SUBURBAN LODGES OF AMERICA INC, S-1/A, 1996-05-22

SUBURBAN LODGES OF AMERICA INC
S-1/A, 1996-05-22
HOTELS & MOTELS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1996

REGISTRATION NO. 333-2876
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 3

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------------

SUBURBAN LODGES OF AMERICA, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
GEORGIA 7011 58-1781184
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

120 INTERSTATE NORTH PARKWAY EAST MR. DAVID E. KRISCHER
SUITE 120 PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATLANTA, GEORGIA 30339 120 INTERSTATE NORTH PARKWAY EAST
(770) 951-9511 SUITE 120
(Address, including zip code, and telephone ATLANTA, GEORGIA 30339
number, including area code, of (770) 951-9511
registrant's principal executive offices) (Name, address, including zip code, and
telephone number, including area code, of
agent for service)
</TABLE>

------------------------

Copies to:

<TABLE>
<S> <C>
MICHAEL H. TROTTER, ESQ. RANDOLPH C. COLEY, ESQ.
KILPATRICK & CODY KING & SPALDING
1100 PEACHTREE STREET 191 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309 ATLANTA, GEORGIA 30303
(404) 815-6500 (404) 572-4600
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.

If any of the securities on this Form are being offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box: / /

------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MAY 22, 1996

3,000,000 SHARES

[SUBURBAN LODGE LOGO]

SUBURBAN LODGES OF AMERICA, INC.
COMMON STOCK

All of the 3,000,000 shares of Common Stock, $0.01 par value per share (the
"Common Stock"), offered hereby are being sold by Suburban Lodges of America,
Inc. (the "Company"). Prior to this offering (the "Offering"), there has been no
public market for the Common Stock. It is currently estimated that the initial
public offering price will be between $14.00 and $16.00 per share. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price. The Company has applied for quotation of the
Common Stock on The Nasdaq Stock Market upon notice of issuance, under the
proposed symbol "SLAM."

SEE "RISK FACTORS" ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Price Underwriting Proceeds to
to Public Discount(1) Company(2)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................... $ $ $
Total(3)....................... $ $ $
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting offering expenses payable by the Company estimated at
$1,350,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 450,000 additional shares of Common Stock at the Price to Public less
the Underwriting Discount solely to cover over-allotments, if any. If the
Underwriters exercise this option in full, the Price to Public will total
$ , the Underwriting Discount will total $ and the
Proceeds to Company will total $ . See "Underwriting."

The shares of Common Stock are offered by the several Underwriters named
herein when, as and if delivered to and accepted by the Underwriters and subject
to their right to reject any order in whole or in part. It is expected that
delivery of the certificates representing the shares will be made against
payment therefor at the office of Montgomery Securities on or about
, 1996.
------------------------
MONTGOMERY SECURITIES
J.C. BRADFORD & CO.
LEGACY SECURITIES CORP.

, 1996
<PAGE> 3

[PICTURES TO BE PROVIDED]

EXISTING FACILITIES

COMPANY-OWNED:
Atlanta (Conyers), GA
Atlanta (Forest Park), GA
Atlanta (Fulton Industrial), GA
Atlanta (Mableton), GA
Atlanta (Norcross), GA
Birmingham (Oxmoor), AL
Charlotte (Matthews), NC
Greenville (Mauldin Road), SC

FRANCHISED:
Atlanta (Lilburn/Highway 78), GA
Atlanta (Marietta), GA
Atlanta (Stone Mountain), GA
Birmingham (Inverness/Greystone), AL
Birmingham (Riverchase/Pelham), AL
Savannah, GA

CONSTRUCTION FACILITIES

COMPANY-OWNED:
Atlanta (Douglasville), GA
Atlanta (Tara Blvd.), GA
Chesapeake, VA
Greenville (Wade Hampton Blvd.), NC
Knoxville (Kingston Pike), TN
Louisville (Preston Highway), KY

FRANCHISED:
Atlanta (Decatur), GA
Atlanta (Lawrenceville), GA
Atlanta (Indian Trail/I-85), GA
Atlanta (Roswell), GA

DEVELOPMENT FACILITIES

COMPANY-OWNED:
Atlanta (Northside Drive), GA
Charlotte (I-77), NC
Memphis (Ridgeway Road), TN
Newport News, VA

FRANCHISED:
Atlanta (Gwinnett Place Mall), GA
Jacksonville (Bay Meadows), FL
Louisville (Taylorsville Rd.), KY

The Company intends to furnish its shareholders with annual reports
containing consolidated financial statements audited by its independent
certified public accountants and with quarterly reports containing unaudited
condensed consolidated financial statements for each of the first three quarters
of each fiscal year.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ STOCK MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements, including the notes thereto, appearing elsewhere in this Prospectus.
The information contained herein assumes that the transactions described under
"Corporate Organization" will occur simultaneously with the closing of the
Offering. Unless the context suggests otherwise, (i) references in this
Prospectus to the "Company" or "Suburban" mean Suburban Lodges of America, Inc.
and its subsidiaries, after giving effect to the Corporate Organization, (ii)
all information in this Prospectus assumes that the Underwriters' over-allotment
option is not exercised and (iii) all references to share and per share data
have been adjusted to reflect a stock split of approximately 2,421-for-1
effected in conjunction with the Corporate Organization.

THE COMPANY

Suburban Lodges of America, Inc. develops, owns, manages and franchises
Suburban Lodge(R) facilities, which are economy extended stay lodging facilities
designed to appeal to value-conscious guests seeking to "Lodge for Less."(SM)
The Company believes that the Suburban Lodge chain is one of the largest lodging
chains (based on number of guest rooms and facilities) devoted to serving the
economy extended stay market. Suburban Lodge guest rooms are fully furnished and
include a combination living room and bedroom, a bathroom and a fully equipped
kitchenette. Weekly maid and linen service, access to cable or satellite
television and coin-operated laundromats are also provided to allow guests to
stay comfortably for extended periods. Suburban Lodge facilities offer clean,
comfortable and attractive accommodations to guests at substantially lower rates
than most traditional and other extended stay lodging facilities. Although daily
rates are available, substantially all guests pay the Company's weekly rates,
which currently range from $139 to $189 per week for single occupancy and from
$149 to $209 per week for double occupancy.

The extended stay segment of the lodging industry, which includes economy
extended stay facilities, is a relatively small but growing segment of the
lodging industry. Of the approximately 3.3 million guest rooms available in the
U.S. lodging industry at the end of 1995, there were approximately 40,000, or
1.2%, dedicated extended stay guest rooms at approximately 360 properties.
Suburban believes that the extended stay market offers a number of attractive
investment characteristics compared to traditional hotels, including higher than
industry average occupancy rates and operating margins. Based upon the high
occupancy rates of the existing Suburban Lodge facilities and published
occupancy rates for other participants in the extended stay market, the Company
believes that Suburban Lodge facilities appeal to an underserved and growing
segment of guests in the extended stay market, including business travelers
(particularly those with limited or no expense accounts), individuals on
temporary work assignments, persons between domestic situations, persons
relocating or purchasing a home, tourists and other value-conscious customers
desiring low-cost, longer-term, quality accommodations with fully equipped
kitchenettes.

After giving effect to the Corporate Organization, the Company owns and
operates eight Suburban Lodge facilities and franchises six additional Suburban
Lodge facilities located in four southeastern states (collectively, the
"Existing Facilities"). The Existing Facilities contain an aggregate of 1,778
guest rooms, have an average of 127 guest rooms and average approximately 3.3
years in age. The Company anticipates that an additional 13 Suburban Lodge
facilities, eight Company-owned and five franchised, will open in 1996 resulting
in an aggregate of 27 Suburban Lodge facilities by year-end. Ten of these
additional facilities, six Company-owned and four franchised (collectively, the
"Construction Facilities"), are currently under construction. Management
anticipates that by the end of the third quarter of 1996 construction will
commence on the three remaining facilities scheduled to open in 1996 and an
additional four facilities scheduled to open in 1997 (collectively, the
"Development Facilities"). The Construction Facilities and the Development
Facilities are located in six southeastern states and are expected to contain an
aggregate of 2,319 guest rooms, representing a 130% increase over the aggregate
number of guest rooms in the Existing Facilities. The Company intends to
continue the growth of the Suburban Lodge chain in 1997 by opening approximately
26 to 28 additional Suburban Lodge facilities, 15 of which are expected to be
Company-owned. The facilities expected to open in 1997 are in various stages of
planning. There can be no assurance that the Company and its franchisees will be

3
<PAGE> 5

able to complete the development of all of these facilities, including the
Construction Facilities and the Development Facilities. See "Risk
Factors -- Development Risks."

The Company's business objective is to become a national provider of
economy extended stay lodging facilities. Suburban's growth strategy is to
develop additional Company-owned facilities and to franchise the Suburban Lodge
concept to independent developers and operators as well as to passive investors
who may retain the Company to develop and manage their Suburban Lodge
facilities. The Company's principal operating strategies are to (i) provide its
guests with clean, comfortable and attractive accommodations at weekly rates
substantially lower than those offered by most traditional and other extended
stay lodging facilities; (ii) control operating costs at each of its facilities
and maintain above industry average operating margins and (iii) ensure guest
satisfaction through a commitment to customer service. The Company believes that
the depth and experience of its senior management team will be an important
factor in executing its growth and operating strategies.

The Company believes that the following features differentiate the Suburban
Lodge system and its facilities from, and provide a competitive advantage over,
traditional and other extended stay lodging facilities:

- LOW WEEKLY RATES. Suburban Lodge facilities offer weekly rates
substantially lower than those offered by most traditional and other
extended stay lodging facilities. The average weekly rate at the nine
Existing Facilities open during the year ended December 31, 1995 (the
"Nine Mature Facilities") was $139.69, compared to an equivalent average
weekly rate (average daily rate multiplied by seven) of $550.16 for
extended stay hotels and $244.06 for lower economy hotels.

- KITCHENETTES. Each Suburban Lodge guest room contains a fully equipped
kitchenette, including a refrigerator, two-burner stove-top, microwave
oven and cooking and eating utensils.

- LONGER GUEST STAYS. Suburban designs, markets and prices its guest rooms
to appeal to guests staying one week or longer. The Company believes that
this strategy results in longer guest stays and higher occupancies. The
average stay during 1995 at the Nine Mature Facilities was approximately
six to seven weeks.

- HIGHER OCCUPANCY. Average occupancy at the Nine Mature Facilities during
1995 was 97.6%, which compares favorably to the average occupancy of 82.0%
for extended stay hotels and 62.8% for lower economy hotels during the
same period.

- STANDARD DESIGN AND LOW CONSTRUCTION COSTS. Suburban Lodge facilities
are designed and built to uniform plans and specifications developed and
periodically refined since 1987. The Company believes that standardization
lowers construction costs and establishes consistent quality. The total
investment in the three most recently completed Company-owned Existing
Facilities was approximately $2.4 million, $3.1 million and $3.3 million
(or approximately $18,400, $22,600 and $23,600 per guest room), including
building structures, improvements, furniture, fixtures, equipment, land
and pre-opening costs. The Company believes that its construction costs
are relatively low due to a number of factors, including careful site
selection, smaller room sizes, economical and durable exterior and
interior finishes and room furnishings and refined building systems and
processes.

4
<PAGE> 6

Suburban Lodge facilities reach stabilization in a relatively short period
after opening. On average, the Nine Mature Facilities exceeded 80%
occupancy within six weeks after opening or acquisition by the Company.

- FRANCHISING OPPORTUNITIES. Suburban believes that the combination of its
experience in franchising, its relationships with its six existing
franchisees, each of whom is an experienced independent real estate
developer, and the potential attractive return on investment for Suburban
Lodge facilities will facilitate the expansion of the Suburban Lodge chain
throughout the country.

Since 1987, the Suburban Lodge system has achieved attractive growth,
operating results and returns on investment. From December 31, 1991 through
December 31, 1995, (i) the number of Suburban Lodge facilities in operation
increased from four to 12; (ii) average occupancy increased from 90.3% to 97.6%
for facilities open at least one year; (iii) average weekly rates increased from
$110.38 to $139.69 for facilities open at least one year, representing a
compound annual growth rate of approximately 6.1% and (iv) weekly revenue per
available room ("Weekly REVPAR") increased from $99.72 to $136.39 for facilities
open at least one year, representing a compound annual growth rate of 8.1%.
Average weekly rate is determined by dividing room revenue by guest rooms sold
for the applicable period and multiplying by seven. Weekly REVPAR is determined
by dividing room revenue by available guest rooms for the applicable period and
multiplying by seven.

Immediately prior to, or simultaneously with, the closing of the Offering,
the Company will (i) acquire from certain partnerships and limited liability
companies (the "Affiliated Entities") owned in whole or in part by certain
affiliates of the Company, seven of the Existing Facilities and four of the
Construction Facilities (these facilities are referred to collectively as the
"Affiliated Facilities") and (ii) acquire from certain non-affiliated third
parties (the "Third Party Sellers") one of the Existing Facilities, two of the
Construction Facilities and two of the Development Facilities (the "Third Party
Facilities"). These transactions are referred to herein as the "Corporate
Organization." See "Corporate Organization" and "Certain Transactions."

Immediately prior to the Corporate Organization, the Company managed eight
Suburban Lodge facilities, owned two of the Development Facilities and was the
franchisor with respect to all of the existing Construction and Development
Facilities. In addition, the Company developed seven of the Existing Facilities.
As previously noted, after giving effect to the Corporate Organization, the
Company owns and operates eight Existing Facilities, franchises the remaining
six Existing Facilities, owns six of the Construction Facilities and four of the
Development Facilities and is the franchisor for four of the Construction
Facilities and three of the Development Facilities.

Upon completion of the Offering, the Company's executive officers and
directors will beneficially own, in the aggregate, approximately 49.1% of the
outstanding Common Stock. See "Risk Factors -- Control of the Company by
Management" and "Principal Shareholders."

The Company was incorporated in Georgia in 1987, and its executive offices
are located at 120 Interstate North Parkway East, Suite 120, Atlanta, Georgia
30339, and its telephone number is (770) 951-9511.

5
<PAGE> 7

THE OFFERING

Common Stock offered by the
Company.......................... 3,000,000

Common Stock to be outstanding
after the Offering(1)............ 7,752,971

Use of proceeds.................. To repay indebtedness assumed in connection
with the acquisition of the Affiliated
Facilities and the Third Party Facilities,
to pay the cash portion of the purchase
prices for the Affiliated Facilities and
the Third Party Facilities, to finance the
development of additional Suburban Lodge
facilities and for other general corporate
purposes. See "Use of Proceeds."

Proposed Nasdaq Stock Market
symbol........................... SLAM
- ---------------

(1) Includes 3,000,000 shares to be sold in the Offering, 1,163,039 shares to be
issued in the Corporate Organization, 3,586,932 shares outstanding after
giving effect to the stock split and 3,000 restricted shares granted to
non-employee directors under the Company's Non-Employee Directors' Stock
Option and Fee Plan (the "Directors' Plan"). Does not include 750,000
shares of Common Stock reserved for issuance under the Company's 1996 Stock
Option and Incentive Award Plan (the "1996 Plan") pursuant to which options
to purchase 400,000 shares will be outstanding upon the closing of the
Offering, and 100,000 shares reserved for issuance under the Directors'
Plan pursuant to which options to purchase 4,500 shares will be outstanding
upon the closing of the Offering. See "Management -- 1996 Stock Incentive
Plans."

COMBINED SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES
SUMMARY HISTORICAL COMBINED AND PRO FORMA FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT SHARE AND CERTAIN OPERATING DATA)

The following table sets forth: (i) combined historical financial
information for Suburban Lodges of America, Inc. and Affiliated Entities and
(ii) pro forma financial information for the Company presented as if the
Corporate Organization, the Offering and the use of the net proceeds therefrom
had occurred on January 1, 1995. The table includes operating data for the
Company-owned and franchised facilities since their respective dates of opening
or acquisition. Such data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operation," the
combined financial statements of Suburban Lodges of America, Inc. and Affiliated
Entities, the pro forma financial information for the Company and the notes
thereto which are contained elsewhere in this Prospectus. The pro forma
information does not purport to represent what the Company's financial position
or results of operations actually would have been if such transactions had, in
fact, occurred on such date or to project the Company's financial position or
results of operations at any future date or for any future period.

6
<PAGE> 8

<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH
YEAR ENDED DECEMBER 31, 31,
--------------------------------------------------- -------
1991 1992 1993 1994 1995 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenue:
Room revenue................................................. $ 2,055 $ 2,184 $ 2,893 $ 3,904 $ 4,431 $ 980
Other facility revenue....................................... 146 173 223 290 296 70
Franchise and other revenue.................................. 51 194 247 151 460 92
------- ------- ------- ------- ------- -------
Total revenue.......................................... 2,252 2,551 3,363 4,345 5,187 1,142
------- ------- ------- ------- ------- -------
Expenses:
Facility operating expenses.................................. 937 1,058 1,364 1,768 2,072 516
Corporate operating expenses................................. 336 378 429 737 883 170
Related party consulting fees................................ -- -- -- -- 17 3
Depreciation and amortization................................ 375 323 372 416 460 104
------- ------- ------- ------- ------- -------
Total expenses......................................... 1,648 1,759 2,165 2,921 3,432 793
------- ------- ------- ------- ------- -------
Operating income.............................................. 604 792 1,198 1,424 1,755 349
Interest expense.............................................. 782 614 725 936 1,098 225
------- ------- ------- ------- ------- -------
Income (loss) before income taxes and extraordinary income... (178) 178 473 488 657 124
Income taxes (benefit)(1)..................................... -- -- -- (14) (20) --
Extraordinary income from early extinguishment of debt........ -- -- -- 130 -- --
------- ------- ------- ------- ------- -------
Net income (loss)...................................... ($ 178) $ 178 $ 473 $ 632 $ 677 $ 124
========= ========= ========= ========= ========= =========
Pro forma net income per share(2).............................
Pro forma weighted average shares outstanding(2)..............

COMPANY PRO FORMA
---------------------------------------
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, -----------------------
1996 1995 1995 1996
------- ------------ --------- ---------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenue:
Room revenue................................................. $ 1,366 $ 5,282 $ 1,182 $ 1,608
Other facility revenue....................................... 86 345 82 110
Franchise and other revenue.................................. 217 351 75 196
------- ------------ --------- ---------
Total revenue.......................................... 1,669 5,978 1,339 1,914
------- ------------ --------- ---------
Expenses:
Facility operating expenses.................................. 653 2,458 619 762
Corporate operating expenses................................. 274 1,276 269 373
Related party consulting fees................................ 6 17 3 6
Depreciation and amortization................................ 116 697 163 174
------- ------------ --------- ---------
Total expenses......................................... 1,049 4,448 1,054 1,315
------- ------------ --------- ---------
Operating income.............................................. 620 1,530 285 599
Interest expense.............................................. 286 -- -- --
------- ------------ --------- ---------
Income (loss) before income taxes and extraordinary income... 334 1,530 285 599
Income taxes (benefit)(1)..................................... 26 574 105 225
Extraordinary income from early extinguishment of debt........ -- -- -- --
------- ------------ --------- ---------
Net income (loss)...................................... $ 308 $ 956 $ 180 $ 374
========= ============== =========== ===========
Pro forma net income per share(2)............................. $ 0.14 $ 0.06
============== ===========
Pro forma weighted average shares outstanding(2).............. 6,751,238 6,751,238
CASH FLOW DATA:
EBITDA(3)..................................................... $ 979 $ 1,115 $ 1,570 $ 1,840 $ 2,215 $ 453
Cash flows provided by (used in):
Operating activities......................................... (143) 399 879 929 1,305 295
Investing activities......................................... (129) (15) (2,349) (651) (4,791) (341)
Financing activities......................................... 348 (273) 1,561 (238) 3,707 128
OPERATING DATA(4):
Number of facilities open at end of period:
Company-owned................................................ 3 3 5 5 6 5
Franchised(5)................................................ 1 3 3 4 6 4
------- ------- ------- ------- ------- -------
System-wide................................................ 4 6 8 9 12 9
========= ========= ========= ========= ========= =========

<CAPTION>
CASH FLOW DATA:
<S> <C> <C> <C> <C>
EBITDA(3)..................................................... $ 736 -- -- --
Cash flows provided by (used in):
Operating activities......................................... 335 -- -- --
Investing activities......................................... (1,802) -- -- --
Financing activities......................................... 1,547 -- -- --
OPERATING DATA(4):
Number of facilities open at end of period:
Company-owned................................................ 6 7 6 7
Franchised(5)................................................ 7 5 3 6
------- ------------ --------- ---------
System-wide................................................ 13 12 9 13
========= ============== =========== ===========
</TABLE>

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Company-owned facilities:
Occupancy................................................... 90.9% 92.9% 95.5% 97.7% 95.8% 97.4%
Average weekly rate......................................... $111.34 $116.59 $121.96 $128.69 $136.77 $129.75
Weekly REVPAR(6)............................................ $101.26 $108.27 $116.47 $125.74 $130.93 $126.38
Franchised facilities(5):
Occupancy................................................... 88.4% 85.9% 96.8% 98.9% 93.2% 99.3%
Average weekly rate......................................... $107.42 $119.15 $123.21 $131.03 $146.34 $136.02
Weekly REVPAR(6)............................................ $ 94.96 $101.57 $119.23 $129.59 $135.44 $135.13

<CAPTION>
Company-owned facilities:
<S> <C> <C> <C> <C>
Occupancy................................................... 96.1% 96.3% 97.7% 96.5%
Average weekly rate......................................... $148.38 $ 135.91 $128.92 $148.62
Weekly REVPAR(6)............................................ $142.75 $ 130.76 $125.89 $143.45
Franchised facilities(5):
Occupancy................................................... 91.1% 91.6% 99.5% 89.7%
Average weekly rate......................................... $155.89 $ 150.54 $139.62 $157.00
Weekly REVPAR(6)............................................ $140.95 $ 137.01 $138.90 $139.71
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------
PRO FORMA(7) AS ADJUSTED(8)
------------ --------------
<S> <C> <C>
BALANCE SHEET DATA:
Total assets......................................................................................... $ 19,698 $ 42,563
Long-term debt....................................................................................... 15,780 --
Shareholders' equity................................................................................. 1,644 41,878
</TABLE>

(Notes on following page)

7
<PAGE> 9

- ---------------

(1) Historical financial data does not include a provision for income taxes for
Affiliated Entities because such entities were limited liability companies
or partnerships not subject to income taxes. Income taxes or income tax
benefits have been provided for Suburban Lodges of America, Inc. and its
subsidiaries where appropriate under Statement of Financial Accounting
Standards ("SFAS") 109, "Accounting for Income Taxes." Federal and state
income taxes have been provided for the Company on a pro forma basis at a
combined effective tax rate of 37.5%. See Note 7 to the Combined Financial
Statements.

(2) Pro forma per share information assumes that 6,751,238 shares were issued
in connection with the Corporate Organization, the related stock split and
the Offering on January 1, 1995. Shares outstanding for purposes of
computing pro forma earnings per share exclude 1,001,733 shares issued
relative to amounts used for general corporate purposes. Outstanding shares
of Suburban Lodges of America, Inc. differ substantially from the shares of
Common Stock that will be outstanding after the Offering. Accordingly, the
Company believes that the presentation of historical per share information
is not meaningful.

