WICHITA, KS—Value Place, the nation's largest affordable extended-stay hotel operator, has just bought 22 of its franchise outlets for $115 million, another move in its on-going efforts to further expand and reposition its national portfolio. In September, GlobeSt.com reported that company officials were using a $100 million capital investment from the privately-held, New York-based investment firm Lindsay Goldberg LLC. to jump start the construction of 50 new company-directed projects.
These 22 properties were owned by its largest franchisee, a partnership comprised of Angelo, Gordon & Co. and other investors. Value Place now owns 74 of its 185 franchise locations. However, company officials say they still seek franchisees to further fuel its growth strategy, and want to double the number of its franchised properties. The newly acquired hotels are in Austin, Columbus, Phoenix, Salt Lake City, Denver, Indianapolis, Washington, DC, Florida and elsewhere.
The typical Value Place location has 124 rooms in a four-floor, 45,000-square-foot building on two acres that provides guests with a bedroom, a desk with an internet connection and a full kitchen. David Redfern, president of real estate development for Value Place, told GlobeSt.com in September that they will soon begin construction of 10 new locations in Denver, 9 in Atlanta and 15 in Miami. Other metro areas in the expansion plans include Boston, Cleveland, Chicago, Milwaukee, San Antonio and Houston.
“This acquisition continues the growth of the Value Place brand, and is part of our larger plan to develop and acquire properties corporately, upgrade our properties to maintain high quality standards, and accelerate the growth of our franchise network,” says Dan Weber, chief executive officer of Value Place. “These twenty-two high quality properties are in many of the same major markets as our existing portfolio, which allows us to leverage marketing and management resources.”
The $115 million sales price represents an approximately 9% capitalization rate on the trailing 12-month EBITDA, after reserve, collectively generated by the properties.
“This transaction accelerates our franchise growth efforts through a development agreement to build new franchised Value Place properties in Tampa and Charlotte, two growing markets with a great need for our brand,” says Kyle Rogg, chief operating officer and president of Value Place.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
