Service Properties Trust (SVC) 2025 Q4 法說會逐字稿

Good morning and welcome to the Service Properties Trust fourth quarter 2025 earnings conference call. (Operator Instructions)

Please note this event is being recorded.

I would now like to turn the conference over to Kevin Barry, Senior Director of Investor Relations. Please go ahead.

Good morning. Thank you for joining us today. Thank you for joining us today. With me on the call are Chris Bilotto, President and Chief Executive Officer; Jesse Abair, Vice President; and Brian Donley, Treasurer and Chief Financial Officer. In just a moment, they will provide details about our business and our performance for the fourth quarter of 2025, followed by a question-and-answer session with sell-side analysts.

I would like to note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Also note 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 beliefs and expectations as of today, February 26, 2026, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the form and statements made in today's conference call.

Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, which can be accessed from our website at screet.com.

Or the SEC's website.

Investors are cautioned not to place on new reliance upon any forward-looking statements. In addition, this call may contain non-GAAP financial measures including normalized funds from operations or normalized FfoO and adjusted EBITA R. A reconciliation of these non-GAAP figures to net income is available in SVC's earnings release presentation that we issued last night, which can be found on our website. Lastly, we will be providing guidance on this call, including estimated 200. 26 normalized Ffoel EBITA, and adjusted EBITA.

We are not providing a reconciliation of these non-GAAP measures as part of our guidance because certain information required for such reconciliation is not available without unreasonable efforts or at all. I will now turn the call over to Chris.

Thank you, Kevin. Good morning, everyone, and thank you for joining the call today.

Yesterday we reported 4th quarter results that highlight our continued progress optimizing SPC's portfolio, strengthening our financial profile, and repositioning the company for long-term growth and value creation.

I will begin today's call with a brief update on our key strategic and financial initiatives and share operating highlights from our hotel portfolio. Jesse will provide an update on our net lease platform and recent acquisitions. Brian will then discuss our financial results and balance sheet, along with the introduction of annual guidance for 2026.

Starting with our strategic priorities.

We had a productive quarter completing previously announced hotel sales and taking action to reduce leverage and strengthen SVC's balance sheet.

During the quarter, we sold 66 hotels totaling nearly 8,300 keys for $534 million.

This activity increased our total dispositions for the year to 112 hotels, totaling approximately 14,600 keys for nearly $860 million. We use the proceeds and cash on hand to proactively redeem all $800 million of our 2026 debt maturities and $300 million of our February 2027 notes.

Building on this momentum in 2026, we remain focused on selling additional hotels and executing further strategies to improve SPC's cash flows, debt maturity profile, and overall cost of capital. Consistent with these objectives, in January we sold the Simply Suites for $7.1 million with 133 keys and launched the remarketing of nine focus service hotels that we initially brought to market in 2025.

These hotels benefit from stable occupancy and positive cash flow, providing an opportunity to cater to a wider buyer pool, which is supported by the current interest level we are seeing with the marketing process.

Also in January, we init initiated the marketing of seven full service Seneta managed hotels with 2010 Keys, with locations across the Southeast, Midwest and Pacific Northwest.

Given their current cash drag, the sale of these seven properties is expected to increase annual EBITDA by approximately $13 million and improve our leverage metrics. We believe these assets offer an attractive opportunity for investors seeking value add lodging real estate with repositioning potential through targeted capital investment.

In terms of timing, our current plan is to formalize offers and select buyers over the next several months, and we are targeting staggered closings during the back half of 2026. We estimate total proceeds of $175 million to $200 million which will be used for debt reduction.

Complementing these efforts, earlier this week, we announced further action to strengthen our debt maturity profile. We priced $745 million of new 5-year mortgage financing secured by our existing net lease master trust. To support this financing, SVC contributed to the trust an additional 158 retail properties, which included legacy properties where we renewed tenants or re-tenanted the property, one of our travel center master leases, and assets we acquired over the past year. In total, the contributed properties had an appraised value of approximately $1.1 billion.

The transaction proceeds will be used to redeem all $700 million of our 8.38% notes due in 2029 at significantly lower interest rates.

Based on the weighted average coupon of 5.96%, we expect this transaction to result in annual cash savings of approximately $14 million or $0.08 per share.

