Debt

12 Months Ended

Dec. 31, 2016

DEBT

During the years ended December 31, 2016 and 2015, the following debt transactions occurred (in thousands):



	December 31, 2016				December 31, 2015
Debt - beginning of year	$	2,762,388			$	2,859,391
Additions:
Proceeds from term loan facilities, net of debt discount	1,293,500				—
Proceeds from senior notes payable, net of debt discount	788,000				500,000
Proceeds from revolving credit facilities	70,000				90,000
Amortization and write-off of deferred financing costs and debt discount ⁽¹⁾	29,091				9,902
Deductions:
Payments on mortgage loan	(1,931,157		)		(586,892		)
Payments on term loan facilities	(369,713		)	⁽²⁾	(8,537		)
Payments on revolving credit facilities	(25,000		)		(90,000		)
Payments of deferred financing costs ⁽¹⁾	(31,835		)		(11,476		)
Debt - end of year	$	2,585,274			$	2,762,388

______________________


(1)	Excludes amortization and payments of deferred financing costs related to revolving credit facilities.


(2)	Includes principal payment of $3.25 million made in January 2017, included in accounts payable and accrued liabilities as of December 31, 2016.

The Company’s outstanding debt, net of unamortized debt discount, and unamortized deferred financing costs, as of December 31, 2016 and 2015, consists of the following (in thousands):



				Outstanding Principal						Unamortized Deferred Financing Costs					Interest Rate
Loan	Stated Amount ⁽¹⁾			December 31, 2016			December 31, 2015			December 31, 2016		December 31, 2015		Stated Interest Rate	December 31, 2016		December 31, 2015	Maturity Date
Mortgage loan
ESH REIT 2012 Mortgage Loan - Component B	$	350,000		$	—		$	111,157		$	—	$	784	3.4047%	N/A		3.4047%	N/A
ESH REIT 2012 Mortgage Loan - Component C	1,820,000			—			1,820,000			—		18,752		4.0547%	N/A		4.0547%	N/A
Term loan facilities
ESH REIT 2016 Term Facility	1,300,000		⁽²⁾	1,290,560		⁽³⁾	—			15,804		—		LIBOR⁽⁴⁾⁽⁵⁾ + 3.00%	3.75%	⁽⁵⁾	N/A	8/30/2023	⁽⁸⁾
ESH REIT 2014 Term Loan	375,000			—			365,157		⁽⁶⁾	—		3,635		LIBOR + 4.25 %	N/A		5.00%	N/A
Senior notes
ESH REIT 2025 Notes	1,300,000			1,289,041		⁽⁷⁾	500,000			23,523		10,756		5.25%	5.25%		5.25%	5/1/2025
Revolving credit facilities⁽⁹⁾
ESH REIT 2016 Revolving Credit Facility	350,000			45,000			—			2,570		—		LIBOR + 2.75%	3.33%		N/A	8/30/2021
ESH REIT 2013 Revolving Credit Facility	250,000			—			—			—		1,431		LIBOR + 3.00%	N/A		N/A	N/A
Corporation Revolving 2016 Credit Facility	50,000			—			—			511		—		LIBOR + 3.00%	N/A		N/A	8/30/2021
Corporation Revolving 2013 Credit Facility	50,000			—			—			—		956		LIBOR + 3.75%	N/A		N/A	N/A
Unsecured Intercompany Facility
Unsecured Intercompany Facility	75,000		⁽¹⁰⁾	—			—			—		—		5.00%	5.00%		N/A	8/30/2023
Total				$	2,624,601		$	2,796,314		$	42,408	$	36,314

______________________


(1)	Amortization is interest only, except for the 2016 Term Facility which amortizes in equal quarterly installments of $3.25 million.


(2)	ESH REIT is able to increase its borrowings under the 2016 ESH REIT Credit Facilities by an amount of up to $600.0 million, plus additional amounts, in each case subject to certain conditions.


(3)	The 2016 Term Facility is presented net of an unamortized debt discount of approximately $6.2 million as of December 31, 2016.


(4)	The 2016 Term Facility includes a LIBOR floor of 0.75%.


(5)	$500.0 million of the 2016 Term Facility is subject to a floating-to-fixed interest rate swap at a fixed rate of 1.175% as of December 31, 2016 (see Note 8).


