Service Properties Trust Announces First Quarter 2022 Results
Service Properties Trust (SVC) reported a net loss of $(119.8) million or $(0.73) per share for Q1 2022, an improvement from $(195.0) million or $(1.19) per share in Q1 2021. Normalized FFO was $(3.4) million, improving from $(42.0) million a year earlier. Adjusted EBITDAre increased 85.1% to $90.1 million. Comparable RevPAR showed a marked recovery from 37.3% below 2019 levels in January to 25.7% in March 2022. The company has executed hotel sales valued at $539.3 million, enhancing liquidity as it navigates upcoming debt maturities.
- Adjusted EBITDAre increased 85.1% year-over-year to $90.1 million.
- Improved hotel operating trends with comparable RevPAR rising significantly during Q1 2022.
- Successful execution of hotel disposition plan, closing or under agreement for 64 hotels for $539.3 million.
- Enhanced liquidity through amended credit facility, extending maturity to January 2023.
- Net loss of $(119.8) million for Q1 2022, despite improvement from previous year.
- Normalized FFO remained negative at $(3.4) million.
- Continued high operating expenses with hotel operating revenues increasing but so did expenses.
Net Loss of
Normalized FFO of
Adjusted EBITDAre of
Amended Revolving Credit Facility and Extended Maturity to
Progress on
“Hotel operating trends began to improve in mid-February as the impact of the Omicron variant subsided and bookings increased at our urban and select service hotels. Comparable RevPAR improved as the first quarter progressed from
In
Results for the Quarter Ended
|
Three Months Ended |
|||||||
|
2022 |
|
2021 |
|||||
|
($ in thousands, except per share data) |
|||||||
Net loss |
$ |
(119,822 |
) |
|
$ |
(194,990 |
) |
|
Net loss per common share |
$ |
(0.73 |
) |
|
$ |
(1.19 |
) |
|
Normalized FFO (1) |
$ |
(3,409 |
) |
|
$ |
(41,996 |
) |
|
Normalized FFO per common share (1) |
$ |
(0.02 |
) |
|
$ |
(0.26 |
) |
|
Adjusted EBITDAre (1) |
$ |
90,106 |
|
|
$ |
48,705 |
|
(1) |
Additional information and reconciliations of net loss determined in accordance with |
-
Net loss: Net loss for the quarter ended
March 31, 2022 was , or$119.8 million per diluted common share, compared to a net loss of$0.73 , or$195.0 million per diluted common share, for the quarter ended$1.19 March 31, 2021 . Net loss for the quarter endedMarch 31, 2022 includes a , or$10.3 million per diluted common share, of net unrealized losses on equity securities, a$0.06 , or$5.5 million per diluted common share, net gain on sale of real estate and a$0.03 , or$5.5 million per diluted common share, loss on asset impairment. Net loss for the quarter ended$0.03 March 31, 2021 includes , or$19.6 million per diluted common share, of hotel manager transition related costs,$0.12 , or$6.5 million per diluted common share, of net unrealized losses on equity securities, and a$0.04 , or$1.2 million per diluted common share, loss on asset impairment. The weighted average number of diluted common shares outstanding was 164.7 million and 164.5 million for the quarters ended$0.01 March 31, 2022 and 2021, respectively.
-
Normalized FFO: Normalized FFO for the quarter ended
March 31, 2022 were negative , or$3.4 million per diluted common share, compared to negative Normalized FFO of$(0.02) , or$42.0 million per diluted common share, for the quarter ended$(0.26) March 31, 2021 .
