Service Properties Trust(SVC) - 2025 Q2 - Quarterly Results

Quarterly Results Second Quarter 2025 Highlights SVC met Q2 2025 expectations, progressing its net lease REIT transformation with hotel sales, debt reduction, and strong portfolio performance - Company is transforming into a majority net lease REIT[8] - $900 million under binding agreements for 114 Sonesta hotels (14,925 keys), with closings expected late Q3 and Q4 2025. Total 2025 hotel sales proceeds expected to be $966 million. Proceeds to repay debt[8][14] - Quarterly distribution of $0.01 per common share declared[10] Key Financial Metrics (Q2 2025) | Metric | Value | | :----------------------- | :---------------- | | Net loss | $(38.2) million | | Normalized FFO | $57.6 million | | Adjusted EBITDAre | $163.8 million | | Hotel RevPAR | $101.27 | | Adjusted Hotel EBITDA | $73.1 million | | Net Lease occupancy | 97.3% | | Net Lease rent coverage | 2.04x | Investment Activity (Q2 2025) | Category | Value | | :-------------------- | :---------- | | Capital Expenditures | $39.2 million | | Net Lease Property Sales | $13.7 million (4 properties, 140,512 sq ft) | | Net Lease Property Acquisitions | $29.9 million (7 properties, 83,436 sq ft) | | Weighted Average Lease Term (Acquisitions) | 16.1 years | | Rent Coverage (Acquisitions) | 2.60x | - Borrowed $550 million under revolving credit facility on July 1, 2025, fully drawn as of August 5, 2025, holding $670 million cash on hand[15] - Announced early redemption of $350 million 5.25% senior unsecured notes due 2026, expected around September 4, 2025, using cash on hand[15] Financials Key Financial Data This section provides a snapshot of SVC's key financial performance indicators and balance sheet items across several quarters Selected Income Statement Data (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (USD) | Q2 2024 (USD) | Change | | :-------------------- | :------------------ | :------------------ | :----------- | | Total revenues | $503.4 million | $512.9 million | (1.9%) | | Net loss | $(38.2) million | $(73.8) million | 48.3% (improvement) | | FFO | $55.9 million | $57.8 million | (3.3%) | | Normalized FFO | $57.6 million | $73.8 million | (22.0%) | | CAD | $16.8 million | $3.4 million | 387.7% | | Adjusted EBITDAre | $163.8 million | $171.5 million | (4.5%) | Per Common Share Data (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------- | :------ | :------ | :----------- | | Net loss | $(0.23) | $(0.45) | 48.9% (improvement) | | FFO | $0.34 | $0.35 | (2.9%) | | Normalized FFO | $0.35 | $0.45 | (22.2%) | | CAD | $0.10 | $0.02 | 400.0% | Capitalization (as of 6/30/2025) | Metric | Value (USD) | | :-------------------------------- | :------------------ | | Total common shares | 166,860,830 | | Closing price | $2.39 | | Equity market capitalization | $398.8 million | | Debt (principal balance) | $5.83 billion | | Total market capitalization | $6.22 billion | Liquidity (as of 6/30/2025) | Metric | Value (USD) | | :-------------------------------- | :------------------ | | Cash and cash equivalents | $63.2 million | | Available borrowings under secured revolving credit facility | $550.0 million | | Total liquidity | $613.2 million | Selected Balance Sheet Data (6/30/2025 vs 12/31/2024) | Metric | 6/30/2025 (USD) | 12/31/2024 (USD) | Change | | :-------------------- | :-------------------- | :--------------------- | :------- | | Total gross assets | $10.20 billion | $10.36 billion | (1.5%) | | Total assets | $6.93 billion | $7.12 billion | (2.6%) | | Total liabilities | $6.24 billion | $6.27 billion | (0.5%) | | Total shareholders' equity | $695.9 million | $851.9 million | (18.3%) | Condensed Consolidated Statements of Income (Loss) This statement details SVC's Q2 2025 revenues and expenses, showing a reduced net loss year-over-year Revenues (Three Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change | | :-------------------- | :--------------- | :--------------- | :----------- | | Hotel operating revenues | $404.4 million | $412.5 million | (1.96%) | | Rental income | $99.0 million | $100.5 million | (1.42%) | | Total revenues | $503.4 million | $512.9 million | (1.85%) | Expenses (Three Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change | | :-------------------------- | :--------------- | :--------------- | :----------- | | Hotel operating expenses | $328.9 million | $328.2 million | 0.20% | | Depreciation and amortization | $75.0 million | $95.7 million | (21.58%) | | Loss on asset impairment | $17.7 million | $34.9 million | (49.40%) | | Total expenses | $438.6 million | $474.4 million | (7.56%) | Net Loss (Three Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change | | :------- | :--------------- | :--------------- | :----------- | | Net loss | $(38.2) million | $(73.8) million | 48.32% (improvement) | | Net loss per common share | $(0.23) | $(0.45) | 48.89% (improvement) | Condensed Consolidated Balance Sheets This section presents SVC's financial position, showing decreased assets and equity, and increased assets held for sale Assets (June 30, 2025 vs December 31, 2024) | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | Change | | :-------------------------------- | :------------------------ | :-------------------------- | :------- | | Total real estate properties, net | $5.45 billion | $6.37 billion | (14.49%) | | Assets of properties held for sale | $849.1 million | $43.1 million | 1869.9% | | Cash and cash equivalents | $63.2 million | $143.5 million | (55.9%) | | Total assets | $6.93 billion | $7.12 billion | (2.63%) | Liabilities and Shareholders' Equity (June 30, 2025 vs December 31, 2024) | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | Change | | :-------------------------- | :------------------------ | :-------------------------- | :------- | | Unsecured debt, net | $4.03 billion | $4.02 billion | 0.16% | | Secured debt, net | $1.69 billion | $1.69 billion | 0.13% | | Total liabilities | $6.24 billion | $6.27 billion | (0.49%) | | Total shareholders' equity | $695.9 million | $851.9 million | (18.29%) | Debt Summary This section details SVC's debt portfolio, categorizing it by secured and unsecured debt, highlighting interest rates and maturity dates Debt Composition (as of June 30, 2025) | Debt Type | Principal Balance (USD) | Weighted Average Interest Rate | Weighted Average Years to Maturity | | :---------------------- | :---------------------------- | :----------------------------- | :-------------------------------- | | Secured Floating Rate Debt | $145.0 million | 6.627% | 1.9 | | Secured Fixed Rate Debt | $1.61 billion | 7.484% | 5.0 | | Unsecured Fixed Rate Debt | $4.08 billion | 5.930% | 3.3 | | Total / Weighted Average | $5.83 billion | 6.375% | 3.7 | - SVC announced early redemption of $350 million 5.25% senior unsecured notes due 2026, expected around September 4, 2025, using cash on hand[25] - As of July 1, 2025, SVC borrowed $550 million under its revolving credit facility as a precautionary measure, fully drawn as of August 5, 2025[25] Debt Maturity Schedule This section illustrates SVC's debt maturity profile, showing principal payments across future years for various debt types Debt Maturity Profile (Principal amounts in USD) | Year | Unsecured Fixed Rate Debt | Secured Floating Rate Debt | Secured Fixed Rate Debt | Total | | :--- | :------------------------ | :------------------------- | :---------------------- | :---- | | 2025 | $2.0 million | $145.0 million | $0 | $147.0 million | | 2026 | $800.0 million | $0 | $0 | $800.0 million | | 2027 | $850.0 million | $0 | $0 | $850.0 million | | 2028 | $400.0 million | $0 | $600.7 million | $1.00 billion | | 2029 | $1.13 billion | $0 | $0 | $1.13 billion | | 2030 | $400.0 million | $0 | $0 | $400.0 million | | 2031 | $0 | $0 | $1.00 billion | $1.00 billion | | 2032 | $500.0 million | $0 | $0 | $500.0 million | Secured vs. Unsecured Debt (as of June 30, 2025) | Debt Type | Percentage | | :---------- | :--------- | | Secured Debt | 