Service Properties Trust

What they do

Service Properties Trust is a Maryland REIT that owns and leases service-focused retail properties and hotels. As of June 30, 2026, it owned 745 net lease properties (13.5 million square feet) and 93 hotels (over 21,000 rooms). Net lease properties are triple-net leased to tenants; hotels are leased to wholly owned TRSs managed by third-party hotel operators.

Revenue drivers

• Net lease properties — 745 properties as of June 30, 2026, generating rental income from triple-net leases. Largest tenant TravelCenters of America (TA) leases 175 travel centers under five master leases with annual minimum rents of $269.5 million.
• Hotels — 93 hotels managed by four operators, generating hotel operating revenues. Comparable hotels showed increases in ADR and RevPAR in Q2 2026 vs Q2 2025.

Recent performance

For Q2 2026 (three months ended June 30, 2026), revenue was $320.1 million. Annual revenue declined from $1.50 billion in 2024 to $1.41 billion in 2025, with net losses of $275.5 million in 2024 and $202.3 million in 2025. Operating cash flow fell from $139.4 million in 2024 to $117.8 million in 2025. Dividends per share dropped to $0.04 in 2025 from $0.61 in 2024.

Strategy

Management is focused on reducing debt and transitioning to a majority net lease portfolio. During 2025, the company sold 112 hotels for $858.8 million and acquired 29 net lease properties. In 2026, it issued $745 million of net lease mortgage notes and raised $541.8 million in a common share offering, using proceeds to redeem $1.55 billion of debt. It continues to market additional hotels for sale.

Risks

• High debt and refinancing risk — Long-term debt was $5.50 billion as of December 31, 2025, with a substantial amount of debt and potential difficulty refinancing maturing obligations at reasonable costs.
• Tenant concentration — High concentration of properties operated by TA and Sonesta; their failure to perform could adversely impact results and cause operational disruption.
• Asset sale execution — May not succeed in selling properties at target prices, which could impede deleveraging and portfolio rebalancing.
• Macroeconomic conditions — Inflation, interest rates, tariffs, and possible recession could hurt hotel operations and tenant ability to pay rent.

Outlook

Management expects continued hotel sales and net lease acquisitions as part of rebalancing. As of August 3, 2026, it was under agreement to sell 12 hotels for $77.35 million and negotiating or marketing two more. Macroeconomic uncertainty, including tariffs and interest rates, could affect future performance.