The company undertakes no obligation to revise or publicly release the results any revision to the forward looking 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, can be accessed from our website at sbcreit.com, or the SEC's website. Investors are cautioned not to place undue reliance upon any forward looking statements. In addition, this call may contain non GAAP financial measures, including normalized funds from operations or normalized FFO, and adjusted EBITDAre. A reconciliation of these non GAAP figures to net income is available in SVC's earnings release presentation we issued last night, which can be found on our website. Finally, are providing guidance on this call including adjusted hotel EBITDA, which 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, will turn the call over to Chris. Thank you, Kevin. Good morning, everyone.

Thank you for joining the call today.

Last night, we reported first quarter earnings results that were in line with our expectations highlighted by comparable RevPAR growth of 2.6% within our lodging portfolio, steady operating performance from our net lease retail properties and growth in adjusted EBITDAre year over year. Additionally, we advanced our strategic plans to optimize our portfolio by selling assets to deleverage our balance sheet, and reinvest in growth opportunities. Will begin our discussion with an overview of our hotel portfolio performance during the quarter, and an update on our investment activities. Then Jesse will discuss our net lease portfolio And finally, Brian will review our financial results and guidance. At a macro level, we continue to monitor the broader economic activity trade tariff policy and shifts in overall consumer sentiment. While performance within our lodging portfolio was in line with expectations, RevPAR softened as the quarter progressed, partially driven by a pullback in government and inbound international travel, as well as airlines reducing flight commitments and crew business. Conversely, positive post renovation performance with certain hotels in our portfolio favorable trends with our group revenue pace and a stable outlook for our net lease portfolio remain bright spots as we continue through the year.

In the meantime, we are proceeding with the priorities and objectives we set for the year continue to monitor this evolving market backdrop while maintaining flexibility to adjust our operating plans and capital investments as necessary. Necessary. As it relates to our disposition activities, we are currently tracking with our plans to sell 123 hotels during 2025 with estimated proceeds of $1,100,000,000 We plan to use these proceeds to strengthen SVC's balance sheet through debt repayments and strategies to improve the overall portfolio through certain triple net lease acquisitions and capital spending on hotels. Turning to our hotel portfolio performance during the first quarter. Overall, comparable hotel RevPAR grew 2.6% year over year outpacing the industry by 40 basis points despite meaningful revenue displacement from renovation activity. Excluding eight hotels under renovation during the quarter, comparable RevPAR increased 3.7% with transient and group revenues outperforming contract. RevPAR growth was supported by occupancy and ADR gains, lift from hotels under renovation last year as well as citywide events. GOP and adjusted hotel EBITDA declined year over year primarily due to active hotel renovations, increases in labor, and higher utility costs with a colder than average first quarter. By service level, our full service hotels reported a 1.9% increase in RevPAR, excluding one hotel under renovation during the quarter full service portfolio RevPAR would have been 3.2% year over year.

Strong growth in group was supported by elevated leisure demand at Royal Sonestra in both Kauai and San Juan, with the Royal Sonesta in New Orleans and DuPont, Washington DC driving demand from the Super Bowl and inauguration respectively. Other notable improvements were driven by increased transient from our IHG and Radisson hotels, with increased OTA and retail business and from post renovation lift at Sonesta White Plains. Our select service portfolio produced exceptional growth with RevPAR up 10.6% year over year mainly driven by occupancy growth in our Hyatt Place and Sonesta Select portfolios. Notably, RevPAR growth was driven by a 15% occupancy rise and 2.7% improvement in ADR at our recently renovated Hyatt Place hotels. RevPAR growth at Sonesta Select hotels reflect the fourth consecutive quarter of year over year occupancy gains, specifically in Boca Raton Camarillo, California and Philadelphia. In our extended stay portfolio, RevPAR was essentially flat as a modest increase in ADR was offset by a decline in occupancy. Renovation activity continues to have a more pronounced impact on our ES Suites portfolio performance as six hotels were under renovation during the first quarter, compared to one hotel in the prior year period. To mitigate this disruption, Sonesta remains focused on driving short term stays and additional room nights with transient discounts and targeted marketing through wholesale channels.

