Blackstone Real Estate Sells Turtle Bay Resort

Rhea-AI Summary

Blackstone Real Estate has agreed to sell Turtle Bay Resort for $725 million, which it bought in 2018 for $332 million and invested heavily in renovations. The sale will bring total proceeds to $768 million, including a recent land sale to Areté Collective. The transaction showcases Blackstone's ability to enhance luxury hospitality assets and is expected to close in Q3 2024. Turtle Bay Resort, one of the largest employers on O'ahu's North Shore, features 450 rooms and underwent significant upgrades under Blackstone's ownership.

Positive

• Sale of Turtle Bay Resort for $725 million, representing a significant return on investment.
• Total sale proceeds of $768 million, inclusive of recent land sale.
• Successful completion of extensive renovations, enhancing the resort's value.
• Creation of high-quality jobs on O’ahu’s North Shore.
• Positioned Turtle Bay Resort for long-term success through strategic investments.

Negative

• Dependence on the sale closing successfully in Q3 2024.
• Potential market fluctuations affecting the final sale value.
• No specific financial details on the costs of renovations provided, making net gain unclear.

Insights

Financial Analyst

Blackstone's sale of Turtle Bay Resort comes as a significant financial event with impressive returns. Purchased in 2018 for $332 million, it is now sold for $725 million, resulting in a gross profit of $393 million. This reflects a 118% increase in asset value over approximately six years. Such returns are notable even within the lucrative hospitality sector and signal Blackstone’s effective asset management strategies.

From a financial perspective, the cap rate, or capitalization rate, is essential when analyzing property investments. It represents the return on investment based solely on the expected income the property will generate. While the exact NOI (Net Operating Income) post-renovation isn't disclosed, a significant increase in property value typically implies enhanced operational efficiency and revenue. This is especially critical given the high capital expenditures invested in the renovation.

For investors, the positive outcome here highlights Blackstone's strategic prowess and suggests that similar investments may also yield substantial returns. However, it’s important to consider that such high returns may not always be replicable across different assets or market conditions. Economic cycles, local market dynamics and specific property attributes all play a role in determining investment outcomes.

Market Research Analyst

The transaction involving Turtle Bay Resort speaks volumes about current trends in the hospitality and real estate markets. The substantial appreciation in value and successful sale underscores demand for luxury and iconic properties, particularly in attractive locations like O’ahu’s North Shore. The extensive renovations and upgrades likely positioned the property favorably in the market, catering to high-end clientele seeking premium experiences.

Furthermore, the involvement of sustainable development practices by Areté Collective aligns with growing trends towards environmental sustainability in real estate. This indicates a shift in market preferences, where stakeholders favor projects that incorporate climate resilience and sustainable growth.

For retail investors, this transaction highlights the potential profitability of well-managed luxury properties. However, it also underscores the importance of sustainability and environmental considerations, which are increasingly becoming key value drivers in the real estate market.

Legal Expert

The legal aspects of this transaction are notable due to the involvement of high-profile legal and financial advisors like Simpson Thacher & Bartlett LLP and SMBC, ensuring compliance and safeguarding interests on both sides. The complexity of such a high-value deal involves navigating various regulatory, environmental and operational considerations, particularly given the scale of renovations and the sustainable development aspect by Areté Collective.

For stakeholders, this underscores the importance of robust legal frameworks and advisory in facilitating smooth transactions and maximizing asset value. Legal diligence ensures that renovations and operations meet regulatory standards, thus protecting long-term investments from potential litigation or compliance issues.

Inclusive of recent land sale, sale proceeds total $768 million

NEW YORK--(BUSINESS WIRE)-- Blackstone Real Estate today announced that it has reached an agreement to sell Turtle Bay Resort for $725 million. Blackstone purchased the hotel in 2018 for $332 million and subsequently invested significant capital in renovations.

Rob Harper, Head of Blackstone Real Estate Asset Management Americas, said, “This transaction is an excellent outcome for our investors and a testament to Blackstone’s ability, including through the pandemic, to transform iconic, luxury hospitality assets. The team executed an ambitious business plan, investing significant capital to reposition the resort for long-term success while also adding high-quality jobs on the North Shore.”

With 450 rooms on 1,300 acres along the North Shore of O’ahu, Turtle Bay Resort is one of the area’s largest employers and boasts a variety of top-tier amenities. Under Blackstone’s ownership, the Resort recently benefitted from a transformative renovation, including the guestrooms and bungalows, lobby, pools, restaurants, retail, meeting space, spa, a new club lounge, building systems, as well as an updated exterior and arrival experience.

The sale is expected to close in the third quarter of 2024.

In a separate transaction, Areté Collective, a vertically integrated development company known for sustainable development practices that prioritize climate resilience, announced the closing of a transaction to purchase 65 acres of land at Turtle Bay on O‘ahu’s North Shore.

Inclusive of the recent land sale to Arete and following the close of the property sale transaction, sale proceeds generated on the hotel by Blackstone will total $768 million.

Eastdil Secured, Jones Lang LaSalle and Sumitomo Mitsui Banking Corporation (SMBC) are acting as Blackstone’s financial advisors, and Simpson Thacher & Bartlett LLP is serving as Blackstone’s legal counsel.

About Blackstone Real Estate

Blackstone is a global leader in real estate investing. Blackstone’s real estate business was founded in 1991 and has US $339 billion of investor capital under management. Blackstone is the largest owner of commercial real estate globally, owning and operating assets across every major geography and sector, including logistics, residential, office, hospitality and retail. Our opportunistic funds seek to acquire undermanaged, well-located assets across the world. Blackstone’s Core+ business invests in substantially stabilized real estate assets globally, through both institutional strategies and strategies tailored for income-focused individual investors including Blackstone Real Estate Income Trust, Inc. (BREIT), a U.S. non-listed REIT, and Blackstone’s European yield-oriented strategy. Blackstone Real Estate also operates one of the leading global real estate debt businesses, providing comprehensive financing solutions across the capital structure and risk spectrum, including management of Blackstone Mortgage Trust (NYSE: BXMT).

View source version on businesswire.com: https://www.businesswire.com/news/home/20240529973758/en/

Jeffrey Kauth

(212) 583-5395

Jeffrey.Kauth@Blackstone.com

Source: Blackstone

FAQ

What is the sale price of Turtle Bay Resort by Blackstone Real Estate?

Blackstone Real Estate is selling Turtle Bay Resort for $725 million.

When did Blackstone purchase Turtle Bay Resort?

Blackstone Real Estate purchased Turtle Bay Resort in 2018.

How much did Blackstone invest in renovations at Turtle Bay Resort?

While the exact amount is not specified, Blackstone invested significant capital in renovations at Turtle Bay Resort.

When is the sale of Turtle Bay Resort expected to close?

The sale is expected to close in the third quarter of 2024.

What are the total proceeds from the Turtle Bay Resort sale?

The total sale proceeds, including a recent land sale, will be $768 million.