|
Extended Stay America has announced the sale the Crossland Economy Studios brand, including 47 hotels, as well as six Extended Stay America hotels to Westmont Hospitality (minority owner of the Red Roof Inn brand) for US$285 million. The deal is expected to close November 16. R.W. Baird analyst David Loeb said Baird views the deal as positive for ESA as it further refines the company’s focus on its name-sake brand. On a trailing 12 months (TTM) basis through 2Q15, the 53 hotels generated US$29 million of adjusted EBITDA, which implies the portfolio is being sold at ~9.8x TTM EBITDA. Following the sale, Extended Stay is expected to make a special one-time distribution to shareholders equal to the taxable gain on the sale. Loeb added that management is also expected to use the remaining proceeds to reduce debt or for investment into hotels more in line with its overall strategy (capital to fund renovations, development or acquisitions). In conjunction with this announcement, Extended Stay management reaffirmed its previous 3Q15 and full-year guidance ranges (inclusive of the 53 hotels being sold). |
×
