Financial Data and Key Metrics Changes - Normalized FFO for Q1 2025 was $10.8 million or $0.07 per share, down from $0.13 per share in the prior year quarter [24] - Adjusted EBITDAre increased slightly year over year to $115.8 million [24] - Comparable hotel RevPAR grew by 2.6% year over year, with GOP and adjusted hotel EBITDA declining year over year primarily due to renovations and increased costs [6][10] Business Line Data and Key Metrics Changes - Comparable hotel RevPAR growth was supported by occupancy and ADR gains, with full-service hotels reporting a 1.9% increase in RevPAR [10] - Select service portfolio saw exceptional growth with RevPAR up 10.6% year over year, driven by occupancy growth [11] - Extended stay portfolio's RevPAR was flat due to a decline in occupancy, impacted by renovation activities [11] Market Data and Key Metrics Changes - The lodging portfolio experienced a softening in RevPAR as the quarter progressed, influenced by reduced government and international travel [8] - Group revenue pace increased by 6.5% year over year, indicating strong demand despite overall market challenges [35] Company Strategy and Development Direction - The company plans to sell 123 hotels in 2025 with estimated proceeds of $1.1 billion to strengthen the balance sheet and reinvest in growth opportunities [9][14] - A strategic shift towards increasing net lease exposure is anticipated, with a target of 54% net lease properties and 46% lodging assets [16] - The company aims to optimize its portfolio through asset sales and reinvestment in high-potential hotels [12] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing macroeconomic uncertainties but expressed confidence in the portfolio optimization initiatives and durable cash flows from net lease assets [16] - The company expects challenges in the travel and lodging industries to affect key segments like government and leisure travel [27] - Future performance is anticipated to improve as renovations complete and group revenue continues to grow [35] Other Important Information - The company is under contract to sell four hotels from a previously launched portfolio, with expected proceeds of $26.5 million [13] - The net lease portfolio remains nearly 98% leased, with a weighted average lease term of eight years, providing steady cash flow [18] Q&A Session Summary Question: Can you walk us through the RevPAR trends in the quarter? - Management indicated that RevPAR started strong in January but decelerated towards March, with preliminary April numbers showing a decrease of 1% year over year [32][33] Question: What is the impact of international and government business on demand? - Approximately 30% of the portfolio is in top markets affected by international travel, with a modest decrease in government business noted [34][35] Question: How confident is the company in completing hotel sales at the expected price? - Management expressed confidence due to a robust selection process and strong buyer interest, with transactions expected to occur in phases [36][38] Question: Will the company continue to have hotel exposure in the future? - Management confirmed that while the focus is shifting towards net lease properties, hotel exposure will remain part of the strategy [41][43] Question: What caused the shift in timing for hotel dispositions? - The shift was attributed to the diligence process associated with larger portfolios, rather than broader market concerns [61][62] Question: How is the CapEx program being managed in light of potential tariff impacts? - The company is monitoring costs and sourcing strategies to mitigate potential impacts from tariffs on capital expenditures [64][66] Question: What types of properties were acquired in the net lease segment? - The company acquired a car wash and a casual dining concept, with plans for further acquisitions in casual dining and QSR [76][78]

