Control of the operations
Management’s commitment to a diversification strategy is demonstrated by the fact that it has raised more than $120 billion in assets under management to commit to strategies that didn’t existed in 2007.
Management also has strong control over the company’s operations through the partnership structure. Management and other employees own approximately 45% of the firm’s units and control over 50% of voting power. With their own investments at stake, the general partners are incentivized to work for the unitholder’s interest.
Low-Budget Motel 6 Gets In on Lodging Growth Boom
Parent company G6, backed by Blackstone, is expanding in Latin America
A rendering of a new Estudio 6 room at a property being built in Salamanca, Mexico. ILLUSTRATION: ARQUITECTOS SANTOSCOY
By CRAIG KARMIN
March 3, 2015 2:21 p.m. ET
Record sales prices for luxury properties and an explosion of lifestyle brands have marked the recent hotel boom. But a low-budget staple is enjoying some of the industry’s strongest growth.
Motel 6, the 53-year old brand famous for its roadside locations and no-frills lodging, is upgrading thousands of rooms and entering new markets in Latin America, where its parent company, G6 Hospitality LLC, broke ground last month on its first hotel.
Blackstone Group LP, which acquired Motel 6 from Accor SA for $1.9 billion in 2012, is fueling the expansion. The previous owner, a French hotel operator, had slowed investment in the brand after turning its focus elsewhere. Blackstone said at the time of the 2012 acquisition it would spend another $500 million to upgrade the existing properties, and it now expects to exceed that figure.
The New York investment firm sold $2 billion in a combination of commercial mortgage-backed securities and mezzanine debt last week as part of a refinancing. It values the hotel chain at nearly $3 billion, according to people familiar with the hotel company.
New ownership “brought a fresh perspective and fresh spirit to the organization,” says Jim Amorosia, G6 chief’s chief executive.
The Blackstone Group L.P. (BX) (Previous Close: $38.14, Get Quote) (Ratings, Earnings and Dividend History)
The Blackstone Group L.P. saw a large growth in short interest in the month of February. As of February 13th, there was short interest totalling 13,106,936 shares, a growth of 37.9% from the January 30th total of 9,505,239 shares. Approximately 2.5% of the shares of the company are sold short. Based on an average trading volume of 5,102,464 shares, the days-to-cover ratio is presently 2.6 days.
Javier Larrea | Getty Images
Look at NXP Semiconductors run! This stock was up 17 percent on Monday on news that it will acquire Freescale Semiconductor. Jim Cramer thinks this stock behavior is strange: Normally it's the target of the takeover that soars, not the acquirer!
Then again, this isn't a plain vanilla acquisition that hit the market. This one could breed a powerhouse, so it only makes sense that stocks wouldn't act like any old normal acquisition.
"Honestly, I think that NXP's acquisition of Freescale, for $11.8 billion in cash and stock, may be the best semiconductor merger yet. In fact, I think this deal could be a game changer," the "Mad Money" host said.
Cramer knows from past experience that consolidations in the semiconductor space have been very lucrative. This new NXP Freescale merger is no exception.
Currently, NXP is the 14th largest player in the semi space, and Freescale is the 18th largest. Combined, they will become the fourth largest, following Intel, Qualcomm and Texas Instruments. That's quite a jump!
The two companies were a match made in heaven, and Cramer sees enormous cross-selling opportunities. Currently, NXP is the top maker of semiconductors for infotainment and keyless ignition systems. Freescale is dominant in digital networking chips, radio frequency devices and sensors.
Put these companies together, and Cramer sees that they will dominate the auto market at a critical time when cars and things are rapidly becoming more connected.
On the flip side, NXP's debt load will increase dramatically from 1.7 times to 3 times EBITDA after the deal is completed. However, Cramer is not worried about this as he foresees that the company will generate significantly more cash flow. NXP anticipates it will be able to bring the balance sheet back to normal in a year and half.
BX broke out on 1/22/2015 at $35... but you adjust if for the dividend and it was around 34.... stockcharts site has a good adjusted chart..BX paid over $2 in dividends for 1 year..and that needs to be taken for total price appreciation...I am way over invested in BS and need to sell some...retired here and just need to be prudent..first bought 9/30/2012 at 14.56 and 10/7/2012 at 14.27 and added more a couple of time..with dividends it is a great investment.. I didnt try to trade the dips as some probably unsuccessful traders try to do..of course the market has been amazing...that sure helps..but making me quite cautious...made enoough this year to satisfy me..just want to preserve my capital at my age..
good articles out....Higher returns over equity
Blackstone has witnessed some of the fastest bottom-line growth in the industry. The scale and performance of the company supports this growth. In exchange, equity holders enjoy higher returns and higher dividend payouts. Blackstone has generated a return on equity of 22% to 27% over the past five years, which is 30% to 50% higher than the industry average of 19% over the same period. The company has also maintained operating and net-profit margins.
cash amount is $1.225 Billion plus stock in a great company..BX is so smart....FLS was another winner..
