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Blackstone’s Feeling Hospitable (Again)


Image source: Unsplash.com

What's going on?

Days after American investment firm Blackstone sold the last of its stake in Hilton Worldwide – which ended up being the most profitable private investment in real estate, ever – it announced on Monday that it’s checking into another hotel, LaSalle Hotel Properties, for $5 billion.

What does this mean?

Blackstone bought Hilton Worldwide in 2006 and expanded the company by more than doubling the number of hotels that Hilton manages – but started to sell off its shares in 2013 after Hilton’s stock went public. On Friday, it confirmed that it had officially sold all its shares in the company – Hilton’s stock is up 85% since listing.

But that doesn’t mean Blackstone’s leaving the world of real estate – it’ll be buying LaSalle’s 41 hotels, adding it to a growing list of companies owned by Blackstone with ties to “the only thing in the world that lasts”.

Why should I care?

For markets: Chinese investors have been a big part of Hilton’s rebound under Blackstone.

Last year Blackstone sold about 25% of Hilton Worldwide to Chinese firm HNA Group (although HNA ended up selling its stake after the Chinese government flagged some regulatory concerns). That wasn’t Hilton’s first parlay with Chinese investors: it also sold the iconic Waldorf Astoria Hotel in New York for $1.9 billion – the most ever paid for a single hotel – to a Chinese insurer, Anbang.

The bigger picture: Several factors could be encouraging investment in real estate right now.

Blackstone will be adding LaSalle to a portfolio of companies alongside Gramercy Property Trust, which it paid $7.6 billion to acquire last week. Buying real estate companies might be pretty attractive in the current US economy, as they’re probably cheaper now than they were a year ago: their stock prices have slid as interest rates have increased, which is generally harmful for their business models (read more here).

Originally posted as part of the Finimize daily email.

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