Turning to investment activity. As we enter 2025, our focus remains on strengthening our balance sheet and portfolio through asset sales, reinvesting in our hotels with the highest opportunity for upside, and a gradual investment in net lease acquisitions. Notable hotel completions will include the renovation of our Senesta Los Angeles Airport and our Senesta Hilton Head during the first half of twenty twenty five and our Sonesta in Atlanta Simply Suites in Burlington, Massachusetts during the back half of the year. Forecasted displacement from ongoing renovations will be less significant in Q2 and with projected strong year over year performance gains with nine hotels completing renovations in early twenty twenty five. These gains are expected to mitigate renovation related disruptions with planned construction starting on four full service hotels in Q4. During the first quarter, as part of the '22 portfolio set of hotels we launched for disposition in early twenty twenty four, we sold four of these hotels with five fourteen keys for a combined sales price of $19,600,000 We are under contract to sell the remaining four hotels within this portfolio, which includes four ninety two keys for a combined sales price of $26,500,000 We anticipate these will close during the second quarter.

Also during the first quarter, we completed a robust marketing effort for the sale of 114 Sonesta hotels. These assets received strong buyer interest reflecting a deep and well capitalized buyer pool concluding with over 30 bids under the Sonesta brand. The portfolio was awarded to four buyers and includes both new and existing Sonesta franchise relationships. Buyers are actively engaged and following a customary diligence period, we anticipate the sales will be completed in phases over the next few quarters. In total, we plan to sell 120 hotels in 2025 for approximately $1,100,000,000 The pricing implies an 18 times multiple on hotel EBITDA of $60,000,000 over the trailing twelve months. This valuation is well above SVC's multiple of approximately 11 times trailing twelve months adjusted EBITDAre. Turning to our triple net lease assets. We are making meaningful progress with our capital recycling initiatives. As Jesse will elaborate, since the end of the quarter, we have acquired or under agreements to acquire nine net lease retail properties for $30,000,000 We view this as a strategic growth initiative and plan to gradually expand our retail acquisition activity over time, capitalize on accretive opportunities in our pipeline. Upon completion of our hotel disposition program, and noted retail acquisitions, We estimate that SVC's composition by investment will shift from 56% lodging assets and 44% net lease properties today to 54% triple net lease and 46% lodging assets.

Based on this allocation, we believe that investors will begin to re rate shares of SVC based on a triple net lease valuation basis as opposed to a lodging REIT. In sum, we are off to a solid start in 2025. While the current macroeconomic environment has created uncertainty, we believe our portfolio optimization initiatives durable cash flows from our triple net lease assets, and capital management initiatives will be significant drivers of long term value creation. I will now turn it over to Jesse to discuss the net lease portfolio. Thank you, Chris. The recent macro volatility underscores the benefits that our steady cash flow generating net portfolio contributes to SVT As of March 31, we own seven thirty nine service oriented retail net lease properties with annual minimum rents of $381,000,000 Our net lease assets were nearly 98% leased with a weighted average lease term of eight years. Our tenant base consists of 175 tenants operating under 136 brands spanning 21 distinct industries. Thereby mitigating our exposure to any one retail sector and offering opportunities to grow our existing relationships with a variety of different operators. Only 2.1% of our minimum rents are scheduled to expire in 2025 and approximately 3% in each of the following years through 2029.

As of quarter end, the aggregate coverage of our net lease portfolios minimum rents was 2.07 times on a trailing twelve month basis which was essentially flat on a sequential quarter basis. Excluding our TA Travel Center properties, which are backed by BP's investment grade credit, minimum rent coverage remained strong at 3.6 times. Down a tenth of a turn compared to the prior quarter. By design the net lease portfolio which largely provides non discretionary goods and services to consumers, should continue to perform well even during challenging economic times. In fact, many of our tenants such as our quick service restaurants and grocery stores typically benefit from the trade down effect during periods of lower consumer confidence. Others like our travel centers have the flexibility to pass pricing pressures on to customers. Particularly in the case of fuel costs. Just as our net lease portfolio weathered the pandemic related disruption, we anticipate it will exhibit consistency even in the event of sustained volatility in the near term. The essential businesses of our tenants the strong credit backing our TA leases and the portfolio's healthy coverage ratios bode well for ongoing resiliency irrespective of macroeconomic conditions. With respect to investments, as we signaled last quarter, we are underway on our strategy to prudently grow the net lease segment of our business in an effort to enhance the tenant and geographic diversity of the portfolio increase weighted average lease term, and expand annual minimum rents.

