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Mar 31, 2020
Service Properties Trust Q1 2020 Earnings Report
Reported a net loss and a decrease in normalized FFO due to the impact of the COVID-19 pandemic.
Key Takeaways
Service Properties Trust announced its financial results for the quarter ended March 31, 2020, reporting a net loss of $33.7 million, or $0.20 per diluted common share, and Normalized FFO of $123.1 million, or $0.75 per diluted common share. The company has taken steps to preserve capital and amended its credit agreement to obtain waivers from compliance with certain financial covenants.
Net loss for the quarter ended March 31, 2020 was $33.7 million, or $0.20 per diluted common share.
Normalized FFO for the quarter ended March 31, 2020 were $123.1 million, or $0.75 per diluted common share.
SVC amended its credit agreement to obtain waivers from compliance with certain financial covenants through March 2021.
As of May 7, 2020, SVC has agreed to defer an aggregate of $8.6 million of second quarter 2020 rent for tenants representing approximately 6.4% of our annual minimum returns and rents.
Revenue by Segment
Forward Guidance
SVC's forward-looking statements involve risks and uncertainties, and actual results may differ materially from those projected.
Positive Outlook
- SVC believes it has the ability to withstand the current economic downturn because of its strong balance sheet, liquidity and agreements with its hotel operators and net lease tenants.
- SVC has taken steps to preserve capital until economic activity improves.
- SVC is working closely with its hotel operators to identify ways to optimally reduce operating costs and working with its net lease tenants whose businesses are temporarily closed due to government mandates or guidelines, on alternative rent arrangements in order to help them withstand the crisis.
- SVC's current expectation is that it may experience fewer hotel closures relative to some of its peers because of the larger mix of suburban extended stay and select service hotels that comprise SVC’s hotel portfolio.
- SVC obtained a limited waiver of certain financial covenants through March 2021.
Challenges Ahead
- If the COVID-19 pandemic or the current economic conditions continue for an extended period or worsen, SVC’s operators’ and tenants’ businesses, operations and cash positions may be materially and adversely impacted and result in some of them being unable to pay rents and returns to us or in continuing as going concerns.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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