Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

COMMITMENTS AND CONTINGENCIES

Lease Commitments—The Company is a tenant under long-term ground leases at four of its hotel properties. The initial terms of the ground lease agreements terminate at various dates between 2021 and 2096, and three leases include multiple renewal options for generally five or 10 year periods. The Company is a tenant under an office lease for its corporate office. The initial term of the office lease terminates in August 2021 and includes renewal options for two additional terms of five years each.

Rent expense on ground and office leases is recognized on a straight-line basis and was approximately $3.3 million for each of the years ended December 31, 2016 and 2015 and approximately $3.2 million for the year ended December 31, 2014. Ground lease expense is included in hotel operating expenses and office lease expense is included in general and administrative expenses in the accompanying consolidated statements of operations.

Future minimum lease payments under operating leases as of December 31, 2016, are as follows (in thousands):



Years Ending December 31,
2017	$	2,718
2018	2,788
2019	2,843
2020	2,964
2021	2,288
Thereafter	80,684
Total	$	94,285

Other Commitments—The Company has a commitment to make quarterly payments in lieu of taxes to the owner of the land on which one of its properties is located. The initial term of the agreement terminates in 2031. The cost related to this commitment was approximately $0.3 million for each of the years ended December 31, 2016, 2015 and 2014, and is included in hotel operating expenses in the accompanying consolidated statements of operations.

Letter of Credit—As of December 31, 2016, the Company had one outstanding letter of credit, issued by the Corporation, for $1.8 million, which is collateralized by the 2016 Corporation Revolving Credit Facility.

Paired Share Repurchase Commitment—As of December 31, 2016, the Corporation and ESH REIT agreed to

repurchase 45,000 Paired Shares for approximately $0.4 million and $0.3 million, respectively, for which settlement had not yet occurred.

Legal Contingencies—The Company is not a party to any litigation or claims, other than routine matters arising in the ordinary course of business that are incidental to the operation of the business of the Company. The Company believes that the results of all claims and litigation, individually or in the aggregate, will not have a material adverse effect on its business or consolidated financial statements.

ESH REIT [Member]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Lease Commitments—ESH REIT is a tenant under long-term ground leases at four of its hotel properties. The initial terms of the ground lease agreements terminate at various dates between 2021 and 2096 and three leases include multiple renewal options for generally five or 10 year periods.

Rent expense on ground leases is recognized on a straight-line basis and was approximately $1.5 million for each of the years ended December 31, 2016 and 2015 and approximately $1.6 million for the year ended December 31, 2014. Ground lease expense is included in hotel operating expense in the accompanying consolidated statements of operations.

Future minimum lease payments under operating leases as of December 31, 2016, are as follows (in thousands):



Years Ending December 31,
2017	$	750
2018	771
2019	775
2020	845
2021	852
Thereafter	80,684
Total	$	84,677

Other Commitments—ESH REIT has a commitment to make quarterly payments in lieu of taxes to the owner of the land on which one of its properties is located. The initial term of the agreement terminates in 2031. The cost related to this commitment was approximately $0.3 million for each of the years ended December 31, 2016, 2015 and 2014, and is included in hotel operating expenses in the accompanying consolidated statements of operations.

Paired Share Repurchase Commitment—As of December 31, 2016, ESH REIT agreed to repurchase 45,000 Class B common shares for approximately $0.3 million, for which settlement had not yet occurred.

Legal Contingencies—ESH REIT is not a party to any litigation or claims, other than routine matters arising in the ordinary course of business that are incidental to the operation of the business of ESH REIT. ESH REIT believes that the results of all claims and litigation, individually or in the aggregate, will not have a material adverse effect on its business or consolidated financial statements.