(3) EBITDA represents income (loss) before interest expense, income taxes (if
applicable) and depreciation and amortization. EBITDA is a commonly used
financial analysis tool for measuring and comparing lodging companies and
other companies with significant amortization and depreciation expense and
for analyzing operating performance, leverage and liquidity of such
companies. Such data are not a measure of financial performance under
generally accepted accounting principles and should not be considered as an
alternative to net income as an indicator of the Company's operating
performance or as an alternative to cash flow as a measure of liquidity.
(4) Pro forma operating data includes the Forest Park facility, which will be
acquired from a Third Party Seller, as a Company-owned facility.
(5) Data for the franchised facilities is not included in the financial and
operating data included above.
(6) Weekly REVPAR is determined by dividing room revenue by available guest
rooms for the applicable period and multiplying by seven.
(7) The pro forma balance sheet data is presented as if the Corporate
Organization had occurred on March 31, 1996 and does not give effect to the
Offering.
(8) The as adjusted pro forma balance sheet data is presented as if the
Corporate Organization, the sale by the Company of 3,000,000 shares of
Common Stock at an assumed initial public offering price of $15.00 per
share and the application of the net proceeds therefrom had occurred on
March 31, 1996.

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RISK FACTORS

In evaluating the Company's business, prospective investors should
carefully consider the following factors in addition to the other information
contained in this Prospectus.

DEVELOPMENT RISKS

The Company intends to grow primarily by developing and franchising
additional Suburban Lodge facilities. Development involves substantial risks,
including the risk that development costs will exceed budgeted or contracted
amounts, the risk of delays in construction, the risk of failing to obtain all
necessary zoning and construction permits, the risk that financing might not be
available on favorable terms, the risk that developed properties will not
achieve desired revenue or profitability levels once opened, the risk of
competition for suitable development sites from competitors which have greater
financial resources than the Company, the risk of incurring substantial costs in
the event a development project must be abandoned prior to completion, changes
in governmental rules, regulations and interpretations and general economic and
business conditions. Although the Company intends to manage development to
reduce such risks, there can be no assurance that present or future developments
will perform in accordance with the Company's expectations. The Company
currently intends to complete construction of eight Company-owned facilities
during 1996, to complete approximately 15 Company-owned facilities in 1997 and
to continue an active development program thereafter. There can be no assurance
that the Company will be able to complete all of these facilities or do so on a
timely basis or within budget. As of the date of this Prospectus, the facilities
expected to open in 1997 are in various stages of planning, and the Company has
acquired or has an option to acquire the sites for four of these facilities.

In general, the Company takes approximately 12 months to develop a Suburban
Lodge facility, including seven to eight months devoted to construction. The
Company anticipates that the total cost of each of the six Company-owned
Construction Facilities, including building structures, improvements, furniture,
fixtures, equipment, land and pre-opening costs, will range from $3.1 million to
$3.4 million (or approximately $23,300 to $26,500 per guest room). The Company
anticipates the total aggregate cost to open all of the Company-owned
Construction Facilities and Development Facilities will be $32.3 million. In the
past, Suburban Lodge facilities have, on average, reached 90% occupancy within
90 days of opening; however, there can be no assurance that each new facility
will obtain such figures within such time period.

MANAGEMENT OF GROWTH

Suburban has experienced rapid growth in its revenues, the number of its
employees and the scope of its operations. This growth has resulted in, and is
expected to continue to create, new and increased responsibilities for
management personnel, as well as added demands on the Company's operating and
financial systems. In addition, as the Company continues to pursue an
accelerated expansion strategy through the development and franchising of new
Suburban Lodge facilities, new Company-owned and franchised facilities will be
opened in geographic markets in which the Company has limited or no previous
operating or franchise experience. The Company's growth will depend on the
efforts of key management personnel and the Company's ability to attract or
develop new management personnel and to integrate these new employees into its
overall operations. If the Company is unable to manage growth effectively, the
Company's business and results of operations could be materially and adversely
affected. See "Business -- Business Strategy."

RISKS OF INDEPENDENT FINANCING

The Company expects that it will require additional financing over time,
the amount of which will depend on a number of factors, including the number of
facilities the Company constructs and the cash flow generated by its facilities.
The Company has obtained a commitment for a $50 million line of credit (the
"Line of Credit"), which it anticipates will be available upon the closing of
this Offering; however, $25 million of the Line of Credit is subject to
obtaining commitments from other lenders, and there can be no assurance that
such commitments will be obtained. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." The terms of any additional financing the

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<PAGE> 11

Company may be able to procure are unknown at this time. Any future debt
financing or issuances of preferred stock by the Company will be senior to the
rights of the holders of Common Stock, and any future issuances of Common Stock
will result in the dilution of the then-existing shareholders' proportionate
equity interests in the Company.

DEPENDENCE ON SENIOR MANAGEMENT

Suburban's continued success will depend to a significant extent upon the
efforts and abilities of its senior management and key employees, including
David E. Krischer, the founder, Chairman of the Board, Chief Executive Officer
and President of the Company. The loss of Mr. Krischer's services could have a
material adverse effect upon the Company; however, the Company carries a $3
million key man life insurance policy on Mr. Krischer's life. See
"Management -- Directors and Executive Officers."

CONTROL OF THE COMPANY BY MANAGEMENT

It is expected that after consummation of the Offering, Mr. Krischer will
beneficially own approximately 35.8% of the outstanding shares of Common Stock
of the Company and, together with the other executive officers and directors of
the Company as a group, will own 49.1% of the outstanding shares of Common
Stock. By reason of such holdings, these shareholders acting as a group will be
able to control the affairs and policies of the Company and will be able to
elect a sufficient number of directors to control the Company's Board of
Directors and to approve or disapprove any matter submitted to a vote of the
shareholders, including certain fundamental corporate transactions (such as
certain mergers and sales of assets) requiring shareholder approval. See
"Principal Shareholders." The Board of Directors will control the declaration
and determination of the size of dividends.

FAIR MARKET VALUE OF FACILITIES CONTRIBUTED MAY BE LESS THAN CONSIDERATION PAID

Although the price of each Affiliated Facility and each Third Party
Facility was based on an appraisal performed by an independent appraiser, the
Affiliated Entities may not have been able to sell the facilities in the open
market to an unrelated third party at the same price. The Company, however,
believes that the terms of such transactions are fair to the Company. In
connection with the sale to the Company of the Affiliated Facilities, Messrs.
Krischer, Kuse and McGovern and their respective affiliates will receive
351,694, 227,122 and 150,364 shares of Common Stock, respectively, and $84,600,
$545,700 and $386,600 of cash, respectively. See "Corporate Organization" and
"Certain Transactions."

The Existing Facilities owned by the Affiliated Entities were opened or
acquired during a period from December 1988 through April 1995, and the start of
construction on the Construction Facilities owned by the Affiliated Entities
ranges from October 1995 through May 1996. The aggregate purchase price of the
facilities being acquired from the Affiliated Entities is approximately $37.6
million. The aggregate cost of construction, and in one instance, the cost of
acquisition, of the Affiliated Entities is approximately $21.6 million.

RISKS ASSOCIATED WITH THE LODGING INDUSTRY

The economy extended stay segment of the lodging industry, in which the
Company operates, may be adversely affected by changes in national or local
economic conditions and other local market conditions, such as an oversupply of
lodging or a reduction in demand for lodging in a geographic area, changes in
travel patterns, extreme weather conditions, changes in governmental regulations
which influence or determine wages, prices, construction costs or methods of
operation, changes in interest rates, the availability of financing for
operating or capital needs and changes in real estate tax rates and other
operating expenses. In addition, due in part to the strong correlation between
the lodging industry's performance and economic conditions, the lodging industry
is subject to cyclical changes in revenues and profits. These risks may be
exacerbated by the relatively illiquid nature of real estate holdings. Downturns
or prolonged adverse conditions in real estate or capital markets or in national
or local economies or the inability of the Company to dispose of an investment
when it finds disposition to be advantageous or necessary could have a material
adverse impact on the Company.

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<PAGE> 12

COMPETITION IN THE LODGING INDUSTRY

The lodging industry is highly competitive. Competitive factors within the
industry include room rates, quality of accommodations, name recognition, supply
and availability of alternative lodging, including short-term lease apartments,
service levels, name recognition, reputation, reservation systems and
convenience of location. Each of the Existing Facilities and Construction
Facilities is located, and each of the Development Facilities will be located,
in a developed area that includes competing lodging facilities. The number of
competitive lodging facilities in a particular area could have a material
adverse effect on occupancy, average weekly rates and Weekly REVPAR of the
Existing Facilities and Construction Facilities or facilities developed or
acquired in the future. See "Business -- Competition."

The Company anticipates that competition within the extended stay lodging
market will increase substantially in the foreseeable future. A number of other
lodging chains and developers recently have announced their intent to develop or
are already attempting to develop extended stay lodging facilities which may
compete with the Company's facilities. In particular, some of these entities
have announced their intent to target the economy segment of the extended stay
market in which the Company competes. The Company may compete for guests and for
new development sites with certain of these established entities which have
greater financial resources than the Company and better relationships with
lenders and real estate sellers. These entities may be able to accept more risk
than the Company can prudently manage. Further, there can be no assurance that
new or existing competitors will not significantly reduce their rates or offer
greater convenience, services or amenities or significantly expand or improve
facilities in markets in which the Company competes, thereby materially
adversely affecting the Company's business and results of operations.

REAL ESTATE INVESTMENT RISKS

General Risks

The Company's investment in its facilities will be subject to varying
degrees of risk generally incident to the ownership and operation of real
property. The underlying value of the Company's real estate investments is
significantly dependent upon its ability to maintain or increase cash provided
by operations. The value of the Company's facilities and the income from the
facilities may be materially adversely affected by changes in national economic
conditions, changes in general or local economic conditions and neighborhood
characteristics, competition from other lodging facilities, changes in real
property tax rates and in the availability, cost and terms of financing, the
impact of present or future environmental legislation and compliance with
environmental laws, the ongoing need for capital improvements, changes in
operating expenses, changes in governmental rules and fiscal policies, civil
unrest, acts of God, including earthquakes and other natural disasters (which
may result in uninsured losses), acts of war, changes in zoning laws and other
factors which are beyond the control of the Company.

Illiquidity of Real Estate

Real estate investments are relatively illiquid. The ability of the Company
to vary its portfolio in response to changes in economic and other conditions
will be limited. There can be no assurance that the Company will be able to
dispose of an investment when it finds disposition advantageous or necessary or
that the sale price of any disposition will recoup or exceed the amount of the
Company's investment.

Uninsured and Underinsured Losses Could Result in Loss of Value of Facilities

Suburban maintains comprehensive insurance on each of its facilities,
including liability, fire and extended coverage. The Company believes this
coverage is of the type and amount customarily obtained for or by an owner of
similar real property assets. However, there are certain types of losses,
generally of a catastrophic nature, such as earthquakes and floods, that may be
uninsurable or not economically insurable. The Company uses its discretion in
determining amounts, coverage limits and deductibility provisions of insurance,
with a view to obtaining appropriate insurance on the Company's facilities at a
reasonable cost and on suitable terms. This may result in insurance coverage
that in the event of a loss would be insufficient to pay the full current market
value or current replacement cost of the Company's lost investment. Inflation,
changes

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<PAGE> 13

in building codes and ordinances, environmental considerations and other factors
also might make it infeasible to use insurance proceeds to replace a facility
after it has been damaged or destroyed. Under such circumstances, the insurance
proceeds received by the Company might not be adequate to restore its economic
position with respect to such facility.

COMPETITION FOR AND DEPENDENCE ON FRANCHISEES

One of the Company's sources of revenue is franchise agreements with
facility owners. The Company competes with national and regional brand
franchisors, most of which have greater name recognition and financial resources
than the Company. Competition for franchisees is intense among national brand
franchisors in the lodging industry. Suburban believes that its ability to
attract a franchisee is based principally upon both the perceived value and
quality of its brand names and services and the potential economic advantages to
the facility owner of retaining the Company's brand name. The Company believes
that the perceived value of a brand name to a facility owner is in part a
function of the success of the facilities currently under management. No
assurance can be given that the Company will be successful in retaining current
or competing for additional franchisees. While the Company does not anticipate
that the loss or termination of any single franchise agreement would have a
material adverse effect on its operations, the loss of a multi-facility
franchisee could have a material adverse effect on the Company's results of
operations. Further, the Company is highly dependent upon the efforts of its
franchisees with respect to revenues from franchising operations, particularly
with franchisees who manage their own facilities. See "Business -- Business
Strategy -- Growth Strategy" and " -- Franchise, Development and Management
Agreements."

EMPHASIS ON SUBURBAN LODGE FACILITIES

The Company intends to develop and franchise additional Suburban Lodge
facilities. Suburban currently does not intend to develop lodging facilities
with other franchisors. Accordingly, Suburban will be subject to risks inherent
in concentrating investments in a single franchise brand, such as a reduction in
business following adverse publicity related to the brand, which could have a
material adverse effect on the Company's business and results of operations.

MARKET CONCENTRATION

Nine of the Existing Facilities are located in the State of Georgia, and
eight of such facilities are located in metropolitan Atlanta. See
"Business -- The Facilities." Therefore, adverse events or conditions which
affect those areas particularly (such as natural disasters or adverse changes in
local economic conditions) could have a more pronounced negative impact on the
operations of the Company. However, the Line of Credit contains limitations on
the Company's ability to expand in the Atlanta, Georgia and Charlotte, North
Carolina areas. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."

IMPACT OF ENVIRONMENTAL REGULATIONS

Suburban's operating costs may be affected by the obligation to pay for the
cost of complying with existing environmental laws, ordinances and regulations.
In addition, in the event any future legislation is adopted, the Company may
from time to time be required to make significant capital and operating
expenditures in response to such legislation. Suburban attempts to minimize its
exposure to potential environmental liability through its site selection
procedures. The Company typically secures an option to purchase land subject to
certain contingencies. Prior to exercising such option and purchasing the
property, the Company conducts a Phase I environmental assessment (which
generally involves a physical inspection and database search, but not soil or
groundwater analyses). Under various federal, state and local environmental
laws, ordinances and regulations, a current or previous owner or operator of
real property may be liable for the costs of removal or remediation of hazardous
or toxic substances on, under or in such property. Such laws often impose
liability whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In addition, the presence of
contamination from hazardous or toxic substances, or the failure to remediate
properly such contaminated property, may materially adversely affect the owner's

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<PAGE> 14

ability to use or sell such real property or to borrow using such real property
as collateral. Persons who arrange for the disposal or treatment of hazardous or
toxic substances may also be liable for the costs of removal or remediation of
such substances at the disposal or treatment facility, whether such facility is
or ever was owned or operated by such person. Certain environmental laws and
common-law principles could be used to impose liability for releases of
hazardous materials, including asbestos-containing materials ("ACMs"), into the
environment, and third parties may seek recovery from owners or operators of
real properties for personal injury associated with exposure to released ACMs or
other hazardous materials. Environmental laws may also impose restrictions on
the manner in which property may be used or transferred or in which businesses
may be operated, and these restrictions may require expenditures. In connection
with the ownership and operation of its facilities, the Company may be liable
for any such costs. Any potential environmental liability the Company may have
solely as a franchisor is less clear; however, the Company's business and
results of operations could be materially adversely affected if a franchisee
incurred environmental liability. Although the Company has not received any
notice of potential liability for environmental cleanups or violations from a
federal, state or local government agency and is not currently aware of any
material environmental claims pending or threatened against it or any of its
franchised facilities, no assurance can be given that such notice will not be
served or that a material environmental claim will not be asserted against the
Company and its franchised facilities. The cost of defending against claims of
liability or remediating contaminated property and the cost of complying with
environmental laws could materially adversely affect the Company's results of
operations and financial condition. See "Business -- Environmental Matters."

GOVERNMENT REGULATION AND COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT

The lodging industry is subject to numerous federal, state and local
government regulations including those relating to building and zoning
requirements. Also, the Company is subject to laws governing its relationship
with employees, including minimum wage requirements, overtime, working
conditions and work permit requirements. The Company is also subject to federal
regulations and certain state laws that govern the offer and sale of franchises.
Many state laws impose substantive requirements on franchise agreements,
including limitations on non-competition provisions and termination or
nonrenewal of a franchise. Some states require that certain materials be
approved before franchises can be offered or sold in that state. The failure to
obtain approvals to sell franchises or an increase in the minimum wage rate,
employee benefit costs or other costs associated with employees could materially
adversely affect the Company.

Under the Americans with Disabilities Act of 1990 (the "ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. While the Company believes that the Existing
Facilities and the Construction Facilities are substantially in compliance with
these requirements, a determination that the Company or one of its franchisees
is not in compliance with the ADA could result in the imposition of fines or an
award of damages to private litigants. In addition, changes in governmental
rules and regulations or enforcement policies affecting the use and operation of
the facilities, including changes to building codes and fire and life-safety
codes, may occur. If the Company were required to make substantial modifications
at its facilities to comply with the ADA or other changes in governmental rules
and regulations, the Company's financial condition and ability to develop new
facilities could be materially adversely affected.

PROPERTY TAX AND INSURANCE FLUCTUATIONS

Each of the Company's facilities is subject to real property taxes. Real
property taxes may increase or decrease as property tax rates change and as the
facilities are assessed or reassessed by taxing authorities. Also, each of the
Company's facilities is covered by property and casualty insurance. Property and
casualty insurance rates may increase depending upon claims experience,
insurance market conditions and the replacement value of the facilities.

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ANTI-TAKEOVER CONSIDERATIONS

Staggered Board

The Company's Board of Directors is divided into three classes serving
staggered three-year terms. The terms of the current directors will expire in
1997, 1998 and 1999. The staggered terms of directors may limit the ability of
the holders of Common Stock to change control of the Company even if a change of
control were in such shareholders' best interests. See "Description of Capital
Stock -- Certain Provisions of Georgia Law and the Company's Articles of
Incorporation and Bylaws." The foregoing may discourage offers or other bids for
the Common Stock at a premium over the market price thereof.

Articles and Bylaws

The ownership positions of Mr. Krischer and the other executive officers
and directors of the Company as a group, together with the anti-takeover effects
of certain provisions in the Company's Articles of Incorporation and Bylaws, may
have the effect of delaying, deferring or preventing a change of control of the
Company, even if a change of control were in the shareholders' best interests.
For example, the Articles of Incorporation require that all shareholder actions
must be effected at a duly-called annual or special meeting of shareholders, and
the Bylaws require that shareholders follow an advance notification procedure
for certain shareholder nominations of candidates for the Board of Directors and
for certain other business to be conducted at any meeting of shareholders. In
addition, the Company's Articles of Incorporation authorize "blank check"
preferred stock, so that the Company's Board of Directors may, without
shareholder approval, issue preferred shares through a shareholders rights plan
or otherwise, which could inhibit a change of control. See "Description of
Capital Stock."

Georgia Anti-Takeover Statutes

The Company has adopted both the fair price and business combinations with
interested stockholders provisions of the Georgia Business Corporation Code
("Georgia Code"), which, in general, impose restrictions upon acquirors of ten
percent or more of the Common Stock. These statutes may delay, defer or prevent
a change of control of the Company, even if a change of control were in the
shareholders' best interests. See "Description of Capital Stock -- Certain
Provisions of Georgia Law and the Company's Articles of Incorporation and
Bylaws -- Anti-Takeover Protection."

Rights Agreement

The Company's Board of Directors has adopted a Rights Agreement (the
"Rights Agreement"). Pursuant to the terms of the Rights Agreement, one right (a
"Right") will be issued in respect of each share of Common Stock outstanding
upon the consummation of the Offering, including the shares issued in connection
with the Corporate Organization. Rights will also attach to shares of Common
Stock issued after the Corporate Organization and the Offering but prior to the
date on which the Rights are distributed pursuant to the terms of the Rights
Agreement. Each Right will entitle the holder thereof to purchase a fraction of
a share of the Company's Series A Participating Cumulative Preferred Stock or,
in certain instances, Common Stock or stock of the Acquiring Person (as defined
below) if, in most instances (i) a third party or group (an "Acquiring Person")
acquires beneficial ownership of 15% or more of the Common Stock or (ii) a
tender or exchange offer that would result in a person or group becoming an
Acquiring Person is commenced. The Rights Plan will be in effect through May
2006 and could have the effect of discouraging tender offers or other
transactions which could result in shareholders receiving a premium over the
market price for the Common Stock. See "Description of Capital Stock -- Rights
Agreement."

ABSENCE OF PRIOR PUBLIC MARKET

Prior to the Offering, there has been no public market for shares of the
Common Stock, and there can be no assurance that an active trading market will
develop or, if developed, will be sustained. The Company has been informed by
Montgomery Securities and J.C. Bradford & Co. that they intend to make a market
in the Common Stock following the Offering, although there can be no assurance
that they will make such a market. The initial public offering price of the
Common Stock will be determined through negotiations with the

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<PAGE> 16

representatives of the Underwriters. See "Underwriting" for the factors to be
considered in determining the initial public offering price of the shares of
Common Stock.

VOLATILITY OF MARKET PRICE

After completion of the Offering, the market price of the Common Stock
could be subject to significant fluctuations due to variations in quarterly
operating results and other factors, such as changes in general conditions in
the economy, the financial markets or the lodging industry, natural disasters or
other developments affecting the Company or its competitors. In addition, the
securities markets have experienced significant price and volume fluctuations
from time to time in recent years. This volatility has had a significant effect
on the market prices of securities issued by many companies for reasons
unrelated to their operating performance, and these broad fluctuations may
materially adversely affect the market price of the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Approximately 4,752,971 shares of Common Stock will become eligible for
sale in the public market at various times after the completion of the Offering,
subject to compliance with an exemption from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), such as Rule 144
or Rule 144A. The holders of these shares have agreed that they will not sell
any shares of Common Stock held by them (other than shares acquired in the
Offering or acquired thereafter in the public market) for a period of 180 days
from the date of this Prospectus, subject to certain exceptions, without the
consent of Montgomery Securities (one of the representatives of the
Underwriters), which may be withheld in its sole discretion. The Company intends
to register under the Securities Act, shortly after the completion of the
Offering, all shares reserved for issuance under the 1996 Plan and the
Directors' Plan. The Company has also granted "piggyback" registration rights to
the persons who will receive Common Stock in the Corporate Organization with
respect to the shares acquired in the Corporate Organization and all other
shares of Common Stock owned by such individuals. Accordingly, approximately
4,750,000 shares are subject to registration rights. See "Description of Capital
Stock -- Registration Rights." In addition, the Company may consider filing a
registration statement covering shares of Common Stock that may be issued in
connection with potential future acquisitions and resales thereof by the
recipients, although no such acquisitions are currently contemplated. Shares so
registered could be sold in the public market. No predictions can be made as to
the effect, if any, that market sales of such shares or the availability of such
shares for sale would have on the market price for shares of Common Stock
prevailing from time to time. Sales of substantial amounts of shares of Common
Stock in the public market following the Offering could materially adversely
affect the market price of the Common Stock and could impair the Company's
future ability to raise capital through an offering of equity securities. See
"Shares Eligible for Future Sale."

IMMEDIATE AND SUBSTANTIAL DILUTION

The purchasers of the shares of Common Stock offered hereby will experience
an immediate and substantial dilution of $9.66 per share on a pro forma net
tangible book value basis. See "Dilution."

DIVIDEND POLICY

The Company does not anticipate paying any cash dividends on the Common
Stock in the foreseeable future. See "Dividend Policy."

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CORPORATE ORGANIZATION

Immediately prior to, or simultaneously with, the closing of the Offering,
the Company will, directly or through its subsidiaries, (i) acquire through
merger from certain partnerships and limited liability companies, in which
Messrs. Krischer, Kuse or McGovern and certain officers of the Company have
interests, seven of the Existing Facilities and four of the Construction
Facilities and (ii) acquire through merger or acquisition of assets from the
Third Party Sellers one of the Existing Facilities, two of the Construction
Facilities and two of the Development Facilities. In connection with these
transactions, the owners of the Affiliated Entities will receive shares of
Common Stock and cash. Two of the Third Party Sellers will receive a combination
of Common Stock and cash, two of the Third Party Sellers will receive all cash
and one of the Third Party Sellers will receive all Common Stock. The price to
be paid for each Affiliated Facility and each Third Party Facility was based
upon an appraisal performed by an independent appraiser. See "Risk
Factors -- Fair Market Value of Facilities Contributed May be Less than
Consideration Paid." After the completion of the Corporate Organization, all of
the facilities in which Messrs. Krischer, Kuse or McGovern and certain officers
of the Company have an ownership interest will be owned by the Company.