30.1% | | Unsecured Debt | 69.9% | Leverage Ratios, Coverage Ratios and Debt Covenants This section details SVC's leverage and coverage ratios, along with compliance with senior note debt covenants for Q2 2025 Leverage Ratios (Trailing Twelve Months Ended June 30, 2025) | Metric | 6/30/2025 | 6/30/2024 | Change | | :---------------------------------------------------------------- | :-------- | :-------- | :------- | | Net debt / total gross assets | 56.5% | 55.1% | +1.4 pts | | Net debt / gross book value of real estate assets and cash and cash equivalents | 60.0% | 59.1% | +0.9 pts | | Secured debt / total assets | 25.0% | 22.4% | +2.6 pts | | Variable rate debt / net debt | 2.5% | 0.0% | +2.5 pts | Coverage Ratios (Trailing Twelve Months Ended June 30, 2025) | Metric | 6/30/2025 | 6/30/2024 | Change | | :---------------------------------------------------------------- | :-------- | :-------- | :------- | | Rolling four-quarter Adjusted EBITDAre / rolling four-quarter interest expense | 1.4x | 1.7x | (0.3x) | | Net debt / rolling four-quarter Adjusted EBITDAre | 10.2x | 9.4x | +0.8x | Senior Note Debt Covenants (Trailing Twelve Months Ended June 30, 2025) | Covenant | Required Minimum/Maximum | 6/30/2025 | Compliance | | :---------------------------------------------------------------- | :----------------------- | :-------- | :--------- | | Total unencumbered assets / unsecured debt | 150% (minimum) | 190.0% | Met | | Total debt / adjusted total assets | 60.0% (maximum) | 55.9% | Met | | Secured debt / adjusted total assets | 40.0% (maximum) | 16.8% | Met | | Consolidated income available for debt service / debt service | 1.50x (minimum) | 1.49x | Not Met (below 1.50x) | | Total unencumbered assets in guarantor subsidiaries / senior guaranteed unsecured debt | 2.2x (minimum) | 4.51x | Met | - As of June 30, 2025, SVC was below the covenant levels under its debt agreements necessary to incur additional debt[34] Capital Expenditures Summary This section outlines SVC's Q2 2025 capital expenditures, showing a year-over-year decrease in total capital improvements Capital Expenditures (Three Months Ended June 30) | Category | Q2 2025 (USD) | Q1 2025 (USD) | Q2 2024 (USD) | Change (QoQ) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :------------------ | :----------- | :----------- | | Hotel capital improvements | $37.9 million | $42.5 million | $65.2 million | (10.9%) | (41.9%) | | Lease related costs | $0.3 million | $0.3 million | $1.0 million | 0.4% | (72.5%) | | Recurring capital expenditures | $38.1 million | $42.8 million | $66.2 million | (10.9%) | (42.4%) | | Redevelopment and other activities | $1.1 million | $3.0 million | $0.3 million | (63.6%) | 312.3% | | Total capital improvements & FF&E Reserve fundings | $39.2 million | $45.8 million | $66.5 million | (14.3%) | (40.9%) | Property Acquisitions and Dispositions This section details SVC's property acquisition and disposition activities, focusing on hotel divestment and net lease acquisitions Acquisitions (Since January 1, 2025) | Quarter Acquired | Number of Properties | Property Type | Square Footage | Purchase Price (USD) | Weighted Average Lease Term | Average Rent Coverage | | :--------------- | :------------------- | :------------ | :------------- | :------------------------- | :-------------------------- | :-------------------- | | Q2 2025 | 7 | Net Lease | 83,436 | $29.9 million | 16.1 years | 2.60x | | Q3 2025 (since July 1st) | 7 | Net Lease | 54,141 | $14.5 million | 13.1 years | 2.34x | | Total | 14 | | 137,577 | $44.4 million | 15.0 years | 2.50x | Dispositions (Since January 1, 2025) | Quarter Disposed | Number of Properties | Property Type | Rooms/Square Footage | Sales Price (USD) | | :--------------- | :------------------- | :------------ | :------------------- | :---------------------- | | Q1 2025 | 3 Hotels, 3 Net Lease | Hotel, Net Lease | 420 rooms, 103,043 sq ft | $15.1 million (Hotels), $3.1 million (Net Lease) | | Q2 2025 | 1 Hotel, 3 Net Lease | Hotel, Net