Strategic Hotels & Resorts Inc., the owner of luxury resorts across the U.S., is exploring a sale and hired a bank to help it find a buyer, according to people familiar with the matter.
Strategic’s adviser has contacted potential suitors to gauge their interest, said the people, who asked not to be identified because the process is private. The Chicago-based company has a market value of about $3.46 billion.
Pierre Omidyar, the EBay Inc. founder who controls development company Ohana Real Estate Investors, is among those interested in acquiring Strategic, two people familiar with the matter said. Discussions are continuing and there is no certainty of a deal.
Megan Hakes, a spokeswoman for Strategic, said the company doesn’t comment on market rumors. Christopher Keefe, vice president of marketing and communications at Omidyar Network, didn’t immediately respond to requests for comment.
Strategic shares jumped 3.5 percent to close at $13.50, a five-month high.
The company, owner of high-end hotels including the Ritz-Carlton Half Moon Bay in California and Manhattan’s Essex House, is courting buyers as demand for upscale lodging rises and corporate travel rebounds. The occupancy rate at luxury properties reached 70.9 percent this year through June, up from
69.2 percent a year earlier, according to Hendersonville, Tennessee-based research firm STR Inc.
The real estate investment trust is wagering that a pickup in business travel will accelerate, Chairman and President Raymond “Rip” Gellein said after agreeing to buy a Four Seasons resort in Scottsdale, Arizona, in November. The company then acquired the Montage Laguna Beach resort in Southern California from an affiliate of Omidyar’s Ohana Real Estate Investors for $360 million in January. Last year, Strategic bought Blackstone Group LP’s stake in the Hotel del Coronado near San Diego.
In June 2013, Strategic hired brokerage Eastdil Secured LLC to help explore selling the firm, Reuters reported at the time, citing two sources familiar with the matter that it didn’t identify.
Cash from around the globe is pouring into U.S. commercial real estate, pushing prices past records set during the pre-crisis boom. Hotel values have climbed about 12 percent in the past year to surpass the 2007 peak by 1 percent, according to research firm Green Street Advisors LLC.
Foreign and domestic buyers are making big bets on high-end lodging. Beijing-based Anbang Insurance Group Co. bought New York’s Waldorf Astoria hotel in February for $1.95 billion in the largest deal ever for a U.S. hotel. In March, Blackstone agreed to buy three high-end U.S. resorts for about $1.3 billion from a group led by billionaire John Paulson’s Paulson & Co.