- Service Properties Trust (NASDAQ:SVC) will transfer the branding and management of 103 hotels to Sonesta International Hotels from InterContinental Hotels Group (NYSE:IHG), after SVC and IHG weren't able to resolve defaults by IHG.
- SVC had sent notices of termination to IHG for failure to pay SVC's minimum returns and rents due for July and August 2020 totaling $26.4M, plus accrued interest; IHG had until Aug. 24, 2020 to avoid termination by making payment to SVC.
- The effective date of the termination is Nov. 30, 2020, the same date that SVC plans to transfer the branding and management of the hotels to Sonesta.
- Following the utilization of the remaining $9.0M of IHG's security deposit in July, SVC will only recognize the hotel level cash flow, if any, of its currently IHG branded hotels in its operating results through the termination date.
- For the six months ended June 30, 2020, SVC realized returns and rents of $108.2M, or 66 cents per share, under its IHG agreements.
- The 103 IHG branded hotels generated $12.2M, or 7 cents per share, of hotel level cash flows during H1 2020.
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See SVC cash flow from operations over the past five quarters:
