Extended Stay America officials released first quarter earnings Monday with no plans to hold a conference call in a sign that the acquisition by Blackstone Real Estate Partners and Starwood Capital Group might be closing soon.
According to the company's earnings release, comparable systemwide revenue per available room in the first quarter declined 1.7% year over year to $43.56. Average daily rate fell 5.7% to $58.07 and occupancy increased 4.3% to 75%.
Extended Stay America ended the quarter with a pipeline of 51 hotels with approximately 6,200 rooms. The company opened two hotels in its ownership portfolio and three franchised hotels in the first quarter, including the 124-room Extended Stay America Daytona Beach — Ormond Beach in Ormond Beach, Florida.
Extended Stay America reported total revenue in the first quarter of $259.6 million, which was a 2.5% decrease from the first quarter of 2020 and a 6.5% decrease from the first quarter of 2019.
Net income during the quarter was $12.4 million — up from $7.8 million in the first quarter of 2020 — and adjusted earnings before interest, taxes, depreciation and amortization was $90.9 million, which was down 7% compared to the first quarter of 2020.
Extended Stay America spent $30.4 million on capital expenditures during the quarter. The company ended the quarter with $371 million in cash and equivalents, including $13.2 million in restricted cash. Its total debt outstanding was $2.68 billion.
Acquisition Pending
On March 15, the companies announced Blackstone and Starwood Capital would acquire the Extended Stay America brand and management operations and its paired-share real estate investment Trust ESH Hospitality for approximately $6 billion, or $19.50 per paired share. At the end of the first quarter, the company's owned portfolio comprised 563 hotels and 62,674 rooms.
Extended Stay America announced its Board of Directors had unanimously approved the deal and ESH's Board of Directors also approved the sale.
Shareholders of Extended Stay America and ESH Hospitality will convene on June 8 to vote on the transaction.
According to proxy statements filed to the U.S. Securities and Exchange Commission in April, Extended Stay America received several offers dating back to 2017, including higher separate offers from both Starwood Capital and Blackstone.
Some of Extended Stay America's investors have expressed dissatisfaction with the $6 billion deal. Tarsadia Capital, which owns 3.9% of ESA's shares, has strongly opposed the deal, along with SouthernSun Asset Management, Cooke & Bieler, River Road Asset Management and Hawk Ridge.
At press time, Extended Stay America's stock price was $19.73, up 33.2% year to date and up 2.7% since the deal with Blackstone and Starwood Capital was first announced on March 15. The Nasdaq Composite Index is up 4% year to date.