With the completion of this new financing in 2026, we will continue to focus our efforts on improving performance within our hotel portfolio, along with capital preservation, which includes reduced net lease acquisition activity to roughly $25 million funded through sales of select net lease assets, along with a reduction to our overall capital spend across our hotel portfolio, which Brian will speak to momentarily.

Turning to hotel performance, during the fourth quarter, the US lodging industry remained soft amid uneven demand trends, with revPAR declining 1.1% year over year. Performance continued to be bifurcated as the luxury and upper upscale segments were the only segments of post-growth, supported by higher income leisure travelers and premium experiences.

The business transient segment remained muted, reflecting the impact of the prolonged government shutdown and value conscious customers remained sensitive to broader macroeconomic conditions pressuring lower tier segments. SPC's portfolio continued to deliver steady top-line growth as revparar increased 70 basis points year over year, outpacing the broader industry by 180 basis points and representing the 5th consecutive quarter of outperformance.

We have invested significantly in hotel renovations in recent years, upgrading nearly half of our retained portfolio, and these assets are delivering stronger topline performance. We expect this momentum to continue as our renovated hotels capture market share.

Excluding the hotels we are exiting, our remaining 77 hotels delivered relatively stronger 4th quarter performance with revPAR up 170 basis points year over year, driven by occupancy gains of 140 basis points. Contract business, particularly airline related demand, remained a key growth driver, partially offset by a decline in government bookings and software transient revenues.

Hotel EBITDA declined year over year due to elevated labor costs and broader operating expense pressures. Additionally, the scale and timing of hotel dispositions during the quarter created temporary operational disruptions that weighed on performance, which we view as largely transitional. As the volume and pace of dispositions conclude, we expect this disruption to taper, allowing performance to normalize.

Further complementing our efforts to support performance improvement across our hotels, SeEA, which manages the majority of SPC's owned hotels and is 34% owned by SPC, recently announced the appointment of Keith Pierce and Jeff Lear as co-CEOs effective April 1st. We believe their leadership and experience will be instrumental in further optimizing Seneta revPAR market share performance while driving operational discipline and efficiencies across the SPC owned portfolio.

Looking ahead to 2026, we are cautiously optimistic that lodging market conditions will improve and that demand will stabilize as the year progresses. More specifically, our hotel footprint is well positioned to benefit from large events throughout the year, including the World Cup, which with 75 matches taking place in SBC markets, representing over 40% of our retained hotel rooms. Across our net lease portfolio.

We are forecasting continued improvement with ongoing leasing, sales of non-core assets, and benefits from the full year NOI contribution from our acquisitions in 2025.

I will now turn it over to Jessie to discuss the Net leease portfolio in more detail.

Thank you and good morning. As Chris mentioned, over the past year we successfully executed our acquisition strategy aimed at growing annual base rent and improving the metrics of our net lease platform, accounting for three closings subsequent to year-end. Investments over the past year total $101 million which were funded with a combination of cash on hand and proceeds from Net leease dispositions. The acquisitions included a balanced mix of quick service and casual dining restaurants, automotive services, fitness, and value retailers. In total, the acquisitions had a weighted average lease term of 14.3 years, average rent coverage of 2.7 times, and an average going in cash cap rate of 7.5%, and an average GAAP cap rate of 8.3%. Moving forward, our disciplined investment criteria will remain unchanged, with a focus on service-based brands that demonstrate resilience even in uncertain macro environments and remain largely insulated from e-commerce disruption.

However, the pace of acquisitions will be mostly limited to capital recycling within our portfolio.

For the full year 2026, we project total net lease deal volume of approximately $25 million.

With the tenant roster augmented by our recent acquisitions, we will be actively looking for ways to leverage our new and established brand relationships for additional growth opportunities in the form of sales packs and off-market deals.

With respect to our net lease results for the fourth quarter, at year end, SPC's portfolio consisted of 760 properties across 42 states with annual base rents of $390 million. The portfolio was approximately 97% leased with a weighted average lease term of 7.4 years. We have over 180 tents operating under 140 brands across 21 distinct industries.

Annualized base rent increased 2.4%, largely a function of our recent acquisition activity.

Our asset management team had a particularly strong quarter, executing leases totaling 536,000 square feet, averaging over 9 years of term and a cash rent roll-up of 15%.

Portfolio lease expirations remain well laddered, with just over 5% of annualized rents expiring through the end of 2027.