-
Adjusted EBITDAre: Adjusted EBITDAre for the quarter ended
March 31, 2022 compared to the same period in 2021 increased85.1% to .$90.1 million
As of
|
|
Three Months Ended |
|
|||||||||
|
|
2022 |
|
2021 |
|
Change |
|
|||||
|
|
($ in thousands, except hotel statistics) |
||||||||||
|
|
|
|
|
|
|
|
|||||
No. of hotels |
|
|
295 |
|
|
|
295 |
|
|
— |
|
|
No. of rooms or suites |
|
|
46,596 |
|
|
|
46,596 |
|
|
— |
|
|
Occupancy |
|
|
53.6 |
% |
|
|
39.8 |
% |
|
13.8 |
pts |
|
ADR |
|
$ |
114.85 |
|
|
$ |
88.59 |
|
|
29.6 |
% |
|
|
|
$ |
61.56 |
|
|
$ |
35.26 |
|
|
74.6 |
% |
|
Hotel operating revenues (1) |
|
$ |
292,382 |
|
|
$ |
163,508 |
|
|
78.8 |
% |
|
Hotel operating expenses (1) |
|
$ |
283,924 |
|
|
$ |
210,414 |
|
|
34.9 |
% |
|
|
|
$ |
8,458 |
|
|
$ |
(46,906 |
) |
|
n/m |
|
|
|
|
|
2.9 |
% |
|
|
(28.7 |
)% |
|
n/m |
|
|
|
|
|
|
|
|
|
|
|||||
All Hotels (2) |
|
|
|
|
|
|
|
|||||
No. of hotels |
|
|
298 |
|
|
|
310 |
|
|
(12 |
) |
|
No. of rooms or suites |
|
|
47,285 |
|
|
|
49,015 |
|
|
(1,730 |
) |
|
Occupancy |
|
|
53.3 |
% |
|
|
40.1 |
% |
|
13.2 |
pts |
|
ADR |
|
$ |
115.24 |
|
|
$ |
88.02 |
|
|
30.9 |
% |
|
|
|
$ |
61.42 |
|
|
$ |
35.30 |
|
|
74.0 |
% |
|
Hotel operating revenues (1) |
|
$ |
297,406 |
|
|
$ |
168,953 |
|
|
76.0 |
% |
|
Hotel operating expenses (1) |
|
$ |
292,186 |
|
|
$ |
207,129 |
|
|
41.1 |
% |
|
|
|
$ |
5,220 |
|
|
$ |
(38,176 |
) |
|
n/m |
|
|
|
|
|
1.8 |
% |
|
|
(22.6 |
)% |
|
n/m |
|
|
(1) |
Reconciliations of hotel operating revenues and hotel operating expenses used to determine |
|
(2) |
Results of all hotels as owned during the periods presented, including the results of hotels sold by SVC for the period owned by SVC. |
Recent operating statistics for SVC’s hotels are as follows:
|
|
295 Hotels, 46,596 rooms |
|
2022 vs 2019 |
||||||||
|
|
Occupancy |
|
Average Daily
|
|
RevPAR |
|
Occupancy |
|
Average Daily
|
|
RevPAR |
January |
|
45.9 % |
|
|
|
|
|
(14.9)Pts |
|
(17.0) % |
|
(37.3) % |
February |
|
53.4 % |
|
|
|
|
|
(15.3)Pts |
|
(12.7) % |
|
(32.1) % |
March |
|
61.6 % |
|
|
|
|
|
(13.1)Pts |
|
(9.9) % |
|
(25.7) % |
All Hotels
|
|
298 Hotels, 47,285 rooms |
|
2022 vs 2019 |
||||||||
|
|
Occupancy |
|
Average Daily
|
|
RevPAR |
|
Occupancy |
|
Average Daily
|
|
RevPAR |
January |
|
45.6 % |
|
|
|
|
|
(15.3)Pts |
|
(19.2) % |
|
(39.5) % |
February |
|
53.1 % |
|
|
|
|
|
(15.7)Pts |
|
(13.4) % |
|
(33.2) % |
March |
|
61.3 % |
|
|
|
|
|
(13.4)Pts |
|
(10.2) % |
|
(26.3) % |
Preliminary
Net Lease Retail Portfolio:
SVC’s net lease retail portfolio is summarized as follows:
|
|
As of |
Number of properties |
|
786 |
Industries |
|
21 |
Tenants |
|
174 |
Brands |
|
133 |
Square feet |
|
13.5 million |
Occupancy |
|
|
Weighted average lease term (by annual minimum rent) |
|
10.0 years |
Rent Coverage |
|
2.67x |
During the quarter ended
Recent Investment Activities:
During the quarter ended
SVC has entered into agreements to sell 42 Sonesta branded hotels (30 extended stay hotels with 3,438 keys and 12 select service hotels with 1,517 keys) located in 22 states for an aggregate sales price of
Capital expenditures made at certain of SVC’s properties for the quarter ended
In
Liquidity and Financing Activities:
-
As of
May 3, 2022 , SVC had of cash and cash equivalents.$916.1 million -
As previously announced, in
April 2022 , SVC and its lenders amended the agreement governing its revolving credit facility to, among other things, extend the previous covenant waiver period throughDecember 31, 2022 , modify certain covenant requirements now scheduled to resume in the third quarter of 2022, reduce the size of the facility to , allow for the acquisition of up to$800.0 million of real estate assets through the waiver period and increase the limit on amounts SVC can fund for certain other investments to$300.0 million through the waiver period, and require SVC to maintain minimum liquidity levels to address near term debt maturities.$100.0 million -
Also in
April 2022 , SVC exercised its option to extend the maturity date of the credit facility toJanuary 2023 . SVC has one additional six-month extension option available, subject to meeting certain conditions.
