Extended Stay America Announces Completed Hotel Disposition for $65 Million
CHARLOTTE, N.C., Nov. 23, 2020 (GLOBE NEWSWIRE) -- Extended Stay America, Inc. and ESH Hospitality, Inc. (NASDAQ:STAY) (together, the “Company”) today announced the completed disposition of
one hotel in California for gross proceeds of $65.0 million. The hotel is now closed and the buyer expects to convert the hotel to an alternative use in the coming months.
The gross proceeds represent:
- $445,200 per key valuation
- 20.2 times 2019 Property Adjusted EBITDA and 38.1 times trailing twelve month (“TTM”) Property Adjusted EBITDA as of September 30, 2020
- Cap rate of 3.8% on 2019 Property Adjusted EBITDA and cap rate of 1.8% on TTM Adjusted EBITDA as of September 30, 2020
Extended Stay America’s President and Chief Executive Officer Bruce Haase, commented, “This sale highlights the strong intrinsic value of our large, geographically diverse real estate portfolio. With the pace of development since the Company’s founding, it is impossible to replicate our real estate portfolio today. We believe that our strategy to strategically curate our REIT assets at significantly accretive multiples, as evidenced by this transaction, will create significant shareholder value in the coming years.”
Distribution Update
The Company expects to generate taxable income on this asset sale of approximately $0.11 to $0.12 per ESH Hospitality, Inc. common share outstanding. The Company expects to distribute most or all the taxable income from the disposition to shareholders at the same time as its 2020 catch-up dividend in the first quarter of 2021, subject to Board approval.
Non-GAAP Reconciliation of Property Net Income to Property Adjusted EBITDA | ||||||
(Unaudited) | ||||||
(In Thousands) | ||||||
Trailing Twelve | ||||||
Months Ended | Year Ended | |||||
September 30, 2020 | December 31, 2019 | |||||
Property Net Income | $ | 1,277 | $ | 2,782 | ||
Depreciation and amortization | 385 | 382 | ||||
Loss on disposal of assets | 45 | 47 | ||||
Property Adjusted EBITDA | $ | 1,707 | $ | 3,211 |
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Disclosure Regarding Non-GAAP Financial Measures