Extended Stay America is preparing a public offering three years after its purchase by a team comprising Blackstone Group, Centerbridge Partners and Paulson & Company.
REPORT FROM THE U.S.—Extended Stay America is preparing a public offering of shares, according to a filing with the U.S. Securities and Exchange Commission made today.
The IPO could be valued up to $100 million, according to the SEC filing. It’s not clear how many shares ESA is releasing as part of the offering. ESA was acquired in October 2010 for $3.9 billion by a team comprised of Blackstone Group LP, Centerbridge Partners LP and Paulson & Company.
Proceeds of the IPO will be used to maintain ownership of Extended Stay Hospitality, a real estate investment trust that will be a subsidiary of ESA following the transaction; reduce debt; and for general corporate purposes, according to the filing. ESA owns and operates 682 properties representing 75,900 rooms in the U.S. and Canada.
Representatives from ESA did not return calls for comment by press time.
Armel Leslie, a spokesman for Paulson, declined comment citing the quiet period surrounding the IPO. Representatives from Blackstone and Centerbridge did not immediately return messages Monday morning.
The filing states that the company’s new owners found the company’s revenue per available room was “significantly lower” than competitors in the mid-priced extended-stay segment.
“Our new management team has implemented significant improvements in the business, including improving the quality of our hotels through significant capital investment, initiating and substantially completing the rebranding of our mid-price extended stay hotel properties under the core Extended Stay America brand, increasing marketing to improve brand awareness and developing a company-wide culture and processes around service excellence,” according to the filing.
“Together, we believe these initiatives will increase demand and attract guests who are willing to pay a higher rate for an improved product and service offering, will enable us to narrow the significant RevPAR difference that exists between us and our nearest competitors in the mid-price extended stay segment and continue to position us to grow our business.”
ESA filed for Chapter 11 bankruptcy protection from creditors on 15 June 2009. The company previously was acquired in 2007 for $8 billion by a group led by David Lichtenstein.
Compiled by Shawn A. Turner.