To that end, we recently acquired entered agreements to acquire nine net lease properties for a total of $33,000,000 These transactions have a weighted average lease term of sixteen years average rent coverage of three point zero times, and average cash and GAAP cap rates of 7.38.4% respectively. We are funding the acquisition of these properties with a combination of capital recycling and flexible financing. During the quarter, we utilized increased equity value within our net lease portfolio and closed on a $45,000,000 variable funding note facility. This new financing along with the asset backed security financing we implemented in 2023 highlights our ability to use our net lease portfolio to obtain attractively priced financing options. Looking ahead, we see opportunities to further expand the portfolio through acquisitions with attractive lease economics, and accretive yields. While our transaction volume will remain relatively modest in the near term, as Chris highlighted, we anticipate that our net lease portfolio will more significantly to the overall SVC platform in the future.

Before I pass it to Brian, I want to acknowledge the recent publication of the RMR Group's annual sustainability report. Provides a comprehensive overview of our managers' commitment to sustainability. We will continue our ongoing efforts at SVC to advance these sustainability initiatives which to date resulted in tangible improvements energy efficiency, operating costs, tenant satisfaction. I will now turn the call over to Brian. Discuss our financial results. Thanks, Jesse. Good morning. Starting with our consolidated financial results for the first quarter of twenty twenty five, normalized FFO was $10,800,000 or $07 per share, versus $0.13 per share in the prior year quarter. Adjusted EBITDAre increased slightly year over year to $115,800,000 Financial results this quarter as compared to the prior year quarter were impacted most by a $10,100,000 increase in interest expense. For our two zero one comparable hotels this quarter, RevPAR increased by 2.6% and gross operating profit margin percentage declined by three thirty basis points to 21.4%. Below the GOP line cost at our comparable hotels decreased $1,700,000 or 3.4% from the prior year driven primarily by lower property insurance premiums. Our hotel portfolio generated adjusted hotel EBITDA of $23,000,000 decline of 20.5% from the prior year but within our guidance range.

By service level, adjusted hotel EBITDA year over year decreased $4,000,000 for our full service hotels. Increased $2,400,000 for our select service hotels and decreased $4,300,000 for our extended stay hotels.

The eight hotels that were under renovation during the quarter represented $3,800,000 or 60% of the decline of adjusted hotel EBITDA year over year. The renovations at our 17 high Place hotels were completed in the first quarter of twenty twenty five and we saw a 35% year over year improvement in RevPAR to $77 and adjusted hotel EBITDA increased $2,900,000 year over year. Both our Hyatt and Radisson agreements include limited guarantees of performance thresholds that are now in full effect post renovations. During Q1, our earnings benefited from a $2,900,000 increase in guarantee utilization under these agreements to cover the shortfalls in hotel cash flows available to pay our Owners' Priority returns. Throughout the remainder of 2025, we plan to sell 119 hotels with 15,912 keys. During the first quarter, these 119 hotels generated RevPAR of $65 and adjusted hotel EBITDA of $6,900,000 representing a decline of 30% year over year The result of these exit hotels were impacted by onetime expenses and general disruption we expected from the marketing process.

The 83 hotels we expect to retain generated RevPAR of $99 and adjusted hotel EBITDA of $17,700,000 during the quarter. A decrease of $4,500,000 20% year over year. Most of this decline year over year in the retained portfolio is related to renovation disruption, notably at our Sonesta LAX and Royal Sonesta in Cambridge, Massachusetts. Turning to our expectations for Q2, we are currently projecting second quarter RevPAR of $99 to $102 and adjusted hotel EBITDA of 69,000,000 to $74,000,000 While we typically see a seasonal benefit to hotel operating results in the second quarter, we anticipate the headwinds in the travel and lodging industries to affect key segments like government and leisure. Additionally, the portfolio will be impacted by revenue displacement from ongoing renovations.

