Las Vegas Sun

March 28, 2024

Starwood-ITT deal approved by Nevada regulators

The deal, to be completed by Monday, will create the world's largest hotelier, Starwood executives said prior to getting approvals Thursday from the state Gaming Control Board and its parent Gaming Commission.

Phoenix-based Starwood beat out Hilton Hotels to take over ITT's Sheraton and Caesars hotels and casinos. Its new Nevada properties include Caesars Palace and the Desert Inn in Las Vegas and Caesars Tahoe at Lake Tahoe.

Starwood now owns and operates properties under 23 names, including Ritz-Carlton, Doubletree, Hilton, Marriott and Wyndham.

The marriage of ITT and Starwood creates an empire of 650 Sheraton, Westin and Caesars resorts and casinos worldwide with $10 billion in annual revenue.

But Starwood chairman and chief executive Barry Sternlicht told the state Gaming Commission that the Desert Inn is already being marketed for sale following its recent, costly renovation.

And chief financial officer Ron Brown said a $1.95 billion sale of another Starwood asset, World Directories, closed Thursday.

Regulators were told proceeds from the sale and a proposed $650 million bond issue would be used to reduce Starwoods's $7.5 billion debt, and a $5 billion refinancing is in the works.

More than 300 real estate investment trusts, or REITs, operate nationwide, and many trade on major stock exchanges. Some own mortgages instead of property; others own both.

Starwood's structure is unique in that it's the only hotel REIT that's allowed to manage the hotels it buys, thanks to a grandfather clause in regulations imposed years ago.

Starwood consists of two separate entities: Starwood Hotels & Resorts Trust, a real estate investment trust that buys and owns hotel properties, and Starwood Hotels & Resorts Worldwide Inc., a hotel operating and management company.

Sternlicht built Starwood from the ruins of a bankrupt California hotel investment firm in 1995 using an arcane tax loophole to stimulate Wall Street's interest in the company.

Starwood capped its seemingly overnight success by purchasing Westin Hotels & Resorts for $1.8 billion and then capturing ITT. The ITT deal was first priced at $10.6 billion but Starwood now puts the price at about $14.6 billion, including cash, stock and assumed debt.

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