Park Hotels & Resorts Inc. (NYSE:PK) today announced that it closed on the sale of 11 non-core assets, including a portfolio of three Embassy Suites hotels, a portfolio of seven U.K. hotels and one South African hotel for total gross proceeds of $317 million, equating to $136,000 per key across three separate transactions. When adjusted for Park’s anticipated capital expenditures of $123 million for the 11 hotels, the proceeds represent a 5.7% capitalization rate on the portfolio’s projected 2017 net operating income (7.9% excluding capex), or 14.8x the portfolio’s projected 2017 EBITDA (10.7x excluding capex).
“I am thrilled with our team’s success in executing our stated strategy of recycling capital out of non-core assets with significant expected capex, while dramatically reducing our exposure to international markets,” commented Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer of Park. “Since the start of the year, we have closed on 12 asset sales totaling nearly $379 million with an average RevPAR of just $106, or 36% lower than Park’s pro-forma RevPAR on a trailing 12-month basis, while saving an estimated $132 million of anticipated capex over the next few years.”
Embassy Suites Portfolio
The Embassy Suites portfolio sold for total gross proceeds of approximately $95.8 million, equating to $142,000 per key. The portfolio consists of the 241-room Embassy Suites by Hilton Atlanta Perimeter Center in Atlanta, Georgia, the 236-room Embassy Suites by Hilton San Rafael Marin County in San Rafael, California, and the 199-room Embassy Suites by Hilton Kansas City Overland Park in Overland Park, Kansas.
The U.K. portfolio sold for total gross proceeds of approximately $189 million, equating to $141,000 per key. The portfolio consists of the 188-room Hilton London Islington in London, U.K., the 173-room Hilton Bath City in Bath, U.K., the 184-room Hilton Edinburgh Grosvenor in Edinburgh, U.K., the 198-room Hilton Belfast in Belfast, U.K., the 278-room Hilton Blackpool in Blackpool, U.K., the 138-room Hilton Milton Keynes in Milton Keynes, U.K. and the 175-room Hilton Coylumbridge in Coylumbridge, U.K.
In addition to the above-mentioned sales, Park also closed on the sale of the 327-room Hilton Durban Hotel located in Durban, South Africa for gross proceeds of approximately $32.5 million, equating to $99,000 per key.
Park Hotels & Resorts Inc. (NYSE: PK) is the second largest publicly traded lodging real estate investment trusts with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park’s portfolio currently consists of 55 premium-branded hotels and resorts with over 32,000 rooms located in prime U.S. and international markets with high barriers to entry.
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