This guidance does not include the impact of any potential asset dispositions. Turning to the balance sheet. At quarter end, we had $5,800,000,000 of debt outstanding with a weighted average interest rate of 6.4%. Our next debt maturity is $350,000,000 of senior unsecured notes maturing in February 2026. As of quarter end, had $80,000,000 of cash on hand $50,000,000 outstanding on our $650,000,000 revolving credit facility. Turning to our capital expenditure activity. During the first quarter, we invested $46,000,000 in capital improvements at our properties. Notable projects this quarter included an HVAC project in one of the towers at our Royal Sonesta Boston amounts for the extensive renovation of our Sonesta at LAX and the public space renovation at our Sonesta Hilton Head Resort. For the full year, we continue to expect capital expenditures to be approximately $250,000,000 This includes $120,000,000 to $140,000,000 of maintenance capital with the rest going towards renovation and redevelopment initiatives. We are monitoring the potential impact that tariffs may have on the cost of capital capital improvements as well as potential delays and uncertainties in the supply chain that may impact the availability of materials. We are adapting our plans as necessary to mitigate these external pressures.

That concludes our prepared remarks. We're ready to open the line for questions.

We'll now begin the question and answer session. And your first question today will come from Jonathan Jenkins with Oppenheimer and Company. Please go ahead.

Good morning. Thank you for taking my questions. First one for me, wanted to parse into the RevPAR trends in the quarter. Look, there's and I know there's lots of macroeconomic uncertainty out there, but Chris, you mentioned a slowdown over the quarter. Can you walk us through kind of the month progression and how the quarter came in relative to your initial expectations? And then also any thoughts or color on where April ended up?

Yes. I think kind of more broad broadly, I think overall RevPAR kind of came in kind of where expected. But as I think about the quarter specifically, we started higher kind of in January as just over 2.5% and that shows some deceleration going into March. Down to about half of a point. And so I think that's how I would think about the trajectory and the slowdown as far as overall RevPAR. I would say for April, Brian has given some guidance on kind of where we expect that RevPAR guidance to be for the quarter. Softness in April is initially or at least the preliminary numbers showing about a decrease of 1% year over year. And so we expect there to be some ramp as the quarter progresses, all things being equal. Yes. That's very helpful. And then might be difficult, but can you provide some color on how much international and government business your hotels have? And and what you're seeing more real time from those two parts of demand? And maybe as a follow-up to the last question, your thoughts on how much of what you're seeing in April or saw in April and March attributable to calendar shifts versus more of a structural slowdown in demand?

Yes. I mean the international travel, kind of question is a little bit more tricky. I think the way we might think about it do you think about kind of our broader full service portfolio and more so kind of on the retained side about 30% of our portfolio is located what we would call kind of the top 10 markets. So I think from that standpoint, we have kind of a manageable amount of assets as might be impacted by international travel. I think broadly speaking, we're seeing some pressure on contracts from kind of the slowdown in airline business or at least kind of the temporary pause in airline business? I think government specifically saw a modest decrease I think the number was about $2,500,000 in cancellations across the government contract business with just overall efficiency efforts. But I think more specifically, some of the bright spots are, I think, more akin to the fact that we're seeing strong group revenue pace It's up about 6.5% over the same time last year, which is close to $9,000,000 And then we expect to kind of see some outsized ramp with respect to our renovation hotels. As those continue to kick in and produce positive EBITDA throughout the quarters.

And so there's some take and give with some of the more broader kind of macroeconomic trends alongside just some of the initiatives that are specific to our portfolio. That I think will provide kind of a healthy balance as we progress throughout the year. Okay. That's excellent color there.

And then switching gears to the hotel dispositions it sounds like they're progressing nicely. Can you help us think about your confidence level and completing the sales at the price point that you talked about? This year? And any updated thoughts on maybe how that's progressing relative to initial expectations would be helpful.

Yes. I mean, think that we had a robust process, right, with respect to the selection and awarded by We have a pretty deep bench with respect to the amount of offers, which I think gives us some confidence in managing expectations on pricing through a competitive process. We're active in the diligence process. We have signed turn sheets. With four different buyers where we divided up the pool. We've done a lot of what I would call kind of early stage diligence work with third party reports and other things, which are active being reviewed and updated as necessary. And I think the process is progressing. I mean, it's a very different process when you're selling a small subset of hotels, one, two, five hotels, versus larger portfolios such as we're doing. And so I think we feel good about the trajectory and the pace we're at today. And from transaction standpoint, there's nothing to suggest that we won't transact as planned. And I think that the bigger change from kind of expectations as we expect the takedown of these portfolios to happen in phases just given the size. And so that's going to kind of show transactions occurring over more than one quarter, for example, as we continue to wind down the disposition efforts specific to the 114 hotels.

