Park Hotels & Resorts (PK) Announces Sale of W New Orleans – French Quarter and Provides Update on Hotel Reopenings, Trends
- Virus woes, slowing economic growth weigh on Wall Street
- 'Becoming JP Morgan of the Future': Square (SQ) Dips on Deal to Acquire BNPL Afterpay For $29B in Stock, Benefits Outweigh High Price Says Analyst
- Oil slumps 4% on concerns over demand and OPEC supply boost
- ON Semiconductor (ON) Surges on Strong Q2 Results and Q3 Outlook
- Dollar down again as dovish Fed tone prevails ahead of data
Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.
Park Hotels & Resorts Inc. (NYSE: PK) (“Park” or the “Company”) today announced that it has closed on the sale of the 97-room W New Orleans – French Quarter (the “Hotel”) located in New Orleans, LA, for gross proceeds of approximately $24.1 million, or $249,000 per key. When adjusted for Park’s anticipated capital expenditures (“capex”), the sale price represents a 4.3% capitalization rate on the Hotel’s 2019 net operating income (5.8% excluding capex), or 17.9x the Hotel’s 2019 EBITDA (13.3x excluding capex). Proceeds from the sale will be used to repay debt.
The sale of the Hotel marks the 25th non-core hotel that Park has sold or disposed of since its spin-off from Hilton in January 2017, with gross proceeds from these 25 hotels totaling over $1.2 billion. Since the Company’s acquisition of Chesapeake Lodging Trust in September 2019, it has now sold six non-core hotels as part of its ongoing strategy to de-lever its balance sheet and transform its portfolio.
Operational UpdatePark also announced that the Company recently reopened three West Coast hotels due to improving demand trends in their respective markets. The 360-room Le Meridien San Francisco and the 171-room Hotel Adagio, Autograph Collection, both located in San Francisco, as well as the 850-room DoubleTree Hotel Seattle Airport, all reopened in late March. Park now has 52 out of 59 hotels open, accounting for nearly 80% of the Company’s total room count. The Company’s seven remaining suspended hotels are currently expected to reopen over the next couple of quarters as travel restrictions ease and demand recovers.
The Company continues to witness encouraging improvements in demand, with occupancy at its consolidated hotels increasing from 21% in January to nearly 33% in March, while the portfolio achieved positive EBITDA in March with nearly half of all open consolidated hotels generating positive EBITDA. Park’s hotels located in leisure-oriented destinations or submarkets have recorded strong increases in leisure demand over the latter half of the first quarter and into the second quarter. As a result of the recent strong performance, Park’s monthly burn rate decreased to $26 million in March from the average monthly burn rate of $42 million the company reported during the fourth quarter 2020.
“I am pleased to announce our first non-core asset sale since the onset of the COVID-19 pandemic at very strong pricing amidst encouraging buyer demand for premium, well-located hotels in markets with high barriers to entry,” stated Thomas J. Baltimore, Jr., Chairman and CEO of Park. “The sale of the W New Orleans – French Quarter helps to streamline our portfolio to focus our resources on our larger assets as well as reduce our exposure in a market where we already have a strong presence with our 1,622-room Hilton Riverside hotel. We remain laser-focused on executing on our strategic priorities, including reopening our hotels, reducing our burn rate and further de-levering our balance sheet, as we enter a promising period of demand recovery over the coming months. Operationally, leisure demand trends continue to improve at a faster pace than we had initially anticipated, with a broader based recovery across all demand segments expected over the back half of 2021 and well into 2022.”
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Paysafe Limited (PSFE) Acquires PagoEfectivo
- Tech Recruitment Titan Expands Office Base to Toronto
- Pre-Open Stock Movers 08/02: (XCUR) (DLPN) (AUTL) Higher; (PH) (SQ) Lower (more...)
Create E-mail Alert Related CategoriesCorporate News
Related EntitiesDefinitive Agreement
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!