In connection with these transactions, the owners of the Affiliated
Entities will receive (i) an aggregate of 999,483 shares of Common Stock,
including 896,099 shares issuable to affiliates of the Company (including
351,694 shares issuable to Mr. Krischer, 227,122 shares issuable to Mr. Kuse and
his affiliates, 150,364 shares issuable to Mr. McGovern, an aggregate of 142,709
shares issuable to HS II Associates, L.P. and HS III Associates, L.P.
(significant investors in many of the Affiliated Entities and together the
second largest shareholder of the Company prior to the Corporate Organization,
hereinafter referred to as "HS Associates") and 24,210 shares issuable to the
other officers of the Company as a group) and (ii) $2.9 million in cash
(including $84,600 to Mr. Krischer, $545,700 to Mr. Kuse and his affiliates,
$386,600 to Mr. McGovern and $48,000 to the other officers of the Company as a
group). The Company will pay $385,000 in cash to acquire certain minority
interests in one of the Affiliated Entities and will pay a $100,000 development
fee (of which $25,000 is payable to Mr. Krischer). The Company will also assume
an aggregate of approximately $18.5 million of indebtedness secured by the
Affiliated Facilities and approximately $1.3 million owed to affiliates of the
Company, including approximately $144,700 to Mr. Krischer and his affiliates,
$1.1 million to Mr. Kuse and his affiliates and $84,000 to Mr. McGovern. See
"Certain Transactions." The acquisition of all but two of the Affiliated
Entities will be accounted for as if it was a pooling of interests. As a result,
there will be no increase in the carrying value of such interests. The purchase
method of accounting will be applied with respect to the acquisition of two of
the Affiliated Entities.

The aggregate purchase price for the Third Party Facilities is expected to
be approximately $12.7 million, which will be paid by the delivery to the Third
Party Sellers of approximately $4.7 million in cash and approximately 163,556
shares of Common Stock and includes the assumption of approximately $5.6 million
of debt secured by the Third Party Facilities. The purchase method of accounting
will be applied with respect to the acquisition of the Third Party Facilities.

As part of the Corporate Organization, the Company will effect a stock
split of approximately 2,421-for-1. The number of shares issued in the Corporate
Organization is based upon an assumed initial public offering price of $15.00
per share. Accordingly, the number of shares issued in the Corporate
Organization will vary based on the actual initial public offering price, and a
corresponding adjustment may be required to the stock split.

Immediately prior to consummation of the Corporate Organization, the
Affiliated Entities intend to distribute to Mr. Krischer, as agent, the cash and
cash equivalents of the Affiliated Entities for purposes of liquidating current
liabilities and making final distributions to the owners of the Affiliated
Entities. As of March 31, 1996, the cash to be distributed to Mr. Krischer, as
agent, aggregated approximately $814,000. As of March 31, 1996, Messrs.
Krischer, Kuse and McGovern would have received approximately $245,000, $152,000
and $90,000, respectively, of such distributions after liquidation of certain
liabilities in the amount of approximately $323,000. Such distributions are
expected to reduce substantially the cash balances of the Affiliated Entities
immediately prior to the closing of the Offering.

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Each of the agreements pursuant to which the Company will acquire the
Affiliated Facilities and the Third Party Facilities contains standard
representations and warranties on the part of the sellers, including
representations and warranties regarding title to the acquired assets,
environmental matters, financial statements and undisclosed liabilities. Each
agreement also contains standard conditions to closing, including accuracy of
the representations and warranties made therein. In addition, the owners of the
Affiliated Entities and the Third Party Sellers have agreed, severally and not
jointly, to indemnify the Company, under certain limited circumstances, for
breaches of the representations and warranties made by the Affiliated Entities
and the Third Party Sellers in the acquisition agreements, including
representations and warranties regarding environmental matters.

USE OF PROCEEDS

The net proceeds to the Company from the Offering are estimated to be
approximately $40.5 million ($46.8 million if the Underwriters' over-allotment
option is exercised in full) assuming an initial public offering price of $15.00
per share and after deduction of the underwriting discount and other estimated
offering expenses. The Company intends to use such net proceeds as follows:

<TABLE>
<S> <C>
Repayment of indebtedness assumed in connection with the Corporate
Organization......................................................... $25.8 million
Payment of cash in connection with the acquisition of facilities....... 7.6 million
Development of additional Suburban Lodge facilities and general
corporate purposes................................................... 7.1 million
-------------
Total........................................................ $40.5 million
===========
</TABLE>

Mortgage indebtedness to be repaid with a portion of the net proceeds of
the Offering ($13.3 million) bears interest, as of March 31, 1996, at annual
rates ranging from 8.5% to 10.75% and matures at various times from 1999 to
2018. Construction loans to be repaid with a portion of the net proceeds of the
Offering ($10.6 million) bear interest, as of March 31, 1996, at annual rates
ranging from 8.5% to 11.0% and mature in 2002. Indebtedness to be repaid to the
owners of the Affiliated Entities, including Messrs. Krischer, Kuse and McGovern
($1.9 million), bears interest at annual rates ranging from 10.0% to 12.5% and
matures at various times from 1996 to 2003. See Notes 3 and 6 of Notes to
Combined Financial Statements. Indebtedness incurred within the last year was
used for the development and construction of certain Company-owned Existing
Facilities, Construction Facilities and Development Facilities. See "Certain
Transactions."

Suburban intends to complete construction of the Company-owned Construction
Facilities and finance the development of the Company-owned Development
Facilities and other future developments with a portion of the net proceeds of
the Offering, cash flow from operations, borrowings under the Line of Credit and
future securities offerings. Suburban anticipates that the total development and
construction costs for completion of the Company-owned Construction Facilities
and the Company-owned Development Facilities will be approximately $22.2 million
and that after the application of a portion of the net proceeds of the Offering,
the Company will have to borrow approximately $15.2 million under the Line of
Credit to complete these facilities.

Pending use of the proceeds as set forth above, the net proceeds will be
invested in interest-bearing, short-term, investment grade securities or money
market accounts. Such investments may include, for example, government and
government agency securities, certificates of deposit and interest-bearing bank
deposits.

DIVIDEND POLICY

The Company has not paid dividends on its Common Stock. The Board of
Directors intends to continue a policy of retaining earnings to finance the
Company's growth and, therefore, does not anticipate paying any such dividends
in the foreseeable future. In addition, the Line of Credit does, and future
financing arrangements may, impose minimum net worth covenants and other
limitations that could restrict the Company's right to pay dividends.

17
<PAGE> 19

CAPITALIZATION

The following table sets forth the pro forma short-term debt and
capitalization of the Company as of March 31, 1996, as if the Corporate
Organization occurred on such date, and as adjusted to reflect the sale by the
Company of 3,000,000 shares of Common Stock at an assumed initial public
offering price of $15.00 per share and the application of the net proceeds
therefrom as described under "Use of Proceeds." This table should be read in
conjunction with the selected financial data, the historical and combined pro
forma financial statements of the Company and the related notes thereto
contained elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------
PRO FORMA AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Current portion of long-term debt and capital lease obligations....... $ 536 $ --
Current portion of notes payable to affiliates........................ 1,053 --
--------- -----------
Total short-term debt......................................... $ 1,589 $ --
======== =========
Long-term debt and capital lease obligations............................ $15,168 $ --
Long-term notes payable to affiliates................................... 612 --
Shareholders' equity:
Preferred Stock, par value $1.00 per share, 5,000,000 shares
authorized; no shares issued and outstanding....................... -- --
Common Stock, par value $0.01 per share, 100,000,000 shares
authorized; 4,752,971 shares issued and outstanding; 7,752,971
shares issued and outstanding, as adjusted(1)...................... 48 78
Additional paid-in capital............................................ 1,596 41,800
--------- -----------
Total shareholders' equity....................................... 1,644 41,878
--------- -----------
Total capitalization.......................................... $17,424 $41,878
======== =========
</TABLE>

- ---------------

(1) Does not include 750,000 shares of Common Stock reserved for issuance under
the 1996 Plan pursuant to which options to purchase 400,000 shares will be
outstanding upon the closing of the Offering, and 100,000 shares reserved
for issuance under the Directors' Plan pursuant to which options to
purchase 4,500 shares will be outstanding upon the closing of the Offering.
See "Management -- 1996 Stock Incentive Plans."

18
<PAGE> 20

DILUTION

As of March 31, 1996, the pro forma net tangible book value of the Company,
giving effect to the transactions (other than the Offering) described in the
notes to the pro forma consolidated balance sheet contained elsewhere in this
Prospectus, was approximately $1,158,000, or $0.25 per share of Common Stock.
Net tangible book value per share is defined as the book value of tangible
assets of the Company, less all liabilities, divided by the number of
outstanding shares of Common Stock. After giving effect to the Offering at an
assumed initial public offering price of $15.00 per share, and after deducting
estimated offering expenses and the underwriting discount, the pro forma net
tangible book value of the Company at March 31, 1996, would have been
approximately $41,408,000, or $5.34 per share. This represents an immediate
increase in such net tangible book value of $5.08 per share to the existing
shareholders and an immediate dilution of $9.66 per share to purchasers of
shares in the Offering. The following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price................................. $15.00
Pro forma net tangible book value per share as of March 31, 1996
(adjusted for the Corporate Organization, but excluding the net
proceeds of the Offering)........................................ $0.25
Increase in pro forma net tangible book value per share attributable
to payments by purchasers of shares in the Offering.............. 5.09
Pro forma net tangible book value per share after the Corporate
Organization and the Offering.................................... 5.34
------
Dilution per share to new investors................................... $ 9.66
======
</TABLE>

The following table summarizes, as of March 31, 1996, and after giving
effect to the Corporate Organization and the Offering, the differences between
(i) the existing shareholders, (ii) the owners of the Affiliated Entities and
the Third Party Sellers and (iii) the investors in the Offering, with respect to
the number of shares purchased, the total consideration paid to the Company and
the average price per share of Common Stock.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- --------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Shares owned by existing shareholders....... 3,586,932 46.3% $ 1,014 --% $ --
Shares issued in the Corporate
Organization.............................. 1,166,039 15.0 6,193,707 12.1 5.31
Shares purchased in the Offering............ 3,000,000 38.7 45,000,000 87.9 15.00
--------- ------- ----------- -------
Total............................. 7,752,971 100.0% $51,194,721 100.0%
======== ===== ========== =====
</TABLE>

The foregoing table excludes 750,000 shares of Common Stock reserved for
issuance pursuant to the 1996 Plan and 100,000 shares reserved for issuance
under the Directors' Plan. See "Management -- 1996 Stock Incentive Plans."

19
<PAGE> 21

SELECTED COMBINED HISTORICAL FINANCIAL DATA (1)

SUBURBAN LODGES OF AMERICA, INC.
AND AFFILIATED ENTITIES
(IN THOUSANDS, EXCEPT FOR OPERATING DATA)

The selected combined financial data set forth below has been derived from
the historical combined financial statements of Suburban Lodges of America, Inc.
and Affiliated Entities. The historical combined financial statements of
Suburban Lodges of America, Inc. and Affiliated Entities for the three years
ended December 31, 1995 have been audited by Deloitte & Touche LLP, independent
accountants, whose report thereon appears elsewhere herein. The selected data
for the years 1991 and 1992 and the three month periods ended March 31, 1995 and
1996 have been derived from the unaudited combined financial statements of
Suburban Lodges of America, Inc. and Affiliated Entities. In the opinion of
management, the unaudited financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the information set forth therein. The combined historical results for the three
months ended March 31, 1995 and 1996 are not necessarily indicative of the
results for a full year. These selected combined financial data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the historical combined financial statements and
related notes thereto of Suburban Lodges of America, Inc. and Affiliated
Entities.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenue:
Room revenue............................ $ 2,055 $ 2,184 $ 2,893 $ 3,904 $ 4,431 $ 980 $ 1,366
Other facility revenue.................. 146 173 223 290 296 70 86
Franchise and other revenue............. 51 194 247 151 460 92 217
------- ------- ------- ------- ------- ------- -------
Total revenue......................... 2,252 2,551 3,363 4,345 5,187 1,142 1,669
------- ------- ------- ------- ------- ------- -------
Expenses:
Facility operating expenses............. 937 1,058 1,364 1,768 2,072 516 653
Corporate operating expenses............ 336 378 429 737 883 170 274
Related party consulting fees........... -- -- -- -- 17 3 6
Depreciation and amortization........... 375 323 372 416 460 104 116
------- ------- ------- ------- ------- ------- -------
Total expenses........................ 1,648 1,759 2,165 2,921 3,432 793 1,049
------- ------- ------- ------- ------- ------- -------
Operating income.......................... 604 792 1,198 1,424 1,755 349 620
Interest expense.......................... 782 614 725 936 1,098 225 286
------- ------- ------- ------- ------- ------- -------
Income (loss) before income taxes and
extraordinary income.................. (178) 178 473 488 657 124 334
Income taxes (benefit)(2)................. -- -- -- (14) (20) -- 26
Extraordinary income from early
extinguishment of debt.................. -- -- -- 130 -- -- --
------- ------- ------- ------- ------- ------- -------
Net income (loss)....................... ($ 178) $ 178 $ 473 $ 632 $ 677 $ 124 $ 308
======== ======== ======== ======== ======== ======== ========
CASH FLOW DATA:
EBITDA(3)................................. $ 979 $ 1,115 $ 1,570 $ 1,840 $ 2,215 $ 453 $ 736
Cash flows provided by (used in):
Operating activities.................... (143) 399 879 929 1,305 295 335
Investing activities.................... (129) (15) (2,349) (651) (4,791) (341) (1,802)
Financing activities.................... 348 (273) 1,561 (238) 3,707 128 1,547
(Notes on following page)
</TABLE>

20
<PAGE> 22

- ---------------

(1) The table includes operating data for the Company-owned and franchised
facilities since their respective dates of opening or acquisition.
(2) Historical financial data does not include a provision for income taxes for
Affiliated Entities because such entities were limited liability companies
or partnerships not subject to income taxes. Income taxes or income tax
benefits have been provided for Suburban Lodges of America, Inc. and its
subsidiaries where appropriate under SFAS 109, "Accounting for Income
Taxes." See Note 7 to the Combined Financial Statements.
(3) EBITDA represents income (loss) before interest expense, income taxes (if
applicable) and depreciation and amortization. EBITDA is a commonly used
financial analysis tool for measuring and comparing lodging companies and
other companies with significant amortization and depreciation expense and
for analyzing operating performance, leverage and liquidity of such
companies. Such data are not a measure of financial performance under
generally accepted accounting principles and should not be considered as an
alternative to net income as an indicator of the Company's operating
performance or as an alternative to cash flow as a measure of liquidity.
(4) Data for the franchised facilities is not included in the financial and
operating data included above.
(5) Weekly REVPAR is determined by dividing room revenue by available guest
rooms for the applicable period and multiplying by seven.

21
<PAGE> 23

PRO FORMA COMBINED STATEMENTS OF OPERATIONS
SUBURBAN LODGES OF AMERICA, INC.
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)

The Company's unaudited pro forma combined statements of operations for the
year ended December 31, 1995 and for the three month periods ended March 31,
1995 and 1996 are presented as if the Corporate Organization, the Offering and
the application of the net proceeds therefrom had occurred as of January 1,
1995. See "Use of Proceeds." The pro forma information is based in part upon the
combined statement of operations which should be read in conjunction with the
combined financial statements of Suburban Lodges of America, Inc. and Affiliated
Entities and the notes thereto and the financial statements of Gulf Coast
Associates, Ltd. d/b/a Suburban Lodge of Forest Park and the notes thereto which
are contained elsewhere in this Prospectus. In management's opinion, all
adjustments necessary to reflect the effect of these transactions have been
made.

The following unaudited pro forma combined statements of operations are not
necessarily indicative of what actual results of operations of the Company would
have been assuming such transactions had been completed as of January 1, 1995,
nor do they purport to represent the results of operations for future periods.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------------------
SUBURBAN
LODGES
OF AMERICA, INC.
AND AFFILIATED GULF COAST ASSOCIATES,
ENTITIES LTD. (FOREST PARK PRO FORMA COMPANY
HISTORICAL FACILITY) ADJUSTMENTS PRO FORMA
---------------- ---------------------- ------------- ----------
<S> <C> <C> <C> <C>
Revenue:
Room revenue................... $4,431 $851 $ 5,282
Other facility revenue......... 296 49 345
Franchise and other revenue.... 460 -- ($109)(A) 351
------- ------ ----------
Total revenue.......... 5,187 900 5,978
------- ------ ----------
Expenses:
Facility operating expenses.... 2,072 495 (109)(A) 2,458
Corporate operating expenses... 883 -- 393(B) 1,276
Related party consulting
fees........................ 17 17
Depreciation and
amortization................ 460 128 109(C) 697
------- ------ ----------
Total expenses......... 3,432 623 4,448
------- ------ ----------
Operating income................. 1,755 277 1,530
Interest expense................. 1,098 307 (1,405)(D) --
Income taxes (benefit)........... (20) -- 594(E) 574
------- ------ ----------
Net income (loss)................ $ 677 ($30) $ 956
=========== ================ =========
Pro forma net income per
share(F)....................... $ 0.14
=========
Pro forma weighted average shares
outstanding(F)................. 6,751,238
</TABLE>

- ---------------
(Notes on following page)

22
<PAGE> 24

(A) Reflects the elimination of certain intercompany transactions which are as
follows: (i) franchise costs -- $27; (ii) management and incentive
fees -- $79 and (iii) administrative fees -- $3.
(B) Reflects an increase in: (i) salaries and benefits -- $106; (ii) audit and
tax fees -- $65; (iii) legal expenses -- $35; (iv) directors' fees,
expenses and stock awards -- $40; (v) directors' and officers'
insurance -- $125 and (vi) additional overhead -- $22; in each case, as a
result of becoming a public company.
(C) Reflects the following: (i) the elimination of amortization on deferred
loan costs on the previous indebtedness -- $26; (ii) the new amortization
on deferred loan costs related to $25 million of the Line of Credit -- $125
and (iii) adjustment to record the new depreciation related to the
acquisition price of the Forest Park Facility computed using the straight
line method over 40 years for buildings and the straight line method over
seven years for fixtures and equipment -- $10.

(D) Reflects reduction of interest expense due to the repayment of all
outstanding indebtedness from the proceeds of the Offering -- $1,098 and
the elimination of interest expense on the Forest Park Facility -- $307.

(E) Historical financial data does not include a provision for income taxes for
the Existing Facilities or the Construction Facilities because they were
owned by partnerships or limited liability companies not subject to income
taxes. The historical financial data does include a provision for income
taxes for Suburban Lodges of America, Inc. and subsidiaries. The pro forma
adjustments reflect federal and state income taxes (assuming a 37.5%
combined effective tax rate) as if the Company had been taxed as a
C-Corporation.

(F) Pro forma per share information assumes that 6,751,238 shares were issued
in connection with the Corporate Organization and its related stock split
and the Offering on January 1, 1995. Shares outstanding for purposes of
computing pro forma earnings per share exclude 1,001,733 shares issued
relative to amounts used for general corporate purposes. Outstanding shares
of Suburban Lodges of America, Inc. differ substantially from the shares of
Common Stock that will be outstanding after the Offering. Accordingly, the
Company believes that the presentation of historical per share information
is not meaningful.

23
<PAGE> 25

PRO FORMA COMBINED STATEMENTS OF OPERATIONS

SUBURBAN LODGES OF AMERICA, INC.
THREE MONTHS ENDED MARCH 31, 1995 AND 1996 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1995 THREE MONTHS ENDED MARCH 31, 1996
---------------------------------------------------------------- ----------------------------------
SUBURBAN SUBURBAN
LODGES LODGES
OF AMERICA, INC. GULF COAST OF AMERICA, INC. GULF COAST
AND AFFILIATED ASSOCIATES, LTD. AND AFFILIATED ASSOCIATES, LTD.
ENTITIES (FOREST PARK PRO FORMA COMPANY ENTITIES (FOREST PARK
HISTORICAL FACILITY) ADJUSTMENTS PRO FORMA HISTORICAL FACILITY)
---------------- ---------------- ------------- --------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Room revenue........ $ 980 $202 $ 1,182 $1,366 $242
Other facility
revenue........... 70 12 82 86 24
Franchise and other
revenue........... 92 -- ($17)(A) 75 217 --
------ ----- --------- ------ -----
Total
revenue..... 1,142 214 1,339 1,669 266
------ ----- --------- ------ -----
Expenses:
Facility operating
expenses.......... 516 120 (17)(A) 619 653 130
Corporate operating
expenses.......... 170 -- 99(B) 269 274 --
Related party
consulting fees... 3 3 6
Depreciation and
amortization...... 104 32 27(C) 163 116 34
------ ----- --------- ------ -----
Total
expenses.... 793 152 1,054 1,049 164
------ ----- --------- ------ -----
Operating income...... 349 62 285 620 102
Interest expense...... 225 76 (301)(D) -- 286 76
Income taxes
(benefit)........... -- 105(E) 105 26 --
------ ----- --------- ------ -----
Net income (loss)..... $ 124 ($14) $ 180 $ 308 $ 26
============ ============ ======== ============ ============
Pro forma net income
per share(F)........
Pro forma weighted
average shares
outstanding(F)......

PRO FORMA COMPANY
ADJUSTMENTS PRO FORMA
------------- ----------
<S> <C> <C>
Revenue:
Room revenue........ $1,608
Other facility
revenue........... 110
Franchise and other
revenue........... ($21)(A) 196
----------
Total
revenue..... 1,914
----------
Expenses:
Facility operating
expenses.......... (21)(A) 762
Corporate operating
expenses.......... 99(B) 373
Related party
consulting fees... 6
Depreciation and
amortization...... 24(C) 174
----------
Total
expenses.... 1,315
----------
Operating income...... 599
Interest expense...... (362)(D) --
Income taxes
(benefit)........... 199(E) 225
----------
Net income (loss)..... $ 374
==========
Pro forma net income
per share(F)........ $ 0.06
==========
Pro forma weighted
average shares
outstanding(F)...... 6,751,238
==========
</TABLE>

(Notes on following page)

24
<PAGE> 26

(A) Reflects the elimination of certain intercompany transactions which are as
follows for 1995: (i) franchise costs -- $6 and (ii) management and
incentive fees -- $11. Such adjustments for 1996 are: (i) franchise
costs -- $8 and (ii) management and administrative fee -- $13.
(B) Reflects an increase for 1995 and 1996 in: (i) salaries and
benefits -- $27; (ii) audit and tax fees -- $16; (iii) legal
expenses -- $9; (iv) directors' fees, expenses and stock awards -- $10; (v)
directors' and officers' insurance -- $31 and (vi) additional
overhead -- $6; in each case, as a result of becoming a public company.
(C) Reflects the following: (i) the elimination of amortization on deferred
loan costs on the previous indebtedness -- $7 in 1995 and $10 in 1996; (ii)
the new amortization on deferred loan costs related to $25 million of the
Line of Credit -- $31 in 1995 and 1996 and (iii) adjustment to record the
new depreciation related to the acquisition price of the Forest Park
Facility computed using the straight line method over 40 years for
buildings and the straight line method over seven years for fixtures and
equipment -- $3 in 1995 and 1996.