That's great to hear. And as a follow-up on that, we think about the two debt maturities coming in 2026, is the plan still to repay those with the asset sales? That's correct. That plan has not changed.

Okay. Perfect. And then maybe last one for me.

Chris, you talked about the shift towards increased net lease exposure and the valuation change At a high level, when you look out at SVC in five or ten years, do you think we'll continue to see those trends of decreasing hotel exposure and increasing net leased properties to a point where SVC at some point could entirely just be a net lease REIT or do you think you'll always continue to have hotel exposure in some capacity? In the future?

Yes. I mean the plan today is we'll continue to have hotel exposure. That change that's not a change. That we're anticipating. I think given kind of the outsized view on of where the opportunities reside, specifically on the net lease side, we would expect the gap to widen over time. With respect to kind of the investments specific to net lease relative to hotel. But I don't want to lose sight of the fact that even with the hotels we're retaining there's going to be continual opportunity to drive EBITDA. So I think from kind of a net net, we would expect to see performance progress on both sides just through kind of more organic growth on the net lease and then kind of the EBITDA piece on the hotel side. I think more specifically, we're going to often be looking at our portfolios across the board at optimization opportunities and we'll evaluate those and present those as appropriate. But I think given what we have today, we've got a lot of great things we're working on. I think working through those, selling these assets, advancing capital projects and other initiatives is really where our focus is going to be for 2025.

Okay. That's great. I appreciate all the color from everyone today.

Thank you very much. That's all for me. Thank you.

And your next question today will come from Meredith Jensen with HSBC. Please go ahead.

Thanks. A lot of great questions asked specifically, the last one was the biggest one for me. And maybe I could just ask another sort piece to that, although your answer was fairly clear, was what might have caused sort of the the pivot to to have more enthusiasm to sort of build back up or or reevaluate the net lease portfolio as being a greater strength? Is it that the hotel portfolio has been sort of harder to manage in the cost side of it? Or is there anything in particular regarding the hotels and the pursuit of sort of a broader hotel portfolio that might have changed?

Look, I mean, I think generally speaking, the business is something that we continue to have conviction on. It is a kind of a more capital intensive type business. But nonetheless, we do see pockets of opportunity for ROI and growth and we've communicated what that looks like how we're investing capital. When you think about the net lease side, look, we've got a large portfolio on the net lease side where we haven't been in a position to execute on strategies for growth. And I think more specifically being in a position where we can improve overall fundamentals around the portfolio through driving wall, through driving kind of better brands and opportunities in the portfolio. Think our view is just going open other doors the company with respect to how we think about financing opportunities, valuations, and other relative pieces. And so, continuing to bolster and strengthen that and take it in strides is just in our view kind of a great opportunity to round out the portfolio on a go forward basis.

Thanks. And does how do you view sort of this discussion in terms of the the value of your stake in Sonesta and sort of the relationship there?

Yeah. The 34% Meredith know, Sonesta's as we're going through transitions with our hotel portfolio, they too are transitioning to more of a franchise platform. And have done a lot of initiatives to improve that higher margin business at the operating company. So that's a big part of their growth strategy. So we believe that there'll be increasing value as time goes on as they continue to expand the footprint of Sonesta through that franchise platform. Again, it's a very high margin business and it'll flow through to us over time. The equity stake and how we account for it, we do do pick up our 34% of their earnings and their EBITDA in our numbers. So the balance sheet reflects around $100,000,000 of an investment but we believe over time that will grow. Okay.

That's super helpful. Thank you. And just sort of clarification on two things discussed on On the hotels leaving the system, we had sort of thought that it would be a pretty clean cut in sort of second quarter June sort of timeframe. How should we model the hotel hotels leaving the system?

I think it's more appropriate to assume that Q2 and Q3 is where we'll start to kind of see the allocation of those leaving the system. [indiscernible] [indiscernible] [indiscernible] We're about just a follow-up on that. We're modeling and then it'll exit. By the end of Q3. It's the way we're doing it.

