Blackstone, Starwood to pay $1.5B for WoodSpring Suites properties

Acquisition from Brookfield is partners’ second extended-stay sector deal

National /
Jan.January 21, 2022 11:15 AM

From left: Stephen Schwarzman, chairman, Blackstone; Barry Sternlicht, chief executive officer, Starwood Capital Group (Getty Images, Brookfield Asset Management/Illustration by Steven Dilakian for The Real Deal)

For the second time in the span of a year, Blackstone and Starwood Capital Group are buying into the extended-stay hotel hype.

The two companies are teaming up to acquire 111 WoodSpring Suites properties from Brookfield Asset Management for about $1.5 billion, The Wall Street Journal reported. The deal is expected to close as soon as next month.

The brand specializes in providing lodging for those staying at least a week. The properties include in-room kitchens and larger spaces to attract and accommodate long-term travelers. Guests at WoodSpring Suites often stay for more than 30 days, according to the Journal.

Hotel data tracker STR reported extended-stay hotels marked relative success in 2021. The properties boasted an occupancy rate of 73.2 percent for the year, compared to that seen in other hotel sectors combined of only 55.9 percent.

Brookfield reportedly began exploring a sale of its WoodSpring Suites portfolio several months ago, seeking around $1.5 billion. The hotels are franchised by Choice Hotels.

After investment firm Lindsay Goldberg acquired WoodSpring, it sold the franchise business to Choice Hotels. The company also proceeded to sell the hotel properties to Brookfield for roughly $750 million, according to the Journal.

The deal comes months after Blackstone and Starwood made an even bigger bet on the extended-stay sector. In March, the two companies dished out $6.3 billion to acquire the 62,257-key portfolio of Extended Stay America, which took the country’s largest lodging REIT private at a price of $20.50 per share.

That deal was financed with a $4.65 billion CMBS loan from JPMorgan, Citi and Deutsche Bank.

As of April, occupancy in the portfolio was at 79 percent after bottoming out exactly a year earlier at 60 percent. That portfolio extended across 40 states and room rates varied by region, from an average of $115 per night in New York City to an average in the low $50s in Atlanta, Dallas and Detroit.

[WSJ] — Holden Walter-Warner





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