A joint venture between Blackstone Group Inc. and Starwood Capital Group is financing its acquisition of Extended Stay America Inc. via a massive commercial mortgage-backed securities offering this week, one of the largest single-loan CMBS deals in a decade, Bloomberg News reported. The $4.65 billion so-called single-asset, single-borrower (SASB) CMBS securitizes a loan originated by JPMorgan, Citigroup, and Deutsche Bank to fund most of Blackstone and Starwood’s roughly $6 billion acquisition of Extended Stay’s 560 hotels located throughout 40 states. Extended Stay’s shareholders approved the bid on June 11 to purchase the company at $20.50 per share. The portfolio of hotels comprises 62,257 guest rooms, according to a presale report from Fitch Ratings, who along with Moody’s Investors Service and Kroll Bond Ratings assigned AAA ratings to the two senior tranches of the structure. The deal is carved into slices offering investors different levels of risk, though only Kroll rated the tranches below BBB-, with the lowest-ranked rated single-B. The Extended Stay CMBS is the first SASB deal tied to hotels in nearly a year. Only Blackstone’s $5.6 billion industry-property CMBS debt sale from October 2019 is larger, at least for deals issued since the Great Financial Crisis, according to data compiled by Bloomberg.