Conference Call:
On
A live audio webcast of the conference call will also be available in a listen-only mode on SVC’s website, www.svcreit.com. Participants wanting to access the webcast should visit SVC’s website about five minutes before the call. The archived webcast will be available for replay on SVC’s website for about one week after the call. The transcription, recording and retransmission in any way of SVC’s first quarter conference call is strictly prohibited without the prior written consent of SVC.
Supplemental Data:
A copy of SVC’s First Quarter 2022 Supplemental Operating and Financial Data is available for download at SVC’s website, www.svcreit.com. SVC’s website is not incorporated as part of this press release.
Non-GAAP Financial Measures and Certain Definitions:
SVC presents certain “non-GAAP financial measures” within the meaning of the applicable
Please see the pages attached hereto for a more detailed statement of SVC’s operating results and financial condition and for an explanation of SVC’s calculation of FFO and Normalized FFO, EBITDA,
Average Daily Rate, or ADR, represents rooms revenue divided by the total number of room nights sold in a given period. ADR provides useful insight on pricing at SVC’s hotels and is a measure widely used in the hotel industry.
Comparable Hotels Data: SVC presents RevPAR, ADR, and occupancy for the periods presented on a comparable basis to facilitate comparisons between periods. SVC generally defines comparable hotels as those that were owned by it on
Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels. Occupancy is an important measure of the utilization rate and demand of SVC’s hotels.
Rent Coverage: SVC defines Rent Coverage as earnings before interest, taxes, depreciation, amortization and rent, or EBITDAR, divided by the annual minimum rent due to SVC weighted by the minimum rent of the property to total minimum rents of the net lease portfolio. EBITDAR amounts used to determine rent coverage are generally for the latest twelve-month period reported based on the most recent operating information, if any, furnished by the tenant. Operating statements furnished by the tenant often are unaudited and, in certain cases, may not have been prepared in accordance with GAAP and are not independently verified by SVC. Tenants that do not report operating information are excluded from the rent coverage calculations. In instances where SVC does not have financial information for the most recent quarter from its tenants, it has calculated an implied EBITDAR for the 2022 first quarter using industry benchmark data to reflect current operating trends. SVC believes using this industry benchmark data provides a reasonable estimate of recent operating results and rent coverage for those tenants.
Revenue per
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(dollars in thousands, except share data) |
||||||||
(unaudited) |
||||||||
|
|
As of |
|
As of |
||||
|
|
2022 |
|
2021 |
||||
ASSETS |
|
|
|
|
||||
Real estate properties: |
|
|
|
|
||||
Land |
|
$ |
1,919,126 |
|
|
$ |
1,918,385 |
|
Buildings, improvements and equipment |
|
|
7,989,900 |
|
|
|
8,307,248 |
|
Total real estate properties, gross |
|
|
9,909,026 |
|
|
|
10,225,633 |
|
Accumulated depreciation |
|
|
(3,031,295 |
) |
|
|
(3,281,659 |
) |
Total real estate properties, net |
|
|
6,877,731 |
|
|
|
6,943,974 |
|
Acquired real estate leases and other intangibles, net |
|
|
275,504 |
|
|
|
283,241 |
|
Assets held for sale |
|
|
452,100 |
|
|
|
515,518 |
|
Cash and cash equivalents |
|
|
969,609 |
|
|
|
944,043 |
|
Restricted cash |
|
|
2,963 |
|
|
|
3,375 |
|
Equity method investments |
|
|
61,974 |
|
|
|
62,687 |
