B. Riley Securities doubts TKO's $2B unsolicited cash bid for SVC's remaining 93 hotels

B. Riley Securities sees a limited chance that Jim Koehler's TKO can close its $2 billion unsolicited cash bid for Service Properties Trust's remaining 93 hotels. "Our initial takeaway is that there is a limited chance that this transaction will be completed," the firm wrote in reporting first published by Bisnow. SVC, the RMR Group-managed REIT that trades on Nasdaq, acknowledged the offer on Oct. 7 and has until Friday to respond, according to the report.

The 93 hotels are 12 percent of SVC's property count, while the $2 billion offer is more than double SVC's market capitalization, which is under $1 billion. The report also cites no known prior contact between SVC and Koehler's firm and little public record of TKO executing a deal of that size.

TKO wants the hotels without management agreements or franchise obligations. One analyst estimated that severing the Sonesta agreement alone would cost $535 million before agreements with Hyatt, IHG and Radisson are addressed. Sonesta is the largest operator tied to the portfolio.

SVC sold 66 hotels for $534 million in December, bringing its total hotel sales for the year to 112 properties and nearly 15,000 rooms for $859 million combined. Roughly $5.8 billion of debt maturities come due over the next five years. The shares have slipped more than 40 percent over 12 months. They rallied Friday on the bid and gave back those gains by Monday morning.