Three days after ending an 11-year association with Hilton Worldwide Holdings (HLT) by divesting its remaining stock in the hotel group, Blackstone Group (BX) clinched a deal to acquire an upscale REIT after defeating rival bidders.
LaSalle Hotel Properties (LHO), which owns several luxury hotels, agreed to be acquired by Blackstone for $4.8 billion in cash (includes debt), after declining a slightly bigger offer by a group of investors led by Pebblebrook Hotel Trust. The purchase price represents a 35% premium to LaSalle shareholders.
Rejecting Pebblebrook’s offer, LaSalle said the former’s stock was overvalued and cited the company’s inflated guidance as to the reason for the high stock value. Pursuant to the transaction, which is anticipated to close in the third quarter of 2018, LaSalle will pay a $0.225 dividend of beneficial interest for the second quarter.
“We are pleased to have reached this agreement with Blackstone, which we believe is in the best interests of our shareholders and represents the culmination of a thorough review of strategic alternatives,” said LaSalle CEO Stuart Scott.
LaSalle Hotel Properties, which owns several luxury hotels, agreed to be acquired by Blackstone for $4.8 billion in cash
Meanwhile, a deal between LaSalle and Pebblebrook was widely expected by market watchers, who predict the transaction with Blackstone might face hassles in securing the approval of LaSalle’s investors. Apparently, it is the immediate cash value offered by Blackstone that lured LaSalle into the deal.
Of late, the slowing luxury property market in the US has been witnessing an uptrend, supported by the ongoing economic recovery. Blackstone, which buys underperforming real estate properties and sells them after renovation, had trimmed its ownership in Hilton progressively after acquiring it more than a decade ago.
In a separate development, Blackstone agreed to sell financial services solutions provider Ipreo, which the company co-owns with Goldman Sachs’ Merchant Banking division, to data analytics firm IHS Markit (INFO) for $1.86 billion. The deal is expected to conclude in the second half of the current fiscal year, based on various approvals.
Shares of LaSalle, which rose around 14% so far this year, gained nearly 6% after the deal was announced. Blackstone stock made modest gains.