Service Properties Trust - Shares Of Beneficial Interest · NASDAQ:SVC
Service Properties Trust - Shares Of Beneficial Interest — Service Properties Trust — Investor Day (May 2022)
44 slides from Service Properties Trust - Shares Of Beneficial Interest's investor day presentation, May 23, 2022
Slide 1: Service Properties Trust Investor Day: May 23, 2022
SERVICE PROPERTIES TRUST (Nasdaq: SVC) Investor Day: May 23, 2022
Slide 2: Warning Concerning Forward-Looking Statements
2 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Warning Concerning Forward-Looking Statements This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever we use wor
Slide 3: SVC Investor Day Agenda
3 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 SVC Investor Day Agenda ❑ Company Overview and Recent Events ❑ Portfolio Update: Hotels ❑ Portfolio Update: Net Lease ❑ Balance Sheet, Leverage Strategy & Liquidity ❑ Key Takeaways
Slide 4: SVC: Company Overview
4 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 SVC: Company Overview SVC invests in two asset categories: hotels and service-focused retail net lease properties to provide diversification to its cash flows. Necessity-based retail assets with strong rent coverage, low capex requirements and long
Slide 5: SVC: Company Overview - Diversified Portfolio with National Scale
5 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 SVC: Company Overview 236 HOTELS(1) 39,678 KEYS(1) $6.1B INVESTMENT(1) 786 RETAIL NET LEASE ASSETS 13.5M RENTABLE SQUARE FEET $5.1B INVESTMENT 1,022 PROPERTIES(1) $11.2B INVESTMENT Diversified Portfolio with National Scale (1) Excludes 62 Exit Hote
Slide 6: SVC: Recent Events
6 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 SVC: Recent Events Progress on Hotel Sales: Closed on 20 additional sales since May 5th earnings call Line of Credit Amended: Extended maturity date to January 2023 Early Notes Redemption: Announced June redemption of August 2022 Senior Notes Hotel
Slide 7: Hotel Portfolio Overview
SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Net Lease Portfolio Overview HOTEL PORTFOLIO Sonesta Hilton Head Hilton Head. SC
Slide 8: Hotel Overview: Retained Hotels by Service Level, Location and Chain Scale
8 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Hotel Overview: Retained Hotels(1) by Service Level, Location and Chain Scale. Full Service, 37.5% Select Service, 26.1% Extended Stay, 36.4% Upscale, 49.1% Upper Upscale, 14.3% Upper Midscale/ Midscale, 36.6% Location Keys % of Portfolio Suburban
Slide 9: Hotel Overview: Update on Disposition Strategy
9 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Hotel Overview: Update on Disposition Strategy. Closed 42 of 68 previously announced hotel dispositions for aggregate proceeds of $397.6 million Purchase and sale agreement on an additional 22 hotels for an aggregate purchase price of $141.0 millio
Slide 10: Hotel Portfolio: Dispositions Improve Overall Quality of Hotel Portfolio
10 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Hotel Portfolio: Dispositions Improve Overall Quality of Hotel Portfolio. (1) Retained Hotels portfolio consists of 236 hotels. Exit hotels consist of 62 hotels held for sale as of 3/31/2022. (2) Exit Hotels for FY 2019 statistics consist of 67 ho
Slide 11: Hotel Portfolio: Retained Hotels Performance vs 2019
11 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Hotel Portfolio: Retained Hotels(1) Performance vs 2019. (1) Retained Hotels portfolio consists of 236 hotels. Exit Hotels portfolio consists of the 62 hotels held for sale as of 3/31/2022. Full Service April 2022 As a Pct. Of April 2019 Occupancy
Slide 12: Hotel Portfolio: Retained Hotels YTD Performance
12 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Hotel Portfolio: Retained Hotels YTD Performance. $110.15 $121.41 $128.77 $134.70 $49.68 $64.47 $79.58 $88.36 40% 45% 50% 55% 60% 65% 70% $0 $20 $40 $60 $80 $100 $120 $140 Jan '22 Feb '22 Mar '22 Apr-22 YTD Monthly Operating Statistics ADR RevPAR
Slide 13: Hotel Portfolio: Meaningful Improvement from Full Service Portfolio
13 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Hotel Portfolio: Meaningful Improvement from Full Service Portfolio. • Recovery reflected in improving performance from SVC’s full service portfolio, with occupancy increasing to 62.8% in April from 35.7% in January. • Full service RevPAR improved
Slide 14: Hotel ADR, RevPAR and EBITDA Margins vs Lodging REIT Group
14 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Hotel Portfolio: Hotel ADR, RevPAR and EBITDA Margins vs Lodging REIT Group. 2019 Comparable ADR and RevPAR vs Lodging REIT Group(1) 2019 Hotel EBITDA Margins vs Lodging REIT Group $0 $50 $100 $150 $200 $250 $300 SVC APLE INN AHT CLDT RLJ RHP XHR
Slide 15: Net Lease Portfolio
SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Arby’s Sterling Heights, MI NET LEASE PORTFOLIO Petro Stopping Center Wilmington, IL
Slide 16: Net Lease Portfolio: High-Quality Service & Necessity Based Assets
16 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Net Lease Portfolio: High-Quality Service & Necessity Based Assets. Net Lease Portfolio Statistics 786 $372mm Properties Annual Contractual Rent 13.5mm 10 Years Rentable Square Feet Weighted Average Lease Term 97.6% 2.67x Occupancy Rent Coverage D
Slide 17: Net Lease Portfolio: Reliable Income Stream and Low Capex Requirements
17 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 (1) By annual minimum rent. Net Lease Portfolio: Reliable Income Stream and Low Capex Requirements. Well-Laddered Lease Expirations (1) 97% of Leases Have Contractual Increases or Percentage Rent Lease Structures $372mm 0.6% 0.8% 3.1% 2.4% 3.2% 3.
