Sec Form 13D Filing - STARWOOD CAPITAL GROUP GLOBAL II L.P. filing for Extended Stay America Inc. (STAY) - 2020-04-16

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.   )*

EXTENDED STAY AMERICA, INC.

ESH HOSPITALITY, INC.

(Name of Issuer)

Common Stock, par value $0.01 per share, of Extended Stay America, Inc., and

Class B Common Stock, par value $0.01 per share, of ESH Hospitality, Inc.,

which are attached and trade together as a Paired Share
(Title of Class of Securities)

30224P200**
(CUSIP Number)

Ellis F. Rinaldi, Esq.
Executive Vice President and Co-General Counsel
Starwood Capital Group Global I, L.L.C.
591 West Putnam Avenue
Greenwich, CT 06830
(203) 422-7700

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

April 6, 2020
(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  o

Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment contain information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes).

** This CUSIP number pertains to ESH Hospitality, Inc.’s Paired Shares, each representing one share of Class B common stock, par value $0.01 per share, of ESH Hospitality, Inc. together with one share of common stock, par value $0.01 per share, of Extended Stay America, Inc., which are attached and trade as a single unit (a “Paired Share”).

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

2

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

3

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

4

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

5

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

6

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

7

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

8

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

9

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

10

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

11

* The calculation of the foregoing percentage is based on 177,254,938 Paired Shares outstanding as of February 21, 2020, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 26, 2020.

12

Item 1.         Security and Issuer

This statement on Schedule 13D (this “Statement”) relates to the Paired Shares of Extended Stay America, Inc., a Delaware corporation (“ESA”), and ESH Hospitality, Inc., a Delaware corporation (“ESH REIT” and, together with ESA, the “Issuer”).  The principal executive offices of the Issuer are located at 11525 N. Community House Road, Suite 100, Charlotte, North Carolina 28277. As reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Form 10-K”) filed with the Securities and Exchange Commission on February 26, 2020, as of February 21, 2020, there were 177,254,938 Paired Shares outstanding.

Item 2.         Identity and Background

(a) - (c)         This Statement is being filed jointly on behalf of the following persons (collectively, the “Reporting Persons”): (i) SAR Public Holdings, L.L.C., a Delaware limited liability company (“SAR Public Holdings”), (ii) SOF-XI U.S. Private SAR Holdings, L.P., a Delaware limited partnership (“SOF-XI U.S. Private SAR Holdings”), (iii) SOF-XI U.S. Institutional SAR Holdings, L.P., a Delaware limited partnership (“SOF-XI U.S. Institutional SAR Holdings”), (iv) Starwood XI Management Holdings GP, L.L.C., a Delaware limited liability company (“Starwood XI Management Holdings GP”), (v) Starwood XI Management, L.P., a Delaware limited partnership (“Starwood XI Management”), (vi) Starwood XI Management GP, L.L.C., a Delaware limited liability company (“Starwood XI Management GP”), (vii) Starwood Capital Group Global II, L.P., a Delaware limited partnership (“SCG Global II”), (viii) SCGG II GP, L.L.C., a Delaware limited liability company (“SCGG II GP”), (ix) Starwood Capital Group Holdings GP, L.L.C., a Delaware limited liability company (“SCG Holdings GP” and, collectively with SAR Public Holdings, SOF-XI U.S. Private SAR Holdings, SOF-XI U.S. Institutional SAR Holdings, Starwood XI Management Holdings GP, Starwood XI Management, Starwood XI Management GP, SCG Global II and SCGG II GP, the “Starwood Entities”), (x) BSS SCG GP Holdings, LLC, a Delaware limited liability company (“BSS SCG GP Holdings”), and (xi) Barry S. Sternlicht.  The agreement among the Reporting Persons relating to the joint filing of this Statement is attached to this Statement as Exhibit 1.

The business address of SAR Public Holdings, SOF-XI U.S. Private SAR Holdings, SOF-XI U.S. Institutional SAR Holdings and Starwood XI Management Holdings GP is 591 West Putnam Avenue, Greenwich, Connecticut 06830. The business address of Starwood XI Management, Starwood XI Management GP, SCG Global II, SCGG II GP, SCG Holdings GP, BSS SCG GP Holdings and Barry S. Sternlicht is 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139.