Approximately 2/3 of our annual annual base rents are generated by our TA travel centers backed by BP's investment grade credit profile. 34 of our travel center assets leased to TA served as collateral for our recent ABS financing. We are pleased with the strong investment grade ratings and robust investor demand that these notes received, which we believe reflects confidence in the stability of cash flows from these assets for years to come.

And with that, I'll turn the call over to Brian to discuss our financial results.

Thanks, Jesse, and good morning. Starting with our consolidated financial results for the fourth quarter of 2025, normalized FFO was $27.5 million or $0.17 per share, flat compared to the prior quarter. Justin EBIT R decreased $5 million year over year to $125.6 million.

Overall financial results this quarter as compared to the prior quarter were primarily impacted by an $11.8 million or $0.07 per share decline in hotel EBITDA, partially offset by a $6 million or $0.04 per share one-time tax benefit related to our hotel in San Juan, and $5 million or $0.03 per share related to our 34% share of Senesta International's results.

For our 94 comparable hotels this quarter, red par increased by 70 basis points. The gross operating profit margin percentage declined by 370 basis points to 20.5%. Below the GOP line costs at our comparable hotels improved 1.5% from the prior year, driven by lower property taxes at certain hotels.

Our hotel portfolio generated adjusted hotel even of $21.3 million but decline of 35% from the prior year as a result of elevated labor costs, higher hotel overhead costs, and the impact of non-repeat business interruption insurance recognized in the prior year.

77 hotels in our retained portfolio generated revPAR of $106 an increase of 170 basis points year over year, and adjusted hotel ETA of $25 million during the quarter, a decrease of $8 million year over year.

Turning to the balance sheet, we currently have $5.2 billion of debt outstanding with a weighted average interest rate of 5.95%. Using the proceeds from asset sales in January, we partially repaid $300 million of SEC's aggregate $400 million senior notes scheduled to mature in February 2027.

On Monday, we announced our second securitization of that lease assets. This new five-year financing totaled $745 million in principal at a weighted average coupon of 5.96% and a maturity of March 2031.

SVC is contributing 158 net lease properties with a total appraised value of $1.1 billion. We're using the proceeds to fully redeem SVC $700 million of 838 senior guaranteed unsecured notes with a June 2029 maturity to maximize cash flow savings and improve our debt covenant, specifically coverage of interest expense.

This refinancing will result in annual cash interest savings of approximately $14 million or $0.08 per share.

Our next debt maturities consist of $100 million remaining of our 4.95% unsecured senior notes due February of 2027, which we plan to address with proceeds from asset sales, followed by our $580 million and $0.00 coupon notes due September 2027, which are secured by one of our TA leases and have a one year extension option.

Turning to our capital expenditure activity. During the 4th quarter, we invested $106 million in capital improvements, bringing our full year spend to $238 million. Fourth quarter capbacks included commencement of our redevelopment of the Nautilus in Miami, major projects at the Royal Seneta in New Orleans and Cambridge, the Senesta in Denver, and ongoing renovations at the Senesta ES Suites in Anaheim, and the Simply Suites Las Vegas.

Turning to our financial outlook, we introduced full year 2026 guidance on our earnings presentation issued last night.

For the full year 2026, we're currently projecting the following.

For the 94 hotels owned as of year end, we expect total rev for $108 to $113 and Hotel EBITDA $124 to $144 million.

Within our net lease portfolio, we expect net operating income of $380 to $386 million.

For our consolidated metrics, we're projecting adjusted EBITA $500 to $520 million a normalized FFO per share of 65 to $0.77.

This full year guidance assumes midpoint interest expense of $378 million with cash interest of $300 million and non-cash amortization of interest of $78 million.

We're also assuming G&A expense of $40 million and a weighted average share account of 169 million shares.

This guidance does not reflect the impact of completing 17 Senesta hotel dispositions, and it assumes $25 million of capital recycling in our net lease portfolio.

We expect total CapEx for the year of $120 million to $140 million.

Collectively, our financial guidance projects SVC to generate free cash flow after capbacks in 2026. This marks an important milestone following three years of elevated capital investments to enhance our retained hotel portfolio.

To conclude, our 4th quarter results demonstrate continued momentum in repositioning SEC and strengthening companies' cash flows supported by our capital market transactions and execution on asset sales. As we move forward, we remain focused on growing EBITA and further optimizing SEC's portfolio to drive sustained value for our shareholders. That concludes our prepared remarks. We're ready to open the line for questions.

