JPMorgan Chase, Citi as well as german bank teamed up to create one of the largest commercial mortgage-backed securities with one asset and one borrower (CMBS) loans of the last decade – no less than for a large hotel portfolio.
Blackstone Real Estate Partners as well as Barry Sternlichtfrom Starwood Capital Group finally got a purchase for about $ 6 billion Long stay in America last week, financing the bulk of the brand’s acquisition and its portfolio of 560 hotels with a $ 4.65 billion CMBS debt that will soon hit the market, according to Fitch Ratings analysis of the transaction.
It will be the largest borrower, CMBS funding to be issued with Blackstone Group secured $ 5.6 billion in debt in 2019 to finance part of the huge pool of logistics and light industrial assets it acquired from a global investment manager and logistics and infrastructure investor. GLP, for $ 18.7 billion.
Blackstone and Starwood have teamed up to provide about $ 1.64 billion in equity to acquire Extended Stay for $ 5.94 billion, nearly 27 percent of the $ 6.2 billion deal. On June 11, the joint venture buyers received approval from Extended Stay shareholders for their offer at $ 20.50 a share to acquire the business, which has 62,257 keys in 40 states, according to Fitch, according to Fitch. Blackstone and Starwood were forced increase your offer for business after some little resistance.
According to Fitch, the debt and equity capital went towards the acquisition of the company, and it paid $ 296 million towards closing costs and financed $ 54 million in working capital. It is planned that debt financing will be securitized under ESA 2021-ESH deal and is expected to be formally closed on July 8th.
Key factors driving the sale and financing of the company to the Blackstone-Starwood joint venture – a couple that have been exploring the purchase of Extended Stay America for some time – were the sheer size and scale of buyers and the fact that Blackstone was once part of Extended Stay’s ownership, according to Fitch. Blackstone previously owned part of the business from 2004 to 2007 and from 2010 to 2013.
What makes the portfolio particularly appealing is the resilience that extended stay hotels in general have shown during the coronavirus pandemic. Extended Stay America’s portfolio has outperformed the broader hotel sector by a mile.
According to Fitch citing data STRU.S. hotel revenues per room available (RevPAR) were down nearly 42% in the first quarter of 2021 compared to the fourth quarter of 2019, right before COVID-19 hit the sector. But RevPAR for Extended Stay America fell just 6.4 percent over the same time, and it is growing again. Its monthly RevPAR stood at $ 50.98 in April 2021, up nearly 52 percent from its low of $ 33.56 in April 2020 and just 2.3 percent below its RevPAR figure in April 2019 equal to $ 52.16.
The acquisition may mark a strategic renewal of Blackstone’s relationship with the hospitality sector. Ahead of the pandemic, Blackstone had reduced its placement up to about 10 percent your real estate portfolio (valued at approximately $ 340 billion) in favor of a greater focus on logistics, residential, life sciences and film studio assets – a move that proved to be very discerning in the era of a pandemic…