New REIT – Extended Stay America (STAY)

Ticker Symbol           STAY

Market Traded On     NYSE

Minimum Quarterly Distribution       Not announced

Offering Price   $20.00

Initial Yield   N/A

Company Website  Extended Stay America

New REIT Extended Stay American started trading today (11/13/2013) and in a strange performance for a REIT traded up $3.87 from the IPO price of $20.

Extended Stay America is the first lodging REIT in quite some time to come to market and is sponsored by owners Blackstone LP and Paulson and Co. who bought the company out of bankruptcy in 2010.  The IPO represents only about an 17% ownership stake.

STAY is a large REIT with over $4 Billion in assets and this IPO values the company at over $4 billion.  The company runs over 600 moderately priced extended stay hotels/motels.

Certainly the market has high expectations for a new REIT without a stated minimum  distribution (the pro forma financials would seem to imply a distribution in the neighborhood of $1.50/share per year–a 7.5% yield on the offering price).

The offering documents are below.