Lightstone Buys Extended Stay for $8B

"This was a perfect opportunity for us to expand our growing portfolio into the hotel industry, and acquiring Extended Stay Hotels immediately puts us in a leadership position within the extended-stay market," says David Lichtenstein, chairman/CEO of the locally based Lightstone, whose holdings to this point had consisted mostly of office and retail properties. "This transaction is consistent with our strategy of acquiring companies with outstanding brand identity and bringing the necessary resources to unlock long-term value."

The acquisition involves a total of 683 properties adding up to 76,000 units in 44 states and Canada. The Spartanburg, SC-based Extended Stay currently operates under five brands: Extended Stay Deluxe, Extended Stay America, Homestead Suites, StudioPlus and Crossland.

Blackstone had owned Extended Stay for just three years. Affiliates of Blackstone Real Estate Partners IV and Blackstone Capital Partners IV bought the company in 2004 in a deal valued at $3.1 billion including cash and the assumption of $1.1 billion of debt. At the time Extended Stay Hotels consisted of a total of 475 properties in 42 states.

For Lightstone, the deal was orchestrated in-house by Joshua Kornberg, director of acquisitions; CFO Michael M. Schurer; and general counsel Joseph E. Teichman. A spokesman for Blackstone declined to comment.

According to information released by Lightstone, Bears Stearns & Co., Blackstone Corporate Advisory, Banc of America Securities and Merrill Lynch acted as financial advisors to Blackstone. Simpson Thacher & Bartlett was the legal advisor to Extended Stay Hotels and Blackstone. Citi, Wachovia and Lehman Brothers were financial advisors to Lightstone, and Dechert LLP was the company's legal advisor.