SERVICE PROPERTIES TRUST: Entry into Material Definitive Agreement, Financial Statements and Supporting Documents (Form 8-K)

Item 1.01. Conclusion of a significant definitive agreement.

On October 4, 2022we have amended the agreement governing our revolving credit facility, or our credit agreement, with Wells Fargo Bank, National Associationas administrative agent and lender, and a syndicate of other lenders, and have exercised our option to extend the maturity date of our six-month revolving credit facility to July 15, 2023. In accordance with the amendment, we are required to maintain a minimum liquidity of $600.0 million until we repay our
$500.0 million of 4.50% senior bonds maturing in June 2023or 2023 tickets, and at least $150.0 million liquidity thereafter.

The amendment also removes, under certain conditions, the restrictions on the payment of ordinary dividends and the issuance of secured debt securities that we had previously agreed to during the existing waiver period, or waiver period, during which the compliance with certain financial covenants of our credit agreement has been waived. As previously indicated, the waiver period extends until December 31, 2022but some of the financial covenants of our credit agreement are tested and fully effective as of the quarter ended September 30, 2022. Additionally, pursuant to the Amendment, we are permitted to make a one-time payment of the net cash proceeds of certain transactions during the Waiver Period to redeem the 2023 Notes.

Our revolving credit facility continues to be secured by 73 properties.

Wells Fargo Bank, National Association and the other lenders party to our credit agreement, as amended, and their affiliates, have engaged and may in the future engage in investment banking, commercial banking, advisory and other commercial transactions in the ordinary course of business with us. They have received, and may in the future receive, the usual fees and commissions for these assignments.

The foregoing description of the Amendment to Our Credit Agreement is not complete and is submitted and qualified in its entirety by reference to the copy of the Sixth Amendment to Our Amended and Restated Credit Agreement attached as Schedule 10.1 to this current report on Form 8-K, and is incorporated herein by reference.

                 Warning Concerning Forward-Looking Statements

This current report on Form 8-K contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Moreover, whenever we use words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, we make forward-looking statements. These forward-looking statements are based on our current intentions, beliefs or expectations, but the forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained or implied by our forward-looking statements due to a variety of factors. For instance:

The continued availability of borrowings under our revolving credit facility is

   subject to our satisfying certain financial covenants and other credit facility
   conditions, which we may be unable to satisfy, despite the amendment,

Actual costs under our revolving credit facility will be greater than costs quoted

   rate plus a premium because of fees and expenses associated with the facility,

Our ability to make future distributions to our shareholders depends on a

   number of factors, including our future earnings, the capital costs we incur to
   acquire and maintain our properties and our working capital requirements. We
   may be unable to increase or maintain our current rate of distributions on our
   common shares and future distributions may be reduced or eliminated, and

The amendment removes, under certain conditions, restrictions on

   paying common dividends and issuing secured debt that we previously agreed to
   during the Waiver Period. The amendment also permits us to make a one-time
   payment of net cash proceeds from certain transactions during the Waiver Period
   to repay the 2023 notes. A possible implication from these statements is that
   we will continue to pay a dividend to our shareholders in the future or
   increase the rate of such dividends. Our dividend rates are set and reset from
   time to time by our Board of Trustees. Our Board of Trustees considers many
   factors when setting dividend rates including our historical and projected
   income, normalized funds from operations, cash available for distribution, the
   then current and expected needs and availability of cash to pay our obligations
   and fund our investments, distributions which may be required to be paid to
   maintain our tax status as a real estate investment trust and other factors
   deemed relevant by our Board of Trustees in its discretion. Accordingly, future
   dividend rates may be increased or decreased and there is no assurance as to
   the rate at which future dividends will be paid. Other possible implications
   from these statements are that we will issue secured debt in the future and
   that we will repay or redeem the 2023 notes prior to their maturity. The
   issuance of secured debt in the future and the repayment or redemption of the
   2023 notes prior to their maturity are dependent on a number of factors and may
   not occur.

The information contained in our filings with the Security and Exchange CommissionWhere SECONDincluding under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, identifies other important factors that could cause our actual results to differ materially from those indicated or implied by our forward-looking statements. Our deposits with the SECOND are available on the DRY website at

You should not place undue reliance on forward-looking statements.

Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

Section 9.01. Financial statements and supporting documents.

(d) Exhibits.

  10.1     Sixth Amendment to Amended and Restated Credit Agreement, dated as of
         October 4, 2022, among Service Properties Trust, Wells Fargo Bank,
         National Association, as Administrative Agent, and each of the other
         institutions party thereto. (Filed herewith.)

104      Cover Page Interactive Data File. (Embedded within the Inline XBRL

© Edgar Online, source Previews

Comments are closed.