Blackwells Urges Competitive Sale Process After $2 Billion TKO Offer Rejected
Key Facts
Blackwells Capital urged the board of Service Properties Trust to begin negotiations with TKO and other parties as part of a competitive, transparent sale process for its hotel portfolio, after the board rejected TKO’s $2 billion all-cash offer on November 4, according to a Blackwells letter published via Yahoo Finance. The activist said the board considered the offer substantially below the portfolio’s value. The demand focuses on the hotels’ sale; the letter does not establish that Blackwells sought to sell the entire company. Blackwells called for independent trustees alone to oversee the process, supported by independent financial and legal advisers. The move comes amid declining company revenue and widening losses, according to its quarterly filing with the U.S. Securities and Exchange Commission.
Blackwells set a deadline for the board to respond to its demands in writing by 5:00 p.m. Eastern time on Friday, November 13, 2026. The demands include beginning good-faith negotiations with TKO and other potential buyers as part of a competitive, transparent sale process. The letter also said independent trustees should oversee the process, with independent financial and legal advisers involved. The available facts did not include an outcome to the negotiations or a board decision on the demands. The response deadline therefore remains the next step Blackwells announced in its letter.
The dispute over the portfolio’s value rests on differing estimates cited by Blackwells in its letter. It said Service Properties Trust materials dated November 4 target a value of between $2.5 billion and $3 billion for the hotels the company plans to retain over one to two years. TKO’s rejected offer, by contrast, was $2 billion for the hotel portfolio, according to the letter. Blackwells quoted the board as saying the offer substantially undervalued the portfolio. These figures reflect the parties’ positions as relayed by the activist, while the available materials did not provide an independent valuation of the portfolio.
The demand comes as the company reported weaker financial performance in the third quarter of 2026. Revenue was $399.520 million, compared with $478.770 million in the third quarter of 2025, a year-over-year decline of 16.6%, according to the company’s report. Net loss widened to $87.940 million from $46.945 million a year earlier. For the nine months ended September 30, 2026, net loss was $462.956 million, compared with $201.539 million in the corresponding period of 2025. The results provide financial context for discussions of asset options, but do not establish that the financial deterioration prompted Blackwells’ move.
The company attributed most of the decline in hotel revenue in the third quarter to hotel sales since July 1, 2025, which reduced revenue by $94.624 million compared with the same period a year earlier. Higher occupancy and average rates at some hotels offset $15.427 million of the impact, according to the report. Service Properties Trust sold 32 properties in the nine months ended September 30, 2026, for a total sale price of $88.159 million, excluding closing costs. It then sold, from October 1 through November 2, 2026, 8 hotels with 1,509 keys for $50.6 million, excluding closing costs. The sales show that the company was already disposing of assets from its portfolio, while Blackwells is calling for a competitive process involving TKO and other parties.
Service Properties Trust’s portfolio comprised 87 hotels with 19,897 rooms or suites as of September 30, 2026. Blackwells said the company owns 34% of Sonesta, which operates most of its hotels. It also noted that Service Properties Trust’s chairman also chairs RMR, the company’s external manager. In the stock market, shares of the company, listed under the ticker SVC, closed at $5.5 on November 5, 2026. The evidence did not include the stock’s opening price or session high and low, nor did it link the closing price to Blackwells’ demand or the offer’s rejection.