Demands a Transparent, Competitive Sale Process Overseen by Unconflicted Trustees
Demands Repeal of Bylaw Provisions Blackwells Believes Unlawfully Extinguish the Rights That Make a Share a Share
NEW YORK, Nov. 06, 2026 (GLOBE NEWSWIRE) — Blackwells Capital LLC (together with its affiliates, “Blackwells”), a shareholder of Service Properties Trust (Nasdaq: SVC; “SVC” or the “Trust”), today sent a letter to SVC’s Board of Trustees concerning the Board’s November 4 rejection of TKO LLC’s $2.0 billion all-cash offer for the Trust’s hotel portfolio, a price more than twice the market value of the entire Trust.
Jason Aintabi, Chief Investment Officer of Blackwells Capital LLC, said: “Service Properties Trust carries $9.6 billion of invested capital; the market values its entire equity at roughly $815 million; every fee stream in between has flourished. A board that tells its owners the hotels alone are worth significantly more than $2.0 billion has exactly one legitimate way to prove it: a genuine process, run in the open, by unconflicted trustees.”
The full text of the letter follows:
November 5, 2026
Via Email and Overnight Courier
The Board of Trustees
Service Properties Trust
Adam D. Portnoy, Chair · Christopher J. Bilotto · Laurie B. Burns · Jeanmarie Cooney
Robert E. Cramer · Donna D. Fraiche · William A. Lamkin · Rajan Penkar
c/o Lindsey A. Getz, Secretary
Two Newton Place, 255 Washington Street, Suite 300
Newton, Massachusetts 02458-1634
Dear Members of the Board of Trustees:
Blackwells Capital LLC, together with its affiliates (“Blackwells”), is a shareholder of Service Properties Trust (Nasdaq: SVC; “SVC” or the “Trust”). We write concerning the Board’s rejection on November 4, without discernible process, of the $2.0 billion all-cash offer for the Trust’s hotel portfolio, and concerning the bylaws with which it has fortified itself against its owners. Our demands are set out below. We require the Board’s written response to each of them by 5:00 p.m., Eastern Time, on Friday, November 13, 2026.
On October 7, TKO LLC offered $2.0 billion in cash for SVC’s entire hotel portfolio. The Trust confirmed receipt and said the Board would “carefully review and consider” it. TKO had executed the nondisclosure agreement, which awaited only your countersignature, and offered a $50 million escrow. It offered to keep Sonesta as franchisor on Sonesta’s own documents, and said publicly that other bids may exist and that all of them should be disclosed. After four weeks of silence, the answer was a single slide of an investor presentation: “unanimously rejected,” because $2.0 billion “significantly undervalues SVC’s hotel portfolio.” No meeting, no advisor, no disclosure, no number. The rejection nonetheless conceded, in writing, that the hotels alone are worth significantly more than $2.0 billion (a view we share), which is more than twice the market value of the entire Trust. An offer a board believes too low is the beginning of a process, not the end of one.
The Board’s refusal must be read against its record. The Trust has $9.6 billion of capital invested. The market values its entire equity at roughly $815 million. The share price is down 85 percent in five years and 35 percent in a year. The dividend has been cut 98 percent. In April you sold $575 million of new equity at the lows. In July you effected a one-for-five reverse split so the quotation would read less painfully. The arithmetic is more unforgiving still. Capitalize the net lease income at the cap rates you yourselves paid this year, and of a $5.4 billion enterprise value the market attributes to the 87 hotels you reported at September 30 roughly $900 million, a fifth of the capital invested in them. Your own November 4 materials target $2.5 to $3.0 billion for the hotels you plan to keep, one to two years from now. Both numbers can be true at once, and together they are the indictment: the value is in the hotels; the discount is in you.
The Chair of this Board runs RMR, the Trust’s external manager, and chairs Sonesta, which operates most of the Trust’s hotels. SVC owns 34 percent of Sonesta. Its own filings identify Mr. Portnoy as the controlling stockholder. The Trust’s chief executive is an RMR executive vice president who also runs a second RMR trust, and whose RMR portfolio is hotel asset management. Its chief financial officer is simultaneously the chief financial officer of a third RMR vehicle. The Secretary to whom this letter is addressed is RMR’s general counsel. The hotels paid $30.7 million in management fees in nine months. Exiting Sonesta has been publicly estimated at some $535 million, and some $765 million of the Trust’s capital has lately renovated the very hotels it refuses to sell, every dollar of it fee-bearing. In September Sonesta waived an $11 million fee on one hotel sale in exchange for extending its other management contracts to 2043. A wholesale sale ends all of it. The question before this Board is not whether the price is enough for the owners, but whether any number is enough for the manager. The cost of changing hotel management is a figure to negotiate and disclose. The only interest served by refusing to find out is the manager’s.
