Good day, and welcome to the Service Properties Trust second quarter 2024 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Stephen Colbert, Director of IR. Please go ahead. Good morning. Joining me on today's call are Todd Hargreaves, President and Chief Investment Officer, Brian Donley, Treasurer and Chief Financial Officer, and Jesse Hebert, Vice President. 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 SVC. I'd 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. These forward-looking statements are based on SVC's present beliefs and expectations as of today, August 7, 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 at svcreit.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. We are also introducing our calculation of cash available for distribution or CAD this quarter. Reconciliations of these non-GAAP financial measures to net income, as well as components to calculate AFFO, are available in our financial reporting package, which can be found on our website. Finally, we are providing guidance on this call, including hotel EBITDA. We are not providing a reconciliation of this non-GAAP measure as part of our guidance, because certain information required for such reconciliation is not available without unreasonable efforts or at all. With that, I'll turn the call over to Todd. Thank you, Stephen, and good morning. As Stephen mentioned, Jesse Hebert joined SVC in June as our vice president. Jesse is also a vice president at the RMR Group, where he leads a team responsible for the sourcing, underwriting, entitlement, and leasing of all development projects managed by RMR. Welcome, Jesse. Now on to our results. During the quarter, we experienced RevPAR growth at our full service and select service portfolios, led by gains in our group and contract segments, while our extended stay hotels continue to be impacted by reduced occupancy related to longer-term stays. While we are seeing a pullback in leisure travel, our 34 urban hotels outpaced the market with a 4.1% RevPAR increase. Eight of our top 10 performing hotels from a top-line perspective in terms of year-over-year improvement were Sonesta full-service hotels, much of which was driven by group and our urban concentration, while our bottom-performing hotels were either under renovation during the quarter or experienced softer transient demand due to non-repeat, market-specific events in markets such as Chicago, Nashville, and Atlanta. Portfolio-wide, performance was affected by revenue displacement at our hotels that were under renovation during the quarter. Excluding the renovation properties, portfolio RevPAR increased 1.6% year-over-year, led by occupancy, which improved by 1.7 percentage points and was highlighted by a 13.8% increase in group room nights at our Royal Sonesta hotels. Moving to performance by service level. Our full service portfolio experienced top-line gains in our group and contract segments, where RevPAR increased 10.6% and 5.5%, respectively. This was offset by a decline in transient RevPAR of 3.5%, resulting from market softness and renovation displacement. Excluding the 5 hotels under renovation, our full service portfolio RevPAR increased by 2.9% year-over-year, outpacing the industry. Increased group revenues at our Sonesta-branded hotels in Cambridge, Washington, DC, Redondo Beach, and Denver, as well as our Radisson-managed hotels in San Diego and Seattle, contributed to the improvement, and the increased group demand led to higher F&B revenues, which increased $1.2 million during the quarter. Notably, we experienced outsized RevPAR growth in some of the hotels and markets that have been most challenged, including 38% growth at our Royal Sonesta in Minneapolis and 34% growth at our Royal Sonesta in Seattle. Our extended stay portfolio experienced a 1.6% decline in RevPAR year-over-year. Consistent with the trend from previous quarters, our longer-term extended stay occupancy has been decreasing, with notable declines experienced at our hotels in Salt Lake City, Portland, Oregon, and Dallas. Performance at our select service hotels was led by our Sonesta Selects, reporting increased RevPAR of 3.3% year-over-year, led by our contract segment at our hotels in Philadelphia, Nashville and Atlanta. Hotel operating expenses impacted margins during the second quarter due to cost increases in insurance premiums and deductibles, as well as labor, our largest expense, representing 44% of total OpEx, where we realized a 5.5% increase year-over-year on a per available room basis. Segmentation is shifting away from transient towards group, which now represents 20.8% of total revenues, up from 19.3% during the previous year quarter, and group pace is up 11.9% from the same time last year, with strong contributions across all our operators. Sonesta has made progress on its brand building initiatives, measured by its Travel Pass revenue mix, which increased 8.6 percentage points in the full service portfolio to 29.4%, and TravelPass on-property enrollments are up 7% year-over-year. Turning to our net lease portfolio, which represents 44% of SVC's portfolio by investment. As of June 30, 2024, our 749 service-oriented retail net lease properties were 97.3% leased, with a weighted average lease term of 8.4 years. Our lease maturities are well laddered, and only 3.4% of our net lease minimum rents expire before 2026. The aggregate coverage of our net lease portfolio's minimum rents was 2.25 times on a trailing twelve-month basis as of June 30, 2024. The decline from the previous year quarter results from the lower EBITDA reported by TA and increased TA rents. As an update to our previously announced 22 non-core planned hotel dispositions, subsequent to quarter end, we closed on two hotels at an aggregate sales price of $10.8 million, and are under purchase and sale agreement to sell 16 hotels for $113.2 million. We are either marketing or negotiating