The Real Deal New York

QIA in talks for Starwood’s St. Regis hotels: report

Qatar's sovereign wealth fund could buy NYC, San Francisco properties for $1B
May 05, 2016 08:05AM

St. Regis NYC

The St. Regis New York at 2 East 55th Street (inset: Sheikh Abdullah bin Mohammed Al Thani)

The Qatar Investment Authority, the energy-rich nation’s sovereign wealth fund, is reportedly in advanced negotiations to buy the St. Regis luxury hotels in New York and San Francisco from Starwood Hotels & Resorts.

Both hotels are owned by Starwood Hotels & Resorts, which is currently finalizing a $12.4 billion takeover by fellow international hotel chain Marriott International that is expected to create the world’s largest hotel operator. Starwood is looking to sell five U.S. hotels in advance of the deal’s closing, including properties in Maui, Atlanta and Chicago, while also seeking a leasehold sale of the W New York in Times Square.

The landmarked St. Regis New York, at 2 East 55th Street off Fifth Avenue, holds 238 rooms, while its counterpart in San Francisco has 260 rooms, according to Bloomberg. While the pair of hotels could fetch as much as $1 billion, sources with knowledge of Starwood’s talks with QIA said they could sell for less.

The hotels would represent QIA’s latest ambitious real estate play in New York, with the sovereign wealth fund detailing plans last year to invest $35 billion in the U.S. over the next five years. QIA also acquired a 44 percent interest in Brookfield Property Partners’ $8.6 billion Manhattan West mixed-use development on the Far West Side, and opened a New York office in September to improve its access with the U.S. market.

A deal between Starwood and the sovereign wealth fund would indicate continuing, strong interest from foreign buyers in U.S commercial real estate assets. Last month, Saudi investor Olayan Group agreed to acquire the Chetrit Group’s Sony Building at 550 Madison Avenue in a deal valued at north of $1.3 billion, as The Real Deal first reported. [Bloomberg]Rey Mashayekhi