Park Hotels ‘laser-focused’ on selling non-core assets

TYSONS, Virginia — Sales of non-core assets continue to be a primary focus for REIT Park Hotels & Resorts.

“From a capital allocation standpoint, we made meaningful progress toward our goal of $300-400 million in non-core dispositions with the sale of the Hyatt Centric Fisherman’s Wharf for $80 million,” Thomas Baltimore, CEO of the Tysons, Virginia-based REIT said during the second-quarter earnings call. “While the transaction market remains challenging, we are actively encouraged by discussions from potential buyers of several non-core assets, and we remain laser-focused on achieving our target.”

Park has set a goal of disposing of its remaining 18 non-core hotels as soon as it can. Baltimore said the company has now sold or disposed of 46 assets with proceeds now north of $3 billion.

Thomas Balitmore

“I’m excited about the investments we’ve made in our core portfolio, as we continue to enhance asset quality and strategically allocate capital… We are confident that reinvesting in our portfolio is the highest and best use of our capital, positioning us for sustained growth and outperformance,” he said.

Park’s sale of the 316-key Hyatt Centric Fisherman’s Wharf for $80 million was half of its previous sales price. It was a notable transaction that Atlas Hospitality Group mentioned in its study of California hotel sales in the first half of 2025.

Sean Dell’Orto, CFO for Park, gave an update on another notable disposition, the sale of the 1,919-key Hilton San Francisco Union Square and the adjacent 1,023-key Hilton Parc 55, which the REIT handed back to its lender in 2023.

“I’m pleased to report that the receiver has made substantial progress toward the sale of the two hotels,” he said. “The purchase and sale agreement was recently signed with a closing expected by October 29.”

There has been much speculation about what will happen on the sale of two of San Francisco's largest hotels and what it will do for the market's valuations.

Despite the progress, Baltimore said it’s a challenging environment for M&A.

“Some have used the phrases frozen or stalled,” he said. “It’s an environment where you have just got to work a little harder… There’s plenty of liquidity, both on the equity and the debt side. Buyers are being cautious with their underwriting and being disciplined. We are in active discussions on a number of hotels.”

Some have used the phrases frozen or stalled. It’s an environment where you have just got to work a little harder… There’s plenty of liquidity, both on the equity and the debt side.

Thomas Baltimore

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Baltimore said he thinks by the end of 2026, the REIT will have made significant progress on that sales goal.

“There could be a straggler or two that remains, but we’re doing everything in our power to clean up as quickly as we can,” he said.

Ultimately, Baltimore said the REIT wants to focus on what it defines as its core portfolio, which accounts for about 90% of the value of the company. Doing that will also strengthen the REIT’s overall RevPAR results. 

“If you take out our non-core [assets] and just look at our core, I think the RevPAR is about $215 and would certainly be as strong as any of our peers,” he said. “We’d love to deal with just one cleanup trade. But the reality is every asset has its own story with legal and tax [issues] and, in some cases, joint ventures and other complexities.

“[Our team] is working hard to reshape the portfolio and clean up those non-core assets as quickly as we can. You can expect we’ll have announcements here in the coming months.”

In other Q2 results, the REIT said its comparable RevPAR was down 1.6% year-over-year. The company attributed a lot of that loss to the suspended operations in May at the Royal Palm South Beach Miami hotel in Florida, which is undergoing comprehensive renovations.

The company also lowered its full-year 2025 RevPAR guidance 150 basis points at the midpoint from $185-191 to $184-187 but raised its adjusted EBITDA from $588-648 million to $595-$645 million based on better flow through and a reduction in insurance premiums (the REIT touted a 25% reduction in insurance premiums that went into effect on June 1).

The company also decided to permanently close the Embassy Suites Kansas City Plaza in Missouri in the third quarter as the REIT agreed to terminate the ground lease at the end of September. Baltimore also said Park was exiting non-core hotels in Seattle and Sonoma, Washington, and will terminate those ground leases at the end of the year.

Park leadership said it continued to see improvements in group demand at its urban hotels and certain resort hotels year-over-year, with group revenues at the Hilton Waikoloa Village increasing 57%, while group revenues at the Waldorf Astoria Orlando grew nearly 29% following its renovations. Group revenues at the Hilton New York Midtown increased over 16%. While Park said it expects comparable group revenue pace to decrease 14% YOY in the third quarter, it is expecting an increase of 18% for Q4 YOY.

Baltimore said the REIT continued expects performance to accelerate meaningfully in Hawaii (where Park has two properties) in the third quarter as air lift to the islands continues to ramp up. 
“In our opinion, Hawaii is one of the most dynamic and resilient resort markets in the country, with less supply growth forecasted versus any other U.S. market,” he said. “We are very encouraged about Hawaii.”

Other Q2 highlights

• Through Q2, Park’s liquidity was approximately $1.3 billion, including $950 million of available capacity under the company’s revolving credit facility
• Park’s net debt was approximately $3.7 billion, and the weighted average maturity of Park’s consolidated debt is 2.7 years.
• The REIT spent nearly $45 million on capital improvements at its hotels and expects to incur approximately $310-$330 million in capital expenditures during 2025
• Net loss and net loss attributable to stockholders were $2 million and $5 million, respectively
• Adjusted EBITDA was $183 million
• Diluted adjusted FFO per share was $0.64

What the analysts said

Analyst Patrick Scholes of Truist Securities said the earnings were a beat as EBITDA came in 6% ahead of consensus.

“While this was a nice headline beat, revenues were in line with expectations as upside came from various other items such as a one-time $5 million tax credit associated with a tax refund for the Chicago hotels and lower various departmental and support expenses,” he said.