Zell Takes Large Position in Starwood: Report

Late yesterday, in an SEC filing, entities controlled by Sam Zell reported that they had taken a 7.72 percent stake in Starwood Hotels & Resorts Worldwide Inc. According to a Reuters News report, some market watchers think that this may signal the end of the slide in real estate that

Late yesterday, in an SEC filing, entities controlled by Sam Zell reported that they had taken a 7.72 percent stake in Starwood Hotels & Resorts Worldwide Inc. According to a Reuters News report, some market watchers think that this may signal the end of the slide in real estate that came following his astute sale of Equity Office Properties at the turn of the year.According to the report, Zell has 14.75 million shares that were bought from October 2007 through January 2008. Share costs were from $39.63 to $62.37 per share. All told Zell has put about $737 million into the hotelier.As CPN has reported, Starwood has big plans for 2008. Last week the owner of such high-profile brands as Sheraton, Westin, St. Regis and Le Meridien, currently has in the pipeline 500 hotels totaling 120,000 rooms. Its 900th hotel will open this year, and the company expects to increase its portfolio by 50 percent over the next five years. Starwood’s most aggressive growth will be in the Asia/Pacific market, where the company plans to increase its portfolio by more than 70 percent. More than half of the 70 Starwood hotels under development in that region are in China, primarily Sheraton and Four Points by Sheraton properties. Ten hotels are in the pipeline in India, where Starwood already has 20 properties. Ten new Starwood hotels will be opening this year in Europe, the Middle East or Africa, with nearly 50 scheduled to open by 2012. According to the SEC filing, Zell plans only to invest and not to become involved with the direction or management of Starwood.”The bottom line is that I think Zell sees long-term value in the Starwood brand,” said David Loeb, senior research analyst and managing director at Baird, who further noted that Zell has cash on hand, not investing all of his proceeds from the sale of Equity Office Properties in his purchase of The Tribune Co.He does not believe, though, that Zell is seeking a controllling position in Starwood.”He is making what he sees as an attractive equity investment in a beaten-upindustry,” Loeb said.