Back in February 2016, Hilton announced its intention to spin off its real estate and timeshare businesses in an effort to unlock the value of its shares. Under the plan of reorganization, Park Hotels & Resorts (NYSE: PK) was created to hold the portfolio of hotel and resort properties that Hilton Worldwide owned. At the same time, Hilton Grand Vacations (NYSE: HGV) would be the new holder of Hilton’s timeshare business.
Under the terms of the spinoff, Hilton Worldwide investors received one share of Park Hotels & Resorts (NYSE: PK) stock for every five shares of Hilton common stock they owned. Similarly, one share of Hilton Grand Vacations (NYSE: HGV) stock was distributed for every 10 shares of Hilton common stock.
Following the spinoff, Hilton wanted to keep the value of its original company shares in the same range as it traded before the spinoff. The 1-for-3 reverse split was designed to accomplish that goal.
So at the end of the day, a shareholder with 300 shares of Hilton Worldwide would own the following positions:
60 shares of Park Hotels & Resorts (NYSE: PK);
30 shares of Hilton Grand Vacations (NYSE: HGV); and
100 shares of the new Hilton, after the reverse split was completed.
Freeing the individual divisions to conduct their own business has allowed each new company to pursue opportunities differently. The new publicly traded real estate companies hope that separately, they’ll produce better overall performance than they would have together, but the move has also allowed investors to vote with their feet and choose the parts of Hilton’s former integrated business that they like the best. Thus, real estate and Hilton investors shouldn’t be surprised if all three pieces of the former Hilton company end up doing well in the future.
About Park Hotels & Resorts
Park Hotels & Resorts Inc. is one of the largest publicly traded hotel real estate investment trusts (REITs) comprised of a geographically diverse portfolio of hotels and resorts with significant underlying real estate value. The Park Hotels & Resorts portfolio of real estate properties consists of approximately 55 premium-branded hotels and resorts with over 32,000 rooms located in prime United States and international markets with high barriers to entry.
Over 85% of the Park Hotels & Resorts portfolio of real estate properties is in the luxury or upper upscale segment, and over 95% is located in the United States, including locations in 14 of the top 25 markets. In addition, over 70% of the Park Hotels & Resorts portfolio of real estate properties is located in the central business districts of major cities, resort, or conference destinations.
Park Hotels & Resorts was established as an independent company on January 3, 2017, following its spin-off from Hilton. The Park Hotels & Resorts headquarters are located in McLean, Virginia and their ticker symbol on the New York Stock Exchange is “PK”. Their common stock shares can easily be purchased by new real estate investors by opening an account with a local or national stock broker such as Charles Schwab, TD Ameritrade, Fidelity, or E-Trade.