The principal business of SAR Public Holdings consists of investing in the securities of the Issuer.  The principal business of SOF-XI U.S. Private SAR Holdings is performing the functions of, and serving as, the co-managing member of SAR Public Holdings, and serving as the managing member, member or limited partner of other entities affiliated with the Starwood Entities.  The principal business of SOF-XI U.S. Institut ional SAR Holdings is performing the functions of, and serving as, the co-managing member of SAR Public Holdings, and serving as the managing member, member or limited partner of other entities affiliated with the Starwood Entities.  The principal business of Starwood XI Management Holdings GP is performing the functions of, and serving as, the general partner of each of SOF-XI U.S. Private SAR Holdings and SOF-XI U.S. Institutional SAR Holdings and other entities affiliated with the Starwood Entities.  The principal business of Starwood XI Management is performing the functions of, and serving as, the sole member of Starwood XI Management Holdings GP, and serving as the sole member, general partner or special limited partner of other entities affiliated with the Starwood Entities.  The principal business of Starwood XI Management GP is performing the functions of, and serving as, the general partner of Starwood XI Management.  The principal business of SCG Global II is performing the functions of, and serving as, the sole member of Starwood XI Management GP and other entities affiliated with the Starwood Entities.  The principal business of SCGG II GP is performing the functions of, and serving as, the general partner of SCG Global II and other entities affiliated with the Starwood Entities.  The principal business of SCG Holdings GP is performing the functions of, and serving as, the sole member of SCGG II GP, and serving as the managing member or general partner of other entities affiliated with the Starwood Entities.  The principal business of BSS SCG GP Holdings is performing the functions of, and serving as, the sole member of SCG Holdings GP, and serving as the general partner or managing member of other entities affiliated with Barry S. Sternlicht.  Barry S. Sternlicht is the managing member of BSS SCG GP Holdings.  The principal occupation of Barry S. Sternlicht is to serve as the Chief Executive Officer of Starwood Capital Group.  The business address of Starwood Capital Group is 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139.

13

(d)                                 During the last five years, none of the persons listed in this Item 2 has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors).

(e)                                  During the last five years, none of the persons listed in this Item 2 has been party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f)                                   Barry S. Sternlicht is a citizen of the United States of America.  Each of the other Reporting Persons are entities formed in the State of Delaware.

Item 3.         Source and Amount of Funds or Other Consideration

As of the date hereof, SAR Public Holdings holds 15,121,847 Paired Shares purchased in open market transactions between March 4, 2020 and April 15, 2020 for an aggregate cash purchase price of approximately $136,788,930, excluding sales commissions, as set forth on Exhibit 2 to this Statement.  The source of funds for this consideration was the available capital of the Starwood Entities, which may, at any given time, include capital contributions from investors in the Starwood Entities in the ordinary course of business or borrowings off the subscription based credit facility available to the Starwood Entities.

Item 4.         Purpose of Transaction

The Reporting Persons acquired the Paired Shares for investment purposes, subject to the following:

The Reporting Persons intend to review on a continuing basis the Reporting Persons’ investment in the Issuer.  As a result of the Reporting Persons’ continuous review and evaluation of the business of the Issuer, the Reporting Persons may communicate with the board of directors of the Issuer, members of management and/or other stockholders or other relevant parties from time to time with respect to operational, strategic, financial or governance matters or otherwise work with management and the board of directors with a view to maximizing stockholder value.  The Reporting Persons may seek to sell or otherwise dispose of some or all of the Issuer’s securities (which may include, but is not limited to, transferring some or all of such securities to its affiliates or distributing some or all of such securities to such Reporting Person’s respective partners, members or beneficiaries, as applicable) from time to time, and/or may seek to acquire additional securities of the Issuer (which may include rights or securities exercisable or convertible into securities of the Issuer) from time to time, in each case, in open market or private transactions, block sales or otherwise.  Any transaction that the Reporting Persons may pursue may be made at any time and from time to time without prior notice and will depend on a variety of factors, including, without limitation, the price and availability of the Issuer’s securities, subsequent developments affecting the Issuer, the Issuer’s business and the Issuer’s prospects, other investment and business opportunities available to the Reporting Persons, general industry and economic conditions, the securities markets in general, tax considerations and other factors deemed relevant by the Reporting Persons.

