Service Properties Trust(US:SVC)2025-11-05 21:27Property Ownership and Sales - As of September 30, 2025, the company owned 912 properties across 46 states, the District of Columbia, Canada, and Puerto Rico[118] - The company sold 52 hotels with a total of 7,114 keys for a combined sales price of $391,352,000 and entered into agreements to sell 69 hotels for $567,500,000[120] - The company sold 56 properties for a combined sales price of $343,893 during the nine months ended September 30, 2025, and has agreements to sell 69 hotels for a total of $567,500[168] - The company acquired 20 net lease properties for a total purchase price of $54,701 during the nine months ended September 30, 2025, and has agreements to acquire five additional properties for $25,350[169] Financial Performance - Total revenues for the three months ended September 30, 2025, were $478,770,000, a decrease of 2.5% compared to $491,171,000 in the same period of 2024[130] - Hotel operating revenues decreased by 3.4% to $377,576,000, primarily due to hotel sales since July 1, 2024[131] - The company reported a net loss of $46,945,000 for the three months ended September 30, 2025, compared to a net loss of $46,901,000 in the same period of 2024[130] - Rental income decreased by $271 million (0.1%) to $300,441 million in the nine months ended September 30, 2025, compared to $300,712 million in 2024[143] - Hotel operating revenues decreased by $22,713 million (2.0%) to $1,116,944 million in the nine months ended September 30, 2025, compared to $1,139,657 million in 2024[143] - Total revenues decreased by $22,984 million (1.6%) to $1,417,385 million in the nine months ended September 30, 2025, compared to $1,440,369 million in 2024[143] - Net loss increased by $2,405 million (1.2%) to $201,539 million in the nine months ended September 30, 2025, compared to $199,134 million in 2024[143] - Revenues for the nine months ended September 30, 2025 were $1,134,198, while expenses were $1,395,011, resulting in a net loss of $260,813[195] Occupancy and Rates - As of September 30, 2025, the overall occupancy rate for all hotels was 68.9%, an increase of 1.0 percentage points compared to 67.9% in 2024[203] - The average daily rate (ADR) for all hotels decreased to $145.50 from $147.27, reflecting a decline of 1.2%[203] - Revenue per available room (RevPAR) for all hotels was $100.25, slightly up by 0.2% from $100.05 in the previous year[203] - The average occupancy for retained hotels was 67.8%, up from 66.4% in the previous year[203] - The Royal Sonesta Hotels® achieved an occupancy rate of 67.5% for the three months ended September 30, 2025, unchanged from the previous year[203] - Sonesta Hotels & Resorts® saw an increase in occupancy from 60.5% to 64.8%, a change of 4.3 percentage points[203] - The Crowne Plaza® brand reported a 2.9 percentage point increase in occupancy to 65.6% compared to 62.7% in 2024[203] Net Lease Portfolio - The net lease portfolio consisted of 752 properties with an aggregate of 13,185,953 square feet, achieving 97.3% occupancy and requiring annual minimum rents of $388,745,000[128] - The company’s largest tenant, TA, leased 175 travel centers under master leases requiring annual minimum rents of $264,262,000[128] - The net lease properties were 97.3% occupied as of September 30, 2025, with 20 properties available for lease[205] - The top tenant, TravelCenters of America Inc., accounts for 68.0% of the total annualized minimum rent with $264,262,000[208] - The net lease properties are diversified across 21 distinct industries, with travel centers representing 68.8% of the annualized minimum rent[210] - The total investment in net lease properties is $5,055,676,000, with a significant portion allocated to travel centers[210] Debt and Financing - The company issued $580,155 in zero coupon senior secured notes due 2027 in September 2025, raising net proceeds of approximately $490,000[175] - The company redeemed $350,000 of its outstanding 5.25% senior unsecured notes due 2026 in September 2025, funded using cash on hand[176] - As of September 30, 2025, the company had total debt maturities of $5,910,298, with $1,432,113 due in 2027 and $1,000,737 due in 2028[180] - The company maintains a $650,000 secured revolving credit facility, with no borrowings outstanding as of September 30, 2025, and an annual interest rate of 6.74%[172] - As of September 30, 2025, total debt to adjusted total assets ratio was 57.5%, below the maximum covenant requirement of 60%[188] - Secured debt to adjusted total assets ratio stood at 23.9%, well below the maximum limit of 40%[188] - Consolidated income available for debt service to debt service ratio was 1.56x, exceeding the minimum requirement of 1.50x[188] - Total unencumbered assets to unsecured debt ratio was 202.6%, surpassing the minimum threshold of 150%[188] - Total unencumbered assets in guarantor subsidiaries to senior guaranteed unsecured debt ratio was 3.84x, above the minimum requirement of 2.20x[188] - The company’s fixed rate debt totals $5.910 billion, with an annual interest expense of $343.401 million[219] - A one percentage point increase in interest rates would increase the annual interest cost by approximately $53.301 million, excluding certain senior secured notes[219] - The company has no outstanding amounts under its revolving credit facility and $45 million under the Variable Funding Note (VFN) as of September 30, 2025[221] Cash Flow and Capital Expenditures - Cash and cash equivalents at the end of the nine months ended September 30, 2025, increased to $441,232 from $62,846 in 2024, representing a significant increase of 603%[162] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $136,305, a decrease of 8.3% from $149,043 in 2024[162] - The company funded $126,465 for capital improvements in excess of FF&E reserves during the nine months ended September 30, 2025, and expects to fund an additional $70,000 in Q4 2025 and $150,000 in 2026[165] Shareholder Distributions - The company declared a total distribution of $5,002 to common shareholders during the nine months ended September 30, 2025, with a quarterly distribution of $0.01 per share[170] - The company declared distributions of $0.01 per share for the three months ended September 30, 2025, compared to $0.20 per share for the same period in 2024[217] Strategic Focus - The company aims to transition to a service-focused retail net lease property portfolio while improving the performance of retained hotels[121] - The company is subject to various financial covenants that restrict its ability to incur additional debt and require maintenance of specific financial ratios[187] - The company’s strategy to manage interest rate exposure has not materially changed since December 31, 2024[218]