DEBT | DEBT Summary - The Company’s outstanding debt, net of unamortized debt discount and unamortized deferred financing costs, as of June 30, 2019 and December 31, 2018 , consists of the following (dollars in thousands): Stated (1) Carrying Amount Unamortized Deferred Financing Costs Loan June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018 Stated Interest Rate Maturity Date Term loan facility ESH REIT Term Facility $ 1,300,000 $ 1,127,040 (2) $ 1,132,259 (2) $ 9,416 $ 10,546 LIBOR (3) + 2.00% 8/30/2023 (1) Senior notes 2025 Notes 1,300,000 1,292,329 (4) 1,291,671 (4) 16,466 17,877 5.25% 5/1/2025 Revolving credit facilities ESH REIT Revolving Credit Facility 350,000 — — 1,193 (5) 1,469 (5) LIBOR (3) + 2.75% 8/30/2021 Corporation Revolving Credit Facility 50,000 — — 237 (5) 292 (5) LIBOR (3) + 3.00% 8/30/2021 Unsecured Intercompany Facility Unsecured Intercompany Facility (6) 75,000 — — — — 5.00% 8/30/2023 Total $ 2,419,369 $ 2,423,930 $ 27,312 $ 30,184 _________________________________ (1) Amortization is interest only, except for the ESH REIT Term Facility (as defined below), which amortizes in equal quarterly installments of $2.8 million . In addition to scheduled amortization, subject to certain exceptions, annual mandatory prepayments of up to 50% of Excess Cash Flow, as defined, may be required under the ESH REIT Term Facility. 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. (2) ESH REIT Term Facility is presented net of an unamortized debt discount of $3.9 million and $4.3 million as of June 30, 2019 and December 31, 2018 , respectively. (3) As of June 30, 2019 and December 31, 2018 , one-month LIBOR was 2.40% and 2.50% , respectively. As of June 30, 2019 , $250.0 million of the ESH REIT Term Facility is subject to an interest rate swap at a fixed rate of 1.175% . (4) The 2025 Notes (as defined below) are presented net of an unamortized debt discount of $7.7 million and $8.3 million as of June 30, 2019 and December 31, 2018 , respectively. (5) Unamortized deferred financing costs related to revolving credit facilities are included in other assets in the accompanying condensed consolidated balance sheets. (6) Any outstanding debt balances and interest expense, as applicable, owed from ESH REIT to the Corporation eliminate in consolidation. ESH REIT Credit Facilities In August 2016, ESH REIT entered into a credit agreement, as may be amended and supplemented from time to time, providing for senior secured credit facilities (collectively, the “ESH REIT Credit Facilities”) consisting of a $1,300.0 million senior secured term loan facility (the “ESH REIT Term Facility”) and a $350.0 million senior secured revolving credit facility (the “ESH REIT Revolving Credit Facility”). Under the ESH REIT Credit Facilities , ESH REIT may increase its borrowings by an amount of up to $600.0 million , plus additional amounts, in each case subject to certain conditions. ESH REIT Term Facility — The ESH REIT Term Facility bears interest at a rate equal to (i) LIBOR plus 1.75% for any period during which ESH REIT maintains a public corporate family rating better than or equal to BB- (with a stable or better outlook) from S&P and Ba3 (with a stable or better outlook) from Moody’s (a “Level 1 Period”) or LIBOR plus 2.00% for any period other than a Level 1 Period; or (ii) a base rate, as defined, plus 0.75% during a Level 1 Period or 1.00% for any period other than a Level 1 Period. ESH REIT has the option to prepay outstanding loans under the ESH REIT Term Facility without penalty. ESH REIT Revolving Credit Facility — The 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 Consolidated Total Net Leverage Ratio, as defined, or (ii) a base rate, as defined, plus a spread that ranges from 1.25% to 1.75% based on ESH REIT’s Consolidated Total Net Leverage Ratio, as defined. In addition to paying interest on outstanding principal, ESH REIT incurs a fee of 0.35% or 0.175% on the unutilized revolver balance. ESH REIT is also required to pay customary letter of credit fees and agency fees. As of June 30, 2019 , ESH REIT had no letters of credit outstanding under the facility and available borrowing capacity of $350.0 million . ESH REIT 2025 Notes In May 2015 and March 2016, ESH REIT issued $500.0 million and $800.0 million , respectively, of its 5.25% senior notes due in May 2025 (the “2025 Notes”) under an indenture (the “Indenture”) with Deutsche Bank Trust Company Americas, as trustee, in private placements pursuant to Rule 144A of the Securities Act of 1933, as amended. 