Financial Data and Key Metrics Changes - The company reported normalized FFO of $10.8 million or $0.07 per share, down from $0.13 per share in the prior year quarter [21] - Adjusted EBITDAre increased slightly year over year to $115.8 million [21] - Interest expense increased by $10.1 million compared to the prior year [21] Business Line Data and Key Metrics Changes - Comparable hotel RevPAR grew by 2.6% year over year, with GOP and adjusted hotel EBITDA declining due to renovations and increased costs [5][9] - Full service hotels reported a 1.9% increase in RevPAR, while select service portfolio saw a 10.6% increase [9][10] - Extended stay portfolio's RevPAR was flat, impacted by renovations [10] Market Data and Key Metrics Changes - The lodging portfolio experienced a slowdown in RevPAR growth as the quarter progressed, influenced by reduced government and international travel [6][30] - Group revenue pace increased by 6.5% year over year, indicating strong demand despite overall market challenges [33] Company Strategy and Development Direction - The company plans to sell 123 hotels in 2025, with estimated proceeds of $1.1 billion to strengthen the balance sheet and reinvest in growth opportunities [7][13] - A strategic shift towards increasing net lease exposure is anticipated, with a target of 54% net lease and 46% lodging assets post-disposition [14] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing macroeconomic uncertainties but expressed confidence in portfolio optimization initiatives and durable cash flows from net lease assets [14] - The company expects RevPAR for Q2 to be between $99 and $102, with adjusted hotel EBITDA projected at $69 million to $74 million [25] Other Important Information - The company is focused on capital expenditures of approximately $250 million for the year, with $120 million to $140 million allocated for maintenance capital [27] - The company has recognized an impairment on 16 hotels, with expectations of a gain on sale for the remaining hotels in the portfolio [68][70] Q&A Session Summary Question: Can you walk us through the RevPAR trends in the quarter? - Management indicated that RevPAR started strong in January but showed deceleration by March, with preliminary April numbers showing a decrease of 1% year over year [30][31] Question: What is the impact of international and government business on demand? - Approximately 30% of the portfolio is in top markets, with a modest decrease in government contracts noted [32][33] Question: How confident is the company in completing hotel sales at the expected price? - Management expressed confidence due to a robust selection process and active diligence with buyers [34][36] Question: Will the company continue to have hotel exposure in the future? - The company plans to maintain hotel exposure while increasing net lease properties, expecting performance progress on both sides [40][41] Question: What caused the shift in timing for hotel dispositions? - The shift was attributed to the diligence process associated with larger portfolios rather than broader market concerns [59][60] Question: How is the CapEx program being managed in light of potential tariff impacts? - The company is monitoring tariffs and has locked in pricing for many projects, with contingencies in place to manage costs [62][63] Question: What types of properties were acquired in the net lease segment? - The company acquired a car wash and a casual dining concept, with plans for further acquisitions in QSR and casual dining [76][78] Question: What is the outlook for the Sonesta brand in relation to the hotel portfolio? - The plan is for the hotels being sold to retain the Sonesta franchise agreements [84]

Core Insights - Service Properties (SVC) reported revenue of $435.18 million for Q1 2025, a slight year-over-year decline of 0.3% [1] - The company's EPS for the same period was $0.07, a significant improvement from -$0.48 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $428.9 million, resulting in a surprise of +1.46% [1] - The EPS also surpassed the consensus estimate of $0.05, delivering a surprise of +40.00% [1] Revenue Breakdown - Hotel operating revenues were reported at $334.96 million, slightly above the estimated $329.65 million, reflecting a year-over-year decline of 0.4% [4] - Rental income reached $100.22 million, exceeding the average estimate of $99.29 million, with a year-over-year increase of 0.2% [4] Stock Performance - Over the past month, shares of Service Properties have returned +6.6%, compared to the Zacks S&P 500 composite's +11.5% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

分组1 - Service Properties (SVC) reported quarterly funds from operations (FFO) of $0.07 per share, exceeding the Zacks Consensus Estimate of $0.05 per share, but down from $0.13 per share a year ago, representing a 40% surprise [1] - The company posted revenues of $435.18 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.46%, although this is a slight decrease from $436.25 million in the same quarter last year [2] - Over the last four quarters, Service Properties has surpassed consensus FFO estimates two times and topped consensus revenue estimates three times [2] 分组2 - The stock has underperformed, losing about 24% since the beginning of the year compared to the S&P 500's decline of 3.9% [3] - The current consensus FFO estimate for the coming quarter is $0.41 on revenues of $501.72 million, and for the current fiscal year, it is $0.90 on revenues of $1.86 billion [7] - The Zacks Industry Rank for REIT and Equity Trust - Other is currently in the bottom 34% of over 250 Zacks industries, indicating potential challenges for the sector [8]

