Service Properties Trust — Financial Results
Large-Scale Hotel Sell-Off Is Reshaping the Company's Identity
| Metric | Detail |
|---|---|
| Hotels earmarked for disposal (2025 plan) | 122 hotels, 15,931 rooms |
| Hotels sold by Dec 31, 2025 | 112 hotels, proceeds of $858,752 |
| Hotels remaining to sell | 9 hotels + 7 additional full-service hotels added Jan 2026 |
| Hotels to be retained long-term | 52 Sonesta-managed properties |
The company is deliberately shrinking its hotel business, selling off roughly 90% of the originally targeted hotels at a combined price of nearly $859 million. The goal is to pivot toward being primarily a net lease property company — where tenants pay most expenses themselves — with a smaller, higher-quality hotel portfolio remaining.
Retained Hotels Are Performing Better; Exit Hotels Are Declining
| Group | RevPAR 2025 | RevPAR 2024 | Change |
|---|---|---|---|
| Retained Hotels (comparable) | $114.17 | $111.60 | +2.3% |
| Exit Hotels (comparable) | $66.69 | $70.73 | -5.7% |
RevPAR (revenue per available room) is the standard measure of hotel income efficiency. The hotels the company plans to keep are improving, while those being sold are deteriorating — suggesting the disposals are shedding weaker assets and keeping the better performers.
Net Loss Narrowed but the Business Is Still Losing Money
| Metric | 2025 | 2024 |
|---|---|---|
| Net loss | $(202,321) | $(275,526) |
| Net loss per share | $(1.22) | $(1.67) |
| Normalized FFO per share | $0.78 | $1.07 |
The company reduced its net loss by about $73 million year-over-year, largely due to the hotel sales and lower depreciation. However, Normalized FFO (funds from operations, the REIT equivalent of underlying earnings) fell from $1.07 to $0.78 per share, meaning the core business is generating less cash than before — partly because sold hotels no longer contribute revenue.
Debt Reduction Is a Central Priority, But the Debt Load Remains Heavy
| Item | Amount |
|---|---|
| Total debt (Dec 31, 2025) | ~$5.5 billion |
| New secured notes issued (Sep 2025) | $580,155 (zero coupon, due 2027) |
| Senior notes redeemed in 2025 | $800,000 |
| Additional notes redeemed Jan 2026 | $300,000 |
| 2029 notes expected to be redeemed (Mar 2026) | $700,000 |
The company is actively cycling out older unsecured debt and replacing some of it with secured borrowings backed by its travel center properties. While progress is being made, roughly $1.5 billion in debt matures in 2027 alone, making refinancing a key risk to watch.
TA Dominates the Net Lease Portfolio — A Concentration Risk
TravelCenters of America (TA) accounts for 175 of 760 net lease properties and 67.8% of annualized minimum rent ($264 million of $390 million total). TA's rent coverage ratio sits at just 1.20x — meaning TA earns only 20% more than it pays in rent — which is a thin cushion. BP Corporation guarantees the TA leases, which provides a meaningful backstop, but the concentration means the company's net lease income is heavily dependent on one tenant's financial health.
Asset Impairment Charges Are Rising
The company recorded $81.9 million in impairment charges in 2025 (versus $56.2 million in 2024) to write down the carrying value of 28 hotels and 4 net lease properties to reflect lower estimated market values. Rising impairments signal that some assets are worth less than what is on the books, and may complicate future sale prices.