Service Properties Trust Announces a Tender Offer for its $350,000,000 Outstanding 4.50% Senior Notes Due 2025

Rhea-AI Summary

Service Properties Trust (Nasdaq: SVC) has initiated a cash tender offer to purchase its outstanding $350,000,000 4.50% Senior Notes due 2025. This offer includes a consent solicitation for amendments to the indenture governing these notes. The offer expires on June 13, 2024, with an early tender deadline of May 29, 2024. Holders tendering by the early deadline receive an additional $50 per $1,000 principal amount. The offer is contingent upon the issuance of new senior unsecured notes, generating sufficient proceeds for the repurchase and settlement of the outstanding notes. Settlement dates are June 3, 2024, and June 17, 2024, for early and final tenders, respectively.

Positive

• Early tender payment of $50 per $1,000 principal amount for early submissions.
• The tender offer aims to repurchase $350 million in outstanding notes, potentially reducing future interest expenses.
• SVC plans to issue new senior unsecured notes, potentially indicating strong investor interest and confidence.
• Amendments to the indenture may simplify future debt management.

Negative

• The tender offer is contingent upon the successful issuance of new notes, which is not guaranteed.
• Failure to complete the new notes offering may impact the company's financial strategy.
• Potential increase in overall debt levels if new notes have higher interest rates.
• Early termination risk if conditions for the offer are not met.

Financial Analyst

Service Properties Trust's announcement of a tender offer for its $350,000,000 outstanding 4.50% Senior Notes due 2025 is particularly significant for bondholders and investors. The company plans to repurchase these notes using cash generated from a new issuance of senior guaranteed unsecured notes. This strategy, if executed correctly, could potentially improve the company's debt profile and reduce future interest expenses.

The tender offer provides two different payment structures, incentivizing bondholders to tender their notes early with a $50 early tender payment. The fixed spread over the U.S. Treasury yield ensures that investors receive a premium over the current market yield of similar maturity Treasury securities.

While this move offers potential benefits, such as a reduction in interest payments and alignment of debt maturities, it is contingent on the successful issuance of new notes. Investors should keep an eye on the completion of this new issuance as any delays or issues could affect the company's ability to execute its debt management plan effectively.

Rating: 1 (positive)

Market Research Analyst

The tender offer by Service Properties Trust indicates a proactive approach to managing its debt. This move is not just about repaying the existing notes but also about strategically refinancing to optimize financial health. By issuing new notes to manage the buyback, the company is likely aiming to take advantage of the current interest rate environment, which might offer lower rates compared to the 4.50% on their existing notes.

This approach can be particularly beneficial in the long term, as it shows the company's commitment to maintaining a balanced and manageable debt profile, which can be a positive signal to investors looking for stability. However, the reliance on the successful issuance of new notes introduces an element of risk. If the market conditions change unfavorably or if there is low demand for the new issuance, the company's plan could face hurdles.

Overall, this move suggests that the company is focusing on long-term financial stability, which could enhance investor confidence. However, investors should be aware of the potential risks associated with the new issuance and monitor how the market conditions evolve.

Rating: 1 (positive)

NEWTON, Mass.--(BUSINESS WIRE)-- Service Properties Trust (Nasdaq: SVC) today announced that it has commenced a cash tender offer, or the Offer, to purchase any and all of its outstanding $350,000,000 aggregate principal amount of 4.50% Senior Notes due 2025 (CUSIP No. 44106MAT9), or the Notes, and a related consent solicitation for certain proposed amendments to the indenture governing the Notes, or the Indenture, as described below.

The following table sets forth certain terms of the Offer:

Title of Notes	CUSIP/ISIN	Outstanding Principal Amount	UST Reference Security	Bloomberg Reference Page(1)	Fixed Spread (bps)	Early Tender Payment(2)(3)
4.50% Senior Notes due 2025	CUSIP: 44106M AT9 ISIN: US44106MAT99	$350,000,000	1.750% UST due 3/15/2025	FIT3	+35 bps	$50.00

(1)		The applicable page on Bloomberg from which the Dealer Manager (as defined below) will quote the bid side price of the applicable U.S. Treasury security. In the table above “UST” denotes a U.S. Treasury security.
(2)		Per $1,000 principal amount of Notes tendered and accepted for purchase.
(3)		Included in the Total Consideration for Notes tendered and accepted for purchase on or prior to the Early Tender Deadline.

The Offer is being made upon, and is subject to, the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement, dated May 15, 2024, or the Offer to Purchase. The Offer will expire at 5:00 p.m., New York City time, on June 13, 2024, unless extended by SVC, or the Expiration Date, or earlier terminated. Tenders of Notes may be withdrawn at any time at or prior to 5:00 p.m., New York City time, on May 29, 2024, which is also the Early Tender Deadline, but may not be withdrawn thereafter except in certain limited circumstances as described in the Offer to Purchase.

The total consideration, or the Total Consideration, to be paid in the Offer for Notes that are validly tendered and not withdrawn at or prior to the Early Tender Deadline and accepted for purchase will be determined in the manner described in the Offer to Purchase by reference to a fixed spread over the yield to maturity of the U.S. Treasury reference security specified in the table above and in the Offer to Purchase and will include an early tender payment of $50 per $1,000 principal amount of Notes accepted for purchase, or the Early Tender Payment. Holders of Notes who validly tender their Notes following the Early Tender Deadline and prior to the Expiration Date will only receive the applicable “Tender Offer Consideration” per $1,000 principal amount of any such Notes tendered by such holders that are accepted for purchase, which is equal to the Total Consideration minus the Early Tender Payment. The Total Consideration will be determined at 10:00 a.m., New York City time, on May 30, 2024 unless extended by SVC, or the Pricing Date.