Company Overview - As of March 31, 2025, the company owned 941 properties across 46 states, the District of Columbia, Canada, and Puerto Rico[101]. - The company owned 739 service-focused retail properties leased to 175 tenants, with TA being the largest tenant, leasing 175 travel centers[109]. - The hotel portfolio includes 145 distinct brands across 22 industries, with a total of 201 comparable hotels[161]. - As of March 31, 2025, the company operates net lease tenants across 21 distinct industries within the U.S. service-focused retail sector[171]. Financial Performance - For the three months ended March 31, 2025, hotel operating revenues decreased by 0.4% to $334,963,000 compared to $336,236,000 in 2024[112]. - The company's net loss for the three months ended March 31, 2025, was $116,435,000, an increase of 48.5% from a net loss of $78,383,000 in 2024[122]. - Revenues for the three months ended March 31, 2025, were $369,833, while expenses were $451,361, resulting in a net loss of $81,528[156]. - Funds From Operations (FFO) for the three months ended March 31, 2025, is $10,186,000, down from $21,104,000 in 2024[180]. - Normalized FFO for the same period is $10,836,000, compared to $21,106,000 in 2024[180]. Occupancy and Revenue Metrics - The average daily rate (ADR) for comparable hotels increased by 1.3% to $144.61 in Q1 2025, while revenue per available room (RevPAR) increased by 2.6% to $83.67[107]. - The average occupancy rate for comparable hotels is 57.9%, an increase of 0.8 percentage points from the previous year[163]. - The overall occupancy rate for all hotels was 57.8%, reflecting a 0.8 percentage point increase from the previous year[164]. - The retained hotels segment had an average occupancy of 56.4%, with a RevPAR of $98.59, representing a 3.9% increase[164]. Asset Management - The net lease portfolio was 97.8% occupied as of March 31, 2025, with annual minimum rents totaling $380,568,000[109]. - The company is in the process of selling 119 hotels with a total of 15,912 keys and a combined net carrying value of $945,100,000, expected to be completed in 2025[103]. - The company sold seven properties for a total sales price of $22,700 in Q1 2025, with additional pending sales of four hotels for $26,500[132]. - Lease renewals for 31,607 rentable square feet were completed at an average rent increase of 18.0% compared to prior rents[165]. - New leases for 1,685 rentable square feet were signed at a rent increase of 15.7% over prior rents[165]. Debt and Financing - As of March 31, 2025, the total outstanding fixed rate debt is $5,681,122, with an annual interest expense of $361,831[182]. - The company had $50,000 outstanding under its $650,000 revolving credit facility, with $600,000 available for borrowings[136]. - The annual interest rate on borrowings under the revolving credit facility was 6.91% as of March 31, 2025, down from 7.84% in 2024[136]. - Debt maturities as of March 31, 2025, totaled $5,681,122, with significant maturities in 2026 ($801,958) and 2027 ($851,958)[140]. - The company amended its revolving credit facility to reduce the required debt service coverage ratio from 1.50 times to 1.30 times, effective for Q4 2024[138]. Market Risks and Interest Rates - The company is exposed to market risks associated with interest rate changes, managing this exposure by monitoring financing alternatives[181]. - A one percentage point increase in interest rates would raise the annual floating rate interest expense from $6,232 to $7,182 based on current outstanding amounts[186]. - Changes in market interest rates will affect the fair value of fixed rate debt obligations, with a hypothetical one percentage point change potentially altering fair value by approximately $180,112[182]. - The company may consider hedge arrangements in the future to mitigate exposure to interest rate fluctuations[189]. Distributions and Shareholder Returns - The company declared a quarterly distribution of $0.01 per common share, totaling approximately $1,666, to be paid on May 15, 2025[134]. - The company declared distributions of $0.01 per share for the three months ended March 31, 2025, down from $0.20 per share in 2024[180].