contracts for the remaining four hotels, which have an aggregate net book value of $23 million. In conclusion, we expect our hotel portfolio to benefit from the needed renovations, although we may see mixed results due to revenue displacement until they are completed. Ultimately, these refreshed properties, combined with the anticipated removal of some of our more challenged hotels as sales are completed, will allow Sonesta to focus on offering a higher quality portfolio and improve our market share. Furthermore, our balance sheet is well positioned, with no debt maturities until 2026, and the performance of our net lease portfolio remains strong and is anchored by an investment grade-rated tenant in BP. I'll now turn the call over to Brian to discuss our financial results in more detail. Thank you, Todd, and good morning. Starting with our consolidated financial results for the second quarter of 2024, Normalized FFO was $73.8 million, or $0.45 per share, versus $0.58 per share in the prior year quarter. Adjusted EBITDARE declined 7.4% year-over-year to $171.5 million. Financial results this quarter, as compared to the prior year quarter, were impacted by higher interest expense and lower Hotel EBITDA. Results from our net lease portfolio remained consistent year-over-year. For our 218 comparable hotels this quarter, RevPAR decreased by 20 basis points. Gross operating profit margin percentage declined by 170 basis points to 32.7%, and gross operating profit decreased by $5.9 million from the prior year period. Below the GOP line, costs at our comparable hotels increased $6.3 million from the prior year, driven primarily by increased insurance expense, along with higher real estate taxes as a result of favorable tax appeals that benefited the prior year quarter. Our 220 hotels generated Hotel EBITDA of $82.4 million, a decline from the prior year of $11 million, but in line with our guidance range provided last quarter. By service level, Hotel EBITDA year-over-year decreased $5 million for our 48 full service hotels, declined $1.9 million for our 61 select service hotels, and $4 million for our 111 extended stay hotels. For the 21 hotels that were under renovation during the quarter, Hotel EBITDA declined $5.7 million. Turning to our expectations for Q3, we're currently projecting full quarter Q3 RevPAR of $94-$97, and hotel EBITDA in the $65 million-$69 million range. To the balance sheet. During the second quarter, we successfully executed on a new $1.2 billion senior notes offering, comprised of $700 million of 8 3/8 notes, due in 2029, and $500 million of 8 7/8 notes, due in 2032. We repaid all $1.2 billion of unsecured notes that were scheduled to mature in 2025. Interest expense is projected to be $99.2 million for the third quarter of 2024 as a result of these financings. We currently have $5.7 billion of fixed rate debt outstanding, with a weighted average interest rate of 6.4% and no debt maturities until February 2026. Our $650 million revolving credit facility remains undrawn. Turning to our investing activity, we made $66 million of total capital improvements at our properties during the second quarter, comprised of $22 million of recurring capital and $44 million related to our hotel renovation program. We continue to expect full-year capital expenditures of $300 million-$325 million. We expect 21 hotels across all our service levels to be under renovation in the third quarter, and we will have completed major renovations at 34 hotels during the full calendar year, including 5 full service hotels, 18 select service hotels, and 11 extended stay hotels.... Subsequent to quarter end, we sold two hotels and three net lease properties for $12.6 million of total proceeds. We currently have 18 hotels with a carrying value of $97 million and 10 net lease properties with a carrying value of $6 million remaining as held for sale. The 22 hotels sold or to be sold as of June 30, 2024, generated losses of just under $1 million for the second quarter. In July, we announced our regular quarterly common dividend of $0.20 per share, which represents a normalized FFO payout ratio of 44%. This quarter, we have introduced our calculation of CAD in our earnings presentation. For the trailing twelve months ended June 30th, 2024, our CAD annualized payout ratio was 110% as a result of our elevated CapEx spending, higher cost of capital, and declining hotel EBITDA. That concludes our prepared remarks. We're ready to open the line for questions. We'll now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Bryan Maher with B. Riley. Please go ahead. Thank you, and good morning. Just a few from me today. Can you talk a little bit about the actual and/or expected return on capital of the CapEx spending, and how you think about that relative to, you know, just selling, you know, a particular hotel and avoiding that CapEx altogether? Sure, Brian, good morning. I'll start and let Todd weigh in on some of the sales decisions. You know, when we deploy CapEx, you know, the CapEx is really, as we've tried to show in our calculations, recurring versus non-recurring renovations or redevelopment or repositioning. The repositionings and redevelopments, you know, we've talked about this in prior calls or in investor conferences where, you know, we target around an 8% return on average. Some will do better, some, you know, might come in a little bit under that, depending on the market or the type of work we've done. And we're starting to see some of the progress. We don't have enough volume yet to definitively say we're meeting or exceeding that. You know, there are some that are, and some that aren't. It really depends on what's going on in the overall macro environment as well. So it's not always easy to measure, but what we do is we look at, you know, a period prior to doing any renovation work, let the hotel stabilize for a period and then, you know, see where we are