Park Hotel & Resorts to Sell Another $400M of Portfolio

Park Hotel & Resorts will continue its campaign of selling off hotel properties to boost the liquidity of its balance sheet, aiming to sell another $400M worth of assets by the end of the year, the REIT said in a Q2 earnings call. 

Thus far this year, the company has sold five hotels worth a total of $270M. Park said the hotel sales had been executed at or near pre-pandemic 2019 valuations. The funds have been invested back into the company in stock buybacks and debt reduction.

“Despite recent choppiness in the debt markets, interest in hotel real estate remains high. Accordingly, we expect to sell another $300 million to $400 million of assets to reduce leverage and reinvest back in our portfolio,” said Tom Baltimore, Park Hotels & Resorts CEO, during the Q2 earnings call.

Baltimore said the company’s growing war chest of liquidity—now $1.8B, with no significant maturities coming due in the next 12 months—would be deployed to “maintain flexibility as we look to pivot between defense and offense, depending on what the markets dictate.”

Recent transactions by Park include the sale of its 25% interest in the Hilton San Diego Bayfront Sunstone Hotel investors for $157M and the Homewood Suites by Hilton at the Seattle Convention Center on Pike Street for $80M.

In its Q2 earnings report, the REIT said it had stronger-than-expected Q2 performance as an ongoing recovery in leisure travel was augmented by increasing business travel, which came in at 95% of 2019 levels.

In a Q2 2022 earnings call, the company said its business-oriented hotels opened for the entirety of the quarter and recorded mid-week occupancies of 73%, an improvement of 30% over the first quarter.

Park said its hotels in urban markets saw demand surge and occupancy average 64% for Q2, a 25% increase over Q1 2022. During the second quarter, the company’s last remaining pandemic shutdown, the Parc 55 San Francisco, reopened on May 19 and notched 67% occupancy at the 1,000-room landmark in June.

Park Hotel & Resorts has a portfolio of 49 premium-branded hotels and resorts with more than 30K rooms. The REIT says that 85% of the portfolio is in the luxury or “upper-upscale” segment; 80% is located in CBDs of major cities.

Based in Tysons, VA, Park was established as an independent company in 2017 after a spin-off from Hilton. In 2019, Park acquired Chesapeake Lodging Trust, adding hotels in San Francisco, Boston, Miami and Los Angeles.