Blackstone to Transform Cosmopolitan of Las Vegas

In a new Wall Street Journal article titled Blackstone Looks to Buck the Odds on Vegas Strip, Craig Karmin examine's the company's move to turn around the Cosmopolitan Hotel-Casino in Las Vegas. An excerpt follows:

At the Cosmopolitan of Las Vegas, the top four floors of the hotel's 52-story east tower offer some of the Strip's prime real estate. Views from the wraparound balconies stretch for miles, and ceilings soar up to 16 feet. Yet these rooms sit unfinished and have never been occupied by guests.

Now, Blackstone Group LP plans to transform that space into grand suites in hopes of attracting high rollers from around the world who have largely ignored the property's underperforming casino thus far. The New York investment firm bought the hotel and casino property for $1.73 billion in December from Deutsche Bank AG.

The makeover is part of Blackstone's vision for turning around the Cosmopolitan, which has been one of the biggest real estate busts of all time. Deutsche Bank, which took control of the property in 2008 after the original owner defaulted, spent about $4 billion on the project before unloading it.

Blackstone executives said they expect to spend up to $200 million on the property, in part by completing elements of Deutsche Bank's aborted plan. In addition to the top-floor suites, Blackstone has ideas for new VIP rooms in the casino areas and is looking to add new bars and restaurants in vacant space on the first three floors.

For more news and information visit Blumberg Capital Partners.

Westin Diplomat Sold for $460M

In a massive half-billion-dollar deal, the Westin Diplomat Resort & Spa in Hollywood, Florida has sold for $460 million to Diplomat Hotel Owner LLC, an affiliate of Thayer Lodging Group of Annapolis, Maryland. The 998-unit hotel at 3555 S. Ocean Drive was sold by Diplomat Properties Limited Partnership, a company with ties to hotel owner United Association, a 370,000-member plumbers and pipefitters union based in Annapolis, according to a Sun Sentinel article.

In addition to the hotel, with spa and tennis courts on nearly 10 acres at 3555 S. Ocean Drive in Hollywood, Thayer also bought a neighboring 18-hole golf course for $20 million, and paid $55.5 million for several adjacent parcels at 3451-3690 S. Ocean Drive. Thayer made the deal through three affiliates, Diplomat Hotel Owner LLC, Diplomat Golf Course Venture LLC and Diplomat Landings Owner LLC, according to a deed recorded Thursday in Broward County, the Daily Business Review said. In total, Thayer paid $535.5 million to Diplomat Companies Limited Partner, linked to the plumbers' trade union.

"I think this is the biggest real estate transaction in Florida and one of the largest in the country this year," said Jack McCabe, CEO and founder of McCabe Research & Consulting, which did the market feasibility study for Thayer.

For more news and information visit Blumberg Capital Partners.

DiamondRock Acquires NYC Hilton for $68.4M

DiamondRock Hospitality announced that it's entered into an agreement to purchase the Hilton Garden Inn Chelsea New York City for $68.4 million. The Hilton Garden Inn is a 169-room hotel recently constructed and opened in 2007 on West 28th Street between 6th and 7th Avenues in New York City. The purchase price of $68.4 million represents a 12.9 multiple of the Hotel's 2010 full-year forecasted EBITDA of $5.3 million and better than a 7% capitalization rate on forecasted 2010 full-year net operating income of $4.8 million.

DiamondRock CEO Mark Brugger said in a Bloomberg BusinessWeek statement that the company wanted the hotel because the property has the "ability to charge essentially full-service room rates with a more profitable limited service cost structure as a result of its strong Hilton Garden Inn branding, access to Hilton Worldwide's powerful reservations system and traveler loyalty generated from the Hilton guest rewards program." DiamondRock retained the current hotel manager subject to a new, short-term management agreement.

For more news and information visit Blumberg Capital Partners.