NYC's St. Regis May Be on Block in Starwood Hotel Sale

  • Company to reduce properties by $1 billion worth this year
  • CEO says rival bid to Marriott's unlikely but still possible

Starwood Hotels & Resorts Worldwide Inc. may be in talks to sell hotels including the St. Regis New York as part of its goal of reducing its property holdings by about $1 billion this year, Chief Executive Officer Tom Mangas said.

Sovereign-wealth funds and insurance companies continue to have a strong appetite for hotels in gateway cities as they seek to diversify their holdings, Mangas said on Starwood’s fourth-quarter earnings conference call Thursday. He declined to comment in detail when asked about the prospect of selling assets including the St. Regis in Manhattan and the Westin Maui Resort & Spa because talks might be under way, he said.

“There is high interest for assets that are one of a kind, like the St. Regis New York,” Mangas said in response to a question about possible interest in the Fifth Avenue hotel from sovereign-wealth funds and high-net-worth buyers. “I don’t want to comment too much about where valuations are or will be because we might be working on trying to lock down specific valuations.”

Starwood on Tuesday said it completed the sale of the luxury Hotel Imperial in Vienna to Al Habtoor Investment, part of a United Arab Emirates conglomerate, for $78.8 million. On Thursday, Mangas said the price per room was about $571,000, underscoring that values for high-quality hotel properties remain strong.

Last year, Barry Sternlicht’s Starwood Capital Group, which isn’t affiliated with Starwood Hotels, sold New York’s luxury Baccarat Hotel to a unit of China’s Sunshine Insurance Group for $230 million, or about $2 million a room, the second-highest price on that basis for a New York hotel, behind the Plaza.

Marriott Takeover

Starwood is on course to complete a planned takeover by Marriott International Inc. by the middle of the year, Mangas said. While market volatility, which has made it harder to raise debt financing, makes a rival offer to Marriott’s unlikely, there’s still a chance an outside bidder could emerge, he said. Hyatt Hotels Corp. and Chinese companies reportedly pursued Starwood before Marriott prevailed with a winning offer in November.

The company is focused on selling North American and European properties, while economic turmoil in Latin America makes sales there more difficult, Mangas said. Starwood has 19 hotels left to sell, and is aiming to find buyers for about $800 million worth of them this year, he said. Its $1 billion sales goal for this year includes five properties worth about $200 million that are part of the planned spinoff of its timeshare business.

The company’s effort to sell the biggest assets “gives us confidence that we can get the extra $800 million of incremental sales,” Mangas said on the call. “We’re down to the short strokes here.”

(Corrects seventh paragraph of story published Feb. 18 to show $800 million refers to value of properties planned for sale this year.)
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