Jackson Armstrong's questions to Service Properties Trust (SVC) leadership • Q1 2025
Question
Jackson Armstrong questioned the specific reasons for the shift in the hotel disposition timeline, the risk level of the CapEx program given potential tariffs, the confidence in pursuing net lease acquisitions in the current environment, and the details behind the impairment charge on 16 hotels.
Answer
President and CEO Christopher Bilotto stated the disposition timeline shift is a function of the complexity and phased nature of a large portfolio sale, not broader market concerns. He also noted that net lease acquisitions are attractive due to favorable pricing and their role in improving the overall portfolio composition. CFO Brian Donley explained that the 2025 CapEx plan is largely locked in, while future plans will mitigate tariff risks through sourcing and scope adjustments. Donley clarified the impairment was on a specific pool of 15 hotels, and that in aggregate, the company expects to recognize a gain on the sale of the full 114-hotel portfolio.