• 0
  • Home
  • About Us
  • What We Do

Shopping Cart

GPAM
  • Home
  • About Us
  • What We Do

Blackstone sues over scotched $265M hotel deal

Blackstone-owned Homewood Suites by SF airport (Credit: Hilton and iStock)
Blackstone-owned Homewood Suites by SF airport (Credit: Hilton and iStock)

The coronavirus is being blamed for a $265 million hotel deal falling apart with the Blackstone Group suing the suddenly recalcitrant buyer.

Six limited liability companies that trace back to Blackstone Real Estate Advisors, an affiliate of the mammoth New York City-headquartered company, filed a lawsuit Thursday against KS Development after the Arcadia-based real estate investment firm terminated a deal to buy nine hotels across California.

The lawsuit says that there was nothing in KS Development’s contract affording the buyer to abandon the deal due to an economic downturn, which has specifically ravaged the hotel industry with coronavirus-related travel bans and stay at home orders.

“Deteriorating market conditions” are of “no consequence” to the purchase agreement, according to the complaint filed in Los Angeles County Superior Court.

The Blackstone plaintiffs want to keep the $9 million escrow deposit plus interest that KS Development put down, and also get damages for the defendant’s alleged breach of contract.

Messages left Monday with KS Development, which is a subsidiary of Kam Sang Co., were not returned.

KS Development agreed to buy nine hotels from entities controlled by Blackstone in January, from a Homewood Suites by the San Francisco airport to a Residence Inn in San Diego and
three hotels in Thousand Oaks, with the multi-property deal slated to close by April 1.

According to the complaint, KS Development grew nervous in February that it could not get sufficient acquisition financing due to coronavirus lending jitters, prompting Blackstone offering to extend the closing date to June in exchange for another $1 million escrow deposit.

KS Development did not agree to Blackstone’s extension. According to a court exhibit, KS Development wrote a March 18 letter to Blackstone stating, “Buyer understands that the operations, occupancies, and revenues have significantly changed as a result of the COVID-19 virus since the time that the agreement was executed,” and that Blackstone should have accordingly provided KS Development revised revenue projects.

Blackstone fired back with a missive the next day, stating that while it is true “occupancy and revenue have dropped considerably since the onset of Covid-19 coronavirus,” the seller was only under obligations to maintain the hotel’s operations, which it had been doing, and did not have a duty to provide new financial statements.

KS Development responded by instructing the escrow agent, First American Title Insurance Company, to hold on to its $9 million, and indicated that the deal would be terminated.

The sale’s dramatic unraveling comes at a time of extraordinary uncertainty for the hotel industry. Early projections from the National Hotel and Lodging Association, an industry trade group, found that hoteliers are losing $200 million in revenue each day because of the coronavirus, and that there might be one million layoffs nationally at hotels.

The post Blackstone sues over scotched $265M hotel deal appeared first on The Real Deal Los Angeles.

Powered by WPeMatico

  • 30 March 2020
  • The Real Deal
  • Uncategorized
  •  Like
Macy’s announces furloughs for “majority” of its workers →← LA County seeks hundred of hotel rooms for coronavirus patients
  • Recent Posts

    • Hoteliers sound the alarm on looming distress  May 24, 2025
    • Growth markets see retail boom even with tariff uncertainty May 24, 2025
    • Westchester resi project gets city OK after union drops objection May 23, 2025
    • WATCH: ‘Father of CMBS’ Ethan Penner to run for governor of California May 23, 2025
    • Fashion Island office fetches $756 psf May 23, 2025
  • Recent Comments

    • Archives

      • May 2025
      • April 2025
      • March 2025
      • February 2025
      • January 2025
      • December 2024
      • November 2024
      • October 2024
      • September 2024
      • August 2024
      • July 2024
      • June 2024
      • May 2024
      • April 2024
      • March 2024
      • February 2024
      • January 2024
      • December 2023
      • February 2023
      • January 2023
      • December 2022
      • November 2022
      • October 2022
      • September 2022
      • August 2022
      • July 2022
      • June 2022
      • May 2022
      • April 2022
      • March 2022
      • February 2022
      • January 2022
      • December 2021
      • November 2021
      • October 2021
      • September 2021
      • August 2021
      • July 2021
      • June 2021
      • May 2021
      • April 2021
      • March 2021
      • February 2021
      • January 2021
      • December 2020
      • November 2020
      • October 2020
      • September 2020
      • August 2020
      • July 2020
      • June 2020
      • May 2020
      • April 2020
      • March 2020
      • February 2020
      • January 2020
      • December 2019
      • November 2019
      • October 2019
      • September 2019
      • August 2019
      • July 2019
      • June 2019
      • May 2019
      • April 2019
      • March 2019
      • February 2019
      • January 2019
      • December 2018
      • November 2018
      • October 2018
      • September 2018
      • August 2018
      • July 2018
      • June 2018
      • May 2018
      • April 2018
      • March 2018
      • February 2018
      • January 2018
      • December 2017
    • Global Property and Asset Mangement, Inc.
      137 North Larchmont
      Los Angeles, California 90010
      +1 213-427-1127

    © 2025 GPAM