Reopened BX again. Had to chase it a bit, from $45.50.
Reopened at $46.50 I'll add if lower to this one. Decent dividend Elroy. Not extraordinary, but probably sustainable
Or maybe not... Added to BX at $45.
Blackstone and Starwood Capital Check in to Extended Stay America
8:49 am ET April 21, 2020 (Dow Jones) Print
By Esther Fung
The often staid extended-stay segment of the lodging market, where many guests book hotel rooms for weeks rather than days, has been getting a lot of attention during the coronavirus pandemic.
Extended Stay America, Inc., which focuses on midprice lodging in this category, is a prominent chain and has attracted investment from two of the biggest real-estate investors, both of which have some history with the company. Blackstone Group Inc. and Starwood Capital Group have each acquired equity positions recently, according to public filings and people familiar with the matter.
These two companies had vied over the hotel chain a decade ago.
The lodging industry overall has been decimated as the pandemic has brought most all business and leisure travel to a halt. Among the hardest hit have been convention hotels that cater to large group meetings and luxury hotels.
More affordable, economically-priced hotels are still enjoying some demand, attracting medical, government, construction workers, airline crew and even some full-time residents.
About a third of the rooms in economy-class hotels were occupied during the week ended April 11, according to hotel data-tracking firm STR. Luxury hotels, by comparison, sold only 9% of rooms during that time.
"As some Americans lose their homes because they can't make mortgage payments, you may see the occupancy in the economy and extended stay properties increase as people move into temporary shelter for awhile," Jan Freitag, a senior vice president at STR, said in a webinar last week.
Other popular extended-stay hotel chains include Mainstay Suites from Choice Hotels International Inc., Home2 Suites by Hilton Worldwide Holdings Inc. and TownePlace Suites from Marriott International Inc., though the latter two are typically at a higher price point.
Charlotte, N.C.-based Extended Stay operates 632 hotels with rooms that include kitchens and dining areas for guests looking to stay for a week or longer.
Like a number of other hotel companies, Extended Stay withdrew its 2020 earnings guidance in March but said that its low-cost operating model, strong balance sheet, and focus on longer term extended-stay guests differentiates the company from its peers.
Extended Stay attracts workers on assignment and people in need of temporary housing with pet-friendly rooms and on-site laundry options, according to its website. While according to STR about 4,700 U.S. hotels have temporarily closed in recent weeks, Extended Stay said it hasn't closed any of its properties during the pandemic.
This resilience attracted Blackstone Group's interest in mid-March, when it purchased a 4.9% stake in the company at an average price of $6.50 a share, according to people familiar with the matter. The purchases came during a recent period when Blackstone spent more than $1 billion acquiring shares of publicly traded real estate-related companies, these people said.
Starwood Capital, led by chief executive Barry Sternlicht, acquired 8.5% of Extended Stay America for $136.8 million, which averages out to around $9.05 per share, according to a stock exchange filing.
Blackstone knows Extended Stay America well, having purchased it in 2004 for around $2 billion when the hotel chain had less than 500 hotels. At that time, the investment firm already owned Homestead Village, a midprice extended-stay hotel chain. The properties were grouped under Extended Stay Hotels.
In 2007, Blackstone sold this portfolio to Lightstone Group for $8 billion in a highly-leveraged deal. The hotel chain subsequently filed for bankruptcy in 2009.
In 2010, Blackstone and Starwood battled for control of what was then called Extended Stay Inc. through competing consortia 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.
Shares of Extended Stay closed Monday at $9.35, up from a year-to-date low of $5.35 in March.
Write to Esther Fung at esther.fung@wsj.com
(END) Dow Jones Newswires
April 21, 2020 08:49 ET (12:49 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
