Why Service Property Trust Shares Are On The Rise Today

What happened

Actions of Services Properties Trust (NASDAQ: SVC) had risen nearly 10% as of 3:12 p.m. EDT after the real estate investment trust (REIT) reported earnings for the third quarter of 2021.

So what

Services Properties, which owns hotels and other commercial properties, reported a net loss of $ 0.36 per share on total revenue of more than $ 437 million for the third quarter of 2021. Both figures exceed analyst consensus estimates.

Normalized operating funds were nearly $ 44 million in the quarter, up from $ 23.2 million in the third quarter of 2020. Hotel revenue per available room also increased to $ 67.71 in the quarter, up from $ 41.35 a year ago.

Image source: Getty Images.

“With weekly COVID-19 cases on the decline, we expect to see a rebound in business travel over the next few quarters, especially at our full-service hotels as urban centers reopen,” John said. Murray, president and CEO of Services Properties, said in a report.

Murray added, “We collected all rents owed by our net tenants during the third quarter and our largest net tenant, TravelCenters of America, continues to benefit from healthy trucking activity and improved operational efficiency. “

Now what

This has been difficult for Services Properties since the coronavirus pandemic. At the start of the pandemic, Services Trust virtually eliminated its dividend to preserve capital, which is difficult for a REIT, a class of stocks known for its large dividends.

While there is probably a rise here as it is a resumption game, I still consider this stock to be risky as dividends are one of the main draws of REITs. Additionally, the hospitality and retail sectors may not have gotten out of the woods yet.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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