Park Hotels & Resorts has signed two different deals to sell two properties in San Francisco for a combined amount of $303.5m.
The two properties to be divested are 360-room Le Meridien San Francisco and the 171-room Hotel Adagio, Autograph Collection.
Both the deals are expected to close within the next 60 days.
In a statement, Park Hotels & Resorts said: “Following the sale of both hotels, Park’s exposure to San Francisco will decrease by 210 basis points to 14.6% 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 $80m of corporate bank debt outstanding.”
The hospitality company will receive gross proceeds of $221.5m from the sale of Le Meridien San Francisco. The sale price equates to a 5.9% capitalisation rate on 2019 net operating income, when adjusted for Park’s anticipated capex.
Park will receive gross proceeds of $82m by divesting Hotel Adagio.
Since spinning off from Hilton in January 2017, Park has divested or disposed a total of 27 assets. The latest transactions will increase the figure to 29.
Park chairman and CEO Thomas J. Baltimore, Jr. said: “I am incredibly pleased with our two upcoming dispositions in San Francisco, which are under contract at very attractive pricing, demonstrating the strong demand by institutional investors seeking high-quality hotels in urban markets.
“The upcoming sales of these two assets highlight our unwavering commitment to reducing leverage and prudently allocating capital.
“Once these two dispositions are completed, we will have exceeded our stated goal of selling $300m to $400m of hotels in 2021, with our year-to-date disposition efforts totalling approximately $477m of gross proceeds.”
In May, Park Hotels & Resorts signed deals to divest Hotel Indigo San Diego Gaslamp Quarter in San Diego, California and the Courtyard Washington Capitol Hill Navy Yard in Washington, DC.