Okay. Thank you. And on you were speaking about international international and group. What I heard that two $500,000 what percentage of nights would group and international and sort of business transient and leisure transient be? And when you speak about groups, what would the average size for group be?

Yeah. It's a tough kind of a tough question in general. I think that you know, I guess more specifically I guess we look at it from the lens of just the overall kind of net impact to group versus qualifying more specifically on the size of the group? And as I mentioned overall that's kind of a net positive impact of close to 6.5% or about $9,000,000 And so I think that's kind of more of a better proxy in Brian can elaborate a little bit more.

Yeah. I mean most of our hotels, I mean we don't have any large conventions size hotels for the most We get a lot of smaller Smurf type group business, especially on the weekends. Obviously, some of our urban hotels have larger groups. But generally speaking, they're medium to average size group business.

And the percentages of government, international, kind of the sort of pie Yeah. Let us with you on We don't have that in front of us.

Okay, great. Thank you so much. Your next question today will come from Jack Armstrong with Wells Fargo. Please go ahead.

Hey, good morning. Thanks for taking the question.

So I guess just circling back to the hotel dispositions, prior expectations of closing on the majority of the dispositions by the end of Q2 to now kind of somewhere between Q2 and Q3 Can Can you walk us through specifically what happened there? What drove that kind of shifting right? Was it buyers taking a little bit more time with due diligence? The kind of general slowdown in transaction markets with all of the uncertainty and in April. Just some color there on what drove the shift in timing would be helpful. Yes. I mean, really it's just a function of the process and diligence when you're dealing with larger portfolios. I think it's not not a customary to for these things to kind of tend to ebb and flow. I would say it's not specific to the broader market. And any concern around risks that may have been introduced since awarding it to these buyers. It's really just a function of going through the process. And again, I think these being taken down in phases just kind of extends that timeline for overall execution and coming out of the system. So again, it's really just the size of the portfolio, the depth that goes into a transaction of this size.

Okay. Helpful.

Helpful there.

Just kind of jumping over to your CapEx program. How derisked is your CapEx spend for the year? You mentioned particularly programs in Q4. So to the extent that tariffs remain in place and there's some pressure on and E and other goods you're getting from particularly China, Is there a capacity you think to pull back on that program deferred sometime to next year?

Yes. Lot A lot of the stuff we have in motion for the rest of the calendar year, we're for the most part sort of locked in pricing and we're underway with a lot of projects. As we continue to scope out plans to begin projects in 2026, we're going to start talking about That's why we're looking at where do we source our products from. We're looking for our suppliers to help direct us where things might be not as impactful from a tariff standpoint. We're going to look at our scope, reevaluate the overall cost and potential impact there's different things we're going to do and continue to do mitigate any sort of cost pre we generally put in some sort of cost contingencies when we're planning our projects. But in general, we're just monitoring the situation with tariffs in specific countries and where goods are coming from. As everybody else is and we'll react accordingly.

Okay. And then on the net lease acquisitions, I guess what's given you the confidence to go out and be acquisitive in this environment? The capital plan and exiting from the hotels, you kind of expect incremental capital to start to go into paying down debt. So giving you the confidence in this environment to go out and get those acquisitions done? Yes. I mean, there's a handful of things I think kind of as we discussed I think improving the overall composition of the portfolio is going to open up other opportunity for us kind of medium and long term with respect to portfolio composition, other financing initiatives, We have an ABS instrument in place that benefits from certain KPIs and potential to kind of recast that as more accretive yields. And I think kind of just more broadly speaking, we're seeing an opportunity where we're able to kind of push pricing in certain opportunities with kind of a bid ask spread of 30 to 50 basis points, which are going to continue to kind of create going opportunity for us to buy at we would think what we believe to be attractive pricing. And again, it's just it's a small piece to kind of a broader strategy with respect to exits capital investment and other related items.

But it's just healthy more specifically given we have some arbitrage there to kind of enhance the overall portfolio. Okay. And then in the quarter, you recognized an impairment on 16 hotels. Is it a fair breed that of the the portfolio, there's only 16 that have moved to that stage a disposition process where you're recognizing an impairment? Or is that just the only impaired portion of a larger portfolio And then as we're thinking about modeling on a go forward basis, is that level of impairment for 16 hotels roughly applicable to the size of the rest of the portfolio?

