Service Properties Trust Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2024

There are 9 speakers on the call.

Operator

Hello, good morning, and welcome to the Service Properties Trust Third Quarter 2024 Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. As a reminder, this conference is being recorded. I would now like to hand the call to Kevin Barry, Senior Director of Investor Relations.

Operator

Please go ahead.

Speaker 1

Thank you, and good morning, everyone. Thanks for joining us today. With me on the call are Todd Hargreaves, President and Chief Investment Officer Jesse Hebert, Vice President and Brian Donnelly, Treasurer and Chief Financial Officer. In just a moment, they will provide details about our business and our performance for the Q3 of 2024, followed by a question and answer session with sell side analysts. I would like to note the recording and retransmission of today's conference call is prohibited without the prior written consent of the company.

Speaker 1

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 based on SVB's beliefs and expectations as of today, November 7, 2024, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the SEC, which can be accessed from our website atsvcreit.com or the SEC's website. Investors are cautioned not to place undue reliance upon any forward looking statements.

Speaker 1

In addition, this call may contain non GAAP financial measures, including normalized funds from operations or normalized FFO, cash available for distribution or CAD and adjusted EBITDAre. A reconciliation of these non GAAP figures to net income are available in SVC's earnings release presentation that we issued last night, which can be found on our website. And finally, we are providing guidance on this call, including hotel EBITDA. We are not providing a reconciliation of this non GAAP measure as part of our guidance because certain information required for such reconciliation is not available without unreasonable efforts or at all. With that, I will turn the call over to Todd.

Speaker 2

Thank you, Kevin, and good morning. Our Q3 results reflect a continued trend of mixed performance across our lodging portfolio due to our ongoing hotel capital improvement renovation program, balanced by the stable cash flow generation within our net lease portfolio. Before discussing results, I would like to highlight some actions we are taking to improve our liquidity and reduce leverage. On October 16, we announced the reduction of our regular quarterly common dividend from $0.20 per share to $0.01 per share. The reduction will result in approximately $127,000,000 of annual savings, providing us with significant flexibility to accelerate deleveraging, while continuing to execute on our portfolio optimization initiatives.

Speaker 2

We also announced our plans to sell 114 focused service hotels in the Sonesta portfolio, which have an aggregate of 14,925 keys and a net carrying value of $850,000,000 We expect to sell these hotels in 2025 and are targeting proceeds of approximately $1,000,000,000 Additionally, we expect the sales of these hotels will result in savings of approximately $725,000,000 in capital expenditures, which is forecasted to be spent on these properties over a 6 year period. These divestitures will transform our Sonesta portfolio to focus on full service hotels as well as certain higher performing focus service hotels. Upon completion of the disposition plan, we expect that Sonesta will continue to manage 39 full service hotels, 14 Extended Stay Hotels and 6 Select Service Hotels owned by SVC. SVC will continue to own 34% of Sonesta. Turning to our results for the hotel portfolio.

Speaker 2

During the quarter, overall performance continued to be affected by revenue displacement at certain of our hotels undergoing renovation. While comparable RevPAR declined 80 basis points year over year, excluding the renovation properties comparable RevPAR experienced an increase of 1.7% year over year. Beginning with our full service portfolio, which reported a RevPAR decline of less than 1%, strength within group was offset by the impact of renovation displacement on transient revenues as well as top line weakness in contract business. Excluding the 4 full service hotels under renovation during the quarter, full service portfolio RevPAR grew by 2.5% year over year outpacing industry growth by 160 basis points. 8 of our top 10 performing hotels in terms of year over year improvement were Sonesta full service hotels.

Speaker 2

More specifically, our Royal Sonesta Hotel in New Orleans benefited from improved group results along with a related uplift in banquet revenue. The Royal Sonesta Houston Galleria experienced an increase in demand in the aftermath of the Paris Hurricane Barrel and our properties in Chicago generated gains from the Democratic National Convention. Our extended stay portfolio experienced the most disruption in our Our extended stay portfolio experienced the most disruption in our portfolio as 11 hotels

Speaker 3

were under renovation during the

Speaker 2

quarter compared to only 3 in Q3 2023. In addition, lower longer term stays at our hotels in Atlanta, San Diego and Las Vegas led to lower extended stay occupancy. Based on this multi quarter trend, Sonesta is currently focused on enhancing value from shorter term stay bookings through OTA and wholesale channels. In total, RevPAR for

Speaker 4

our extended stay portfolio declined 1.5% year over year.

