Lone Star Funds, the private-equity firm founded by Dallas billionaire John Grayken, agreed to buy 38 U.S. select-service hotels from Hyatt Hotels Corp. for about $590 million.

The purchase consists of about 4,950 rooms at properties including Hyatt Place and Hyatt House hotels, Chicago-based Hyatt said in a statement today. The hotels will maintain their existing branding under a franchise agreement between Hyatt and Lone Star, which plans to spend about $50 million in additional capital on renovations over the next two years.

“Hyatt utilized its strong balance sheet and industry expertise to launch the Hyatt Place and Hyatt House brands,” Steve Haggerty, global head of capital strategy, franchising and select service for Hyatt, said in the statement. “We are now leveraging that brand equity to recycle capital while maintaining a long-term brand presence in multiple markets.”

Lone Star joins investors including Blackstone Group LP and Barry Sternlicht’s Starwood Capital Group in buying select-service hotels, which lack amenities such as restaurants and have limited service offerings. Purchasing such properties and boosting their profitability is often easier than acquiring more upscale hotels with higher operating costs and lower returns.

Jed Repko, a spokesman for Dallas-based Lone Star, didn’t immediately return a call for comment. Hyatt said the transaction is expected to be completed in November.

–With assistance from Hui-yong Yu in Seattle.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net. To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.net. 

Tags: hyatt
Photo Credit: A Hyatt Place hotel property in Garden City, NY. Hyatt Place