Host Marriott to Become Real Estate Trust

Host Marriott Corp. said that it will become a real estate investment trust and buy 13 luxury hotels for $1.78 billion from the Blackstone Group, adding the Four Seasons, Hyatt and Swissotel brands to its Marriott hotels. Host Marriott also will spin off its 31 retirement communities valued at about $700 million into a new company. The moves are aimed at helping Bethesda, Md.-based Host Marriott, already one of the largest owners of U.S. hotels, make more acquisitions. As a REIT, it will be able to shelter more income from taxes and get better access to financing. And the new brands will give it a larger selection of hotels to pick from, instead of being restricted to just buying Marriott properties. Host Marriott will pay Blackstone about $835 million in cash and assumed debt and issue 47 million operating partnership units of $20 each that can be exchanged for shares. That will make the New York-based investment bank Host Marriott’s largest shareholder with a 19% stake. Host Marriott shares rose $1.44 to close at $21.25 on the NYSE.