Service Properties Trust

SVC

Market cap $353M

Not all REIT dividends are sustainable. Overleverage, troubled assets, and high payout ratios are clear red flags. I highlight 3 popular REITs at high risk of cutting their dividend.

Service Properties Trust (SVC) is transitioning from a hotel-focused REIT to a predominantly net lease REIT, unlocking valuation upside. SVC has executed significant hotel asset sales, reduced debt, and now boasts robust liquidity exceeding $1 billion. The current 10x EBITDA multiple undervalues SVC relative to net lease peers, suggesting 30–40% share price upside.

Indexes for US equity real estate investment trusts increased during the week of Christmas. The Dow Jones Equity All REIT index climbed 1.14% over the recent week, roughly in line with the 1.40% gain for the S&P 500 and 1.20% increase for the Dow Jones Industrial Average. Multifamily REIT Aimco recorded the largest share-price increase for the week among all US REITs with at least $200 million in market capitalization, up 6.76%.

A low valuation is not enough in the REIT sector. Many of the cheapest REITs are also the worst investments. I highlight many REIT value traps to avoid going into 2026.

NEWTON, Mass.--(BUSINESS WIRE)--Service Properties Trust (Nasdaq: SVC) (“SVC”) today provided an update on its hotel dispositions and recent actions to strengthen its balance sheet. Hotel Sales During the 2025 fourth quarter to date, SVC has closed on the sales of 66 hotels with a total of 8,294 keys for aggregate gross proceeds of approximately $534 million. Year to date, SVC has sold 112 hotels with a total of 14,631 keys for aggregate gross proceeds of approximately $859 million. SVC remains.

I like a lot of REITs, but not all of them. Quite a few of them are overleveraged, poorly managed, and own troubled assets. I present three popular REITs to avoid.

The price-to-net asset value valuations for publicly listed US equity real estate investment trusts rose in November, after two consecutive months of decline. US equity REITs closed November at a median 18.2% discount to their consensus NAV per share estimates, according to S&P Global Market Intelligence data. Healthcare REITs posted the highest median premium to NAV.

The REIT sector has seen back-to-back tough months as it saw a modest average negative total return in September (-0.73%) and fell deeper into the red in October (-4.03%). Small cap REITs (-5.05%) had the worst performance in October. Micro caps (-2.81%), mid caps (-3.11%) and large caps (-4.45%) were also in negative territory albeit to a smaller degree. Only 21.66% of REIT securities had a positive total return in October.

I invest most of my capital in REITs. Even then, I'm bearish on a lot of them. This is a sector in which you need to be very selective to succeed.

Most asset classes are not offering any discounts this Black Friday. REITs are the exceptions, with many offering up to 50% discounts. But possibly not for much longer. Here is why this could be your last chance to secure these bargains.