NEW YORK, June 3, 2026, 17:03 (EDT)
Service Properties Trust dropped 3.5% to end at $1.66 on Wednesday, below its $1.70 open. Investors reacted to the REIT’s new update on reducing debt, selling hotels and shifting to retail net lease properties. Trading volume was 3.93 million on Nasdaq before the close.
The timing is key. SVC took the stage at Nareit’s REITweek in New York to argue it’s more of a net lease REIT than just a hotel landlord. Net lease REITs hold properties with tenants who pay under long-term leases and pick up the bills for taxes, insurance and upkeep. President and CEO Chris Bilotto and CFO Brian Donley had a 9:30 a.m. Eastern slot.
Investors aren’t buying the pitch on talk alone. SVC, in a securities filing dated June 1, said it uploaded a new investor presentation as part of its official disclosures.
SVC said in the presentation it has done about $1.6 billion in capital-markets deals so far in 2026, including $542 million raised from a common-share sale and the redemption of $1.55 billion in unsecured debt. The company said these moves cut annual cash interest payments by $59 million. SVC said year-to-date RevPAR through April was up 6.8% from a year ago, beating industry growth of 4.0%. RevPAR tracks how well hotels are doing by combining room price and occupancy.
Management stuck to its 2026 full-year outlook for adjusted EBITDAre, keeping the range at $500 million to $520 million. EBITDAre is not a GAAP metric. It tracks operating profit before interest, taxes, depreciation, and some property costs. The company also put normalized FFO at $124 million to $144 million. Per-share FFO landed at $0.24 to $0.27 after the April equity raise increased the share count.
Valuation looks simple, but the market isn’t budging. SVC reported around 70% of its Q1 last-12-month adjusted EBITDAre from retail net lease assets, but shares traded at 11.1 times 2026 EBITDA estimates. That’s about the same as hotel REIT peers and much under the net lease REIT average of 15.6 times. The company’s peer group in its presentation included Realty Income, Apple Hospitality REIT, and Host Hotels & Resorts.
SVC didn’t get any lift from that argument. Host Hotels & Resorts picked up 0.9%. Apple Hospitality added 1.7%. Realty Income dipped 0.3%. The Vanguard Real Estate ETF was off 0.2%.
Stocks fell across the board. The Nasdaq Composite dropped 0.9% and the S&P 500 lost 0.7% as oil prices surged and geopolitics weighed on sentiment, leaving little support for smaller, more leveraged property names.
During the May earnings call, Bilotto said “SVC’s portfolio transformation is well underway,” citing asset sales and operational changes as steps toward more cash flow in the future. Donley noted that after completing recent debt and equity deals, the company has no unsecured debt coming due until 2028. Investing
Net lease remains the core of the story. In its most recent quarterly filing, SVC reported 761 service retail net lease sites and 93 hotels as of March 31. Retail net leases were 96.6% occupied with a weighted average lease term of 7.3 years. That portfolio includes 175 travel centers leased to its largest tenant, TravelCenters of America.
The hotel story is still tough. SVC said it’s working through 15 hotel sales totaling 3,022 keys, expecting to put the cash toward general business needs like paying down debt. The goal is to unload weaker hotels and trim future capex, but there’s still execution risk as buyers in this market are able to negotiate on price.
But the downside is still there. SVC flagged risks around consumer confidence, corporate travel, lodging demand, inflation, tariffs, interest-rate uncertainty, labor costs and possible economic headwinds. These could hit hotel operations, tenants’ rent payments and its own access to funding. If hotel sales fall, or travel slows before renovations kick in, the net lease re-rating could take longer.
Hotel investors now look to see if there are actual hotel-sale closings and what second-quarter RevPAR trends bring. They also want to know if the $59 million in interest savings will show up as cash available for distribution, instead of just offsetting the hit from dilution and hotel losses that haven’t gone away.
