Strategic Hotels & Resorts, Inc. BEE has progressed on its acquisition by the affiliate of The Blackstone Group L.P. BX as the former received an approval from its shareholders at a special meeting.
Per this deal, which is expected to close on Dec 11, 2015, Blackstone will pay $14.25 per share in cash to acquire all outstanding shares of Strategic Hotels. The deal is valued at around $6 billion.
Strategic Hotels owns several high-end hotels and resorts in the U.S. Its high-end property portfolio includes trophy assets like Manhattan's Essex House, Hotel del Coronado near San Diego, and Ritz Carlton in Half Moon Bay, CA.
On the other hand, Blackstone’s deal to acquire Strategic Hotels is consistent with the company’s plan to expand its footprint in the luxury hotel sector. In May 2015, Blackstone purchased JW Marriott and Ritz-Carlton in Orlando, FL, and JW Marriott Phoenix Desert Ridge, AZ for about $1.25 billion from a group led by Paulson & Co.
We note that Strategic Hotels has proven to be a steady performer. The company reported an earnings surprise of 4.17% in the last quarter, having beaten the Zacks Consensus Estimate in three out of the past four quarters, with an average surprise of 27.09%. The company has focused on streamlining its business, buying stakes in joint ventures and simplifying its balance sheet. Its acquisition by Blackstone is aimed at creating substantial value for its shareholders.
Strategic Hotels currently has a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like Hospitality Properties Trust HPT and RLJ Lodging Trust RLJ. Both these stocks carry a Zacks Rank #2 (Buy).
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