Lease | 94 rooms, 140,512 sq ft | $4.5 million (Hotel), $13.7 million (Net Lease) | | Q3 2025 (since July 1st) | 2 Hotels, 1 Net Lease | Hotel, Net Lease | 234 rooms, 33,106 sq ft | $6.6 million (Hotel), $6.6 million (Hotel), $0.9 million (Net Lease) | | Total | 16 | | 1,006 rooms, 276,661 sq ft | $63.2 million | Portfolio Information Portfolio Summary SVC's portfolio comprises 942 properties, including hotels and net lease assets, diversified across tenants, brands, industries, and states Portfolio Composition (as of June 30, 2025) | Category | Count | Details | Investment (USD) | % of Total Investment | | :------------------ | :---- | :-------------------- | :--------------------- | :-------------------- | | Hotel Properties | 200 | 35,101 rooms | $6.34 billion | 55.7% | | Net Lease Properties | 742 | 13,162,020 sq ft | $5.04 billion | 44.3% | | Total Properties | 942 | | $11.38 billion | 100.0% | - Diversification Facts: 178 Tenants/Operators, 145 Brands, 22 Industries, 46 States[42] - Top Geographical Diversification (by investment): California (13%), Texas (7%), Florida (7%), Illinois (6%), Georgia (8%)[45] Consolidated Portfolio Diversification by Industry This section details SVC's portfolio diversification by industry, with hotels and travel centers as the largest segments Top Industries by Investment (as of June 30, 2025) | Industry | Investment (USD) | Percent of Total Investment | | :-------------------------- | :--------------------- | :-------------------------- | | Hotels | $6.34 billion | 55.7% | | Travel Centers | $3.31 billion | 29.1% | | Restaurants - Quick Service | $280.8 million | 2.5% | | Health and Fitness | $196.1 million | 1.7% | | Restaurants - Casual Dining | $193.4 million | 1.7% | Consolidated Portfolio by Geographical Diversification This section provides a geographical breakdown of SVC's portfolio by investment, with California, Texas, and Florida as top states Top 5 States by Total Investment (as of June 30, 2025) | State | Total Investment (USD) | % of Total Investment | Hotel Investment (USD) | Net Lease Investment (USD) | | :---------- | :--------------------------- | :-------------------- | :--------------------------- | :------------------------------- | | California | $1.49 billion | 13.1% | $1.21 billion | $273.1 million | | Texas | $812.0 million | 7.1% | $309.7 million | $502.3 million | | Florida | $754.2 million | 6.6% | $495.6 million | $258.6 million | | Illinois | $694.2 million | 6.0% | $413.2 million | $281.1 million | | Georgia | $673.2 million | 5.8% | $407.7 million | $265.5 million | - Top 10 states account for 55.7% of total investment, 61.2% of hotel investment, and 49.5% of net lease investment[52] Hotel Portfolio by Brand This section details SVC's hotel portfolio by brand, with Royal Sonesta and Sonesta Hotels & Resorts representing the largest investments Top Hotel Brands by Investment (as of June 30, 2025) | Brand | Number of Hotels | Number of Rooms or Suites | Investment (USD) | Percent of Total Hotel Investment | Investment Per Room or Suite | | :------------------------ | :--------------- | :------------------------ | :--------------------- | :-------------------------------- | :--------------------------- | | Royal Sonesta Hotels® | 17 | 5,663 | $1.95 billion | 30.7% | $344,175 | | Sonesta Hotels & Resorts® | 22 | 7,207 | $1.47 billion | 23.1% | $203,542 | | Sonesta ES Suites® | 52 | 6,689 | $1.07 billion | 16.8% | $159,272 | | Sonesta Select® | 38 | 5,551 | $633.3 million | 10.0% | $114,093 | | Sonesta Simply Suites® | 46 | 5,894 | $556.3 million | 8.8% | $94,376 | Hotel Operating Statistics by Service Level - All Hotels - Three Months Ended June 30, 2025 This section provides Q2 2025 hotel operating statistics, showing modest RevPAR growth but a decline in Adjusted Hotel EBITDA All Hotels Operating Statistics (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------- | :-------- | :-------- | :------- | | Occupancy | 69.2% | 69.1% | +0.1 pts | | ADR | $146.32 | $146.02 | +0.2% | | RevPAR | $101.27 | $100.85 | +0.4% | | Adjusted Hotel EBITDA | $73.3 million | $83.2 million | (11.8%) | Retained Hotels (Total/Average, Three Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------- | :-------- | :-------- | :------- | | Occupancy | 69.0% | 68.2% | +0.8 pts | | ADR | $175.89 | $175.21 | +0.4% | | RevPAR | $121.30 | $119.51 | +1.5% | | Adjusted Hotel EBITDA | $53.5 million | $60.6 million | (11.7%) | Exit Hotels (Total/Average, Three Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------- | :-------- | :-------- | :------- | | Occupancy | 69.5% | 70.2% | (0.7) pts | | ADR | $107.75 | $108.72 | (0.9%) | | RevPAR | $74.94 | $76.32 | (1.8%) | | Adjusted Hotel EBITDA | $19.9 million | $22.6 million | (12.1%) | Hotel Operating Statistics by Service Level - All Hotels - Six Months Ended June 30, 2025 This section presents H1 2025 hotel operating statistics, indicating modest RevPAR growth but a significant decline in Adjusted Hotel EBITDA All Hotels Operating Statistics (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------- | :-------- | :-------- | :------- | | Occupancy | 63.6% | 63.1% | +0.5 pts | | ADR | $145.67 | $144.64 | +0.7% | | RevPAR | $92.63 | $91.28 | +1.5% | | Adjusted Hotel EBITDA | $98.5 million | $115.9 million | (15.0%) | Retained Hotels (Total/Average, Six Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------- | :-------- | :-------- | :------- | | Occupancy | 62.9% | 61.8% | +1.1 pts | | ADR | $175.02 | $173.59 | +0.8% | | RevPAR | $110.15 | $107.21 | +2.7% | | Adjusted Hotel EBITDA | $73.4 million | $84.3 million | (12.9%) | Exit Hotels (Total/Average, Six Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------- | :-------- | :-------- | :------- | | Occupancy | 64.4% | 64.9% | (0.5) pts | | ADR | $107.97 | $108.40 | (0.4%) | | RevPAR | $69.59 | $70.33 | (1.1%) | | Adjusted Hotel EBITDA | $25.1 million | $31.5 million | (20.5%) | Net Lease Portfolio by Brand This section outlines SVC's net lease portfolio by brand, with TravelCenters of America as the largest tenant by investment and rent Top 5 Net Lease Brands by Investment (as of June 30, 2025) | Brand | Investment (USD) | Percent of Total Investment | Annualized Minimum Rent (USD) | Percent of Total Annualized Minimum Rent | Rent Coverage | | :-------------------------- | :--------------------- | :-------------------------- | :---------------------------------- | :--------------------------------------- | :------------ | | TravelCenters of America Inc. | $2.25 billion | 44.8% | $180.3 million | 46.7% | 1.31x | | Petro Stopping Centers | $1.02 billion | 20.1% | $83.9 million | 21.7% | 1.31x | | The Great Escape | $98.2 million | 1.9% | $7.7 million | 2.0% | 4.75x | | Life Time Fitness | $92.6 million | 1.8% | $5.8 million | 1.5% | 2.84x | | Buehler's Fresh Foods | $76.5 million | 1.5% | $5.7 million | 1.5% | 2.72x | - Total Net Lease Portfolio (as of June 30, 2025): 742 properties, 13,162,020 sq ft, $5.04 billion investment, $386.5 million annualized minimum rent, 2.04x average rent coverage[60] Net Lease Portfolio by Industry This section categorizes SVC's net lease portfolio by industry, with Travel Centers dominating investment and annualized minimum rent Top 5 Net Lease Industries by Investment (as of June 30, 2025) | Industry | Investment (USD) | Percent of Total Investment | Annualized Minimum Rent (USD) | Percent of Total Annualized Minimum Rent | Rent Coverage | | :-------------------------- | :--------------------- | :-------------------------- | :---------------------------------- | :--------------------------------------- | :------------ | | Travel Centers | $3.31 billion | 65.7% | $267.6 million | 69.2% | 1.33x | | Restaurants - Quick Service | $280.8 million | 5.6% | $19.6 million | 5.1% | 2.99x | | Restaurants - Casual Dining | $193.4 million | 3.8% | $12.1 million | 3.1% | 2.94x | | Health and Fitness | $196.1 million | 3.9% | $11.8 million | 3.1% | 2.23x | | Grocery Stores | $129.2 million | 2.6% | $9.3 