Hilton confirms earlier plans to spin off more than half its hotels into a REIT in what analysts estimate will be upwards of a $10B deal.
The REIT will include around 70 properties under both the Hilton and DoubleTree banners—most of them upscale assets, both in the US and abroad.
The hotel giant is following the wave of enterprises tapping into its real estate holdings. Sears and Darden restaurants have also recently unlocked their real estate assets with REITs, while corporate giants like Macy's and McDonald's considered it.
The move should make investors happy—REITs pay few corporate taxes and tend to trade at higher multiples of their earnings than parent companies, the Wall Street Journal reports.
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But those low corporate income taxes have brought the process under political fire, and soon spinning off REITs will be a thing of the past. In December, Congress passed a bill banning future REIT spinoffs, except for those grandfathered in (like Hilton).
Hilton also announced a plan to separate its timeshare business—also like others in the industry—to create a new entity with a portfolio of around 50 top-line club resorts with an exclusive, long-term licensing agreement with Hilton. [WSJ]
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