Sale of Luxury Chain Includes Ritz-Carlton in Half Moon Bay, CA and Essex Home In Manhattan
Luxury hotel business Strategic Hotels & & Resorts, Inc. early today it has accepted be gotten by Blackstone Realty Partners VIII L.P. in a deal that values the hotel REIT’s portfolio at about $6 billion, consisting of debt.
Blackstone will certainly acquire all outstanding shares of Strategic Hotels (NYSE: BEE) for $14.25 per share in money in the deal, expected to be finished by the first quarter of 2016 pending traditional closing conditions, consisting of a shareholders vote at a special conference on a date to be announced.
Strategic Hotels & & Resorts Chairman and CEO Raymond L. “Rip” Gellein said in a statement that the board “completely thought about various alternatives over the course of the past few short years, and this all-cash offer from Blackstone develops considerable investor value with a high degree of execution certainty.”
Blackstone, which has actually formerly taken Hilton Worldwide Holdings Inc. and La Quinta Holdings Inc. personal, is now settings its sites on Strategic Hotels, the only pure-play luxury hotel REIT.
“As long term financiers in the accommodations market, we remain positive in the fundamentals of the sector despite recent market volatility,” said Tyler Henritze, co-head of U.S. acquisitions for Blackstone Real Estate, explaining Strategic Hotels as one of the greatest quality luxury hotel profiles in the country.
J.P. Morgan is serving as monetary advisor to Strategic Hotels. Simpson Thacher & & Bartlett LLP is acting as legal consultant to Blackstone.
Discuss the potential sale of Strategic Hotels has actually distributed for more than 2 years and did not come as a shock to the investment community on Monday. Waterfall Financial investment Inc., the company owned by tech billionaire Bill Gates, disclosed last month that it has obtained $21.5 million in shares, boosting its stake in the business to 9.8 %, which Cascade was interested in exploring a possible sale or takeover. Strategic verified on Aug. 17 that it was exploring strategic options.
The sale is part of a new wave of publicly traded and private hospitality mergers and acquisitions activity. Hotel REITs have actually come under increasing pressure from investors to put themselves up for sale, spin off assets or take other steps to bolster share prices.
Dallas-based Ashford Hospitality Prime last month revealed strategies to assess its strategic alternatives, following the similar statement by Strategic Hotels earlier in August and Starwood Hotels & & Resorts Worldwide last spring.
With lodging stocks down 19.7 % year to date versus a decrease of 9.4 % for the broader Morgan Stanley REIT Index, private evaluations are now well above public appraisals and “we are not amazed to see public operators seeking value for investors,” said Rod Petrik, hotel REIT analyst with Stifel Nicholas.
The $14.25 offer rate for BEE represents a boost of 13 % over the trading cost on July 23, when media reports initially surfaced about a prospective deal, and a 5.6 % premium over Friday’s closing share cost, Petrik noted.
La Quinta Holdings, another reported takeover target, stated last week Inc. that it accepted sell 24 hotels of its 870 hotels completing about 86,000 living rooms to a concealed buyer.
In a private deal, Walnut Creek, CA-based financial investment business Hall Equities Group acquired ZMC Hotels, a 50-year-old hotel chain possessed by the Goldfine household of Duluth, MN.