(6)	The 2014 Term Loan is presented net of an unamortized debt discount of approximately $1.3 million as of December 31, 2015.


(7)	The 2025 Notes are presented net of an unamortized debt discount of approximately $11.0 million as of December 31, 2016.

(8)

In addition to scheduled amortization noted in (1) above, subject to certain exceptions, annual mandatory prepayments of up to 50% of Excess Cash Flow, as defined, may be required under the 2016 Term Facility commencing with the year ending December 31, 2017. Annual mandatory prepayments for the year ending December 31, 2017 and each year thereafter, are due during the first quarter of the following year.


(9)	Unamortized deferred financing costs related to revolving credit facilities are included in other assets in the accompanying consolidated balance sheets.

(10)

As of December 31, 2016, the outstanding balance owed from ESH REIT to the Corporation under the Unsecured Intercompany Facility was $50.0 million. ESH REIT is able to increase its borrowings under the Unsecured Intercompany Facility to an amount of up to $300.0 million, plus additional amounts, in each case subject to certain conditions. The outstanding debt balance and interest expense owed by ESH REIT to the Corporation related to the Unsecured Intercompany Facility eliminate in consolidation.

In August 2016, ESH REIT entered into the 2016 ESH REIT Credit Facilities (as defined below), pursuant to which it borrowed $1,300.0 million under the 2016 Term Facility (as defined below) at 99.5% of par value, or approximately $1,277.5 million net of debt issuance costs, and $50.0 million under the 2016 ESH REIT Revolving Credit Facility (as defined below). Also in August 2016, the Corporation and ESH REIT entered into the Unsecured Intercompany Facility (as defined below), pursuant to which ESH REIT borrowed $75.0 million from the Corporation. ESH REIT used the proceeds from the 2016 ESH REIT Credit Facilities and the Unsecured Intercompany Facility, together with cash on hand, to fully repay the outstanding balance of approximately $1,497.6 million under Component C of its 2012 Mortgage Loan (as defined below). ESH REIT incurred approximately $14.1 million of debt extinguishment costs in connection with the repayment of the 2012 Mortgage Loan, consisting of the write-off of unamortized deferred financing costs of approximately $12.8 million and other costs of approximately $1.3 million.

In March 2016, ESH REIT issued $800.0 million of additional 2025 Notes (as defined below) at 98.5% of par value. ESH REIT received net proceeds of approximately $772.8 million, which, together with cash on hand, were used to fully repay the balance of approximately $366.5 million outstanding under its 2014 Term Loan (as defined below) and repay approximately $433.5 million of the outstanding balance under its 2012 Mortgage Loan, which consisted of approximately $111.2 million of Component B and approximately $322.3 million of Component C. ESH REIT incurred approximately $12.1 million of debt extinguishment costs in connection with the repayments of the 2014 Term Loan and the 2012 Mortgage Loan, consisting of the write-off of unamortized deferred financing costs and debt discount of approximately $8.4 million and prepayment penalties and other costs of approximately $3.7 million. Debt extinguishment costs are included as a component of net interest expense in the accompanying consolidated statements of operations.

Outstanding Indebtedness

ESH REIT Credit Facilities

On August 30, 2016, ESH REIT entered into a new credit agreement providing for senior secured credit facilities (collectively the "2016 ESH REIT Credit Facilities") consisting of a $1,300.0 million senior secured term loan facility (the "2016 Term Facility") and a $350.0 million senior secured revolving credit facility (the "2016 ESH REIT Revolving Credit Facility"). Subject to the satisfaction of certain criteria, borrowings under the 2016 ESH REIT Credit Facilities may be increased by an amount of up to $600.0 million, plus additional amounts, so long as, after giving effect to the incurrence of such incremental facility and the application of proceeds thereof, its pro-forma senior loan-to-value ratio is less than or equal to 45%.

Obligations under the 2016 ESH REIT Credit Facilities are guaranteed by certain existing and future material domestic subsidiaries of ESH REIT, other than those owning real property, subject to customary exceptions. Obligations under the 2016 ESH REIT Credit Facilities are secured, subject to certain exceptions, including an exception for real property, by a first-priority security interest in substantially all of the assets of ESH REIT and the guarantors.

