10 Worst Performing REITs in 2024

2. Service Properties Trust (NASDAQ:SVC)

Year-to-Date Decline: 53.40%  

Number of Hedge Fund Holders: 18

Service Properties Trust (NASDAQ:SVC) has more than $11 billion invested in two asset categories which are hotels and service-focused retail net lease properties. As of June 30, the firm owned 220 hotels throughout the United States and in Puerto Rico and Canada and also owned 749 service-focused retail net lease properties with over 13.3 million square feet throughout the US.

The REIT has a diversified net lease and hotel portfolio with a national scale which remains a strategically positioned portfolio. While its hotels are typically located in urban or high-density suburban locations intended to be convenient for business travelers, its service-focused net lease properties include brands and industries benefitting from solid demand drivers. The REIT owns necessity-based retail assets with strong rent coverage, low capex requirements, and long lease terms. This balances the cyclicality of SVC’s hotel portfolio.

For Q2 2024, Service Properties Trust (NASDAQ:SVC) recorded a normalized FFO of $73.8 million and a net loss of $73.9 million. In July, the REIT sold two hotels and three vacant net lease properties. Simultaneously, it entered into agreements to sell 16 hotels with an aggregate of 1,930 keys for an aggregate sales price of $113.2 million and one net lease property with 3,381 square feet for a sales price of $1.3 million.

Recently, Service Properties Trust (NASDAQ:SVC) reduced quarterly distribution to $0.01 per share which will result in $127 million of annual savings. The firm also plans to sell 114 Sonesta-managed focused service hotels in 2025 to use the net sales proceeds to repay debt. Thus, SVC is making efforts to improve portfolio performance, reduce capital expenditures and leverage, and position its hotel portfolio well for the long term.