Service Properties Sells Las Vegas Office Building

The deal is the first step in the firm's disposition plan to sell about $500 million in non-core assets following a $2.4 billion retail portfolio acquisition last month.
Image via Pixabay
Image via Pixabay

Service Properties Trust, formerly known as Hospitality Properties Trust, has sold 1505 South Pavilion Center in Las Vegas, a 138,558-square-foot office property, for $57 million, or approximately $411 per square foot. The sale is part of the company’s previously announced disposition plan to sell up to $500 million of none-core assets following its recent $2.4 billion acquisition of a net lease service retail portfolio from Spirit MTA REIT.

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John Murray, president & CEO of the Newton, Mass.-based REIT, said in a prepared statement the sale of the Las Vegas office building was the first step in executing its strategy following the Sept. 20 closing of the SMTA transaction. He said the disposition proceeds represent a 6.4 percent capitalization rate and will be used to reduce the company’s leverage. Murray also noted the sales price was a record per-square-foot price for the Las Vegas office market.

Still known as HPT, the REIT announced in June it was purchasing a 774-property net lease portfolio for $2.4 billion in cash from SMTA. The 12 million-square-foot portfolio consisted of properties in 43 states across the U.S. and represented a wide range of industries and brands, including quick service and casual dining restaurants, movie theaters, health and fitness, specialty retail, auto parts and services and other service-oriented businesses. The deal more than doubled HPT’s assets, going from 506 properties to 1,280 properties. Service Properties Trust’s portfolio, which also includes hotels, is now operating under long-term management or lease agreements in 45 states, Washington, D.C., Puerto Rico and Canada. The company has about $12.6 billion in assets under management.

Service Properties Trust changed its name to better represent the service-oriented assets acquired in the deal. On Sept. 25, it began trading under the ticker symbol SVC on the Nasdaq, instead of HPT. The firm is managed by the operating subsidiary of The RMR Group Inc., an alternative asset management company headquartered in Newton.