Yahoo Finance Park Hotels (PK) Sells Seattle Hotel & San Diego JV Stake
Park Hotels & Resorts Inc. PK announced the completion of the sale of the 195-room Homewood Suites by Hilton Seattle Convention Center Pike Street in Seattle, WA. Also, the lodging REIT accomplished the sale of its 25% joint venture stake in the 1,190-room Hilton San Diego Bayfront in San Diego, CA.
The two transactions resulted in combined gross proceeds of $237 million. It includes Park Hotels’ $55 million pro-rata share of secured debt in Hilton San Diego Bayfront. PK will utilize the sale proceeds for general corporate needs. The combined sale price marks a 6.3% capitalization rate on the 2019 net operating income.
The moves come as part of Park Hotels’ capital recycling program and so far in the year, the company has sold interests in four hotels for combined gross proceeds of roughly $260 million. Currently, Park Hotels also has one additional non-core hotel under contract for $9.4 million. In May, the company sold the 211-room Hilton Chicago/Oakbrook Suites for gross proceeds of $10.3 million.
These efforts keep PK on track to achieve its target of $200 to $300 million of asset sales in 2022. The strategic capital recycle program is aimed at lowering net leverage and positioning the portfolio for sustainable long-term growth.
After suffering a severe impact of the onset of the pandemic with travel cancellations and social distancing requirements, the lodging industry fundamentals are now experiencing a rebound.
Earlier in June, Park Hotels’ Chairman and CEO, Thomas J. Baltimore, Jr., noted that “Leisure demand remains robust in our Hawaii, Florida and Puerto Rico markets, while business transient and group demand trends continue to accelerate across our urban portfolio, with the pace of improvement expected to continue over the balance of the year.”
Shares of Park Hotels have declined 29.4% compared with the 15.2% fall of the industry in the past three months. At present, PK carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Stocks to Consider
Some key picks from the REIT sector include Extra Space Storage Inc. EXR and OUTFRONT Media OUT.
The Zacks Consensus Estimate for Extra Space Storage’s 2022 funds from operations (FFO) per share has moved 1.6% upward in the past month to $8.25. EXR presently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for OUTFRONT Media’s ongoing year’s FFO per share has been raised 7.7% over the past two months to $2.09. OUT sports a Zacks Rank #1 currently.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Zacks Investment Research
