Service Properties Trust (which commonly goes by its Nasdaq symbol SVC) plans to sell 114 focused service hotels managed by Sonesta International Hotels Corp. (or collectively with its parent and subsidiaries, Sonesta) with an aggregate of 14,925 keys and a reported aggregate net carrying value of $850 million. SVC expects to sell these hotels in 2025 and use the net sales proceeds to repay debt. SVC also expects the sales of these hotels will result in savings of approximately $725 million in capital expenditures, which was forecasted to be spent on these hotels over a six-year period.
SVC currently owns 187 hotels that are managed by Sonesta under five brands, including 14 hotels that SVC is currently in the process of selling and the 114 being announced for sale today. Upon completion of the disposition plan in 2025, SVC expects that Sonesta will continue to manage 39 full service hotels, 14 extended stay hotels and 6 select service hotels owned by SVC. SVC will continue to own 34 percent of Sonesta.
“Given the slow recovery of our hotel portfolio in combination with our hotel capital improvement and renovation program and our deteriorating leverage metrics, we believe it is prudent to reduce the distribution to increase SVC’s liquidity and enhance our financial flexibility,” Todd Hargreaves, president and chief investment officer of SVC, said in a statement. “The reduction in the distribution from the previous level will preserve approximately $127 million of SVC’s liquidity annually. We are also planning to sell 114 hotels to generate additional liquidity and concentrate the Sonesta portfolio on full service hotels and certain higher performing focused service hotels. We expect these sales will also result in reduced capital expenditure and leverage, improve portfolio performance and better position SVC’s hotel portfolio for the long term.”
The hotels Sonesta will continue to manage are:
The hotels being sold are:
