TKO submitted a formal written offer to acquire the entire hospitality portfolio of Service Properties Trust for $2 billion in cash. The proposed transaction would give SVC immediate liquidity to reduce debt while allowing the company to focus on its net lease retail platform.
TKO said the offer values SVC’s hotel portfolio at a significant premium to its implied market valuation and would eliminate the operational complexity and capital requirements associated with hotel ownership.
The proposed acquisition is subject to negotiation and approval by SVC’s Board of Directors, execution of definitive transaction agreements, and customary closing conditions.
TKO said the $2 billion purchase price for the hotel portfolio alone exceeds SVC’s current public market capitalization.
SVC’s common shares closed at $6.49 on October 6, 2026, after declining more than 50% over the prior 12 months.
TKO argued that selling the hotel assets could accelerate SVC’s transformation into a pure-play net lease REIT.
SVC currently owns a 745-property net lease portfolio that generates more than $500 million of annual EBITDA.
TKO said that business has more predictable cash flows, lower capital requirements, and a simpler operating model than the hospitality portfolio.
The company also said the transaction proceeds could allow SVC to retire more than 40% of its outstanding debt while retaining the net lease platform.
TKO acknowledged that SVC management has previously discussed selectively streamlining its portfolio rather than fully exiting the lodging sector.
However, TKO said it believes the certainty of the proposed all-cash consideration exceeds the risk-adjusted value of pursuing a multi-year portfolio strategy.
The hospitality investor also argued that SVC faces refinancing pressure because its existing weighted average cost of debt may be difficult to replicate in the current interest rate environment.
TKO has retained legal and financial advisors and said it is prepared to move quickly toward definitive agreements.
There is no assurance that SVC will accept the proposal or that a transaction will ultimately be completed.
KEY QUOTES:
“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.”
“This acquisition represents a transformational opportunity for our firm. SVC has assembled an exceptional collection of hospitality assets across prime markets, and we are prepared to move swiftly and decisively to bring this transaction to fruition.”
“Our all-cash offer eliminates financing risk and provides SVC with the certainty it needs to execute a successful strategic repositioning.”
Jim Koehler, CEO of TKO
