Blackstone Is Said to Buy Three Hotels for $1.3 Billion

Blackstone Group LP agreed to buy three high-end U.S. resorts for about $1.3 billion from a group led by Paulson & Co., according to a person with knowledge of the transaction.

The properties are the JW Marriott and the Ritz-Carlton in Orlando, Florida, and the JW Marriott Phoenix Desert Ridge in Arizona, said the person, who asked not to be identified because the deal isn’t public.

Peter Rose, a spokesman for New York-based Blackstone, and Armel Leslie, a spokesman for Paulson & Co., the hedge fund-firm run by billionaire John Paulson, declined to comment.

Blackstone, the world’s largest real estate private-equity firm, is wagering that U.S. hotel values will keep climbing, particularly for resorts that can host large groups such as conferences. The three properties have a combined 470,000 square feet (44,000 square meters) of meeting space and about 2,500 room keys, the person said.

A group led by Paulson took over a portfolio of hotels including the Orlando resorts after Morgan Stanley’s real estate fund defaulted on debt in 2011. The bank acquired the properties as part of its $6.7 billion purchase of CNL Hotels & Resorts Inc. in 2007, as real estate values peaked.

The Orlando market has a higher rate than the U.S. average. Revenue per available room, an industry measure of occupancy and rate, was $93.20 for hotels in Orlando in the first two months of this year, according to Hendersonville, Tennessee-based research firm STR Inc. That compares with $66.83 nationwide.

Investor demand for luxury resorts has climbed because of a recovery in group travel and little new construction in the industry. Strategic Hotels & Resorts Inc. in November agreed to buy the Four Seasons Resort Scottsdale at Troon North in Scottsdale, Arizona, for $140 million. The same month, DiamondRock Hospitality Co. said it would buy the Westin Beach Resort & Spa in Fort Lauderdale, Florida, for $149 million.

(Corrects the Arizona property being purchased in second paragraph of story published March 30.)
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