Extended Stay America IPO could value company at up to $4.2 bln — Reuters

Hotel chain Extended Stay America Inc said it expects to sell 28.3 million common shares at $18-$21 each in an initial public offering, valuing the company at as much as $4.2 billion.

The offering would raise about $594 million at the higher end of the projected price range.

The company, headed by former Starbucks Corp Chief Executive James Donald, was bought for $3.9 billion at a bankruptcy auction in October 2010 by a group including hedge funds Paulson & Co and Centerbridge Partners and private equity firm Blackstone Group LP.

Blackstone and Paulson each hold about 27.8 percent of the Charlotte, North Carolina-based company, which operates of 682 hotels in the United States and Canada.

Blackstone has also filed IPO plans for U.S. hotel operator Hilton Worldwide Inc. Sources have told Reuters it is seeking a valuation of about $30 billion.

Deutsche Bank, Goldman Sachs and J.P. Morgan are lead underwriters for the offering.

The hotel industry’s revenue per available room, a measure of room rates and occupancy levels, has increased by about 6.9 percent in the Americas over the past three years, according to Smith Travel Research.

Private equity firms have been trying to sell or list assets to take advantage of a surging IPO market as a market rally and low interest rates entice investors into stocks.

Total proceeds raised from IPOs rose to $11.80 billion in the third quarter from $6.70 billion a year earlier.

Shares of Brixmor Property Group Inc, a shopping center company owned by Blackstone Group, rose as much as 4 percent in their market debut on Wednesday.