Blackstone and Starwood Capital JV to acquire Extended Stay America for $6 billion

George Sell George Sell Uploaded 15 March 2021

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US: A 50/50 joint venture between funds managed by Blackstone Real Estate Partners and Starwood Capital Group have signed a definitive agreement to acquire Extended Stay American for $19.50 per share in an all-cash transaction valued at $6 billion.

The purchase price represents a premium of 23.3 per cent over the 30-day volume-weighted average share price ending March 12, 2021 and a premium of 15.1 per cent over the closing stock price on March 12, 2021.

This will be the third time Blackstone has owned ESA, following its initial purchase in 2004. Tyler Henritze, head of US acquisitions for Blackstone Real Estate, said: “We have confidence in the extended stay model. We helped create this company nearly twenty years ago, and believe our expertise puts us in a unique position to add long-term value.”

Barry Sternlicht, CEO of Starwood Capital, highlighted the company’s resilience over the past year despite persistent challenges due to government lockdowns and travel restrictions.

The transaction is expected to close in the second quarter of 2021, contingent upon customary closing conditions, including approval of the company’s stockholders. The transaction is not contingent on receipt of financing.

The deal comes 11 months after the two investment firms acquired 8.5 per cent (Starwood Capital) and 4.9 per cent (Blackstone) stakes in ESA, early in the pandemic.

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