Speaker 2

Within our select service portfolio, Sonesta Select generated 50 basis points of RevPAR growth, driven by increased occupancy and growth within contract business, specifically at our hotels in Philadelphia and Atlanta. However, this increase was offset by residual effects from recently completed renovations within the Hyatt portfolio, resulting in a total select service RevPAR decline of 20 basis points year over year. Turning to hotel operating expenses despite strategic shifts towards in house staffing and reductions in contract labor, rising wage rates across all service levels continue to weigh on hotel profitability. Occupancy growth in our full service portfolio led to the most pronounced labor cost increases. Beyond labor, the largest cost increases during the Q3 consists of group commissions and real estate taxes.

Speaker 2

In terms of customer segmentation, we continue to see a declining mix of transient business offset by an increase in group revenues on a year over year basis. During the Q3, transient group customers represented approximately 74% 19% of our total hotel revenues respectively, followed by contract business representing 6%. Sonesta remains focused on increasing brand loyalty with an emphasis on growing its Travel Pass program. Across our full service and focused service Sonesta Hotels, Travel Pass revenue represented more than 25% of room revenue during the quarter over 3 percentage points of growth within full service hotels year over year. We continue to make progress on strategic dispositions during the quarter, selling 6 hotels with an aggregate of 8 22 keys for an aggregate sales price of $44,900,000 Since quarter end, we have sold 5 additional hotels with an aggregate of 642 keys for an aggregate sales price of $32,200,000 We've also reached agreement to sell 8 hotels with an aggregate of 985 keys for a combined sales price of 44,200,000 dollars In closing, we are taking measures to increase our liquidity and reduce leverage, highlighted by our recent announcement to sell 114 hotels and reflective of the continuation of our long term strategy to build a managed portfolio in key growth markets.

Speaker 2

I will now turn the call over to Jesse to discuss the net lease portfolio in more detail.

Speaker 4

Thank you, Todd. Turning to

Speaker 5

our net lease portfolio, which represents 44% of SBC's portfolio by investment as of September 30, 2024. Our 745 service oriented retail net leased properties were 97.6 percent leased with a rated weighted average lease term of 8.3 years. Approximately 2 thirds of our portfolio is anchored by a strong credit quality tenant and BP and the remainder includes more than 170 diverse tenants operating in over 20 industries. Our lease maturities are well laddered with only 2.6% of our net lease minimum rents scheduled to expire before 2026. The aggregate coverage of our net lease portfolios minimum rents was 2.2 times on a trailing 12 month basis as of September 30, 2024 which was consistent on a sequential quarter basis.

Speaker 5

Excluding the TA properties, minimum rent coverage was 3.7 times. Between the BP backs TA leases and the strong coverage for the balance of the portfolio, we expect our net lease assets to continue their consistent performance providing stable cash flows to SVC. In addition to the hotel dispositions Todd discussed earlier, transaction activity during the quarter included the sale of 4 net lease properties containing a combined 52,000 square feet resulting in approximately $3,600,000 in aggregate sale proceeds. We also entered into an agreement to sell a 3,300 square foot net leased property for $1,000,000 Overall, our net lease portfolio continues to generate steady and predictable income streams that afford SBC flexibility as we execute our hotel capital improvement plans and take steps to optimize our balance sheet. I will now turn the call over to Brian to discuss our financial results.

Speaker 4

Thank you, Jesse, and good morning. Starting with our consolidated financial results for the Q3 of 2024, normalized FFO was $52,900,000 or $0.32 per share versus $0.56 per share in the prior year quarter. Adjusted EBITDAre declined 11.6% year over year to $155,000,000 Financial results this quarter as compared to the prior year quarter continue to be impacted by higher interest expense and lower hotel EBITDA. For our 2 13 comparable hotels this quarter, RevPAR decreased by 80 basis points, gross operating profit margin percentage declined by 380 basis points to 27.5 percent and gross operating profit decreased by $50,000,000 from the prior year period. Below the GOP line costs at our comparable hotels increased $600,000 or 1% from the prior year, driven primarily by increased real estate taxes, partially offset by lower insurance expense.

