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Highgate, Cerberus acquire CorePoint Lodging for $1.5B

Joint venture paying $15.65 per share in all-cash deal for La Quinta brand

From left: Cerberus' Stephen Feinberg, CorePoint Lodging's Keith Cline and Highgate's Mehdi and Mahmood Khimji (Cerbuerus, CorePoint, Highgate, Booking)

From left: Cerberus' Stephen Feinberg, CorePoint Lodging's Keith Cline and Highgate's Mehdi and Mahmood Khimji (Cerbuerus, CorePoint, Highgate, Booking)

CorePoint Lodging, a publicly traded lodging REIT spun off of the La Quinta hotel brand, is being acquired by a joint venture at a deal valuing the company at nearly $1.5 billion.

Affiliates of Highgate and Cerberus Capital Management agreed to acquire the company, CorePoint announced Monday. The affiliates will pay $15.65 per share, an approximately 42 percent hike from July 13, the day before CorePoint announced its exploration of strategic alternatives.

CorePoint stockholders stand to gain even more depending on the result of an IRS audit over unpaid taxes, which the company hopes to settle for less than $160 million. The acquisition, meanwhile, is expected to close in the first quarter of 2022.

The deal marks the latest vote of confidence in hotels after the pandemic sank the industry.

Amid widespread vaccination access and evolving travel restrictions, Blackstone and Starwood Capital in March acquired Extended Stay America for about $6 billion at $19.50 per share. The deal marked the largest since the onset of the pandemic, and came just a few months before Hyatt Hotels purchased Apple Leisure Group in August from KKR & Co and KSL Capital Partners for $2.7 billion in cash.

The CorePoint spinoff in 2018 separated La Quinta’s real estate from the franchise and management business, which was quickly sold to the Wyndham Hotel Group. The company is Wyndham’s largest franchisee, placing midscale and upper-midscale hotels near employment centers and transit areas like airports.

CorePoint had been selling a number of hotels in recent months. The REIT sold a La Quinta in Deerfield Beach for $5.7 million in September 2020 to Shree Sai Properties LLC. In the second quarter of that year alone, the operator sold seven non-core hotels for $29 million.

Highgate is no stranger to major hotel portfolio deals. Last year, the company — known at the time as Colony Capital — sold a majority of its hotel business to Highgate in a deal valuing the properties at $2.8 billion. Six of its seven hotel portfolios were sold for $67.5 million, plus the assumption of $2.7 billion in debt.

Earlier this year, Cerberus raised about $2.8 billion for an opportunistic real estate fund, exceeding the $2 billion target. The fund was set to look at direct assets, as well as entities with big real estate exposure and debt, such as non-performing or defaulted loans.

After the acquisition closes, CorePoint will go private and will no longer have common stock traded.

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New York

Highgate, Cerberus acquire CorePoint Lodging for $1.5B

Joint venture paying $15.65 per share in all-cash deal for La Quinta brand

From left: Cerberus' Stephen Feinberg, CorePoint Lodging's Keith Cline and Highgate's Mehdi and Mahmood Khimji (Cerbuerus, CorePoint, Highgate, Booking)

From left: Cerberus' Stephen Feinberg, CorePoint Lodging's Keith Cline and Highgate's Mehdi and Mahmood Khimji (Cerbuerus, CorePoint, Highgate, Booking)

CorePoint Lodging, a publicly traded lodging REIT spun off of the La Quinta hotel brand, is being acquired by a joint venture at a deal valuing the company at nearly $1.5 billion.

Affiliates of Highgate and Cerberus Capital Management agreed to acquire the company, CorePoint announced Monday. The affiliates will pay $15.65 per share, an approximately 42 percent hike from July 13, the day before CorePoint announced its exploration of strategic alternatives.

CorePoint stockholders stand to gain even more depending on the result of an IRS audit over unpaid taxes, which the company hopes to settle for less than $160 million. The acquisition, meanwhile, is expected to close in the first quarter of 2022.

The deal marks the latest vote of confidence in hotels after the pandemic sank the industry.

Amid widespread vaccination access and evolving travel restrictions, Blackstone and Starwood Capital in March acquired Extended Stay America for about $6 billion at $19.50 per share. The deal marked the largest since the onset of the pandemic, and came just a few months before Hyatt Hotels purchased Apple Leisure Group in August from KKR & Co and KSL Capital Partners for $2.7 billion in cash.

The CorePoint spinoff in 2018 separated La Quinta’s real estate from the franchise and management business, which was quickly sold to the Wyndham Hotel Group. The company is Wyndham’s largest franchisee, placing midscale and upper-midscale hotels near employment centers and transit areas like airports.

CorePoint had been selling a number of hotels in recent months. The REIT sold a La Quinta in Deerfield Beach for $5.7 million in September 2020 to Shree Sai Properties LLC. In the second quarter of that year alone, the operator sold seven non-core hotels for $29 million.

Highgate is no stranger to major hotel portfolio deals. Last year, the company — known at the time as Colony Capital — sold a majority of its hotel business to Highgate in a deal valuing the properties at $2.8 billion. Six of its seven hotel portfolios were sold for $67.5 million, plus the assumption of $2.7 billion in debt.

Earlier this year, Cerberus raised about $2.8 billion for an opportunistic real estate fund, exceeding the $2 billion target. The fund was set to look at direct assets, as well as entities with big real estate exposure and debt, such as non-performing or defaulted loans.

After the acquisition closes, CorePoint will go private and will no longer have common stock traded.

Read more

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