Service Properties Trust Announces Changes to the Benchmark Index for its Business Management Agreement with The RMR Group LLC

Rhea-AI Summary

Service Properties Trust (Nasdaq: SVC) has amended its business management agreement with The RMR Group LLC (Nasdaq: RMR) to introduce the MSCI U.S. REIT/Hotel & Resort REIT Index as the new benchmark for incentive management fees, effective from August 1, 2021. This replaces the discontinued SNL U.S. REIT Hotel Index. Historical returns for the SNL Index show cumulative returns of -6.56%, -19.07%, and 10.06% for various periods ending July 31, 2021. The decision aims to align fee calculations more closely with widely-used benchmarks.

Positive

• Implementation of a widely-used index for incentive fees which may enhance management performance alignment.

Negative

• Replacement of the SNL U.S. REIT Hotel Index may indicate a lack of desirable performance under the previous index.

MSCI U.S. REIT/Hotel & Resort Index to Replace Discontinued SNL U.S. REIT Hotel Index

NEWTON, Mass.--(BUSINESS WIRE)-- Service Properties Trust (Nasdaq: SVC), or SVC, announced today that it has amended its business management agreement with The RMR Group LLC, or RMR LLC, a majority-owned subsidiary of The RMR Group Inc. (Nasdaq RMR), to replace the benchmark index used in the calculation of incentive management fees. Pursuant to the amendment, for periods beginning on and after August 1, 2021, the MSCI U.S. REIT/Hotel & Resort REIT Index will replace the discontinued SNL U.S. REIT Hotel Index and be used to calculate benchmark returns per share for purposes of determining any incentive management fee payable by SVC to RMR LLC. For periods prior to August 1, 2021, the SNL U.S. REIT Hotel Index will continue to be used.

For purposes of calculating any incentive fees, the following lists the historical returns used to calculate incentive fees under the applicable SNL indices for the two years and stub period ending July 31, 2021:

		Total Return for the Period
Benchmark Return (cumulative % return of SNL Index) at 7/31/2021(1)		12/31/2018 to 7/31/2021		12/31/2019 to 7/31/2021		12/31/2020 to 7/31/2021
SNL U.S. REIT Hotel Index		-6.56%		-19.07%		10.06%
(1) Adjusted for common share issuances during the measurement period.

The calculation of incentive management fees for the next three measurement periods will continue to use the SNL U.S. REIT Hotel Index in calculating the benchmark returns for periods through July 31, 2021. Following the announcement that the SNL U.S. REIT Hotel Index would be discontinued, SVC and RMR sought to replace the expiring index with a comparable, publicly accessible and widely-used index that most closely matched its composition and historical performance. The MSCI U.S. REIT/Hotel & Resort REIT Index is a well-known REIT benchmark and the historical returns are comparable to the SNL U.S. REIT Hotel Index it will be replacing.

About Service Properties Trust

Service 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 management company that is headquartered in Newton, Massachusetts.

A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211001005181/en/

Kristin Brown, Director, Investor Relations

(617) 796-8232

Source: Service Properties Trust

FAQ

What is the new index for Service Properties Trust's incentive management fees?

The new index is the MSCI U.S. REIT/Hotel & Resort REIT Index, effective from August 1, 2021.

What index was replaced by the MSCI U.S. REIT/Hotel & Resort Index?

The MSCI U.S. REIT/Hotel & Resort Index replaced the discontinued SNL U.S. REIT Hotel Index.

When was the amendment to the business management agreement announced by SVC?

The amendment was announced on [insert date from PR].

What does the historical performance of the SNL U.S. REIT Hotel Index show?

The cumulative returns for the SNL Index were -6.56%, -19.07%, and 10.06% for various periods ending July 31, 2021.

Who manages Service Properties Trust?

Service Properties Trust is managed by The RMR Group LLC.