Q1 2025 Service Properties Trust Earnings Call Transcript
Key Points
- Service Properties Trust (SVC) reported a 2.6% year-over-year growth in RevPAR within its lodging portfolio, outpacing the industry by 40 basis points.
- The company is advancing its strategic plans by selling assets to de-leverage its balance sheet and reinvest in growth opportunities.
- SVC's select service portfolio showed exceptional growth with RevPAR up 10.6% year-over-year, driven by occupancy growth in recently renovated hotels.
- The net lease portfolio remains nearly 98% leased with a weighted average lease term of eight years, providing steady cash flow.
- SVC plans to shift its investment composition to 54% triple net lease and 46% lodging assets, which may lead to a re-rating of its shares based on a triple net lease valuation basis.
- RevPAR softened as the quarter progressed, partially due to a pullback in government and inbound international travel.
- GOP and adjusted Hotel EBITDA declined year-over-year, primarily due to active hotel renovations, increases in labor, and higher utility costs.
- The extended stay portfolio's RevPAR was essentially flat, with a modest increase in ADR offset by a decline in occupancy.
- Renovation activity had a pronounced impact on the suites portfolio performance, with six hotels under renovation during the first quarter.
- Financial results were impacted by a $10.1 million increase in interest expense, and normalized FFO per share decreased from $0.13 to $0.07 year-over-year.
Good morning and welcome to the Service Properties Trust. First quarter 2025 earnings conference call.(operator Instructions). I would now like to turn the call over to Kevin Barry, senior director of industrial relations. Please go ahead.
Good morning. Thank you for joining us today With me on the call are Chris Bilotto, President and Chief Executive Officer, Jesse Abair, Vice President, and Brian Donley, treasurer and Chief Financial Officer. In just a moment they will provide details about our business and our performance for the first quarter of 2025, followed by a question and answer session with cell side analysts. I'd like to note that the recording and re-transmission of today's conference call is prohibited without the prior written consent of the company.
Also note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are
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