|
Investment in equity securities |
|
|
50,899 |
|
|
|
61,159 |
|
Due from related persons |
|
|
44,430 |
|
|
|
48,168 |
|
Other assets, net |
|
|
281,862 |
|
|
|
291,150 |
|
Total assets |
|
$ |
9,017,072 |
|
|
$ |
9,153,315 |
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
||||
Revolving credit facility |
|
$ |
1,000,000 |
|
|
$ |
1,000,000 |
|
Senior unsecured notes, net |
|
|
6,146,258 |
|
|
|
6,143,022 |
|
Accounts payable and other liabilities |
|
|
422,490 |
|
|
|
433,448 |
|
Due to related persons |
|
|
14,025 |
|
|
|
21,539 |
|
Total liabilities |
|
|
7,582,773 |
|
|
|
7,598,009 |
|
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
|
||||
|
|
|
|
|
||||
Shareholders’ equity: |
|
|
|
|
||||
Common shares of beneficial interest, |
|
|
1,651 |
|
|
|
1,651 |
|
Additional paid in capital |
|
|
4,553,020 |
|
|
|
4,552,558 |
|
Cumulative other comprehensive income |
|
|
783 |
|
|
|
779 |
|
Cumulative net income available for common shareholders |
|
|
2,515,838 |
|
|
|
2,635,660 |
|
Cumulative common distributions |
|
|
(5,636,993 |
) |
|
|
(5,635,342 |
) |
Total shareholders’ equity |
|
|
1,434,299 |
|
|
|
1,555,306 |
|
Total liabilities and shareholders’ equity |
|
$ |
9,017,072 |
|
|
$ |
9,153,315 |
|
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) |
||||||||
(amounts in thousands, except per share data) |
||||||||
(unaudited) |
||||||||
|
|
|
|
|
||||
|
|
Three Months Ended |
||||||
|
|
2022 |
|
2021 |
||||
Revenues: |
|
|
|
|
||||
Hotel operating revenues (1) |
|
$ |
297,406 |
|
|
$ |
168,953 |
|
Rental income (2) |
|
|
96,358 |
|
|
|
92,217 |
|
Total revenues |
|
|
393,764 |
|
|
|
261,170 |
|
|
|
|
|
|
||||
Expenses: |
|
|
|
|
||||
Hotel operating expenses (1)(3) |
|
|
290,343 |
|
|
|
195,352 |
|
Other operating expenses |
|
|
2,269 |
|
|
|
3,417 |
|
Depreciation and amortization |
|
|
104,113 |
|
|
|
124,368 |
|
General and administrative |
|
|
11,989 |
|
|
|
12,657 |
|
Loss on asset impairment, net (4) |
|
|
5,500 |
|
|
|
1,211 |
|
Transaction related costs (5) |
|
|
1,177 |
|
|
|
19,635 |
|
Total expenses |
|
|
415,391 |
|
|
|
356,640 |
|
|
|
|
|
|
||||
Gain (loss) on sale of real estate, net (6) |
|
|
5,548 |
|
|
|
(9 |
) |
Unrealized losses on equity securities, net (7) |
|
|
(10,260 |
) |
|
|
(6,481 |
) |
Interest income |
|
|
273 |
|
|
|
57 |
|
Interest expense (including amortization of debt issuance costs and debt discounts and premiums of |
|
|
(92,344 |
) |
|
|
(89,391 |
) |
Loss before income taxes and equity in losses of an investee |
|
|
(118,410 |
) |
|
|
(191,294 |
) |
Income tax expense |
|
|
(695 |
) |
|
|
(853 |
) |
Equity in losses of an investee (8) |
|
|
(717 |
) |
|
|
(2,843 |
) |
Net loss |
|
$ |
(119,822 |
) |
|
$ |
(194,990 |
) |
|
|
|
|
|
||||
Weighted average common shares outstanding (basic and diluted) |
|
|
164,667 |
|
|
|
164,498 |
|
|
|
|
|
|
||||
Net loss per common share (basic and diluted) |
|
$ |
(0.73 |
) |
|
$ |
(1.19 |
) |
See Notes
|
|||||||
RECONCILIATIONS OF FUNDS FROM OPERATIONS, NORMALIZED FUNDS |
|||||||
FROM OPERATIONS, EBITDA, EBITDAre AND ADJUSTED EBITDAre |
|||||||
(amounts in thousands, except per share data) |
|||||||
(unaudited) |
|||||||
|
Three Months Ended |
||||||
|
2022 |
|
2021 |
||||
Calculation of FFO and Normalized FFO: (9) |
|
|
|
||||
Net loss |
$ |
(119,822 |
) |
|
$ |
(194,990 |
) |
Add (Less): Depreciation and amortization |
|
104,113 |
|
|
|
124,368 |
|
Loss on asset impairment, net (4) |
|
5,500 |
|
|
|
1,211 |
|
(Gain) loss on sale of real estate, net (6) |
|
(5,548 |
) |
|
|
9 |
|
Unrealized losses on equity securities, net (7) |
|
10,260 |
|
|
|
6,481 |
|
Adjustments to reflect SVC’s share of FFO attributable to an investee (8) |
