Highgate, Cerberus to acquire CorePoint Lodging for $1.5B Cash
The US lodging REIT focuses on midscale and upper-midscale select-service hotels.
CorePoint Lodging announced that it was being acquired for $1.5 billion in an all-cash transaction through a joint venture between affiliates of Highgate and Cerberus Capital Management.
Highgate and Cerberus would acquire all outstanding shares of the REIT, which has described itself as “the only public US lodging REIT strategically focused on the ownership of midscale and upper-midscale select-service hotels.” The acquisition price is based on $15.65 per share.
CorePoint was a spinoff of the La Quinta hotel brand and started with 316 owned La Quinta Inn-affiliated properties. Wyndham Hotels and Resorts acquired the brand and management business as well as more than 900 of the franchised hotels.
“This transaction continues our strategy of maximizing value and represents a compelling opportunity to deliver immediate and certain cash value to our stockholders,” Keith Cline, CorePoint CEO and president, said in prepared remarks. The company has been shedding properties since 2019 to raise cash and reduce leverage.
On Monday the stock dropped about 12.7% from Friday’s close of $17.76. Share prices had been building from under $16 since October 28.
The answer is likely found in the context of a pre-market earnings release. Total revenue for the first nine months of 2021 was $377 million, but in 2019, it was $642 million.
Although operations are improving from the depths of the pandemic, occupancy is down from 2019 and it fell “nearly 10 percentage points between July and September of this year,” according to The Motley Fool. RevPAR (revenue per available room) was down almost $18.50 over the same period.