(Reuters) - Blackstone Group LP (BX.N) will buy real estate investment trust Strategic Hotels & Resorts BEE.N in a deal valued at $6 billion, attracted by the company’s iconic hotel properties in key locations of the United States.
Strategic Hotels’ properties include the Four Seasons Washington, D.C. on Pennsylvania Avenue, the Westin St. Francis on Union Square in San Francisco and the beach-front Ritz-Carlton Laguna Niguel in Orange County, California.
The company’s shares rose to as much as $14.10 on Tuesday, just below the offer price of $14.25 per share.
Blackstone shares rose as much as 4.5 percent to $35.17.
“There are buyers who are looking for more than just economic returns and might be willing to pay a lot more (for each of Strategic Hotels’ properties) than what Blackstone paid for the whole portfolio,” Canaccord Genuity Inc analyst Ryan Meliker told Reuters.
Blackstone has been on a property buying spree, snapping up everything from single-family homes in the United States to distressed commercial real estate in Europe.
Real estate overtook private equity as Blackstone’s most high-profile and lucrative business in 2014, accounting for 43 percent of its economic net income in the year.
Strategic Hotels’ Hotel del Coronado in Southern California is among its landmark properties that are sightseeing attraction in themselves, RBC Capital Markets analyst Wes Golladay said.
The beach-front hotel opened in 1888 and was designated a national historic landmark in 1977. Comedian Charlie Chaplin and U.S. President Franklin Roosevelt were among its celebrity guests.
Strategic Hotels said on Tuesday that Blackstone would also buy all outstanding membership units of its division Strategic Hotels Funding LLC for $14.25 per unit.
The deal, which includes debt, is expected to close by the first quarter of 2016. Strategic Hotels had long-term debt of about $1.81 billion as of June 30.
The company said in August it was exploring a sale, among other strategic alternatives, and had hired J.P. Morgan as financial adviser.
J.P. Morgan and Duff & Phelps advised Strategic Hotels’ board. Sidley Austin LLP is the company’s legal adviser, while Simpson Thacher & Bartlett LLP is Blackstone’s legal counsel.
Reporting by Ankit Ajmera in Bengaluru; Editing by Ted Kerr and Kirti Pandey