|
666 |
|
|
|
465 |
|
FFO |
|
(4,831 |
) |
|
|
(62,456 |
) |
Add (Less): Transaction related costs (5) |
|
1,177 |
|
|
|
19,635 |
|
Adjustments to reflect SVC's share of Normalized FFO attributable to an investee (8) |
|
245 |
|
|
|
825 |
|
Normalized FFO |
$ |
(3,409 |
) |
|
$ |
(41,996 |
) |
|
|
|
|
||||
Weighted average common shares outstanding (basic and diluted) |
|
164,667 |
|
|
|
164,498 |
|
|
|
|
|
||||
Basic and diluted per common share amounts: |
|
|
|
||||
Net loss per share |
$ |
(0.73 |
) |
|
$ |
(1.19 |
) |
FFO |
$ |
(0.03 |
) |
|
$ |
(0.38 |
) |
Normalized FFO |
$ |
(0.02 |
) |
|
$ |
(0.26 |
) |
Distributions declared per share |
$ |
0.01 |
|
|
$ |
0.01 |
|
|
Three Months Ended |
||||||
|
2022 |
|
2021 |
||||
Calculation of EBITDA, EBITDAre and Adjusted EBITDAre:(10) |
|
|
|
||||
Net loss |
$ |
(119,822 |
) |
|
$ |
(194,990 |
) |
Add (Less): Interest expense |
|
92,344 |
|
|
|
89,391 |
|
Income tax expense |
|
695 |
|
|
|
853 |
|
Depreciation and amortization |
|
104,113 |
|
|
|
124,368 |
|
EBITDA |
|
77,330 |
|
|
|
19,622 |
|
Add (Less): Loss on asset impairment, net (4) |
|
5,500 |
|
|
|
1,211 |
|
(Gain) loss on sale of real estate, net (6) |
|
(5,548 |
) |
|
|
9 |
|
Adjustments to reflect SVC’s share of EBITDAre attributable to an investee (8) |
|
680 |
|
|
|
543 |
|
EBITDAre |
|
77,962 |
|
|
|
21,385 |
|
Add (Less): Transaction related costs (5) |
|
1,177 |
|
|
|
19,635 |
|
Unrealized losses on equity securities, net (7) |
|
10,260 |
|
|
|
6,481 |
|
Adjustments to reflect SVC’s share of Adjusted EBITDAre attributable to an investee (8) |
|
245 |
|
|
|
825 |
|
General and administrative expense paid in common shares (11) |
|
462 |
|
|
|
379 |
|
Adjusted EBITDAre |
$ |
90,106 |
|
|
$ |
48,705 |
|
See Notes
|
|||||||
CALCULATION AND RECONCILIATION OF HOTEL EBITDA |
|||||||
|
|||||||
(amounts in thousands) |
|||||||
(unaudited) |
|||||||
|
|
|
|
||||
|
Three Months Ended |
||||||
|
2022 |
|
2021 |
||||
Number of hotels |
|
295 |
|
|
|
295 |
|
Room revenues |
$ |
254,623 |
|
|
$ |
147,785 |
|
Food and beverage revenues |
|
25,145 |
|
|
|
7,834 |
|
Other revenues |
|
12,614 |
|
|
|
7,889 |
|
Hotel operating revenues - comparable hotels |
|
292,382 |
|
|
|
163,508 |
|
Rooms expenses |
|
86,475 |
|
|
|
55,101 |
|
Food and beverage expenses |
|
22,233 |
|
|
|
8,676 |
|
Other direct and indirect expenses |
|
126,378 |
|
|
|
110,530 |
|
Management fees |
|
11,554 |
|
|
|
5,152 |
|
Real estate taxes, insurance and other |
|
35,490 |
|
|
|
30,192 |
|
FF&E reserves (12) |
|
1,794 |
|
|
|
764 |
|
Hotel operating expenses - comparable hotels |
|
283,924 |
|
|
|
210,414 |
|
|
$ |
8,458 |
|
|
$ |
(46,906 |
) |
|
|
2.9 |
% |
|
|
(28.7 |
)% |
|
|
|
|
||||
Hotel operating revenues (GAAP) (1) |
$ |
297,406 |
|
|
$ |
168,953 |
|
Add (Less): |
|
|
|
||||
Hotel operating revenues from non-comparable hotels |
|
(5,024 |
) |
|
|
(5,445 |
) |
Hotel operating revenues - comparable hotels |
$ |
292,382 |
|
|
$ |
163,508 |
|
|
|
|
|
||||
Hotel operating expenses (GAAP) (1) |
$ |
290,343 |
|
|
$ |
195,352 |
|
Add (Less): |
|
|
|
||||
Hotel operating expenses from non-comparable hotels |
|
(8,276 |
) |
|
|
3,285 |
|
Reduction for security deposit and guaranty fundings, net (3) |
|
— |
|
|
|
10,392 |
|
FF&E reserves from managed hotel operations (12) |
|
1,236 |
|
|
|
764 |
|
Other (13) |
|
621 |
|
|
|
621 |
|
Hotel operating expenses - comparable hotels |
$ |
283,924 |
|
|
$ |
210,414 |
|
See Notes
|
|||||||
CALCULATION AND RECONCILIATION OF HOTEL EBITDA |
|||||||
All Hotels |
|||||||
(amounts in thousands) |
|||||||
(unaudited) |
|||||||
|
|
|
|
||||
|
Three Months Ended |
||||||
|
2022 |
|
2021 |
||||
|
|
|
|
||||
Room revenues |
