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Blackstone Explores Private Sale, IPO for La Quinta Hotels

Franchisor La Quinta up for saleAfter buying La Quinta in 2006 and growing through selling franchises, the Blackstone Group is readying La Quinta and its 800 hotels for a private sale or an initial public offering. It is a sign that commercial real estate values are back, according to the Wall Street Journal.

But some analysts say that lodging should perform well in the current economic environment. They point out that, if interest rates rise, hotels can raise daily rates more easily than at office buildings or other properties with long leases.

"We're actually in the sweet spot of the cycle, and it will probably be that way for a few years," said David Loeb, a hotel analyst with Robert W. Baird & Co.

Blackstone acquired La Quinta for $2.3 billion plus debt in 2006. The private-equity firm invested hundreds of millions of dollars to upgrade, expand and promote the chain, which included hiring actor Fred Willard to do voice-over in television commercials.

Under Blackstone's ownership, La Quinta has nearly doubled the number of hotels in the chain to 805 and now has more than 80,000 rooms. While the hotel properties themselves account for about two-thirds of the value of La Quinta, the company stopped buying new properties and focused on growing through franchises.

The private-equity firm and its two partners bought Extended Stay out of bankruptcy in 2010 for $3.9 billion. The new owners spent about $400 million on the company.

Having nearly 200,000 hotel rooms, Blackstone is the largest owner of American hotels. The article points out that Blackstone could take giant Hilton public by the end of the year. It acquired the chain for $18 billion and $7 billion in assumed debt, back in 2007.


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