(Operator Instructions) Jack Armstrong, Wells Fargo.

Hey, good morning. Thanks for taking the question. Can you share with us how revPAR has trended in the first quarter to date and what's driving the width of your revPAR growth guidance? It's about 250 basis points wider than we've seen from your peers who have given guidance so.

Far.

As far as what we're seeing so far, in the early part of Q1, we're tracking in line, if not exceeding our projections for the full year guidance, we have January's actuals, in the books, and, we see red par through, the mid-February, so all is trending well so far, as far as the range, given some of the volatility in our portfolio with disruption and displacement. We put the range in, which you think is, appropriate for, the activity in our hotels and some of the uplift and, some of the citywide events and some of whether or not some of that activity pans out, could have an impact on either side of our guidance range in our midpoint.

Okay, helpful there. And then on your net lease acquisition guidance, it's a meaningful step down from 2025 levels. Can you walk through the strategy shift there and how you're thinking about deploying capital and the net lease business now?

Yeah I think from kind of an overall strategy I think you know you know more specifically we're looking at just overall capital deployment holistically for the company which includes. Decreasing capital spend at the hotels, accordingly and then also kind of thinking about just our overall acquisition trajectory and and we we've got the opportunity to kind of flex up or down as needed but ultimately the $25 million dollar guidance will be supported by sales of net lease properties so kind of net zero in that standpoint and we think that's kind of a healthy outlook just based on, where our performance guidance is for 2026.

Okay, great. And could you provide some color on what your guidance assumes for expense growth at the midpoint and maybe break out some of the components like labor, insurance, and anything else that we should be focused on?

Sure, overall to the midpoint, just top-line is a little over 4% expectation on growth. The bottom line, we're seeing around 6%, and a big part of that is labor, base labor and wages is roughly 3 to 3.5%, but we're seeing increased pressure on the benefit side, which continues to, hamper margins. We're the midpoint guidance assumes, margins, relatively flat, we get those numbers.

Okay, and then do you have a sense of how any of the changes coming at Senesta with the new management team may impact SVC? And is there any benefit included from that in your 2026 guidance?

No, the 2026 guidance is based on, kind of budgeted forecasted hotel performance and kind of the things we've touched on, certainly, with this management team coming in, I think there's, a legacy track record of experience, from each of them and kind of what they've done historically, and so I think, net net we view it as a positive and we embrace any opportunity for change to drive performance and I think they'll do just that, so. I think anything they bring to the table, will be incrementally beneficial.

Great, that's it for me. 34.

So, I was going to say the 34%, share of of semester's earnings, we're not projecting much growth there in the guidance.

Okay, makes sense. Thanks for the time.

Tyler Batory, Oppenheimer.

Hey, good morning. Thanks for taking my questions. You want to start on the hotel portfolio and the guidance, and Brian, I think you had mentioned, 4% top-line growth. Just help us think about, how much of your revPAR in 2026 and the performance on an apples to apples basis versus 2025. You think is being driven by, a higher quality portfolio, maybe progress on Senea brand recognition. Versus market factors, things like the World Cup, etc.

Yeah, the guidance and the growth trajectory, the midpoint revPAR is around 110, which is a 3% revPAR growth, 4% on gross revenues. That is apples to apples, so again, we have higher revPAR based on the weighting of, full service hotels, and a lot of the growth we're expecting is coming from lifts, from, some of the low benchmarks we had in 25 because of renovations and displacement. We'll see some displacement still in 2026. And we put that number out in our earnings presentation, and, that's part of, the Nautilus and some other bigger projects. But I think market factors, Chris mentioned the World Cup, is America 250, and other citywide events that we should see some benefit from. So it's a little bit of everything.

There.

Okay, and then in terms of the the margin outlook you mentioned, flat year over year, so low 10s 12%, I guess any help, I mean, how much displacement is still in that number, how much disruption is still in that margin number, and just any help thinking about, a normalized EBITDA margin for the portfolio or kind of where you'd like to see EBITDA margin for the portfolio move over the medium term.

Yeah, in the 26 guidance we've noted about $12 million in displacement from renovations.

And so I think you know that that it's going to vary year to year right depending on the the renovations that we do specifically and you know I think kind of generally speaking we're doing some larger renovations, specifically with the Nautilus and it'll have an outsized impact to displacement so I wouldn't view that as a run rate. I think it would be less than that, generally speaking, probably consistent with, what we saw in 2025, but again.

