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Service Properties Trust (SVC)
NASDAQ:SVC
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Service Properties
(NASDAQ:SVC)
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Rating:49Neutral
Price Target:
$2.50
▼(-8.42% Downside)
The overall stock score of 49 reflects significant financial challenges, including negative profitability and high leverage, which are the most impactful factors. While there are strategic initiatives and positive corporate events that could improve the outlook, the current financial instability and valuation concerns weigh heavily on the score.
Service Properties (SVC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$458.25M
Dividend Yield1.47%
Average Volume (3M)1.20M
Price to Earnings (P/E)―
Beta (1Y)1.22
Revenue Growth-0.23%
EPS Growth-38.68%
CountryUS
EmployeesN/A
SectorReal Estate
Sector Strength53
IndustryREIT - Hotel & Motel
Share Statistics
EPS (TTM)-0.23
Shares Outstanding166,636,140
10 Day Avg. Volume1,697,782
30 Day Avg. Volume1,196,150
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap13.16
Enterprise Value/Revenue3.20
Enterprise Value/Gross Profit6.87
Enterprise Value/Ebitda12.79
Forecast
1Y Price Target
$2.75Price Target Upside0.73% Upside
Rating ConsensusHold
Number of Analyst Covering2
Service Properties Business Overview & Revenue Model
Company DescriptionService Properties Trust (SVC) is a real estate investment trust (REIT) that primarily invests in the hospitality and healthcare sectors. The company focuses on acquiring and owning a diversified portfolio of service properties, including hotels and healthcare-related facilities, which are leased to qualified operators. SVC aims to generate long-term growth and income for its shareholders through strategic investments in properties across various regions.
How the Company Makes MoneyService Properties Trust generates revenue primarily through long-term lease agreements with hospitality and healthcare operators. The company earns rental income from its portfolio of properties, which includes hotels, senior living facilities, and wellness centers. Additionally, SVC may benefit from management fees, as some of its properties are operated by third-party management companies, providing another stream of income. The company's revenue is significantly influenced by the performance of the hospitality and healthcare markets, occupancy rates, and the quality of its tenant operators. Strategic partnerships with reputable operators also enhance its revenue stability and growth potential.
Service Properties Earnings Call Summary
Earnings Call Date:Aug 05, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Neutral
The call presented a mixed outlook. While there were significant achievements in progressing with hotel dispositions and a robust net lease acquisition pipeline, challenges such as declining hotel-level EBITDA, increased interest expense, and a breach in debt covenant highlight financial pressures.Q2-2025 Updates
Positive Updates
Significant Progress on Hotel Dispositions
SVC has sold 8 hotels for $46 million and is on track to complete 122 hotel sales totaling nearly 16,000 keys for gross proceeds of $966 million, marking a strategic shift towards a predominantly net lease REIT.
RevPAR Outperformance
RevPAR increased 40 basis points year-over-year, outperforming the broader industry by 90 basis points, driven by gains in both occupancy and ADR.
Robust Net Lease Portfolio
The net lease portfolio consists of 742 service-oriented retail properties with annual minimum rents of $387 million, 97% leased, with a weighted average lease term of 7.6 years.
Strong Acquisition Pipeline
SVC has acquired or entered agreements to acquire 20 net lease retail properties for $55 million, with a weighted average lease term of 15 years and an average cap rate of 7.4%.
Negative Updates
Decline in Hotel-Level EBITDA
Hotel-level EBITDA declined during the quarter, primarily due to elevated labor costs, broader inflationary pressures, and $2.4 million of year-over-year negative EBITDA due to renovation displacement.
Increased Interest Expense
An $8.8 million increase in interest expense contributed to a decrease in adjusted EBITDAre by $7.7 million year-over-year.
Debt Covenant Breach
SVC's 1.5x debt service coverage covenant was below the minimum requirement at 1.49x, leading to the precautionary measure of fully drawing down the $650 million credit facility.
