Extended Stay retires $150 million of debt, lowers leverage to 3.7x

By Devika Patel

Knoxville, Tenn., Feb. 28 – Extended Stay America, Inc. retired almost $150 million of debt in 2018, lowering its ratio of net debt to EBITDA to 3.7x from 3.9x the prior year.

“During 2018, we returned approximately $250 million to shareholders all while retiring nearly $150 million in debt and significantly increasing the cash on our balance sheet,” president and chief executive officer Jonathan Halkyard said Thursday on the company’s earnings conference call for the fourth quarter and year ended Dec. 31.

“This improvement in our balance sheet was recognized by Moody’s in the second half of 2018 as Moody’s upgraded all tranches of the company’s debt and revolver,” Halkyard said.

“We are pleased to have been able to reduce leverage over the past several years and reduce our term loan spread to Libor,” chief financial officer Brian T. Nicholson said on the call.

As of Dec. 31, the company had $2.44 billion of gross debt outstanding, down from $2.59 billion as of Dec. 31, 2017.

Adjusted EBITDA was $126.6 million for the fourth quarter and $599.7 million for the full year.

As of Dec. 31, the company’s net leverage ratio was 3.7x, compared to 3.9x as of Dec. 31, 2017.

At the end of the year, Extended Stay’s total cash balance was $303 million, compared to $151 million at the end of 2017.

The lodging real estate investment trust is based in Charlotte, N.C.

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