(D) Reflects reduction of interest expense due to the repayment of all
outstanding indebtedness from the proceeds of the Offering -- $225 in 1995
and $286 in 1996 and the elimination of interest expense on the Forest Park
Facility -- $76 in 1995 and 1996.

25
<PAGE> 27
PRO FORMA COMBINED BALANCE SHEET

SUBURBAN LODGES OF AMERICA, INC.
MARCH 31, 1996 (UNAUDITED)
(IN THOUSANDS)

The following unaudited pro forma combined balance sheet is presented as if
the Corporate Organization, the Offering at an assumed initial public offering
price of $15.00 per share and the application of the net proceeds therefrom had
occurred on March 31, 1996. See "Use of Proceeds." Such pro forma information is
based in part upon the unaudited historical combined balance sheet which should
be read in conjunction with the combined financial statements of Suburban Lodges
of America, Inc. and Affiliated Entities, and the notes thereto and the
financial statements of Gulf Coast Associates, Ltd. d/b/a Suburban Lodge of
Forest Park and the notes thereto which are contained elsewhere in this
Prospectus. In management's opinion, all adjustments necessary to reflect the
effect of these transactions have been made.

The following unaudited pro forma combined balance sheet is not necessarily
indicative of what the actual financial position would have been assuming such
transactions had been completed as of March 31, 1996, nor does it purport to
represent the future financial position of the Company.

<TABLE>
<CAPTION>
SUBURBAN LODGES
OF AMERICA, INC. GULF COAST
AND ASSOCIATES, LTD.
AFFILIATED (FOREST PARK COMPANY
ENTITIES FACILITY) PRO
HISTORICAL HISTORICAL ELIMINATIONS(A) ADJUSTMENTS FORMA
---------------- ---------------- --------------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents... $ 767 $ 162 ($162) $ 40,500 (B) $15,026
(3,800) (C)
(3,392) (D)
(15,704) (E)
(1,665) (E)
(250) (F)
(814) (G)
(131) (H)
(385) (I)
(100) (J)
Prepaid expenses and other
current assets............ 441 13 (13) 441
Advances to Affiliates...... 30 30
Current deferred tax
asset..................... 7 -- 7
-------- ------- -------
Total current
assets............. 1,245 175 15,504
-------- ------- -------
Deferred expenses, net........ 449 -- 250 (F) 250
-------- -------
(449) (K)
Investments in facilities, at
cost........................ 17,222 3,145 (625) 1,280 (C) 28,722
7,700 (D)
Accumulated depreciation...... (2,096) (625) 625 (2,096)
-------- ------- -------
Net investment in
facilities................ 15,126 2,520 26,626
Deferred taxes and other
assets...................... -- 7 (7) 183 (L) 183
-------- ------- -------
Total assets......... $ 16,820 $2,702 $42,563
============== ============== =======
(Notes on following page)
</TABLE>

26
<PAGE> 28

<TABLE>
<CAPTION>
SUBURBAN LODGES
OF AMERICA, INC. GULF COAST
AND ASSOCIATES, LTD.
AFFILIATED (FOREST PARK COMPANY
ENTITIES FACILITY) PRO
HISTORICAL HISTORICAL ELIMINATIONS(A) ADJUSTMENTS FORMA
---------------- ---------------- --------------- ----------- -------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Current portion of long-term
debt and
capital lease
obligations............... $ 536 $2,728 ($2,728) ($536) (E) $ --
Current portion of notes
payable to affiliates..... 1,053 -- (1,053) (E) --
Accounts payable............ 150 47 (47) (62) (M) 88
Construction accounts
payable................... 336 -- 336
Accrued interest............ 131 -- (131) (H) --
Accrued expenses and
other..................... 431 222 (222) (170) (M) 261
-------- ------- -------
Total current
liabilities........ 2,637 2,997 685
Long-term debt and capital
lease obligations........... 13,313 -- (15,168) (E) --
1,855 (D)
Long-term notes payable to
affiliates.................. 612 448 (448) (612) (E) --
-------- ------- -------
Total liabilities.... 16,562 3,445 685
Preferred stock, $1.00 par
value: 5,000,000 shares
authorized, none issued..... -- -- --
Shareholders' equity:
Common stock............ -- -- 78 (N) 78
Additional paid-in
capital.............. 1 -- 40,500 (B) 41,800
2,453 (D)
(449) (K)
(814) (G)
232 (M)
(385) (I)
(100) (J)
(1,670) (O)
1,927 (P)
(78) (N)
183 (L)
Retained deficit........ (1,670) -- 1,670 (O) --
Partners' capital (deficit)... 1,927 (743) 3,263 (1,927) (P) --
-------- ------- -------
(2,520) (C)
Total shareholders'
equity and
partners'
capital............ 258 (743) 41,878
-------- ------- -------
Total liabilities and
shareholders'
equity............. $ 16,820 $2,702 $42,563
============== ============== ========
</TABLE>

- ---------------

(A) Reflects the elimination of (i) assets not acquired ($182) and (ii)
liabilities not assumed ($3,445) in connection with the purchase of the
Forest Park Facility from the net proceeds of the Offering.

(B) Reflects the proceeds of the Offering of 3,000,000 shares of Common Stock
($45,000) net of related expenses ($4,500).

27
<PAGE> 29

(C) Reflects the purchase of the Forest Park Facility for cash ($3,800) from
the net proceeds of the Offering. The Forest Park Facility is accounted for
at its acquisition cost. The price has been preliminarily allocated to land
($600), buildings ($2,698) and fixtures and equipment ($502). Such
allocation is based upon estimates and may be subject to revision.

(D) Reflects the purchase of the Company-owned Construction and Company-owned
Development Facilities for a total consideration of $7,700 composed of cash
from the net proceeds of the Offering ($3,392), assumed construction debt
($1,855), and 163,556 shares of Common Stock issued in conjunction with the
Corporate Organization ($2,453). Such facilities are recorded at their
acquisition cost and are recorded as construction-in-progress until
completion. The Company anticipates that the total development and
construction costs for completion of the Company-owned Construction
Facilities and the Company-owned Development Facilities will be
approximately $22.2 million and that after application of the net proceeds
of the Offering, it will have to borrow approximately $15.2 million under
the Line of Credit to complete these facilities.

(E) Reflects the repayment of long-term debt and capital lease obligations
($15,704) and notes payable to Affiliates ($1,665) from the net proceeds of
the Offering.

(F) Reflects the payment of deferred financing costs on the Line of Credit from
the net proceeds of the Offering ($250).

(G) Represents cash and cash equivalents not acquired and distributed to Mr.
Krischer, as agent for the purpose of liquidating current liabilities and
making final distributions with respect to the Affiliated Entities, in
conjunction with the Corporate Organization ($814).

(H) Represents accrued interest on long-term debt ($80) and notes payable to
Affiliates ($51) paid from the net proceeds of the Offering.

(I) Cash distributions ($385) to partners in an Affiliated Entity in exchange
for their 8% interest in such partnership in connection with the Corporate
Organization.

(J) Cash distribution to certain partners in the Conyers Facility in payment of
a development fee ($100) in connection with the Corporate Organization.

(K) Reflects the elimination of deferred financing costs related to debt to be
repaid from the net proceeds of the Offering ($449).

(L) Represents the establishment of deferred taxes at the effective rate of
37.5% for the difference between the book and tax basis of assets at March
31, 1996 ($183).

(M) Represents accounts payable ($62) and accrued expenses ($170) not assumed
in the Corporate Organization.

(N) Reflects the reclassification of (i) the par value of 3,000,000 shares of
Common Stock to be issued in the Offering ($30); (ii) the par value of
163,556 shares of Common Stock issued for the Company-owned Construction
and the Company-owned Development Facilities acquired from Third-Party
Sellers ($2); (iii) the par value of 999,483 shares of Common Stock issued
to owners of the Affiliated Entities, accounted for as if it were a pooling
of interests, in conjunction with the Corporate Organization ($10) and (iv)
the par value of 3,585,451 shares of Common Stock issued in connection with
the stock split effected in connection with the Corporate Organization
($36).

(O) Reflects the reclassification of retained deficit to additional paid-in
capital ($1,670) in connection with the Corporate Organization.

(P) Reflects the reclassification of partners' capital to additional paid-in
capital ($1,927) in connection with the Corporate Organization.

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<PAGE> 30

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Formed in 1987, the Company presently owns and operates eight Suburban
Lodge facilities and franchises six additional Suburban Lodge facilities located
in four southeastern states. These Existing Facilities contain an aggregate of
1,778 guest rooms and have an average of 127 guest rooms. The Company
anticipates that an additional 13 Suburban Lodge facilities, eight Company-owned
and five franchised, will open in 1996 resulting in an aggregate of 27 Suburban
Lodge facilities by year-end. Ten of these additional facilities, six
Company-owned and four franchised, are currently under construction. Management
anticipates that by the end of the third quarter of 1996 construction will
commence on the three remaining facilities scheduled to open in 1996 and an
additional four facilities scheduled to open in 1997. There can be no assurance
that the Company and its franchisees will be able to complete the development of
the Construction Facilities and the Development Facilities. See "Risk
Factors -- Development Risks."

The Company's growth strategy is to develop additional Company-owned
facilities and to franchise the Suburban Lodge concept to independent developers
and operators, as well as to passive investors who may retain the Company to
develop and manage their Suburban Lodge facilities. The Company has obtained a
commitment for the Line of Credit to fund future development projects, including
the Development Facilities, and for working capital. Suburban's principal
operating strategies are to (i) provide its guests with clean, comfortable and
attractive accommodations at weekly rates substantially lower than those offered
by most traditional and other extended stay lodging facilities; (ii) control
operating costs at each of its facilities and maintain above industry average
operating margins and (iii) ensure guest satisfaction through a commitment to
customer service. Given the Company's focus on maintaining competitive prices
and the historically high occupancies at the Existing Facilities, the Company's
growth is expected to be generated principally by the development of new
Company-owned and franchised Suburban Lodge facilities.

RESULTS OF OPERATIONS

The following discussion of results of operations relates only to the
Company and the Company-owned Existing Facilities, exclusive of the Forest Park
facility, which was owned by one of the Third Party Sellers during the stated
periods. The following table sets forth certain combined historical operating
information for Suburban Lodges of America, Inc. and Affiliated Entities, as a
percentage of total revenue, for the periods indicated.

<TABLE>
<CAPTION>
SUBURBAN LODGES OF AMERICA, INC.
AND AFFILIATED ENTITIES
-------------------------------------
THREE MONTHS
YEAR ENDED ENDED MARCH
DECEMBER 31, 31,
--------------------- -------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Room revenue............................................... 86.0% 89.9% 85.4% 85.8% 81.8%
Other facility revenue..................................... 6.7 6.7 5.7 6.1 5.2
Franchise and other revenue................................ 7.3 3.4 8.9 8.1 13.0
----- ----- ----- ----- -----
Total revenue.................................... 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Facility operating expenses................................ 40.6 40.7 40.0 45.2 39.1
Corporate operating expenses and related party consulting
fees..................................................... 12.8 17.0 17.3 15.1 16.8
Depreciation and amortization.............................. 11.1 9.6 8.9 9.1 7.0
----- ----- ----- ----- -----
Total expenses................................... 64.5 67.3 66.2 69.4 62.9
----- ----- ----- ----- -----
Operating income........................................... 35.5% 32.7% 33.8% 30.6% 37.1%
===== ===== ===== ===== =====
</TABLE>

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<PAGE> 31

The following table sets forth certain information with respect to facility
level operating performance for the periods indicated, which the Company
believes is important in assessing its operating performance.

Comparison of the quarter ended March 31, 1996 to the quarter ended March 31,
1995

Total revenue for the quarter ended March 31, 1996 was approximately
$1,705,000 which was an increase of $563,000, or 49.2%, over the quarter ended
March 31, 1995. Room revenue for the period increased by approximately $386,000
of which approximately $304,000 was attributable to the opening of the Matthews
facility in August 1995 and $82,000 was attributable to facilities open
throughout both periods. The increase in room revenue for facilities open
throughout both periods resulted from a $16.37 increase in Weekly REVPAR from
$126.38 to $142.75. The increase resulted from an $18.63 increase in average
weekly rates from $129.75 to $148.38, which was partially offset by a slight
decrease in occupancy.

Franchise and other revenue from corporate operations for the quarter ended
March 31, 1996, which includes management, construction and development revenue,
was approximately $217,000, an increase of $125,000, or approximately 135.9%,
over the quarter ended March 31, 1995. Franchise revenue for the period
increased $18,000, or approximately 33.3%, from $54,000 in 1995 to $72,000 in
1996. The additional franchise revenue reflects increased royalties on open
facilities as a result of two additional openings in 1995 and increases in
royalties from facilities open for both periods. Development revenue, which
increased approximately $60,000, from $27,000 in the first quarter of 1995 to
$87,000 in the first quarter of 1996, resulted from the development of three
additional sites placed under construction for third party franchisees.
Construction revenue increased approximately $9,000, from $18,000 in the first
quarter of 1995 to approximately $27,000 in the first quarter of 1996, as a
result of the three construction projects noted above. The development and
construction services which generated these revenues were performed pursuant to
development agreements negotiated on a case by case basis, and the management
services which generated these revenues were performed pursuant to the Company's
standard Management Agreement. See "Business -- Franchise, Development and
Management Agreements."

Facility operating expenses increased approximately $137,000, or 26.5%, to
approximately $653,000 for the quarter ended March 31, 1996 from approximately
$516,000 for the quarter ended March 31, 1995. This increase reflects the full
quarter expenses of the Matthews facility totaling approximately $106,000, and
the balance of the increase in facility operating expenses of $31,000 is related
to increases in expenses at facilities open during the entire quarter.
Depreciation and amortization increased $12,000, or approximately 11.5%,
principally as a result of the opening of the Matthews facility.

Corporate operating expenses and related party consulting fees increased
$107,000, or approximately 62.0%, to $280,000. This increase was due to the
additional staffing in the financial and development segments of the business as
well as upgrades and expansion of computer systems, corporate advertising and
marketing programs and executive compensation and benefit plans.

Interest expense during the quarter ended March 31, 1996 increased $61,000,
or approximately 27.0%, to $286,000 primarily from an increase in indebtedness
associated with the opening of the Matthews facility. The Company's policy is to
capitalize interest expense incurred in connection with the construction and
development of Suburban Lodge facilities prior to the opening dates.

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<PAGE> 32

Comparison of the year ended December 31, 1995 to the year ended December 31,
1994

Total revenue for the year ended December 31, 1995 was approximately
$5,301,000, which was an increase of $957,000, or 22.0%, over the year ended
December 31, 1994. Room revenue for the period increased by approximately
$528,000, of which approximately $354,000 was attributable to the opening of the
Matthews facility in August 1995 and $174,000 was attributable to facilities
open throughout both periods. The increase in room revenue for facilities open
throughout both periods resulted from a 4.1% increase in Weekly REVPAR from
$125.74 to $130.93. The increase resulted from a 6.3% increase in average weekly
rates from $128.69 to $136.77, which was partially offset by a slight decrease
in occupancy.

Franchise and other revenue from corporate operations for the year ended
December 31, 1995, which includes management, construction and development
revenue, was approximately $460,000, an increase of $309,000, or approximately
205.0%, over the year ended December 31, 1994. Franchise revenue for the period
increased $96,000, or approximately 98.0%, from $98,000 in 1994 to $194,000 in
1995. The additional franchise revenue reflects two initial franchise fees for
facilities which opened in 1995, and increased royalties on open facilities as a
result of increases in revenue at these facilities. The franchise component of
the Company's business produces a high return as a result of its relatively
small incremental overhead. Management foresees accelerated expansion of this
component of the Company's business. Development and construction revenue from
the development of five additional sites acquired or placed under construction
during the year for third party franchisees were approximately $44,000 and
$116,000, respectively, in 1995, representing an aggregate increase of
approximately $154,000 from 1994. Management fees in 1995, for third party
management activities, increased to approximately $107,000 from $47,000 in 1994.

Facility operating expenses increased $304,000, or approximately 17.2%, to
$2,072,000 for the year ended December 31, 1995 from $1,768,000 for the year
ended December 31, 1994. More than half the increase, or $166,000, resulted from
preparation for the opening and operation of the Matthews facility. The
Company's policy is to expense pre-opening costs as they are incurred due to the
short stabilization period for its facilities. The balance of the increase in
facility operating expenses of $138,000 is related to increases in expenses at
facilities open during the entire year. Management's focus on recruiting
property managers, expanding compensation and benefit programs, implementing
proactive quality assurance programs to ensure all rooms are maintained at
quality standards and general increases in utilities and guest supplies were the
principal causes for the $138,000 increase in costs. Depreciation and
amortization increased $44,000, or approximately 10.6%, principally as a result
of the opening of the Matthews facility.

Corporate operating expenses and related party consulting fees increased
$163,000, or approximately 22.1%, to $900,000. This increase was due to the
addition of senior management, including hiring a Chief Financial Officer and
Treasurer, a Vice President of Development and a land acquisition specialist, to
help prepare for accelerated development and expansion, as well as upgrades in
computer systems, corporate advertising and marketing programs and executive
compensation and benefit plans.

Interest expense during 1995 increased $162,000, or approximately 17.3%, to
$1,098,000, primarily from an increase in indebtedness associated with the
opening of the Matthews facility. As of December 31, 1995, Suburban had
outstanding indebtedness on six of the Existing Facilities of $10,724,000. The
Company's policy is to capitalize interest expense incurred in connection with
the construction and development of Suburban Lodge facilities prior to their
opening dates.

Comparison of the year ended December 31, 1994 to the year ended December 31,
1993

Total revenue for the year ended December 31, 1994 was $4,345,000, an
increase of $982,000, which represents a 29.2% increase over the year ended
December 31, 1993. Room revenue for the period increased by approximately
$1,011,000, of which approximately $881,000 was attributable to a full year of
operations in 1994 for the Mableton and Greenville facilities, and $130,000 was
attributable to facilities open throughout both periods. The $130,000 increase
in room revenue resulted principally from a 8.0% increase in Weekly REVPAR from
$116.47 to $125.74, which was caused by a 5.5% increase in average weekly rate
from $121.96 to $128.69 and a modest increase in occupancy. Other facility
revenue in 1994, which includes television

31
<PAGE> 33

rental, telephone charges and laundry revenue, increased by approximately
$67,000, principally as a result of the full year of operations of the Mableton
and Greenville facilities.

Franchise and other revenue from corporate operations for the year ended
December 31, 1994, which includes management, construction and development
revenue, was $151,000, a decline of $96,000, or approximately 38.9%, from the
year ended December 31, 1993. Franchise revenue for the period increased by
$32,000, or approximately 48.5%, from $66,000 in 1993 to $98,000 in 1994.
However, development and construction revenue from the development of third
party franchised facilities declined by $122,000 as a result of the lack of
development activity during 1994.

Facility operating expenses increased $404,000, or approximately 29.6%, to
$1,768,000 for the year ended December 31, 1994 from $1,364,000 for the year
ended December 31, 1993. Of such increase, $363,000 resulted from the inclusion
of a full year of operating expenses at the Mableton and Greenville facilities,
which were opened or acquired in June 1993 and September 1993, respectively. The
remaining increases resulted from a change in utilities and real estate taxes at
the facilities. Depreciation and amortization increased $44,000, or
approximately 11.8%, principally as a result of a full year of depreciation of
the Mableton and Greenville facilities.

Corporate operating expenses increased $308,000, or approximately 71.9%, to
$737,000. The increase is due primarily to increases in salaries and benefits
and general office expenses related to new site openings and increased franchise
activity, which had a positive impact on income in 1995.

During 1994, interest expense increased $212,000, or approximately 29.3%,
from $724,000 to $936,000, due to an increase in indebtedness associated with
the opening of the Mableton and Greenville facilities.

LIQUIDITY AND CAPITAL RESOURCES

Historically, Suburban has funded its operations principally through cash
flow from operations. During the year ended December 31, 1995, the Company
generated cash flow from operations of $1,305,000 compared to $929,000 for the
year ended December 31, 1994. The increase of $376,000 was substantially
attributable to the increase in income before an extraordinary item. During the
year ended December 31, 1994, the Company generated $929,000 in cash flow from
operations, which represents an increase of $49,000 over 1993. The Company had
cash balances of $467,000 and $687,000 at December 31, 1994 and December 31,
1995, respectively. Immediately prior to consummation of the Corporate
Organization, the Affiliated Entities intend to distribute to Mr. Krischer, as
agent, the cash and cash equivalents of the Affiliated Entities for purposes of
liquidating current liabilities and making final distributions, as adjusted in
accordance with the terms of the acquisition agreements, which as of March 31,
1996 aggregated approximately $814,000. As of March 31, 1996, Messrs. Krischer,
Kuse and McGovern would have received approximately $245,000, $152,000 and
$90,000, respectively, of such distributions, after liquidation of certain
liabilities in the amount of approximately $323,000. Such distributions are
expected to reduce substantially the cash balances of the Affiliated Entities
immediately prior to the closing of the Offering.

The Company has funded its development principally from borrowings and, to
a lesser extent, equity contributions. As of March 31, 1996, Suburban had
outstanding indebtedness on six of the Existing Facilities of $10,578,000. Upon
consummation of the Corporate Organization, the Offering and application of the
net proceeds therefrom, Suburban does not anticipate having any outstanding
borrowings under the Line of Credit. The Company anticipates that the total
development and construction costs for completion of the Company-owned
Construction Facilities and the Company-owned Development Facilities will be
approximately $22.2 million, which it intends to fund with a portion of the net
proceeds from the Offering, borrowings of $15.2 million under the Line of Credit
and cash flow from operations. The Company anticipates that in the immediate
future a typical 132-guest room Suburban Lodge facility will cost approximately
$3.4 million (approximately $25,800 per guest room) to develop and construct,
including building structures, improvements, furniture, fixtures, equipment,
land and pre-opening costs. In the past, Suburban Lodge facilities have, on
average, reached 90% occupancy within 90 days of opening; however, there can be
no assurance that each new facility will obtain such figures within such time
period.

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<PAGE> 34

At December 31, 1995, the Company had material commitments for capital
expenditures of approximately $3.5 million related to the development and
construction of the Conyers and Douglasville facilities. As of the date of this
Prospectus, a substantial portion of these commitments has been spent and such
funds were obtained primarily from borrowings.

From time to time, the Company may also acquire Suburban Lodge facilities
from its franchisees. Other than the Development Facilities, the Company has no
present agreements, commitments or understandings to acquire other facilities or
sites. However, the Company is continually searching for other appropriate sites
on which to develop additional Suburban Lodge facilities.

The Company has obtained a commitment for a $50 million Line of Credit with
PNC Bank, Kentucky, Inc. ("PNC"); however, $25 million of the Line of Credit is
subject to obtaining commitments from other lenders, and there can be no
assurance that such commitments will be obtained. Under the terms of the
commitment letter, borrowings under the Line of Credit will bear interest at the
Company's election at (i) the higher of PNC's prime rate plus three-quarters of
one percent or the Federal Funds rate plus one and one-quarter percent or (ii)
the Euro-Rate plus two and one-quarter percent. The term of the Line of Credit
is two years, and advances under the Line of Credit will be secured by
substantially all of the Company's assets, assuming the Company obtains the
entire $50 million under the Line of Credit, and the Company may not incur
additional debt on the assets securing the Line of Credit. Advances under the
Line of Credit may not exceed 45% of the appraised value of the Company-owned
facilities based on PNC-commissioned appraisals. The Line of Credit will contain
the following financial covenants: maintenance of a minimum debt service
coverage ratio of 2.25x, a minimum ratio of earnings before interest, taxes,
depreciation and amortization to consolidated debt service of 2.50x and a
maximum ratio of consolidated debt to the market value of the Company of 45%. In
addition, the Company may not incur any unsecured debt (other than normal trade
payables), may not incur more than $50 million of recourse debt (including the
Line of Credit), must limit investment in facilities under development and land
to 35% of the market value of the Company and must maintain a net worth equal to
or greater than $30 million plus 80% of the aggregate net proceeds received by
the Company from any equity offering subsequent to the closing of the Line of
Credit. Further, no more than 15% of Company-owned facilities may be
concentrated in a single Metropolitan Statistical Area ("MSA"), excluding the
Atlanta, Georgia and Charlotte, North Carolina MSAs and the Company may not own
more than 10 facilities in the Atlanta, Georgia MSA or four facilities in the
Charlotte, North Carolina MSA without PNC's consent. Borrowings under the Line
of Credit may be prepaid without prepayment penalty.