Speaker 4

Our 2 14 hotels generated hotel EBITDA of $60,100,000 a decline of $15,400,000 from the prior year. By service level, hotel EBITDA year over year decreased $9,500,000 for our 47 full service hotels, declined $2,000,000 for our 60 select service hotels and $4,000,000 for our 107 extended stay hotels. For the 17 hotels that were under renovation during the quarter, hotel EBITDA declined $7,100,000 As Todd discussed earlier, we plan to sell 114 focused service and estimated hotels with 14,925 keys in 2025. We have provided operating statistics within our earnings presentation that provides details on the hotels we are exiting and the hotels SVC currently expects to retain. For the quarter, the 130 hotels we are exiting, including hotels currently in the market for sale, generated RevPAR of $72 and hotel EBITDA of $16,900,000 The 84 hotels SCC plans to retain generated RevPAR of $113 and hotel EBITDA of $43,000,000 during the quarter.

Speaker 4

Turning to our expectations for Q4, we're currently projecting full quarter Q4 RevPAR of $82 to $85 and hotel EBITDA in the $34,000,000 to $39,000,000 range. Turning to the balance sheet. We currently have $5,700,000,000 of fixed rate debt outstanding with a weighted average interest rate of 6.4%. Our next debt maturity is $350,000,000 of senior unsecured notes maturing in February 2026. We currently have over $700,000,000 of total liquidity, including full availability of our $650,000,000 revolving credit facility.

Speaker 4

We expect to generate approximately $1,000,000,000 in 2025 from the 114 hotels we announced we are selling and expect to use the sales proceeds for the repayment of debt. Turning to our investing activity, we made $82,000,000 of total capital improvements in our properties during the Q3, comprised of $30,000,000 of recurring capital and $52,000,000 related to our hotel renovation program. The largest spend this quarter was for renovations at our full service hotels in LAX, White Plains, New York and Miami Airport, which totaled over $26,000,000 of capital during the quarter. These same three hotels generated a $5,700,000 decline

Speaker 3

in

Speaker 4

hotel EBITDA year over year. We currently expect the full year 2024 capital expenditure spend to be around $300,000,000 We expect 15 hotels across all of our service levels to be under renovation in the 4th quarter and we will have completed major renovations at 30 hotels during the calendar year, including 4 full service hotels, 18 select service hotels and 8 extended stay hotels. During the quarter, we sold 6 hotels with 822 keys for $44,900,000 and 4 net lease assets for $3,600,000 We're under agreement to sell 8 hotels with 985 keys for sale price of $44,200,000 We made the difficult but prudent decision to reduce the common $0.01 this quarter given the recent operating performance of our hotels and the extensive CapEx program we have initiated. We expect to save $127,000,000 annually, enhancing our liquidity and financial flexibility. To sum up, we're taking steps to deliver on our commitment to refocus our hotel portfolio, reduce capital expenditures and repay debt to improve our position for the long term.

Speaker 4

That concludes our prepared remarks. We're ready to open the line for questions.

Operator

Thank you. We will now begin the question and answer session. Today's first question comes from Bryan Maher with B. Riley. Please go ahead.

Speaker 6

Thank you and good morning. I was looking to probe a little bit more on the longer term outlook for renovation activity and more specifically on the full service hotels. Can you give us any rough idea of what we're looking at in number of years and number of dollars?

Speaker 4

Hey, Brian, good morning and thanks for the question. We're not prepared to give guidance on CapEx spend for 25 or beyond. We're going to do that on our Q4 call as typical for us. I will say we expect the number to be below what we're spending this year. There's so much going on right now with sales, timing.

Speaker 4

We continue to reevaluate projects as they come up for approval, whether or not it makes sense to move forward. So there's a lot of moving pieces today. I just sum it up by saying we do expect a lower spend next year.

Speaker 6

I think in your prepared comments, you said that you are planning on retaining 84 hotels. Maybe to ask in a different way, of the 84 hotels, how many do you think need a more than normal CapEx, some deeper renovation to some degree?

Speaker 4

Yes. I mean, I think the hotels that we're keeping the full service boxes being the largest concentration, there's a good number of them that have been renovated or in good quality standing right now in the market. But there is definitely a portion that we'll continue to deploy capital in. I'm just not prepared to guide exactly how many that might be. We'll give more color as we go forward as I described.

Speaker 2

Right. And out of those 84, a large number have been renovated already. I mean, that includes all the 17 Hyatts, one of the Radisson's as well as several of the Sandesters as well.

Speaker 6

Is there any update on doing the Nautilus and when that would be?

Speaker 2

Yes. The Nautilus, we're expecting to start that renovation at some point in 2025. If you recall that hotel when we purchased it, we reported that we were going to put in another $25,000,000 into the renovation to convert that to a James and do some work around the rooms and common areas there. So that's still the plan. That may not be the final budget, but we expect that to be operating as a James in 2026.