million | 2.4% | 3.22x | - Total Net Lease Portfolio (as of June 30, 2025): 742 properties, 13,162,020 sq ft, $5.04 billion investment, $386.5 million annualized minimum rent, 2.04x average rent coverage[64] Net Lease Portfolio by Tenant (Top 10) This section identifies SVC's top 10 net lease tenants, with TravelCenters of America Inc. as the largest by investment and rent Top 10 Tenants by Investment (as of June 30, 2025) | Tenant | Brand Affiliation | Investment (USD) | Percent of Total Investment | Annualized Minimum Rent (USD) | Rent Coverage | Weighted Average Lease Term (years) | | :-------------------------------- | :------------------------------------------ | :--------------------- | :-------------------------- | :---------------------------------- | :------------ | :---------------------------------- | | TravelCenters of America Inc. | TravelCenters of America / Petro Stopping Centers | $3.27 billion | 64.9% | $264.3 million | 1.31x | 7.9 | | Universal Pool Co., Inc. | The Great Escape | $98.2 million | 1.9% | $7.7 million | 4.75x | 2.2 | | Healthy Way of Life II, LLC | Life Time Fitness | $92.6 million | 1.8% | $5.8 million | 2.84x | 10.0 | | Styx Acquisition, LLC | Buehler's Fresh Foods | $76.5 million | 1.5% | $5.7 million | 2.72x | 10.3 | | Professional Resource Development, Inc. | Heartland Dental | $61.1 million | 1.2% | $4.8 million | 4.71x | 0.8 | | Norms Restaurants, LLC | Norms | $53.7 million | 1.1% | $3.8 million | 3.36x | 20.0 | | Express Oil Change, L.L.C. | Express Oil Change | $49.7 million | 1.0% | $3.7 million | 5.77x | 9.8 | | Pilot Travel Centers LLC | Flying J Travel Plaza | $41.7 million | 0.8% | $3.3 million | 3.14x | 3.5 | | Automotive Remarketing Group, Inc. | America's Auto Auction | $38.3 million | 0.8% | $3.2 million | 9.08x | 9.8 | | Fleet Farm Group LLC | Fleet Farm | $37.8 million | 0.8% | $2.8 million | 2.15x | 11.0 | | Subtotal, Top 10 | | $3.82 billion | 75.8% | $305.1 million | 1.69x | 7.9 | Net Lease Portfolio - Expiration Schedule This section details the net lease portfolio's expiration schedule, showing significant annualized minimum rent expiring in 2033 Annualized Minimum Rent Expiration (as of June 30, 2025) | Year | Annualized Minimum Rent Expiring (USD) | Percent of Total Annualized Minimum Rent Expiring | Cumulative Percent of Total Annualized Minimum Rent Expiring | | :--- | :------------------------------------------- | :------------------------------------------------ | :---------------------------------------------------------- | | 2025 | $6.4 million | 1.7% | 1.7% | | 2026 | $11.6 million | 3.0% | 4.7% | | 2027 | $12.8 million | 3.3% | 8.0% | | 2028 | $9.6 million | 2.5% | 10.5% | | 2029 | $10.5 million | 2.7% | 13.2% | | 2030 | $6.3 million | 1.6% | 14.8% | | 2031 | $5.2 million | 1.3% | 16.1% | | 2032 | $2.9 million | 0.8% | 16.9% | | 2033 | $270.5 million | 69.9% | 86.8% | | 2034 | $5.7 million | 1.6% | 88.4% | | 2035 | $19.4 million | 5.0% | 93.4% | | 2036 | $6.1 million | 1.6% | 95.0% | | 2037 | $3.2 million | 0.8% | 95.8% | | 2038 | $1.2 million | 0.3% | 96.1% | | 2039 | $3.7 million | 1.0% | 97.1% | | 2040 | $2.4 million | 0.6% | 97.7% | | 2041 | $2.6 million | 0.7% | 98.4% | | 2042 | $0 | 0.0% | 98.4% | | 2043 | $2.1 million | 0.5% | 98.9% | | 2044 | $0.3 million | 0.1% | 99.0% | | 2045 | $4.0 million | 1.0% | 100.0% | | Total | $386.5 million | 100.0% | | - Weighted Average Lease Term: 7.6 years[71] Net Lease Portfolio - Occupancy Summary This section provides an occupancy summary for SVC's net lease portfolio, showing a 97.3% occupancy rate as of June 30, 2025 Net Lease Occupancy (as of June 30, 2025 vs June 30, 2024) | Metric | 6/30/2025 | 6/30/2024 | | :-------------------------- | :-------- | :-------- | | Properties (end of period) | 742 | 749 | | Vacant properties end of the period | 20 | 20 | | Percentage of properties leased | 97.3% | 97.3% | Appendix Company Profile and Research Coverage This section profiles Service Properties Trust (SVC) as a REIT, managed