Service Properties Trust 8-K

What Happened
Service Properties Trust (SVC) filed an 8-K reporting that on February 20, 2026 its special-purpose subsidiaries entered into a Note Purchase Agreement to sell $745.0 million of Net‑Lease Mortgage Notes — Series 2026-1 (the 2026 ABS Notes) to qualified institutional buyers and outside the U.S. under Regulation S. The transaction is expected to close on or about March 6, 2026, with net proceeds of approximately $730.0 million after fees. On the same date, SVC delivered a notice to redeem all of its outstanding 8.375% Senior Guaranteed Unsecured Notes due 2029 (principal $700.0 million), with the redemption expected on or about March 7, 2026, and anticipated to be funded with the ABS proceeds.

Key Details

• Issuers: SVC ABS LLC, SVC 2026 ABS LLC and SVC 2026 TA ABS LLC; Note Purchase Agreement dated February 20, 2026.
• ABS structure: $745.0M total across three classes — Class A $220.0M at 5.157% (S&P AAA expected), Class B $375.0M at 5.795% (S&P AA expected), Class M $150.0M at 7.549% (S&P BBB expected).
• Payment & term: Classes A/B require monthly principal paydowns (annualized 0.50% and 0.25%, respectively); Class M is interest‑only until maturity in March 2031; callable at par beginning March 2029.
• Collateral & related debt: Secured by 472 net-lease retail properties (158 contributed by SVC) and pro rata with existing net-lease mortgage notes (~$604.3M outstanding) plus a $45.0M variable funding note previously issued by SVC ABS LLC.
• Use of proceeds: ~ $730.0M expected to repay outstanding debt and for general corporate purposes; redemption notice delivered for $700.0M principal of 2029 notes (redemption date ~March 7, 2026).
• Transaction notes: Securities sold to QIBs/Reg S; not registered under the Securities Act; closing is subject to customary conditions and may be delayed or not occur.

Why It Matters
This transaction, if completed, would replace $700M of unsecured 2029 notes with asset‑backed, secured financing, potentially improving near-term liquidity and refinancing risk by locking in long‑dated ABS on a portfolio of 472 net-lease retail properties. Investors should note the financing is contingent on customary closing conditions — if the ABS issuance does not close, the planned redemption and stated use of proceeds may not occur. The filing also discloses expected S&P ratings for the new ABS classes and the anticipated impact on SVC’s debt structure (secured ABS collateral and scheduled principal paydowns).