Financial Performance - Service Properties Trust reported a net loss of $116.4 million, or $0.70 per common share, for the first quarter of 2025[14]. - The total revenues for the quarter were $435.2 million, down from $456.6 million in the previous quarter[17]. - Total revenues for Q1 2025 were $435,179, a slight decrease of 0.25% from $436,250 in Q1 2024[18]. - Net loss for Q1 2025 was $116,435, compared to a net loss of $78,383 in Q1 2024, representing a 48.6% increase in losses year-over-year[18]. - Total expenses increased to $447,302 in Q1 2025, up from $415,873 in Q1 2024, marking a 7.5% rise[18]. - Cash and cash equivalents decreased to $80,147 as of March 31, 2025, down from $143,482 at the end of 2024, a decline of 44.6%[22]. - Total assets decreased to $6,976,079 as of March 31, 2025, compared to $7,119,558 at the end of 2024, a reduction of 2.0%[22]. - Total shareholders' equity decreased to $734,573 as of March 31, 2025, down from $851,873 at the end of 2024, a decline of 13.8%[22]. - Funds from Operations (FFO) for the three months ended March 31, 2025, was $10,186,000, down from $18,946,000 in the previous quarter[87]. - Normalized FFO for the same period was $10,836,000, compared to $28,617,000 in the previous quarter[87]. - EBITDA for the three months ended March 31, 2025, was $75,025,000, a decrease from $116,958,000 in the previous quarter[89]. Hotel Operations - The company achieved a 2.6% increase in comparable hotel RevPAR, reaching $83.52, despite revenue displacement from hotel renovations[8]. - Hotel operating revenues decreased to $334,963 in Q1 2025 from $336,236 in Q1 2024, a decline of 0.38%[18]. - The average occupancy rate for all hotels increased to 57.9% in Q1 2025, up from 57.1% in Q1 2024, representing a 0.8 percentage point increase[60]. - The average daily rate (ADR) for all hotels rose to $144.61 in Q1 2025, a 1.3% increase from $142.74 in Q1 2024[60]. - The full-service segment's average occupancy was 53.5% in Q1 2025, down from 54.5% in Q1 2024, a decrease of 1.0 percentage point[60]. - The extended stay and select service segment achieved an average occupancy of 64.6% in Q1 2025, up from 56.6% in Q1 2024, an increase of 8.0 percentage points[60]. - The adjusted hotel EBITDA for retained hotels decreased by 20.2% to $17.696 million in Q1 2025 from $22.164 million in Q1 2024[60]. - Room revenues for Q1 2025 were $266,439, a decrease of 4.5% from $278,614 in Q4 2024[91]. - Total hotel operating expenses for Q1 2025 were $313,309, slightly down from $321,127 in Q4 2024[91]. Asset Management - The net lease occupancy rate was 97.8% as of March 31, 2025, with a net lease rent coverage of 2.07x[14]. - The company sold four hotels and three net lease properties for net proceeds exceeding $20 million, ending the quarter with over $680 million in liquidity[8]. - Service Properties Trust plans to sell 123 hotels for a total of $1.1 billion this year, with four hotels under agreements to be sold for $26.5 million[9]. - Capital expenditures for the quarter amounted to $45.8 million[14]. - The company owns 202 hotels and 739 service-focused retail net lease properties as of March 31, 2025[13]. - The company has 739 net lease properties, with a total investment of $5,031,881, accounting for 44.3% of total investments[42]. - The average lease term for acquired properties is 18.5 years, with a weighted average lease coverage of 2.14x[38]. - The company disposed of 3 hotel properties in Q1 2025 for a total sales price of $15,100, averaging $35,952 per room[38]. - The company reported a net gain on the sale of real estate of $746 in Q1 2025, in connection with the sale of four hotels and three net lease properties[94]. Investment and Portfolio - As of March 31, 2025, the total investment in the net lease portfolio is $5,031,881,000, with an annualized minimum rent of $380,568,000, resulting in a rent coverage ratio of 2.07x[65]. - TravelCenters of America Inc. is the largest tenant, accounting for 65.0% of total investment at $3,270,106,000 and generating an annualized minimum rent of $259,080,000[69]. - The travel center industry represents 65.8% of the total investment in the portfolio, with 178 properties and an annualized minimum rent of $262,392,000[65]. - The average investment per property across 111 distinct brands is $2,651, with an average annual minimum rent of $176 per property[64]. - The top 10 tenants account for 76.0% of total investment, with a combined annualized minimum rent of $299,895,000[69]. - The portfolio includes 739 properties with a total square footage of 13,189,476, indicating a diverse range of tenants and industries[65]. - The weighted average lease term for the portfolio is 7.4 years[72]. Management and Strategy - The company is managed by The RMR Group, which has approximately $40 billion of real estate assets under management[80]. - Forward-looking statements indicate SVC's plans for hotel sales to enhance liquidity and optimize its portfolio, though these are subject to various risks and uncertainties[123]. - SVC's ability to maintain sufficient liquidity and manage debt is critical for its operational stability and growth[123]. - The company faces risks from market conditions, including interest rate fluctuations and economic downturns, which could impact its performance[123]. - SVC's management agreements include provisions for minimum returns, with certain payments secured by guarantees, enhancing revenue predictability[117].