As we think about capital deployment, it's another factor, we touched on the fact that we're being mindful of how we deploy capital, so that's going to then dictate how we think about the types of renovations and which hotels we address so it really will be on a case by case basis as we think about kind of the go forward scenario.

Okay, great. So a good segue to my next question just in terms of capbacks in 26 versus 25, meaningful step down there. Just remind us what's being planned for 2026. How much is the Nautilus, and then, any reminders in terms of what you're thinking about a normalized cap apps for the hotel portfolio going forward.

Sure that the 120 to 140 is a big step for us, I think the pace of large significant renovations are, winding down for us, we're going to be more spacing projects out. The Nautilus is definitely the biggest piece of this year. Yeah, we had about $12 million of CapEx activity in Q4 25 related to the Nautilus, which is mostly exterior work. The room's renovation is kicking off next month. I think it's roughly 30 $35 million. We're projecting in the first half of, 26 related to that project alone. We're also. The Cambridge Royal Sonesta, there's two towers in that hotel. We're doing one of those, there's a property to one of our, hotels down in DC as well as some other hotels scattered across the country that we're still doing renovations, but again, the pace and the volume and the size, will continue to wind down so that 120-ish, is, currently what we're thinking for next year and probably for future years as well at this stage.

Okay, so switching gears to the debt side of things and now that you've done the, $745 million of securitized notes, I guess how much more room do you have, in terms of, whether it's it's covenants or just overall capacity in terms of utilizing some of those assets, to kind of funds, some of the debt maturities that are coming up in the next couple of years.

Yeah, I mean that was a a well executed transaction for us. It did bring our secured debt to total asset capacity down from, well, the covenant went from 20% to 33% out of a max of 40% under our covenant, so not a lot of headroom for a large transaction, but the way we're thinking about debt maturities. The zero coupons are already secured by assets, so you know we can refinance those with the existing collateral or other man, another manner.

I mean we have some unsecured notes that we need to clean up, in early 20 by early 27, and then, our focus is largely on the unsecured notes due at the end of 27, which, between asset sales and, potential other transactions, we'll look to refinance those out.

Okay, and then last question for me just to tie together all of the commentary on the debt side of things and lots of moving pieces, I know you got asset sales, and you've made a lot of adjustments in terms of, what you're doing with your cash, but just kind of level set. What you have coming due 2027 and 2028 as well, and just like in an ideal scenario, how are you thinking about handling, all of those maturities?

Sure, in my prepared remarks we talked about the 100 million that's currently due in February, which the asset sales, we think we'll be able to use those proceeds to clean those up.

I mentioned the zero coupons is the next bigger maturity and there is an extension option those are backed by TA assets we feel very good we'll be able to either refinance those or extend those, followed by the 27th, the December 27th, the asset sales that are in flight we'll knock out a piece of those, and then behind that is February 28th unsecured notes. Which we're very focused on whether it be asset sales, further asset sales, or refinancing, it's a little early to talk about specifics on how exactly we're going to execute, but, we feel confident, given what we just did, it'll give us some breathing room for covenant purposes and then just be able to evaluate our options in the market and potentially bring more, properties for sale to help, mitigate those maturities.

Okay, great, so thank you for all the detail, very helpful. It's all for me.

Thank you.

(Operator Instructions) John Massocca, B. Riley Securities.

Good morning. Maybe focusing on the hotel dispositions that you kind of have out there, in 2026, do those largely or entirely reflect, the assets you called out in December is being marketed for sale and then also the assets that needed to be re-marketed, that kind of slipped out of the 2025 dispositions.

Yeah, that, that's correct. So the nine focus service, that are part of the 16 we're in the market with are the carryover from 2025, so that those reflect the remarketing, and then the seven full service hotels which we launched in January reflect.

Those hotels that we articulated, that we had identified to sell, and again these are kind of the cash drag hotels, more specifically, in part as part of that endeavor, so yes, these 16 reflect, those that we previously communicated.

Are the nine, kind of re-marketed hotels, are those EBITDA positive, and if so, how much kind of offset would that be to what you've already stated in terms of the EBITDA drag from the 7 larger hotels you're marketing.

