Extended Stay America Files Preliminary Proxy Statement and Reiterates Board and Management Support for Acquisition Agreement With Blackstone and Starwood Capital - Seite 3

The transaction values the Company at 15.6x 2020 EBITDA, 13.0x 2021 estimated consensus EBITDA and 11.6x 2022 estimated consensus EBITDA. These represent significant premiums to where Extended Stay has consistently traded over its time as a public company, averaging a 9.5x NTM EBITDA multiple over the five years prior to the pandemic, and 9.1x NTM EBITDA for the year prior to the pandemic.⁴  

The transaction provides superior value to the continued execution of Extended Stay’s strategic plan on a time and risk-adjusted basis

• The transaction provides certain value in place of execution risk
  

At the core of the Boards’ decision to endorse this transaction was an assessment of the risk-adjusted present value of the Company’s stand-alone business plan as the industry recovers from the pandemic, weighed against the certainty of $19.50 per share in cash today. The Boards’ believe this transaction delivers a meaningful premium to our shareholders as compared to our stand-alone plan, without the execution and market risks.  

The Boards, with the assistance of the management team and outside advisors, carefully evaluated the prospects of the Company’s standalone strategic plan and the risks inherent in the execution of the multiple aspects of the plan. Specifically, the Boards considered the following factors based on management’s judgment, among other things:

○  Significant Capital Needs: The magnitude of capital necessary to maintain and renovate the Company’s real estate assets which are on average more than 21 years old and at replacement age for many significant components. In management’s view, the real estate needs at least $750 million over the next three years, or approximately 20% of projected revenue over that same time period, for property maintenance and renovations necessary to maintain competitive market standards;
○  Expense Growth Pressures: Management’s outlook for property level performance, including both potential revenue gains and related cost considerations, with labor costs and certain other expenses facing above inflationary pressures;
○  Value Contribution from Asset Dispositions: An assessment of the Company’s asset disposition program including the realistic volume and value of asset sales, the uncertain contribution to multiple uplift from deployed sale proceeds and the ability to reduce the cost structure of the remaining business; and