The 2016 ESH REIT Credit Facilities contain a number of restrictive covenants that, among other things and subject to certain exceptions, limit ESH REIT’s ability and the ability of its subsidiaries to incur additional debt, modify existing debt, create certain liens, pay dividends and distributions, make certain investments and other restricted payments, enter into affiliate transactions, amend or modify certain material operating leases and management agreements, sell assets or merge, consolidate or transfer all or substantially all of their assets. The 2016 ESH REIT Credit Facilities contain certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, cross-defaults to certain other indebtedness and certain material operating leases and management agreements. If an event of default occurs, the administrative agent is entitled to take various actions, including the acceleration of amounts due under the 2016 ESH REIT Credit Facilities and additional actions that a secured creditor is permitted to take following a default. As of December 31, 2016, ESH REIT was in compliance with all covenants under the 2016 ESH REIT Credit Facilities.

2016 Term Facility—ESH REIT borrowed $1,300.0 million under the 2016 Term Facility upon the closing of the 2016 ESH REIT Credit Facilities. The 2016 Term Facility bears interest at a rate equal to (i) LIBOR (subject to a floor of 0.75%) plus a spread which is applicable at such time by reference to the Rating Level Period, as defined, or (ii) base rate (determined by reference to the highest of (A) the prime lending rate, (B) the overnight federal funds rate plus 0.50% or (C) the one-month adjusted LIBOR rate (subject to a floor of 0.75%) plus 1.00%) plus a spread which is applicable at such time by reference to the Rating Level Period. Spreads range from 2.75% to 3.00% for LIBOR loans and 1.75% to 2.00% for base rate loans, and vary depending on ESH REIT's credit rating. The 2016 Term Facility amortizes in equal quarterly installments in annual amounts of 1.0% of the principal amount outstanding, or $13.0 million, commencing on December 31, 2016, with the remaining balance payable at maturity. In addition to scheduled amortization, subject to certain exceptions, mandatory prepayments of up to 50.0% of annual Excess Cash Flow may be required based on ESH REIT's Consolidated Leverage Ratio, each as defined. Annual mandatory prepayments are due during the first quarter of the following year. The 2016 Term Facility matures on August 30, 2023.

ESH REIT has the option to voluntarily prepay outstanding loans under the 2016 Term Facility at any time upon three business days’ prior written notice for LIBOR loans or on one business day’s prior written notice for base rate loans. In addition to customary "breakage" costs with respect to LIBOR loans, amounts refinanced, substituted or replaced by indebtedness which has a lower all-in yield than the all-in yield under the 2016 Term Facility on or prior to February 28, 2017 (other than as a result of a transformative transaction) are subject to a prepayment penalty equal to 1.00% of the aggregate principal amount refinanced, substituted or replaced. Prepayments made after February 28, 2017 are not subject to a prepayment penalty.

2016 ESH REIT Revolving Credit Facility—ESH REIT borrowed $50.0 million upon the facility's closing. The 2016 ESH REIT Revolving Credit Facility provides for the issuance of up to $50.0 million of letters of credit. Borrowings under the facility bear interest at a rate equal to (i) LIBOR plus a spread that ranges from 2.25% to 2.75% based on ESH REIT’s Total Net Leverage Ratio, as defined, or (ii) base rate (determined by reference to the highest of (A) the prime lending rate, (B) the overnight federal funds rate plus 0.50%, or (C) the one-month adjusted LIBOR rate plus 1.00%) plus a spread that ranges from 1.25% to 1.75% based on ESH REIT’s Total Net Leverage Ratio, as defined. There is no scheduled amortization under the 2016 ESH REIT Revolving Credit Facility and the facility matures on August 30, 2021.

In addition to paying interest on outstanding principal, ESH REIT incurs a fee of 0.35% or 0.175% on the unutilized revolver balance, based on the amount outstanding under the facility. ESH REIT is also required to pay customary letter of credit fees and agency fees. As of December 31, 2016, ESH REIT had no letters of credit outstanding under the facility, an outstanding balance of $45.0 million and available borrowing capacity of $305.0 million.