Sentiment: Strong Buy
Posted date March 1, 2015 - 3:00am
Blackstone exec ready to bet big on Cosmopolitan of Las Vegas
Global Head of Real Estate for Blackstone, Jonathan Gray, speaks as contract talks begin between the Culinary representatives and Cosmopolitan officials at the Cosmopolitan of Las Vegas, Wednesday, Feb. 18, 2015. (Donavon Lockett/Las Vegas Review-Journal)
Global Head of Real Estate for Blackstone, Jonathan Gray, left, and Senator Dean Heller talk prior to kicking off contract talks between the Culinary representatives and Cosmopolitan officials at the Cosmopolitan of Las Vegas, Wednesday, Feb. 18, 2015. (Donavon Lockett/Las Vegas Review-Journal)
writes the weekly column Inside Gaming, reflecting what is happening in the industry. It appears Sunday and Wednesday in Business. Follow him on Twitter: @howardstutz
Follow on: Feeling grows that Net poker is nearingInside Gaming
By HOWARD STUTZ
LAS VEGAS REVIEW-JOURNAL
Blackstone Group executive Jonathan Gray never will be mistaken for Nick the Greek. The company’s head of global real estate considers himself just a gambling novice.
Yet, the head of the New York-based private equity fund is wagering $1.73 billion it can make The Cosmopolitan of Las Vegas a shining jewel on the Strip.
To hear Gray describe the 4-year-old Strip hotel-casino, Blackstone is well on its way to beating the odds.
Gray, 45, oversees Blackstone Real Estate Partners, which owns $81 billion in real estate assets.
The company completed its purchase of the 2,995-room Cosmopolitan from Germany-based Deutsche Bank in December. The stylish hotel-casino was Blackstone’s largest real estate asset purchase ever.
“We’ve bought companies, but this is a sizable real estate investment,” Gray said. “I live in New York, and of all the assets we’ve bought, this is the only one that people come up to me and say, ‘Oh my God, I love the Cosmo.’ ”
In December, Gray and other Blackstone executives talked exuberantly about the Cosmopolitan when the purchase was approved by Nevada gaming regulators.
His tone hasn’t changed in two months.
During an interview in a Cosmopolitan board room, Gray said the company, which owns the Hilton Worldwide hotel chain, has a history of investing in businesses or into markets that have run into difficult times.
In Las Vegas, the company already owned about 1,000 homes purchased out of foreclosure and the 1.4-million-square-foot HC | Hughes Center at Paradise and Flamingo roads when it acquired The Cosmopolitan.
“We have a positive view of Las Vegas,” Gray said. “Las Vegas is down, but not out.”
Gray said regional gaming markets will continue to face economic and competitive challenges. And they will never replace Las Vegas.
“It’s difficult to replicate the entertainment and infrastructure you have here, with the meeting space, restaurants, retail and hotels all in one location,” Gray said.
The Cosmopolitan is best known for its dining options and popular nightclubs, including The Chelsea, Rose.Rabbit.Lie. and Marquee, which is one of the top-grossing clubs in the United States.
During its presentation to state gaming regulators, Blackstone said the property collects 80 percent of its revenue from the hotel’s two 52-story towers and the extensive food and beverage operations.
Gray said the figure is something the ownership wants to change. The company plans to invest more than $100 million initially into The Cosmopolitan to complete four floors of unfinished hotel rooms in the East Tower. Other public areas of the property also will be enhanced.
“It could take a couple hundred million to get this place where it should be,” Gray said.
He said the property’s unique advertising message, “a little bit of wrong,” won’t change, and the hotel rooms will remain available through Marriott’s Autograph Collection. New restaurant concepts also are being considered.
The focus will be on the gaming floor.
“It’s an area of great opportunity,” Gray said. “From a mathematical standpoint, The Cosmopolitan runs the highest average room rates on the Strip today. The gaming revenue per room is below the average of all the hotels on the Strip. That doesn’t seem to make a lot of sense to us.”
To fix those matters, Blackstone brought in veteran gaming executive Bill McBeath. He was president of three Strip resorts, The Mirage, Treasure Island and Bellagio, and most recently served as president of CityCenter.
McBeath says he is looking at ways to increase the casino play but also improve other areas of the resort. McBeath, who has been on the job since late December, likened the past few months to “drinking a glass of water out of a fire hydrant.”
He’s taken in every aspect of the property.
“I have put together a pretty aggressive program to enhance and differentiate our product offering,” McBeath said. “We have to deliver a product with a great nongaming offering, but at the same time, you can’t escape that we have a 100,000-square-foot casino on the first floor. You have to celebrate that with programs and services.”
McBeath’s commitment goes beyond his CEO position. He said he “made an investment” in the resort and is a minority owner.
