Service Properties Trust (SVC) announced a significant reduction in its regular quarterly cash distribution on common shares, decreasing it from $0.20 to $0.01 per share. This dividend cut is projected to generate $127 million in annual savings, which will be used to increase SVC's liquidity and enhance financial flexibility.
Concurrently, SVC revealed plans to sell 114 focused-service hotels managed by Sonesta International Hotels Corporation, encompassing 14,925 keys with an aggregate net carrying value of $850.0 million. These sales are anticipated to close in 2025, with net proceeds primarily allocated to debt repayment.
The company expects these hotel dispositions to result in approximately $725 million in capital expenditure savings over a six-year period. This strategic move aims to concentrate the Sonesta portfolio on full-service and higher-performing focused-service hotels, improving overall portfolio performance and better positioning SVC's hotel assets for the long term amidst a slow recovery and deteriorating leverage metrics.
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