Speaker 6

Okay. Just two more quick ones. The Hyatts that you renovated earlier this year, I think RevPAR was maybe negative 6% in the second, negative 2% in the third. I'm assuming there was some lag there. Can you give us any early indications as to what you're seeing there in the Q4?

Speaker 2

Yes. I mean, we have completed the I don't have any specifics on the RevPAR and EBITDA at the hotels for so far in the Q4. But to your point, we have completed the renovations at all those hotels. There's still some a little bit of work to start on the exteriors as well as a couple of other things, but they're substantially done. So we expect to start seeing that lift here in the next quarter or 2 from those renovations.

Speaker 6

Okay. Just last, on the 114 hotels that you've announced that you're going to sell, how many of those do you expect to stay encumbered by the Sonesta brand?

Speaker 2

It's hard to say exactly how many. My sense is the majority of the hotels will remain encumbered of brand and that's based on our experience with the recent hotels we've sold through the phase of 68, the 22 that we're currently in process just based on our success in selling those hotels and if they've stayed encumbered or not. The hotels we're selling in this portfolio are much stronger performers than what we've sold over the past few years, which I believe will lead to the ability to or that more of a likelihood that they stay Sonesta branded. Most of what I'd say probably 85% of what we've sold of the Sonesta hotels has remained encumbered under a franchise agreement. Most of the ones that were sold unencumbered were groups that wanted to convert the ES suites to multifamily and were willing to pay a 30% premium or more.

Speaker 2

So I don't know the exact number, but it's going to it's likely to be kind of around that percentage or higher.

Speaker 6

Okay. Thank you.

Speaker 4

Thank you.

Operator

Thank you. The next question comes from Dorey Kaston with Wells Fargo. Please go ahead.

Speaker 7

I'm just I'm trying to reconcile the capital, a new owner may need to put in, versus the EBITDA per key that they generate?

Speaker 2

You're talking about I guess the first part of the question, Dory, is that related to the sale hotels?

Speaker 7

Yes, the 114. Sure.

Speaker 2

So the 114, so and we have included in the supplemental detail of the EBITDA for sale hotels and if you annualize that it's about $60,000,000 in EBITDA. I think most of those hotels, not all of them are the same, some of them aren't as don't need as large of a renovation as some others might. But I think for the most part, anywhere depending on the brand and the last renovation date, I would say anywhere from 25,000 to 50,000 a key, a buyer will anticipate having to invest in the hotel above the purchase price.

Speaker 7

Okay. And the 114, those are the on a trailing 12 basis, you were saying those generated around $60,000,000 in EBITDA?

Speaker 2

That's right.

Speaker 7

Okay. And then can you give us a sense about for the retained hotels where your trailing 12 margins are? And longer term, where you would expect those to stabilize once the renovation upside has been realized?

Speaker 4

Yes, the 84 hotel story generated in the trailing 12 about $156,000,000 of EBITDA. The margin on a net basis was only 15%. The 14 select service and the other properties that we're keeping had a much higher margin than that. Again, with 114 focus service hotels we're disposing of had margins in the 15s. The ones we're keeping out of focused service are in the 30% range.

Speaker 4

The full service hotels is somewhat dragging down the weighted average margin of EBITDA at the 15% level, given the noise in that portfolio and some of the Hyatts, the focus service Hyatts as well as the Sonesta full service hotel. So there's a mixed bag going on. So again, we've selected the highest performing focus service hotels to retain out of the Sonesta portfolio and those margins are very healthy in the 30s, the low 30s where we think they should be running. The full service hotels, we have work to do to get those margins back up to where they need to be in the 20s and upward to 30%.

Speaker 7

Okay. Sorry, let me just repeat that. The exit hotels are currently around 15% margin and the ones that you're keeping are also somewhat around there, but eventually they should get towards the high 20s, 30 range. Is that correct?

Speaker 4

Yes. I tried to illustrate the bifurcation of focus versus full service on what we're retaining. And there's a split of sort of a story of why it's dragging down to 15% and it's related to the full service hotels. And some of the properties we've had under renovation like the highest only generated a margin of 7%. We surely we expect that to ramp up very quickly as we move into 25 that will have some of these averages and then some of the other properties that we've had under renovation have very low margins right now.

Speaker 7

Okay. And then last one, just since you made the announcement of your disposition plans, have you received any inbound interest in portfolios or is it a little bit early?

