CHICAGO—In the second lodging portfolio deal within the space of a day, locally based Hyatt Hotels Corp. said Thursday evening that it was selling 38 Hyatt Place and Hyatt House properties through affiliates to a company organized by Lone Star Funds for $590 million. The Chicago-based hotelier is also marketing another six select service assets.

As part of the sale, which is expected to close in November, Hyatt will enter into franchise agreements with the Lone Star entity. All of the properties in the 4,950-key portfolio will maintain their existing Hyatt Place and Hyatt House branding.

Plano, TX-based Aimbridge Hospitality will manage the properties on Lone Star's behalf. The Lone Star entity plans to spend $50 million on capital improvements over the next 24 months.

“Hyatt utilized its strong balance sheet and industry expertise to launch the Hyatt Place and Hyatt House brands,” says Steve Haggerty, global head of capital strategy, franchising and select service for Hyatt. “We are now leveraging that brand equity to recycle capital while maintaining a long-term brand presence in multiple markets.” He adds that the renovations Lone Star is planning “will help maintain the brands' reputation as the leading brands in their segments and we look forward to deepening our relationship with Lone Star and Aimbridge.”

The portfolio includes 27 Hyatt Place properties in Birmingham, AL; Rancho Cordova, CA; Aurora, CO; Mystic, CT; Lakeland and Tampa, FL; Alpharetta and Norcross, GA; Boise, ID; Itasca, IL; Florence and Lousville, KY; Auburn Hills and Livonia, MI; Omaha; Secaucus, NJ; Albuquerque; Charlotte, NC; Independence and Mason, OH; Oklahoma City; Cranberry Township and Pittsburgh, PA; Brentwood, Memphis and Nashville, TN; and Richmond, VA. The 11 Hyatt Houses locations are in Shelton, CT; Burlington, MA; Branchburg, Morristown and Whippany, NJ; Fishkill, NY; Morrisville, NC; East Norriton, PA; and Richmond and Sterling, VA.

Even before the deal with Dallas-based Lone Star was struck, the select-service hotel sector has been a focal point for private equity firms and REITS in recent months, following the Blackstone Group's successes with Extended Stay America and La Quinta Holdings. As Bloomberg pointed out, the appeal lies in the relative ease of buying such properties and boosting their profitability, compared to more upscale hotels with higher operating costs and lower returns.

On Thursday morning, GlobeSt.com reported that NorthStar Realty Finance and Chatham Lodging Trust had agreed to buy a $1.1-billion portfolio of select service and extended stay properties from Inland American Real Estate Trust. Late June saw Starwood Capital nearly triple its presence in the select service and extended stay space with its acquisition of TMI Hospitality for a reported $1 billion, while earlier that month ARC Hospitality Trust grew its portfolio by an even larger multiple, going from six properties to 132 with the $1.925-billion deal to buy the Equity Inns portfolio from private equity funds sponsored by Goldman Sachs.