Lightstone's Extended Stay Hotels files for Bankruptcy

Lightstone Group bought Extended Stay Hotels from Blackstone in 2007 for $8 billion and files for bankruptcy with $7.4 billion in financing amid lower occupancy and room rates. Extended Stay Hotels operates 680 properties in 44 states. According to the filing, the chain is only worth $3.3 billion in the current environment.

Lightstone's David Lichtenstein contributed only $200 million of equity and borrowed a chunk of that for the deal. Under the proposed restructuring, he will avoid personal guarantees and continue to manage the properties.

The largest debt holders of Extended Stay secured debt are Wachovia, Bank of America and Bear Stearns/Blackrock. The filing follows a failure to restructure $3.3 billion of mezzanine debt.

More details at Bloomberg.