The following is a summary of the Service Properties Trust (SVC) Q4 2023 Earnings Call Transcript:
Financial Performance:
Service Properties reported an increase in total revenues by $7.1 million mainly due to F&B sales, however, operating expenses increased due to the rise in real estate taxes and insurance costs, affecting margins.
The normalized FFO for Q4 2023 was $50 million or $0.30 per share, a decline from $0.44 per share in Q4 2022.
Adjusted EBITDA decreased 6.2% YoY to $141.2 million primarily due to higher interest expense, a reduction in hotel EBITDA and low rental income.
The company executed a new 8-year $1 billion senior secured notes offering at 8.625% and repaid all $1.2 billion of unsecured notes that were due in 2024.
The total liquidity at the end of Q4 2023 was $750 million, providing the company with stable financial groundwork.
Business Progress:
The company is investing in hotel improvements to boost performance and has identified 22 Sonesta hotels for sale to reduce overall CapEx, augment RevPAR and enhance hotel EBITDA margins.
Service Properties expects short-term disruptions due to ongoing renovations but anticipates long-term benefits in the form of significant RevPar increases.
Capital expenditures of $250 million to $275 million are projected in 2024 to continue the renovation program.
The company announced its quarterly common dividend of $0.20 per share, exhibiting a 48% normalized FFO payout ratio for 2023.
More details: Service Properties Trust IR
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