The Marriott Towneplace Suites in Chicago is one hotel owned by TMI Hospitality.
The Marriott Towneplace Suites in Chicago is one hotel owned by TMI Hospitality. ()

Private equity firm Starwood Capital announced plans Thursday to snap up hotel chain operator TMI Hospitality for a reported $1 billion.

Under the terms of the deal, Greenwich, Conn.-based Starwood will acquire all outstanding stock of TMI, a property development and management company that operates 188 budget and extended stay hotels in 26 states, including Marriott Residence Inn and Comfort Inn. Starwood already owns 103 similar hotels, according to a TMI news release.

The deal is subject to franchiser and lender approval. The companies did not provide a closing date for the transaction.

Latham & Watkins is advising Starwood while Morrison & Foerster and Morgan, Lewis & Bockius are advising TMI.

“The acquisition of TMI Hospitality, a proven and trusted property manager, offers Starwood Capital the exciting opportunity to build on our investments in select-service and extended-stay lodging,” said Suril Shah, senior vice president of acquisitions for Starwood, in a statement. “We are looking forward to continuing the legacy of TMI’s development and management platform.”

TMI chairman and CEO Lauris Molbert said in the same statement, “With Starwood Capital, TMI will be able to continue pursuing its growth strategy while fulfilling its mission of impressing guests.”

Molbert had denied that the hotels were for sale when questioned by Prairie Business magazine in May about the rumored transaction. The publication cited a report by real estate trade newsletter Real Estate Alert, which valued the deal at $1 billion, according to ALM sister publication Globe Street.

Neither Starwood nor TMI would confirm the transaction value Friday. The deal is one of a slew of recent transactions in the recovering hospitality industry, including a reportedly pending deal by Blackstone Group to buy select-service hotels from Starwood Group, according to Bloomberg.

Latham & Watkins partners Gary Axelrod in Chicago and Edward Sonnenschein in New York led the deal for Starwood, with help from associates Jason Morelli and Megan Sindel. Tax partners Julie Maron and Robin Struve also advised, along with finance partner Dara Denberg.

In 2013, Axelrod also represented Starwood on a $150 million joint venture between Starwood and the developers of a Margaritaville-brand resort in Florida.

Advising TMI for MoFo was a team led by corporate partner David Slotkin. Others providing counsel include tax partner Paul Borden; real estate partner Thomas Fileti and of counsel Susannah Cupp; and corporate partner Spencer Klein. Associates Daniel Hannon, Jeremy Schropp Christina Valencia, Shane Shelley and Louisa Zhou also advised.

The Starwood deal was MoFo’s first time working on a transaction for TMI, according to a firm spokeswoman.

Morgan Lewis also represented TMI on the Starwood deal, led by business and finance partner John Kober. Others on the team included business and finance partner Jonathan Ayre; tax of counsel Dan Carmody; employee benefits partner Brian Hector and senior counsel Lou Joseph; business and finance partner Elizabeth Perdue; and employee benefits senior attorney Jason Ray.

The firm wouldn’t comment on any other work they may have performed for the company.