Debt (Tables)

12 Months Ended

Dec. 31, 2018

During the years ended December 31, 2018 and 2017, the following debt transactions occurred (in thousands):



	December 31, 2018			December 31, 2017
Debt, net of deferred financing costs and debt discount(s) - beginning of year ⁽¹⁾	$	2,534,768		$	2,585,274
Additions:
Proceeds from revolving credit facilities	—			105,000
Amortization and write-off of deferred financing costs and debt discount ⁽²⁾	7,954			7,437
Deductions:
Payments on term loan facilities	(147,215		)	(12,943		)
Payments on revolving credit facilities	—			(150,000		)
Debt, net of deferred financing costs and debt discount(s) - end of year ⁽¹⁾	$	2,395,507		$	2,534,768

______________________


(1)	Excludes mandatorily redeemable preferred stock and capital lease obligations.


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

Company's Outstanding Debt, Unamortized Deferred Financing Costs and Debt Discount

The Company’s outstanding debt, net of unamortized debt discount and unamortized deferred financing costs, as of December 31, 2018 and 2017, consists of the following (dollars in thousands):



			Carrying Amount						Unamortized Deferred Financing Costs							Interest Rate
Loan	Stated Amount⁽¹⁾		December 31, 2018			December 31, 2017			December 31, 2018			December 31, 2017			Stated Interest Rate	December 31, 2018		December 31, 2017	Maturity Date
Term loan facilities
ESH REIT 2016 Term Facility	1,300,000	⁽²⁾	1,132,259		⁽³⁾	1,278,545		⁽³⁾	10,546			13,433			LIBOR⁽⁴⁾ + 2.00%	4.15%	⁽⁴⁾	3.69%	8/30/2023	^(1), ⁽⁵⁾
Senior notes
ESH REIT 2025 Notes	1,300,000		1,291,671		⁽⁶⁾	1,290,356		⁽⁶⁾	17,877			20,700			5.25%	5.25%		5.25%	5/1/2025
Revolving credit facilities
ESH REIT 2016 Revolving Credit Facility	350,000	⁽²⁾	—			—			1,469		⁽⁷⁾	2,020		⁽⁷⁾	LIBOR + 2.75%	N/A		N/A	8/30/2021
Corporation Revolving 2016 Credit Facility	50,000		—			—			292		⁽⁷⁾	401		⁽⁷⁾	LIBOR + 3.00%	N/A		N/A	8/30/2021
Unsecured Intercompany Facility
Unsecured Intercompany Facility	75,000	⁽⁸⁾	—			—			—			—			5.00%	5.00%		5.00%	8/30/2023
Total			$	2,423,930		$	2,568,901		$	30,184		$	36,554

______________________


(1)	Amortization is interest only, except for the 2016 Term Facility (as defined below), which amortizes in equal quarterly installments of $3.1 million. See (5) below. In February and December 2018, ESH REIT made voluntary prepayments of $60.0 million and $75.0 million, respectively.


(2)	ESH REIT is able to increase its borrowings under the 2016 ESH REIT Credit Facilities (as defined below) 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 $4.3 million and $5.3 million as of December 31, 2018 and 2017, respectively.


(4)	$300.0 million of the 2016 Term Facility is subject to an interest rate swap at a fixed rate of 1.175% as of December 31, 2018 (see Note 8).

(5)

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. Annual mandatory prepayments for the year are due during the first quarter of the following year. No mandatory prepayments are required in the first quarter of 2019 based on ESH REIT’s Excess Cash Flow for the year ended December 31, 2018.


(6)	The 2025 Notes (as defined below) are presented net of an unamortized debt discount of $8.3 million and $9.6 million as of December 31, 2018 and 2017, respectively.


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


(8)	As of December 31, 2018, no amounts were outstanding under the Unsecured Intercompany Facility. ESH REIT is able to borrow under the Unsecured Intercompany Facility an amount up to $300.0 million, plus additional amounts, in each case subject to certain conditions. Outstanding debt balances and interest expense, as applicable, owed from ESH REIT to the Corporation eliminate in consolidation.

Components of Interest Expense

The components of net interest expense during the years ended December 31, 2018, 2017 and 2016 are as follows (in thousands):



	Year Ended December 31, 2018			Year Ended December 31, 2017			Year Ended December 31, 2016
Contractual interest⁽¹⁾	$	116,348		$	118,510		$	127,633
Amortization of deferred financing costs and debt discount	8,005			8,097			9,882
Debt extinguishment and other costs⁽²⁾	3,030			3,335			27,435
Interest income	(2,513		)	(170		)	(413		)
Total	$	124,870		$	129,772		$	164,537

______________________


(1)	Includes dividends on the shares of mandatorily redeemable preferred stock.


(2)	Includes interest expense associated with capital leases.

Future Maturities of Debt

The future maturities of debt as of December 31, 2018, are as follows (in thousands):



Years Ending December 31,
2019	$	11,366	⁽¹⁾
2020	11,366		⁽¹⁾
2021	11,366		⁽¹⁾
2022	11,366		⁽¹⁾
2023	1,091,128		⁽¹⁾
Thereafter	1,300,000		⁽¹⁾
Total	$	2,436,592

______________________


(1)	Under the 2016 Term Facility, annual mandatory prepayments of up to 50% of Excess Cash Flow, as defined, may be required. Annual mandatory prepayments for the year are due during the first quarter of the following year. No mandatory prepayments were required in the first quarter of 2019 based on ESH REIT’s Excess Cash Flow for the year ended December 31, 2018.

