Fitch Ratings: Hotel and Lodging Radar Screen
May 19, 2015 10:22am
Fitch views the most likely outcomes as a transformative merger (with Starwood likely the target) or brand acquisition. Real estate private equity funds are also awash in cash and could consider Starwood an attractive, leverageable acquisition target. Highly liquid hotel capital markets could facilitate a leveraged recapitalization. However, Fitch puts a lower probability on this outcome given the company's public commitments to its existing financial policy and investment-grade ratings. Only some of Starwood's indentures provide for a 101% bondholder put option under a change of control.
Blackstone Reducing Stake in Hilton: To sell 90MM shares, reducing stake to under 50%; underwriters have option to sell an additional 13.5MM shares. Fitch expects Blackstone to scale back its Board influence at Hilton, similar to what has occurred at its other recently IPOed real estate related investments (i.e. Brixmor Property Group - Fitch IDR 'BBB-'/ROS). Blackstone took HLT public at the end of 2013 for $20/share.
Extended Stay's Inaugural Issuance: ESH Hospitality, Inc.'s $500MM of senior notes due 2025 priced at 5.25%, and net proceeds will be used to repay amounts under a mortgage loan. On its 1Q15 earnings call, the company positioned the issuance as a refinancing of its 2012 CMBS loans intended to extend debt maturities of the REIT debt. It's unclear to us why the company chose to issue in the HY bond market versus refinancing with secured property level mortgage loans. Fitch estimates the pricing is roughly 75 bps wide of comparable mortgage debt.
Apple Hospitality to Test Equity Market's Appetite for Hotel IPOs: Apple Hospitality REIT Inc.'s executive chairman, Glade Knight, disclosed that the company has taken steps to list its shares, which "provides the most favorable option for shareholder liquidity at this time." One of the largest REITs, with over 170 hotels, Apple's portfolio consists mostly of limited service and extended stay hotels.
Contact: Alyssa Castelli
+1 (212) 908-0540
Blackstone to Acquire the Windsor Atlantica Hotel in Rio de Janeiro
Smaller US Hoteliers Will Take More Risk to Stay Relevant
Healthy Consumer, Spending Shifts Benefit U.S. Lodging & Leisure
Fitch Expects 1-2% US Lodging RevPAR Growth in 2017
Slow Growth, Higher Labor Costs to Challenge U.S. Hotel Margins Says Fitch Ratings
Cyclical Challenges Drive Gaming, Lodging, & Restaurant Bankruptcies
HNA Group Makes Strategic Investment in Hilton with Acquisition of 25% Equity Interest from Blackstone
US Leisure Strength Unsustainable; RevPAR Likely to Turn
Apple Hospitality REIT, Inc. Completes Merger with Apple REIT Ten, Inc. Resulting in a Combined Enterprise Value $5.7 Billion
With U.S. Hotels at Peak, CMBS Being Watched with a Wary Eye
US RevPAR Forecast Lowered to 3%-4% Amid Signs of Fatigue
Tourism Spending to Buoy US Leisure Sector Demand
Starwood Reports Q2 2016 Net Loss of $263 million Compared to Net Income of $146 in the Year Ago Quarter
U.S. Hotels Gain Incremental Negotiating Strength Over OTAs
Marriott's Bid for Starwood Challenged in Lawsuit by Hotel Owners
US Lodging in Twilight of Latest Upcycle; Caution Ahead
Starwood Reports Q1 2016 Net Income of $90 million Compared to $99 million in Q1 2015; Adjusted EBITDA was $281 million
Flexible Models Ease US Leisure Cos. Cuban Market Entry Says Fitch Ratings
Revised Starwood Offer Likely Delays Marriott's Ratings Momentum
China Investors in US Hotels Pursue Core-At-Any-Cost Plan
Please login or register to post a comment.