Hyatt Hotels is taking a course that many other hotel asset owners are doing: selling select-service hotels, and buying or retaining more upscale real estate.
Today we learned that the Chicago-based hotel operator will sell 38 domestic select-service properties to Lone Star Funds, the private-equity firm founded by billionaire John Grayken, for around $590 million.
The purchase consists of about 4,950 rooms under the Hyatt Place and Hyatt House brands, Hyatt said. Post-sale, Hyatt will reportedly maintain the franchise agreements.
For its part, Lone Star said it plans to spend about $50 million in additional capital on renovations over the next two years.
"Hyatt utilized its strong balance sheet and industry expertise to launch the Hyatt Place and Hyatt House brands," Steve Haggerty, global head of capital strategy, franchising and select service for Hyatt, said in the statement. "We are now leveraging that brand equity to recycle capital while maintaining a long-term brand presence in multiple markets."
The transaction is expected to be completed in November.
(For a closer look at Hyatt Place and Hyatt House, check out HM's Q&A with Hyatt’s SVP of franchise and managed development for Hyatt Place and Hyatt House in North America, Julienne Smith.)
The sale is in stark contrast to Hyatt's recent acquisiton of the Park Hyatt New York in August for $390 million. Said Haggerty of the acquisition, "Park Hyatt New York is an excellent example of Hyatt using the strength of its balance sheet to enter markets like New York that have high barriers to entry, and acquiring whole ownership of the hotel gives us the flexibility to recycle the asset at the appropriate time."
The comment an almost facsimile of what he said about the Hyatt Place/House portfolio sale.