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Commitments and Contingencies
9 Months Ended
Sep. 30, 2018
Entity Information [Line Items]  
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
Lease Commitments—The Company is a tenant under long-term ground leases at three of its hotel properties as of September 30, 2018. The current terms of the ground lease agreements terminate at various dates between 2021 and 2096, and include multiple renewal options for generally five or ten year periods. During the second quarter of 2018, the Company exercised its option to purchase one of its former ground leased properties, and the transaction closed during the third quarter of 2018. The Company is a tenant under a 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 $0.8 million for each of the three months ended September 30, 2018 and 2017, and approximately $2.4 million for each of the nine months ended September 30, 2018 and 2017. Ground lease expense is included in hotel operating expenses and office lease expense is included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.
Other Commitments—The Company has commitments to make quarterly payments in lieu of taxes to the owners of two land parcels. The initial terms of the agreements terminate in 2031 and 2034. The costs related to these commitments were approximately $0.1 million for each of the three months ended September 30, 2018 and 2017, and approximately $0.2 million for each of the nine months ended September 30, 2018 and 2017, and is included in hotel operating expenses in the accompanying unaudited condensed consolidated statements of operations.
Letters of Credit—As of September 30, 2018, the Company had one outstanding letter of credit, issued by the Corporation, for $0.2 million, which is collateralized by the 2016 Corporation Revolving Credit Facility.
Paired Share Repurchase Commitment—As of September 30, 2018, the Corporation and ESH REIT agreed to repurchase approximately 7,500 Paired Shares for approximately $0.1 million and $0.1 million, respectively, for which settlement had not yet occurred.
Legal Contingencies—On February 13, 2018, the Company learned that a default judgment had been entered against it and certain of its affiliates on March 16, 2017 in the State Court of Gwinnett County, Georgia in an action entitled Sweeting v. Extended Stay America, Inc. et al., Case No. 16-C-06630-S4. The case is one of two personal injury actions arising out of the death of a child, brought by the child’s estate and personal representative, and brought by the child’s mother, respectively. The first action is currently pending. A default judgment was entered in the second case due to an inadvertent error in responding to service of process. The Company filed motions to open the default and set aside the judgment. On October 19, 2018, the court granted the Company's motion to open the default and set aside the judgement.
The Company is not a party to any additional 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 additional litigation and claims, individually or in the aggregate, will not have a material adverse effect on its business or consolidated financial statements.
ESH REIT  
Entity Information [Line Items]  
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
Lease Commitments—ESH REIT is a tenant under long-term ground leases at three of its hotel properties as of September 30, 2018. The current terms of the ground lease agreements terminate at various dates between 2021 and 2096, and include multiple renewal options for generally five or ten year periods. During the second quarter of 2018, ESH REIT exercised its option to purchase one of its former ground leased properties, and the transaction closed during the third quarter of 2018. Rent expense on ground leases is recognized on a straight-line basis and was approximately $0.4 million for each of the three months ended September 30, 2018 and 2017 and approximately $1.1 million for each of the nine months ended September 30, 2018 and 2017. Ground lease expense is included in hotel operating expenses in the accompanying unaudited condensed consolidated statements of operations.
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 $0.1 million for each of the three months ended September 30, 2018 and 2017 and approximately $0.2 million for each of the nine months ended September 30, 2018 and 2017, and is included in hotel operating expenses in the accompanying unaudited condensed consolidated statements of operations.
Paired Share Repurchase Commitment—As of September 30, 2018, ESH REIT agreed to repurchase approximately 7,500 Class B common shares for approximately $0.1 million for which settlement had not yet occurred.
Legal Contingencies—On February 13, 2018, ESH REIT learned that a default judgment had been entered against it and certain of its affiliates on March 16, 2017 in the State Court of Gwinnett County, Georgia in an action entitled Sweeting v. Extended Stay America, Inc. et al., Case No. 16-C-06630-S4. The case is one of two personal injury actions arising out of the death of a child, brought by the child’s estate and personal representative, and brought by the child’s mother, respectively. The first action is currently pending. A default judgment was entered in the second case due to an inadvertent error in responding to service of process. ESH REIT filed motions to open the default and set aside the judgment. On October 19, 2018, the court granted ESH REIT's motion to open the default and set aside the judgement.
ESH REIT is not a party to any additional 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 additional litigation and claims, individually or in the aggregate, will not have a material adverse effect on its business or consolidated financial statements.