McLEAN, VA–Park Hotels & Resorts announced it has closed on the sale of 11 non-core assets across three separate transactions for total gross proceeds of $317 million, or $136,000 per key. The sales included a portfolio of three Embassy Suites hotels, a portfolio of seven UK hotels and one South African hotel. 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 of 7.9% excluding capex, or 14.8x the portfolio's projected 2017 EBITDA, which is 10.7x excluding capex.
The REIT is executing well on its capital recycling plan, selling off its non-core asset to focus on its strategic markets and holdings, Marc Magazine, executive managing director of Savills Studley, tells GlobeSt.com.
The market has come back again for hotel trades after a pause in sales for the first three quarters of 2017, he adds. “That pause has ended and people are looking to buy hotels again, particularly as it is clear that interest rates will rise over the next year. Investors want to acquire their product and secure them with low interest rates.”
The Embassy Suites portfolio sold for total gross proceeds of approximately $95.8 million, or $142,000 per key. The portfolio consists of the 241-room Embassy Suites by Hilton Atlanta Perimeter Center, the 236-room Embassy Suites by Hilton San Rafael Marin County in San Rafael, Calif., and the 199-room Embassy Suites by Hilton Kansas City Overland Park in Overland Park, Kan.
The UK portfolio sold for total gross proceeds of approximately $189 million, or $141,000 per key. Starwood Capital Group's Global Opportunity Fund XI was the buyer. The portfolio consists of the 188-room Hilton London Islington in London, the 173-room Hilton Bath City in Bath, the 184-room Hilton Edinburgh Grosvenor in Edinburgh, the 198-room Hilton Belfast in Belfast, the 278-room Hilton Blackpool in Blackpool, the 138-room Hilton Milton Keynes in Milton Keynes, and the 175-room Hilton Coylumbridge in Coylumbridge.
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, or $99,000 per key.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
