Dori Kesten: Okay. And I may have missed this, but how apprised are you kept on the plans for your two former San Francisco assets at this point?
Thomas Baltimore: The question again, Dori, I’m sorry, you broke up.
Dori Kesten: How apprised are you being kept on the plans for your two former San Francisco assets?
Thomas Baltimore : Again, we have the receivers in control. As a courtesy, I know that Sean occasionally and other members of the team are reaching out. If they have questions or anything that we can do, but the reality is that we’re not involved in the day-to-day. We have no economic benefit and no economic risk moving forward. And I think given how San Francisco has played out, I think we would all agree that, that was a very wise and very prudent decision, while difficult, certainly the right decision for Park and for our shareholders.
Operator: Our next question is from Jay Kornreich with Wedbush Securities.
Jay Kornreich: Just to follow-up on the strong start to the year. RevPAR growth in the fourth quarter was about 4%, January jump to 13%, February was up 8%. So I’m just curious what caused this kind of upward hockey stick level of growth to start the year? And is this something you foresaw? Or did it kind of come by surprise at all?
Thomas Baltimore: I see it as a pleasant surprise. As we pointed out, obviously, group was up 16%, obviously, in the fourth quarter. We saw sequential, I think, about 12% increase between third and fourth quarter. And I think we’ve all been talking about and expecting obviously the group in urban would really begin to accelerate. So I think it’s a natural progression. We just sort of got the pickup a little sooner in terms of its acceleration in January and February. As Sean noted and I noted earlier, obviously, Apple and Cupertino is a great example of we got some short-term business there. Obviously, you had some one-time events of the sugar bowl in New Orleans. But again, New Orleans was up north of 50%. Look at San Jose, obviously, had an event, but up 35%.
So you’re really starting to see obviously that those business travelers really get back on the road. Again, that need to connect to be together, build those relationships that need is never going to go away. So really, this is a natural progression. And given the fact that if you think about our portfolio, we’ve got such small and certainly below the long-term average in terms of supply impact, that’s going to continue to benefit us as we move forward. New York, again, you’re taking supply out of the market. There hasn’t been, I think, a permit approved since 2021. So we look at New York and are very, very bullish. And obviously, we had a great ’23 and very encouraged about ‘24 as we look out, just to give another example. Chicago, again, we knew there was going to be a very strong citywide almost near record and up 65%, close to about 780,000 room nights as we look out there, but there was a strong group business in January, which also gave us an additional tailwind there.
So it is broad win.
Operator: Our next question is from Anthony Powell with Barclays.
Anthony Powell: I guess a question on your remaining, I guess, California exposure. Two hotels in San Francisco, two in Silicon Valley that Sean talked about and one Downtown L.A., the Hilton Checkers, I think all of the gap versus ’19 is that those via properties. So maybe talk about what you’re seeing there? And are those hotels still core to your portfolio?
Thomas Baltimore: Yes, Anthony, it’s a great question. I would say, look, having 3% exposure in San Francisco. And look, it’s important to have a diversified portfolio. I would respectfully submit that those groups that say, I’m going to be leisure only. I’m not sure that’s really a sustainable or those that are going to be — I’m going to focus on urban and group, having that diversified portfolio, I think, is really showing significant benefit to us. So as we think about San Francisco, I’ve said, I certainly expect that, that market is going to come back. I just think that it’s going to be elongated and pushed out for the two assets that we own there, obviously, the JW Marriott and also the Hyatt Centric. Certainly, assets that, at this point, we continue to expect to hold as we think about San Jose and Cupertino again, two attractive assets.
Downtown L.A., I think, is a different story. They’re in a different, complex, challenging situation, not dissimilar to what’s happening in San Francisco. And we’ll continue to evaluate that submarket and see what we do in the future.
Anthony Powell: Got it. I think Tom, you also talked about acquisitions. If the capital markets just cooperate, can you maybe expand on that? What do you mean by capital markets? Is it equity, debt capital and remind us what your target leverage ratio is right now?
Thomas Baltimore: Yes. I mean, look, we’ve always said from the moment of the spin that we wanted to be leveraged kind of 3x to 5x and we’d certainly like to be closer to 4x. I think in the context of capital markets, it’s really beginning to get rerated EBITDA multiple and getting our stock up and something close to the net asset value. I think even the worst of times, we didn’t do a dilutive equity raise. We’re not going to do one now. We’ve been, I think, passionate and laser-focused on recycling capital. We’ve sold assets. We’ve used that to reinvest back in the portfolio and to buy back stock and reduce leverage. I’d say that we would be anchored in those same goals and principles, but we’re always looking opportunistically.
And if there are unique situations that are accretive, we certainly are going to continue to underwrite and explore. But we’ll see. We’ll see how the year unfolds, but we certainly want to be on offense at the appropriate time. Right now, and last year was a great example of that buying back 15 million shares at an average price of $12 or inside of that was a very prudent decision for shareholders in our view.
Operator: Our next question is from David Katz with Jefferies.
