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Acquisitions

Blackstone and Starwood buy stakes in Extended Stay

(Credit: Extended Stay America)

Blackstone and Starwood Capital have each acquired equity positions in Extended Stay America. The lodging company operates 632 hotels with rooms that include kitchens and dining areas for guests looking to stay for a week or longer, WSJ noted. Extended Stay attracts workers on assignment and people in need of temporary housing.

  • Dig Deeper: Barry Sternlicht’s Starwood bought an 8.5% stake in the company for $136.8 million, which averages out to around $9.05 per share. Blackstone Group purchased a 4.9% stake in Mid-march at an average price of $6.50 a share
  • Dislocation in the public markets: The purchases came during a recent period when Blackstone spent more than $1 billion acquiring shares of publicly traded real estate-related companies. Shares of Extended Stay currently trade at $8.50 per share, up from a year-to-date low of $5.35.
  • History: Lightstone Group paid $8.1 billion for the company at the top of the market in 2007. The highly leveraged deal relied on more than $7.4 billion in debt, and only $200 million in equity from the real estate firm. The failed deal ultimately brought Extended Stay into bankruptcy protection.
  • What happened next: In 2010, Blackstone and Starwood battled for control of what was then called Extended Stay looking to take the lodging company out of bankruptcy. Blackstone’s group prevailed, purchasing the chain for around $3.9 billion. In 2013, it made a profitable exit by taking the chain public.

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