Blackstone Group LP (BX:US) is close to an agreement to buy a group of select-service hotels from Clarion Partners LLC for about $800 million, according to a person with knowledge of the deal.
The agreement would be for 47 extended-stay Residence Inn and Homewood Suites hotels, with a majority located in the top 25 U.S. markets, said the person, who asked not to be identified because the transaction hasn’t been completed.
Blackstone, the largest real estate private-equity firm, has been buying select-service hotels -- properties with limited food and beverage and other services -- amid a recovery in the U.S. lodging industry. In September, an affiliate of the New York-based company agreed to buy 16 hotels from Hersha Hospitality Trust for $217 million. A $1.3 billion deal for hotel owner Apple REIT Six Inc. was completed last May, and in 2012 Blackstone bought the Motel 6 and Studio 6 budget chains.
Christine Anderson, a Blackstone spokeswoman, declined to comment. Paula Schaefer, a spokeswoman at New York-based Clarion Partners, didn’t return telephone calls seeking comment. Real Estate Alert reported the potential deal earlier today.
Investors are attracted to select-service hotels because they have lower operating costs than more upscale properties, with higher returns, according to Patrick Scholes, an analyst at SunTrust Robinson Humphrey Inc. in New York.
“If you look at many cities like San Francisco or New York, hotel real estate is trading at a premium price,” Scholes said in a telephone interview. “You’re not finding a lot of value. So you have to look a little harder by going into smaller markets or by going down in the lodging categories. You have to think more outside of the box to get better returns.”
Blackstone rose 1.1 percent today to $33.60. The shares (BX:US) have jumped 56 percent in the past year as stakes in companies, including hotel operator Hilton Worldwide Holdings Inc. (HLT:US), have soared. The firm oversees more than $270 billion across credit, private equity, hedge funds and its other businesses.
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