- S&P Global downgraded Service Properties Trust’s credit rating to B- due to $2B in upcoming maturities.
- Roughly 40% of the REIT’s debt is set to mature within 24 months.
- Asset sales generated $859M last year, but future sales may be limited, raising liquidity concerns.
- SVC’s credit outlook remains negative, with capital structure at risk if refinancing plans falter.
Debt Pressure Drives Downgrade
According to Bisnow, Service Properties Trust, a Newton, Massachusetts-based REIT known as SVC, faces rising financial pressure. The company must address $2B in debt that matures within the next two years.
As a result, S&P Global downgraded SVC’s credit rating from B to B-. The agency cited concerns about SVC’s ability to refinance its obligations and preserve liquidity.
Asset Sales May Not Close the Gap
SVC completed the sale of 112 hotels in 2025, yielding $859M in proceeds, and continues to market additional hotel assets. However, S&P analysts suggest that the pool of assets suitable for divestiture may shrink, making it harder for the REIT to cover remaining debt through disposals alone. Management confirmed their strategy includes more sales, but future volumes could be limited.
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Portfolio Balance and Occupancy Trends
SVC owns a $10B portfolio split nearly evenly between hotels and net-leased retail properties. At year-end, the net-leased retail segment was 96.6% occupied, down slightly from the previous year. The hotel portfolio recorded 61.6% occupancy for the fourth quarter, with RevPAR at $99.24, marginally trailing national averages. This pressure on fundamentals mirrors challenges facing other major landlords, including an industrial REIT grappling with trade policy uncertainty and rising vacancies across key markets. The company recently refinanced a $700M loan with a $745M CMBS facility, signaling ongoing efforts to manage maturities through refinancing and sales.
What’s Next
The negative outlook from S&P highlights ongoing liquidity pressures and the urgent need for Service Properties Trust to address looming maturities and possible covenant hurdles. SVC is managed by The RMR Group, which oversees several public REITs across various asset types. Neither SVC nor The RMR Group issued an immediate statement regarding the downgrade.