$ |
258,620 |
|
|
$ |
152,728 |
|
Food and beverage revenues |
|
25,902 |
|
|
|
8,172 |
|
Other revenues |
|
12,884 |
|
|
|
8,053 |
|
Hotel operating revenues |
|
297,406 |
|
|
|
168,953 |
|
Rooms expenses |
|
88,743 |
|
|
|
56,578 |
|
Food and beverage expenses |
|
23,234 |
|
|
|
9,042 |
|
Other direct and indirect expenses |
|
127,017 |
|
|
|
99,766 |
|
Management fees |
|
11,332 |
|
|
|
5,238 |
|
Real estate taxes, insurance and other |
|
40,638 |
|
|
|
35,741 |
|
FF&E reserves (12) |
|
1,222 |
|
|
|
764 |
|
Hotel operating expenses |
|
292,186 |
|
|
|
207,129 |
|
|
$ |
5,220 |
|
|
$ |
(38,176 |
) |
|
|
1.8 |
% |
|
|
(22.6 |
)% |
|
|
|
|
||||
Hotel operating expenses (GAAP) (1) |
$ |
290,343 |
|
|
$ |
195,352 |
|
Add (Less): |
|
|
|
||||
Reduction for security deposit and guaranty fundings, net (3) |
|
— |
|
|
|
10,392 |
|
FF&E reserves from managed hotels operations (12) |
|
1,222 |
|
|
|
764 |
|
Other (13) |
|
621 |
|
|
|
621 |
|
Hotel operating expenses |
$ |
292,186 |
|
|
$ |
207,129 |
|
See Notes
(1) |
As of |
|
(2) |
SVC reduced rental income by |
|
(3) |
When managers of SVC’s hotels are required to fund the shortfalls of owner’s priority return under the terms of SVC’s management agreements or their guarantees, SVC reflects such fundings in its condensed consolidated statements of income (loss) as a reduction of hotel operating expenses. There was no net reduction to hotel operating expenses during the three months ended |
|
(4) |
SVC recorded loss on asset impairment of |
|
(5) |
Transaction related costs for the three months ended |
|
(6) |
SVC recorded a |
|
(7) |
Unrealized gain or loss on equity securities, net represents the adjustment required to adjust the carrying value of SVC’s investment in shares of TA common stock to its fair value. |
|
(8) |
Represents SVC’s proportionate share from its equity investment in Sonesta. |
|
(9) |
SVC calculates FFO and Normalized FFO as shown above. FFO is calculated on the basis defined by |
|
(10) |
SVC calculates EBITDA, EBITDAre, and Adjusted EBITDAre as shown above. EBITDAre is calculated on the basis defined by Nareit which is EBITDA, excluding gains and losses on the sale of real estate, loss on impairment of real estate assets, if any, and adjustments to reflect SVC’s share of EBITDAre attributable to an investee. In calculating Adjusted EBITDAre, SVC adjusts for the items shown above. Other real estate companies and REITs may calculate EBITDA, EBITDAre and Adjusted EBITDAre differently than SVC does. |
|
(11) |
Amounts represent the equity compensation for SVC’s Trustees, officers and certain other employees of SVC’s manager. |
|
(12) |
Various percentages of total sales at certain of SVC’s hotels are escrowed as reserves for future renovations or refurbishments, or FF&E reserve escrows. SVC owns all the FF&E reserve escrows for its hotels. |
|
(13) |
SVC is amortizing a liability it recorded for the fair value of its initial investment in Sonesta as a reduction to hotel operating expenses in its condensed consolidated statements of income (loss). SVC reduced hotel operating expenses by |
Warning Concerning Forward-Looking Statements
This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. 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. 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. For example:
-
