Hilton Looks to Be Biggest Hotel IPO Ever

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Dec. 11 (Bloomberg) -- Thor Equities Founder and CEO Joseph Sitt and Bloomberg's Leslie Picker discuss the Hilton IPO with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Have one of the biggest private equity profits of all time.

The market picks up 48% this year.

It might be just the right time for hilton to take itself public.

Our guests -- what is this saying to you about what happens in the real estate environment right now?

Two things.

Those that have the staying power as they did to ride through the tough times, are now reaping the rewards.

These guys did it one step smarter or better.

John, who heads the real estate group and headed this acquisition and restructuring, really pulled a wise move when the market brought down his debt really cheap.

And recapitalized it and gave it to patients for a new day.

The biggest story here, it is a global story.

Often times, folks like lactone or ourselves, we invest in a particular market, hilton is truly a global play and the world, particularly emerging markets, it is really booming.

China, there are so many opportunities for various rents of hills it to open up.

Cities you have never heard of that are starving.

8 million people in them.

Like she ought.

-- she hot -- shiad.

It is everywhere.

Frontier markets like indonesia, mexico, africa, they just have so much legs in which to be able to grow their bland -- brand.

Back here in the united states, they are doing pretty well.

We own something, probably their oldest asset, 140-year-old hotel we just finished redeveloping together with the hilton corporation.

Business has been good.

Hilton has got a good brand.

People are starting to travel for business and pleasure.

What do we think in terms of pricing?

Is there a lot of appetite for hilton?

There is a lot.

We are hearing five times oversubscribed as of yesterday.

Another cap -- in other words, five times as many bids as were available.

It means it is doing decently well for an ipo of its size.

That is pretty extraordinary.

In terms of pricing, we should expect that within the next two hours.

That is with the lead underwriters and the company and blackstone as well.

They would determine where the pricing would be.

It should be somewhere within the range, some are within the midpoint of 1950. that could change within the next hour or two.

This becomes the largest hotel by market cap.

Revenues are also bigger.

It is the biggest publicly traded hotel in the world.

I read it was actually the size of marriott -- combined.

Why we seem its appetite right now?

We have got a market that is on a tear this year.

That is without a doubt.

Real estate has been a part of the story.

We have seen a lot of recovery.

Why do you think investors want this right now?

It is not just an asset play.

Because of the way their business model works and they have changed over time, we actually bought the house from hilton and relicensed the brand name or franchise.

You own the real estate and they run the hotel.

What that allows is the division they originally had.

For the company, it allows them to scale up the business dramatically with little capital expense.

A lien on folks like us to put up the dollars.

When people go back and are looking at stock rises, people had concern.

I heard comments.

My comment back was you cannot just look at it from real estate metrics.

We have to look at it from a growth story business metrics and everybody has got real estate analysts looking at multiples and say it is too expensive.

They have so much room to grow and so little capital for the amount of profits they can add.

8 million population sitting in china that nobody ever heard of.

Let me ask you, so you own the hilton, how are they as a hotel manager.

Our experience has been good.

They are detailed.

The ceo is a very bright guy.

He brought him in a few years ago and he did several different initiatives to tighten the ship.

Both involved with getting owners to put more dollars to invest in capital expense to keeping the brand standards.

Better disciplines in terms of execution, better friendliness.

I sincerely believe when you go into a hilton today, you get editor services.

They really put the focus on the business and the brand.

I think the results is hard work.

That is now showing with this ipo.

By phone has had a few.

What is going on.

Why are they ipo in all of these right now?

We saw an extended stage a month ago.

Last time i checked, it was up 26% from the offering date.

It did extremely well.

The docket is hilton, which we will price tomorrow.

We will see how that does.

After that, we reported the national chain of hotels, that that is also looking to go public.

That is a blackstone company as well.

They are seeing tons of appetite for these companies right now.

The flipside is, whenever you see this many deals come to market, you say, is this as good as it gets?

The owner of the underlying real estate.

What is your take.

It is not just on fundamentals.

The fundamentals will prove out.

Sort of what you are alluding -- alluding to, right now, there is appetite for this product.

As readily as you can see the great appetite, you can see what we only had a couple of years ago where folks are not looking.

They are benefiting here in terms of blackstone with hitting and getting sales up while the wind is in the sale and demand is out there for it.

It is what people want.

People got dollars, interest rates are low.

Alternative investments are not great.

It creates demand.

They are lucky they are hitting the market at the right point and the right time.

What are you looking at right now?

Where you seeing opportunity when it comes to real estate?

For us, twofold.

Number one is the great cities we still think of.

You talk about hospitality.

We do a lot of things that relate to tourism.

Retail real estate and markets like fifth avenue that disproportionally benefit london, etc.. whether it is the hospitality sector we invest in or the retailer, we still see prime, superhigh quality 27 cities disproportionally benefiting from the emerging markets.

People think 8 million people who have new wealth in the city that you just discuss, are only going to be influencing the local marketplace.

It is far wider.

Today, with the ceo of one of the largest luxury good change in the world, we are talking about fails in the beijing stores.

To their surprise, the vast majority of chinese shopping there are from providences in the netherlands.

Same thing if you visit shops in new york or visit hotels in london.

You are seeing so much of new customers and start to say, the mexicans, resilience, chinese, the world has globalized and there are so many more countries with new wealth and new excitement and new people starting to travel.

Our investment focus is more investing in the best of the best cities, in developed

This text has been automatically generated. It may not be 100% accurate.


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