Service Properties Trust Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 29, 2024

Key Takeaways

  • Negative Sentiment: RevPAR fell 2.2% year-over-year due to lower occupancy, and hotel EBITDA declined significantly amid disruptions from 23 active renovations.
  • Neutral Sentiment: Management plans $250–275 million of capital expenditures in 2024 across 36 hotels, forecasting 1–2% RevPAR disruption this year but aiming for long-term performance gains post-renovation.
  • Positive Sentiment: SVC is marketing 22 underperforming Sonesta hotels (2,832 keys) that generated negative $4.7 million EBITDA in 2023 for disposition, expecting to enhance portfolio margins and returns once sold.
  • Positive Sentiment: The net lease portfolio remains 97.1% leased with a weighted average lease term of 8.8 years and 68% of rents backed by investment-grade BP, delivering stable, predictable cash flows.
  • Negative Sentiment: Normalized FFO dropped to $0.30 per share from $0.44, and adjusted EBITDAre declined 6.2% to $141.2 million, pressured by higher operating expenses and lower rental income.
AI Generated. May Contain Errors.
Earnings Conference Call
Service Properties Trust Q4 2023
00:00 / 00:00

There are 7 speakers on the call.

Operator

Good morning, and welcome to the Service Properties Trust 4th Quarter 2023 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Steven Colbert, Director of Investor Relations. Please go ahead.

Speaker 1

Good morning. Joining me on today's call are Todd Hargreaves, President and Chief Investment Officer and Brian Donnelly, Treasurer and Chief Financial Officer. Today's call includes a presentation by management followed by a question and answer session with analysts. Please note that the recording, retransmission and transcription of today's conference call is prohibited without the prior written consent of SEC. I would like to point out that today's conference call contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws.

Speaker 1

These forward looking statements are based on SVC's present beliefs and expectations as of today, February 29, 2024. Actual results may differ materially from those projected in these forward looking statements. Additional information concerning factors that could cause those differences is contained in our filings with the SEC, which can be accessed from our website atsecreit.com or the SEC's website. The company undertakes no obligation to revise or publicly release the results of any revision to the forward looking statements made in today's conference call. In addition, this call may contain non GAAP financial measures, including normalized funds from operations or normalized FFO and adjusted EBITDAre.

Speaker 1

Reconciliations of these non GAAP financial measures to net income as well as components to calculate AFFO are available in our supplemental operating and financial data package, which can be found on our website. And with that, I'll turn the call over to Todd.

Speaker 2

Thank you, Stephen, and good morning. SVC's 4th quarter results reflect themes we are witnessing across the lodging industry as demand has moderated and high operating costs are impacting profits. While we expect market softness to continue during the first half of twenty twenty four, we are optimistic that the back half of the year should improve due to macroeconomic factors and improved business and inbound international travel. We are using this time to invest capital into our hotels, which we expect will lead to improved performance and an attractive return on investment. Now on to our results.

Speaker 2

During the quarter, we experienced a moderate top line decline in our hotel portfolio as year over year comparable ADR growth was offset by reduced occupancy, leading to a RevPAR decline of 2.2% and reduced hotel EBITDA, largely due to disruption from 23 active renovations during the quarter. Excluding the hotels experiencing renovation impacts, RevPAR was flat, decreasing by 30 basis points from the previous year quarter, while total revenues increased $7,100,000 led by F and B sales. We expect the pace of renovations to remain elevated during 2024. Our portfolio of full service hotels gained 40 basis points of RevPAR over the previous year quarter, led by gains in our Group and Contract segments, which were up 6.2% and 10.2% year over year respectively. Strong Group business was driven by corporate demand at our hotels in Cambridge, Las Vegas and San Francisco and contract revenues fueled sizable ADR increases at our Sonesta branded hotels in Redondo Beach, San Juan and Kauai.

Speaker 2

The notable $7,100,000 of increased revenues mentioned earlier was mostly the result from banquet and catering as well as expanded hours at our F and B outlets in our 3 Downtown Chicago Royal Sonesta properties. Our portfolio of select service hotels experienced the most disruption during the quarter, leading to a RevPAR decline of 5.8% year over year, as 18 of our 61 hotels were under renovation. Our Sonesta Select portfolio grew RevPAR by 1.3%, much of which was driven by airline contract revenues in the Atlanta, Phoenix and Los Angeles markets. Our extended stay portfolio experienced a 2.8% decline in RevPAR year over year when excluding 3 hotels under renovation. This segment has seen reduced occupancy from non repeat long term extended stay business for medical related and project based accounts, while shorter term stays with higher ADRs have increased.