In the future, the Company may seek to increase the amount of its credit
facilities, negotiate additional credit facilities or issue corporate debt or
equity securities. Any debt incurred or issued by the Company may be secured or
unsecured, fixed or variable rate interest and may be subject to such terms as
the Board of Directors of the Company deems prudent. See "Business -- Business
Strategy."

The Company believes that the net proceeds to the Company from the
Offering, together with cash generated from operations and borrowings
anticipated to be available under the Line of Credit, will be sufficient to meet
the Company's working capital and capital expenditure needs for the immediate
future.

SEASONALITY

Management believes that extended stay lodging facilities are not as
seasonal in nature as the overall lodging industry due to long-term guest stays.
Based upon the experience of the Existing Facilities, management expects that
occupancy and revenues may be lower than normal during the months of November,
December and January due to the holiday season. Because many of Suburban's
expenses do not fluctuate with occupancy, such declines in occupancy may cause
fluctuations or decreases in the Company's quarterly earnings.

INFLATION

The rate of inflation as measured by changes in the average consumer price
index has not had a material effect on the revenue or operating results of the
Company. However, inflation in the future could affect the Company's operating
or construction costs. See "Risk Factors -- Development Risks."

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<PAGE> 35

BUSINESS

OVERVIEW

The Company develops, owns, manages and franchises Suburban Lodge(R)
facilities, which are economy extended stay lodging facilities designed to
appeal to value-conscious guests seeking to "Lodge for Less."(SM) The Company
believes that the Suburban Lodge chain is one of the largest lodging chains
(based on number of guest rooms and facilities) devoted to serving the economy
extended stay market. Suburban Lodge guest rooms are fully furnished and include
a combination living room and bedroom, a bathroom and a fully equipped
kitchenette. Weekly maid and linen service, access to cable or satellite
television and coin-operated laundromats are also provided to allow guests to
stay comfortably for extended periods. Suburban Lodge facilities offer clean,
comfortable and attractive accommodations to guests at substantially lower rates
than most traditional and other extended stay lodging facilities. Although daily
rates are available, substantially all guests pay the Company's weekly rates,
which currently range from $139 to $189 per week for single occupancy and from
$149 to $209 per week for double occupancy.

Immediately prior to the Corporate Organization, the Company managed eight
Suburban Lodge facilities, owned two of the Development Facilities and was the
franchisor with respect to all of the Existing Construction and Development
Facilities. In addition, the Company developed seven of the Existing Facilities.
As previously noted, after giving effect to the Corporate Organization, the
Company owns and operates eight Existing Facilities, franchises the remaining
six Existing Facilities, owns six of the Construction Facilities and four of the
Development Facilities and is the franchisor for four of the Construction
Facilities and three of the Development Facilities.

The extended stay segment of the lodging industry, which includes economy
extended stay facilities, is a relatively small but growing segment of the
lodging industry. Of the approximately 3.3 million guest rooms available in the
U.S. lodging industry at the end of 1995, there were approximately 40,000, or
1.2%, dedicated extended stay guest rooms at approximately 360 properties.
Suburban believes that the extended stay market offers a number of attractive
investment characteristics compared to traditional hotels, including higher than
industry average occupancy rates and operating margins. Based upon the high
occupancy rates of the Existing Facilities and published occupancy rates for
other participants in the extended stay market, the Company believes that
Suburban Lodge facilities appeal to an underserved and growing segment of guests
in the extended stay market. These guests include business travelers
(particularly those with limited or no expense accounts), individuals on
temporary work assignments, persons between domestic situations, persons
relocating or purchasing a home, tourists and other value-conscious customers
desiring low-cost, longer-term, quality accommodations with fully equipped
kitchenettes, with individuals on temporary work assignments and persons
relocating or purchasing a home constituting the two largest groups of guests.

- LOW WEEKLY RATES. Suburban Lodge facilities offer weekly rates
substantially lower than those offered by most traditional and other
extended stay lodging facilities. The average weekly rate at the Nine
Mature Facilities during the year ended December 31, 1995 was $139.69,
compared to an equivalent average weekly rate (average daily rate
multiplied by seven) of $550.16 for extended stay hotels and $244.06 for
lower economy hotels.

- KITCHENETTES. Each Suburban Lodge guest room contains a fully equipped
kitchenette, including a refrigerator, two-burner stove-top, microwave
oven and cooking and eating utensils.

- HIGHER OCCUPANCY. Average occupancy at the Nine Mature Facilities during
1995 was 97.6%, which compares favorably to the average occupancy of 82.0%
for extended stay hotels and 62.8% for lower

34
<PAGE> 36

economy hotels during the same period. The Company believes that its high
occupancy is primarily a result of the combination of its low weekly rates
and its guest room amenities. Many of the Existing Facilities frequently
maintain waiting lists of people seeking available guest rooms.

- OPERATING EFFICIENCIES. The Company seeks to minimize costs throughout
its operations. Suburban believes that long-term guest stays, weekly
rather than daily housekeeping and limited office hours produce
significant operating efficiencies. Each Suburban Lodge facility has a
staff of approximately six to eight on-site employees, including a general
manager, which is substantially smaller than the staffs at most
traditional lodging facilities.

- STANDARD DESIGN AND LOW CONSTRUCTION COSTS. Suburban Lodge facilities
are designed and built to uniform plans and specifications developed and
periodically refined since 1987. The Company believes that standardization
lowers construction costs and establishes consistent quality. The total
investment in the three most recently completed Company-owned Existing
Facilities was approximately $2.4 million, $3.1 million and $3.3 million
(or approximately $18,400, $22,600 and $23,600 per guest room), including
building structures, improvements, furniture, fixtures, equipment, land
and pre-opening costs. The Company anticipates that the total cost of each
of the six Company-owned Construction Facilities, including building
structures, improvements, furniture, fixtures, equipment, land and
pre-opening costs, will range from approximately $3.1 million to $3.4
million (or approximately $23,300 to $26,500 per guest room). The Company
believes that its construction costs are relatively low due to a number of
factors, including careful site selection, smaller room sizes, economical
and durable exterior and interior finishes and room furnishings and
refined building systems and processes.

- ATTRACTIVE UNIT ECONOMICS. Suburban believes its facilities have
achieved attractive unit level economics. For the two most recently
completed Company-owned Existing Facilities open at least one quarter, one
of which was open throughout 1995 and the other which opened in August
1995, facility level earnings before interest, taxes and depreciation for
the year ended December 31, 1995, constituted 25.2% and 22.4% (based on
annualized fourth quarter results less certain pre-opening expenses),
respectively, of their total development and construction costs, including
building structures, improvements, furniture, fixtures, equipment, land
and pre-opening costs. Suburban believes that the owners of the recently
completed franchised Existing Facilities have obtained comparable returns
on their facilities before accounting for fees and expenses paid to the
Company. The Company believes that its facilities' favorable unit
economics are due, in part, to the fact that Suburban Lodge facilities
reach stabilization in a relatively short period after opening. On
average, the Nine Mature Facilities exceeded 80% occupancy within six
weeks after opening or acquisition by the Company.

BUSINESS STRATEGY

Suburban's business objective is to become a national provider of economy
extended stay lodging facilities. The Company intends to achieve its objective
through the execution of its growth and operating strategies. Suburban's growth
strategy is to develop additional Company-owned facilities and to franchise the
Suburban Lodge concept to independent developers and operators as well as to
passive investors who will retain the Company to develop and manage their
Suburban Lodge facilities. The Company's principal

35
<PAGE> 37

operating strategies are to (i) provide its guests with clean, comfortable and
attractive accommodations at weekly rates substantially lower than those offered
by most traditional and other extended stay lodging facilities; (ii) control
operating costs at each of its facilities and maintain above industry average
operating margins and (iii) ensure guest satisfaction through a commitment to
customer service.

Growth Strategy

Company-owned Development. The Company presently owns and operates eight
Suburban Lodge facilities and franchises six additional Suburban Lodge
facilities located in four southeastern states. The Existing Facilities contain
an aggregate of 1,778 guest rooms, have an average of 127 guest rooms and
average approximately 3.3 years in age. The Company anticipates that an
additional 13 Suburban Lodge facilities, eight Company-owned and five
franchised, will open in 1996 resulting in an aggregate of 27 Suburban Lodge
facilities by year-end. Ten of these additional facilities, six Company-owned
and four franchised, are currently under construction. Management anticipates
that by the end of the third quarter of 1996 construction will commence on the
three remaining facilities scheduled to open in 1996 and an additional four
facilities scheduled to open in 1997. The Construction Facilities and the
Development Facilities are located in six southeastern states and are expected
to contain an aggregate of 2,319 guest rooms, representing a 130% increase over
the aggregate number of guest rooms in the Existing Facilities. The Company
intends to continue the growth of the Suburban Lodge chain in 1997 by opening
approximately 26 to 28 additional Suburban Lodge facilities, 15 of which are
expected to be Company-owned. The facilities expected to open in 1997 are in
various stages of planning. There can be no assurance that the Company and its
franchisees will be able to complete the development of all of these facilities,
including the Construction Facilities and the Development Facilities. See "Risk
Factors -- Development Risks."

The Company believes that the depth and experience of its senior management
team will be an important factor in executing its growth strategy. David E.
Krischer, the Company's founder, Chairman of the Board, Chief Executive Officer
and President, developed the Suburban Lodge concept and has overseen the
development or acquisition of each of the Company-owned Existing Facilities. In
addition, both the Company's Vice President of Operations and its Vice President
of Construction have been employed by the Company since its inception. The
Company's in-house development team has significant experience in developing
Suburban Lodge facilities and supervises all phases of development to ensure
on-time construction within budget that meets the Company's standards. This team
developed seven of the Existing Facilities and currently is developing five of
the Construction Facilities and three of the Development Facilities.

Suburban initially plans to develop and operate Company-owned facilities in
the Southeast and Midwest and to franchise the Suburban Lodge system on a
nationwide basis. The Company also intends to develop and operate Company-owned
facilities on a nationwide basis, but it has no specific timetable for such
expansion. By initially clustering the Company-owned facilities in these
regions, Suburban believes that it will increase consumer awareness of the
Suburban Lodge(R) brand name and achieve efficiencies in purchasing, marketing
and management. In selecting particular cities, the Company plans to identify
markets that have high levels of employment and MSAs with populations of 150,000
or more. In considering specific development sites, the Company reviews
demographic and traffic studies, the availability and pricing of suitable sites,
the costs and risks of developing and any other factors deemed relevant,
including site selection criteria based on the experience of the Existing
Facilities. In particular, the Company looks for sites that are exposed to
heavily-traveled thoroughfares with nearby retail and restaurant developments
and that are located in areas with a substantial number of employers.

Suburban has developed uniform plans and specifications for the design of
Suburban Lodge facilities. Depending upon site configuration, land costs and
climate conditions, each facility will be constructed using Suburban's two-story
or three-story exterior corridor design and will contain between 120 and 150
guest rooms. Once the Company has selected and acquired a site and obtained
regulatory permits and approvals, the construction phase of development
generally requires approximately seven to eight months, with the entire
development process lasting approximately 12 months. Suburban has relationships
with several architectural and engineering firms as well as independent general
contractors, whose work is supervised by the Company's in-house development
team. The Company believes that these relationships facilitate the construction
of its facilities.

36
<PAGE> 38

Franchising and Third Party Development and Management Activities. In
addition to operating Company-owned Suburban Lodge facilities, the Company
franchises Suburban Lodge facilities. In particular, the Company franchises the
Suburban Lodge concept to independent developers and operators and intends to
franchise the Suburban Lodge concept to passive investors who may retain the
Company to develop and manage their Suburban Lodge facilities. Suburban
considers its franchisees to be an integral component of its continued growth
and believes its relationship with its franchisees is excellent. As of March 31,
1996, six independent franchisees, each of whom has extensive experience in
multi-unit real estate development, were operating or developing franchised
Suburban Lodge facilities in Alabama, Florida and Georgia. The Company plans to
work with its franchisees to open 11 to 13 franchised Suburban Lodge facilities
in 1997, although there can be no assurance that all of these facilities will be
opened. See "Risk Factors -- Development Risks" and " -- Competition for and
Dependence on Franchisees."

Through franchising, the Company intends to accelerate the growth of the
Suburban Lodge chain, thereby increasing its market presence and brand awareness
in both new and existing markets, while generating incremental revenues at an
attractive margin. Further, the Company anticipates that the development of a
large network of lodging facilities will result in economies of scale in
management, marketing and purchasing. Suburban intends to offer franchising
opportunities on a national level and believes that its existing infrastructure
and experience in franchising the Suburban Lodge concept will be an important
factor in executing its franchising strategy.

Suburban believes that several aspects of the Suburban Lodge concept should
be attractive to franchise prospects, including the depth of the Company's
management team and its experience in the economy extended stay market, the
competitive pricing and low per guest room development costs of each Suburban
Lodge facility and the potential for a franchisee to receive a superior return
on investment. Management is currently unaware of any lodging competitor that
targets franchise opportunities primarily for newly constructed extended stay
lodging facilities at a similar price point. The Company also offers development
and management services to franchisees who are passive investors for additional
fees. See " -- Franchise, Development and Management Agreements -- Fees." The
Company's current franchisees have been obtained primarily through referrals. In
addition, the Company advertises franchising opportunities at industry trade
shows and intends to advertise franchising opportunities in trade publications.

Operating Strategies

Suburban's principal operating strategies are to (i) provide its guests
with clean, comfortable and attractive accommodations at weekly rates
substantially lower than those offered by most traditional and other extended
stay lodging facilities; (ii) control the operating costs at each of its
facilities and maintain above industry average operating margins and (iii)
ensure guest satisfaction through a commitment to customer service.

Economy Pricing. Suburban's principal operating strategy is to offer its
guests weekly rates substantially lower than those offered by most traditional
and other extended stay lodging facilities. The average weekly rate at the Nine
Mature Facilities during 1995 was $139.69, compared to an equivalent average
weekly rate of $550.16 for extended stay hotels and $244.06 for lower economy
hotels. The Company also competes with individual extended stay facilities and
small chains of extended stay facilities which have average weekly rates
comparable to the Company's average weekly rates. The Company believes that its
high occupancy is primarily a result of the combination of its low weekly rates,
which appeal to a broad base of potential guests, and its guest room amenities.
Suburban intends to maintain its competitive pricing policy and to focus on
achieving high occupancy rates. The Company is able to offer clean, comfortable
and attractive accommodations at its low weekly rates due to the low development
costs for each Suburban Lodge facility and the low operating costs involved in
operating a Suburban Lodge facility. According to the Company's latest guest
survey, approximately 32% of guests who responded said they would have either
stayed with family or friends or would not have travelled to the area if an
extended stay facility similar to a Suburban Lodge facility had not been
available.

37
<PAGE> 39

Low Operating Costs. Suburban seeks to minimize costs throughout its
operations. The Company is able to control its operating costs because it
operates each facility with a staff of approximately six to eight full-time
employees, which is smaller than the staffs at most traditional lodging
facilities, maintains limited office hours and provides weekly rather than daily
housekeeping. In addition, because the average guest stay is approximately six
to seven weeks, the Company has been able to minimize its marketing and
advertising efforts while maintaining high occupancies. Longer guest stays also
reduce guest check-in traffic and the administrative costs of the facilities.

Guest Satisfaction. The Company prides itself on maintaining a positive
and professional relationship with its guests and seeks to instill this approach
in all of its employees. The Suburban Lodge philosophy is to provide clean,
comfortable and attractive lodging accommodations to guests at substantially
lower rates than most traditional and other extended stay lodging facilities and
to serve guests in a professional manner. In particular, the Company strives to
maintain guest satisfaction by keeping each of its facilities well maintained
and in good condition. The Company conducts periodic guest surveys in order to
ascertain its guests' needs and concerns. According to the latest guest survey,
approximately 99% of guests who responded (255 of 258) said they would recommend
Suburban Lodge to friends and associates.

THE FACILITIES

The Existing Facilities are located in four southeastern states, contain an
aggregate of 1,778 guest rooms, have an average of 127 guest rooms and average
approximately 3.3 years in age. The Construction Facilities and Development
Facilities are located in six southeastern states and are expected to contain an
aggregate of 2,319 guest rooms, representing a 130% increase over the aggregate
number of guest rooms in the Existing Facilities. A newly developed Suburban
Lodge facility is built using either a two-story or three-story design. The two
designs have similar architectural styles and guest room floor plans. The
majority of Suburban Lodge guest rooms are uniform in size and weekly rates for
single occupancy currently range from $139 to $169. Recently developed
facilities, however, include some larger guest rooms for which a range of $169
to $189 is charged. Each facility includes guest rooms, a general manager's
apartment, an office and a guest laundry room and offers convenience items for
sale to its guests in the front office. Each guest room includes a combination
living room and bedroom, a fully equipped kitchenette (including a refrigerator,
two-burner stove-top, microwave oven and cooking and eating utensils), a
telephone and access to satellite or cable television. Each Suburban Lodge
facility also offers weekly maid and linen service.

The following tables set forth certain information with respect to the
Existing Facilities, Construction Facilities and Development Facilities.

<TABLE>
<CAPTION>
AVERAGE OCCUPANCY(2) AVERAGE WEEKLY RATE(2)
------------------------------------ ---------------------------------------------------
THREE
THREE MONTHS MONTHS
YEAR ENDED ENDED YEAR ENDED ENDED
DECEMBER 31, MARCH 31, DECEMBER 31, MARCH 31,
EXISTING DATE NUMBER OF -------------------- ------------ ----------------------------- ------------------
FACILITIES OPENED ROOMS(1) 1993 1994 1995 1995 1996 1993 1994 1995 1995 1996
- ----------- ------- --------- ---- ---- ---- ---- ---- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMPANY-OWNED:
Atlanta
(Forest
Park),
GA(3)... Mar-88 126 96.6% 99.1% 98.8% 98.9% 98.4% $117.61 $123.70 $131.47 $124.97 $149.97
Atlanta
(Fulton
Industrial),
GA...... Dec-88 108 98.1 99.6 99.2 98.6 99.6 119.78 124.62 129.18 126.20 137.38
Atlanta
(Norcross),
GA...... Jun-89 129 99.6 99.8 97.9 99.5 98.6 122.46 131.15 140.20 131.34 147.49
Birmingham
(Oxmoor),
AL...... Jul-90 151 96.8 94.3 92.5 94.2 89.1 121.47 128.73 138.04 129.40 144.64
Atlanta
(Mableton),
GA(4)... Jun-93 79 94.2 97.6 97.1 94.6 98.1 128.20 128.93 130.59 130.29 133.30
Greenville
(Mauldin
Road),
SC...... Sep-93 130 73.8 98.1 97.8 99.7 94.1 120.91 129.44 138.14 131.22 149.49
Charlotte
(Matthews),
NC...... Aug-95 139 86.6 99.6 146.02 169.36
Atlanta
(Conyers),
GA...... Apr-96 138
SUBTOTAL/WEIGHTED
AVERAGE... 1,000 95.7% 98.0% 96.3% 97.7% 96.5% $121.05 $127.82 $135.91 $128.92 $148.62
FRANCHISED(5):
Birmingham
(Riverchase/Pelham),
AL...... Jun-92 122
Atlanta
(Stone
Mountain),
GA...... Nov-92 132
Atlanta
(Marietta),
GA...... Aug-94 132
Birmingham
(Inverness/Greystone),
AL...... Sep-95 130
Atlanta
(Lilburn/Highway
78), GA.. Nov-95 132
Savannah,
GA...... Mar-96 130
---------
SUBTOTAL/WEIGHTED
AVERAGE... 778 96.8% 98.9% 91.6% 99.5% 89.7% $125.99 $134.03 $150.54 $139.62 $157.00
---------
SYSTEM-WIDE
TOTAL/WEIGHTED
AVERAGE... 1,778 96.1% 98.2% 94.6% 98.3% 93.5% $122.51 $129.67 $141.24 $132.65 $151.99
=========
</TABLE>

(Notes on following page)

38
<PAGE> 40

<TABLE>
<CAPTION>
NUMBER
CONSTRUCTION FACILITIES LOCATION ESTIMATED OPENINGS(6) OF ROOMS(1)
- ------------------------------------------------------------- ----------------- --------------------- -----------
<S> <C> <C> <C>
COMPANY-OWNED:
Douglasville............................................... Atlanta, GA Second Quarter 1996 132
Preston Highway(7)......................................... Louisville, KY Third Quarter 1996 150
Kingston Pike.............................................. Knoxville, TN Third Quarter 1996 132
Tara Blvd.(7).............................................. Atlanta, GA Third Quarter 1996 138
Wade Hampton Blvd.......................................... Greenville, SC Third Quarter 1996 126
Chesapeake................................................. Chesapeake, VA Fourth Quarter 1996 132
-----
SUBTOTAL............................................. 810
-----
FRANCHISED:
Lawrenceville.............................................. Atlanta, GA Second Quarter 1996 132
Roswell.................................................... Atlanta, GA Second Quarter 1996 134
Decatur.................................................... Atlanta, GA Third Quarter 1996 133
Indian Trail/I-85.......................................... Atlanta, GA Fourth Quarter 1996 150
-----
SUBTOTAL............................................. 549
-----
DEVELOPMENT FACILITIES
COMPANY-OWNED:
Charlotte/I-77............................................. Charlotte, NC Fourth Quarter 1996 132
Northside Drive............................................ Atlanta, GA Fourth Quarter 1996 150
Newport News............................................... Newport News, VA First Quarter 1997 132
Ridgeway Rd.(8)............................................ Memphis, TN First Quarter 1997 138
-----
SUBTOTAL............................................. 552
-----
FRANCHISED:
Taylorsville Rd............................................ Louisville, KY Fourth Quarter 1996 132
Baymeadows................................................. Jacksonville, FL First Quarter 1997 138
Gwinnett Place Mall........................................ Atlanta, GA First Quarter 1997 138
-----
SUBTOTAL............................................. 408
-----
TOTAL............................................ 2,319
============
</TABLE>

- ---------------

(1) The number of guest rooms does not include the general manager's apartment.
(2) Information is provided from the date of opening or acquisition of each
facility.
(3) The Forest Park facility will be acquired from an unrelated third party for
$3.8 million in cash. However, this facility has been managed by the Company
since its opening in March 1988.
(4) The Mableton facility was acquired in June 1993 and converted to a Suburban
Lodge facility in October 1994.
(5) Individual facility information has not been provided for the franchised
facilities due to non-disclosure agreements between the Company and its
franchisees.
(6) The Company believes that each of the Construction and Development
Facilities will open during the calendar quarter indicated. However, the
Company and its franchisees may not be able to complete the development of
all of these facilities on schedule. See "Risk Factors -- Development
Risks."
(7) These facilities will be acquired from unrelated third parties for a
combination of Common Stock and cash.
(8) This facility is being acquired from Legacy Lodging, LLC, an affiliate of
Legacy Securities Corp. See "Underwriting."