Speaker 2

Yes. We've received a lot of interest. It is very early, it's still very preliminary. We are going to we're in the process of engaging a broker. So we are going to run a process, but we have received significant interest because there's a lot of institutional groups that have been really trying to scale these types of portfolios based on what's been in the market, what's currently in the market and to my knowledge was expected to come to market for select service and extended stay hotels.

Speaker 2

There just haven't been many large kind of high quality portfolios. So a lot of groups have been having to buy these properties in 1s and 2s and 3s. So we received a lot of inbounds for groups that want to buy portfolios of 20, 30 hotels to really scale up. So not surprised with the interest with the inbound interest, but it really just confirms our belief that there's going to be a lot of demand for the portfolio.

Speaker 7

Okay. Thank you.

Speaker 4

Thank you.

Operator

Thank you. The next question is from Tyler Batory with Oppenheimer. Please go ahead.

Speaker 8

Thank you. Good morning. So I got a bunch of follow-up questions here. Just talking about the $1,000,000,000 number, which I think was a bit better than we had been expecting. I guess, how much confidence do you have in that?

Speaker 8

It's nice to see you float that out, but I'm not sure just kind of where your expectations are in terms of pricing? And just to be clear on a few topics with the sales, I mean, are you expecting these to be more kind of one offs or do you think there are some larger portfolio opportunities or larger buyers out there in groups? Obviously, moving interest rates more recently cost of capital, I'm not sure if that's playing into things. And I think you said a portion of the hotels are going to be sold unencumbered. Just talk a little bit about that, kind of how you think about the value of the Sonesta brands, and just kind of pricing that sell it associated with Sonesta versus giving buyers a little bit more flexibility?

Speaker 2

Sure. Okay. So starting with the first question. So I mean $1,000,000,000 that's an estimate. Obviously, we wanted to give some guidance into what we were expecting to get and that's based off our internal valuations, outside broker valuations, historical sales of hotels in our portfolio adjusted for what we think that the better quality and performance of these hotels are.

Speaker 2

These are very different hotels than what we've sold in the past in the Sonesta portfolio. The 68 and the 22 that we're in the midst of selling, in aggregate, both of those portfolios had negative EBITDA at the time of sale. So buyers were looking at those on a per key basis, on a stabilized yield on cost basis. These hotels, they're not all the same. Some of them will price on a cap rate basis, some of them will still price on a per key basis or

Speaker 3

a

Speaker 2

revenue multiple basis. But again, these had $60,000,000 or so of EBITDA on a trailing 12 month basis. So much different set of hotels, a lot of these are in good markets. Some have been recently renovated as well. So it's a different set.

Speaker 2

So it's how we came up with the value was a combination of per key and cap rate. So again, the $1,000,000,000 is really just an estimate, but it is above that net book value number that we for these hotels. To your second question, this isn't going to sell 1 portfolio, but if you ask me today, I would envision it's sold as larger portfolios, maybe 10, 20, 30 hotels. And that's based off a lot of the conversations we've had. Back to Dory's question about we've gotten a lot of inbounds from institutional groups looking to put out a good amount of capital and looking to grow in scale.

Speaker 2

That said, we're also going to get a lot of interest from buyers who are interested in buying the ones, twos and threes similar to what we have sold. In terms of encumbered versus unencumbered, I don't know, I mean, yes, I'm not sure exactly where that lands, but based on I think you were getting at the value of how SVC values the brand encumbrance, it's going to be a similar calculation as we've done in the past when we're comparing offers and we're trying to evaluate the value of the royalty fee streams given our 34% ownership interest in Sonesta when comparing the offer. So that's going to be something we look at as we get offers in. Again, just based off what we've sold in the past, what we've heard from the market so far, I expect most of these hotels, again, I would estimate today if I had to estimate 85% plus would be sold encumbered, but we'll see where offers come in.

Speaker 8

Okay, great. I just asked about 10 questions at once. So I appreciate you hitting on all those. So in terms of the EBITDA performance in the portfolio both in the quarter and for Q4, I mean you came in at 60,000,000 dollars for Q3, the guide was $65,000,000 to $69,000,000 And I think in Q4, the range there was a little bit lower than we had. There's a lot of moving pieces in the portfolio, so I'm not sure maybe the renovation disruption was a little bit greater than you thought.

Speaker 8

I know going through the asset sales obviously impacts that number too. So I'm not sure if there's kind of some outside factors here that are impacting the EBITDA performance and EBITDA generation of the hotel portfolio?