Speaker 2

The results in this segment were largely market dependent with positive RevPAR relative to 2022 at our extended stay hotels in Boston, San Francisco and Sunnyvale, offset by declines in San Diego, Reno, Dallas and Atlanta. Segmentation in our portfolio shifted away from transient, which represented 72.5 percent of total revenues in Q4 due to a continued softening in leisure demand, while group mix increased 1.3% year over year to 18.1% of revenues and contract mix increased 80 basis points to 7.3%. 2024 full year group pace is up $19,000,000 or 22.5 percent over the same time last year, with strong growth across all our operators. OTA revenue as a percentage of total revenues decreased from 27.6 percent to 25.9 percent year over year during the quarter, and our operators continue to focus efforts on driving bookings to their websites to lessen the dependency on 3rd party channels and charge commissions. Anesto remains focused on building its brand through spend on advertising, marketing and IT initiatives.

Speaker 2

Travel Pass continues to see increased consumer adoption, evidenced by the mix of room nights in Sonesta's full service hotels increasing by 16.5% year over year. Heightened operating expenses are impacting margins and while our operators lessen their reliance on contract labor by filling open positions, Below the GOP line expenses have increased, notably real estate taxes up $2,500,000 from Q4 2022 and insurance costs up $2,400,000 from increased premiums as well as deductibles paid on a higher number of claims. We expect near term disruption in our portfolio as renovations are completed during the upcoming quarters. However, we are already starting to see the benefits of these renovations at some of our recently renovated hotels with substantial RevPAR increases and we are expecting upcoming renovation hotels to also benefit from these much needed improvements. Turning to our net lease portfolio, which represents 45 percent of SVSU's portfolio by investment.

Speaker 2

As of December 31, 2023, our 752 service oriented retail net lease properties were 97.1% leased with a weighted average lease term of 8.8 years. Our lease maturities are well added and only 2.1% of our net lease minimum rents expire prior to the end of 2024. The aggregate coverage of our net lease portfolios minimum rents was 2.46 times on a trailing 12 month basis as of December 31, 2023. The decline sequentially is largely driven by softer EBITDAR reported by TA for Q4 2023. Notably, the increase in fuel margins that TA benefited from post pandemic due to increased trucking activity has returned to more normalized levels, consistent with levels immediately preceding the pandemic.

Speaker 2

And these properties remain some of our most stable investments as rent payments are guaranteed by investment grade rated subsidiary of BP. Rent coverage for our other retail net lease tenants was stable at 3.7 times. Transaction activity during the quarter consisted of no acquisitions and 9 net lease dispositions for an aggregate sales price of $8,800,000 As we have discussed previously, we continually evaluate opportunities to optimize our portfolio, specifically trimming our lodging portfolio of lower performing hotels that have been a headwind to overall EBITDA. After careful analysis, we have begun to market 22 Sonesta Hotels, totaling 2,832 keys for disposition, including 9 Sonesta ES Suites, 5 Simply Suites, 7 Sonesta Selects and 1 Full Service Sonesta Hotel. These hotels have a net book value of $162,000,000 and in aggregate reported negative EBITDA of $4,700,000 during 2023.

Speaker 2

In addition, each of these hotels were slated for renovation in future years, which should reduce our overall CapEx spend. We expect that aggregate RevPAR and hotel EBITDA margins for the remaining hotel portfolio will improve with the removal of the subset of hotels. We also have one other hotel under contract to sell for $3,300,000 that is part of our Radisson agreement. To wrap up my comments before turning it over to Brian, we are confident that the hotel portfolio will see improved financial and operational performance as renovation capital is invested and after the expected dispositions of the 22 hotels that I discussed. In addition, our net lease portfolio provides consistent, dependable cash flows with 68% of annual minimum rents coming from an investment grade rated tenant and VP with over $750,000,000 of total liquidity and a large pool of highly valuable unencumbered assets, our balance sheet is well positioned with no debt maturities until 2025.