A conflict of this size survives only where the owners cannot reach it. That is the work of the Trust’s bylaws, an interlocking scheme to extinguish the rights that make a share a share.
To nominate a trustee, a shareholder must have held 1 percent of the Trust, roughly $8 million, for three years, unhedged and in certificated form. The nominee must carry the approval of Louisiana’s casino regulators, or file with them a compliance plan, personal financial disclosures included. And the notice must demonstrate that 67 percent of the voting power has already been solicited. That solicitation requires the shareholder list. Maryland law gives the list to 5 percent holders, and Section 9.2 voids any transfer that would create one. The prerequisite is impossible by design. Section 3.2 reserves seats on this Board for the manager’s own personnel. Section 16.2 charges a shareholder who sues and loses the Trust’s legal fees, with 15 percent interest, a device Maryland law now prohibits.
We believe every one of these provisions is unlawful, irreconcilable with Sections 2-404, 2-513 and 2-113 of the Maryland General Corporation Law as applied to Maryland real estate investment trusts, and with the Trust’s own Declaration, which promises an annual election of trustees, grants shareholders the inspection rights of a Maryland corporation, and forbids bylaws inconsistent with either. If the object is to abolish ownership, the bylaws should say so in one sentence: at Service Properties Trust, ownership is a fee stream for the manager and an illusion for everyone else.
In 2014, holders of 81 percent of CommonWealth REIT, a Portnoy-led, RMR-managed trust, consented to remove its entire board, Mr. Portnoy and Mr. Lamkin among the removed, after Glass Lewis wrote of “nearly three decades of abysmal governance practices.” Mr. Lamkin chairs this Board’s Audit Committee today, counted among the “Independent Trustees” whose unanimity the November 4 rejection advertises. A year ago, Office Properties Income Trust, again Portnoy-chaired and RMR-managed, filed for Chapter 11. Its public shareholders were extinguished. RMR kept the management contract, and this Trust’s chief financial officer still keeps its books. At RMR, the fees outlive the shareholders. That is the business model.
Accordingly, Blackwells demands that the Board:
- Engage immediately and in good faith with TKO and every other credible party, beginning by countersigning the nondisclosure agreement, through a transparent, competitive sale process overseen exclusively by trustees who have never served on another RMR- or Portnoy-affiliated board, advised by independent financial and legal advisors reporting solely to them;
- Disclose to shareholders every written proposal received for the hotel portfolio, or for the Trust itself, during the past twenty-four months, as TKO has publicly requested;
- Disclose the analysis underlying the Board’s statement that $2.0 billion “significantly undervalues” the hotel portfolio, identify the independent financial advisor, if any, that rendered it, and present the value of selling and of retaining the same hotels as of the same date;
- Commit in writing that any termination, transition or other payments to RMR, Sonesta or their affiliates in connection with any sale will be negotiated solely by the trustees described in paragraph 1 and disclosed in full before signing;
- Repeal Sections 2.14, 3.2, 9.2 and 16.2 of the bylaws; and
- Respond to this letter in writing by 5:00 p.m., Eastern Time, on Friday, November 13, 2026.
If this Board believes the owners of Service Properties Trust lack the standing, the means or the will to hold it to account, it is welcome to test the proposition. This letter is written without waiver of, and with express reservation of, all of Blackwells’ rights and remedies.
Very truly yours,
BLACKWELLS CAPITAL LLC
Jason Aintabi
Chief Investment Officer
About Blackwells Capital
Blackwells is a multi-strategy alternative asset management firm that invests in public and private markets globally. Our public markets portfolio focuses on currencies, equities, credit and commodities. When necessary, we engage with public company boards to drive value for all stakeholders. Our private markets portfolio includes investments in space, clean energy, infrastructure, real estate and technology. Further information is available at www.blackwellscap.com.
Contact
[email protected]