Slide 18: Net Lease Portfolio: TravelCenters of America
18 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Net Lease Portfolio: TravelCenters of America (Nasdaq: TA). 28% of SVC’s Portfolio (based on investment) $7mm % rent based on increases in sales $253mm total rent in 2021 $246mm annual minimum cash payments 2.2x 1.9x LTM 3/31/21 LTM 3/31/22 1.9x 1
Slide 19: Net Lease Portfolio: TravelCenters of America turnaround
19 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Net Lease Portfolio: TravelCenters of America (Nasdaq: TA). • TA is successfully executing a corporate turnaround strategy, recently reporting an increase of 52% in adjusted EBITDA for the LTM ended March 31, 2022 versus the prior year period. • T
Slide 20: Net Lease Portfolio: Service Focused Retail Net Lease Portfolio
20 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 16% 12% 9% 9% 7% 7% 6% 6% 4% 24% Restaurants-Quick Service Movie Theaters Restaurants-Casual Dining Health and Fitness Grocery Stores Medical, Dental Office, Hospitals, Clinics Home Leisure Automotive Equipment & Services Automotive Dealers Other
Slide 21: Balance Sheet and Liquidity
SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Valuation Sonesta Silicon Valley Milpitas, CA BALANCE SHEET AND LIQUIDITY
Slide 22: Balance Sheet Overview as of March 31, 2022, as Adjusted
22 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Balance Sheet Overview as of March 31, 2022, as Adjusted.(1) Debt Maturities Book Capitalization Strong Balance Sheet Floating Rate Debt 10% Unsecured Fixed Rate Debt 72% Shareholder’s Equity 18% • Unsecured senior notes: $5.7 billion. • Revolving
Slide 23: Balance Sheet and Liquidity
23 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Balance Sheet and Liquidity. Liquidity Update(1) $ in millions Cash & Equivalents at 3/31/22 $ 969 Credit line paydown - Apr'22 (200) Sonesta funding - Apr'22 (25) Senior notes redemption - Jun'22 (500) Hotel sales proceeds since 3/31/22 329 Antic
Slide 24: Public Debt Covenants
24 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Public Debt Covenants. Metric Covenant March 31, 2022 Pro Forma(1) March 31, 2022 Total Debt / Adjusted Total Assets Allowable Maximum: 60.0% 58.3% 55.6% Secured Debt / Adjusted Total Assets Allowable Maximum: 40.0% 8.1% 6.8% Consolidated Income A
Slide 25: Liquidity
25 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Liquidity. Hotel EBITDA expected to cover capex and fuel future growth as operations continue to stabilize. LTM Ended 3/31/22 Net Lease Portfolio Operations $ 380 million Pro forma debt service(1) (313) million G&A (53) million Surplus $ 14 millio
Slide 26: Leverage Strategy
26 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Leverage Strategy. 3/31/22 Pro Forma(1) 3/31/22 Net Debt $6.2B $5.8B Gross Assets $12.0B $11.4B Net Debt / Gross Assets 51.7% 50.5% 3/31/22 Pro Forma(1) LTM Ended 3/31/22 LTM Adjusted EBITDAre $465.0M $456.9M Interest Expense $368.7M $339.2M LTM A
Slide 27: Capex Plan: Significant Investment to Upgrade SVC's Hotel Portfolio
27 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Capex Plan: Significant Investment to Upgrade SVC’s Hotel Portfolio. Projected Spend in 2022: $200 million • Hotel operations expected to cover the cash outflow Projected Spend beyond 2022: $250 million annually over the next three to four years •
Slide 28: Operational Outlook: Q2 2022
28 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Operational Outlook. Q1 2022 April 2022 Estimated Q2 2022 RevPAR $61.42 $83.38 $85 - $88 Hotel EBITDA $5 million $25 million $70 - $80 million Hotel EBITDA Margins 2% 18.1% 19% - 22% Operational Outlook: Q2 2022 We expect continued elevated leisur
Slide 29: Key Takeaways
SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 KEY TAKEAWAYS Sonesta Fort Lauderdale Fort Lauderdale, FL
Slide 30: Reasons to Own SVC
30 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Reasons to Own SVC. Diversified portfolio by asset type, demand segment and geographic exposure Steady net lease cash flows balance the cyclicality of the lodging sector Higher quality hotel portfolio following recent sales Hotel portfolio to be u
