October 8, 2013 5:41 pm

Hotel chain Extended Stay America sets sights on $500m IPO

Extended Stay America, the mid-priced hotel chain owned by Blackstone Group, Centerbridge Partners and Paulson & Co, plans to raise $500m in a public offering.

Deutsche Bank, Goldman Sachs Group and JPMorgan Chase are the lead underwriters on the offering, according to regulatory filings with the Securities and Exchange Commission.

The North American company is valued at about $3bn to $4bn excluding debt, a person familiar with the matter said. It had previously announced a place holder amount of $100m.

Extended Stay’s owners, which hold equal parts in the company, are taking the hotel chain public three years after buying it out of bankruptcy as the economic downturn took a toll on its business.

The rally in US stocks since the crisis has lifted valuations, allowing private equity companies to tap public investors to exit investments made during the buyout boom years. Blackstone, which owns more than 200,000 hotel rooms in the US alone through its portfolio companies, is looking to unwind a series of holdings in US commercial real estate and housing assets that it has accumulated in recent years. The private equity group also owns Hilton Worldwide, which last month filed for a $1.25bn IPO.

Extended Stay has hired Starbucks’ former chief executive James Donald to lead the company as it looks to revitalise the brand. The company reported $1bn in 2012 revenue and $22.3m in net income, regulatory documents show.

Founded in 1995, Extended Stay owns and operates 682 hotel properties comprising about 75,900 rooms across the US and Canada.

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