Service Properties Trust Shares Plunge
Skift Take
Service Properties Trust is reducing its dividend, selling 114 hotels to repay debt and save on capital expenditures, and will continue owning 34% of Sonesta while selling other properties.
The DJIA was up 337 points while Nasdaq rose 51, the S&P 500 was up 27 points and the 10-year treasury yield was down .02 to 4.02%. Lodging stocks were modestly higher. CHH traded up to a new high while HGV and SOND were both up 5% on the day. The biggest mover was SVC, down -16% to a new low.
Service Properties Trust shares plunged on the news they were reducing their quarterly dividend from $0.20 per share to $0.01. The dividend reduction will result in $127 million of annual savings. SVC is also planning to sell 114 focused service hotels managed by Sonesta International Hotels Corporation with an aggregate of 14,925 rooms and an aggregate net carrying value of $850 million. SVC expects to sell the hotels next year and use the proceeds to repay debt. SVC expects the sales of the hotels to result in savings of $725 million in capital expenditures, which were forecast to be spent on the hotels over a six-year period. Of the 187 hotels SVC owns that are managed by Son