Group 1 - The theme of the article is centered around value creation in investing, emphasizing that investors are all seeking alpha through various mechanisms [1] - Value creation is often associated with taking on different risk factors, which can manifest in various forms [1] Group 2 - The article does not provide specific company or industry insights, focusing instead on general investment principles and the nature of risk [2]

Financial Data and Key Metrics Changes - The company reported normalized funds from operations (FFO) of $28.6 million or $0.17 per share, down from $0.30 per share in the prior year quarter [28] - Adjusted EBITDAre declined 7.4% year over year to $130.6 million [28] - Gross operating profit (GOP) margin percentage declined by 160 basis points to 25.3%, with GOP flat compared to the prior year period [29] Business Line Data and Key Metrics Changes - Comparable hotel RevPAR grew 4.2% year over year, with a 6.8% increase when excluding 14 hotels under renovation [9] - Full-service hotels reported a RevPAR increase of 4.3%, while select service portfolio RevPAR increased by 9.6% year over year [10][12] - The extended stay portfolio saw a RevPAR growth of 1.2%, with increased occupancy offsetting a decline in average daily rate (ADR) [13] Market Data and Key Metrics Changes - The company is marketing the sale of 114 Sonesta hotels, expecting to net sales proceeds of at least $1 billion [15][16] - The retained portfolio of 83 hotels experienced a RevPAR increase of 6.3% to approximately $101, with adjusted hotel EBITDA increasing by 10% year over year to $30.6 million [18] Company Strategy and Development Direction - The company aims to strengthen its balance sheet through asset sales and reinvest in hotels with the highest potential for upside [19] - The focus is on acquiring net leased assets and evolving the strategy to grow this portfolio through well-vetted acquisitions [25][80] - The company plans to address 2026 debt maturities with proceeds from hotel sales, followed by capital expenditures to enhance the hotel portfolio [75][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the current renovation program and portfolio rationalization efforts will lead to meaningful occupancy and rate gains in the upcoming year [20] - The company anticipates continued disruption in 2025 at hotels under renovation and expects softer seasonal results through the winter months [33] Other Important Information - The company completed renovations at 28 hotels in 2024, with a total capital expenditure of $303 million for the year [34] - Full-year 2025 capital expenditures are expected to be approximately $250 million, with a focus on maintenance capital and renovation initiatives [35] Q&A Session Summary Question: How would return expectations change for the remaining assets after not spending CapEx for the 115 assets to be sold? - Management indicated that return expectations remain the same, with high single-digit returns expected, but specific projects may yield higher returns [40][41] Question: Can you provide context around the acquisition volume for net leased assets? - Management stated that initial acquisition volumes would be small, with a focus on building out the pipeline in the first half of the year [44] Question: How much of the $150 million borrowed on the line in Q4 has been paid back in Q1? - Management confirmed that $50 million is currently outstanding from the draw made for liquidity management purposes [46] Question: What are the expectations for the debt service coverage ratio throughout this year? - Management expects to maintain a ratio close to 1.5%, indicating a precautionary measure to ensure stability [51] Question: Can you elaborate on the performance of the retained hotels in Q1? - Management noted that the retained hotels are expected to see a year-over-year decline in margins due to seasonal patterns and ongoing renovations [57][58] Question: How is the asset sale process going compared to expectations? - Management reported that the process has gone well, with strong interest from buyers and competitive bidding [64][65] Question: Will any of the $250 million capital expenditures be spent on hotels that are going to be sold this year? - Management indicated that a small percentage, approximately $20 to $25 million, may be spent on exiting properties for necessary maintenance [71] Question: What are the capital priorities for 2025? - Management outlined priorities as addressing 2026 debt maturities, capital expenditures for hotel enhancements, and potentially acquiring more net lease assets [75][80]

Service Properties Trust Fourth Quarter 2024 Financial Results and Supplemental Information February 26, 2025 Sonesta Fort Lauderdale Beach Fort Lauderdale, FL | Service Properties Trust Announces Fourth Quarter 2024 Financial Results | 4 | | --- | --- | | Fourth Quarter 2024 Highlights | 5 | | Key Financial Data 7 | | --- | | Consolidated Statements of Income (Loss) 8 | | Consolidated Balance Sheets 9 | | Debt Summary 10 | | Debt Maturity Schedule 11 | | Leverage Ratios, Coverage Ratios and Debt Covenants ...

Service Properties (SVC) came out with quarterly funds from operations (FFO) of $0.17 per share, beating the Zacks Consensus Estimate of $0.15 per share. This compares to FFO of $0.30 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of 13.33%. A quarter ago, it was expected that this real estate investment trust would post FFO of $0.37 per share when it actually produced FFO of $0.32, delivering a surprise of -13.51%.Over the last four ...