1. What is a REIT?
A real estate investment trust, or REIT, is a company that owns (and in some cases operates) income producing real estate such as offices properties. In order to qualify to be a REIT under the United States Internal Revenue Code, a company generally must distribute annually at least 90% of its taxable income to its shareholders. REITs generally pay little or no corporate income taxes because they are able to deduct dividends they pay from their taxable earnings.
REITs are total return investments and they typically provide attractive dividends plus the potential for moderate, long term capital appreciation.
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2. What is funds from operations (FFO) and normalized FFO?
FFO is a non-GAAP measure of a REIT's operating cash flow. It differs from GAAP net income largely due to the exclusion of non-cash items, such as depreciation and amortization. Many securities analysts judge a REIT's performance based largely upon FFO per share results. SVC’s normalized FFO also excludes the impact of acquisition related costs, estimated business management incentive fees and gains/losses on the early extinguishment of debt.
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3. What is Hotel RevPAR?
RevPar or Revenue per Available Room is the total hotel guest room revenue divided by the total number of available hotel rooms.
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4. What are your debt ratings?
Services Properties Trust is investment grade rated by both Moody’s (Baa3) and Standard & Poor’s (BBB-).
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5. When does your fiscal year end?
Our fiscal year ends on December 31.
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6. Who is TravelCenters of America? What is its relationship to SVC?
TravelCenters of America, or TA, is SVC’s former 100% owned subsidiary and our largest tenant, and we are TA’s largest shareholder. TA was created as a separate public company in 2007 as a result of its spin-off from SVC.
TravelCenters of America is a limited liability company. TA owns and/or franchises standalone travel centers and standalone restaurants. SVC owns a significant number of travel centers, of which we lease to TravelCenters of America LLC or its subsidiaries pursuant to long term leases.
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7. Who is The RMR Group LLC? What is its relationship with SVC?
SVC is managed by The RMR Group LLC, the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR). RMR is an alternative asset management company that was founded in 1986 to manage real estate companies and related businesses. RMR primarily provides management services to five publicly traded equity real estate investment trusts, or REITs, and three real estate related operating businesses. In addition to managing SVC, RMR manages Senior Housing Properties Trust, a REIT that primarily owns healthcare, senior living and medical office buildings, Office Properties Income Trust, a REIT focused on owning, operating and leasing buildings primarily leased to single tenants and those with high credit quality characteristics like government entities, and Industrial Logistics Properties Trust, a REIT that owns and leases industrial and logistics properties. RMR also provides management services to TravelCenters of America LLC, a publicly traded operator and franchisor of travel centers along the U.S. Interstate Highway System (including all the travel centers that SVC owns), convenience stores and restaurants, Five Star Senior Living Inc., a publicly traded operator of senior living communities, and Sonesta International Hotels Corporation, a privately owned operator and franchisor of hotels (including some of the hotels that SVC owns) and cruise ships. RMR also manages publicly traded securities of real estate companies, a publicly traded mortgage REIT and private commercial real estate debt funds through wholly owned SEC registered investment advisory subsidiaries. As of June 30, 2019, RMR had $30.6 billion of real estate assets under management and the combined RMR managed companies had approximately $12 billion of annual revenues, over 1,500 properties and over 50,000 employees.
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