For a whopping $6 billion all-cash transaction, Blackstone Group Inc. and Starwood Capital Group have come together to acquire Extended Stay America, Inc.
On Monday, 15th March 2021, both the companies signed a definitive agreement for a 50/50 joint venture acquisition with funds managed for $19.50 per paired share. This share constitutes a premium of 15.1% over the closing stock price and a premium of 23.3% over the 30-day volume-weighted average share price of Extended Stay on Friday, 12th March 2021.
Blackstone Group Inc. is an alternative investment management company founded in 1985. It manages public debt and equity, multi-asset class strategies, secondary fund of funds, credit, hedge fund solutions, private equity, real estate and more. Blackstone Group released its first IPO in 2007 on the New York Stock Exchange. It is one of the leaders in the real estate business and the largest property owner across the world.
Meanwhile, the Starwood Capital Group is a private investment firm founded in 1991 that trades in real estate, energy infrastructure, oil & gas worldwide. It has approximately 4100 employees currently with 16 offices in 7 countries. Starwood Capital manages Starwood Property Trust, which is the largest commercial mortgage REIT (Real Estate Investment Trust) in the USA, established in 2009. This trust has been listed on the New York Stock Exchange since its inception.
Extended Stay America, Inc., established in 1995, is a mid-priced extended stay segment chain consisting of 650 hotels in the USA. It has been publicly traded as a paired share with ESH Hospitality, Inc at New York Stock Exchange since 1995. This subsidiary of Extended Stay is the largest lodging REIT in North America as per the unit and room numbers, including 564 hotels and around 62,500 rooms.
This acquisition of Extended Stay has come about because its rooms were a go-to option for the essential workers, healthcare professionals, and so many other people for temporary housing during the pandemic. Both Blackstone Group and Starwood Capital see a lot of potential and growth in this apartment hotel chain when the deal gets closed soon.
As per their executives, the sale of Extended Stay is the largest in the hotel sector during the COVID-19. It is a positive sign for the lodging industry in these tough pandemic times wherein the bookings for hotels in the USA have plunged substantially.