Speaker 2

I will now turn the call over to Brian to discuss our financial results in more detail. Thanks, Todd, and good morning. Starting with our consolidated financial results for

Speaker 3

the Q4 of 2023, normalized FFO was $50,000,000 or $0.30 per share versus $0.44 per share in the prior year quarter. Adjusted EBITDAre decreased 6.2 percent year over year to $141,200,000 Our results this quarter as compared to the prior year were impacted by higher expense, a decline in hotel EBITDA and lower rental income recognized. Rental income decreased by $4,100,000 this quarter compared to the prior year, largely as a result of our percentage rents recognized last year under our historical lease terms with TA, partially offset by increased minimum rental income recognized under the revised terms of our leases with TA following the BP transaction last May. Turning to the performance of our hotel portfolio, for our 2 19 comparable hotels this quarter, RevPAR decreased by 2.2 percent, gross operating profit margin percentage declined by 2 10 basis points to 26.3 percent, Gross operating profit decreased by $6,400,000 from the prior year period. Below the GOP line costs of our comparable hotels increased 4,900,000 dollars from the prior year, driven primarily by increased property insurance and real estate tax expense.

Speaker 3

Our 2 21 hotels generated hotel EBITDA of $43,600,000 a 19.3% decline from the prior year and below our guidance range of $45,000,000 to $49,000,000 driven by higher expenses and renovation disruption. By service level, hotel EBITDA year over year declined $6,100,000 for our 49 full service hotels, dollars 3,100,000 for our 61 select service hotels and $2,800,000 for our 111 extended stay hotels. Turning to our expectations for Q1, we're currently projecting full quarter Q1 RevPAR $77 to $80 and hotel EBITDA in the $28,000,000 to $31,000,000 range. We will continue to see softer seasonal results through the remainder of the winter months before activity picks up in the spring. Our portfolio will also see continued disruption in 2024 at hotels we have under renovation.

Speaker 3

Turning to the balance sheet. During the Q4, we successfully executed on a new 8 year, dollars 1,000,000,000 senior secured notes offering at 8.5.8 percent and repaid all $1,200,000,000 of unsecured notes that were scheduled to mature in 2024. Interest expense is projected to be $91,500,000 for the Q1 of 2024 following these financings. We currently have $5,600,000,000 of fixed rate debt outstanding with a weighted average interest rate of 5.94%. Our next debt maturity is $350,000,000 of senior notes maturing in March 2025.

Speaker 3

We currently have $100,000,000 of cash and our $650,000,000 revolving credit facility is undrawn for total liquidity of $750,000,000 Turning to investing activity. During the Q4, we sold 9 net lease properties for a total price of $8,800,000 We made $106,000,000 of total capital improvements at our properties during the Q4 and we expect to make capital expenditures of $250,000,000 to $275,000,000 in 2024 as we continue to ramp up our renovation program within the hotel portfolio. Of this capital spend, we expect $80,000,000 to $100,000,000 of maintenance type capital with the rest going towards renovation capital. We expect 36 hotels across all of our service levels to be under renovation throughout 2024. In January, we announced our regular quarterly common dividend of $0.20 per share, which we believe is well covered, representing a 48% normalized FFO payout ratio for the year end 2023.

Speaker 3

That concludes our prepared remarks. We're ready to open the line for questions.

Operator

Our first question comes from Brian Maher with B. Riley FBR. Please go ahead.

Speaker 4

Thank you and good morning. Just a few from me. On the hotel renovations, can you try to quantify for us what you think that that's going to do to hotel margins and or RevPAR throughout the year? And then maybe drill down a little bit on the non maintenance CapEx spend. What type of level of activity is going to go on at those 36 hotels?

Speaker 4

And does any of that include the Nautilus that you bought last year in South Beach?

Speaker 3

Good morning, Brian. I'll start. Thank you for the question. As far as quantifying the disruption and potential activity, it's going to be a little choppy. In Q4, we had 23 hotels under renovation and we saw a significant reduction in RevPAR for the hotels in the 20% range.

Speaker 3

And EBITDA pretty much eroded for that hotel portfolio set. As we look forward, we're going to have hotels coming out of renovation where you get a nice lift and the expected improvement of the position of the hotel and RevPAR index and so forth. So we're going to have some ups and downs. Net net, we're projecting RevPAR. It won't be as drastic as the 20% RevPAR decline for the 23% subset.