Decline in Normalized FFO
Normalized FFO was $57.6 million or $0.35 per share, down from $0.45 per share in the prior year quarter.
Company Guidance
During the Service Properties Trust Second Quarter 2025 Earnings Conference Call, the company provided guidance on several key metrics. SVC reported significant progress on its hotel disposition program, having sold 8 hotels for $46 million and entered agreements to sell 114 Sonesta hotels for $900 million. The company expects to complete a total of 122 hotel sales in 2025, generating $966 million in gross proceeds, with a valuation of 18.4x hotel EBITDA over the trailing 12 months. Despite a decline in hotel-level EBITDA due primarily to elevated labor costs and renovation disruptions, the company reported a 40 basis points year-over-year increase in RevPAR, with the retained hotels showing a 150 basis points increase. Looking ahead, SVC projects Q3 RevPAR between $98 and $101 and adjusted hotel EBITDA ranging from $54 million to $58 million. The company aims to reduce capital expenditures to $150 million in 2026, down from $250 million in 2025, as it continues to focus on capital recycling and deleveraging.Service Properties Financial Statement Overview
Summary
Service Properties is facing financial challenges with negative profitability margins and high leverage. The company's declining equity ratio and inconsistent cash flows highlight significant risks. While there are efforts to manage debt, the overall financial health remains precarious, necessitating strategic interventions to stabilize operations and improve financial outcomes.Income Statement
The income statement shows a concerning trend with negative net income in recent periods and a declining gross profit margin from 33.5% in 2024 to 28.5% TTM (Trailing-Twelve-Months). The revenue growth rate is minimal at 1.7% from 2023 to 2024, with a slight decrease in 2025 TTM. Negative EBIT and Net Profit Margins indicate financial distress, affecting profitability.40
Negative
Balance Sheet
The balance sheet reveals high leverage with a debt-to-equity ratio of 7.71 TTM, reflecting significant financial risk. The equity ratio has been declining from 16.7% in 2021 to 10.5% TTM, indicating reduced financial stability. However, the decrease in total liabilities suggests some effort in managing debt, albeit not sufficient to offset overall risks.55
Neutral
Cash Flow
Cash flow analysis shows inconsistent free cash flow with a drastic decline from 2023 to the TTM period. The operating cash flow to net income ratio indicates challenges in converting income to cash, exacerbated by negative net income. This instability in cash flows raises concerns about liquidity and operational efficiency.50
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.89B | 1.90B | 1.87B | 1.86B | 1.50B | 1.27B |
| Gross Profit | 877.76M | 602.96M | 632.29M | 635.65M | 484.84M | 567.35M |
| EBITDA | 471.25M | 555.83M | 664.80M | 581.45M | 286.05M | 501.76M |
| Net Income | -277.89M | -275.53M | -32.78M | -135.24M | -543.66M | -301.47M |
Balance Sheet | ||||||
| Total Assets | 6.93B | 7.12B | 7.36B | 7.49B | 9.15B | 8.69B |
| Cash, Cash Equivalents and Short-Term Investments | 63.18M | 143.48M | 180.12M | 38.37M | 944.04M | 73.33M |
| Total Debt | 0.00 | 5.71B | 5.52B | 5.66B | 7.14B | 6.21B |
| Total Liabilities | 6.24B | 6.27B | 6.13B | 6.10B | 7.60B | 6.58B |
| Stockholders Equity | 695.94M | 851.87M | 1.23B | 1.39B | 1.56B | 2.10B |
Cash Flow | ||||||
| Free Cash Flow | 277.07M | 139.39M | 485.55M | 293.55M | 151.23M | -152.43M |
| Operating Cash Flow | 134.69M | 139.39M | 485.55M | 243.13M | 49.90M | 37.60M |
| Investing Cash Flow | -174.37M | -222.86M | -29.58M | 397.25M | -101.31M | -51.81M |
| Financing Cash Flow | 96.25M | 43.02M | -303.56M | -1.54B | 907.37M | 24.40M |
Service Properties Technical Analysis
Positive
2.73
Price Trends
2.72
Positive
2.54
Positive
2.51
Positive
Market Momentum
0.03
Positive
47.97
Neutral
12.06
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SVC, the sentiment is Positive. The current price of 2.73 is below the 20-day moving average (MA) of 2.80, above the 50-day MA of 2.72, and above the 200-day MA of 2.51, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 47.97 is Neutral, neither overbought nor oversold. The STOCH value of 12.06 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SVC.
