TKO Hotels Proposes $2 Billion Acquisition of Service Properties Trust Hotel Portfolio

TKO Hotels announced Tuesday it has submitted a formal written offer to acquire the entire hotel portfolio of Service Properties Trust (SVC) for $2 billion in cash. The transaction, if completed, would provide SVC with immediate liquidity to reduce debt and allow the company to concentrate on its net lease retail platform.

"We have tremendous conviction in the long-term value of SVC's hotel portfolio and believe TKO is uniquely positioned to unlock its full potential," said Jim Koehler, CEO of TKO. He added that the all-cash offer eliminates financing risk and provides SVC with the certainty needed to execute a successful strategic repositioning.

The acquisition would accelerate SVC's transformation into a focused, pure-play net lease retail REIT. SVC's common shares have declined more than 50% over the past year, and the proposed $2 billion purchase price for the hotel portfolio alone exceeds SVC's current total market capitalization.

SVC's 745-property net lease portfolio generates over $500 million in annual EBITDA and is characterized by predictable cash flows and minimal capital requirements. The hospitality segment, by contrast, is capital-intensive, operationally complex, and subject to cyclical volatility.

The proposed acquisition is subject to negotiation with, and approval by, SVC's Board of Directors, execution of definitive documentation, and satisfaction of customary closing conditions. TKO has engaged legal and financial advisors and is prepared to work expeditiously toward execution of definitive agreements.