by The RMR Group, and lists its research and rating coverage - Company Type: REIT owning hotels and service-focused retail net lease properties[80] - Management: Managed by The RMR Group (Nasdaq: RMR), an alternative asset management company with approximately $40 billion in assets under management as of June 30, 2025[81] - Research Coverage: B. Riley Securities, Inc., Wells Fargo Securities, and Oppenheimer & Co. Inc[82] - Rating Agencies: Moody's Investors Service and S&P Global[82] Governance Information This section lists the members of SVC's Board of Trustees and its key officers, outlining the company's leadership structure - Board of Trustees: Christopher J. Bilotto (Managing Trustee), Laurie B. Burns (Independent Trustee), Robert E. Cramer (Independent Trustee), Donna D. Fraiche (Lead Independent Trustee), William A. Lamkin (Independent Trustee), Rajan C. Penkar (Independent Trustee), and Adam D. Portnoy (Chair of the Board & Managing Trustee)[84] - Officers: Christopher J. Bilotto (President and Chief Executive Officer), Jesse W. Abair (Vice President), and Brian E. Donley (Chief Financial Officer and Treasurer)[84] Calculation of FFO, Normalized FFO and CAD This section reconciles net loss to FFO, Normalized FFO, and CAD, detailing adjustments for non-GAAP performance and distribution capacity FFO, Normalized FFO, and CAD (Three Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change | | :-------------------- | :--------------- | :--------------- | :----------- | | Net loss | $(38.2) million | $(73.8) million | 48.3% (improvement) | | FFO | $55.9 million | $57.8 million | (3.3%) | | Normalized FFO | $57.6 million | $73.8 million | (22.0%) | | CAD | $16.8 million | $3.4 million | 387.7% | Per Common Share Amounts (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------- | :------ | :------ | :----------- | | Net loss | $(0.23) | $(0.45) | 48.9% (improvement) | | FFO | $0.34 | $0.35 | (2.9%) | | Normalized FFO | $0.35 | $0.45 | (22.2%) | | CAD | $0.10 | $0.02 | 400.0% | Calculation of EBITDA, EBITDAre and Adjusted EBITDAre This section presents the calculation of EBITDA, EBITDAre, and Adjusted EBITDAre, providing insights into operating performance before certain impacts EBITDA, EBITDAre, and Adjusted EBITDAre (Three Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change | | :-------------------- | :--------------- | :--------------- | :----------- | | Net loss | $(38.2) million | $(73.8) million | 48.3% (improvement) | | EBITDA | $140.0 million | $116.2 million | 20.5% | | EBITDAre | $160.9 million | $154.1 million | 4.4% | | Adjusted EBITDAre | $163.8 million | $171.5 million | (4.5%) | Calculation and Reconciliation of Hotel EBITDA and Adjusted Hotel EBITDA - All Hotels This section details the calculation of Hotel EBITDA and Adjusted Hotel EBITDA, showing a year-over-year decrease despite stable revenues Hotel Operating Revenues and Expenses (Three Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change | | :-------------------- | :--------------- | :--------------- | :----------- | | Hotel operating revenues | $404.4 million | $412.5 million | (1.96%) | | Hotel operating expenses | $332.8 million | $330.1 million | 0.82% | | Hotel EBITDA | $71.6 million | $82.4 million | (13.0%) | | Adjusted Hotel EBITDA | $73.1 million | $82.4 million | (11.4%) | | Adjusted Hotel EBITDA Margin | 18.1% | 20.0% | (1.9) pts | Hotel Operating Revenues and Expenses (Six Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change | | :-------------------- | :--------------- | :--------------- | :----------- | | Hotel operating revenues | $739.4 million | $748.7 million | (1.25%) | | Hotel operating expenses | $646.1 million | $637.4 million | 1.36% | | Hotel EBITDA | $93.3 million | $111.3 million | (16.2%) | | Adjusted Hotel EBITDA | $96.0 million | $111.3 million | (13.8%) | | Adjusted Hotel EBITDA Margin | 13.0% | 14.9% | (1.9) pts | Notes to Condensed Consolidated Statements of Income (Loss) and Calculations of FFO, Normalized