LaSalle Hotel Properties LHO announced that it has reached a definitive agreement with affiliates of Blackstone Group LP BX , per which the private equity behemoth will acquire all outstanding common shares of LaSalle for $33.50 per share, in an all-cash deal, valuing the acquisition at $4.8 billion.
The private equity firm outbid Pebblebrook Hotel Trust's PEB offer that in April bid $3.5 billion in a cash-and-stock deal to acquire the company that owns 41 upscale hotels in 11 markets across seven states and the District of Columbia.
Notably, Blackstone's offer represents a premium of 5% to LaSalle's shares closing price on May 18, 2018, before news of the acquisition surfaced. Further, the all-cash deal might also have given the company an edge over Pebblebrook's offer providing immediate and certain cash value to the hotel owner. In addition, it provides significant premium to the company's shareholders.
On the other hand, the deal is a strategic fit for Blackstone, which, of late, has been dominating the lodging sector with its remarkable acquisition and disposition activities. The firm typically buys hotels and other real estate holdings at cheap valuations and disposes those at a profit after restructuring operations.
Evidently, Blackstone recently sold its stake in Hilton Worldwide Holdings HLT , for approximately $1.32 billion, after investing in the company for nearly 11 years.
Notably, hotel real estate investment trusts (REIT) have been witnessing impressive price rallies amid bright prospects. Several tailwinds, including improving economy, growth in employment and rise in wages, are likely to spur demand for hotels in the upcoming quarters. Particularly, improved room demand on the back of positive consumer outlook and strong demand from leisure division signal better prospects for hotel REITs.
Shares of this Zacks Rank #2 (Buy) company have surged 35.7%, outperforming its industry's growth of 3.3% in the past three months. Moreover, its 2018 funds from operations (FFO) per share have witnessed 4.3% upward revision in the past month.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Blackstone Group L.P. (BX): Free Stock Analysis Report Hilton Worldwide Holdings Inc. (HLT): Free Stock Analysis Report LaSalle Hotel Properties (LHO): Free Stock Analysis Report Pebblebrook Hotel Trust (PEB): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research