Service Properties Trust (Nasdaq: SVC) is a publicly traded real estate investment trust (REIT). SVC invests in two asset categories: hotels and service-focused retail net lease properties, to provide diversification and stability to SVC’s cash flows.
Strong diverse portfolio of hotel assets:
- SVC’s hospitality portfolio of 214 hotels is weighted toward extended stay properties, which generally have lower fixed costs and higher margins relative to full service hotels.
- Typically in near-urban locations with solid demand drivers and in 46 states, Washington, D.C., Puerto Rico and Canada, SVC’s geographic diversity is structured to mitigate specific market risk.
- SVC’s hotels are primarily operated by Sonesta International, one of the fastest growing hotel brands in the U.S., as well as Hyatt and Radisson.
Defensively positioned service-focused retail net lease properties:
- SVC’s portfolio of 745 service-focused retail net lease properties totals over 13.3 million square feet and is well diversified by geography, tenant and industry.
- Net lease is a naturally defensive asset class with long average lease terms and low capex requirements.
- Exposure to service-based concepts aligns with consumer preferences and provides insulation from ecommerce disruption.
External manager provides deep management expertise and significant cost benefits:
- SVC is externally managed by The RMR Group Inc. (Nasdaq: RMR), a leading U.S. alternative asset management company with nearly $41 billion of real estate assets under management.
- RMR’s depth of management and experience in the real estate industry is a competitive advantage for SVC.
- RMR provides management services to SVC at lower costs than for similar quality services if the company was self-managed.
Strong balance sheet:
- Over $11 billion of diverse real estate assets.
- Well-laddered debt maturities for senior unsecured notes.
- SVC also owns approximately 34% of the shares of Sonesta Holdco Corporation.