Service Properties Trust(SVC) - 2025 Q3 - Quarterly Results

Financial Performance - Net loss of $46.9 million, or $0.28 per common share, for the third quarter of 2025[14] - Total revenues for Q3 2025 were $478,770, a decrease of 2.5% from $491,171 in Q3 2024[19] - Net loss for Q3 2025 was $46,945, compared to a net loss of $46,901 in Q3 2024, reflecting a slight increase in losses[19] - Funds from operations (FFO) for Q3 2025 were $30,432, down 45.6% from $55,863 in Q2 2025[18] - Adjusted EBITDAre for Q3 2025 was $145,018, a decrease from $154,992 in Q3 2024[18] - The company reported a rolling four-quarter CAD of $(88,250) for Q3 2025, compared to $(148,057) in Q3 2024[18] - The company experienced a loss on asset impairment of $27,067,000 for the three months ended September 30, 2025[86] - For the three months ended September 30, 2025, the company reported a net loss of $46,945,000 compared to a net loss of $38,159,000 for the previous quarter[87] - EBITDA for the three months ended September 30, 2025, was $135,537,000, a decrease from $140,007,000 in the prior quarter[87] - Adjusted EBITDAre for the three months ended September 30, 2025, was $145,018,000, down from $163,776,000 in the previous quarter[87] Asset and Investment Overview - Total assets as of September 30, 2025, were $6,980,324, a decrease from $7,119,558 as of December 31, 2024[20] - Total liabilities increased to $6,332,416 as of September 30, 2025, compared to $6,267,685 at the end of 2024[20] - Cash and cash equivalents rose to $417,415 as of September 30, 2025, up from $143,482 at the end of 2024[20] - Total investments amount to $10,750,101, with $5,694,425 allocated to hotels (53.0% of total investments) and $5,055,676 to net lease properties (47.0% of total investments)[41] - The company acquired 24 properties in 2025, with a total purchase price of $70,643 and an average cash cap rate of 7.4%[36] - The company has a total of 160 hotels, with an average investment per room of $192,796[56] - The portfolio includes 178 travel centers, which account for 30.8% of total investments, indicating a significant focus on this sector[48] - The company operates in a diverse range of industries, with 23 different categories represented in its portfolio, including health and fitness, movie theaters, and grocery stores[48] Debt and Liquidity - No significant debt maturities until February 2027, with $650.0 million of available borrowing capacity under the revolving credit facility[15] - As of September 30, 2025, total debt amounts to $5,505,298, with a weighted average interest rate of 5.896%[23] - The leverage ratio of net debt to total gross assets is 57.9%, an increase from 56.5% in the previous quarter[30] - The company has a total of $1,750,000 in debt maturing in 2026, with $1,500,000 maturing in 2027[26] - The weighted average lease term is 7.1 years, indicating a stable income stream from the portfolio[73] Hotel Operations - Hotel RevPAR was $100.25, consistent with guidance, while adjusted hotel EBITDA was $45.4 million[14] - For the three months ended September 30, 2025, hotel capital improvements totaled $43,208, while total capital improvements and FF&E reserve fundings reached $46,987[34] - For the three months ended September 30, 2025, the average occupancy rate for all hotels was 68.9%, an increase of 1.0 percentage points compared to 67.9% in 2024[57] - The average Daily Rate (ADR) for all hotels decreased by 1.2% to $145.50 in 2025 from $147.27 in 2024[57] - Adjusted Hotel EBITDA for all hotels decreased by 18.9% to $44,261,000 in 2025 from $54,552,000 in 2024[57] - The number of hotels operated decreased to 160 as of September 30, 2025, down from 200 in the previous quarter[90] Tenant and Lease Information - The net lease portfolio consists of 752 properties, totaling 13,185,953 square feet, with 178 properties in the travel centers industry, representing 65.5% of total investment[65] - TravelCenters of America Inc. is the largest tenant, accounting for 64.7% of total investment at $3,270,106,000, with an annualized minimum rent of $264,262,000 and a rent coverage ratio of 1.27x[69] - The average investment per property across the portfolio is $6,705, with an average annual minimum rent of $517,000[71] - The average lease term for the top 10 tenants is 7.6 years, with a weighted average rent coverage of 1.67x[69] Strategic Outlook - The company continues to explore market expansion opportunities and new strategies to enhance its portfolio and investment returns[41] - Forward-looking statements indicate SVC's efforts to enhance financial stability and potential acquisitions to optimize cash flow resilience[126] - Risks include market conditions, interest rate fluctuations, and the ability to maintain sufficient liquidity and refinance debt[127] - SVC's ability to increase occupancy and room rates is crucial for future revenue growth and operational success[127] - The company emphasizes the importance of diversifying sources of rents and returns to improve cash flow security[127]