FFO, CAD, EBITDA, EBITDAre, Adjusted EBITDAre, Hotel EBITDA and Adjusted Hotel EBITDA This section provides explanatory notes to financial statements and non-GAAP calculations, detailing adjustments and significant events - Asset Impairment: SVC recorded a net loss on asset impairment of $17.7 million for Q2 2025 (17 hotels and 2 net lease properties) and $54.7 million for the six months ended June 30, 2025 (17 hotels and 2 net lease properties)[94][95] - Real Estate Sales: SVC recorded a net loss on sale of real estate of ($0.2) million for Q2 2025 (4 hotels, 4 net lease properties) and a gain of $0.6 million for the six months ended June 30, 2025 (6 hotels, 7 net lease properties)[94] - Rental Income Adjustment: Rental income increased by $2.7 million for Q2 2025 and $6.6 million for the six months ended June 30, 2025, due to straight-line recognition of scheduled rent changes[95] - Transaction Related Costs: Transaction related costs for Q2 2025 were $1.3 million, primarily for hotel renovations[95] - Early Debt Extinguishment: No loss on early extinguishment of debt in Q2 2025, compared to $16.0 million in Q2 2024[95] Non-GAAP Financial Measures and Certain Definitions This section defines SVC's non-GAAP financial measures and key operational terms, explaining their methodologies and relevance - FFO and Normalized FFO: Calculated based on Nareit definition, adjusting net income for real estate depreciation, impairment, and gains/losses on sales. Normalized FFO further adjusts for specific non-recurring items[98] - CAD (Cash Available for Distribution): Defined as Normalized FFO minus proportionate share of Normalized FFO from equity method investment, plus operating cash flow distributions, less real estate related capital expenditures and other non-cash/non-recurring items[99] - EBITDA, EBITDAre, and Adjusted EBITDAre: EBITDAre is based on Nareit definition, adjusting EBITDA for real estate sales gains/losses and impairment. Adjusted EBITDAre includes further adjustments[100] - Hotel EBITDA and Adjusted Hotel EBITDA: Hotel operating revenues less hotel operating expenses, with Adjusted Hotel EBITDA excluding items not reflective of ongoing operating performance[101] - Other Key Definitions: Includes Adjusted Hotel EBITDA Margin, Adjusted Total Assets, Annualized Dividend Yield, Annualized Minimum Rent, Average Daily Rate (ADR), Cash Cap Rate, Chain Scale, Comparable Hotels Data, Consolidated Income Available for Debt Service, Debt, Earnings and Adjustments Attributable to an Investee, Exit Hotels, FF&E Reserves, FF&E Reserve Deposits Not Funded by Hotel Operations, GAAP, GAAP Cap Rate, General and Administrative Expense Paid in Common Shares, Gross Book Value of Real Estate Assets, Hotel Capital Improvements and FF&E Reserve Fundings, Investment, Lease Related Costs, Occupancy, Non-Cash Expenses, Non-Cash Interest Expense, Non-Cash Revenues, Owner's Priority Return, Redevelopment and Other Activities, Rent Coverage, Retained Hotels, Revenue per Available Room (RevPAR), Rolling Four Quarter CAD, SOFR, Total Gross Assets, and Weighted Average Lease Term[104][105][106][107][108][109][110][111][112][113][115][116][117][118][119][120][121][122][123][124] WARNING CONCERNING FORWARD-LOOKING STATEMENTS This section cautions against undue reliance on forward-looking statements, which are subject to risks and uncertainties, and may not be updated - Nature of Statements: Contains forward-looking statements about strategic priorities, hotel sales, balance sheet strengthening, debt repayment, portfolio optimization, and long-term value[126] - Risks and Uncertainties: Statements are subject to inherent uncertainties, including market conditions, interest rates, inflation, supply chain disruptions, economic downturns, ability to sell properties, debt covenants, liquidity, and operational challenges[127] - Disclaimer: Advises against undue reliance on forward-looking statements and states no intention to update them unless legally required[128]