Yeah, those are, EBITDA positive. I mean they ended the full year, with roughly $3 million in positive EBITDA for those 9, and net net if you look at 2025, the total, drag would be about $10 million of what we'd be saving.

Okay, and if you think about, potential gross proceeds from those sales, I think if I took what you know they're originally being marketed for plus the range you're giving for the the new.

Hotel sales are expecting in 2026, it would be somewhere, I think roughly like $190 million. Is that still kind of what you're seeing, or has there been some change in pricing given, some of these assets are being re-marketed?

Yeah, we, I mean we talked about 175 million to 200 million as the range, and I think, look, activity is strong, we've been out in the market, since early January, with these different portfolios, the two. And there's good activity, I call for offers is going to start, in the next couple weeks, and then we'll be staggered. Just there's 3 different portfolios that we're marketing, so they'll come in staggered, and I think that'll be indicative of within that range, where we think we're going to land on the higher, the lower, the mid. So we'll have more to talk about, but, again, the activities there, we feel good about the execution, and again we'll just have more to talk about, in the next couple of months.

Okay, and then I guess, pro forma for those sales, do you still expect kind of run rate EBITD mix to be around 70% and at least 30% hotel at the end of 2026?

Yeah, that, that's about right. Obviously we'll get a lift, from removing negative drag, but it's still right around that range.

Okay, and I mean I guess where does that roughly stand today just pro forma for all the transaction activity in in 4Q.

Yeah, and I think it's not too far off from, high 60s to, low 30s to, from even a mix.

Okay, maybe switching gears to net lease, post the transaction in February, I guess how much in the way of non-hotel assets kind of remain.

That are unencumbered by by debt either in terms of like total property number or just kind of brackets around value.

Yeah, I mean, the, yeah, if there was something we thought we could have used in the debt transactions, we would have contributed more assets and taken more proceeds and done a little bit more. The properties that sit outside the securitization, there's roughly call it $27 million of rents. It's not a big portfolio. The weight, the weighted average lease term is under 5 years. There's work to do on leasing. There's movie theaters mixed in, so it's not, I don't think we look at that part of the rest of that part of that portfolio is something that we're going to use for a financing necessarily unless again we, we're able to secure more at lease term. And growth on those assets, but for the most part, ALL5TA assets are now part of some sort of collateral package in our bonds or debt structure.

The hotel portfolio is completely unencumbered, stands one, the high portfolio that backs the revolver, so there is capacity on the hotel side, but again, I think what we're the way we're thinking about, our refinances going forward, it's going to be a mix of, potential.

Bonds or guaranteed bonds or some other form of instruments.

And I would add John that on the on the on the retail properties that are remaining you know we talked about you know raising proceeds through sales some you know those hotels or excuse me those retail properties kind of fit within the remaining properties as far as some we'd be selling as well so.

Okay, and then anything specific on the net lease side to call out, it's not a huge move quarter over quarter, but coverage did drop below 2x. I don't know if that's just the impact of lease escalators taking effect or if there's something you're seeing a specific either individual tenant or tenant industry that maybe is driving a little bit of weakness quarter over quarter on coverage.

Yeah, I would say that the coverage drop is largely a function of, TA coverage dropping 7 basis points quarter over quarter. If you take out the TA assets, coverage remains, well north of 3.5, 3.6 times. And then with respect to the TAP, obviously there's a lot of components that go into that business, but I would say broadly speaking, we're spending, we're seeing BP spending a lot of time and effort, with that portfolio. Towards the end of last year they brought on a new leadership team. They've implemented a business plan for TA specifically aimed at increasing free cash flow through 2027. We continue to see them, invest in these sites, particularly EV charging at scale. So I mean our sense is that it's probably going to take a little bit of time for that coverage to get back up to where it was, probably going back a year and a half, 2 years ago, but, in the meantime, as we know, those. Those leases are backed by BP credit and so we feel pretty good about that and you know it's worth noting that there's just a lot of inherent value in those sites, right? The overall network, the sites themselves, and the long-term fundamentals for trucking so I think overall we feel pretty comfortable with with that sub portfolio.

Okay.

I appreciate all the color. That's it for me.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Chris Bellotto, President and Chief Executive Officer, for any closing remarks.

Thank you for joining today's call. We look forward to meeting with many of you at the upcoming industry conferences this spring. Operator, that concludes our call.

The conference has now concluded.

Thank you for attending today's presentation. You may now disconnect.