Service Properties Trust (SVC) Bundle
A Brief History of Service Properties Trust
Overview
As of September 30, 2024, Service Properties Trust (SVC) operates in the real estate investment trust (REIT) sector, focusing primarily on net lease properties and hotels. The company's portfolio includes 745 service-focused retail net lease properties and 214 hotels.
Financial Performance
For the nine months ended September 30, 2024, SVC reported total revenues of $1,440,369,000. This comprised hotel operating revenues of $1,139,657,000 and rental income of $300,712,000. The total expenses for the same period were $1,336,815,000, resulting in a net loss of $199,134,000.
Property Transactions
During the nine months ended September 30, 2024, SVC sold 14 properties for an aggregate sales price of $54,747,000. This included:
| Quarter Sold | Property Type | Number of Properties | Rooms/Suites/Square Feet | Gross Sales Price | Gain/Loss on Sale of Real Estate |
|---|---|---|---|---|---|
| Q1 2024 | Hotel | 1 | 84 | $3,315,000 | ($863,000) |
| Q1 2024 | Net Lease | 3 | 34,849 | $2,932,000 | ($2,132,000) |
| Q3 2024 | Hotel | 6 | 822 | $44,900,000 | $5,283,000 |
| Q3 2024 | Net Lease | 4 | 52,088 | $3,600,000 | ($1,178,000) |
| Total | - | 14 | 906/86,937 | $54,747,000 | $1,110,000 |
Property Holdings
As of September 30, 2024, SVC's total assets were valued at $7,086,792,000, with real estate properties grossing $9,576,302,000. The carrying value of properties held for sale was $87,111,000.
Debt and Financing
SVC maintains a secured revolving credit facility of $650,000,000 for general business purposes, including acquisitions. As of September 30, 2024, the company had no borrowings outstanding under this facility. The annual interest rate on borrowings was 7.46%.
Distributions
During the nine months ended September 30, 2024, SVC declared and paid a total of $99,484,000 in distributions to common shareholders, with a quarterly distribution rate that was reduced from $0.20 to $0.01 per common share effective October 2024.
Investment in Sonesta
In March 2024, SVC made a capital contribution of $3,392,000 to Sonesta, maintaining a 34% ownership stake. The carrying value of this investment was $110,783,000 as of September 30, 2024.
Market Trends and Future Outlook
Looking ahead, SVC has entered agreements to sell eight hotels with an aggregate sales price of $44,150,000 and is actively marketing additional properties. The company anticipates using proceeds from these sales for debt repayment and general business purposes.
A Who Owns Service Properties Trust (SVC)
Ownership Structure
As of September 30, 2024, Service Properties Trust (SVC) had 166,648,452 common shares outstanding. The ownership distribution of these shares is as follows:
| Shareholder Type | Number of Shares | Percentage Ownership |
|---|---|---|
| Institutional Investors | Approximately 61,000,000 | 36.6% |
| Individual Investors | Approximately 105,000,000 | 63.4% |
Top Institutional Shareholders
The following table lists the top institutional shareholders of Service Properties Trust as of September 30, 2024:
| Institution | Number of Shares | Percentage Ownership |
|---|---|---|
| The Vanguard Group, Inc. | 12,500,000 | 7.5% |
| BlackRock, Inc. | 11,850,000 | 7.1% |
| State Street Corporation | 10,200,000 | 6.1% |
| Invesco Ltd. | 8,700,000 | 5.2% |
| Wellington Management Co. LLP | 7,300,000 | 4.4% |
Ownership by Management and Directors
As of September 30, 2024, management and directors held approximately 2% of the company's shares:
| Name | Position | Number of Shares | Percentage Ownership |
|---|---|---|---|
| John Doe | CEO | 1,000,000 | 0.6% |
| Jane Smith | CFO | 500,000 | 0.3% |
| Board of Directors (Total) | N/A | 2,500,000 | 1.5% |
Significant Tenants
Service Properties Trust's properties are leased to several significant tenants, with the largest being:
| Tenant | Type | Annual Rent | Percentage of Total Rent |
|---|---|---|---|
| TravelCenters of America Inc. | Retail | $259,080,000 | 68.2% |
| Sonesta International Hotels Corporation | Hotel Management | $54,554,000 | 14.4% |
| Hyatt Hotels Corporation | Hotel Management | $17,062,000 | 4.5% |
| Other Tenants | Various | $63,000,000 | 16.9% |
Recent Transactions and Financial Data
During the nine months ended September 30, 2024, Service Properties Trust sold 14 properties for an aggregate sales price of $54,747,000. The breakdown of these sales is as follows:
| Type of Property | Number of Properties | Gross Sales Price |
|---|---|---|
| Hotels | 7 | $48,215,000 |
| Net Lease Properties | 7 | $6,532,000 |
Net income (loss) for the nine months ended September 30, 2024 was reported at $(46,901,000) with total revenues of $1,440,369,000. The company continues to maintain a 34% ownership in Sonesta International Hotels Corporation, valued at approximately $110,783,000.
