Service Properties Trust Announces Q4 2025 Results and 2026 Guidance—Major Portfolio Moves and Financial Actions Unveiled

Key Highlights from the Fourth Quarter and Full Year 2025

• Net Loss: Service Properties Trust (SVC) reported a net loss of \$0.8 million, or \$0.00 per common share for Q4 2025.
• Normalized Funds from Operations (FFO): Normalized FFO stood at \$27.5 million, or \$0.17 per common share.
• Adjusted EBITDAre: Reported at \$125.6 million for the quarter.
• Quarterly Distribution: SVC declared a quarterly distribution on its common shares of \$0.01 per share, paid on February 19, 2026, to shareholders of record as of January 26, 2026.

Major Portfolio Optimization and Deleveraging Initiatives

• Hotel Dispositions:
  • Sold 66 hotels in Q4 2025 for a combined sales price of \$534 million.
  • Total hotel sales in 2025 reached 112 properties, generating \$859 million in proceeds.
  • Proceeds were used to redeem all \$800 million of 2026 debt maturities and \$300 million of February 2027 notes—significantly reducing short-term debt risk.
  • In January 2026, an additional hotel was sold for \$7.1 million, and SVC is actively marketing 16 hotels (3,177 keys) for sale, including 9 focused service and 7 full-service Sonesta hotels.
• Net Lease Portfolio Performance:
  • End-of-quarter occupancy was 96.6%, with rent coverage at 1.98x.
  • Net lease assets continue to deliver stable rental income, providing a buffer against hotel operating volatility.
• Hotel Portfolio Performance:
  • Hotel RevPAR (Revenue per Available Room) was \$99.24 for the quarter. Adjusted Hotel EBITDA was \$27.9 million.
  • SVC’s remaining hotels outperformed industry benchmarks for RevPAR for the fifth consecutive quarter, signaling robust operational performance despite asset sales.
• Debt and Liquidity Actions:
  • In February 2026, SVC priced \$745 million of net lease mortgage notes in an accretive refinancing transaction, reinforcing liquidity and reducing refinancing risk.
  • Full-year 2025 saw proactive debt management, with the redemption of all 2026 and part of 2027 maturities using asset sale proceeds and cash on hand.

2026 Financial Guidance and Strategic Outlook

• 2026 Guidance Ranges:
  • Adjusted EBITDAre: \$500 million – \$520 million
  • Normalized FFO: \$110 million – \$130 million, or \$0.65 – \$0.77 per common share
  • Total Capital Expenditures: \$120 million – \$140 million
• Key Assumptions Underpinning 2026 Guidance:
  • General and administrative expenses midpoint: ~\$40 million
  • Interest expense midpoint: ~\$377.5 million
  • Estimated displacement from hotel renovations: ~\$12 million
  • No hotel acquisitions or further significant dispositions beyond the announced one hotel sale (\$7.1 million) since January 1, 2026
  • Net lease acquisitions and dispositions of ~\$25 million each (with \$7.4 million in acquisitions and \$610K in dispositions completed since January 1, 2026)
  • Weighted average shares outstanding: ~168.5 million
• Management Commentary:
  • President and CEO Christopher Bilotto emphasized SVC’s “continued progress optimizing our portfolio, strengthening our financial profile and repositioning SVC for long term growth.”
  • Focus for 2026 is on further hotel asset sales, active deleveraging, and reinforcing SVC’s cash flows for shareholders.

Balance Sheet and Financial Position at Year-End 2025

• Total Gross Assets: \$9.0 billion
• Total Assets: \$6.49 billion
• Total Liabilities: \$5.85 billion
• Total Shareholders’ Equity: \$646 million
• Debt Composition:
  • Weighted average interest rate: 5.95%
  • Weighted average debt maturity: 3.6 years
  • Senior secured and unsecured notes comprise the majority of debt, with refinancing and extensions completed to push out maturities.
• Key Credit Metrics:
  • Net debt to rolling four-quarter Adjusted EBITDAre: 9.4x
  • Interest coverage (Adjusted EBITDAre/interest expense): 1.3x

Other Noteworthy Items and Potential Share Price Sensitivities

• Active Asset Dispositions: The large volume of hotel sales and the ongoing marketing of additional assets may impact SVC’s property mix, near-term earnings, and future capital allocation.
• Deleveraging and Refinancing Moves: SVC’s proactive debt reduction and refinancing efforts could lower financial risk, bolster credit standing, and support longer-term valuation.
• Dividend Policy: SVC’s quarterly dividend remains at \$0.01 per share, signaling continued conservatism. The payout ratio remains low, but future increases are possible if operating performance and deleveraging allow.
• Strategic Flexibility: Management’s willingness to sell underperforming assets and focus on liquidity may help SVC weather industry volatility and position for growth.
• Risks and Forward-Looking Statements:
  • SVC’s 2026 outlook remains subject to risks, including market conditions, refinancing execution, asset sale timing, tenant and manager performance, interest rate volatility, and broader economic uncertainties (e.g., inflation, supply chains, geopolitical issues).
  • Management explicitly notes that certain non-GAAP reconciliations are not provided due to the unpredictability of certain items (asset impairments, gains/losses on sales, etc.).

Conference Call and Additional Information

• SVC will host a conference call on February 26, 2026, at 10:00 a.m. Eastern Time to discuss results. The webcast and replay will be available on the company’s website.
• Investors are encouraged to review the full earnings presentation and supplemental financial information posted on SVC’s website.

Conclusion

The Q4 2025 and full-year results, paired with aggressive portfolio reshaping and debt reduction, mark a pivotal transition period for SVC. The company’s disciplined asset sales, refinancing, and focus on stable net lease income could materially impact the company’s risk profile and future share price. Investors should watch for the pace of asset sales, success of refinancing, and any changes to the dividend policy as potential catalysts for SVC’s stock.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Forward-looking statements are subject to risks and uncertainties. Please consult official filings and your financial advisor before making investment decisions.

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