What Blackstone’s Offering Will Mean for La Quinta

The underwriters for the offering are J.P. Morgan, Morgan Stanley, Bank of America Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Wells Fargo, EA Markets, Lebenthal Capital Markets, Ramirez & Co., Evercore ISI, Loop Capital Markets, Raymond James, JMP Securities, Mischler Financial Group, RBC Capital Markets and Stifel.

Blackstone owns more than 82 million shares of La Quinta as of the end of September, which equates to almost a 63% ownership of shares outstanding.

Using Monday’s closing price of $20.04 to value the proposed 20 million shares, the total offering would be worth almost $400.1 million.

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The company described itself in its amended November 17, filing:

We are a leading owner, operator and franchisor of select-service hotels primarily serving the midscale and upper-midscale segments under the La Quinta brand. Based on data provided by STR, La Quinta is the fastest growing principal select-service hotel brand in the United States primarily serving these segments in terms of percentage growth of number of hotels over the last ten years ended December 31, 2013, growing our total number of hotels from 362 in 2003 to 854 as of September 30, 2014, significantly outpacing the percentage growth of hotels franchised, owned and operated by Comfort, Holiday Inn Express and Hampton, the hotel brands one or more of which is most often included in the competitive sets we determine for STR, subject to STR’s guidelines, which we refer to as our “main STR competitive set.”

La Quinta had a systemwide portfolio, at the end of September, of 854 hotels, representing approximately 85,500 rooms located across 47 U.S. states, as well as in Canada and Mexico. Out of this group, 353 hotels were owned and operated and 501 were franchised. The company also has a pipeline of 196 franchised hotels at the end of September, to be located in the United States, Mexico, Canada, Colombia, Honduras, Nicaragua and Guatemala. About 83% of the pipeline represents new construction, as opposed to the conversion of an existing hotel.

Shares of La Quinta were up over 1% at $20.27 in the noon hour Tuesday. Shares priced at $16.75 in April for the IPO and since have risen about 21% to the current market price.

The stock has a consensus analyst price target of $22.81 and a post-IPO trading range of $16.01 to $20.96. La Quinta has a market cap of over $2 billion.

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