from a return standpoint. Sure, and I'll add to that. When we're looking at potential sale candidates in the portfolio, that's one of the primary things we look at is: Do these hotels need capital? What is the expected lift in terms of market share, RevPAR, and EBITDA that we're gonna get from putting this money in? If we don't think we're going to get the appropriate return, that could factor into our decision to put a hotel on the sale list. So it's just one of the many factors that we consider. How deep is the buyer pool that you're speaking with? You know, who are these people? You know, at what point do you stop selling, and do you have some kind of optimal mix in your heads as to how much, you know, full service you want to have versus how much select service? I mean, just, you know, I guess what I'm asking is, you know, kind of where's the end game here? Sure. So we're in the midst of selling the 22 hotels now. We've closed on a couple, and a number of others are under purchase and sale, and that's on the heels of the 68 Sonesta hotels we sold back in 2021 and 2022. I'll take it in pieces here. The first question, in terms of the buyer pool, most of the hotels that we're selling are negative EBITDA-producing hotels. They're towards the lower end of hotel quality and market, I would say, in our portfolio. Most of the buyers that are looking at these hotels are... You know, the hotels are losing money, so they're not looking at it on a in-place cap rate obviously. They're looking at it on a price per key basis, and they'll, they'll look at it on a, on a total cost. Most of these hotels are in need of a renovation. If they're sold encumbered of a Sonesta franchise or if they're going to go to another brand or, or, there's, there's typically a, a PIP that they'll need to do. So that typically gets added on, I'd say, anywhere from $25,000-$40,000 a key, depending on which hotel. So most of these buyers are looking at it as they're pricing it on a stabilized return on cost basis. My guess is anywhere from 8%-10% on an unlevered basis, probably mid-teens return on a, on a levered basis. Most of these groups are local operators. Most of what we're selling are select service and extended stay hotels. We have a handful of full service in there as well, but most of these are local operators that own, you know, 2, 3, up to 5 hotels in their portfolio. They're gonna be very focused on driving local business, and have a business plan that they can operate it better than a national operator like Sonesta or one of the larger brands. In terms of the ultimate mix for us. I'd say over 95% of what we sold or are selling are either select service or extended stay hotels. We've sold a couple of full-service hotels as well, but we're not selling any of the Royal Sonesta branded hotels. I think we're trying to shift the mix more toward away from business, more towards leisure-oriented hotels, that Sonesta has proven the ability to to compete or outperform the market. If you look at our Royal Sonesta hotels the past two quarters, quarter one, we saw RevPAR increase over 6% year-over-year. This quarter, we saw it increase 3.3% year-over-year. So we're just trying to shift the mix more towards leisure-oriented hotels away from business. So that's some of the rationale behind why we're selling what we're selling. There may be more coming. We haven't identified any yet. We're in the market with these 22, but there could be more coming next year, as we get more data points, as we get more history on the performance, as we see the results of some of these renovations and the success we're having, the success we're not having, that could lead to selling additional hotels as well. And part of the rationale, and what we look at, too, is what market are we selling into? Right now, it's still very challenging to get any transaction done. Hopefully or potentially we see some relief in terms of interest rates, which should lead to more transaction activity and easier time selling hotels. But right now, we're selling what we think we can get done, and that comes into the equation as well. Okay, just last for me. You know, we're getting a lot of calls and emails on the dividend, and we appreciate the CAD publication information to kind of cross-check versus our model. Is it fair to say that the CAD payout is above 100% because we're only capturing, you know, kind of the stronger second quarter, you know, second quarter, third quarter, strong, fourth quarter, first quarter, weak? And as we, you know, get past third quarter, that the CAD payout ratio will be back under 100%? And, yeah, just any general thoughts on the dividend here would be helpful, and that's all for me. Thank you. Sure, Brian. I know it's been a lot of, a focus for a lot of people. You know, the, the CAD calculation, as I said in my prepared remarks, is over 100% on a trailing four-quarter basis. You know, the CapEx spend, even just the recurring CapEx that we deduct out of that calculation is still pretty high, and will be for the foreseeable, future. Our board will continue to evaluate the dividend level, you know, consider... We, you know, talk about many factors, including the performance outlook of the portfolio, looking at our leverage, our liquidity needs, and, and other, points that, that matter. So, you know, we'll, we'll continue to, evaluate it ongoing as, as we have, continuously done. So I would say that. Thank you. The next question comes from Dori Kesten with Wells Fargo. Please go ahead. Thanks. Good morning. If you think about your expectations back in the beginning of the year, has the recovery in business transient been, you know, in line with, better than, or softer than, than you expected? Hi, Dori. I think it's been relatively in line. I think we started to see a little bit of softening towards the end of last year. You know, this quarter, we've seen corporate negotiated revenues