Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE:PK)
today announced that it has entered into two separate, definitive
contracts to sell the 360-room Le Meridien San Francisco and the
171-room Hotel Adagio, Autograph Collection (San Francisco, CA) for
total proceeds of $303.5 million, or an average sale price of
approximately $572,000 per key. When adjusted for Park’s
anticipated capital expenditures (“capex”), the blended sale price
represents a 6.1% capitalization rate on 2019 net operating income
(6.7% excluding capex), or 14.4x 2019 EBITDA (13.2x excluding
capex). Management currently expects each of the transactions to
close within the next 60 days.
Le Meridien San FranciscoGross proceeds for the
Le Meridien San Francisco are $221.5 million, or approximately
$615,000/key. When adjusted for Park’s anticipated capex, the sale
price equates to a 5.9% capitalization rate on 2019 net operating
income (6.5% excluding capex), or 15.0x 2019 EBITDA (13.7x
excluding capex).
Hotel Adagio, Autograph CollectionGross
proceeds for the Hotel Adagio are $82 million, or approximately
$480,000/key. When adjusted for Park’s anticipated capex, the sale
price equates to a 6.6% capitalization rate on 2019 net operating
income (7.1% excluding capex), or 13.0x 2019 EBITDA (12.2x
excluding capex).
Following the sale of both hotels, Park’s exposure to San
Francisco will decrease by 210 basis points to 14.6% based on 2019
pro-forma Hotel Adjusted EBITDA. Net proceeds from the sales will
be used to partially repay debt currently outstanding on its one
remaining bank term loan. Pro forma for the repayments, the Company
expects to have approximately $80 million of corporate bank debt
outstanding.
Once complete, the transactions will bring the total number of
assets sold or disposed of since spinning off from Hilton in
January 2017 to 29, with total gross proceeds of approximately $1.7
billion.
Operational UpdateThe Company continues to
witness encouraging improvements in demand, and now expects to
break-even at the corporate level in June—an improvement from the
$15 million burn rate achieved in May. Occupancy at its 50
consolidated hotels increased from 32.6% in March to an estimated
49.8% in June, while reaching an estimated 59% for hotels opened
for the entire month of June. Top performing markets during the
month of June included Key West (91.8% occupancy), Hawaii (85.5%)
and Southern California (75.3%).
Park also announced that the Company reopened the 1,544-room
Hilton Chicago on June 10th, bringing its total open portfolio to
54 out of 57 hotels, accounting for 90% of the Company’s total room
count. The Company’s three remaining suspended hotels are currently
expected to reopen over the next several months as demand
recovers.
“I am incredibly pleased with our two upcoming dispositions in
San Francisco, which are under contract at very attractive pricing,
demonstrating the strong demand by institutional investors seeking
high-quality hotels in urban markets,” commented Thomas J.
Baltimore, Jr., Chairman and Chief Executive Officer of Park. “The
upcoming sales of these two assets highlight our unwavering
commitment to reducing leverage and prudently allocating capital.
Once these two dispositions are completed, we will have exceeded
our stated goal of selling $300 million to $400 million of hotels
in 2021, with our year-to-date disposition efforts totaling
approximately $477 million of gross proceeds. Operationally, we
continue to witness strong demand trends across many of our core
markets, while average RevPAR during the month of June exceeded
2019 levels at nearly 20% of our hotels within our consolidated
hotel portfolio. Our portfolio’s performance over the past two
months, along with sequential improvement expected to continue into
July, has accelerated our expectations to break-even at the
corporate level.”
Forward-Looking StatementsThis press release
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Forward-looking
statements include, but are not limited to, statements related to
Park’s current expectations regarding use of proceeds from the sale
of properties. Forward-looking statements include all statements
that are not historical facts, and in some cases, can be identified
by the use of forward-looking terminology such as the words
“outlook,” “believes,” “expects,” “potential,” “continues,” “may,”
“will,” “should,” “could,” “seeks,” “projects,” “predicts,”
“intends,” “plans,” “estimates,” “anticipates,” “hopes” or the
negative version of these words or other comparable words. You
should not rely on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are,
in some cases, beyond the Company’s control and which could
materially affect its results of operations, financial condition,
cash flows, performance or future achievements or events.
Currently, one of the most significant factors continues to be the
adverse effect of COVID-19, including possible resurgences, on the
Company’s financial condition, results of operations, cash flows
and performance, its hotel management companies and its hotels’
tenants, and the global economy and financial markets. COVID-19 has
significantly affected the Company’s business, and the extent to
which COVID-19 continues to affect the Company, its hotel managers,
tenants and guests at the Company’s hotels will depend on future
developments, which are highly uncertain and cannot be predicted
with confidence, including the scope, severity and duration of the
pandemic, the actions taken to contain the pandemic or mitigate its
effect, the emergence of virus variants, the efficacy, availability
and deployment of vaccinations and other treatments to combat
COVID-19, including public adoption rates of COVID-19 vaccines,
additional closures that may be mandated or advisable even after
the reopening of certain of the Company’s hotels on a limited
basis, whether due to an increased number of COVID-19 cases or
otherwise, and the direct and indirect economic effects of the
pandemic and containment measures, among others. Moreover,
investors are cautioned to interpret many of the risks identified
in the risk factors included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2020 as being heightened as a
result of the ongoing and numerous adverse impacts of COVID-19.
Forward-looking statements involve risks, uncertainties and
assumptions. Actual results may differ materially from those
expressed in these forward-looking statements. You should not put
undue reliance on any forward-looking statements and Park urges
investors to carefully review the disclosures Park makes concerning
risk and uncertainties in Item 1A: “Risk Factors” in Park’s Annual
Report on Form 10-K for the year ended December 31, 2020, as such
factors may be updated from time to time in Park’s filings with the
SEC, which are accessible on the SEC’s website at www.sec.gov.
Except as required by law, Park undertakes no obligation to update
or revise publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
About Park Hotels &
ResortsPark is the second largest publicly traded
lodging REIT with a diverse portfolio of market-leading hotels and
resorts with significant underlying real estate value. Park’s
portfolio currently consists of 57 premium-branded hotels and
resorts with over 32,000 rooms primarily located in prime city
center and resort locations. Visit www.pkhotelsandresorts.com for
more information.
For more information, contact:Ian
WeissmanSenior Vice President, Corporate
Strategy571-302-5591iweissman@pkhotelsandresorts.com
For additional information or to receive press
releases via e-mail, please visit our website
atwww.pkhotelsandresorts.com
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