SPT delays sale of Sonesta extended stay portfolio

George Sell George Sell Uploaded 12 August 2020

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US: Service Properties Trust has delayed the sale of 39 extended stay properties managed and branded under its sister company Sonesta.

Speaking during the company’s second-quarter earnings call, president and CEO John Murray confirmed earlier plans to sell the extended stay hotels, collectively estimated to be worth $461.3 million.

“As the impacts of the pandemic set in, we obviously saw that extended stay hotels were performing much better than any other hotel type,” he said. “So we stopped any marketing efforts. We’ve also been evaluating whether some of those hotels might be converted to an alternative use like multifamily. That’s something we’re still considering.”

The company is also looking in to the possibility of expanding the Sonesta portfolio. SPT is planning to reflag 103 properties under a management agreement with InterContinental Hotels Group (IHG).

In its Q2 earnings release, SPT said it had entered into an agreement with IHG on June 1 “waiving the minimum security deposit requirement through 2021 and the requirement to fund FF&E reserves through September 30.

SPT has received no payments from IHG for July or August, but officials said the two companies are currently in negotiations “to see if there may be a mutually beneficial resolution”.

Murray added that the company is "very close" to a purchase and sale agreements for a portfolio of 15 Hawthorn Suites extended stay properties.

“Within the coming week we’ll most likely sign the purchase and sale agreements, so that’s possible to close late in the fourth quarter," he said.

 

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