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Related Party Transactions
 12 Months Ended
Dec. 31, 2016
Entity Information [Line Items]  
Related Party Transactions
RELATED PARTY TRANSACTIONS
Investment funds of the Sponsors held 21,105 shares of the Corporation’s outstanding mandatorily redeemable preferred stock as of December 31, 2016 and 2015.
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. The outstanding debt balance and interest expense owed by ESH REIT to the Corporation related to this facility eliminate in consolidation (see Note 7).
In the fourth quarter of 2016, the Corporation and ESH REIT repurchased and retired approximately 3.85 million Paired Shares from the Selling Stockholders for approximately $35.1 million and $21.6 million, respectively. These Paired Shares were purchased in connection with secondary offerings consummated in the fourth quarter of 2016 and pursuant to, and counted toward, the combined Paired Share repurchase program.
In March 2016, in connection with ESH REIT's $800.0 million issuance of its 2025 Notes discussed in Note 7, an affiliate of one of the Sponsors acted as an initial purchaser and purchased $24.0 million of the 2025 Notes. As such, the affiliate of one of the Sponsors earned approximately $0.4 million in fees related to the transaction for the year ended December 31, 2016.
ESH REIT [Member]  
Entity Information [Line Items]  
Related Party Transactions
RELATED PARTY TRANSACTIONS
Revenues and Overhead Expenses
Leases and Rental Revenues—ESH REIT’s revenues are derived from four leases. The counterparty to each lease agreement is a subsidiary of the Corporation. Fixed rental revenues are recognized on a straight-line basis. For the years ended December 31, 2016, 2015 and 2014, ESH REIT recognized fixed rental revenues of approximately $465.2 million, $490.8 million and $494.0 million, respectively. ESH REIT recognized approximately $229.1 million, $228.8 million and $190.2 million of percentage rental revenues for the years ended December 31, 2016, 2015 and 2014, respectively.
Future fixed rental payments to be received under noncancelable leases as of December 31, 2016, are as follows (in thousands):
Years Ending
December 31,
 
2017
$
480,423

2018
412,409

Total
$
892,832


Overhead Expenses—ESA Management incurs costs under a services agreement with the Corporation and ESH REIT for certain overhead services performed on the entities' behalf. The services relate to executive management, accounting, financial analysis, training and technology. For the years ended December 31, 2016, 2015 and 2014, ESH REIT incurred approximately $8.8 million, $9.5 million and $7.3 million, respectively, related to this agreement, which is included in general and administrative expenses in the accompanying consolidated statements of operations. The expenses ESH REIT incurred under this services agreement include expenses related to applicable employees that participate in the Corporation’s long-term incentive plan (as described in Note 13). Such charges were approximately $1.9 million, $1.1 million and $0.6 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Debt and Equity Transactions
Share Repurchases—In the fourth quarter of 2016, ESH REIT repurchased and retired approximately 3.85 million Class B common shares from the Selling Stockholders for approximately $21.6 million. These shares were purchased in connection with secondary offerings consummated in the fourth quarter of 2016 and pursuant to, and counted toward, the combined Paired Share repurchase program.
Senior Notes Due 2025—In March 2016, in connection with ESH REIT's $800.0 million issuance of its 2025 Notes discussed in Note 6, an affiliate of one of the Sponsors acted as an initial purchaser and purchased $24.0 million of the 2025 Notes. As such, the affiliate of one of the Sponsors earned approximately $0.4 million in fees related to the transaction for the year ended December 31, 2016.
Unsecured Intercompany Facility—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 (see Note 6). During the year ended December 31, 2016, ESH REIT incurred approximately $1.3 million in interest expense related to the Unsecured Intercompany Facility.
Distributions—The Corporation owns all of the Class A common stock of ESH REIT, which represents approximately 56% of the outstanding shares of common stock of ESH REIT. During the year ended December 31, 2016, ESH REIT paid distributions of approximately $155.3 million (of which $47.6 million had been declared as of December 31, 2015) to the Corporation in respect of the Class A common stock of ESH REIT. During the years ended December 31, 2015 and 2014, ESH REIT paid distributions of approximately $150.3 million and $132.7 million, respectively, to the Corporation in respect of the Class A common stock of ESH REIT.
Issuance of Common Stock—In September 2016, ESH REIT issued and was compensated approximately $0.2 million for approximately 25,000 shares of Class B common stock, each of which was attached to a share of Corporation common stock to form a Paired Share, used to settle vested RSUs. In March 2016, ESH REIT issued and was compensated approximately $1.1 million for approximately 199,000 shares of Class B common stock, each of which was attached to a share of Corporation common stock to form a Paired Share, used to settle vested RSUs. In March 2015, ESH REIT issued and was compensated approximately $0.7 million for approximately 97,000 shares of Class B common stock, each of which was attached to a share of Corporation common stock to form a Paired Share, used to settle vested RSUs. Also in March 2015, ESH REIT issued approximately 190,000 shares of Class A common stock to the Corporation for consideration of approximately $1.7 million.
As of December 31, 2016, approximately 164,000 RSUs issued by the Corporation have vested but have not been settled, for which ESH REIT has recognized a receivable of approximately $1.0 million, which is included as a component of due to Extended Stay America, Inc. on the accompanying consolidated balance sheet. In March 2017, in accordance with the awards’ settlement provisions, ESH REIT expects to issue and be compensated for the issuance of the corresponding shares of Class B common stock, each of which will be attached to a share of common stock of the Corporation to form a Paired Share.
Related party transaction balances as of December 31, 2016 and 2015, include the following (in thousands):
 
December 31, 2016
 
December 31, 2015
Leases:
 
 
 
Rents receivable(1)
$
2,609

 
$
4,299

Deferred rents receivable(2)
$
40,259

 
$
41,546

Unearned rental revenues(1)
$
(39,898
)
 
$
(38,321
)
 
 
 
 
Debt:
 
 
 
Loan payable (Unsecured Intercompany Facility)(3)
$
(50,000
)
 
$
—

 
 
 
 
Working capital and other:
 
 
 
Ordinary working capital(4)
$
(12,566
)
 
$
(16,723
)
Equity awards receivable (payable)(5)
958

 
(363
)
Distribution payable(6)
—

 
(47,594
)
     Total working capital and other(7)
$
(11,608
)
 
$
(64,680
)
______________________
(1)
Fixed minimum rents are due one-month in advance. Percentage rents are due one-month in arrears. Rents receivable relate to December 2016 and 2015 percentage rent, respectively. Unearned rental revenues relate to January 2017 and 2016 fixed minimum rent, respectively.
(2)
Represents rental revenues recognized in excess of cash rents received. Amount will decrease over lease terms to zero.
(3)
The Unsecured Intercompany Facility bears interest at 5.0% per annum. ESH REIT is able to increase its borrowings under the Unsecured Intercompany Facility to an amount up to $300 million, plus additional amounts, in each case subject to certain conditions (see Note 6).
(4)
Represents disbursements and/or receipts made by the Corporation or ESH REIT on the other entity's behalf. Includes overhead expenses incurred by the Corporation on ESH REIT's behalf.
(5)
Represents amounts related to RSUs not yet settled or issued.
(6)
Special distribution funded in connection with the sale of 53 hotel properties that was declared in December 2015 and paid in January 2016.
(7)
Outstanding balances are typically repaid within 60 days.