Blackstone Buys Extended Stay Co.

Extended Stay America, a major provider of economy extended stay lodging, today announced it was being acquired by the Blackstone Group, an investment firm that already owns another extended stay brand, Homestead Studio Suites.

The transaction follows the acquisition at the end of 2003 of the Candlewood Suites extended stay brand by InterContinental Hotels Group and is further evidence of the value the market places on the extended stay category. In making the acquisition, Blackstone is paying a 24 percent premium on ESA's latest stock trading price. The transaction is expected to close in the second quarter.

While Blackstone said it intends to maintain ESA's three distinct brands, Homestead Suites CEO Gary DeLapp will oversee management of ESA. ESA will continue to be based in Spartanburg, S.C. Across its three brands, ESA has 432 properties, while the Homestead portfolio consists of 132 hotels. Blackstone said it will complete the 10 ESA properties under construction. Projects in earlier stages of development will be reviewed on a case-by-case basis.

New York-based real estate investment company Blackstone also owns the deluxe Savoy Hotel Group in London and the Watergate Hotel in Washington, D.C. Last month, it acquired ownership of the Hyatt Regency also in Washington.