The 2016 ESH REIT Revolving Credit Facility is subject to a springing financial covenant whereby the senior loan-to-value ratio may not exceed 45% when the aggregate principal amount of borrowings and letters of credit under the 2016 ESH REIT Revolving Credit Facility, excluding up to $30.0 million of letters of credit, is equal to or greater than 25% of the aggregate available principal amount of the 2016 ESH REIT Revolving Credit Facility on the applicable fiscal quarter end date.

ESH REIT Senior Notes Due 2025

On May 15, 2015, ESH REIT issued $500.0 million of its 5.25% senior notes due in 2025 (together with the $800.0 million of additional notes, the “2025 Notes”) under an indenture (the “Indenture”) with Deutsche Bank Trust Company Americas, as trustee, at 100% of par value in a private placement pursuant to Rule 144A of the Securities Act ("Rule 144A"). On March 18, 2016, ESH REIT issued an additional $800.0 million of the 2025 Notes under the Indenture at 98.5% of par value in a private placement pursuant to Rule 144A. The 2025 Notes mature on May 1, 2025 and bear interest at a fixed rate of 5.25% per annum, payable semi-annually in arrears on May 1 and November 1 of each year.

The 2025 Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis by each of ESH REIT’s subsidiaries that guarantee ESH REIT’s obligations under the 2016 ESH REIT Credit Facilities. The 2025 Notes rank equally in right of payment with ESH REIT’s existing and future senior unsecured indebtedness, and senior in right of payment to all future subordinated indebtedness, if any. The 2025 Notes are effectively junior to any of ESH REIT’s secured indebtedness to the extent of the value of the assets securing such indebtedness.

ESH REIT may redeem the 2025 Notes at any time on or after May 1, 2020, in whole or in part, at a redemption price equal to 102.625% of the principal amount, declining annually to 100% of the principal amount from May 1, 2023 and thereafter, plus accrued and unpaid interest. Prior to May 1, 2020, ESH REIT may redeem the 2025 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount, plus a "make-whole" premium, as defined in the Indenture, plus accrued and unpaid interest. Prior to May 1, 2018, subject to certain conditions, ESH REIT may redeem up to 35% of the aggregate principal amount of the 2025 Notes at a redemption price equal to 105.250% of the aggregate principal amount thereof, plus accrued and unpaid interest, with the net cash proceeds from certain equity offerings, provided 65% of the original amount of the principal remains outstanding after the occurrence of each such redemption. Upon a Change of Control, as defined, holders of the 2025 Notes have the right to require ESH REIT to redeem the 2025 Notes at 101% of the principal amount, plus accrued and unpaid interest.

The Indenture contains a number of customary covenants that, among other things and subject to certain exceptions, limit ESH REIT’s ability and the ability of its subsidiaries to incur additional debt, create certain liens, pay dividends or distributions, make certain investments and other restricted payments, enter into affiliate transactions, sell assets or merge, consolidate or transfer all or substantially all of their assets. The Indenture also contains certain customary events of default, including, but not limited to, cross-defaults to certain other indebtedness. If an event of default occurs, the holders of the Notes and the Trustee are entitled to take various actions, including declaring the 2025 Notes immediately due and payable. As of December 31, 2016, ESH REIT was in compliance with all covenants set forth in the Indenture.

Corporation Revolving Credit Facility

On August 30, 2016, the Corporation entered into a revolving credit facility (the "2016 Corporation Revolving Credit Facility") of $50.0 million; no amounts were borrowed upon the facility's closing. The facility provides for the issuance of up to $50.0 million of letters of credit as well as borrowing on same day notice, referred to as swingline loans, in an amount up to $20.0 million. Borrowings under the facility bear interest at a rate equal to (i) LIBOR plus 3.00% or (ii) base rate (determined by reference to the highest of (A) the prime lending rate, (B) the overnight federal funds rate plus 0.50% or (C) the one-month adjusted LIBOR rate plus 1.00%) plus 2.00%. There is no scheduled amortization under the 2016 Corporation Revolving Credit Facility and the facility matures on August 30, 2021.

