Park Hotels & Resorts Sells 3 Assets for $166M
- Jun 26, 2019
Park Hotels & Resorts has closed on the sale of three Hilton hotels totaling 1,098 keys in Atlanta, New Orleans and New Jersey for a total of $166 million, as the NYSE-listed REIT prepares to acquire Chesapeake Lodging Trust. The move is designed to reduce leverage ahead of the proposed $2.7 billion merger of the two REITs, first announced in May.
The sales were already in contract when the merger was announced. The assets consist of the 507-key Hilton Atlanta Airport, the 317-key Hilton New Orleans Airport and the 274-key Embassy Suites Parsippany in Parsippany, N.J. The airport and suburban properties, which Park deems non-core assets, have a combined 2018 RevPAR—revenue per available room—of $109, or about 37 percent below the REIT’s 2018 portfolio average. Park anticipates a 6.9 percent capitalization rate on the three hotels’ 2018 net operating income through the transaction, according to a prepared statement.
Located at 1031 Virginia Ave. in Hapeville, Ga., Hilton Atlanta Airport was built in 1989 and renovated in 2012, according to Travel Weekly. The 17-story hotel neighbors the Hartsfield-Jackson International Airport. The six-floor Hilton New Orleans Airport, sited at 901 Airline Drive in Kenner, La., was built in 1989 and renovated last year. The property is across the road from the Louis Armstrong New Orleans International Airport.
Managed by Hilton, Embassy Suites Parsippany is located at 909 Parsippany Blvd. in a suburban township in Northern New Jersey. The 5-story property, constructed in 1989 and last renovated in 2007, sits on Route 202, roughly 25 miles from Manhattan.
Trimming the portfolio
Park announced in May that it had agreed to sell the New Jersey and New Orleans assets for an aggregate price of $75 million and to sell the Atlanta property for $101 million. In the announcement of the proposed merger with NYSE-listed Chesapeake, Park said it also planned to sell additional non-core hotels, including both of Chesapeake’s New York City hotels.
Following the merger, the combined company is slated to have 66 hospitality assets in 17 states and Washington, D.C. Park has now sold 18 non-core assets for more than $750 million since its inception in 2017, amid an ongoing capital recycling effort, chairman & CEO Thomas J. Baltimore Jr. noted in a statement.
The company was formed when Hilton Worldwide spun off most of its owned real estate portfolio, creating the second-largest lodging REIT in the market. Debt-strapped Chinese conglomerate HNA Group sold off a $1.4 billion stake in the firm last year.