European Hotels to Go Up For Sale
By Adam Durchslag
The Business, London
LONDON, UK, November 22, 2005. A collection of leading hotels are about to be put on the market again, as Blackstone, the private-equity firm, prepares to sell most of its current European hotel assets, worth between E320m ($375m, lb214m) and E350m.
The group, which had owned London's Savoy, Claridges and the Connaught, is understood to be close to selling its Marriott hotels in Munich and London's Grosvenor Square, as well as its Nikko hotel in Dusseldorf, Germany, acquired in 2003. Wealthy families and individuals, as well as large institutions, such as insurance companies and pension funds, are thought to be possible buyers.
Blackstone has renovated these hotels by investing 25 percent of the original purchase price in some cases. The hotels are now believed to be financially attractive for a sale. Profit on some of the hotels has increased by 60 percent in three years. Last year, Blackstone sold the Savoy in London to the Irish property developer, Derek Quinlan.
Blackstone, which sees itself as a hotel owner and operator, has over the past 13 years owned more than 1,000 hotels globally, 720 of which have been managed and operated by the company itself, with a total acquisition cost of more than $16bn. It has owned 190 hotels with 15,000 guest rooms over the same period in Europe. With recent funds added to its firepower, the private-equity group will continue to make bolt-on acquisitions. The $3.1bn Extended Stay America acquisition in the US is an example, incorporating the previous MainStay Suites and Homestead Studio Suites purchases.
In the U.S., Blackstone is understood to have almost closed a $2.1bn real estate fund and in Europe it has completed a E2bn fund, which will focus on western Europe rather than eastern Europe or the Middle East.
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Copyright (c) 2005, The Business, London
Distributed by Knight Ridder/Tribune Business News.
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