Service Properties Risk Analysis
Service Properties disclosed 59 risk factors in its most recent earnings report. Service Properties reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Service Properties Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | 1.38B | 22.66 | 5.18% | 3.65% | 4.81% | 185.08% | |
68 Neutral | 690.71M | -46.54 | 4.80% | 5.72% | -1.91% | -256.67% | |
63 Neutral | 1.13B | 35.67 | 2.98% | 8.14% | 1.42% | -20.13% | |
61 Neutral | 343.83M | 264.91 | 1.24% | 4.61% | -0.87% | ― | |
57 Neutral | 1.35B | -19.92 | -0.82% | 0.35% | 2.00% | 50.70% | |
49 Neutral | $458.25M | ― | -32.60% | 1.47% | -0.23% | -38.68% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% |
* Real Estate Sector Average
Performance Comparison
SVC
Service Properties
2.73
-2.04
-42.77%
INN
Summit Hotel Properties
5.59
-0.90
-13.87%
PEB
Pebblebrook Hotel
11.44
-2.06
-15.26%
CLDT
Chatham Lodging
6.94
-1.34
-16.18%
RLJ
RLJ Lodging
7.37
-1.41
-16.06%
XHR
Xenia Hotels & Resorts
14.24
-0.24
-1.66%
Service Properties Corporate Events
M&A TransactionsBusiness Operations and Strategy
Service Properties Signs New Agreement with Sonesta
Neutral
Sep 2, 2025
Service Properties entered into a new management agreement with Sonesta International Hotels Corporation for 59 hotels effective August 1, 2025. The agreement includes a 15-year term with renewal options, various fees, and conditions for termination. Additionally, Service Properties has sold 10 hotels and is in the process of selling 111 more, with Sonesta waiving termination fees for these sales.
Business Operations and StrategyFinancial Disclosures
Service Properties Releases Investor Presentation August 2025
Neutral
Aug 5, 2025
On August 5, 2025, Service Properties Trust released an investor presentation on its website. The presentation likely provides insights into the company’s financial strategies or performance, which may influence stakeholders’ perceptions and the company’s market positioning.
Executive/Board ChangesShareholder Meetings
Service Properties Shareholders Approve Governance Resolutions
Positive
Jun 16, 2025
At the recent Annual Meeting, Service Properties‘ shareholders elected seven Trustees to the Board for a one-year term, with the election results showing varying levels of support for each nominee. Additionally, shareholders approved a non-binding advisory resolution on executive compensation, the Share Award Plan, and ratified Deloitte & Touche LLP as the independent auditors for the 2025 fiscal year, reflecting continued confidence in the company’s governance and operational strategies.
Business Operations and StrategyFinancial Disclosures
Service Properties Trust Outlines Strategic Priorities in June 2025
Positive
Jun 2, 2025
On June 2, 2025, Service Properties Trust released an investor presentation outlining its strategic priorities and financial position. The company emphasized its focus on rebalancing its hotel portfolio towards full-service urban and leisure-oriented properties, reducing leverage through planned hotel sales, and acquiring single-tenant freestanding properties that are service-oriented and e-commerce resistant. The presentation highlighted the company’s strong financial position with no near-term debt maturities and ample liquidity, positioning it to optimize its portfolio and generate consistent cash flows with embedded growth. The strategic initiatives aim to enhance asset quality, market share, and operating performance, potentially impacting the company’s valuation and stakeholder interests.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.