Marriott Buys 13 Blackstone Hotels
BETHESDA, Md. (AP) _ Host Marriott Corp. said today it will buy 13 luxury hotels, including Ritz-Carlton and Four Seasons brands, from Blackstone Group for $1.77 billion and convert into a real estate investment trust to gain tax advantages shared by competitors.
Host Marriott also plans to spin off its retirement community business into a separate, publicly traded company.
The company’s stock rose 9 percent on the news, gaining $1.68 3/4 to $21.50 in early trading on the New York Stock Exchange.
After the deals are completed, Blackstone _ a New York-based investment bank _ will become the largest shareholder in Host Marriott with 19 percent.
The purchase includes Ritz-Carlton hotels in Boston and Amelia Island, Fla., and Four Seasons hotels in Philadelphia, Atlanta and Beverly Hills, Calif. Other brands include Grand Hyatt, Hyatt Regencies and Swissotel.
The deal is subject to Host Marriott converting to a REIT by March 31, 1999.
Host Marriott is trying to keep with REITs that now dominate the hotel business. The status allows companies to pay no corporate taxes as long as they distribute nearly all of their income to shareholders.
Host Marriott expects to pay approximately $835 million in cash and assumed debt for control of in the hotels. The company also will issue about 47 million operating partnership units in the new REIT. Each operating unit will be exchangeable for one share of Host Marriott common stock, or its cash equivalent, the company said.