Brookfield weighs $1.5B hotel portfolio sale

Firm eyeing deal for extended-stay chain WoodSpring Suites: report

Bruce Flatt, chief executive officer, Brookfield Asset Management (Brookfield Asset Management, WoodSpring Suites, iStock)
Bruce Flatt, chief executive officer, Brookfield Asset Management (Brookfield Asset Management, WoodSpring Suites, iStock)

Brookfield Asset Management is weighing the sale of a portfolio of extended-stay hotels for up to $1.5 billion, Bloomberg reported, citing people familiar with the matter.

The firm is reportedly working with an adviser in regards to a potential sale of its portfolio of WoodSpring Suites, which provides affordable short and medium-term hotel stays without many services or amenities.

The average length of stay is about 15 days, according to Bloomberg, significantly longer than the three-to-five day stays for other hotels, according to S&P Global Ratings analysts. In turn, the hotels are able to generate high margins.

In April, Brookfield negotiated a deal with Hospitality Investors Trust that gave the Toronto-based firm control of 100 hotels as part of a Chapter 11 filing. Brookfield was the largest investor in the trust.

The hotels are franchised by Choice Hotels.

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News of the potential deal comes months after another extended-stay portfolio traded hands for a big price. Blackstone Group and Starwood Capital Group acquired the hotel chain for about $6 billion, at $19.50 per share. Both companies were previous investors in the hotel chain and the bid was later upped to $20.50 per share, a value of about $6.3 billion.

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Brookfield Asset Management CEO Bruce Flatt (Brookfield, iStock)
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Brookfield recently took its struggling real estate arm private. In an August letter to investors, CEO Bruce Flatt said the asset manager hopes to make $25 billion from its real estate portfolio.

The company paid $6.5 billion to buy out the outstanding shares of Brookfield Property Partners, pivoting from public trading to the private markets. In 2020, the firm reported net losses of $2 billion as the pandemic devastated the firm’s mall properties.

There were 281 WoodSpring Suites hotels as of June 30, 2020, according to an SEC filing.

[Bloomberg] — Holden Walter-Warner