North American budget hotel chain La Quinta Holdings Inc (LQ.N) is preparing to explore a sale of the company, hoping for a high valuation as its seeks to spin off its real estate assets, people familiar with the matter said on Monday.

La Quinta believes proceeds from the potential sale would help make the tax hit it will incur as a result of the spinoff more palatable to shareholders, the sources said. It plans to place its real estate business into a publicly listed real estate investment trust, and keep its franchise and management operations.

La Quinta is preparing to engage with potential buyers once it files a so-called Form 10 with the U.S. Securities and Exchange Commission registering the spinoff, according to the sources. La Quinta said earlier this month that it expected the filing to come in the second quarter of 2017.

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