Oyo Buys Motel 6 from Blackstone for $525M

India-based hotel giant Oyo is acquiring Motel 6 from Blackstone for $525 million in all cash as part of its strategy to expand in the U.S.

Jordan B.
September 23, 2024

Together with

Good morning. Blackstone just inked a $525M deal to sell one of America’s most iconic lodging brands, shaking up the hospitality scene. Plus, CRE mortgage debt grew by $31.4 billion in Q2, reaching $4.69 trillion.

Today’s issue is sponsored by Agrippa — a broker-free, AI-powered platform that streamlines direct connections between CRE sponsors, developers, and capital providers.

You currently have 0 referrals, only 1 away from receiving B.O.T.N Multifamily Deal Screener .

Market Snapshot

S&P 500

GSPC

5,702.55

Pct Chg:
-1.70%

FTSE NAREIT

FNER

839.75

Pct Chg:
-0.16%

10Y Treasury

TNX

3.739%

Pct Chg:
+0.011

SOFR

1-month

5.34%

Pct Chg:
0.0%

*Data as of 9/20/2024 market close.

DEAL OF THE DAY

Oyo Buys Motel 6 from Blackstone for $525M

Photo: Brian Snyder/Reuters

India-based hotel giant Oyo is acquiring Motel 6 from Blackstone for $525 million in all cash as part of its strategy to expand in the U.S.

Expanding footprint: Oyo, which already operates 320 hotels across 35 U.S. states, will add Motel 6’s 1,500 locations across the U.S. and Canada to its portfolio. The deal also includes the Studio 6 brand, and Motel 6 will continue operating under its current name. This acquisition boosts Oyo’s footprint in North America significantly, as it aims to capitalize on the U.S. market after slowing global expansion post-pandemic.

Profitable exit: Blackstone, which acquired Motel 6 in 2012 for $1.9 billion, poured $900 million into property upgrades and sold hundreds of Motel 6 properties, turning the chain into a franchise operation. The brand now produces $1.7 billion in annual gross room revenue. Blackstone’s exit yields over $1 billion in profits, more than tripling investor capital during its 12-year ownership.

Zoom in: The U.S. economy hotel sector, including Motel 6, is under pressure with average room rates of $79 per night in 2024—a 14% rise from five years ago but a slight decline from last year. Occupancy rates have also struggled, squeezed by inflation and higher operational costs. Analysts expect some recovery in 2025, with government infrastructure projects, such as the $53 billion CHIPS Act, driving demand from construction crews seeking budget accommodations.

➥ THE TAKEAWAY

Big picture: Oyo’s acquisition of Motel 6 marks a major milestone in its U.S. expansion strategy. It taps into a well-established budget brand as it seeks to dominate the economy lodging segment. For Blackstone, this sale aligns with its strategy of shifting investments and raising cash to capitalize on emerging opportunities in high-growth sectors such as technology, logistics, and life sciences.

TOGETHER WITH AGRIPPA

Looking to enhance your deal flow? Agrippa can help.

With over $1.1B in new deal flow added so far this month, Agrippa has streamlined CRE connections. Our platform empowers users to build direct, lasting relationships — all without the need for costly brokers.

Source Deals at No Cost: Join our waitlist and access deals once we’ve verified your account.
AI-Enhanced Matchmaking: Our system tailors suggestions by analyzing preferences, while our double opt-in connection process ensures communication is mutually agreed upon.
Diverse Opportunities: Explore deals across various geographies, asset classes, and sizes – from $2.5m to $180m (avg. $55m).

Ready to enhance your deal flow? Join Agrippa today!

*Please see the advertising disclosure at the bottom of this newsletter.

✍️ Editor’s Picks

CRE debt: Despite high borrowing costs and rising cap rates slowing commercial real estate deals, CRE mortgage debt grew by $31.4 billion in Q2, reaching $4.69 trillion.
Deep fake: A Florida title company thwarted a property sale scam involving a deepfake impersonation, highlighting the rising threat of AI fraud in real estate. I prefer this response.
Security bill: Palm Beach County is requesting federal reimbursement for the $6.8 million spent on protecting Donald Trump, following increased security measures after recent assassination attempts.
Broker fees: A proposed NYC bill requiring landlords, not tenants, to pay broker fees has gained significant support in the City Council, moving closer to becoming law despite opposition from the real estate industry.

🏘️ MULTIFAMILY

Mixed bag: Rental prices slightly declined nationwide, but affordability remains uneven, with Southern markets improving while cities like Miami and New York remain heavily rent-burdened.
Denver deal: Fairfield Residential acquired the 476-unit Parkfield Apartment Homes in Denver's Green Valley Ranch for $120 million, marking a major investment at $252,101 per unit.
Breaking ground: The Urban League of Broward County plans to break ground in 2025 on Village at Oakland Park, a $170 million, 469-unit affordable housing project.

🏭 Industrial

Oversupply: Rising new industrial supply is pushing vacancy rates higher in top U.S. markets, though a recent construction slowdown suggests a faster recovery ahead.
Key acquisition: Equus Capital Partners purchased a fully leased 299,241-square-foot industrial center in Lakeland, Florida, for $38 million, highlighting the area’s growing role as a major distribution hub.
Phoenix booming: 5C Data Centers, a Canadian company, is developing a 140,000-square-foot data center near Downtown Phoenix, marking its third U.S. project as demand for data facilities surges in the region.

🏬 RETAIL

On the market: Washington Prime Group is nearing the sale of Westminster Mall after its value plummeted 39%, while Shopoff Realty plans a mixed-use redevelopment on its portion of the property.
QSR growth: Starbucks led U.S. quick-service restaurant expansion in 2023 by opening 473 new locations, while Subway continued to lose ground, reflecting Americans' increasing spending on dining out.

🏢 OFFICE

Urban reset: A report finds that U.S. cities need to reallocate space from office use to residential and entertainment areas to combat the economic decline in downtown areas.
Major decline: South Bay Development purchased the former Silicon Valley Bank office campus in Santa Clara for $51 million, nearly $100 million less than its 2020 sale price.

🏨 HOSPITALITY

Boosting revenue: San Francisco doubled its hotel fee hike to 2.25% to fund SF Travel's efforts to attract conventions back to the city amid a struggling hotel sector.

📈 CHART OF THE DAY

Freddie Mac economists estimate a 1.5 million housing unit shortfall, though they suggest the real deficit could be as high as 3.8 million units, indicating a significant supply gap.

FACT OF THE DAY

The largest mall in the world by total area is the Dubai Mall, covering over 12 million square feet—enough to house 50 soccer fields. Despite its size, retail makes up only half of the space, with the rest dedicated to attractions like an aquarium, ice rink, and even a luxury hotel.