EXTENDED STAY AMERICA, INC. Investor Presentation
Sale Transaction Rationale & Context
May 2021
Extended Stay America, Inc.
ESH Hospitality, Inc.
important information
This presentation may be deemed to be solicitation material in respect of the proposed acquisition of Extended Stay America, Inc. and ESH Hospitality, Inc. (together, the "Companies") by a joint venture of Blackstone Real Estate Partners and Starwood Capital Group. In connection with the proposed transaction, the Companies filed with the Securities and Exchange Commission ("SEC") on April 26, 2021, a definitive joint proxy statement and accompanying WHITE proxy cards. STOCKHOLDERS OF THE COMPANIES ARE ADVISED TO READ THE DEFINITIVE JOINT PROXY STATEMENT (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) BECAUSE IT CONTAINS IMPORTANT INFORMATION. Investors may obtain a free copy of the definitive joint proxy statement and other relevant documents filed by the Companies with the SEC at the SEC's Web site at http://www.sec.gov. The definitive joint proxy statement, the WHITE proxy cards and such other documents filed with the SEC may also be obtained for free from the Investor Relations section of the Companies' web site (https://www.aboutstay.com/investor-relations) or by directing a request to the Companies at ir@esa.com.
The Companies and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of the Companies in connection with the proposed transaction. Information about the Companies' executive officers and directors and their respective direct and indirect interests in the proposed transaction is set forth in the definitive joint proxy statement with respect to the proposed transaction filed by the Companies with the SEC on April 26, 2021. Stockholders may obtain free copies of these documents as described in the preceding paragraph.
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transaction summary & rationale
$19.50 per share all-cash transaction provides a compelling value and captures the future upside inherent in our strategic plan
Right Timing
Right Price
Right Process
Right Transaction
Misleading Claims
by Tarsadia Would Destroy
Shareholder Value
- Unique extended stay model drove resilience during pandemic and significant sector outperformance
- Pre-announcementstock price at multi-year high already factoring in post-pandemic recovery and recent strategic initiatives, providing attractive baseline price for sale transaction
- 50%+ premium to pre-pandemicshare priceprovides immediateand compellingvalue to shareholders
- Implied transaction EBITDA multiple of 15.6x trailing (2020), 13.0x forward (2021E) and 11.0x PF 2019, compared to STAY's one-yearpre-COVID average multiple of 9.1x
- Boards fully committed to maximizing shareholder value having explored numerous alternatives over multiple years, including OpCo / PropCo and a whole company sale
- Thorough market review over several years produced only Blackstone and Starwood as interested buyers, with no other buyers emerging since announcement
- Rigorous negotiations over 2 months resulting in 5 price bumps,overseen by fully engaged and transparent Boards of directors
- Culmination of thorough, multi-year processes to explore value-enhancing alternatives
- Supported and endorsed by Management, including the CEO, Bruce Haase
- Superior to value implied by successful continued execution of business plan on a time and risk- adjusted basis
- Misleading recollection of key events and misrepresentation of interactions with STAY
- "White paper" previously shared with the Company pushes clear thesis of ill-conceived OpCo / PropCo structure or levered share repurchases over status quo
- Focus on luxury and upscale hotel brands and REITs as valuation benchmarks for STAY's unique assets and business model lacks credibility
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Company
Highlights
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overview of extended stay
26+ year operating history |
Only dedicated extended stay owner / |
operator |
564 owned hotels and ~62,500 keys |
Geographic Breakdown
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Management's Strategy to Drive Shareholder Value
88 franchised hotels |
Premium Brand
Step-up brand fills gap in competitive
landscape
Commercial Engine
Improvements
Drive ADR through initiatives such as a new website, call center improvements, and relaunched loyalty program
Resilient performance during COVID |
with 2020 hotel operating margins of |
44.5% and RevPAR down only 15% |
Asset Disposition Strategy | Growth of Franchise Business |
Conversions into the ESA portfolio and | |
Asset sales at significantly accretive | |
signing new build contracts as debt | |
multiples for alternative uses | |
markets improve | |
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Disclaimer
Extended Stay America Inc. published this content on 19 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 May 2021 21:21:02 UTC.
