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REPORT: Brookfield Eyeing $1.5B Sale Of Its Extended-Stay Portfolio

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A WoodSpring Suites hotel in Davenport, Iowa.

One of the world's largest alternative asset management firms is considering a sale of its extended-stay hotel portfolio at a time when the sector is posting strong financial performance.

Brookfield Asset Management is exploring the sale of its WoodSpring Suites hotels in a deal that could fetch upward of $1.5B, Bloomberg reported, citing anonymous sources with knowledge of the potential transaction. Brookfield officials declined to comment to Bloomberg for the story.

The potential sale comes three years after Brookfield acquired the 92-hotel portfolio from the private equity firm Lindsay Goldberg for $707M. At the time of the acquisition, the WoodSpring portfolio purchased by Brookfield consisted of nearly 11,000 rooms in 22 states, Asset Securitization Report reported in 2018.

Brookfield may be unloading the assets as the entire hospitality industry approaches pre-pandemic financial levels, especially in the extended-stay hotel sector. While extended-stay hotels continued to perform during the depths of the pandemic — at times, acting as last-resort housing for the most vulnerable of U.S. households — demand for those hotel rooms jumped more than 25% in the third quarter compared to the same period in 2020, according to research by The Highland Group, with occupancy rising 18% year-over-year to an average of 78.8%.

Average daily room rates also reached pre-pandemic 2019 levels of $104.96, with revenue per available room, or RevPAR, up 48.5% to $82.76, The Highland Group reported.

WoodSpring and other extended-stay hotels generate higher margins due to longer-than-average guest stays, Bloomberg reported, citing an S&P Global Ratings analysis report from 2020. Guests stay an average of 15 days versus three to five days at other hotels, and extended-stay hotels required fewer employees to operate, Bloomberg reported.

"It is highly likely that extended-stay hotels will continue to set new performance records during the near term," The Highland Group partner Mark Skinner said in a Nov. 12 statement to Business Travel News.