In addition to paying interest on outstanding principal, the Corporation incurs a fee of 0.35% or 0.175% on the unutilized revolver balance, based on the amount outstanding under the facility. The Corporation is also required to pay customary letter of credit fees and agency fees. As of December 31, 2016, the Corporation had one letter of credit outstanding under this facility of $1.8 million, an outstanding balance drawn of $0 and borrowing capacity available of $48.2 million.

Obligations under the 2016 Corporation Revolving Credit Facility are guaranteed by certain existing and future material domestic subsidiaries of the Corporation, excluding ESH REIT and its subsidiaries and subject to customary exceptions. The facility is secured, subject to certain exceptions, by a first-priority security interest in substantially all of the assets of the Corporation and the guarantors.

If obligations are outstanding under the facility during any fiscal quarter, the 2016 Corporation Revolving Credit Facility requires that the Consolidated Leverage Ratio, as defined, calculated as of the end of such fiscal quarter, be less than or equal to 8.75 to 1.00. The facility is also subject to a springing financial covenant whereby the senior loan-to-value ratio may not exceed 45% when the aggregate principal amount of borrowings and letters of credit under the 2016 Corporation Revolving Credit Facility, excluding up to $30.0 million of letters of credit, is equal to or greater than 25% of the aggregate available principal amount of the 2016 Corporation Revolving Credit Facility on the applicable fiscal quarter end date.

The 2016 Corporation Revolving Credit Facility contains a number of restrictive covenants that, among other things and subject to certain exceptions, limit the Corporation’s ability and the ability of its subsidiaries to incur additional debt, modify existing debt, create certain liens, pay dividends or distributions, make certain restricted payments, enter into affiliate transactions, amend or modify certain material operating leases and management agreements, merge, consolidate or transfer all or substantially all of its assets. The 2016 Corporation Revolving Credit Facility also contains certain customary affirmative covenants and events of default, including, but not limited to, cross-defaults to certain other indebtedness and certain material operating leases. If an event of default occurs, the administrative agent is entitled to take various actions, including the acceleration of amounts due under the facility and additional actions that a secured creditor is permitted to take following a default. As of December 31, 2016, the Corporation was in compliance with all covenants under the 2016 Corporation Revolving Credit Facility.

Unsecured Intercompany Facility

On August 30, 2016, ESH REIT and the Corporation entered into an unsecured intercompany credit facility (the "Unsecured Intercompany Facility"), under which ESH REIT borrowed $75.0 million from the Corporation upon the facility's closing. In December 2016, ESH REIT repaid the Corporation $25.0 million of the outstanding principal on the Unsecured Intercompany Facility. Subject to certain conditions, the principal amount of the Unsecured Intercompany Facility may be increased up to an amount that shall not exceed the greater of (i) $300.0 million and (ii) an unlimited amount so long as the incremental loan-to-value ratio, determined on a pro-forma basis as of the last day of the most recently ended test period, as if any incremental loans available under such incremental commitments had been outstanding on the last day of such period, and, in each case, without netting the cash proceeds of any such incremental loans, does not exceed 5.0%. Loans under the facility bear interest at 5.00% per annum. There is no scheduled amortization under the facility and the facility matures on August 30, 2023. ESH REIT has the option to voluntarily prepay outstanding loans at any time upon one business day’s prior written notice.

The Unsecured Intercompany Facility contains a number of restrictive covenants that, among other things and subject to certain exceptions, limit ESH REIT’s ability and the ability of its subsidiaries to incur additional debt, modify existing debt, create certain liens, pay dividends or distributions, make certain investments and other restricted payments, enter into affiliate transactions, amend or modify certain material operating leases and management agreements, sell assets or merge, consolidate or transfer all or substantially all of their assets. The facility contains certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, cross-defaults to certain other indebtedness and certain material operating leases and management agreements. If an event of default occurs, the Corporation is entitled to take various actions, including the acceleration of amounts due under the facility and all other actions that a creditor is permitted to take following a default. As of December 31, 2016, ESH REIT was in compliance with all covenants under the Unsecured Intercompany Facility.