Speaker 3

Overall, we're projecting about 1% to 2% disruptive displacement in RevPAR for the full year. So again, we're going to have stuff going down, stuff coming back. There'll be some offsetting going on. So it won't be as material in our view today for the year. Then as far as what we're spending, we've got 17 Hyatts that were in full swing in Q4 and those are expected to wrap up in early Q2.

Speaker 3

And that's everything from guest rooms and public space and some exterior work and the same is going to be done for the renovation capital in the Sonesta portfolio. We've got a couple of full service hotels. Our Hilton Head property, for example, we're doing all the rooms off season in the winter months here now. We're going to do the public space at the end of the year when the summer season is over and we have a full slate of select service and extended stay hotels that we're doing the same thing. We're going through the rooms, the public areas, some facade work and so forth.

Speaker 3

So it's a pretty comprehensive program.

Speaker 2

So Brian, the Nautilus is the maintenance capital that we mentioned does not include a lot from the Nautilus. The majority of the Nautilus is likely going to be completed in 2025. So it does not include any maintenance or renovation related to that.

Speaker 4

Okay. 2 more. I mean, you made some comments about TA and I get it the year over year stuff, but you talked about the gas margins getting back to pre pandemic levels from the elevated that we saw over the last couple of years. I just want to clarify though that given the lease structure you have with BP, none of that is really relevant to you and what you get rent wise. It maybe just impacts what the coverage is.

Speaker 4

But with BP as a credit, it's kind of like who cares, right?

Speaker 3

Exactly right, Brian. We're just illustrating that we do report coverage for our whole portfolio and it's such a high weighting in that calculation, but you're 100% right. We have we sleep well at night knowing we have the credit behind us in those lease payments.

Speaker 4

Okay. And then last for me and I'll hop back in the queue. We don't talk much about your net lease assets outside of TA, but there's been a lot in the press regarding retail and retail demand seems to be strong for real estate. I know that you've been selling a few assets kind of smallish non core properties. Can you just give us a little bit of color on how many more sales there are to go, kind of what you're selling?

Speaker 4

And when you do go to release those properties, what kind of rent roll ups are you seeing?

Speaker 2

Sure. So, yes, that's a lot of good points there. We're seeing the same thing on the retail side. We're starting to see more demand, especially in the investment sales market. Our portfolio specifically over the past few years, you've really seen us sell mostly vacant properties, as we really haven't really been buying anything and we've just been selling properties as they become vacant and we don't think we have a good sense of leasing those.

Speaker 2

What you might see us do going forward, now that we're getting back into, there's still a volatile, but a little bit more stable capital markets and buyer activity out there as you're likely going to see us vacant stuff that we knew were issues when we bought SMTA back in 2019. But we have I think we have about 20 vacant properties left. There's a handful more that are probably coming. I think we're up to 97% occupancy in terms of number of properties. So and then in terms of the rent roll ups, generally, we've been at least maintaining rents or rolling up rents.

Speaker 2

There is some situations you see it a lot with the movie theaters that we released those. A lot of those were very high rents on a per square foot basis for the size of those properties. There was a lot of TI amortization in those rents as well. So that's why you might see some rent roll downs. Some of the longer term sale leasebacks that Spirit that the previous owner had done, A lot of times those rents tend to be above market as well.

Speaker 2

So you see some rent roll downs there. But generally, we're I think if you look back the last few years, we're probably averaging about 2% rental growth for that portfolio per year.

Speaker 4

Okay. Thank you very much. Sure.

Operator

Our next question comes from Doreen Kestin with Wells Fargo. Please go ahead.

Speaker 5

Thanks. Good morning. Assuming the 22 Sonesta's are sold, what would your 2019 pro form a RevPAR and Hotel EBITDA margins be?

Speaker 2

Sure. I can pull that up for you. So as I mentioned on the in the prepared remarks, our EBITDA was actually negative for those 22 hotels. It was about negative 4,700,000 dollars So if you take out those hotels for the year, EBITDA margin would be 18.3% and RevPAR would be $92.18 just for the semesters.

Speaker 3

Yes, the sale hotels in 2019 generated about 90 $1,000,000 of hotel EBITDA.

Speaker 5

In 2019, the 22 Snestas generated $19,000,000 in EBITDA, is that what you said?