Speaker 4

Tyler, it's a little bit of everything. The renovations are sometimes tough to pin down and how fast things recover. There's a lot of anecdotal stories at different hotels, some of the select service and extended stay properties when you renovate them. There are groups that won't commit if the property has construction going on and sometimes it takes longer to build some of that business back up. There's various stories like Kauai, for example, last year was performing outperforming because of the compression from the Maui fires and some other one time adjustments on the P and L that negatively compare to this year's performance and the disruption as we talked about, but also cost pressures and just softening demand in leisure and overall lodging.

Speaker 4

So yes, it's a mixed message, but there's a lot going on in the portfolio as we talked about. And we continue to be focused on executing on both the CapEx plan, the disposition plan, operating efficiencies and just trying to get this portfolio to where it needs to be. Okay.

Speaker 8

And then thinking about the RevPAR performance here, I think the past couple of quarters, I think you've lagged some of the other peers and I'm not necessarily looking for guidance. But do you think that that trend could start to flip? I mean, you've done some renovations, going to have some easy comps, you have a higher quality hotel portfolio left. I mean, is it possible you might start to outperform the industry? Is that something that we might see next year possibly just from a RevPAR perspective?

Speaker 2

Sure. No, I think that's a fair assessment. We a lot of our impact to revenue has been disruption from the renovations. If you take out the renovations, we saw RevPAR increase, although we continue to expect to have more renovations. So we continue to expect to have more disruption.

Speaker 2

But once we get through the sales of the 114 hotels, again, this goes back to Brian's comments, we see a lot of upside in the full service portfolio and a lot of the markets that these hotels are in. And then what we're keeping on the focus service side, again, Brian mentioned it, but I'll repeat it. The 20 hotels we're keeping in the of the Sonesta Suites, SNSD Select and Simply Suites. I mean those are very strong performers today. They're on a trailing 12 month basis.

Speaker 2

They're over 30% margins. And one of the reasons we're keeping those and selling the others is these hotels specifically, if you look at the relative to other ones we're selling, it's a 35% RevPAR premium that these hotels are getting. And we've had a challenging time driving margins on some of the hotels that we're selling with the lower RevPAR premium

Speaker 3

that these hotels are getting. And we've had a challenging time driving margins on some of the hotels that we're selling with the lower RevPAR because of just the fixed

Speaker 2

cost you have on the expense side. So long way of answering your question, but yes, I think we should expect as we start to see more of the lift from the renovations, again, we're going to continue to have disruption going forward. But as we exit some of these hotels where we don't see that growth in RevPAR ability, we should start to at the very least see an uptick in RevPAR.

Speaker 8

Okay. Last for me, I mean, just to tie everything together here, I mean, you've made a number of strategic decisions. I guess, how comfortable are you with your liquidity compared with the debt obligations that you have the next couple of years? I think it's something that a lot of folks are focused on. They just look at all the debt maturities that are coming due.

Speaker 8

And obviously, I think in the near term, have a pretty good handle on things. But the question starts to come up of like, well, is there more that might need to be done to handle some of these obligations a little bit farther out? So just trying to get a good sense of kind of how comfortable you are with things in the short term and obviously no one has a crystal ball. But just talking even a little bit longer term, just kind of how you think you're positioned to handle some of the debt maturities that you have coming in 2026 and beyond?

Speaker 4

It's a great question. We're comfortable with our liquidity position in the short term. I think the part of the story and the response to that question is, we've been trying to demonstrate and I think we have demonstrated our ability to access the markets. We've done capital raises $1,000,000,000 in last November and another one in the spring to de risk maturity, debt maturities coming due at SVC. We are selling a significant amount of the hotels to raise cash, to repay debt, but that's not to say we can't refinance the debt.

Speaker 4

This is part of a broader strategic decision to delever. We feel comfortable we'd be able to refinance debt using our different channels. We've done debt within the retail portfolio, the travel center portfolio and on an unsecured corporate basis. So we think we'll have plenty of levers to pull as we've shown in the last few years. So I don't have I'm not overly concerned with liquidity at this point.

Speaker 8

Okay, great. That's all for me. Thank you very much for the detail.

Speaker 2

Thank you.

Operator

Thank you. This concludes our question and answer session. I would like to turn the call back over to Mr. Hargreaves for any closing remarks.

Speaker 2

Thank you everyone for joining today's call. We appreciate your continued interest in SVC and look forward to seeing many of you at NAREIT later this month.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

Powered by Quartr
Earnings Conference Call
Service Properties Trust Q3 2024
00:00 / 00:00