Tenders of Notes will be accepted only in principal amounts equal to $1,000 or integral multiples of $1,000 in excess thereof. Holders who tender less than all of their Notes must continue to hold Notes of such series in the minimum authorized denomination of $1,000 principal amount or an integral multiple of $1,000 in excess thereof.

Payments for Notes purchased will include accrued and unpaid interest from and including the most recent interest payment date for the Notes up to, but not including, the applicable settlement date. The settlement date for Notes that are validly tendered prior to the Early Tender Deadline, or the Early Settlement Date, is expected to be June 3, 2024, subject to all conditions to the Offer having been either satisfied or waived by SVC. The settlement date for the Notes that are tendered following the Early Tender Deadline but prior to the Expiration Date is expected to be June 17, 2024, or the Final Settlement Date, subject to all conditions to the Offer having been either satisfied or waived by SVC.

In connection with the Offer, SVC is soliciting consents from holders of Notes to proposed amendments to the Indenture which would allow SVC to deposit U.S. government securities with the trustee for the Notes in order to effect the Satisfaction and Discharge (as defined below) of the Indenture as it relates to the Notes.

SVC’s obligation to consummate the Offer is subject to the satisfaction or waiver of certain conditions, which are more fully described in the Offer to Purchase, including, among others, SVC’s completion of a new issuance of one or more series of senior guaranteed unsecured notes, or the New Notes Offerings, registered under the Securities Act of 1933, as amended, which generates net proceeds in an amount sufficient to effect (i) the repurchase of Notes validly tendered and accepted for purchase pursuant to the Offer, and (ii) deposit into a trust account an amount of cash and U.S. Treasury securities sufficient to pay all remaining amounts due on the Notes in order to discharge the Indenture in accordance with its terms and conditions with respect to any Notes that remain outstanding after the settlement of SVC’s purchase of Notes pursuant to the Offer on the Early Settlement Date, if applicable, or the Satisfaction and Discharge. SVC currently expects that, following the consummation of the New Notes Offerings, it will effect the Satisfaction and Discharge with respect to any Notes not purchased in the Offer on the Early Settlement Date. However, SVC is not obligated to undertake the Satisfaction and Discharge on the timeline anticipated, or at all.

No assurance can be given that the New Notes Offerings will be completed. The New Notes Offerings are not conditioned upon the consummation of the Offer. In no event will the information contained in this press release regarding the New Notes Offerings constitute an offer to sell or a solicitation of an offer to buy any securities in the New Notes Offerings.

Citigroup Global Markets Inc. is acting as dealer manager for the Offer. The tender agent and information agent for the tender offer is Global Bondholder Services Corporation. Questions regarding the tender offer may be directed to Citigroup Global Markets Inc. at (212) 723-6106 (collect) or (800) 558-3745 (U.S. toll-free). Holders who would like additional copies of the offer documents may call the information agent, Global Bondholder Services Corporation at (212) 430-3774 (collect, for banks or brokers) or (855) 654-2014 (toll-free, for all others) or by e-mail at contact@gbsc-usa.com.

This press release is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell the Notes. The Offer is being made solely by means of the Offer to Purchase that SVC is distributing to holders of the Notes.

About Service Properties Trust

SVC is a real estate investment trust with over $11 billion invested in two asset categories: hotels and service focused retail net lease properties. As of March 31, 2024, SVC owned 220 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of March 31, 2024, SVC also owned 749 service-focused retail net lease properties with over 13.3 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of March 31, 2024, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA. For more information, visit www.svcreit.com.

WARNING CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains statements, including statements about the Offer, the New Notes Offerings and the Satisfaction and Discharge, that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever SVC uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, SVC is making forward-looking statements. These forward-looking statements are based upon SVC’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. SVC’s current intent is to use a portion of the proceeds from the New Notes Offerings to finance the Offer; however, the consummation of the New Notes Offerings will depend on market conditions and other factors, and the New Notes Offerings may be delayed or may not be completed. SVC also currently intends to effect the Satisfaction and Discharge of any Notes not purchased by us in the Offer on the Early Settlement Date; however, SVC may determine not to effect the Satisfaction and Discharge or it may be delayed. Actual results may differ materially from those contained in or implied by SVC’s forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond SVC’s control.

The information contained in SVC’s filings with the SEC, including under the caption “Risk Factors” in SVC’s periodic reports, or incorporated therein, identifies other important factors that could cause differences from SVC’s forward-looking statements. SVC’s filings with the SEC are available on the SEC’s website at www.sec.gov.

You should not place undue reliance upon forward-looking statements.

Except as required by law, SVC does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.‎

View source version on businesswire.com: https://www.businesswire.com/news/home/20240515387257/en/

Stephen Colbert, Director, Investor Relations

(617) 796-8232

Source: Service Properties Trust

FAQ

What is the tender offer announced by Service Properties Trust?

Service Properties Trust has initiated a cash tender offer to purchase its outstanding $350,000,000 4.50% Senior Notes due 2025.

When does the tender offer for SVC's 4.50% Senior Notes due 2025 expire?

The tender offer expires at 5:00 p.m. on June 13, 2024.

What is the early tender deadline for Service Properties Trust's tender offer?

The early tender deadline is 5:00 p.m. on May 29, 2024.

What additional payment is provided for early tenders in SVC's offer?

An additional payment of $50 per $1,000 principal amount is provided for early tenders.

What are the settlement dates for Service Properties Trust's tender offer?

The settlement dates are June 3, 2024, for early tenders and June 17, 2024, for final tenders.

What conditions must be met for the tender offer by Service Properties Trust to proceed?

The offer is contingent upon the successful issuance of new senior unsecured notes.