GlobeSt.com UPDATE: Starwood, Host Marriott Agree to $4B Deal

The sale includes 25 domestic and 13 international hotel properties aggregating a total of 18,964 rooms under the Westin, Sheraton, W Hotels, the Luxury Collection and St. Regis flags. As part of the agreement, Starwood will generally continue to manage the properties under their current flags for up to 40 years.

Among the more notable properties that will switch ownership to Host Marriott when the deal closes are the 1,746-room Sheraton New York Hotel & Towers; the W New York, a 688-room property; the 1,216-room Sheraton Boston Hotel; the 1,044-room Sheraton San Diego Hotel & Marina; the Westin Seattle, an 891-room hotel; and the W Seattle, a 426-room facility. The transaction is expected to close in the first quarter of 2006, company officials say. Other properties in the New York region that are part of the deal include: the Sheraton Stamford Hotel in Stamford, CT, and the Sheraton Hotel Parsippany in New Jersey.

Some of the Starwood international properties that will be purchased by Host Marriott include: the 1,377-room Sheraton Centre Toronto Hotel as well as the Westin Palace in Madrid (468 rooms); the 228-room Westin Palace Milan and the 185-room Westin Eurpoa & Regina in Venice.

GlobeSt.com reported in September that Starwood and Host Marriot were rumored to be talking about a deal. Although neither side would comment at the time, hotel analysts said a deal had been "percolating under the surface for a couple of months."

Starwood chief executive officer Stephen J. Heyer says of the portfolio sale, "This transaction puts a strategic stake in the ground, accelerating Starwood's transformation from a real estate company with some hotel brands to a consumer lifestyle company with a branded hotel portfolio at its core. This well-timed sale commits Starwood to an 'asset right' strategy, shifting our revenue and profit mix to place greater emphasis on successfully developing and leveraging our renowned brands."

Christopher J. Nassetta, president and CEO of Host Marriott, states, "We believe these assets represent one of the highest quality lodging portfolios available and they will compliment our existing portfolio of outstanding hotels. We also believe that we acquired the portfolio at an attractive price that will be accretive to both our earnings and our credit and will add to the short-term and long-term value of the company."

James F. Risoleo, executive vice president of acquisition and development for Host Marriott, adds, "The Starwood portfolio fits our stated strategy of owning irreplaceable assets in premier markets with strong growth profiles and limited near-term supply."

Upon completion of the deal, Host Marriott will be the largest lodging company in the US and the sixth largest public REIT with a portfolio of 145 upscale and luxury properties totaling more than 74,000 rooms. Its properties are affiliated with 17 brands in more than 50 markets in nine countries.

Bear, Stearns & Co. Inc and Deutsche Bank AG acted as financial advisors and Sidney Austin Brown and Wood LLP served as lead legal counsel to Starwood. Goldman Sachs served as financial advisor and Latham & Watkins and Hogan & Hartson LLP served as legal counsel to Host Marriott.