Blackstone to buy Intercontinental Miami owner for $6B

From left: Jon Gray and Essex House in Midtown
From left: Jon Gray and Essex House in Midtown

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

Blackstone said on Tuesday it had agreed to buy Strategic Hotels and Resorts, owner of the Intercontinental Miami, the JW Marriott Essex House New York, and 16 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.

The Intercontinental Miami underwent a $30 million renovation in 2012, which included Venus Williams-designed suites, a 19-story digital canvas on the building’s exterior and the launch of Toro Toro.

Strategic Hotels, a real estate investment trust, sold the New York 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 art-deco Central Park hotel features over 500 rooms and condos.

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Strategic Hotels also owns the Four Seasons hotels and resorts in Silicon Valley, Washington and Jackson Hole, Wyoming, and the Fairmont and Intercontinental hotels in Chicago, 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 and Phoenix 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, Jon Gray, in its September issue. [NYT]Ariel Stulberg