Irving-based hotel owner CorePoint to be acquired for $1.5 billion - The Dallas Morning News

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Irving-based hotel owner CorePoint Lodging will be acquired for $1.5 billion in a joint venture between Highgate and Cerberus Capital Management.

Highgate, a hospitality investment and management company, and Cerberus, a private equity firm, will acquire all of CorePoint’s outstanding shares in an all-cash transaction based on $15.65 a share. The deal is expected to close in the first quarter of 2022.

As part of the deal, CorePoint stockholders could receive additional payment per share if the company is able to resolve an ongoing IRS audit and settle with the tax collection agency for under $160 million.

CorePoint was created in a spinoff of more than 300 La Quinta hotel properties from La Quinta Holdings when it was acquired by Wyndham Worldwide in 2018. The spinoff created a publicly traded real estate investment trust owning the chain’s hotels.

“Over the past few years, CorePoint has been executing on a disciplined asset disposition strategy that has transformed the company’s portfolio and created substantial value,” CorePoint president and CEO Keith Cline said in a statement. “This transaction ... represents a compelling opportunity to deliver immediate and certain cash value to our stockholders.”

CorePoint will be taken private when the deal closes.

CorePoint announced over the summer that it was exploring strategic alternatives, which included a potential sale. The deal price reached with Highgate and Cerberus represents a 42% premium over where CorePoint’s shares were trading when the sale talk started.

The acquisition is the second major deal announced in the last week in the shifting North Texas hotel space.

NewcrestImage just sold a portfolio of 15 hotel properties as part of an $822 million deal with Austin-based real estate investment trust Summit Hotel Properties Inc. It was one of the largest hotel deals struck since the start of the pandemic.

For the three-month period that ended Sept. 30, CorePoint reported a profit of $28 million. The revenue it made per available hotel room has recovered since the same time period in 2020, but was still 14% below pre-pandemic benchmarks, according to a company regulatory filing.

Strong merger and acquisition activity is expected to continue throughout the remainder of the year and into 2022. Continuing low interest rates, a growing pool of capital in private equity war chests and optimism about the economy are fueling a race to acquire companies with technological advancements and revenue creation potential, according to big four accounting firm PricewaterhouseCoopers.

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