Service Properties Trust prices $580 million zero coupon notes due 2027

Service Properties Trust (NASDAQ: SVC) priced $580 million in zero coupon senior secured notes due September 2027 with a 12-month extension option. The notes will generate approximately $500 million in gross proceeds and accrete at 7.50% annually, compounded semi-annually.

The company will use the expected net proceeds of $490 million to redeem its outstanding $450 million 4.750% senior unsecured notes due October 2026 and repay amounts under its revolving credit facility. The offering is expected to close September 23, 2025.

The new notes are secured by first priority liens on equity interests of subsidiaries that own and lease 36 travel center properties to TravelCenters of America Inc. under a master lease generating approximately $48 million in aggregate annual minimum rent.

Service Properties Trust announced the early redemption of its 2026 notes at face value plus accrued interest and applicable make-whole amount, with a redemption date of October 16, 2025.

If the 12-month extension option is exercised, the notes will pay interest semi-annually at an initial rate of 7.50%, increasing by 25 basis points every 120 days during the extension period.

The notes are being offered to qualified institutional buyers under Rule 144A and to non-U.S. investors under Regulation S. They have not been registered under the Securities Act of 1933.

Service Properties Trust is a real estate investment trust with over $11 billion invested in hotels and service-focused retail properties, owning 200 hotels and 742 retail properties as of June 30, 2025.

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