Service Properties Trust closed a $542.3 million underwritten public offering of 479.2 million shares of beneficial interest on April 2 2026, pricing the shares at $1.20 each. The offering included 62.5 million shares issued upon the full exercise of the underwriters’ option, and the net proceeds were approximately $542.3 million after underwriting discounts and expenses.
The company used the proceeds to redeem $100 million of its 4.95% senior notes due February 2027 and $450 million of its 5.50% senior notes due December 2027, for a total redemption of $550 million. The 5.50% notes were redeemed on April 17 2026 and the 4.95% notes on May 2 2026, each at principal plus accrued and unpaid interest with a make‑whole premium applied.
The transaction reduces SVC’s leverage and strengthens its balance sheet ahead of the 2027 debt maturities. By paying down high‑coupon debt, the trust lowers interest expense and improves cash‑flow flexibility, supporting its strategic shift toward a net‑lease‑focused portfolio.
The move follows a March 2026 downgrade to B‑ and a portfolio of 760 net‑lease properties and 94 hotels as of December 31 2025. The equity raise also addressed dilution concerns that prompted a negative market reaction on April 1 2026, as investors weighed the impact of issuing a large volume of shares at a low price and the trust’s difficulty securing traditional debt financing.
Chris Bilotto, President and CEO, said, “We are making significant progress executing SVC’s strategic transformation, the primary prongs of which are the disposition of a substantial portion of our hotel portfolio, and the taking of other actions to strengthen our balance sheet.” The redemption aligns with that strategy by reducing debt that would otherwise be used to finance hotel assets.
The offering and debt repayment position SVC to pursue further portfolio optimization and to manage future debt maturities, though the trust still faces approximately $2 billion of debt due between 2026 and 2028. The capital structure change signals management’s confidence in the long‑term stability of the net‑lease model and its ability to refinance at more favorable terms.
The content on EveryTicker is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.