Service Properties Trust Receives Termination Notice from Hyatt Covering 22 Hotels
January 12, 2021 at 08:00 am EST
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Service Properties Trust announced that it has received a notice of termination from a subsidiary of Hyatt Hotels Corporation with respect to the management agreement for 22 Hyatt Place hotels owned by subsidiaries of the company. Hyatt’s obligations under the management agreement, which requires minimum returns of $22.0 million annually, is supported by a $50.0 million limited guaranty. While Hyatt is current on its payments to the company at this time, it recently exhausted this $50.0 million guaranty and under the terms of the management agreement, Hyatt may terminate the agreement upon 90 days’ notice once the guaranty has been fully utilized. The effective date of the termination pursuant to Hyatt’s notice is April 8, 2021. The company and Hyatt are currently in discussions regarding possible changes to the management agreement which may enable some or all of the hotels to remain Hyatt Place hotels managed by Hyatt. However, if such discussions do not result in a mutually acceptable agreement, the company expects to transition management of the 22 hotels to Sonesta International Hotels Corporation on April 8, 2021 under the Sonesta Select brand. The company also owns 34% of Sonesta.
Service Properties Trust is a real estate investment trust. The Company operates through two segments: hotel investments and net lease investments. It owns a portfolio of hotels and net lease service and necessity-based retail properties. The Company owns over 221 hotels with approximately 37,000 rooms or suites located in over 36 states, in the District of Columbia, Ontario, Canada and San Juan, Puerto Rico. It owns approximately 752 service-oriented retail properties with over 13.3 million square feet located in approximately 42 states. The Companyâs net lease portfolio is occupied by over 175 tenants, which is operating approximately 137 brands in over 21 industries. The Company's net lease portfolio is leased to tenants that include travel centers, quick service and casual dining restaurants, movie theaters, health and fitness centers, grocery stores, automotive parts and services and other businesses in service-oriented and necessity-based industries.