decline slightly year-over-year. Some of that is due to some displacement at some of our business-oriented hotels that in our portfolio as well. I would say it's somewhat as expected, maybe slightly lower. Okay. And then during prior multiyear renovation programs that you've gone through, the portfolio RevPAR growth tends to, you know, lag the chain scales or U.S. in the years you're doing the program and then outperforms in the following several years. Is there anything different about the timing or the extent of this program that could allow you to outperform earlier, such as, you know, bigger or higher return projects being front-end loaded? I wouldn't say... Brian, you can weigh in, too. I wouldn't say there's any major difference this time around than other times around. A lot of the hotels that we're doing now are full-service hotels like Sonesta Hilton Head, which may take longer to do, but I don't see-- I don't think the lift in terms of RevPAR gain and market share is gonna be any different than it's been in prior cycles. Okay. And then my last question: The results implied at Sonesta this quarter, just based on your ownership stake, seemed to be, like, much lower than you're expecting. Was there anything one time flowing through there this quarter, or are there incremental near-term costs flowing through that for longer-term gains? I'm just wondering if there was anything specific to this quarter you'd note. There's a couple of things, Dori. Similar to what we're doing, Sonesta also owns hotels directly. They have a large portfolio in New York, and some of those have been under renovation. They've been using, you know, construction loans to fund that, so there's additional costs there. They're also spending more on, you know, sales and marketing and then other initiatives at the corporate level that have affected the bottom line. So those are really the driving factors. Okay. Can you comment on, I guess, the timing of that and when you would start to see more of an uplift? ... You know, I think that there's a handful of properties that will finish up this year. There was pretty extensive work going on, and New York doesn't always move the fastest as far as projects. But, you know, I think, you know, they'll also have to look at the financing side, too, and where we're at in the market. Yeah, the displacement for the New York hotels, that should be over shortly. They've... At the Benjamin Hotel, the room renovations are substantially completed. As Brian mentioned, some of that was, there's a loan in place where those renovations are being funded with that loan. But I think, you should see that noise start to come off in the coming quarters. Okay. Thank you. The next question comes from Tyler Batory with Oppenheimer. Please go ahead. Thank you. Good morning. A question on the extended stay hotels in the portfolio during the quarter. You know, occupancy's been down a couple quarters in a row. Can you just talk a little bit more about, about what's going on? I'm not sure if there's, you know, maybe some, some market specific, issues at play or, or perhaps just the, the strong growth in, in prior years just making comparisons a little bit challenging. Hi, Tyler. That's the service level you hit on it, that is the area where we've seen somewhat of a pullback, and we started to see this last quarter as well. And what we're seeing is a lot of non-repeat, longer term, extended stay business, true extended stay business at those hotels. So we classify those into four different tiers. You have the tier three, that's 15-plus nights or longer, the tier four, which is 30-plus room nights or longer, and you really need that business for those hotels to succeed. And what you've seen in our portfolio is some of that project-related business that stays for those longer period of times has been non-repeat this year for one reason or another, so we saw it in Q1 as well. And what you, what you have to do there in terms of backfilling that occupancy is you have to rely on the OTAs to fill out those transient rooms, any stays of 1-6 nights. And, that's been impacting ADR because you're paying fees associated with those OTAs. So there's a handful of hotels, specifically in the ES Suites portfolio, that where we've seen the losses concentrated in. If you look at the Simply Suites, we actually saw an increase in RevPAR year-over-year, but it's really related to a handful of project-related business at some of the suites. Okay. Then to follow up on the guidance, if I'm doing my math right, it looks like at the midpoint, RevPAR up, you know, 1% year-over-year, roughly. EBITDA, hotel EBITDA down, double digits, close to 10%. So, you know, did I do that correctly? And then just talk a little bit more about, you know, what's going on, on the EBITDA side of things in Q3. How much is that, you know, renovation disruptions that's impacting that number, too? You are. Yeah, you're doing the math correctly, Tyler. And as we look at Q3, and as I said in my remarks, we expect to have 21 hotels under renovation. Again, that's probably half of the expected decline, similar pattern we had in Q2. You know, the 21 hotels we had under renovation this quarter, declined, you know, $5.8 million. So it was a big, big part of the year-over-year change. So that trend will continue into Q3. We'll continue to see some, you know, seasonal shifts as well, especially as we get into the latter half into Labor Day holiday, similar to year-over-year, in the prior years. So, you know, we'll see similar seasonal trends as well. Okay. All right. I'll leave it there. That's all for me. Thank you. Thank you. Thanks, Tyler. This concludes our question and answer session. I would like to turn the call back over to Todd Hargreaves for any closing remarks. Thank you, everyone, for joining today's call. We appreciate your continued interest in SVC. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.