Short answer on the last part, no. But to the point about which hotels were impaired this quarter, The 114% said as the hotels all were evaluated for indicators impairment under generally accepted accounting principles. And the way it broke down is as Chris mentioned, there are four buyers of the 114 hotels pools of hotels ranging from 15 to 45 hotels, I believe. The pool the smallest of the pools of 15, the fair value, the sales price was below, which represents the fair market was below the carrying cost. So we did take a charge on those 15 The remaining 99 hotels, the sales price fair value all exceeded the book value. So in aggregate, we expect to recognize a gain on sale of real estate when the dust settles on these 114 Okay. And you don't anticipate during the process of due diligence that that impairment could go up Again, overall, we we've been talking north of a billion dollars for the portfolio and the carrying is in the $800 and something million range. So we expect a gain on sale of real estate when we close everything.

Okay. Fantastic. Thanks so much for taking the questions.

Your next question today will come from John Massocca with B. Riley. Please go ahead.

Good morning. So I'm sorry if I missed this.

Just with regards to the net lease acquisitions, kind of more broadly, gave a couple metrics around it, what were the actual properties themselves and what kind of type of properties? The question is, is the actual assets we've purchased or we're looking at the types of properties [indiscernible] There we purchased the two properties during the quarter. One was a car wash and another one was a casual dining concept.

Okay.

That the entire sorry if I misheard it, 33,000,000? Or is that No. So that was what was acquired. Then we had the pipeline of kind of what's under LOI. And to kind of round out the $33,000,000 number we have some opportunities with the grocer but the majority of those opportunities are in casual dining and QSR. And then one fitness concept we're looking at. So that that kind of rounds out the types of concept with kind of the again, larger component by number of properties being on the QSR and casual dining side. Okay. And then on the debt side, just kind of curious why the variable funding note is that something that could increase or you could do more of to continue acquiring on the net lease side or just kind of curious there?

Sure. Hey, John.

When we did the ABS security financing a couple of years ago, [indiscernible] we put that master trust in place In addition, as we looked at our financing alternatives more recently, we took a look at what's in that portfolio that is secured by the Master Trust and realized the valuations have gone up. So we tap the equity and we think in a cost effective way I think the sizing for now I think is short of adding more properties. We don't expect to increase that particular instrument. Could we later if we add more properties into the security pool? Sure. But we felt good about the pricing on that as part of the broader strategy to tap that net lease portfolio to not only as a cost of capital for financing, but also as part of the strategy Chris outlined on the acquisition front.

Is the room within the existing portfolio to add more assets that would allow you to kind of pull out more equity or is that maxed out in terms of either what you want to put into the Master Trust today or what you can put into the Master Trust?

I mean, we can grow the master trust as much as we want. And if we do grow it and we put more into it, we could then utilize the additional equity from a financing standpoint as long as we're keeping the whole entirety of the portfolio in relationship to whatever debt we have within that master trust sort of at the current levels from a loan to value standpoint and other metrics that we're trying to solve for as far as the financeability of the portfolio with geographic and industry and brand concentrations, the walls.

Rent coverage, all that stuff goes into our strategy regarding what we do add or what we might acquire overall. To keep alignment with the existing portfolio given the execution on these ABS notes we did we think it's a very efficient way to finance at a lower cost of capital. What we could see today doing a bond deal, for example.

And when you say like I just kind think within the existing portfolio, right? Like I don't know if there's more LTV you can kind of essentially take out of the net lease. [indiscernible] Yes. The three fifteen properties we that are in the Master Trust secured by ABS notes We just took a fresh look and tap what we believe is extent of the equity we're going to look to pull out for now. But we have another several segment of net lease properties that are not financed or not encumbered that we could utilize in the future.

Okay. And then just one quick one on the hotel side.

The dispositions that are planned, particularly the 114 hotels, is the outlook still that those would continue to have the Sonesta flag on them? Or is there some wiggle room around that maybe with various tranches? Or just kind of curious if that's still what the outlook is today?

Yes, that's the plan. The plan is that these will be with Sonessa franchise agreements.

Okay. That's it for me. Thank you very much.

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

Thank you for joining our call today. We look forward to seeing many of you at the upcoming NAREIT Conference in June. Please reach out to our Investor Relations team if you're interested in scheduling a meeting with SVC. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.