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, plus accrued and unpaid interest. 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. Corporation Revolving Credit Facility In August 2016, the Corporation entered into a revolving credit facility agreement, as may be amended and supplemented from time to time (the “Corporation Revolving Credit Facility”), providing 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 of up to $20.0 million . Borrowings under the facility bear interest at a rate equal to (i) LIBOR plus 3.00% or (ii) a base rate, as defined, plus 2.00% . In addition to paying interest on outstanding principal, the Corporation incurs a fee of 0.35% or 0.175% on the unutilized revolver balance. The Corporation is also required to pay customary letter of credit fees and agency fees. As of June 30, 2019 , the Corporation had one letter of credit outstanding under the facility of $0.2 million and available borrowing capacity of $49.8 million . Unsecured Intercompany Facility In August 2016, ESH REIT, as borrower, and the Corporation, as lender, entered into an unsecured intercompany credit facility (the “Unsecured Intercompany Facility”). As of June 30, 2019 and December 31, 2018, the amount outstanding under the facility was $0 . Under the Unsecured Intercompany Facility, ESH REIT may borrow up to $300.0 million , plus additional amounts, in each case subject to certain conditions. Loans under the facility bear interest at an annual rate of 5.00% . ESH REIT has the option to prepay outstanding balances under the facility without penalty. Covenants The ESH REIT Credit Facilities, the 2025 Notes, the Corporation Revolving Credit Facility and the Unsecured Intercompany Facility contain a number of restrictive covenants that, among other things and subject to certain exceptions, limit the Corporation’s or ESH REIT’s ability and the ability of their respective subsidiaries to engage in certain transactions. In addition, the ESH REIT Revolving Credit Facility and the Corporation Revolving Credit Facility contain financial covenants that, subject to certain conditions, require compliance with certain senior loan-to-value and consolidated leverage ratios. The agreements governing the Corporation’s and ESH REIT’s indebtedness also contain certain customary events of default, including, but not limited to, cross-defaults to certain other indebtedness and, in the case of the ESH REIT Credit Facilities and the Unsecured Intercompany Facility, certain material operating leases and management agreements. As of June 30, 2019 , the Corporation and ESH REIT were in compliance with all covenants under their respective debt agreements. Interest Expense, net —The components of net interest expense during the three and six months ended June 30, 2019 and 2018 , are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Contractual interest (1) $ 28,765 $ 29,076 $ 57,482 $ 58,038 Amortization of deferred financing costs and debt discount 1,996 1,997 3,993 4,012 Debt extinguishment and other costs (2) 405 1,477 806 2,197 Interest income (1,400 ) (125 ) (2,911 ) (182 ) Total $ 29,766 $ 32,425 $ 59,370 $ 64,065 ______________________ (1) Includes dividends on shares of mandatorily redeemable Corporation preferred stock and is net of capitalized interest of $0.4 million , $0.1 million , $0.8 million and $0.1 million , respectively. (2) Includes interest expense on finance leases (see Note 12 ) and unused facility fees. Fair Value of Debt and Mandatorily Redeemable Preferred Stock —As of June 30, 2019 and December 31, 2018 , the estimated fair value of the Company’s debt was $2.5 billion and $2.3 billion , respectively, and the estimated fair value of the Corporation’s 8.0% mandatorily redeemable preferred stock was $7.1 million and $7.0 million , respectively. Estimated fair values are determined by comparing current borrowing rates and risk spreads offered in the market (Level 2 fair value measures) or quoted market prices (Level 1 fair value measures), when available, to the stated interest rates and spreads on the Company’s debt and the Corporation’s 8.0% |