Highgate, Cerberus JV Acquiring CorePoint Lodging For $1.5B
A joint venture of Highgate and Cerberus Capital Management has agreed to acquire hotel owner CorePoint Lodging in an all-cash deal valued at about $1.5B.
The buyers are paying $15.65 per share for the company, which ended the trading day on Friday at $17.76 per share after a sharp rebound from trading at $6.42 per share at the beginning of 2021.
CorePoint Lodging specializes in select-service hotel properties, currently owning 160 properties, primarily La Quinta-branded hotels. Select-service hotels don't typically offer food or beverages and are among the cheaper rooms in the sector.
In July, occupancy in the CorePoint portfolio reached 69%, though it dipped in August and September (61.5% and 59.2%, respectively) as the delta variant of the coronavirus came to the fore.
At the same time the deal was announced, Irving, Texas-based CorePoint reported that for the third quarter of 2021, net income was $17M, or $0.28 per share, compared with a loss of $8M during the same period in 2020. Comparable revenue per available room was $66.38 in Q3, an increase of 71.4% from the same period in 2020 and a decrease of 4.9% from the same period in 2019.
Since the beginning of the coronavirus pandemic, CorePoint has been selling properties. So far, the company has sold 86 hotels for a combined gross sales price of about $477M, with an additional 38 hotels under contract that are expected to generate about $264M in proceeds.
Last year, Highgate acquired six hotel portfolios valued at $2.8B from Colony Capital, with Colony receiving $67M in gross proceeds while Highgate assumed the portfolio's $2.7B of debt. The deal involved 197 hotel properties, with the majority operating under either the Marriott or Hilton flags.
Cerberus has been busy raising capital to pursue opportunistic real estate plays, with investors seemingly eager to join in. As of this year, Cerberus was able to raise $2.8B for Cerberus Institutional Real Estate Partners V, whose initial target was $2B.
