Dealmaker: Blackstone, Starwood Capital Group to Acquire Extended Stay America
A Blackstone Real Estate Partners-Starwood Capital Group venture agreed to acquire Extended Stay America and its real estate investment trust ESH Hospitality for $19.50 per paired share in an all-cash transaction valued at nearly $6 billion.
Extended Stay America is the largest brand in the mid-priced extended stay segment in the U.S. with 649 hotels. ESA also franchises an additional 86 Extended Stay America hotels. ESH Hospitality is the largest lodging real estate investment trust in North America by unit and room count with 563 hotels and more than 62,700 rooms.
Goldman Sachs & Co. LLC is serving as Extended Stay America’s financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP is acting as legal counsel.
J.P. Morgan and Citigroup Global Markets Inc. are acting as financial advisors and providing debt financing to Blackstone and Starwood. Simpson Thacher & Bartlett LLP is providing legal advisor to Blackstone and Kirkland & Ellis LLP is acting as Starwood Capital’s legal advisor.
The $19.50 per paired share offer represents a 15.1 percent premium over Extended Stay America’s closing stock price on March 12, 2021.
Tyler Henritze, Head of U.S. acquisitions for Blackstone Real Estate, said travel and leisure is one of the firm’s “highest conviction” investment themes. “We have confidence in the extended stay model,” he said. “We helped create this company nearly twenty years ago and believe our expertise puts us in a unique position to add long-term value.”
Starwood Capital CEO Barry Sternlicht said Extended Stay American has demonstrated resilience over the past year “despite persistent challenges due to government lockdowns and travel restrictions.” The chain was the only major hotel brand to remain 100 percent open since the pandemic started. The transaction was unanimously approved by ESA’s Board of Directors and approved by ESH’s Board of Directors. The boards expect the transaction to close in the second quarter, contingent upon customary closing conditions but not contingent on receipt of financing.