Mr. Hargreaves states that as the impact of the Omicron variant subsided in mid-February, hotel operating trends began to improve and bookings increased at SVC’s urban and select service hotels.Mr. Hargreaves also noted that SVC expects to benefit further from a rebound in business travel in the coming quarters. This may imply that bookings at SVC’s urban and select service hotels will continue to increase, that business travel will continue to improve and that SVC will benefit as a result; however, the hotel industry and SVC’s business are subject to various risks, including risks beyond its control, such as the continued impact of the COVID-19 pandemic and economic conditions. As a result, bookings at SVC’s urban and select service may not improve at SVC’s hotels and may decline in the future, and SVC may not realize any benefits from improvements in business travel, if any; -
Mr. Hargreaves states that SVC’s net lease properties continue to provide steady cash flows. However, SVC’s net lease tenants may become unable or unwilling to pay rents due to SVC, which could adversely impact SVC and the value of its net lease properties; -
Mr. Hargreaves states that, with an improved hotel portfolio and increased cash position from hotel sales, SVC believes it is well positioned to address its upcoming debt maturities and to benefit as lodging fundamentally improves; however, SVC may not succeed in selling the hotels at the prices and on the timing it expects if at all and lodging fundamentals may not return to the extent SVC expects if at all and they could decline. For these and other possible reasons, SVC may not be able to address its upcoming debt maturities or realize any benefit from lodging fundamentals; -
Although SVC has modified certain covenants under its credit agreement through
December 31, 2022 , if SVC's operating results and financial condition are further adversely impacted by the COVID-19 pandemic or fail to sufficiently improve, it may fail to comply with the terms of the waiver and other requirements under its credit agreement, and SVC may also fail to satisfy certain financial requirements under the agreements governing its public debt. For example, SVC's ratio of consolidated income available for debt service to debt service was below the 1.5x incurrence requirement under its revolving credit facility and its public debt covenants as ofDecember 31, 2021 , and SVC cannot be certain how long this ratio will remain below 1.5x. SVC is currently unable to incur additional debt because this ratio is below 1.5x on a pro forma basis, but is not required to repay outstanding debt as a result of failure to comply with this requirement. SVC is currently fully drawn under its revolving credit facility and could also be required to repay its outstanding debt as a result of non-compliance with certain other requirements of its credit agreement or the agreements governing its public debt. SVC may therefore experience future liquidity constraints, as it is currently unable to incur additional debt under its credit agreement or otherwise for failure to comply with the requirements of its credit agreement or the agreements governing its public debt, and SVC will be limited to its cash on hand or be forced to raise additional sources of capital or take other measures to repay its debt or maintain adequate liquidity; and -
SVC has entered or expects to enter agreements for the sale of 47 properties for an aggregate sales price of
and expects to complete these sales by the end of the second quarter of 2022. The sales of SVC’s properties are subject to conditions; accordingly, SVC cannot provide any assurance that it will sell any of these properties and the sales may be delayed, may not occur or their terms may change. Any sales it may complete may be at prices less than SVC expects.$304.9 million
The information contained in SVC’s filings with the
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/20220504006144/en/
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