The ongoing saga of the Extended Stay America bankruptcy is getting more grim, especially if you're one of the lenders in the ill-fated deal. As we reported, the chain filed for protection in June, claiming $7.1 billion in assets and $7.6 billion in debts. The knuckleheads at The Lightstone Group bought the chain two years ago for $8 billion, most of which was financed.
Yesterday, the Wall Street Journal reported that an appraisal of the 664-property chain put its value at a meager $2.8 billion. If that number holds up, both the first-line and mezzanine lenders will take major haircuts on the disposition of the company.
This deal is the poster child for the insanity that swept through the hotel industry—and all of commercial real estate—in what seems like the long-ago days of the mid-2000s. I hope we never see it again.