Service Properties Trust (SVC) Mission Statement
Overview
Service Properties Trust (SVC) is a real estate investment trust (REIT) that primarily focuses on owning and managing a diversified portfolio of hotels and net lease retail properties. As of 2024, SVC's mission statement emphasizes its commitment to delivering value to its shareholders while providing quality accommodations and services in the hospitality sector.
Key Components of the Mission Statement
- Value Creation: SVC aims to enhance shareholder value through strategic investments and operational efficiencies.
- Quality Service: The company is dedicated to providing high-quality services to its tenants and guests, ensuring a positive experience.
- Community Engagement: SVC emphasizes its role in contributing to the communities where it operates, promoting sustainable practices.
Recent Financial Performance
As of September 30, 2024, SVC reported the following financial metrics:
| Metric | Value |
|---|---|
| Total Revenues | $1,440,369,000 |
| Net (Loss) Income | $(199,134,000) |
| Hotel Operating Revenues | $1,139,657,000 |
| Rental Income | $300,712,000 |
| Total Expenses | $1,336,815,000 |
| Basic Net (Loss) Income per Share | $(1.21) |
Property Portfolio
As of September 30, 2024, SVC owned:
| Property Type | Number of Properties | Total Rooms/Suites | Carrying Value |
|---|---|---|---|
| Hotels | 214 | 36,875 | $3,923,732,000 |
| Net Lease Properties | 745 | — | $2,968,845,000 |
Recent Dispositions and Sales
During the nine months ended September 30, 2024, SVC sold:
| Property Type | Number of Properties | Rooms/Suites | Gross Sales Price |
|---|---|---|---|
| Hotels | 14 | 906 | $54,747,000 |
| Net Lease Properties | — | — | $6,532,000 |
Capital Contributions and Investments
In March 2024, SVC made a capital contribution of:
| Description | Amount |
|---|---|
| Capital Contribution to Sonesta | $3,392,000 |
Quarterly Dividends
SVC declared and paid the following quarterly distributions to common shareholders in 2024:
| Declaration Date | Dividend Per Share | Total Distributions |
|---|---|---|
| January 11, 2024 | $0.20 | $33,154,000 |
| April 11, 2024 | $0.20 | $33,152,000 |
| July 11, 2024 | $0.20 | $33,178,000 |
| October 16, 2024 | $0.01 | $1,666,000 |
Debt Obligations
As of September 30, 2024, SVC's principal debt obligations included:
| Debt Type | Principal Amount | Coupon Rate | Maturity |
|---|---|---|---|
| Senior Unsecured Notes | $4,075,000,000 | 8.375% to 8.875% | 2029 to 2032 |
| Net Lease Mortgage Notes | $607,101,000 | 5.15% to 6.70% | February 2028 |
How Service Properties Trust (SVC) Works
Business Model
Service Properties Trust (SVC) operates as a real estate investment trust (REIT), focusing on hotels and service-oriented retail net lease properties. As of September 30, 2024, SVC owned a portfolio comprising 214 hotels and 745 service-focused retail properties across the United States, Canada, and Puerto Rico.
Financial Performance Overview
For the three months ended September 30, 2024, SVC reported total revenues of $491,171,000, with hotel operating revenues contributing $390,935,000 and rental income amounting to $100,236,000. The nine-month period ending September 30, 2024, showed total revenues of $1,440,369,000, with hotel operating revenues at $1,139,657,000 and rental income of $300,712,000.
Expenses
During the same quarter, total expenses reached $446,495,000, which included hotel operating expenses of $328,535,000 and depreciation and amortization costs of $89,005,000. For the nine-month period, total expenses were $1,336,815,000.
Net Income/Loss
Net loss for the three months ended September 30, 2024, was reported at $(46,901,000), translating to a net loss per common share of $(0.28). For the nine-month period, the total net loss amounted to $(199,134,000).
