Extended Stay America Reports Sale Agreement Of Crossland Economy Studios

(RTTNews) - Extended Stay America, Inc. (STAY) Monday said subsidiaries of the company, including subsidiaries of ESH Hospitality, Inc. or ESH REIT, the company's REIT subsidiary, signed a definitive agreement to dispose of 53 U.S. economy extended-stay hotels and Crossland Economy Studios intellectual property for $285 million in cash.

The disposition of the 47 Crossland Economy Studios branded hotels and six similarly positioned Extended Stay America branded hotels will complete the company's transition to a single, nationwide brand.

These 53 hotels to be sold have not been renovated under the company's ongoing renovation program and generated RevPAR of $27.89 for the last twelve months ended June 30, compared with RevPAR of $45.95 generated by the remaining 629 hotels owned and operated by the company over the same period.

The 53 hotels to be sold generated $29 million of adjusted EBITDA for the last twelve months ended June 30. The transaction is expected to close in the fourth quarter of 2015.

ESH REIT currently expects to use its net proceeds from the transaction to reduce debt and for future capital expenditures and/or acquisitions.

In addition, ESH REIT expects to make a special one-time distribution approximately equal to the taxable gain on the sale. No distribution has yet been declared, and there can be no assurance that any distribution will be declared or paid, the firm added.

Further, the company re-affirmed its previously stated third quarter and full year revenue and adjusted EBITDA guidance inclusive of the 53 properties to be disposed.