Service Properties Trust Completes the Sale of Ten Hotels for $41.0 Million

Rhea-AI Summary

Service Properties Trust (SVC) has completed the sale of ten Hawthorn Suites hotels, totaling 1,212 rooms, for $41 million, which will help repay debt. The hotels had a net carrying value of $30.4 million. Additionally, SVC has entered into a lease agreement for five remaining Hawthorn Suites, set to be sold for $22.3 million by the end of Q2 2021, with an expected return of 8% on lease income.

This strategic move aims to enhance liquidity and reduce debt obligations, vital for SVC's financial health.

Positive

• Raised $41 million from the sale of ten hotels, enhancing liquidity.
• Expected lease income from remaining hotels at an 8% return.

Negative

• Five hotels' sale completion is subject to conditions and may face delays.

Service Properties Trust (Nasdaq: SVC), or SVC, today announced that it has completed the previously announced sale of ten Hawthorn Suites branded hotels with 1,212 rooms and a net carrying value of $30.4 million for an aggregate sales price of $41.0 million, excluding closing costs. The proceeds from the sale will be used for the repayment of debt.

SVC also entered a short-term lease and revised purchase agreement for its five remaining Hawthorn Suites branded hotels with the same buyer. SVC has agreed to sell these five hotels with 430 rooms and a net carrying value of $10.7 million for $22.3 million and expects to complete the sale of these hotels by the end of the second quarter of 2021.

John Murray, President and Chief Executive Officer of SVC, made the following statement regarding today’s announcement:

“We are pleased to have reached this restructured agreement for the sale and lease of these 15 hotels. In addition to closing on the sale of ten hotels, we will receive lease income for the five remaining hotels at an 8% return until these hotels are sold, which we expect to occur in the first half of 2021.”

About Service Properties Trust

Service Properties Trust is a real estate investment trust which owns a diverse portfolio of hotels and net lease service and necessity-based retail properties across the United States and in Puerto Rico and Canada with 149 distinct brands across 23 industries. SVC is managed by the majority owned operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, Massachusetts.

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. 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. 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:

• This press release states that five additional hotels are expected to be sold by the end of the second quarter of 2021. However, the sales of these hotels are subject to conditions, may not be completed, may be delayed or their terms may change.

The information contained in SVC’s filings with the Securities and Exchange Commission, or 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/20201230005041/en/

FAQ

What did Service Properties Trust announce regarding hotel sales on December 30, 2020?

Service Properties Trust announced the completion of the sale of ten Hawthorn Suites hotels for $41 million and plans to sell five more hotels for $22.3 million.

What is the expected return from the lease income on the remaining hotels for SVC?

SVC expects an 8% return on lease income from the remaining hotels until their sale.

When is the expected completion date for the sale of five remaining Hawthorn Suites hotels?

The sale of the five remaining hotels is expected to be completed by the end of the second quarter of 2021.

What was the net carrying value of the ten sold hotels?

The ten sold Hawthorn Suites hotels had a net carrying value of $30.4 million.

What will the proceeds from the hotel sales be used for?

The proceeds from the hotel sales will be used for debt repayment.