OPERATING PRACTICES

The Company has managed Suburban Lodge facilities since 1988, when the
first facility was opened, and is currently managing the eight Company-owned
Existing Facilities. Each Suburban Lodge facility has a general manager, who
resides on-site and is responsible for the overall operation of the facility,
and an assistant manager. Managers are trained in all aspects of facility
operations, with particular emphasis placed on customer service, and are given
broad authority to make day-to-day operating decisions. Managers are supervised
through the Company's management information systems and on-site audits by area
managers. Area managers are assigned to zones that typically include four to six
facilities and visit and inspect each facility in their respective zone on a
regular basis to ensure that consistency and quality standards are being
satisfied. Incentive programs allow managers to earn bonuses based on
achievement of monthly budgets set for each facility and upon performance and
occupancy rates. In addition, the employees of each facility compete against the
Company's other facilities for awards based upon occupancy and their overall
performance. To the extent possible, the Company intends to promote managers
from within its organization. As part of its ongoing training program, the
Company requires that each manager attend monthly training sessions to discuss
improvement of property performance and safety and current industry
developments.

39
<PAGE> 41

Each facility utilizes the Company's proprietary software package that
processes all on-site transactions and maintains financial records. The software
provides on-site management with updated information on items such as available
guest rooms, guest rooms needing cleaning or repairs, room charges due and guest
payment history. Management is not aware of any other software package generally
available which is designed to assist in the operation and management of
extended stay lodging facilities. Each facility is connected by modem to
Suburban's corporate office in Atlanta, and operating results are compiled and
reviewed on a regular basis. The corporate office purchases supplies, pays
virtually all property expenses and prepares monthly financial statements for
all properties managed by the Company.

Suburban collects data about each of its guests, including their
occupation, permanent residence, length of stay and how they learned about the
facility. The Company uses this information as part of its market research and
in the preparation of advertising and sales materials for each facility. In
order to sustain and improve upon the high level of demand historically
experienced at the facilities, Suburban employs various marketing techniques,
which include billboard, print (including yellow pages and newspapers) and radio
advertising, as well as direct marketing by area and general managers to local
employers, and its 24-hour 1-800 guest information line.

The Company is committed to keeping each of its facilities well maintained
and in good condition. Due to the historically high occupancy levels at the
Company-owned Existing Facilities, the Company has adopted a policy of
refurbishing guest rooms on an "as-needed" basis. During the three-year period
ended December 31, 1995, maintenance and repair expenses for the Company-owned
Existing Facilities (exclusive of the Forest Park facility) represented 3.8% to
4.6% of room revenues per year for the Company-owned facilities open for the
entire 12 months during each year.

FRANCHISE, DEVELOPMENT AND MANAGEMENT AGREEMENTS

Franchise Agreements

General. The Company enters into single unit franchise agreements with its
franchisees for the construction of a Suburban Lodge facility over a defined
period of time at a specific site. The Company's current franchise agreement
provides for an initial term of ten years and three months, with a ten-year
renewal option subject to several conditions, including the requirement that the
franchisee modernize or contract to modernize its facility and that it pay the
Company an administrative fee equal to 10% of the initial franchise fee
specified in the then-current franchise agreement. Each franchise agreement
provides the franchisee with a protected territory, in which Suburban agrees not
to construct, operate or grant others the right to construct or operate a
business using Suburban's trade names, trademarks, servicemarks or other indicia
of origin.

Fees. Under the current Suburban Lodge franchise agreement, the franchisee
is required to pay an initial franchise fee for a single facility equal to the
greater of $25,000 or $190 per guest room. Beginning three months after
operations commence, the franchisee is required to pay the Company a monthly
royalty fee of three percent of gross revenues. Upon notice from Suburban, all
franchisees are also required to pay an advertising and marketing fee of one
percent of gross revenues and a reservations/referral fee of one percent of
gross revenues, to cover the franchisee's share of the costs incurred by
Suburban in providing these services. The Company may increase these fees under
certain conditions. Currently, the Company does not require payment of either
advertising/marketing fees or reservations/referral fees, although it intends to
require payment of reservations/referral fees beginning on January 1, 1997.

Services. The Company has prepared comprehensive materials and provides
services to assist each franchisee in developing and operating a Suburban Lodge
facility. These materials and services include development and operating
manuals, pre-opening and ongoing training for the franchisee and its general
manager, proprietary operating software designed specifically for the operation
of a Suburban Lodge facility, prototype architectural plans and specifications
(which offer a choice between Suburban's two-story and three-story structure), a
24-hour 1-800 guest information line (with "fax on demand" capability which
allows a potential guest to receive locator maps and brochures), semi-annual
inspections by Suburban's corporate staff to ensure quality control and
advertising materials and layouts.

40
<PAGE> 42

Franchisee Training and Support. An important element of Suburban's
franchise program is the training it provides to each franchisee. The Company
must approve each franchisee's selection of a general manager, who is required
to complete satisfactorily the Company's training program. In addition, the
Company provides between six to ten days of training to a franchisee with
respect to its first facility, between three to five days of training for each
additional facility and ongoing supervision thereafter. The Company maintains
regular communication with its franchisees to relay operating and marketing
information.

Quality Control. To maintain quality and consistency within the Suburban
Lodge system, the current franchise agreement specifies certain management,
operational, maintenance, record-keeping, accounting, reporting and marketing
standards and procedures with which each franchisee must comply. Each franchisee
is also obligated to comply with Suburban's standards with respect to the
training of operational personnel, safety, maintaining specified insurance, the
type of ancillary services and products which may be provided, the display of
signs and the type, quality and age of furniture, fixtures and equipment to be
included in the guest rooms and throughout the facility. To ensure compliance
with Suburban's quality control standards, the Company's corporate staff
conducts periodic inspections of its franchised facilities.

Reporting. Each franchised facility's operating system is connected via
modem to the Company's central system, which allows Suburban to download sales
and other operating information on a regular basis.

Termination. Suburban has the right to terminate a franchise agreement for
a variety of reasons, including a franchisee's failure to make payments when due
or comply with its other covenants under the franchise agreement, its failure to
adhere to the Company's policies and standards or its failure to comply with any
applicable laws in its operation of the facility. The franchisee may terminate
the agreement only if the Company materially breaches the franchise agreement
(and fails to cure such breach), and only by providing the Company with a
six-month notice of termination. Many state franchise laws limit the ability of
a franchisor to terminate or refuse to renew a franchise. See "-- Governmental
Regulation." Suburban does not anticipate that the termination of any single
franchise agreement would have a material adverse effect on its operations.
Termination by a potential multiple-unit franchisee of several franchise
agreements for various locations could, however, have a material adverse effect
on the Company's operations.

Covenants. During the term of the agreement, each franchisee agrees not to
engage as an owner, operator or in any managerial capacity in any other economy
extended stay lodging business. Each franchisee also agrees not to divulge any
Company trade secrets or any information received from the Company's
confidential operating manual.

Right of First Refusal. If a franchisee desires to sell an interest in the
agreement or the facility, the franchisee must first notify Suburban in writing
of such intention and offer to sell such interest to the Company upon terms and
conditions at least as favorable as those offered by a third party. If the
Company and the franchisee cannot agree within 30 days of such notice on the
terms and conditions of such sale, or if the Company chooses not to acquire such
interest, the franchisee may then sell the interest to a third party on such
terms and conditions, provided that the sale is made within 180 days after the
expiration of any offer to the Company and that the facility continues to be
operated pursuant to the Suburban Lodge system.

Development Agreements

The Company, in accordance with the terms of its current Development and
Design/Build Agreement, may perform development and design services for its
franchisees who are passive investors, including the recommendation of possible
sites, the negotiation for the purchase of sites, securing the services of
engineers, architects and other professionals, the preparation of preliminary
design documents and design/build budgets, negotiation with contractors and the
overall monitoring of the development and construction of the Suburban Lodge
facility. The franchisee pays for the cost of all services and expenditures
associated with the construction of the facility, including development fees to
the Company. The agreement terminates upon the completion of the services
described, or upon termination of the franchise agreement, whichever occurs
first. In addition, in the event either party fails to perform substantially
under the agreement, the party not at fault may terminate the agreement upon
seven days' written notice. The Company has entered into eight development
arrangements negotiated on a case by case basis, all of which are either in
process or have been

41
<PAGE> 43

carried through to completion. In the future, the Company intends to use its
standard Development and Design/Build Agreement, and the Company cannot predict
the number of Development Agreements it will enter into in the future.

Management Agreements

The Company, upon request, will manage franchised Suburban Lodge facilities
for its franchisees pursuant to a management agreement between the Company and
the franchisee. The Company's current Management Agreement has a five-year term,
which is automatically renewed for successive terms unless terminated upon 120
days' written notice. Under the agreement, the Company, in addition to providing
certain pre-opening services, operates and manages the facility and, among other
duties, is responsible for all personnel decisions, the negotiation of operating
leases and contracts, the preparation of advertising campaigns, the payment of
taxes and the general maintenance of the facility. Suburban also maintains the
right to determine all operating policies affecting the appearance of the
facility, the maintenance of the facility and its standards of operation, the
quality of services and other matters affecting customer satisfaction. The
agreement is terminable if either party fails to perform any material term or
condition under the agreement and fails to cure after notice from the
non-defaulting party, if either party files for bankruptcy or upon the
destruction or condemnation of the facility. In addition to a fixed fee for
pre-opening services, Suburban will charge a management fee equal to five
percent of the facility's monthly gross revenues. As of the date of this
Prospectus, the Company has no Management Agreements in effect, and it cannot
predict the number of such agreements it will enter into in the future.

The facility owner is obligated to indemnify the Company against certain
liabilities arising out of the financing of the facility, unless such
liabilities result from the negligence, fault, misrepresentation, omission or
misconduct of the Company, its agents or employees. In addition, to the extent
not covered by insurance, the facility owner is obligated to indemnify the
Company against certain liabilities occasioned by the negligence, fault,
omission or other tortious conduct of the facility owner, its agents, employees
and contractors. Similarly, to the extent not covered by insurance, the Company
is obligated to indemnify the facility owner against certain liabilities
occasioned by the negligence, fault, omission or other tortious conduct of the
Company, its employees, agents, business invitees (except guests) or
contractors.

THE LODGING INDUSTRY

Traditional Lodging Industry

The U.S. lodging industry is estimated to have generated approximately
$52.7 billion in annual room revenues in 1995 and had approximately 3.3 million
rooms at the end of 1995. Industry statistics, which the Company believes to be
reliable, indicate that the U.S. lodging industry's performance is strongly
correlated to economic activity. Room supply and demand historically have been
sensitive to shifts in economic growth, which has resulted in cyclical changes
in average daily room and occupancy rates. Overbuilding in the lodging industry,
combined with the general downturn in the economy in the mid and late 1980s, led
to depressed industry performance and a lack of capital available to the
industry in the late 1980s and early 1990s. Since the early 1990s, the Company
believes that the lodging industry has benefited from a gradually improving
supply and demand balance, as evidenced by increased occupancy and average daily
rates.

Extended Stay Market

The Company believes that the extended stay market generates higher than
industry average occupancy rates and operating margins. Demand for extended stay
lodging has been stimulated by the economic and social changes resulting from
the increased number of corporate reorganizations and trends toward down-sizing
and out-sourcing of various functions, the increased mobility of the workforce
and technological improvements which have allowed businesses to relocate outside
of large metropolitan areas. These changes have created new accommodation needs
for, among others, corporate executives and trainees, consultants, sales
representatives, construction workers and people in between jobs or homes. The
extended stay market is one of the most rapidly evolving sectors of the U.S.
lodging industry. During the three years ended

42
<PAGE> 44

December 31, 1995, the number of dedicated extended stay rooms increased at a
compound annual growth rate of approximately 2.7%, compared with compound annual
room growth of approximately 1.4% for the overall lodging industry during the
same period. However, the majority of these rooms have been developed in the
upscale segment (based on average daily rate) of the extended stay market.

Economy Extended Stay Concept

The economy extended stay segment of the lodging market competes on the
basis of price compared to the extended stay market generally, thereby providing
an economic inducement to guests who are already attracted to the extended stay
concept. In addition, economy extended stay lodging provides a new and
affordable lodging alternative for guests who are value-conscious, have lower
incomes or have limited expense accounts. Based on the Existing Facilities' high
occupancy rates and published occupancy rates for other participants in the
extended stay market, the Company believes that there is a strong demand for
economy extended stay accommodations and that there are few competitors on a
regional basis and none who currently serve the economy extended stay market on
a national level. Of the approximately 3.3 million total available rooms in the
U.S. lodging industry at the end of 1995, there were approximately 40,000, or
1.2%, dedicated extended stay rooms at approximately 360 properties. More than
two-thirds of these extended stay properties were controlled by two competitors,
both of which compete towards the upscale segment (based on average daily rate)
of the extended stay market.

Based on data which the Company believes to be reliable, occupancy and
growth in Weekly REVPAR for Suburban Lodge facilities outpaced certain extended
stay hotels, lower economy hotels in general and the U.S. lodging industry as a
whole between 1991 and 1995. During this period, Weekly REVPAR increased 33.4%
for Suburban Lodge facilities, 16.5% for extended stay hotels, 10.7% for lower
economy hotels and 23.5% for the U.S. lodging industry as a whole.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
OCCUPANCY:
Existing Facilities(1)................................... 90.4% 90.4% 96.1% 98.2% 94.6%
Extended stay hotels(2).................................. 74.8 77.7 80.9 82.7 82.0
Lower economy hotels(3).................................. 63.9 61.4 61.0 62.0 62.8
U.S. hotels(4)........................................... 60.6 61.6 63.0 64.7 65.5
AVERAGE WEEKLY RATE:(5)
Existing Facilities(1)................................... $110.38 $117.51 $122.51 $129.67 $141.24
Extended stay hotels(2).................................. 518.03 522.16 519.01 528.02 550.16
Lower economy hotels(3).................................. 216.59 221.02 228.23 235.63 244.06
U.S. hotels(4)........................................... 412.08 418.40 432.96 449.68 471.37
WEEKLY REVPAR(6):
Existing Facilities(1)................................... $ 99.72 $105.87 $117.69 $127.36 $133.04
Extended stay hotels(2).................................. 387.25 405.81 419.88 436.89 451.09
Lower economy hotels(3).................................. 138.39 135.63 139.29 146.01 153.19
U.S. hotels(4)........................................... 249.80 257.81 272.62 290.79 308.61
</TABLE>

- ---------------

(1) The information for the Existing Facilities includes information for these
facilities since the date of their opening or acquisition.
(2) Average weekly rate and Weekly REVPAR were calculated as described below in
notes 5 and 6, respectively. Includes Residence Inn(R), Homewood Suites(R),
Summerfield Suites(R), Woodfin Suites(R), Hawthorne Suites(R), Homestead
Village(R), Studio Plus(R) and Extended Stay AmericaSM Efficiencies.
(3) Average weekly rate and Weekly REVPAR were calculated as described below in
notes 5 and 6, respectively. Includes 15 chains, including, among others,
Best Inns of America(R), Budget Host Inn(R), EconoLodge(R), Knights Inn(R),
Motel 6(R), Red Carpet Inn(R), Super 8(R) and Thriftlodge(R).
(4) Average weekly rate and Weekly REVPAR were calculated as described below in
notes 5 and 6.
(5) Average weekly rate is determined by dividing room revenue by guest rooms
sold for the applicable period and multiplying by seven.
(6) Weekly REVPAR is determined by dividing room revenue by available guest
rooms for the applicable period and multiplying by seven.

COMPETITION

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<PAGE> 45

term lease apartments, service levels, name recognition, reputation, reservation
systems and convenience of location. Each of the Existing Facilities and
Construction Facilities is located, and each of the Development Facilities will
be located, in a developed area that includes competing lodging facilities,
including both traditional lodging facilities and other extended stay
facilities. The number of competitive lodging facilities in a particular area
could have a material adverse effect on occupancy, average weekly rate and
Weekly REVPAR of the Existing Facilities and Construction Facilities or
properties developed or acquired in the future. See " -- The Facilities."

The Company anticipates that competition within the extended stay lodging
market will increase substantially in the foreseeable future. A number of other
lodging chains and developers recently have announced their intent to develop or
are already attempting to develop extended stay lodging facilities which may
compete with the Company's facilities. In particular, some of these entities
have announced their intent to target the economy segment of the extended stay
market in which the Company competes. The Company may compete for guests and for
development sites with certain of these established entities which have greater
financial resources than the Company and better relationships with lenders and
real estate sellers. These entities may be able to accept more risk than the
Company can prudently manage. Further, there can be no assurance that new or
existing competitors will not significantly reduce their rates or offer greater
convenience, services or amenities or significantly expand or improve facilities
in markets in which the Company competes, thereby materially adversely affecting
the Company's business and results of operations. See "Risk Factors --
Competition in the Lodging Industry."

At the present time, the Company's facilities are located principally in
the Southeast and in particular in metropolitan Atlanta. In these regions, the
Company competes with both traditional lodging facilities and other extended
stay facilities, including individual extended stay facilities and those owned
and operated by competing chains. The Company competes with these facilities by
offering low weekly rates, customer service and convenient locations.

ENVIRONMENTAL MATTERS

Under various federal, state and local laws and regulations, an owner or
operator of real estate may be liable for the costs of removal or remediation of
certain hazardous or toxic substances on such property. Such laws often impose
liability without regard to whether the owner knew of, or was responsible for,
the presence of hazardous or toxic substances. Furthermore, a person that
arranges for the disposal or transports for disposal or treatment a hazardous
substance at a property owned by another may be liable for the costs of removal
or remediation of hazardous substances released into the environment at that
property. The costs of remediation or removal of such substances may be
substantial, and the presence of such substances, or the failure to properly
remediate such substances, may adversely affect the owner's ability to sell or
use such real estate or to borrow using such real estate as collateral. In
connection with the ownership and operation of its properties, the Company may
be potentially liable for any such costs. Any potential environmental liability
the Company may have solely as a franchisor is less clear; however, the
Company's business and results of operations could be adversely affected if a
franchisee incurred environmental liability.

The Company has obtained recent Phase I environmental site assessments
("Phase I Surveys") on the Company-owned Existing Facilities and Company-owned
Construction Facilities and intends to obtain Phase I Surveys prior to the
purchase of any future sites or properties, including the Development
Facilities; however, the Company has not yet obtained Phase I Surveys on two of
the four Development Facilities (Newport News and Ridgeway Rd). While the
Company believes that Phase I Surveys have been obtained on the franchised
facilities, it has not required franchisees to obtain Phase I Surveys. The Phase
I Surveys are intended to identify potential environmental contamination and
regulatory compliance concerns. Phase I Surveys generally include historical
reviews of the properties, reviews of certain public records, preliminary
investigations of the sites and surrounding properties and the preparation and
issuance of written reports. Phase I Surveys generally do not include invasive
procedures, such as soil sampling or ground water analysis. If the Phase I
Survey indicates that additional analysis or testing is appropriate, the Company
will either abandon the site or obtain a Phase II Survey, which generally
involves invasive testing procedures.

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<PAGE> 46

The Phase I Surveys have not revealed any environmental liability or
compliance concern at the Company-owned Existing Facilities that the Company
believes would have a material adverse effect on the Company's business, assets,
results of operations or liquidity, nor is the Company aware of any such
liability or concern. Nevertheless, it is possible that Phase I Surveys will not
reveal all environmental liabilities or compliance concerns or that there will
be material environmental liabilities or compliance concerns of which the
Company will not be aware. Moreover, no assurances can be given that (i) future
laws, ordinances or regulations will not impose any material environmental
liability or (ii) the current environmental condition of the Company's existing
and future properties will not be affected by the condition of neighboring
properties (such as the presence of leaking underground storage tanks) or by
third parties unrelated to the Company.

The Atlanta Suburban Lodge facility located in the Fulton Industrial
District is located in the vicinity of a property from which leaking underground
storage tanks have been removed. Such tanks released petroleum products into the
soil and groundwater, and it is not known whether the release has impacted the
groundwater beneath the Fulton Industrial site. Although this release initially
migrated in groundwater towards the Company's property, it currently appears
that it is unlikely to have impacted the Company's property in light of the tank
owner's ongoing remediation activities and the groundwater monitoring records
from the adjacent property. Suburban does not believe that it will have any
material liability in the event the release migrates or has migrated under the
Fulton Industrial site; however, there can be no guarantee that the Company will
not incur future environmental liabilities arising out of such activities or
that any such liability would not have a material adverse effect on the future
financial condition or results of operations of the Company.

In addition, the initial Phase I groundwater sampling at the Construction
Facility in Greenville, SC, discusses evidence of a dry-cleaning solvent in the
groundwater. The likely source of the solvent is a dry-cleaning facility located
approximately 150 feet upgradient of the site. Based upon a Phase II Survey
obtained with respect to this site, the Company does not believe that it will
have any material liability in connection with the dry-cleaning solvent;
however, there can be no guarantee that the Company will not incur future
environmental liabilities arising out of the presence of the solvent or that any
such liability would not have a material adverse effect on the future financial
condition or results of operation of the Company.

Suburban believes that the Company-owned facilities are in compliance in
all material respects with all federal, state and local ordinances and
regulations regarding hazardous or toxic substances and other environmental
matters. Neither the Company nor, to the knowledge of the Company, any of the
current owners of the managed and franchised facilities has been notified by any
governmental authority of any material noncompliance, liability or claim
relating to hazardous or toxic substances or other environmental issues in
connection with any of its present or former properties.

GOVERNMENTAL REGULATION

A number of states regulate the licensing of lodging facilities by
requiring registration, disclosure statements and compliance with specific
standards of conduct. The Company believes that each of its facilities has the
necessary permits and approvals to operate its respective business, and the
Company intends to continue to obtain such permits and approvals for its new
facilities. The Company is also subject to laws governing its relationship with
employees, including minimum wage requirements, overtime, working conditions and
work permit requirements. An increase in the minimum wage rate, employee benefit
costs or other costs associated with employees could adversely affect the
Company. Both at the federal and state level from time to time, there are
proposals under consideration to increase the minimum wage.

Under the ADA, all public accommodations are required to meet certain
federal requirements related to access and use by disabled persons. Although the
Company has attempted to satisfy ADA requirements in the design of its
facilities, a material ADA claim could be asserted against the Company, which
could result in a judicial order requiring compliance and the expenditure of
substantial sums to achieve compliance, an imposition of fines or an award of
damages to private litigants. These and other initiatives could adversely affect
the Company as well as the lodging industry in general.

Suburban is subject to Federal Trade Commission ("FTC") regulation and
various state laws which regulate the offer and sale of franchises. Several
state laws also regulate various aspects of the franchisor-

45
<PAGE> 47

franchisee relationship. The FTC requires the Company to furnish to prospective
franchisees a franchise offering circular containing prescribed information. A
number of states in which the Company might consider franchising also regulate
the sale of franchises and require registration of the franchise offering
circular with state authorities. State laws that regulate the
franchisor-franchisee relationship presently exist or are being considered in a
substantial number of states, and bills have been introduced in Congress (one of
which is now pending) which provide for federal regulation of certain aspects of
the franchisor-franchisee relationship. These current and proposed franchise
relationship laws limit, among other things, the duration and scope of
non-competition provisions, the ability of a franchisor to terminate or refuse
to renew a franchise and the ability of a franchisor to designate sources of
supply.

TRADEMARKS

The tradename "Suburban Lodge" and the service mark "Lodge for Less" and
related logos are actively used and are significant to the Company's business.
All of these marks have been registered on the Principal Register of the United
States Patent and Trademark Office. The term for the registration of the
"Suburban Lodge" trademark extends to November 2004 on the Principal Register,
at which time it may be renewed for successive ten-year periods. The term for
the registration of the Suburban Lodge name and design logo extends to March
2009, at which time it may be renewed for successive ten-year periods. The term
for the registration of the service mark "Lodge for Less" extends to October
2000, at which time it may be renewed for successive ten-year periods.

