Qatar said in talks for St Regis NYC, San Francisco hotels

[LONDON] The Qatar Investment Authority is in advanced talks to buy the luxury St Regis hotels in New York and San Francisco from Starwood Hotels & Resorts Worldwide Inc, according to people with knowledge of the discussions.

The properties may be worth as much as US$1 billion, though they could sell for less, said the people, who asked not to be identified because the talks are private.

The St Regis New York, a Beaux Arts landmark on 55th Street off Fifth Avenue, has 238 rooms. The California property, across the street from the San Francisco Museum of Modern Art, has 260 rooms.

Starwood has been trying to sell its remaining real estate as it prepares to be acquired by Marriott International Inc next quarter, a deal that will create the world's biggest hotel operator.

Starwood is seeking to sell five hotels in the US, including the Westin Maui Resort & Spa, Westin Peachtree Plaza in Atlanta and the Tremont Chicago Hotel at Magnificent Mile. It is also trying to sell the leasehold on a sixth property, the W New York - Times Square.

David Henderson, a spokesman for the Qatar Investment Authority, and Carrie Bloom, a spokeswoman for Starwood, declined to comment. Starwood's five owned hotels don't include two properties that are scheduled to be sold to Interval Leisure Group in connection with the pending spinoff of Starwood's timeshare business.

FOREIGN BUYERS

Middle Eastern and Chinese buyers have been buying hotels around the world as they seek to diversify their holdings and capitalise on the growth of the travel business.

China's Anbang Insurance Group Co made a surprise US$14 billion bid for Starwood in March before walking away three weeks later, leaving Marriott to proceed with its takeover.

The Qatar Investment Authority, the country's sovereign- wealth fund, was set up in 2005, with a real estate division established in 2009.

It has invested about US$38 billion in property around the world, with US$21.7 billion in office transactions and US$7.5 billion for hotels, including the 2014 purchase of the St Regis Rome, according to Real Capital Analytics Inc.

The wealth fund earlier this year teamed with Douglas Emmett Inc, a real estate investment trust, to purchase four Los Angeles office buildings for US$1.34 billion.

In 2015, Qatar was the second-biggest foreign purchaser of US offices, following its investment in Brookfield Property Partners's US$8.6 billion Manhattan West project. The wealth fund and Brookfield also acquired London's Canary Wharf Group and parent Songbird Estates Plc.

The Doha-based fund opened a New York office in September to better access deals in the US and to manage its growing US investment portfolio. Qatar said at the time it plans to invest US$35 billion in the US over the next five years to diversify its holdings.

BLOOMBERG