30LaSalle Hotel Properties announced recently that it has accepted to sign an agreement to be sold to Blackstone Group at $3.7 billion in cash. The deal comes after the Hotel rejected another cash-and stock offer from Pebblebrook Hotel Trust. The Hotel accepted the latest offer since it’s offered in cash.
Blackstone values LaSalle at $33.50 per share with a premium share of 5% to the company’s closing price last week compared to the Pebblebrook’s offer of $31.75, which according to LaSalle Hotel, undervalued its shareholders’ efforts.
According to Stuart Scott Chairman of LaSalle, there were over 20 potential buyers but the company decided to settle on Blackstone’s offer. The firm signed the confidentiality agreements with at least 10 clients before settling on Blackstone’s prime offer.
LaSalle, which is based the US has 41 upper-upscale and luxury properties, with about 10,450 guestrooms capacity.
Why Pebblebrook’s Deal Failed
Pebblebrook had applied three separate bids to purchase LaSalle with the latest offer being submitted in April 2018 only for another rival company to win the bid. Blackstone, a private-equity giant seems to be more influential in acquiring properties.
Pebblebrook lose on the LaSalle deal is a big blow to the company that was looking forward to expand its business. However, the deal failed to go through probably due to the existing fractious relationship between the top managers of the two companies.
Jon Bortz, CEO at Pebblebrook and Michael Barnello, CEO of LaSalle are allegedly not in good business terms. Reports indicate that Bortz once worked at LaSalle as the CEO before opting out to form Pebblebrook.
Blackstone Wins Big
Blackstone is renowned for acquiring hotels and other real estate properties that are not performing well, restructures, and sells them to other investors at a premium price.
The latest deal is Blackstone’s second major REIT takeover. Recently, the company purchased a commercial real estate fund Gramercy Property Trust for $4 billion in cash terms. Last week, Blackstone terminated its contract with Hilton Worldwide after selling out its shares in the company.
The company has mastered its business philosophy of “Buy It, Fix, It, Sell It”. In 2007, Blackstone acquired Hilton at $26 billion before converting it into a private unit. In 2013, the firm made it public to sell Hilton again and it raised $2.35 billion after selling the renovated hotel property to China-based HNA Group in 2016.