INSURANCE

Suburban currently maintains the types and amounts of insurance coverage
that it considers appropriate for a company in its business. While management
believes that the Company's insurance coverage is adequate, if the Company were
held liable for amounts exceeding the limits of its insurance coverage or for
claims outside of the scope of its insurance coverage, the Company's business,
results of operations and financial condition could be materially and adversely
affected.

EMPLOYEES

As of March 31, 1996, Suburban and its subsidiaries employed 75 persons.
Suburban expects that it will increase the number of its employees as it expands
its business. The Company's employees are not subject to any collective
bargaining agreements, and management believes that its relationship with its
employees is good.

HEADQUARTERS

The Company's corporate headquarters are located in Atlanta, Georgia and
are occupied pursuant to a lease that expires in January 1997. The Company will
reassess its needs for office space at that time, but it believes that its
current office space is sufficient to meet its present needs and does not
anticipate any difficulty securing additional space, as needed, on terms
acceptable to the Company.

LEGAL PROCEEDINGS

Suburban is not a party to any litigation or claim, other than routine
matters incidental to the operation of its business. To date, no claims have had
a material adverse effect on the Company, nor does the Company expect that the
outcome of any pending claims will have such an effect.

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<PAGE> 48

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Certain information regarding the directors, persons who have been
nominated to serve as directors but who will not become directors until
completion of the Offering and all executive officers of the Company is set
forth in the table below.

<TABLE>
<CAPTION>
TERM
NAME AGE POSITION CLASS EXPIRES
- -------------------------------- --- ------------------------------------------- ----- -------
<S> <C> <C> <C> <C>
David E. Krischer............... 47 Chairman of the Board, Chief Executive III 1999
Officer and President
Dan J. Berman................... 31 Vice President -- Franchising and Director III 1999
Seth H. Christian............... 31 Vice President -- Operations
Terry J. Feldman................ 52 Vice President, Chief Financial Officer and -- --
Treasurer
G. Hunter Hilliard.............. 53 Vice President -- Construction -- --
Kevin R. Pfannes................ 41 Vice President -- Development and Secretary -- --
James R. Kuse................... 65 Director II 1998
Michael McGovern................ 52 Director II 1998
John W. Spiegel................. 55 Director I 1997
</TABLE>

DAVID E. KRISCHER. Mr. Krischer formed the Company in 1987 to develop a
national chain of economy extended stay facilities and has served as its
President and Chairman since inception and as Chief Executive Officer since
March 1996. Mr. Krischer has over 15 years of experience in real estate
development and has been involved in the hospitality industry for nearly ten
years. From 1974 to 1986, he was a partner with two Atlanta law firms,
Arrington, Rubin, Winter, Krischer & Goger and Costanzo & Krischer, where his
practice focused on general business and real estate law and real estate
syndication.

DAN J. BERMAN. Mr. Berman joined the Company in September 1993 as its Vice
President -- Franchising and was elected as a Director in March 1996. Prior to
joining the Company in 1993, Mr. Berman practiced commercial law in New York
City with the firm Young and Young from September 1990 to May 1993. Mr. Berman
received the degrees of Juris Doctor and Master of Business Administration from
Emory University Law and Business Schools in 1990.

SETH H. CHRISTIAN. Mr. Christian joined the Company in November 1987 and
was elected Vice President -- Operations in January 1989. From 1983 through
1987, he served as General Manager of Hotel/Restaurant Management, Inc., an
Atlanta-based hospitality company. Mr. Christian is a member of the Board of
Directors of the Arthritis Foundation, Georgia Chapter. Mr. Christian received a
Bachelor of Arts in economics from Georgia State University in 1988.

TERRY J. FELDMAN. Mr. Feldman joined the Company in January 1995 as its
Treasurer and Chief Financial Officer and was elected Vice President in March
1996. He has over 30 years of experience in real estate accounting and finance.
Prior to joining the Company, Mr. Feldman served as the Vice President and Chief
Financial Officer of Unity Mortgage, Inc., a home mortgage lender, from July
1992 to July 1994. Mr. Feldman served as the Vice President and Chief Financial
Officer of Anderson Properties, Inc., a commercial real estate company in
Atlanta, from 1984 to 1992. From 1977 to 1984, he served in treasury and
financial planning capacities at Days Inns of America, Inc. Mr. Feldman is a
Certified Public Accountant.

G. HUNTER HILLIARD. Mr. Hilliard joined the Company in April 1987 as its
Vice President -- Construction. In addition, since 1980, Mr. Hilliard has been
the sole shareholder and Secretary of Acreage Investment Corporation, a real
estate and construction consulting firm. He has over 25 years of experience in
the development and construction of single and multi-family housing, retail
centers and office space.

KEVIN R. PFANNES. Mr. Pfannes joined the Company in January 1996 and was
elected Vice President -- Development in February 1996. He has 17 years of legal
and business experience in the development, acquisition, leasing and financing
of a broad range of commercial real estate transactions. From July 1992 through
January 1995, Mr. Pfannes served as real estate counsel and Director of
Operations of General

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<PAGE> 49

Innkeeping Acceptance Corporation, a wholly-owned subsidiary of Holiday Inns,
Inc., which provided financing for Holiday Inn hotels. From January 1986 to July
1992, Mr. Pfannes was a self-employed attorney, and his practice focused on
commercial real estate matters. From 1979 to 1984, Mr. Pfannes worked for the
Chicago law firm of Rooks, Pitts and Poust, where his practice focused on real
estate and lending matters.

JAMES R. KUSE. Mr. Kuse will become a Director of the Company effective
immediately upon the closing of the Offering. Mr. Kuse has been the Chairman of
the Board of Directors of Georgia Gulf Corporation since January 1985. From
February 1989 through February 1991, Mr. Kuse also served as the Chief Executive
Officer of Georgia Gulf Corporation. Mr. Kuse also serves as a Director of
Rhodes, Inc. and Green Capital Investors.

MICHAEL MCGOVERN. Mr. McGovern will become a Director of the Company
effective immediately upon the closing of the Offering. Since 1975, Mr. McGovern
has been the President and a Director of McGovern Enterprises, Inc., a company
which provides corporate, financial and real estate advisory services throughout
the United States.

JOHN W. SPIEGEL. Mr. Spiegel will become a Director of the Company
effective immediately upon the closing of the Offering. Since 1985, Mr. Spiegel
has served as Executive Vice President and Chief Financial Officer of SunTrust
Banks, Inc. He has also served as Treasurer of Trust Company of Georgia since
1978 and is an officer and director of various subsidiaries of SunTrust Banks,
Inc. Mr. Spiegel is also a member of the Board of Directors of Rock-Tenn
Company, Student Loan Marketing Association and ContiFinancial Corporation.

COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee. Effective upon the closing of the Offering, the Board of
Directors will establish an Audit Committee, which will consist of Mr. Kuse, Mr.
Spiegel and Mr. Krischer. The Audit Committee will make recommendations
concerning the engagement of independent public accountants, review with the
independent public accountants the plans and results of the audit engagement,
approve professional services provided by the independent public accountants,
review the independence of the independent public accountants, consider the
range of audit and non-audit fees and review the adequacy of the Company's
internal accounting controls.

Compensation Committee. Effective upon the closing of the Offering, the
Board of Directors will establish a Compensation Committee, which will consist
of Mr. Kuse and Mr. McGovern. The Compensation Committee will determine
compensation for the Company's executive officers and administer the Company's
1996 Plan.

The Company may from time to time form other committees as circumstances
warrant. Such committees will have authority and responsibility as delegated by
the Board of Directors.

EXECUTIVE COMPENSATION

The following table sets forth certain information regarding the annual
compensation for services in all capacities to the Company and its predecessors
for the fiscal year ended December 31, 1995 of David E. Krischer, the Company's
Chief Executive Officer and the only officer whose annual salary and bonuses
exceeded $100,000. The Company has not entered into an employment agreement with
any of its officers or employees.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS
- --------------------------------------------------------------------- ---- -------- ------
<S> <C> <C> <C>
David E. Krischer.................................................... 1995 $187,000 $7,769
Chairman of the Board, Chief
Executive Officer and President
</TABLE>

48
<PAGE> 50

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Following the consummation of the Offering, the Compensation Committee will
consist of Messrs. Kuse and McGovern. During calendar year 1995, the Company did
not have a Compensation Committee, and all compensation decisions were made by
Mr. Krischer, who also served as President of the Company.

COMPENSATION OF DIRECTORS

The Company's non-employee directors will receive directors fees of $1,250
per board meeting attended, and all Directors will be reimbursed for their
out-of-pocket expenses incurred in connection with their service on the Board of
Directors. For a description of the non-cash compensation to be paid to the
non-employee Directors for their service on the Board, see "Management -- 1996
Stock Incentive Plans -- The Directors' Plan." Messrs. Krischer and Berman will
receive no compensation for their service on the Board of Directors other than
reimbursement for their out-of-pocket expenses incurred in connection with such
service.

INDEMNIFICATION AGREEMENTS

The Company has entered into Indemnification Agreements with certain of its
directors and officers (the "Indemnified Parties"). Under the terms of the
Indemnification Agreements, the Company is required to indemnify the Indemnified
Parties against certain liabilities arising out of their services for the
Company. The Indemnification Agreements require the Company (i) to indemnify
each Indemnified Party to the fullest extent permitted by law; (ii) to provide
coverage for each Indemnified Party under the Company's directors and officers
liability insurance policy and (iii) to advance certain expenses incurred by an
Indemnified Party. The Indemnification Agreements provide limitations on the
Indemnified Parties' rights to indemnification in certain circumstances. To the
extent that indemnification provisions contained in the Indemnification
Agreements purport to include indemnification for liabilities arising under the
Securities Act, the Company has been informed that in the opinion of the
Securities and Exchange Commission (the "Commission"), such indemnification is
contrary to public policy and therefore unenforceable.

1996 STOCK INCENTIVE PLANS

The Company has adopted the 1996 Plan and the Directors' Plan for the
purpose of (i) attracting and retaining employees and directors with ability and
initiative; (ii) providing incentives to those deemed important to the success
of the Company and related entities and (iii) associating the interests of these
individuals with the interests of the Company and its shareholders through
opportunities for increased ownership of Common Stock. The summaries of the 1996
Plan and the Directors' Plan set forth below are qualified in their entirety by
reference to the text of the 1996 Plan and the Directors' Plan, which have been
filed as exhibits to the Registration Statement of which this Prospectus is a
part.

The 1996 Plan

Administration. The 1996 Plan will be administered by the Compensation
Committee of the Board (the "Compensation Committee"). As used in this summary,
the term "Administrator" means the Compensation Committee.

Eligibility. Each employee of the Company or of a wholly-owned subsidiary
of the Company, including an employee who is a member of the Board, is eligible
to participate in the 1996 Plan. The Administrator will select the individuals
who will participate in the 1996 Plan ("Participants"), but no person may
participate in the 1996 Plan while he or she is a member of the Compensation
Committee. The Administrator may, from time to time, grant stock options, stock
appreciation rights ("SARs"), stock awards, restricted stock awards or
performance shares to Participants.

Stock Options. Options granted under the 1996 Plan may be incentive stock
options ("ISOs") or nonqualified stock options. A stock option entitles a
Participant to purchase shares of Common Stock from the Company at the option
price. The option price may be paid in cash, with shares of Common Stock or with
a combination of cash and Common Stock. The option price will be fixed by the
Administrator at the time the

49
<PAGE> 51

option is granted, but the price cannot be less than the shares' Fair Market
Value (as defined in the Plan) on the date of grant. The exercise price of an
ISO granted to any Participant who is a Ten Percent Shareholder (as defined
below) may not be less than 110% of the shares' Fair Market Value on the date of
grant. A Participant is a Ten Percent Shareholder if he owns, or is deemed to
own, more than ten percent of the total combined voting power of all classes of
stock of the Company or a related entity. A Participant is deemed to own any
voting stock owned (directly or indirectly) by the Participant's spouse,
brothers, sisters, ancestors and lineal descendants. A Participant and such
persons are also considered to own proportionately any voting stock owned
(directly or indirectly) by or for a corporation, partnership, estate or trust
of which the Participant or any such person is a shareholder, partner or
beneficiary. An option must expire within ten years from the date of grant,
except that the term of an ISO that is granted to a Ten Percent Shareholder may
not be longer than five years. Moreover, no Participant may be granted ISOs or
related SARs (under all incentive stock option plans of the Company) which are
first exercisable in any calendar year for stock having an aggregate Fair Market
Value (determined as of the date the ISO was granted) that exceeds $100,000.
Finally, no Participant shall be granted options to purchase more than 150,000
shares of stock in any 12-month period.

SARs. SARs entitle the Participant to receive a payment based on a formula
determined by the Administrator and set forth in the SAR Agreement. The
Participant will be entitled to receive no more than the excess of the Fair
Market Value of a share of Common Stock on the date of exercise over the initial
value of the SAR. The initial value of the SAR is the Fair Market Value of a
share of Common Stock on the date of grant. The amount payable upon the exercise
of a SAR may be paid in cash, Common Stock or a combination of the two. SARs may
be granted in relation to option grants ("Corresponding SARs") or independently
of option grants. The difference between these two types of SARs is that to
exercise a Corresponding SAR, the Participant must surrender unexercised that
portion of the stock option to which the Corresponding SAR relates. The maximum
number of shares underlying SARs which can be awarded during any 12-month period
to any Participant is 150,000 shares.

Restricted Stock; Stock Awards. Participants may also be awarded shares of
Common Stock pursuant to a stock award. The Administrator, in its discretion,
may prescribe that a Participant's rights in a stock award shall be
nontransferable or forfeitable or both unless certain conditions are satisfied.
These conditions may include, for example, a requirement that the Participant
continue employment with the Company for a specified period or that the Company
or the Participant achieve stated objectives.

Performance Share Awards. The 1996 Plan also provides for the award of
performance shares. A performance share award entitles the Participant to
receive a payment equal to the Fair Market Value of a specified number of shares
of Common Stock if certain performance standards are met. The Administrator will
prescribe the requirements that must be satisfied before a performance share
award is earned. The performance share requirements may include, for example, a
requirement that the Participant continue employment with the Company for a
specified period or that the Company or the Participant achieve stated
objectives. To the extent that performance shares are earned, the obligation may
be settled in cash, in Common Stock or by a combination of the two. No more than
25,000 performance shares may be earned by a Participant with respect to any
performance period.

Share Authorization. All awards made under the 1996 Plan will be evidenced
by written agreements between the Company and the Participant. A maximum of
750,000 shares of Common Stock may be issued under the 1996 Plan. The share
limitation and the terms of outstanding awards shall be adjusted, as the
Compensation Committee deems appropriate, in the event of a stock dividend,
stock split, combination, reclassification, recapitalization or other similar
event.

Nontransferability. Any option or SAR granted under the 1996 Plan is
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of a Participant, options or SARs may only be exercised by
such Participant. Notwithstanding the foregoing, a Participant may transfer an
option or SAR (other than an ISO and its Corresponding SAR) with respect to all
or part of the shares of Common Stock subject to such option or SAR to the
Participant's spouse, children or grandchildren, to a trust for the benefit of
such family members or to a partnership in which such family members are the
only partners if (a) no consideration is received by the Participant in exchange
for the option or SAR; (b) the agreement evidencing

50
<PAGE> 52

the option or SAR expressly provides for transfers described in this sentence
and is approved by the Committee; (c) the option or SAR continues to be subject
to the same terms and conditions after the transfer and (d) the transfer is
permissible under Rule 16b-3 under the Securities Exchange Act of 1934 (the
"Exchange Act") as in effect from time to time.

Change in Control. In the event the Company undergoes a change in control
(as defined in the 1996 Plan), all restricted stock (other than restricted stock
granted within six months of the Change in Control) shall vest, all performance
awards shall be earned and all options and SARs granted under the 1996 Plan
shall become exercisable. Amounts payable or earned as a result of a change in
control are subject to certain reductions to mitigate the effect of section 280G
of the Internal Revenue Code of 1986 (the "Code").

Assumption of Awards. In the event of a merger, consolidation or statutory
share exchange in which the Company either is not the survivor or becomes a
subsidiary of the acquiring entity, or an acquisition of the Company's assets
that results in the Company going out of business, all awards granted under the
1996 Plan shall be assumed by the acquiring entity.

Termination and Amendment. No option, SAR or stock award may be granted
and no performance shares may be awarded under the 1996 Plan after March 26,
2006. The Board may amend or terminate the 1996 Plan at any time, but an
amendment will not become effective without shareholder approval if the
amendment changes the eligibility requirements, increases the benefits that may
be provided under the 1996 Plan or extends the term of the Plan.

Initial Awards. The Company will grant, on the effective date of the
Registration Statement of which this Prospectus is a part, options to acquire an
aggregate of 400,000 shares of Common Stock. Mr. Krischer will receive options
to purchase 150,000 shares, and Messrs. Berman, Christian, Feldman, Hilliard and
Pfannes will each receive options to purchase 50,000 shares. Each of the
grantees will receive an ISO covering the maximum number of shares for which an
ISO may be awarded, given the $100,000 per year annual limitation discussed
above under the heading "Stock Options," and a nonqualified option covering the
remainder of the shares. The options will become exercisable for 25% of the
shares of Common Stock covered by each such option on the first anniversary of
the date of grant, and with respect to an additional 25% on each anniversary of
such date through the year 2000. Each option, other than the ISOs granted to Mr.
Krischer, will be exercisable for ten years from the date of grant at a price
per share equal to the Offering Price. Due to the Ten Percent Shareholder rule
discussed under the heading "Stock Options," the ISOs granted to Mr. Krischer
will be exercisable for five years from the date of grant at a price per share
equal to 110% of the Offering Price.

Shareholder Rights. A Participant will have no rights as a shareholder
with respect to the shares subject to his or her option until the option is
exercised.

Federal Income Taxes. No income is recognized by a Participant at the time
an option is granted. If the option is an ISO, no income will be recognized upon
the Participant's exercise of the option. Income is recognized by a Participant
when he disposes of shares acquired under an ISO. The exercise of a nonqualified
stock option generally is a taxable event that requires the Participant to
recognize, as ordinary income, the difference between the shares' Fair Market
Value and the option price.

No income is recognized upon the grant of a SAR. The exercise of a SAR is
generally a taxable event. A Participant generally must recognize income equal
to any cash that is paid and the Fair Market Value of Common Stock that is
received in settlement of a SAR.

Unless an election is made under Section 83(b) of the Code, a Participant
will recognize income on account of a stock award on the first day that the
shares are either transferable or not subject to a substantial risk of
forfeiture. The amount of income recognized by the Participant is equal to the
Fair Market Value of the Common Stock received on that date.

Unless an election is made under Section 83(b) of the Code, a Participant
will recognize income on account of the settlement of a performance share award.
The amount of such income will be equal to any cash that is paid and the Fair
Market Value of Common Stock (on the date that the shares are first transferable
or not subject to a substantial risk of forfeiture) that is received in
settlement of the award.

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<PAGE> 53

Suburban ordinarily will be entitled to claim a federal income tax
deduction on account of the exercise of a nonqualified option or SAR, the
vesting of a stock award and the settlement of a performance share award. The
amount of the deduction is equal to the ordinary income recognized by the
Participant. Suburban will not be entitled to a federal income tax deduction on
account of the grant or the exercise of an ISO. Suburban may claim a federal
income tax deduction on account of certain dispositions of Common Stock acquired
upon the exercise of an ISO.

The Directors' Plan

Eligibility. The Directors' Plan provides for the grant of options to
purchase Common Stock to each eligible Director of the Company and the award of
Common Stock to each eligible Director who is a member of the Board upon the
consummation of the Offering. No Director who is an employee of the Company or a
subsidiary is eligible to participate in the Directors' Plan.

Options. The Directors' Plan provides that each eligible Director who is a
member of the Board of Directors will be awarded options to purchase 1,500
shares of Common Stock at the Price to Public on the effective date of the
Registration Statement. Thereafter, option grants under the Directors' Plan will
be made at each annual meeting of the Board of Directors immediately following
their election or re-election, and on such date each eligible Director will
receive options to purchase 1,500 shares of Common Stock at the Fair Market
Value of the Common Stock on the date of grant. The exercise price may be paid
in cash, cash equivalent acceptable to the plan administrator, Common Stock or a
combination thereof. Options granted under the Director's Plan are exercisable
for ten years from the date of grant, subject to certain restrictions described
below.

Exercise of Options. Each option granted to a Director under the
Directors' Plan will become exercisable on the first to occur of: (a) the first
anniversary of the date of grant or (b) the date of the next annual meeting of
the shareholders, in each case if such Director is then a member of the Board.
Notwithstanding the foregoing, if a Director ceases to be a member of the Board
as a result of his or her death or disability, such Director's option will
become immediately exercisable. Except as provided in the event of death or
disability, on the date that a Director ceases to be a member of the Board for
any reason, he or she shall forfeit the right to exercise his or her option with
respect to any shares for which it is not then exercisable in accordance with
the foregoing.

If a Director leaves the Board as a result of death or disability, his or
her option may be exercised within one year following the last date on which the
Director is a member of the Board or during the remainder of the option period,
whichever is shorter. If the Director leaves the Board for any other reason, the
option may be exercised within one year following the last date on which the
Director is a member of the Board or during the remainder of the option period,
whichever is shorter. An option may be exercised with respect to any number of
whole shares less than the full number for which the option could be exercised.

Nontransferability. Any option granted under the Directors' Plan is
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of a Participant, options may only be exercised by such
Participant. Notwithstanding the foregoing, an option may be transferred with
respect to all or part of the shares of Common Stock subject to the option to
the Directors' spouse, children or grandchildren, to a trust for the benefit of
such family members or to a partnership in which such family members are the
only partners if (a) no consideration is received by the director in exchange
for the option; (b) the agreement evidencing the option expressly provides for
transfers described in this sentence and is approved by the plan administrator;
(c) the option continues to be subject to the same terms and conditions after
the transfer and (d) the transfer is permissible under Rule 16b-3 of the
Exchange Act.

Change in Control. In the event the Company undergoes a change in control
(as defined in the Directors' Plan), all restricted stock (other than restricted
stock granted within six months of the Change in Control) shall vest and all
options granted under the Directors' Plan shall become exercisable.

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Company's assets that results in the Company going out of business, all awards
granted under the Directors' Plan shall be assumed by the acquiring entity.

Stock Awards. The Directors' Plan provides that each eligible Director who
is a member of the Board immediately following the closing of the Offering will
be awarded 1,000 shares of restricted Common Stock on that date. All other
awards of Common Stock under the Directors' Plan will be made at the first Board
Meeting following an annual meeting of the Company's shareholders (the date of
each such Board meeting being referred to as an "Award Date"). Each eligible
Director will receive on each Award Date on which he is a member of the Board
the lesser of 1,000 shares of Common Stock or, if the Fair Market Value of 1,000
shares exceeds $10,000 on the Award Date, a number of whole shares of Common
Stock having a Fair Market Value that as nearly as possible equals, but does not
exceed, $10,000.

Vesting of Stock Awards. A Director will be vested in one hundred percent
of the shares of Common Stock awarded to him under the Directors' Plan on the
first to occur of (a) the first anniversary of the date of grant or (b) the date
of the next annual meeting of the shareholders. If, however, a Director is not a
member of the Board on any Award Date on which his shares otherwise would become
vested, no shares will vest for such Director on that date, and the Director
will have no further right in any shares of Common Stock issued to him under the
Directors' Plan that are not then vested.

