TKO Hotels Offers $2 Billion for Service Properties Trust Hotel Portfolio
All-cash bid aims to reshape SVC into pure-play net lease REIT by offloading capital-intensive lodging assets
TKO LLC, a hospitality investment firm based in Aberdeen, S.D., has submitted a formal written offer to acquire the entire hotel portfolio of Service Properties Trust for $2.0 billion in cash. The transaction, contingent on board approval and execution of definitive agreements, would allow SVC to reduce debt while pivoting toward its net lease retail operations.
The timing underscores market skepticism about SVC's dual-asset strategy. SVC common shares closed at $6.49 per share on October 6, 2026, down more than 50 percent over the trailing twelve-month period. TKO notes that its proposed $2.0 billion valuation of the hotel portfolio alone exceeds SVC's entire current public market capitalization, suggesting the lodging assets are trading at a significant discount.
SVC operates a 745-property net lease portfolio generating more than $500 million in annual EBITDA, characterized by predictable cash flows and minimal capital requirements. The hospitality segment, by contrast, demands ongoing capital investment and operates within cyclical market dynamics. Jim Koehler, CEO of TKO, stated: "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. Our all-cash offer eliminates financing risk and provides SVC with the certainty it needs to execute a successful strategic repositioning."
TKO argues that SVC's hotel assets constrain the company's cost of capital, preventing the net lease business from commanding premium multiples available to focused REITs. The transaction would enable SVC to retire more than 40 percent of outstanding indebtedness while preserving the retained net lease platform. TKO acknowledges SVC management has pursued selective portfolio streamlining rather than complete hospitality exit, but contends that immediate cash certainty outweighs the risk-adjusted value of executing a multi-year disposal strategy in a refinancing environment where existing debt costs are unlikely to be replicated.
The proposal remains subject to SVC board negotiation and customary closing conditions. No assurance exists that definitive documentation will be executed or the transaction completed as contemplated. If accepted, the deal would signal a broader market recalibration of mixed-asset hotel REITs toward specialized operating models.