Slide 31: Appendix
SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 APPENDIX Royal Sonesta Minneapolis, MN
Slide 32: Full Service: Royal Sonesta (Upper Upscale)
32 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Full Service: Royal Sonesta (Upper Upscale). Minneapolis, MN Houston, TX Boston, MA San Juan, PR Austin, TX New Orleans, LA Chicago, IL St. Louis, MO Baltimore, MD Chicago, IL
Slide 33: Full Service: Sonesta (Upscale)
33 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Full Service: Sonesta (Upscale). Hilton Head, SC Philadelphia, PA Los Angeles, CA Miami, FL Denver, CO Nashville, TN Charlotte, NC Columbus, OH Irvine, CA Milpitas, CA
Slide 34: Select Service: Sonesta Select (Upscale)
34 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Select Service: Sonesta Select (Upscale). Atlanta, GA Fountain Valley, CA Scottsdale, AZ Las Vegas, NV Bellevue, WA Arlington, VA San Francisco, CA Eden Prairie, MN Middletown, RI
Slide 35: Extended Stay: Sonesta ES Suites and Simply Sonesta
35 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Extended Stay: Sonesta ES Suites (Upper Upscale) and Simply Sonesta (Midscale). Andover, MA Colorado Springs, CO Lake Buena Vista, FL Anaheim, CA Orlando, FL Miami, FL Santa Clara, CA Scottsdale, AZ Princeton, NJ Lake Buena Vista, FL
Slide 36: TravelCenters of America Upgraded Interiors
36 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 TravelCenters of America (Nasdaq: TA) Upgraded Interiors Hebron, OH Seymour, IN Bucksville, AL Atlanta, GA Seymour, IN
Slide 37: Retail Net Lease Portfolio
37 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Retail Net Lease Portfolio. Express Oil Change Birmingham, AL Heartland Dental Columbia, MO Lifetime Fitness South Tulsa, OK Taco Bell Mount Pleasant, MI Mister Car Wash Albuquerque, NM Popeye’s Chicken Tempe, AZ Buehler’s Fresh Foods Ashland, OH
Slide 38: Financials
SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 FINANCIALS Sonesta Emeryville, CA
Slide 39: Calculation of FFO and Normalized FFO
39 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Calculation of Funds From Operations (FFO) and Normalized FFO. (amounts in thousands, except per share data) See accompanying notes on page 43. For the Three Months Ended 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Net loss $ (119,822) $ (1
Slide 40: Calculation of EBITDA, EBITDAre and Adjusted EBITDAre
40 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Calculation of EBITDA, EBITDAre and Adjusted EBITDAre. (dollars in thousands) For the Three Months Ended 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Net loss $ (119,822) $ (198,793) $ (59,714) $ (91,110) $ (194,990) Add (Less): Interest exp
Slide 41: Calculation and Reconciliation of Hotel EBITDA - Comparable Hotels
41 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Calculation and Reconciliation of Hotel EBITDA - Comparable Hotels (dollars in thousands)` Three Months Ended Twelve Months Ended 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2019 Number of hotels 295 295 295 295 295 304 Room revenues
Slide 42: Calculation and Reconciliation of Hotel EBITDA
42 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 See accompanying notes on page 43. dollars in thousands) For the Three Months Ended 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Number of hotels 298 303 304 310 310 Room revenues $ 258,620 $ 272,458 $ 298,607 $ 248,618 $ 152,728 Food and be
Slide 43: Notes to Calculations of FFO, EBITDA and Hotel EBITDA
43 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Notes to Calculations of FFO, Normalized FFO, EBITDA, EBITDAre, Adjusted EBITDAre and Hotel EBITDA 43 1) We recorded a loss on asset impairment of $5,500 to reduce the carrying value of 25 hotels during the three months ended March 31, 2022, $76,5
Slide 44: Non-GAAP Financial Measures Definitions
44 SERVICE PROPERTIES TRUST (Nasdaq: SVC) | May 2022 Non-GAAP Financial Measures Definitions. 44 Non-GAAP Financial Measures: We present certain “non-GAAP financial measures” within the meaning of the applicable Securities and Exchange Commission, or SEC, rules, including FFO, Normalized FFO, EBITDA