ESH REIT

Entity Information [Line Items]

Debt Transactions

During the years ended December 31, 2018 and 2017, the following debt transactions occurred (in thousands):



	December 31, 2018			December 31, 2017
Debt, net of deferred financing costs and debt discount(s) - beginning of year	$	2,534,768		$	2,635,274
Additions:
Proceeds from revolving credit facility	—			105,000
Amortization and write-off of deferred financing costs and debt discount ⁽¹⁾	7,954			7,437
Deductions:
Payments on term loan facilities	(147,215		)	(12,943		)
Payments on loan payable to Extended Stay America, Inc.	—			(50,000		)
Payments on revolving credit facility	—			(150,000		)
Debt, net of deferred financing costs and debt discount(s) - end of year	$	2,395,507		$	2,534,768

______________________


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

Company's Outstanding Debt, Unamortized Deferred Financing Costs and Debt Discount

ESH REIT’s outstanding debt, net of unamortized debt discount and unamortized deferred financing costs, as of December 31, 2018 and 2017, consists of the following (dollars in thousands):



			Carrying Amount						Unamortized Deferred Financing Costs							Interest Rate
Loan	Stated Amount⁽¹⁾		December 31, 2018			December 31, 2017			December 31, 2018			December 31, 2017			Stated Interest Rate	December 31, 2018		December 31, 2017	Maturity Date
Term loan facilities
2016 Term Facility	1,300,000	⁽²⁾	1,132,259		⁽³⁾	1,278,545		⁽³⁾	10,546			13,433			LIBOR⁽⁴⁾+ 2.00%	4.15%	⁽⁴⁾	3.69%	8/30/2023	^(1), ⁽⁵⁾
Senior notes
2025 Notes	1,300,000		1,291,671		⁽⁶⁾	1,290,356		⁽⁶⁾	17,877			20,700			5.25%	5.25%		5.25%	5/1/2025
Revolving credit facilities
2016 Revolving Credit Facility	350,000	⁽²⁾	—			—			1,469		⁽⁷⁾	2,020		⁽⁷⁾	LIBOR + 2.75%	N/A		N/A	8/30/2021
Unsecured Intercompany Facility
Unsecured Intercompany Facility	75,000	⁽⁹⁾	—			—			—			—			5.00%	5.00%		5.00%	8/30/2023
Total			$	2,423,930		$	2,568,901		$	29,892		$	36,153

______________________


(1)	Amortization is interest only, except for the 2016 Term Facility (as defined below), which amortizes in equal quarterly installments of $3.1 million. See (5) below. In February and December 2018, ESH REIT made voluntary prepayments of $60.0 million and $75.0 million, respectively.


(2)	ESH REIT is able to increase its borrowings under the 2016 ESH REIT Credit Facilities (as defined below) 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 $4.3 million and $5.3 million as of December 31, 2018 and 2017, respectively.


(4)	$300.0 million of the 2016 Term Facility is subject to an interest rate swap at a fixed rate of 1.175% as of December 31, 2018 (see Note 7).

(5)


(6)	The 2025 Notes (as defined below) are presented net of an unamortized debt discount of $8.3 million and $9.6 million as of December 31, 2018 and 2017, respectively.


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


(8)	As of December 31, 2018, no amounts were outstanding under the Unsecured Intercompany Facility. ESH REIT is able to borrow under the Unsecured Intercompany Facility an amount up to $300.0 million, plus additional amounts, in each case subject to certain conditions (see Note 11).

Components of Interest Expense

The components of net interest expense during the years ended December 31, 2018, 2017 and 2016, are as follows (in thousands):



	Year Ended December 31, 2018			Year Ended December 31, 2017			Year Ended December 31, 2016
Contractual interest	$	115,778		$	119,819		$	127,215
Amortization of deferred financing costs and debt discount	7,895			7,988			9,124
Debt extinguishment and other costs⁽¹⁾	2,847			3,136			27,196
Interest income	(1,775		)	(20		)	(92		)
Total	$	124,745		$	130,923		$	163,443

______________________


(1)	Includes interest expense associated with capital leases.

Future Maturities of Debt

The future maturities of debt as of December 31, 2018, are as follows (in thousands):



Years Ending December 31,
2019	$	11,366	⁽¹⁾
2020	11,366		⁽¹⁾
2021	11,366		⁽¹⁾
2022	11,366		⁽¹⁾
2023	1,091,128		⁽¹⁾
Thereafter	1,300,000		⁽¹⁾
Total	$	2,436,592

______________________


(1)	Under the 2016 Term Facility, mandatory annual prepayments of up to 50% of Excess Cash Flow, as defined, may be required. Annual mandatory prepayments for the year are due during the first quarter of the following year. No mandatory prepayments were required in the first quarter of 2019 based on ESH REIT’s Excess Cash Flow for the year ended December 31, 2018.

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details