EXTENDED STAY AMERICA acquired by BLACKSTONE

Affiliates of Blackstone Real Estate Partners IV and Blackstone Capital Partners IV signed a definitive agreement on March 5, 2004, to acquire Extended Stay America from its public shareholders through a take-private transaction. Under the terms of the merger agreement, shareholders of the lodging chain received $19.625 in cash per common share. The agreed consideration represented a 24% premium over the closing share price on the day of the announcement and a 204% appreciation relative to the initial public offering price from December 1995. The board of directors of Extended Stay America unanimously approved the transaction, which was scheduled for completion in the second quarter of 2004, subject to shareholder vote and customary closing conditions. The buyer planned to maintain corporate headquarters in Spartanburg, South Carolina. Operational management of the portfolio was assigned to Homestead Studio Suites, an existing holding of Blackstone that owned and operated 132 lodging properties. The transaction did not involve any re-branding of the operational units, which continued under existing banners including Extended Stay America, StudioPLUS, and Crossland Economy Studios. At the time of the agreement, Extended Stay America owned and operated 475 extended-stay properties across 42 states. Chief executive officer George D. Johnson, Jr. headed executive management at signing. Bear Stearns and Bank of America provided debt financing for the leveraged buyout. Morgan Stanley acted as financial adviser to Extended Stay America, with Shearman & Sterling acting as legal counsel. Bear Stearns advised Blackstone on financial matters, and Simpson Thacher & Bartlett provided legal counsel to the acquiring sponsor.