The Real Deal New York

Blackstone to buy Essex House owner for $6B

Strategic Hotels and Resorts owns 18 properties nationwide

September 09, 2015 12:00PM

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From left: Jonathan Gray and Essex House in Midtown

Blackstone Group’s high flying real estate division continues to place massive bets on the U.S. property market, this time focusing its billions in hospitality.

Blackstone said on Tuesday it had agreed to buy Strategic Hotels and Resorts, owner of the 44-story JW Marriott Essex House New York, as well as 17 other properties nationwide, for $6 billion, including debt.

That price amounts to $14.25 a share, paid in cash, a 13 percent premium to the company’s share price before news of the transaction appeared in media reports, the New York Times reported.

Strategic Hotels, a real estate investment trust, sold the luxury hotel at 160 Central Park South to the Dubai Investment Group in 2006 for $424 million. It had a change of heart and reacquired the property from the Emirati firm in 2012 for $325 million. The Central Park-facing hotel features over 500 rooms and condos.

Strategic Hotels owns the Four Seasons hotels and resorts in Silicon Valley, Washington and Jackson Hole, Wyoming, and the Fairmont and Intercontinental hotels in Chicago and Miami, among others.

The move represents a renewed push into hospitality after Blackstone reduced its stake in Hilton Worldwide Holdings below 50 percent last May. It bought three high-end resorts, in Orlando, Florida and Phoenix, Arizona, around the same time.

“As long-term investors in the lodging industry, we remain confident in the fundamentals of the sector despite recent market volatility,” wrote Tyler Henritze, co-head of United States acquisitions for Blackstone Real estate, in a news release.

Simpson Thacher & Bartlett advised Blackstone in the deal. JPMorgan Chase and Sidley Austin advised Strategic Hotels.

Blackstone bought a massive real estate portfolio from GE back in April, paying $23 billion. The Real Deal profiled Blackstone’s real estate group and its head, Jonathan Gray, in its September issue. [NYT]Ariel Stulberg