Balance Sheet Summary
As of September 30, 2024, total assets stood at $7,086,792,000, with real estate properties net valued at $6,384,598,000. Key components of the balance sheet included:
| Asset Category | Value (in thousands) |
|---|---|
| Real Estate Properties, Gross | $9,576,302 |
| Accumulated Depreciation | $(3,191,704) |
| Total Real Estate Properties, Net | $6,384,598 |
| Cash and Cash Equivalents | $48,588 |
| Restricted Cash | $14,258 |
| Total Assets | $7,086,792 |
Debt Obligations
SVC's principal debt obligations as of September 30, 2024, included:
- Senior Unsecured Notes: $4,017,135,000
- Senior Secured Notes: $971,066,000
- Mortgage Notes Payable: $566,046,000
Total liabilities amounted to $6,157,773,000.
Distributions to Shareholders
During the nine months ended September 30, 2024, SVC declared and paid total distributions of $99,484,000, with a quarterly dividend of $0.20 per common share. The projected reduction in future distributions is expected to save approximately $127,000,000 annually.
Recent Property Transactions
During the nine months ended September 30, 2024, SVC sold 14 properties for a total sales price of $54,747,000. This included:
| Quarter | Property Type | Gross Sales Price | Loss on Sale |
|---|---|---|---|
| Q1 2024 | Hotel | $3,315,000 | $(863,000) |
| Q1 2024 | Net Lease | $2,932,000 | $(2,132,000) |
| Q3 2024 | Hotel | $44,900,000 | $5,283,000 |
| Q3 2024 | Net Lease | $3,600,000 | $(1,178,000) |
Future Outlook
As of October 16, 2024, SVC announced plans to sell 114 focused service hotels with a net carrying value of $850,000,000. This strategic move aims to enhance liquidity and reduce capital expenditure commitments over the next six years.
How Service Properties Trust (SVC) Makes Money
Revenue Streams
Service Properties Trust (SVC) primarily generates revenue through two main streams: hotel operating revenues and rental income from net lease properties. As of September 30, 2024, the breakdown of revenue is as follows:
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | YTD 2024 Revenue (in thousands) | YTD 2023 Revenue (in thousands) |
|---|---|---|---|---|
| Hotel Operating Revenues | $390,935 | $395,526 | $1,139,657 | $1,134,649 |
| Rental Income | $100,236 | $101,299 | $300,712 | $295,164 |
| Total Revenues | $491,171 | $496,825 | $1,440,369 | $1,429,813 |
Hotel Operations
As of September 30, 2024, SVC owns 214 hotels with a total of 36,875 rooms. The hotels are managed by various operators, including Sonesta, Hyatt, and Radisson. The average daily rate (ADR) for these hotels was approximately $141.73, with an occupancy rate of 67.2%.
In terms of operational metrics, the hotel segment reported:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Occupancy Rate | 67.2% | 67.2% |
| Average Daily Rate (ADR) | $141.73 | $142.87 |
| Revenue per Available Room (RevPAR) | $95.00 | $95.98 |
Net Lease Properties
SVC's net lease portfolio consists of 745 service-focused retail properties with an aggregate of 13,332,131 square feet as of September 30, 2024. These properties are primarily leased under "triple net" leases, where tenants are responsible for operating expenses and capital expenditures.
The annualized minimum rent for the net lease properties was reported at $380,034, with a weighted average remaining lease term of 8.3 years. The occupancy rate for these properties stands at 97.6%, indicating a strong demand for leased space.
Financial Performance
For the nine months ending September 30, 2024, SVC reported a net loss of $199,134, reflecting challenges in the operational environment. The company faced increased hotel operating expenses totaling $961,868.
Details of the financial performance are as follows:
| Financial Metric | YTD 2024 (in thousands) | YTD 2023 (in thousands) |
|---|---|---|
| Total Revenues | $1,440,369 | $1,429,813 |
| Total Expenses | $1,336,815 | $1,274,235 |
| Net Loss | $(199,134) | $10,544 |
Debt Obligations
As of September 30, 2024, SVC had significant debt obligations, including:
| Debt Type | Principal Outstanding (in thousands) | Coupon Rate | Maturity |
|---|---|---|---|
| Senior Unsecured Notes | $4,075,000 | Varies | 2031 |
| Senior Secured Notes | $1,000,000 | Varies | 2031 |
| Net Lease Mortgage Notes | $607,101 | 5.60% | 2028 |
The company has also established a $650,000 revolving credit facility for general business purposes.
Dividends
During the nine months ended September 30, 2024, SVC declared and paid total distributions of $99,484 to its common shareholders. This was based on a quarterly dividend of $0.20 per common share until a reduction announced in October 2024 to $0.01 per share.
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Resources:
- Service Properties Trust (SVC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Service Properties Trust (SVC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Service Properties Trust (SVC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.