Prior Indebtedness

ESH REIT 2012 Mortgage Loan

On August 30, 2016, ESH REIT fully repaid the balance of approximately $1,497.6 million outstanding under its $2.52 billion mortgage loan comprised of three components originally entered into in November 2012 (the “2012 Mortgage Loan”). Principal amounts, interest rates and maturities of the components of the 2012 Mortgage Loan outstanding as of December 31, 2015 are included in the table above. The outstanding balance of the 2012 Mortgage Loan, which was outstanding under Component C, was scheduled to mature in December 2019.

Substantially all of ESH REIT’s hotel properties served as collateral for the 2012 Mortgage Loan. ESH REIT guaranteed, under a customary recourse carve out guaranty (i) under certain limited circumstances, losses related to the 2012 Mortgage Loan plus enforcement costs incurred by the lenders and (ii) under certain other limited circumstances, repayment of the 2012 Mortgage Loan up to an aggregate liability under this clause (ii) of $252.0 million plus enforcement costs.

All receipts from the mortgaged properties were deposited into a domestic cash management account (“CMA”) for hotels in the U.S. and a Canadian CMA for hotels in Canada. Such CMAs were under the control of the loan service agent and were therefore classified as restricted cash on the accompanying consolidated balance sheet as of December 31, 2015.

ESH REIT 2014 Term Loan

On March 18, 2016, using a portion of the net proceeds from its issuance of $800.0 million of additional 2025 Notes, together with cash on hand, ESH REIT fully repaid the remaining outstanding balance of approximately $366.5 million of its $375.0 million term loan facility (the “2014 Term Loan”) originally entered into in June 2014. The repayment of the 2014 Term Loan resulted in a prepayment penalty of approximately $3.7 million. The 2014 Term Loan was scheduled to mature in June 2019 and bore interest at the rate included in the table above as of December 31, 2015. There was no scheduled amortization; however, subject to certain exceptions, mandatory prepayments of up to 50.0% of Excess Cash Flow may have been required, based on ESH REIT’s Consolidated Leverage Ratio, each as defined. ESH REIT made a mandatory prepayment of approximately $8.5 million during the three months ended March 31, 2015.

2013 ESH REIT Revolving Credit Facility

On November 18, 2013, ESH REIT entered into a $250.0 million revolving credit facility (the “2013 ESH REIT Revolving Credit Facility”), which was terminated on August 30, 2016. Prior to its termination, the facility originally matured in November 2016. The facility provided for the issuance of up to $50.0 million of letters of credit as well as borrowings on same day notice, referred to as swingline loans, in an amount up to $20.0 million. ESH REIT incurred a fee of 0.35% or 0.175% on the unutilized revolver balance, based on the outstanding amount under the facility, and a fee of 3.125% on outstanding letters of credit. Borrowings under the facility bore interest at the rate included in the table above as of December 31, 2015. As of December 31, 2015, ESH REIT had no letters of credit outstanding under this facility, an outstanding balance drawn of $0 and borrowing capacity available of $250.0 million.

2013 Corporation Revolving Credit Facility

On November 18, 2013, the Corporation entered into a revolving credit facility (the “2013 Corporation Revolving Credit Facility”) of $75.0 million. On November 18, 2014, the borrowing availability under the facility decreased to $50.0 million. On August 30, 2016, the facility was terminated. Prior to its termination, the facility originally matured in November 2016. The facility provided for the issuance of up to $50.0 million of letters of credit as well as borrowings on same day notice, referred to as swingline loans, in an amount up to $20.0 million. The Corporation incurred a fee of 0.35% or 0.175% on the unutilized revolver balance, based on the outstanding amount under the facility, and a fee of 3.875% on outstanding letters of credit. Borrowings under the facility bore interest at the rates included in the table above as of December 31, 2015. As of December 31, 2015, the Corporation had one letter of credit outstanding under this facility of $1.8 million, an outstanding balance drawn of $0 and borrowing capacity available of $48.2 million.

Interest Expense—The components of net interest expense for the years ended December 31, 2016, 2015 and 2014 are as follows (in thousands):



	Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014
Contractual interest⁽¹⁾	$	127,633		$	123,411		$	123,736
Amortization of deferred financing costs and debt discount	9,882			10,490			14,510
Debt extinguishment and other costs	27,435			4,198			11,228
Interest income	(413		)	(317		)	(110		)
Total	$	164,537		$	137,782		$	149,364

______________________


(1)	Contractual interest includes dividends on the shares of mandatorily redeemable preferred stock (see Note 9).

