Service Properties Trust SEC 10-Q Report

Service Properties Trust, a real estate investment trust (REIT) primarily engaged in owning and leasing hotels and service-focused retail properties, has released its Form 10-Q report for the first quarter of 2025. The report provides a comprehensive overview of the company's financial performance and operational highlights, reflecting the challenges and strategic initiatives undertaken during the period.

Financial Highlights

• Total Revenues: $435.18 million, reflecting a slight decrease of 0.2% compared to the same period in 2024, primarily due to the sale of certain hotels.
• Net Loss: $116.44 million, an increase of 48.5% from the previous year, driven by higher interest expenses and a significant loss on asset impairment.
• Net Loss Per Common Share (basic and diluted): $0.70, compared to $0.48 in the prior year, indicating a 45.8% increase in loss per share.

Business Highlights

• Hotel Portfolio Performance: As of March 31, 2025, the company owned 202 hotels. The U.S. hotel industry saw increases in average daily rate (ADR) and revenue per available room (RevPAR) compared to the previous year. The company's hotels outpaced industry increases in RevPAR, attributed partly to reduced renovation disruptions.
• Comparable Hotels Data: For the three months ended March 31, 2025, the company's comparable hotels, which exclude one hotel that suspended operations, showed an occupancy rate of 57.9%, an ADR of $144.61, and a RevPAR of $83.67, reflecting a 0.8 percentage point increase in occupancy and a 2.6% increase in RevPAR compared to the same period in 2024.
• All Hotels Data: Across all hotels, the company reported a 57.8% occupancy rate, a 3.4% increase in ADR to $144.61, and a 6.1% increase in RevPAR to $83.52 for the three months ended March 31, 2025, compared to the same period in 2024.
• Net Lease Portfolio: As of March 31, 2025, the company owned 739 service-focused retail net lease properties with an aggregate of 13,189,476 square feet, leased to 175 tenants. These properties were 97.8% occupied with a weighted average lease term of 7.8 years. TA, the largest tenant, leased 175 travel centers under five master leases expiring in 2033.
• Future Outlook - Hotel Sales: 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, expected to be completed in 2025. The proceeds are intended for debt repayment.
• Future Outlook - Capital Improvements: The company plans to fund $210,000 for capital improvements to certain hotels during the last nine months of 2025, using cash on hand and borrowings under its revolving credit facility.
• Future Outlook - Property Sales and Acquisitions: The company is at various stages of selling 115 hotels and six net lease properties, with expectations to complete these sales within one year. Additionally, the company has acquired three net lease properties and entered agreements to acquire six more, subject to conditions.
• Operational Challenges: The company notes that consumer confidence, corporate travel, and lodging demand are affected by economic conditions, inflationary pressures, and uncertainties surrounding interest rates. Increased labor costs and price inflation may continue to impact hotel operations and tenant operations negatively.

SEC Filing: Service Properties Trust [ SVC ] - 10-Q - May. 06, 2025