Speaker 3

Yes, some of them were under different flags and pre pandemic that was the full year hotel EBITDA.

Speaker 5

Okay. And is there you've previously talked about returning to prior peak EBITDA margins once the renovation program is complete. Is there anything going on internally at Senesna now that gives you confidence that perhaps you will exceed those prior peak margins holding to the upside the upside from the dispositions?

Speaker 2

Sure. Yes, I mean, and that Dory, it's a good question. That's one of the reasons that we are selling some of these hotels. We've identified these hotels as ones that we don't think would return to those margin levels. But Sonesta continues to be very focused on expanding the brand awareness, expanding their loyalty program.

Speaker 2

They're putting they're not taking any money out of the business. They're putting everything they get from management fees paid by us, franchise fees they get from other franchisees, all the cash flow they're getting from all their owned hotels, specifically the hotels they own in New York, which are doing very well. All that's going back into the business. So we are seeing the right things in terms of the number of loyalty members they have, the percentage of revenues that are booked through the loyalty program. They continue to put money into their revamp website, mobile app, customer relationship management system.

Speaker 2

They still have a lot of room to go there. I think a couple of and we haven't seen it for all of our hotels in terms of performance yet. Again, I think we will see it once the renovations are complete. But the other thing we are seeing too and we talked about the segmentation, they've really done a start to do a good job of building out their national sales platform. And you're seeing that with the increase in group business that they are starting to pick up.

Speaker 2

A lot of that is driven by sales and distribution channels rather than a lot of the transient in this book through not only the website, but also through the OTA. So to answer your question, we still fully expect to get back to those margin levels. The renovation, I think we'll see immediate impact from those renovations at the Sonesta Hotels. There's a number of hotels, specifically a lot of the Royal Sonesta and full service hotels that they are performing well with and they are competing and outperforming the market in some cases. So again, it's something we would and we I think we've talked about on previous calls.

Speaker 2

It's again, back to the sales, we're looking at the entire portfolio. And anytime we put any money into these hotels in terms of renovation, we're looking at what that return is going to be. We're going out several years in terms of what we expect the operating cash flows to look like. And then we layer on the CapEx, not just the renovation CapEx, but the maintenance CapEx. And if we don't think we're going to get a return on that incremental capital and or back to margins that we think will compete with the market, that's why they ended up on the sale list.

Speaker 5

Okay. And I may have missed this. What did you say the I think it's a 3 year program, what will the total capital spend be, including ROI and maintenance, assuming the semesters are out?

Speaker 3

Yes, we didn't give the multiyear number, Dory, but I think for the next 2 or 3 years, we're going to see these elevated levels. As we mentioned in the prepared remarks, it will be $250,000,000 to $275,000,000 this year and we're going to continue to evaluate and make sure we as Todd mentioned, we believe the investment makes sense. So we'll continue to provide updates as we go along here and move hotels onto the list and start moving projects forward.

Operator

Our next question comes from Tyler Batory with Oppenheimer. Please go ahead.

Speaker 6

Hi, good morning. This is Jonathan on for Tyler. Thanks for taking our questions. First one for me, maybe a follow-up on the CapEx. Can you help us think about how much of that is potentially spillover from this from 2023 last year?

Speaker 6

And any color on the cadence over the year? I mean, I assume it's largely front half weighted.

Speaker 3

Yes, it's a great question. I think I would say probably $25,000,000 to $40,000,000 is probably deferred from 2023. And as far as how the allocation by quarter will go, it's a little hard to predict. But I think you're right, it's Q1 and Q4 book ending the year is where we'll see the most activity as we try to plan these renovations around the peak seasons for us, which generally speaking starts in early spring and runs through early November.

Speaker 6

Okay, very good. And then, thank you for all the color there. And then switching gears to maybe more recent demand trends for the hotel portfolio, Todd, I believe you maybe noted some market softness in the first half of the year. Any additional color on that and any pockets of weakness or slowing that are worth calling out? Anything out there that potentially gives you pause as you look out?

Speaker 2

Sure. It's mostly related to leisure travel, but we're also seeing a slowdown in business travel. We business travel still is probably in our portfolio at least around 70% to 80% of where it was in 2019. And in previous quarters, we had continued to see that tick up and that's really slowed down and flattened out. A lot of our resort hotels we've seen declines year over year in RevPAR, which isn't surprising But yes, the softness is mostly in leisure and business.