Blackstone is relying on McBeath. Gray called his hiring a “coup” for the property.
He also believes the company’s history with hotel workers union UNITE HERE will lead to a labor agreement with Culinary Local 226, which had an adversarial relationship with Deutsche Bank and previous management.
That’s one reason Blackstone, Culinary leaders and elected officials participated in an event last month to celebrate the new ownership. Labor strife is over. It was also a way to introduce Blackstone to the community.
Gray said the company is looking for other potential Strip purchases so The Cosmopolitan won’t be a one-casino company, although he wasn’t tipping his hand on any new deal.
“We generally don’t talk about anything specific,” he said.
He said the private equity group is committed to the investment for the long haul and isn’t looking to a quick sale to recoup its investment.
“We see a lot of upside in this asset,” Gray said. “Selling quickly is not in our plan.”
Gray said his only experience with gambling was with small-stakes blackjack games on trips to Las Vegas. He’s relying on McBeath’s experience and background when it comes to The Cosmopolitan’s casino.
“I like the energy, excitement and entertainment in the casino, but it’s a real stretch to call me a big gambler,” Gray said. “I’ll leave my risk-taking to the investment side of things.”
Sentiment: Strong Buy
However, with Yahoo’s plans to spin-off its stake in Alibaba Group Holding Ltd (NYSE:BABA), there is a small fear among analysts that this will reduce the liquidity of Alibaba’s shares.
By Chris Witkowsky
NEW YORK, Feb. 27 (Buyouts Magazine) - Talk about smooth sailing. Blackstone Group(BX) has told its investors that it expects to hold a first close on its flagship private equity Fund VII in April on $10 billion, according to two limited partners with knowledge of the firm.
That is after officially launching the fund late last year with a $16 billion target and without a cap. The firm had been talking to potential limited partners about the fund since as early as last fall, sources said.
At this kind of pace, who knows how much Blackstone could potentially rake in for Fund VII. One LP who has heard the fundraising pitch said it would not be surprising if the firm tries to raise $18 billion or more.
Blackstone helped stoke the flames of the early fundraising by offering a six-month management fee holiday for early investors, the two sources said. This means LPs who commit prior to the first close will not pay management fees for six months, starting on the official first close date, one source said.
The fee holiday will help smooth out the J-curve for those LPs that qualify, the source said. The J-curve is the expected period of loss in the early years of a private equity fund, followed usually by gains as investments mature and are exited.
Blackstone will share 100 percent of any deal or monitoring fees with LPs in Fund VII, Blackstone President Tony James said during a media call earlier this year. This is the first time Blackstone has moved to a 100 percent deal fee offset in its private equity funds, though i
OBV has been increasing since the bottom on 1/23/2015..forming a reversal pattern..looking to break out here...
Sentiment: Strong Buy
Thu, Feb 26, 2015, 6:10pm EST - US Markets are closed
CLJ15.NYM -4.06% 48.92
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Blackstone's large US$1.8bn CMBS tops list of priced deals
9 minutes ago
By Joy Wiltermuth
NEW YORK, Feb 26 (IFR) - The Blackstone Group's US$1.8bn CMBS refinancing of Motel 6, a low-cost lodging chain it bought three years ago, was the biggest structured finance deal to price on Thursday, bankers and investors said.
Demand helped the issuer to tighten the top three classes 5bp-10bp from talk earlier in the week, even though the trade nearly cashed out Blackstone's entire US$626m equity stake in the company.
Presale reports showed that the new financing returned US$600m in equity to Blackstone, a point that two investors said made it less attractive than the initial US$1bn CMBS, which helped finance Blackstone's 2012 acquisition of Motel 6 from Accor.
"Is it a concern? We have conflicted thoughts," one analyst said. "We don't like to see big cash outs. But again, that's one reason why we will look at the sponsor."
Further down in credit, investors felt they wanted a bit more spread from Blackstone, particularly on the Triple B minus and Double B minus classes, which widened by roughly 15bp before they landed at Swaps plus 290bp and S+390bp, respectively.
Energy producer Samson Resources Corp., owned by private-equity firm KKR & Co.(KKR), is working with restructuring advisers, as a sharp decline in oil and gas prices complicates its efforts to stem losses and keep current on its multibillion-dollar debt load.
The Tulsa, Okla., company is working with law firm Kirkland & Ellis LLP's restructuring practice and Blackstone Group LP's(BX) restructuring advisory group on options for dealing with its $3.8 billion in long-term debt, according to people familiar with the matter.
Companies hire restructuring advisers to explore options to raise capital, sell assets or cut debt through out-of- court restructurings or bankruptcy filings. It isn't clear what options Samson is considering, though the company has previously said it is looking to sell some oil and gas fields.
KKR led a $7.2 billion buyout of Samson in 2011, as the shale-drilling boom was ramping up. The company took on $ 3.6 billion in debt as part of the takeover.