with RMR.
Leases with RMR. We lease office space to RMR in certain of our properties for RMR’s property management offices. Pursuant to our lease agreements with RMR, we recognized rental income from RMR for the three and six months ended June 30, 2026 and 2025 as follows:
SuccessorPredecessor
Period from June 18 through June 30, 2026Period from April 1 through June 17, 2026Three Months Ended June 30, 2025
Rental income from RMR for leased space$30 $164 $232 
SuccessorPredecessor
Period from June 18 through June 30, 2026Period from January 1 through June 17, 2026Six Months Ended June 30, 2025
Rental income from RMR for leased space$30 $344 $433 
Sonesta. Sonesta International Hotels Corporation, or Sonesta, operates a 246,000 square foot hotel within a mixed-use property in Washington D.C. under a management agreement, or the Sonesta Management Agreement, that expires on December 31, 2040, and includes two 10-year renewal options. The Sonesta Management Agreement provides that we are paid an annual owner’s priority return if gross revenues of the hotel, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so. The Sonesta Management Agreement further provides that we are paid an additional return of the operating profits, as defined therein, after paying the owner’s priority return, reimbursing owner or manager advances, funding furniture, fixtures and equipment, or FF&E, reserves and paying Sonesta’s incentive fee, if applicable. The stated annual owner’s priority return is $7,500 and increases by 8.0% of our out-of-pocket capital expenditures and will increase annually to 102% of our prior year’s annual owner’s priority return. We are responsible for any capital expenditures in excess of available funds in the FF&E reserve. Our annual priority return under the Sonesta Management Agreement as of June 30, 2026 was $7,637. The Sonesta Management Agreement requires that 1.0% of gross revenues for 2025, 3.0% of gross revenues for 2026 and 4.0% of gross revenues for each calendar year thereafter be escrowed for future capital expenditures as FF&E reserves.
Hotel operating revenues, realized returns under the Sonesta Management Agreement and FF&E escrow amounts funded during the three and six months ended June 30, 2026 and 2025 were as follows:
SuccessorPredecessor
Period from June 18 through June 30, 2026Period from April 1 through June 17, 2026Three Months Ended June 30, 2025
Hotel operating revenues$1,283 $8,100 $9,417 
Hotel returns$228 $1,968 $2,260 
FF&E escrow deposits$38 $244 $101 
SuccessorPredecessor
Period from June 18 through June 30, 2026Period from January 1 through June 17, 2026Six Months Ended June 30, 2025
Hotel operating revenues$1,283 $15,202 $16,570 
Hotel returns
$228 $2,789 $3,170 
FF&E escrow deposits$38 $456 $182 
Sonesta owed us $407 and $231 in returns under the Sonesta Management Agreement as of June 30, 2026 and December 31, 2025, respectively. Amounts due from Sonesta are included in due from related persons in our condensed consolidated balance sheets. We are required to maintain working capital under the Sonesta Management Agreement and advanced $548 of working capital in 2025 to meet the cash needs for hotel operations.
Pursuant to the Sonesta Management Agreement, we are required to pay Sonesta, after payment of hotel operating expenses, a base management fee equal to 1.5% of gross revenues, as defined in the Sonesta Management Agreement, for 2025 and 3.0% of gross revenues each calendar year thereafter. Additionally, we are required to pay (i) an incentive fee equal to 20% of net operating profit, as defined in the Sonesta Management Agreement, in excess of the annual owner’s priority; (ii) a brand promotion fee of 1.75% of gross revenues for 2025 and 3.5% of gross revenues for each calendar year thereafter; and (iii) a loyalty fee of the greater of 1.0% of room revenues or 4.5% of qualified room revenues from guests participating in certain loyalty programs. Sonesta’s incentive management fee, but not its other fees, is earned only after our annual owner’s priority return is paid. The Sonesta Management Agreement also provides that the pro rata costs Sonesta incurs for advertising, marketing, promotional and public relations programs and campaigns, including its rewards program, for the benefit of this hotel are subject to reimbursement by us or are otherwise treated as hotel operating expenses.
The following tables present management, brand promotion and loyalty fees, which are included in other operating expenses in our condensed consolidated statements of comprehensive income (loss), for the three and six months ended June 30, 2026 and 2025:
SuccessorPredecessor
Period from June 18 through June 30, 2026Period from April 1 through June 17, 2026Three Months Ended June 30, 2025
Management fee$15 $73 $139 
Brand promotion fee44 278 162 
Loyalty fee31 199 146 
Total management, brand promotion and loyalty fees$90 $550 $447 
SuccessorPredecessor
Period from June 18 through June 30, 2026Period from January 1 through June 17, 2026Six Months Ended June 30, 2025
Management fee$15 $104 $245 
Brand promotion fee44 520 285 
Loyalty fee31 372 278 
Total management, brand promotion and loyalty fees$90 $996 $808 
Prior to the Effective Date, we were amortizing a straight line rent receivable through July 2053, the original expiration date of a prior lease for the hotel with Sonesta, as an increase to other operating expenses in our condensed consolidated statements of comprehensive income (loss). The remaining unamortized balance was written off to reorganization costs, net as of the Effective Date. During the Predecessor period, we recognized $91 and $199 of amortization expense during the three and six months ended June 30, 2026, respectively, and $108 and $216 for the three and six months ended June 30, 2025, respectively. As of December 31, 2025, the remaining unamortized balance of this receivable was $11,911.
Mr. Portnoy is a director and controlling shareholder of Sonesta. Another officer and employee of RMR is co-president and co-chief executive officer of Sonesta.
For more information about these and other such relationships and certain other related person transactions, refer to our 2025 Annual Report.