Extended Stay Hotels, the lodging chain owned by Blackstone Group LP (BX), Centerbridge Partners LP and Paulson & Co., plans to file today for an initial public offering later this year, said a person with knowledge of the situation.
The Charlotte, North Carolina-based company hasn’t decided how many shares will be sold or at what price, said the person, who asked not to be identified because the process is private. Extended Stay is owned in equal thirds by its private-equity and hedge-fund shareholders.
The IPO could raise about $500 million, based on the midpoint of the typical 10 percent to 20 percent of a company’s value sold in IPOs, according to data compiled by Bloomberg. Extended Stay is valued at about $3 billion to $4 billion, before debt, the person familiar with the process said. The company has debt of about $3.6 billion, according to the person.
Plans for the IPO filing were reported earlier today by the Wall Street Journal.
Blackstone, the largest U.S. hotelier with holdings including Hilton Worldwide Inc., has said it plans to sell real estate holdings as markets recover from the financial crisis. The company’s shopping center unit Brixmor Property Group filed last week for an IPO. Blackstone has said it expects to take Hilton public over the next 12 to 18 months.
Blackstone created Extended Stay Hotels through a series of investments totaling about $4.9 billion, including the $3 billion purchase of Extended Stay America in 2004, after lodging revenue and property values had been depressed by the 2001 terrorist attacks.
Blackstone later sold Extended Stay for $8 billion in 2007 to Lightstone Group LLC. After the credit crisis hit, Extended Stay filed for bankruptcy protection in 2009 with $7.6 billion in debt. Blackstone then joined Centerbridge and Paulson to buy back the hotel chain out of bankruptcy for about $3.9 billion in 2010.
Peter Rose, a spokesman for Blackstone; Mark Gallogly, co-founder of Centerbridge; and Armel Leslie, a spokesman for Paulson, didn’t immediately respond to e-mails and phone calls placed outside regular business hours.
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