CHARLOTTESVILLE, VA—Shortly after the Blackstone Group announced on Sept. 8 that it would take Strategic Hotels & Resorts private for approximately $6 billion, analysts saw a division between the Chicago-based lodging REIT's trophy assets and its lower-echelon ones, and said the deal's pricing reflected this division. That in turn led SNL Financial to suggest that the alternative asset manager could put some or several of the properties on the block before long. A Blackstone spokesman tells GlobeSt.com the firm has no comment, since the deal for Strategic, which trades on the New York Stock Exchange as BEE, hasn't closed yet.

SNL quoted RBC Capital Markets analyst Wes Golladay and Cannacord Genuity's Ryan Meliker on the split between BEE's trophies, such as the Ritz-Carlton Laguna Niguel in Dana Point, CA, and the “high-quality but non-trophy” assets that comprise the remainder of the REIT's portfolio. Meliker told SNL that trophy hotels have traded lately at cap rates in the 3% to 4% range. “That's not going to work for Blackstone,” he said. “It just doesn't pencil out.”

As for the non-trophy properties that comprise much of BEE's portfolio, Galladay told SNL they're unlikely to appeal to the buyers that go for trophies, including sovereign wealth funds and high net worth individuals. “They're very good assets, but not like, 'Hey, I want to have a picture of this in my office' assets,” Golladay said.

Accordingly, SNL reported, “The logical step for Blackstone may be to split up the portfolio, selling some of the higher-end properties to buyers who will pay higher prices for them individually. In such a scenario, the firm would be acting as a sort of wholesaler, taking on the execution risk of splitting up Strategic's holdings, and paying Strategic a lower price in exchange for its efforts.'

For its part, BEE may have been willing to accept less cash in the sale than it would have garnered from selling assets individually, in exchange for not having to worry about closing multiple deals with multiple parties, according to SNL. “The longer this process takes, the more incremental risk you have,” Golladay told SNL. “So they probably just say, 'OK, maybe we won't get the fullest value, but we'll take a little bit less for it.' Considering the amount of risk, they probably felt comfortable that this was fair value.”