NEWTON, Mass. - Service Properties Trust (NASDAQ:SVC), a real estate investment trust, has priced two series of senior guaranteed unsecured notes totaling $1.2 billion. The offerings, set to settle on June 3, 2024, comprise $700 million of 8.375% notes due 2029 and $500 million of 8.875% notes due 2032.
The company plans to use the net proceeds to redeem $800 million of its 7.50% senior unsecured notes due in 2025. Additionally, funds will cover the purchase of $350 million of its 4.50% senior unsecured notes due the same year, as part of a tender offer previously announced. Remaining proceeds are earmarked for general business purposes.
The offerings, guaranteed by certain SVC subsidiaries, are subject to customary closing conditions. Joint book-running managers for the transaction include major financial institutions such as Citigroup Global Markets Inc., BofA Securities, Inc., and J.P. Morgan Securities LLC.
This financial move comes as SVC manages a diverse portfolio of properties across the United States, Puerto Rico, and Canada, primarily focused on extended stay and select service hotels, as well as service-oriented retail net lease properties. The RMR Group (NASDAQ:RMR), an alternative asset management company, manages SVC.
Investors are cautioned that SVC's statements about the offerings and the use of proceeds are forward-looking and subject to risks and uncertainties. The completion of the offerings and the intended use of proceeds can be affected by various factors, including market conditions and regulatory considerations.
InvestingPro Insights
As Service Properties Trust (NASDAQ:SVC) navigates the financial markets with its latest senior notes offerings, investors are keeping a keen eye on the company's performance metrics. According to InvestingPro, SVC is currently trading at a low EBITDA valuation multiple, which could indicate a potential undervaluation of the company's earnings before interest, taxes, depreciation, and amortization. This is an essential metric for investors who are assessing the value of a company relative to its earnings potential.
In the realm of shareholder returns, SVC stands out with a significant dividend yield of 13.49%, showcasing its commitment to returning value to its shareholders. This is particularly noteworthy as the company has maintained dividend payments for 30 consecutive years, a testament to its financial resilience and dedication to its investors.
From a valuation standpoint, SVC's market capitalization is currently at $949.8M, and it has a price-to-book ratio over the last twelve months as of Q1 2024 of 0.85, which could suggest that the company's stock is trading below its net asset value. This data aligns with the InvestingPro Tips indicating that SVC is also trading at a low revenue valuation multiple.
For investors interested in a more in-depth analysis, InvestingPro offers additional insights, including the observation that SVC's stock price has experienced significant volatility and has fallen considerably over the last three months and five years. For those looking to capitalize on these insights, InvestingPro features a total of 11 tips for SVC, which can be accessed with a special offer. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and unlock the full potential of your investment decisions.
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