Other than as described in this Item 4, none of the Reporting Persons has any current plans or proposals that relate to or that would result in any of the transactions or other matters specified in clauses (a) through (j) of Item 4 of Schedule 13D; provided, that the Reporting Persons at any time and from time to time, may review or reconsider and change their position and/or change their purpose and/or develop such plans and may seek to influence management or the board of directors of the Issuer with respect to the business and affairs of the Issuer, and may from time to time consider pursuing or proposing any such transactions with advisors, the Issuer or other persons.

Item 5.         Interest in Securities of the Issuer

Based on the information set forth in the 2019 Form 10-K, there were 177,254,938 Paired Shares outstanding as of February 21, 2020.

The aggregate number and percentage of Paired Shares beneficially owned by each Reporting Person and, for each Reporting Person, the number of Paired Shares as to which there is sole power to vote or to direct the vote, shared power to vote or to direct the vote, sole power to dispose or to direct the disposition, or shared power to dispose or to direct the disposition are set forth on rows 7 through

14

11 and row 13 of the cover pages of this Schedule 13D and are incorporated herein by reference.

As of the date hereof, SAR Public Holdings beneficially owns an aggregate of 15,121,847 Paired Shares, or approximately 8.53% of the total Paired Shares outstanding.  As a result of the relationships of the other Reporting Persons as described in Item 2 of this Schedule 13D, each of SOF-XI U.S. Private SAR Holdings, SOF-XI U.S. Institutional SAR Holdings, Starwood XI Management Holdings GP, Starwood XI Management, Starwood XI Management GP, SCG Global II, SCGG II GP, SCG Holdings GP, BSS SCG GP Holdings and Barry S. Sternlicht may also be deemed to have beneficial ownership of the foregoing 15,121,847 Paired Shares.

Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission that any of the Reporting Persons (other than to the extent they directly hold the Paired Shares reported on this Schedule 13D) is the beneficial owner of the Paired Shares referred to herein for purposes of Section 13(d) of the Exchange Act, or for any other purpose, and such beneficial ownership is expressly disclaimed.  Each Reporting Person expressly disclaims any assertion or presumption that it and the other persons on whose behalf this Statement is filed constitute a “group.”

The acquisitions of Paired Shares by SAR Public Holdings effected within the past sixty days are set forth on Exhibit 2 to this Schedule, and are incorporated herein by reference.  Except as set forth on Exhibit 2 to this Schedule, none of the Reporting Persons has engaged in any transaction during the past 60 days in any securities of the Issuer.

Item 6.         Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer

The information set forth in Items 3, 4 and 5 of this Schedule 13D is hereby incorporated by reference into this Item 6.

Neither the filing of this Schedule nor any of its contents shall be deemed to constitute an admission by any of the Reporting Persons that he or it is the member of a “group” for purposes of Section 13(d) of the Exchange Act and the rules and regulations thereunder, or for any other purpose.

Item 7.         Material to be Filed as Exhibits

1.              Joint Filing Agreement, dated April 16, 2020, by and among the Reporting Persons.

2.              Trading data.

15

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: April 16, 2020

16

17

18

Exhibit 1

JOINT FILING AGREEMENT

The undersigned hereby agree that they are filing this statement jointly pursuant to Rule 13d-1(k)(1) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Each of them is responsible for the timely filing of such Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning such person contained therein; but none of them is responsible for the completeness or accuracy of the information concerning the other persons making the filing, unless such person knows or has reason to believe that such information is inaccurate.

In accordance with Rule 13d-1(k)(1) promulgated under the Exchange Act, the undersigned hereby agree to the joint filing with each other on behalf of each of them to such a statement on Schedule 13D with respect to the Paired Shares or other securities of Extended Stay America, Inc. and/or ESH Hospitality, Inc. beneficially owned by each of them.  Each of the undersigned hereby expressly authorizes each other party to file on its behalf any and all amendments to such statement.  This Joint Filing Agreement shall be included as an exhibit to such Schedule 13D.

Dated: April 16, 2020

19

20

Exhibit 2

(1)  Represents the total shares acquired and the average price per share on a given day through multiple open market transactions in varying share quantities and at varying share prices.

22