Extended Stay America, Inc. (NYSE:ESA) announced today that it has executed a supplement to provide an additional $100 million in term loans under the Company`s existing credit facility through Morgan Stanley Dean Witter. The $100 million of additional term loans will be due December 31, 2004 and brings the total capital available under the credit facility to $800 million. As of November 30, 1998, the Company had drawn a total of $410 million under the facility, and with this increase will have a balance of $390 million available to fund the completion of additional properties.
As of November 30, 1998 the Company operated 89 StudioPLUS Deluxe Studios, 172 Extended Stay America Efficiency Studios, and 26 Crossland Economy Studios, for a total of 287 operating properties. The Company also had 66 additional properties under construction as of November 30, 1998. As previously announced, the Company plans to have a total of over 300 properties in operation by December 31, 1998 and, beginning in 1999, plans to develop 50 to 70 properties annually with total development costs of approximately $350 million per year. The Company expects that the $390 million of availability under the increased credit facility, along with cash flows from operations, will provide sufficient capital to complete facilities planned to open through the third quarter of 2000. Further, the Company anticipates that the debt required to complete the development of these properties will not exceed 50% of their cost.
George Dean Johnson, Jr., President and CEO, of Extended Stay America, Inc. commented: “We are pleased to be able to increase our credit facility at this time so we can develop our pipeline of projects with confidence that the projects will be funded. We are fortunate to have the largest equity base in the extended stay segment which allows us to use moderate increases in our debt facilities to continue our development while maintaining the reasonable debt levels that we established as a part of our initial business plan. We believe we are uniquely positioned to expand our leadership position in the extended stay lodging segment with this additional capital.”
Extended Stay America`s three extended stay lodging brands often operate concurrently in the same market. All properties are designed to appeal to value conscious guests on visits of a week or longer. Crossland Economy Studios, with rates generally ranging from $159 to $199 per week, offer a double bed and kitchenette. EXTENDED STAYAMERICA Efficiency Studios, generally ranging from $199 to $299 a week, offer a queen-size bed and kitchenette. StudioPLUS Deluxe hotels offer deluxe and queen studios, which include kitchens, at rates generally ranging from $299 to $399 a week. Weekly housekeeping and an on-premise guest laundry are provided at all properties.
Certain statements and information included in this release constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management`s projections, forecasts, estimates and expectations is contained in the Company`s SEC filings.