Extended Stay Hotel Chain Seeks Up to $500 Million in IPO
Extended Stay America Inc., the mid-price lodging chain owned by Blackstone Group LP (BX), Centerbridge Partners LP and Paulson & Co., increased the amount it plans to raise in an initial public offering to as much as $500 million.
Deutsche Bank AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. will underwrite the sale, according to a regulatory filing today. Extended Stay, the largest owner-operator of company-branded hotels in North America, filed for the IPO in July with a placeholder amount of $100 million.
The owners, which hold equal parts of the chain, are taking it public three years after buying it out of bankruptcy. Extended Stay, based in Charlotte, North Carolina, is seeking to take advantage of a rally in shares of lodging companies. The Bloomberg REIT Hotel Index has increased almost 17 percent in 2013 and hovers close to a five-year high.
Blackstone, based in New York, also owns Hilton Worldwide Holdings Inc., which last month filed for a $1.25 billion IPO.
Extended Stay is selling paired common stock, comprising one share of the company and one Class B share of a related entity that seeks to be taxed as a real estate investment trust, the filing shows. Each paired share will trade as one unit.
Extended Stay expects net proceeds from the IPO of about $461 million, according to the filing shows. The company owns and operates almost 700 hotels in the U.S. and Canada, with about 75,900 rooms. The chain is valued at about $3 billion to $4 billion, excluding debt, a person with knowledge of the matter said in July.
The company, led by former Starbucks Corp. (SBUX) Chief Executive Officer Jim Donald, had revenue of $1 billion last year and net income of $22.3 million, according to today’s filing. It has changed owners three times during the past decade’s boom and bust in real estate.
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