Future Maturities of Debt—The future maturities of debt as of December 31, 2016, are as follows (in thousands):



Years Ending December 31,
2017	$	13,000
2018	13,000
2019	13,000
2020	13,000
2021	58,000
Thereafter	2,531,750		⁽¹⁾
Total	$	2,641,750

______________________


(1)	Under the 2016 Term Facility, annual mandatory prepayments of up to 50% of Excess Cash Flow, as defined, may be required commencing with the year ending December 31, 2017. Annual mandatory prepayments for the year ending December 31, 2017 and each year thereafter, are due during the first quarter of the following year.

Fair Value of Debt—As of December 31, 2016 and 2015, the estimated fair value of the Company's debt was approximately $2.7 billion and $2.8 billion, respectively. Estimated fair values are determined by comparing current borrowing rates and risk spreads offered in the market to the stated interest rates and spreads on the Company's debt (Level 2 fair value measures) or quoted market prices (Level 1 fair value measures), when available.

ESH REIT [Member]

Entity Information [Line Items]

Debt

DEBT

During the years ended December 31, 2016 and 2015, the following debt transactions occurred (in thousands):



	December 31, 2016				December 31, 2015
Debt - beginning of year	$	2,762,388			$	2,859,391
Additions:
Proceeds from term loan facilities, net of debt discount	1,293,500				—
Proceeds from senior notes payable, net of debt discount	788,000				500,000
Proceeds from loan payable to Extended Stay America, Inc.	75,000				—
Proceeds from revolving credit facility	70,000				90,000
Amortization and write-off of deferred financing costs and debt discount ⁽¹⁾	29,091				9,902
Deductions:
Payments on mortgage loan	(1,931,157		)		(586,892		)
Payments on term loan facilities	(369,713		)	⁽²⁾	(8,537		)
Payments on loan payable to Extended Stay America, Inc.	(25,000		)		—
Payments on revolving credit facility	(25,000		)		(90,000		)
Payments of deferred financing costs ⁽¹⁾	(31,835		)		(11,476		)
Debt - end of year	$	2,635,274			$	2,762,388

______________________


(1)	Excludes amortization and payments of deferred financing costs related to the revolving credit facility.


(2)	Includes principal payment of $3.25 million made in January 2017, included in accounts payable and accrued liabilities as of December 31, 2016.

ESH REIT’s outstanding debt, net of unamortized debt discounts, and unamortized deferred financing costs as of December 31, 2016 and 2015, consists of the following (in thousands):



				Outstanding Principal						Unamortized Deferred Financing Costs					Interest Rate
Loan	Stated Amount⁽¹⁾			December 31, 2016			December 31, 2015			December 31, 2016		December 31, 2015		Stated Interest Rate	December 31, 2016		December 31, 2015	Maturity Date
Mortgage loan
2012 Mortgage Loan - Component B	$	350,000		$	—		$	111,157		$	—	$	784	3.4047%	N/A		3.4047%	N/A
2012 Mortgage Loan - Component C	1,820,000			—			1,820,000			—		18,752		4.0547%	N/A		4.0547%	N/A
Term loan facilities
2016 Term Facility	1,300,000		⁽²⁾	1,290,560		⁽³⁾	—			15,804		—		LIBOR⁽⁴⁾⁽⁵⁾ + 3.00%	3.75%	⁽⁵⁾	N/A	8/30/2023	⁽⁸⁾
2014 Term Loan	375,000			—			365,157		⁽⁶⁾	—		3,635		LIBOR + 4.25%	N/A		5.00%	N/A
Senior notes
2025 Notes	1,300,000			1,289,041		⁽⁷⁾	500,000			23,523		10,756		5.25%	5.25%		5.25%	5/1/2025
Revolving credit facilities ⁽⁹⁾
2016 Revolving Credit Facility	350,000			45,000			—			2,570		1,431		LIBOR + 2.75%	3.33%		N/A	8/30/2021
2013 Revolving Credit Facility	250,000			—			—			—		—		LIBOR + 3.75%	N/A		N/A	N/A
Unsecured Intercompany Facility
Unsecured Intercompany Facility	75,000		⁽¹⁰⁾	50,000			—			—		—		5.00%	5.00%		N/A	8/30/2023
Total				$	2,674,601		$	2,796,314		$	41,897	$	35,358

______________________


(1)	Amortization is interest only, except for the 2016 Term Facility which amortizes in equal quarterly installments of $3.25 million.


