The Blackstone Group has entered into an agreement to sell a portfolio of four hotels to DiamondRock Hospitality for $495 million. As part of the transaction, Blackstone also will acquire a minority stake in the Bethesda, Maryland-based hospitality REIT.
Under the terms of the agreement, DiamondRock Hospitality will acquire the Hilton Boston, the Westin Washington DC, the Westin San Diego and the Hilton Burlington from the New York-based private equity and real estate giant, which is selling the hotels on behalf of its Blackstone Real Estate Partners (BREP) VI fund. Goldman Sachs acted as financial advisor to DiamondRock in connection with the acquisition, which is expected to close this month.
In addition, DiamondRock chief executive Mark Brugger said in a statement that, as part of the deal, Blackstone “is taking a $75 million ownership stake in” his company. One source told PERE that this represents approximately four percent of DiamondRock's shares.
“We believe in the continued lodging recovery and are excited about receiving an ownership stake in the company,” added Blackstone’s global head of real estate Jonathan Gray.
The four hotels sold to DiamondRock originally were part of a larger portfolio of 14 hotels Blackstone repurchased from Columbia Sussex in 2010 for approximately $950 million. Blackstone initially sold the 14-property portfolio to Columbia Sussex in 2005 for $1.4 billion.
Prior to this transaction, Blackstone sold another one of the properties, the Wyndham Chicago hotel, to Sunstone Hotel Investors in May for $88.4 million. Blackstone currently owns nine of the 14 hotels.
Blackstone has been active in the hotel space this year, having agreed in May to buy the Motel 6 budget chain of North American hotels from global hotel operator Accor for $1.9 billion. The Motel 6 purchase marked the largest US hotel chain acquisition since Extended Stay America was bought out of bankruptcy for $3.93 billion by a Blackstone-led investment consortium in October 2010.