Park Hotels Sells Le Meridien and Hotel Adagio for $304M

Park Hotels & Resorts Inc. has entered into two separate definitive contracts to sell the 360-room Le Meridien San Francisco and the 171-room Hotel Adagio Autograph Collection in San Francisco for total proceeds of $303.5 million or an average sale price of approximately $572,000 per key. When adjusted for Park’s anticipated capital expenditures, the blended sale price represents a 6.1 percent capitalization rate on 2019 net operating income or 14.4x 2019 EBITDA (13.2x excluding capex).

Management currently expects each of the transactions to close within the next 60 days. Gross proceeds for the Le Meridien San Francisco are $221.5 million or approximately $615,000/key. Gross proceeds for the Hotel Adagio are $82 million, or approximately $480,000/key.

Following the sale of both hotels, Park’s exposure to San Francisco will decrease by 210 basis points to 14.6 percent based on 2019 pro-forma Hotel Adjusted EBITDA. Net proceeds from the sales will be used to partially repay debt currently outstanding on its one remaining bank term loan. Pro forma for the repayments, the company expects to have approximately $80 million of corporate bank debt outstanding.

Once complete, the transactions will bring the total number of assets sold or disposed of since spinning off from Hilton in January 2017 to 29, with total gross proceeds of approximately $1.7 billion.