(2)	ESH REIT is able to increase its borrowings under the 2016 ESH REIT Credit Facilities by an amount of up to $600.0 million, plus additional amounts, in each case subject to certain conditions.


(3)	The 2016 Term Facility is presented net of an unamortized debt discount of approximately $6.2 million as of December 31, 2016.


(4)	The 2016 Term Facility includes a LIBOR floor of 0.75%.


(5)	$500.0 million of the 2016 Term Facility is subject to a floating-to-fixed interest rate swap at a fixed rate of 1.175% as of December 31, 2016 (see Note 7).


(6)	The 2014 Term Loan is presented net of an unamortized debt discount of approximately $1.3 million as of December 31, 2015.


(7)	The 2025 Notes are presented net of an unamortized debt discount of approximately $11.0 million as of December 31, 2016.

(8)


(9)	Unamortized deferred financing costs related to revolving credit facilities are included in other assets in the accompanying consolidated balance sheets.


(10)	As of December 31, 2016, the outstanding balance owed by ESH REIT to the Corporation under the Unsecured Intercompany Facility was $50.0 million. ESH REIT is able to increase its borrowings under the Unsecured Intercompany Facility to an amount of up to $300.0 million, plus additional amounts, in each case subject to certain conditions.

Outstanding Indebtedness

ESH REIT Credit Facilities

The 2016 ESH REIT Credit Facilities contain a number of restrictive covenants that, among other things and subject to certain exceptions, limit ESH REIT’s ability and the ability of its subsidiaries to incur additional debt, modify existing debt, create certain liens, pay dividends and distributions, make certain investments and other restricted payments, enter into affiliate transactions, amend or modify certain material operating leases and management agreements, sell assets or merge, consolidate or transfer all or substantially all of their assets. The 2016 ESH REIT Credit Facilities contain certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the administrative agent is entitled to take various actions, including the acceleration of amounts due under the 2016 ESH REIT Credit Facilities and additional actions that a secured creditor is permitted to take following a default, including, but not limited to, cross-defaults to certain other indebtedness and certain material operating leases and management agreements. As of December 31, 2016, ESH REIT was in compliance with all covenants under the 2016 ESH REIT Credit Facilities.

ESH REIT Senior Notes Due 2025

Unsecured Intercompany Facility

Prior Indebtedness

ESH REIT 2012 Mortgage Loan

ESH REIT 2014 Term Loan

2013 ESH REIT Revolving Credit Facility

Interest Expense— The components of net interest expense for the years ended December 31, 2016, 2015 and 2014, are as follows (in thousands):



	Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014
Contractual interest	$	127,215		$	121,715		$	121,672
Amortization of deferred financing costs and debt discount	9,124			9,408			11,869
Debt extinguishment and other costs	27,196			3,890			10,223
Interest income	(92		)	(233		)	(532		)
Total	$	163,443		$	134,780		$	143,232

Future Maturities of Debt—The future maturities of debt as of December 31, 2016, are as follows (in thousands):



Years Ending December 31,
2017	$	13,000
2018	13,000
2019	13,000
2020	13,000
2021	58,000
Thereafter	2,581,750		⁽¹⁾
Total	$	2,691,750

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(1)	Under the 2016 Term Facility, mandatory annual prepayments of up to 50% of Excess Cash Flow, as defined, may be required commencing with the year ending December 31, 2017. Annual mandatory prepayments for the year ending December 31, 2017 and each year thereafter, are due during the first quarter of the following year.

Fair Value of Debt—As of December 31, 2016 and 2015, the estimated fair value of ESH REIT’s debt was approximately $2.7 billion and $2.8 billion, respectively. Estimated fair values are determined by comparing current borrowing rates and risk spreads offered in the market to the stated interest rates and spreads on ESH REIT’s debt (Level 2 fair value measures) or quoted market prices (Level 1 fair value measures), when available.