Park Hotels: A Good Value With A Well-Covered Dividend And Growth Potential Following Merger With Chesapeake Lodging Trust

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Park Hotels & Resorts (PK), headquartered in Tysons, Virginia, was established as an independent company in 2017, following its spin-off from Hilton. It is one of the largest publicly-traded lodging REITS with a portfolio of 48 premium-branded hotels and resorts with over 29,000 rooms located primarily in prime US markets with high barriers to entry.
over 85% of the portfolio is in the luxury or upper upscale segment over 95% of the portfolio is located in the US, including locations in 13 of the top 25 markets over 70% of the portfolio is located in the central business districts of major cities or resort or conference destinations Hilton San Diego Bayfront
Since the spin-off, Park has made substantial progress
Following the spin-off, the situation is as follows:
PK returned more than $2bn of capital to shareholders in the form of dividends and HNA stock buyback (buying back 14M shares at $24.85) The dividend is well-covered with sector leading yield (~7%) and increasing (from $0.43/share to $0.45/share in 2019) Strong and flexible balance sheet: Net Debt/Adjusted EBITDA remains within the stated target range of 3x to 5x and $1bn undrawn line of credit provides flexibility Sold 15 non-core assets for $590M, while reducing exposure to international markets to ~1% of Hotel Adjusted EBITDA Solid RevPAR growth in 2018 and 2019; exceeded peers by 65bps in 2018 and expected... Read more

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