Speaker 2

We have a lot of But yes, the softness is mostly in leisure and business. We have a lot more exposure to business and again another factor in how we identified the hotels we wanted to sell. Most of those are business oriented hotels.

Speaker 6

Okay, excellent. And then maybe last one for me. Can you maybe provide some additional color on per occupied room expenses and where labor expense has trended as of late and your general expectation for expense inflation this year?

Speaker 2

Sure. In terms of we talked about insurance and taxes, but in terms of rooms expenses, it is labor. Labor is just overall the largest expense by far. What we're seeing there is most of the open positions have been filled in our portfolio across all our operators. So there's a lot less reliance on contract labor, which is a positive.

Speaker 2

And it gives us as an employer more negotiation in terms of wages and salaries. What is impacting labor to increase it is that you're continuing to see significant year over year hourly wage increases even for non contract labor, specifically for housekeeping, front desk, F and B, tenants, those types of positions. So that really hasn't slowed down. Maybe it slowed down a little bit, but it's still well above historical norms. So we're a large outside of the taxes and insurance that was probably the largest increase we saw to that was impacting margins this past quarter.

Speaker 6

Okay, great. I appreciate all the color. That's all for me.

Speaker 2

Thank you.

Operator

Next question is a follow-up from Bryan Maher with B. Riley FBR.

Speaker 4

Thank you. Just a quick follow-up on your asset sales. Can you give us a little bit of thoughts on the timing of those, how they play out through the year, kind of what you're thinking on pricing relative to book value? And who are the buyers of these assets? Are they more locals?

Speaker 4

Just a little color would be helpful.

Speaker 1

Sure.

Speaker 2

So the 22, let me start with the first, the one that we talked about briefly on the call was we are selling 1 Radisson Hotel as part of our Radisson agreement that is under contract to sell for $3,300,000 that is expected to close in the next 40 or so days. That one was an outlier in that portfolio. It was the only one that was producing negative EBITDA. Both us and Radisson wanted to sell it. We're taking it out of the agreement, the management agreement, but we are the owner's priority and the guarantee are not getting touched, so that remains the same.

Speaker 2

But back to the 22, which is the larger part of the portfolio, both all 22 of those are in the market now. We haven't called for 1st round offers yet. We'll probably do that towards the end of March, beginning of April. It's likely my sense is those are likely it's not going to be one portfolio buyer. My sense is it's probably going to be anywhere from 5 day buyers if I had to guess, buying 1 offs or portfolios of 3, 4, 5 hotels.

Speaker 2

A lot of the buyers so in terms of timing, my guess is you'll start to see some close in the second quarter, probably the majority in the third quarter. The buyers for those hotels, a lot of them are the same buyers that we had back in 2021 2022. We are marketing these encumbered brands. So we're selling them, expecting buyers to enter into long term franchise agreements with Sonesta, just like we had done a couple of years ago, where the majority of those were sold brand encumbered. So it's a lot of the same existing franchisees that have had good success and understand the Sonesta brand.

Speaker 2

So what we've seen so far has been a lot of interest, which isn't surprising again, because we have that group of previous buyers, but also the transactions that are occurring, it's either the very, very high end hotels or it's the hotel was kind of the lower price point, more select service and extended stay hotels. So not too different than what we a lot of interest there, at least preliminary. In terms of pricing versus book value, it's there's a few variables there. Number 1 is, it still is a volatile market environment. These had negative EBITDA for the last year.

Speaker 2

So you're not really throwing us in place cap rate on it. It's more of a basis play. So the other variable there is how much PIP or CapEx that a buyer is going to put into their underwriting in terms of what their overall cost and overall basis would be. So my sense is, we may not get all the way to book value, but I don't think it's going to be too far below that. Again, we haven't I'll caveat that with we haven't received offers yet and it's a volatile environment.

Speaker 2

But given where our expectations are and our valuations are, I would say we'd probably be somewhat below that, but not too far.

Speaker 4

Okay. Thank you. That's very helpful.

Speaker 2

Sure.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Todd Hargreaves, President and Chief Investment Officer for any closing remarks.

Speaker 2

Thank you everyone for joining today's call and we appreciate your continued interest in SVC.

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