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Marriott Buys 13 Blackstone Hotels

April 17, 1998

BETHESDA, Md. (AP) _ Host Marriott Corp. said Friday it has agreed to buy 13 luxury hotels, including the Ritz-Carlton and Four Seasons brands, from the Blackstone Group for $1.77 billion.

Host Marriott also announced it will convert into a real estate investment trust in order to gain tax advantages shared by its competitors, and will spin off its retirement community business into a separate, publicly traded company.

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 up 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 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.

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