Service Properties Trust Closes on the Sale of 15 Additional Hotels

Rhea-AI Summary

Service Properties Trust (Nasdaq: SVC) has sold 57 Sonesta branded hotels, totaling 7,272 keys, for $496.4 million.

Six additional hotels are under purchase agreements, expected to close in Q3 2022 for $37.4 million.

Occupancy rates improved in April and May, with significant increases noted in urban and select service hotels.

As of June 30, 2022, SVC owned 247 hotels and 775 retail properties, demonstrating a focused strategy on asset management and portfolio optimization.

Positive

• Sold 57 hotels for $496.4 million, significantly enhancing liquidity.
• Six additional hotels under agreement, poised to increase cash flow.
• Improvement in occupancy rates, indicating a rebound in demand.

Negative

• Sales of remaining hotels may not occur as expected due to market conditions.
• Occupancy rates remain subject to risks that could lead to declines.

Brings Total to 57 Hotels Sold with Additional Six Hotels Under Purchase and Sale Agreements

Hotel Occupancy, Average Daily Rate and RevPAR for 244 Comparable Hotels Continued to Improve in April and May 2022

NEWTON, Mass.--(BUSINESS WIRE)-- Service Properties Trust (Nasdaq: SVC) today announced progress on its previously announced plan to sell 68 Sonesta branded hotels. To date, 57 hotels totaling 7,272 keys have been sold for aggregate proceeds of $496.4 million. An additional six hotels totaling 755 keys are under purchase and sale agreements for an aggregate sales price of $37.4 million and are expected to close during the third quarter of 2022. SVC continues to market the five remaining hotels totaling 733 keys and is also marketing 16 Marriott branded hotels totaling 2,155 keys on an unencumbered basis.

Recent Hotel Operating Performance

Improving business transient demand drove increasing rate and occupancy at SVC’s urban and select service hotels in April and May, while leisure demand remained elevated and extended stay occupancies remained stable.

		244 Comparable Hotels, 40,477 rooms				2022 versus 2019
		Occupancy	Average Daily Rate	RevPAR		Occupancy Change	Average Daily Rate % Change	RevPAR % Change
First Quarter 2022		53.2%	$119.93	$63.80		(16.1)pts	(12.5)%	(32.8)%
April 2022		65.3%	$133.15	$86.95		(11.1)pts	(4.6)%	(18.4)%
May 2022		65.5%	$135.71	$88.89		(12.1)pts	(3.6)%	(18.6)%

About Service Properties Trust

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust, or REIT, with approximately $12 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of June 30, 2022, SVC owned 247 hotels with over 41,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of June 30, 2022, SVC also owned 775 retail service-focused net lease properties totaling over 13 million square feet throughout United States. SVC is managed by The RMR Group (Nasdaq: RMR), an alternative asset management company with more than $37 billion in assets under management as of March 31, 2022 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 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:

• SVC has entered agreements for the sale of six hotels for an aggregate sales price of $37.4 million and expects to close these sales during the third 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 and less than its net book value.
• Improving business transient demand drove increasing rate and occupancy at SVC’s urban and select service hotels in April and May. This may imply that such rate and occupancy will continue to improve and that SVC will benefit as a result; however, rate and occupancy at SVC’s hotels are subject to various risks, including risks beyond SVC’s control. As a result, rate and occupancy at SVC’s hotels may not improve and may decline in the future, and SVC may not realize any such benefits.

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.

A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220707005784/en/

Kristin Brown, Director, Investor Relations

(617) 796-8232

Source: Service Properties Trust

FAQ

What is the status of Service Properties Trust's hotel sales as of June 2022?

Service Properties Trust has sold 57 hotels for $496.4 million and has six more hotels under agreement for $37.4 million.

How has the occupancy rate changed for Service Properties Trust hotels?

The occupancy rate for comparable hotels improved in April and May 2022, with notable increases in urban and select service hotels.

What can investors expect from upcoming hotel sales for SVC?

Investors can expect the closing of six additional hotel sales in Q3 2022, contingent on market conditions.

How many hotels does Service Properties Trust currently own?

As of June 30, 2022, Service Properties Trust owns 247 hotels and 775 retail properties.

What risks are associated with the hotel sales of Service Properties Trust?

Sales may face delays or changes, and occupancy rates are subject to market uncertainties that could impact future performance.