Shareholder Rights. A Director will have no rights as a shareholder with
respect to the shares subject to his option until the option is exercised. A
Director will have the right to vote all shares of Common Stock awarded to him
under the Directors' Plan and will receive all dividends paid with respect to
the shares, notwithstanding that the shares have not vested. Upon a Director's
ceasing to be a member of the Board, these rights will immediately terminate
with respect to any share of Common Stock not then vested.

Amendment and Termination. The Directors' Plan provides that the Board may
amend or terminate the Plan at any time, but an amendment will not become
effective without shareholder approval if the amendment changes the eligibility
requirements, increases the benefits that may be provided under the Directors'
Plan, or extends the term of the Director's Plan. No shares of Common Stock will
be awarded under the Directors' Plan after March 26, 2006.

Share Authorization. A maximum of 100,000 shares of Common Stock may be
issued under the Directors' Plan. The share limitation and the terms of
outstanding awards shall be adjusted, as the Compensation Committee deems
appropriate, in the event of a stock dividend, stock split, combination,
reclassification, recapitalization or other similar event.

Profit Sharing Plan

The Company sponsors the Suburban Lodge 401(k) Savings Plan for its
employees. For employees earning under $30,000 per year, the Company will make a
matching contribution of 100% of the first $10 contributed per employee per pay
period. Thereafter, 10% of all contributions over $10 per pay period will be
matched by the Company. For employees earning over $30,000 per year, the Company
will make a matching contribution of 10% of the employee's contribution.
Employee contributions vest immediately upon contribution, and matching
contributions made by the Company vest over time, with all employees with more
than five years of service being fully vested in their Company contributions.
Employees may contribute from one percent to 15% of their pay each pay period up
to an aggregate of $9,500 in 1996. All employees of the Company who have
completed 12 months of service with the Company, have worked 1,000 hours or more
per year and have attained the age of 21 are eligible to participate in the
plan.

CERTAIN TRANSACTIONS

The Company has entered into a number of transactions with certain of its
officers and directors and their affiliates in connection with the restructuring
of the Company and its operations in preparation for public ownership. The
Company will merge with the Affiliated Entities which (i) own and operate seven
Company-owned Existing Facilities and (ii) own and are developing four of the
Construction Facilities, in exchange for an aggregate of 999,483 shares of
Common Stock, with a value of approximately $15.0 million based upon the

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<PAGE> 55

Price to Public, and approximately $2.9 million in cash. Of these shares, an
aggregate of 896,099 shares will be issuable to affiliates of the Company,
including 351,694 shares issuable to Mr. Krischer, 227,122 shares issuable to
Mr. Kuse and his affiliates, 150,364 shares issuable to Mr. McGovern, 142,709
shares issuable to HS Associates and 24,210 shares issuable to the other
officers of the Company as a group, in exchange for their interests in the
Affiliated Entities. These shares have a value of approximately $13.4 million
based on the Offering Price. Of the shares issuable to Mr. McGovern,
approximately 15,300 shares will be issued as payment for development services
rendered in connection with the development of the Mableton facility.

Of the $2.9 million in cash to be paid in connection with the acquisition
of the Affiliates Entities, approximately $1.1 million will be paid to
affiliates of the Company as follows: $84,600 to Mr. Krischer, $545,700 to Mr.
Kuse and his affiliates, $386,600 to Mr. McGovern and $48,000 to the other
officers of the Company as a group. Also, the Company will pay a $100,000
development fee (of which $25,000 is payable to Mr. Krischer) with respect to
the Conyers facility.

From time-to-time Messrs. Krischer, Kuse and McGovern and HS Associates
have made loans to Suburban, the Affiliated Entities and the Third Party Sellers
to fund development, construction and working capital requirements. In
connection with the Corporate Organization, a portion of the net proceeds of the
Offering will be used to repay the indebtedness of the Company and the
Affiliated Entities, including approximately $1.7 million to affiliates of the
Company, including approximately $392,000 to Mr. Krischer and his family
members, $1.1 million to Mr. Kuse and his affiliates, $136,000 to Mr. McGovern
and $125,000 to HS Associates. In addition, Mr. Krischer, HS Associates and Mr.
McGovern have extended a wrap-mortgage of approximately $2.7 million to the
Third Party Seller who owns the Forest Park facility. After repayment of the
underlying mortgage, Mr. Krischer, HS Associates and Mr. McGovern will receive
approximately $550,000, $368,000 and $181,000, respectively, upon repayment of
the wrap-mortgage by the Third Party Seller at the closing of the transaction.
In addition, almost all of the indebtedness to be repaid with a portion of the
net proceeds of the Offering has been guaranteed by Mr. Krischer and one or more
of Mr. McGovern and Mr. Kuse and his affiliates.

Immediately prior to the consummation of the Corporate Organization, the
Affiliated Entities intend to distribute to Mr. Krischer, as agent, the cash and
cash equivalents of the Affiliated Entities for purposes of liquidating current
liabilities and making final distributions to the investors in the Affiliated
Entities. As of March 31, 1996, the cash to be distributed to Mr. Krischer, as
agent, aggregated approximately $814,000. As of March 31, 1996, Messrs.
Krischer, Kuse and McGovern would have received approximately $245,000, $152,000
and $90,000, respectively, of such distributions after liquidation of certain
liabilities in the amount of approximately $323,000. Such distributions are
expected to reduce substantially the cash balances of the Affiliated Entities
immediately prior to the closing of the Offering. Upon the closing of the
Offering, and in conjunction with such cash distributions, the Company will
reimburse the Affiliated Entities for expenses advanced to fund the Offering,
which, as of December 31, 1995, totaled approximately $283,000.

Pursuant to the terms of a Management Agreement between the Company and the
Third Party Seller who owns the Forest Park facility, upon consummation of the
Company's acquisition of the Forest Park facility, the Company will receive a
sales incentive fee equal to 25% of the net proceeds to the Third Party Seller
from such sale after certain deductions, including the repayment of debt. The
Company anticipates that the fee will be approximately $200,000, and it will be
accounted for as a reduction in the price paid for the Forest Park facility.

In 1995, the Company paid $17,000 in consulting fees to Acreage Investment
Corporation, a real estate and construction consulting firm owned by Mr.
Hilliard, the Company's Vice President of Construction. The Company anticipates
that it will pay approximately $8,000 in consulting fees to Acreage Investment
Corporation prior to the consummation of the Offering. After consummation of the
Offering, the Company does not anticipate paying any additional fees to Acreage
Investment Corporation.

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PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock by (i) each director of the Company; (ii) each
executive officer of the Company; (iii) all directors and executive officers of
the Company as a group and (iv) each person known to the Company to beneficially
own more than 5% of the outstanding Common Stock. Unless otherwise indicated,
all shares are owned directly and the indicated person has sole voting and
investment power. The number of shares represents the number of shares of Common
Stock the person is expected to hold immediately following completion of the
Corporate Organization and the Offering.

<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF SHARES OUTSTANDING
NAME OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED COMMON STOCK
- ---------------------------------------------------------------- ------------------ ------------
<S> <C> <C>
David E. Krischer............................................... 2,772,877 35.8%
Dan J. Berman................................................... 144,968 1.9
Seth H. Christian............................................... 145,630 1.9
Terry J. Feldman................................................ 800 *
G. Hunter Hilliard.............................................. 91,219 1.2
Kevin R. Pfannes................................................ 145 *
James R. Kuse(2)................................................ 228,122 2.9
Michael McGovern(2)............................................. 420,381 5.4
John W. Spiegel(2).............................................. 1,000 *
HS II Associates, L.P. and HS III Associates, L.P.(3)........... 680,744 8.8
All directors and executive officers as a group (nine 3,805,142 49.1%
persons)......................................................
</TABLE>

- ---------------

* Represents less than one percent of the outstanding Common Stock.
(1) Unless otherwise indicated, the address of such persons is care of Suburban
Lodges of America, Inc., 120 Interstate North Parkway East, Suite 120,
Atlanta, Georgia 30339.
(2) Includes 1,000 shares of restricted Common Stock granted pursuant to the
Directors' Plan and, with respect to Mr. Kuse, includes 226,123 shares held
of record by K&K Holdings, a partnership in which Mr. Kuse has an indirect
ten percent interest and the remainder of which is owned by his son,
Michael Kuse.
(3) These partnerships are owned by three partners, none of whom is an officer
or director of the Company, who have informed the Company that they intend
to distribute all of the shares to the individual partners promptly upon
receipt. If such distribution occurs, none of the three individuals will
own more than five percent of the Company's outstanding shares of Common
Stock. The address of HS II Associates, L.P. and HS III Associates, L.P. is
6640 Powers Ferry Road, Suite 200, Atlanta, Georgia 30339.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $0.01 per share, and 5,000,000 shares of Preferred
Stock, par value $1.00 per share (the "Preferred Stock"). There are currently
six holders of record of Common Stock. All outstanding shares of Common Stock
are, and the shares of Common Stock offered hereby will be, upon payment
therefor, fully paid and nonassessable.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on all matters
voted on by shareholders, including elections of directors. Except as otherwise
required by law or provided in any resolution adopted by the Board of Directors
with respect to any series of Preferred Stock, the holders of the Common Stock
exclusively possess all voting power. The Articles of Incorporation do not
provide for cumulative voting in the election of directors. Subject to any
preferential rights of any outstanding series of Preferred Stock, the holders of
Common Stock are entitled to such dividends as may be declared from time to time
by the Board of

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Directors from funds available therefor, and upon liquidation are entitled to
receive pro rata all assets of the Company available for distribution to such
holders. The holders of Common Stock have no preemptive rights.

PREFERRED STOCK

The authorized and unissued capital stock of the Company includes 5,000,000
shares of Preferred Stock, par value $1.00 per share. The Board of Directors
generally has the power to issue shares of capital stock without shareholder
approval. The Board of Directors is authorized to establish the rights,
preferences and limitations of any or all shares of Preferred Stock and to
divide such shares into classes or series, with or without voting rights, as the
Board may determine. Except for the Series A Participating Cumulative Preferred
Stock (the "Series A Preferred Stock") issuable pursuant to the Company's Rights
Agreement (as described below), no shares of Preferred Stock are currently
designated, and there is no current plan to designate or issue any other class
or series of Preferred Stock. However, the ability of the Board of Directors to
issue shares of Preferred Stock could impede or deter an unsolicited tender
offer or takeover proposal regarding the Company. See "Risk Factors --
Anti-Takeover Considerations -- Rights Agreement." Shares of capital stock
also could be issued with such terms, provisions and rights which would make a
takeover of the Company more difficult and, therefore, less likely to occur.
In addition, the issuance of Preferred Stock could decrease the amount of
earnings and assets available for distribution to holders of Common Stock and
could have the effect of making removal of management more difficult. In certain
circumstances, this could have the effect of decreasing the market value of the
Common Stock.

RIGHTS AGREEMENT

The Company's Board of Directors has adopted a Rights Agreement, pursuant
to which one right (a "Right") will be issued in respect of each share of Common
Stock outstanding upon consummation of the Offering, including shares issued in
connection with the Corporate Organization. Rights will also attach to shares of
Common Stock issued after the Corporate Organization and the Offering but prior
to the Distribution Date (as defined below).

Each Right will entitle the registered holder to purchase from the Company
one one-hundredth of a share (a "Unit") of Series A Preferred Stock or, in
certain circumstances, Common Stock or stock of the Acquiring Person (as defined
below). Each Unit is structured to be the economic equivalent of one share of
Common Stock. The exercise price per Right will be $60, subject to adjustment
(the "Purchase Price").

The Rights will attach to the shares of Common Stock and will be evidenced
by Common Stock certificates, and no separate certificates evidencing the Rights
(the "Rights Certificates") will be distributed initially. The Rights will
separate from the Common Stock and a distribution of the Rights Certificates
will occur (the "Distribution Date") upon the earlier of (i) ten days following
a public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire (other
than pursuant to an acquisition approved in advance by a majority of the
Continuing Directors (as defined below)), beneficial ownership of 15% or more of
the outstanding shares of Common Stock (the "Share Acquisition Date"), or (ii)
ten business days after the commencement of a tender offer or exchange offer
that would result in a person or group beneficially becoming an Acquiring
Person. Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) any Common Stock certificates issued will contain a
notation incorporating the Rights Agreement by reference and (iii) the surrender
for transfer of any certificates for Common Stock outstanding will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.

The Rights are not exercisable until the Distribution Date and will expire
at the close of business in May 2006, unless earlier redeemed or exchanged by
the Company as described below. As soon as practicable after the Distribution
Date, Rights Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date, and thereafter such
separate Rights Certificates alone will represent the Rights.

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<PAGE> 58

The Rights Agreement also provides that if (i) any person becomes an
Acquiring Person (other than pursuant to a tender or exchange offer approved by
a majority of the Continuing Directors), (ii) during such time as there is an
Acquiring Person an event occurs which results in such Acquiring Person's
ownership interest in the Company being increased by more than 1%, (iii) the
Company is the surviving Corporation in a merger with an Acquiring Person and
the Common Stock is not changed or exchanged or (iv) an Acquiring Person engages
in one or more "self-dealing" transactions as set forth in the Rights Agreement,
then proper provision shall be made so that each holder of a Right (except as
set forth below) will thereafter have the right to receive, upon exercise and
payment of the Purchase Price, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to the
Purchase Price.

If, at any time following the Share Acquisition Date, (i) the Company is
acquired in a merger, statutory share exchange or other business combination in
which the Company is not the surviving corporation or (ii) the Company sells or
transfers assets aggregating more than 50% of its assets or generating more than
50% of its operating income or cash flow, each holder of a Right (except as set
forth below) shall thereafter have the right to receive, upon exercise and
payment of the Purchase Price, common stock of the acquiring company having a
value equal to twice the Purchase Price. The events set forth in this paragraph
and in the preceding paragraph are referred to as the "Triggering Events."

Upon the occurrence of a Triggering Event, Rights that are or were owned by
the Acquiring Person, or any affiliate or associate of such Acquiring Person, on
or after such Acquiring Person's Share Acquisition Date shall be null and void
and may not thereafter be exercised by any person (including subsequent
transferees).

The Purchase Price payable, and the number of shares of Series A Preferred
Stock, Common Stock or other securities or property issuable upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution.

At any time after any person becomes an Acquiring Person, the Company may
exchange all or part of the Rights (other than Rights owned by the Acquiring
Person and certain affiliated persons) for shares of Common Stock (an
"Exchange") at an exchange ratio of one share per Right, as appropriately
adjusted to reflect any stock split or similar transaction.

At any time until ten days following the Share Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $0.001
per Right (the "Redemption Price"). Under certain circumstances set forth in the
Rights Agreement, the decision to make an Exchange or to redeem the Rights shall
require the concurrence of a majority of the Continuing Directors. After the
redemption period has expired, the Company's right of redemption may be
reinstated if an Acquiring Person reduces his beneficial ownership to 10% or
less of the outstanding shares of Common Stock in a transaction or series of
transactions not involving the Company. Immediately upon the action of the Board
ordering redemption of the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.

The term "Continuing Directors" means any member of the board who was a
member of the board immediately before an Acquiring Person becomes such (other
than pursuant to a tender or exchange offer approved by a majority of the
Continuing Directors), and any person who is subsequently elected to the Board
if such person is recommended or approved by a majority of the Continuing
Directors, but does not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.

Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Series A Preferred Stock (or other consideration) of the Company
or for common stock of the acquiring company as set forth above.

Prior to the Distribution Date, the Rights Agreement may be amended in any
respect, other than to change the Redemption Price, the Expiration Date, the
Purchase Price or the number or kind of shares for

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which a Right is exercisable. After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board (in certain circumstances, with the
concurrence of the Continuing Directors) in order to cure any ambiguity, to make
changes that do not adversely affect the interests of the holders of Rights
(excluding the interests of an Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, no amendment to
lengthen the time period governing redemption may be made at such time as the
Rights are not redeemable.

The Rights may have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that acquires more than 15% of the
outstanding shares of Common Stock or if another Triggering Event occurs without
the Rights having been redeemed or in the event of an Exchange. However, the
Rights should not interfere with any merger or other business combination
approved in advance by the Board or a merger or other business combination
approved by the Board and the shareholders because the Rights are redeemable
under certain circumstances. See "Risk Factors -- Anti-Takeover
Considerations -- Rights Agreement."

The dividend and liquidation rights of the Series A Preferred Stock are
designed so that the value of one one-hundredth of a share of Series A Preferred
Stock issuable upon exercise of each Right will approximate the same economic
value of one share of Common Stock, including voting rights. Shares of Series A
Preferred Stock issuable upon exercise of each Right will not be redeemable.
Each share of Series A Preferred Stock will entitle the holder to a minimum
preferential dividend of $1.00 per share, but will entitle the holder to an
aggregate dividend payment of 100 times the dividend declared on each share of
Common Stock. In the event of liquidation, each share of Series A Preferred
Stock will be entitled to a minimum preferential liquidation payment of $1.00,
plus accrued and unpaid dividends and distributions thereon, but will be
entitled to an aggregate payment of 100 times the payment made per share of
Common Stock. In the event of any merger, consolidation or other transaction in
which Common Stock is exchanged for or changed into other stock or securities,
cash or other property, each share of Series A Preferred Stock will be entitled
to receive 100 times the amount received per share of Common Stock. Series A
Preferred Stock is not convertible into Common Stock, but Rights may be
exercisable for shares of Common Stock in certain instances.

Each share of Series A Preferred Stock will be entitled to 100 votes on all
matters submitted to a vote of the shareholders of the Company, and shares of
Series A Preferred Stock will generally vote together as one class with the
Common Stock and any other voting capital stock of the Company on all matters
submitted to a vote of the Company's shareholders. Further, whenever dividends
on the Series A Preferred Stock are in arrears in an amount equal to six
quarterly payments, the Series A Preferred Stock, together with any other shares
of preferred stock then entitled to elect directors, shall have the right, as a
single class, to elect one director until the default has been cured.

Whenever quarterly dividends or other dividends or distributions payable on
the Series A Preferred Stock are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether declared, on the outstanding
Series A Preferred Stock shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, or make any distributions on, any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock; (ii) declare or pay dividends on,
or make any distributions on, any shares of stock ranking on parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such other parity stock; (iii) redeem, purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock or (iv)
redeem, purchase or otherwise acquire for consideration any Series A Preferred
Stock, or any shares of stock ranking on a parity with the Series A Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.

A copy of the Rights Agreement will be available after the Offering free of
charge from the Rights Agent, American Stock Transfer & Trust Company. This
summary description of the Rights and the Rights

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Agreement does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement.

CERTAIN PROVISIONS OF GEORGIA LAW AND THE COMPANY'S ARTICLES OF INCORPORATION
AND BYLAWS

The following summary of certain provisions of Georgia law and the Articles
of Incorporation and Bylaws of the Company does not purport to be complete and
is subject to and qualified in its entirety by reference to Georgia law and the
Articles of Incorporation and the Bylaws of the Company. Certain provisions of
Georgia law and the Articles of Incorporation and Bylaws are described elsewhere
in this Prospectus.

Anti-Takeover Protection

The Company has elected to be covered by two provisions of the Georgia Code
that restrict business combinations with interested shareholders. These
provisions do not apply to a Georgia corporation unless its bylaws specifically
make the statute applicable, and once adopted, such a bylaw may be repealed only
by the affirmative vote of at least two-thirds of the continuing directors and a
majority of the votes entitled to be cast by the voting shares of the Company,
other than shares beneficially owned by an interested shareholder and his
associates and affiliates.

Interested Stockholders Transactions. The Business Combination with
Interested Stockholders Statute regulates business combinations, such as
mergers, consolidations, share exchanges and asset purchases, where the acquired
business has at least 100 shareholders residing in Georgia and has its principal
office in Georgia, as the Company does, and where the acquiror became an
"interested shareholder" of the corporation, unless either (i) the transaction
resulting in such acquiror becoming an "interested shareholder" or the business
combination received the approval of the corporation's Board of Directors prior
to the date on which the acquiror became an interested shareholder or (ii) the
acquiror became the owner of at least 90% of the outstanding voting stock of the
corporation (excluding shares held by directors, officers and affiliates of the
corporation and shares held by certain other persons) in the same transaction in
which the acquiror became an interested shareholder. For purposes of this
statute, an "interested shareholder" generally is any person who directly or
indirectly, alone or in concert with others, beneficially owns or controls 10%
or more of the voting power of the outstanding voting shares of the corporation.
The statute prohibits business combinations with an unapproved interested
shareholder for a period of five years after the date on which such person
became an interested shareholder. The statute restricting business combinations
is broad in its scope and is designed to deter unfriendly acquisitions. The
restrictions contained in this statute shall not apply to any person who was an
"interested shareholder" prior to the Company's adoption of this statute (i.e.,
Mr. Krischer).

Fair Price Requirements. The Fair Price Statute prohibits certain business
combinations between a Georgia business corporation and an interested
shareholder. The Fair Price Statute would permit the business combination to be
effected if (i) certain "fair price" criteria are satisfied; (ii) the business
combination is unanimously approved by the continuing directors; (iii) the
business combination is recommended by at least two-thirds of the continuing
directors and approved by a majority of the votes entitled to be cast by holders
of voting shares, other than voting shares beneficially owned by the interested
shareholder or (iv) the interested shareholder has been such for at least three
years and has not increased his ownership position in such three-year period by
more than one percent in any 12-month period. The Fair Price Statute is designed
to deter unfriendly acquisitions that do not satisfy the specified "fair price"
requirement. In general, the fair-price requirement provides that in a two-step
acquisition transaction, the interested shareholder must pay the shareholders in
the second step either the same amount of cash or the same amount and type of
consideration paid to acquire the corporation's shares in the first step. See
"Risk Factors -- Anti-Takeover Considerations -- Georgia Anti-Takeover
Statutes."

Articles of Incorporation and Bylaws.

Staggered Board of Directors; Removal; Filling Vacancies. The Articles of
Incorporation and Bylaws provide that, subject to any rights of holders of
Preferred Stock to elect additional directors under specified circumstances, the
Board of Directors will consist of not less than two but no more than nine
directors.

59
<PAGE> 61

Initially, there will be five directors, three of whom will be independent
directors. The Board of Directors is divided into three classes of directors
serving staggered three-year terms. The classification of directors has the
effect of making it more difficult for shareholders to change the composition of
the Board of Directors. The Company believes, however, that the longer time
required to elect a majority of a classified Board of Directors will help to
ensure the continuity and stability of the Company's management and policies.
The classification provisions could also have the effect of discouraging a third
party from accumulating large blocks of the Company's stock or attempting to
obtain control of the Company, even though such an attempt might be beneficial
to the Company and its shareholders. Accordingly, shareholders could be deprived
of certain opportunities to sell their shares of Common Stock at a higher market
price than might otherwise be the case. See "Risk Factors -- Anti-Takeover
Considerations -- Staggered Board." The shareholders shall be entitled to vote
on the election or removal of directors, with each share entitled to one vote.

The Bylaws provide that, subject to any rights of the Preferred Stock, and
unless the Board of Directors otherwise determines, any vacancies will be filled
by the affirmative vote of a majority of the remaining directors, even if less
than a quorum, provided that independent directors shall nominate and approve
directors to fill vacancies created by independent directors. Accordingly, the
Board of Directors could temporarily prevent any shareholder from enlarging the
Board of Directors and filling the new directorships with such shareholder's own
nominees. A vacancy resulting from an increase in the number of directors also
must be filled by action of a majority of the entire Board of Directors. A
director may be removed only with cause by the vote of the holders of 50% of the
outstanding shares at a special meeting of the shareholders called for the
purpose of removing him. This provision, when coupled with the provisions of the
Bylaws authorizing the Board of Directors to fill vacant directorships,
precludes the Company's shareholders from removing incumbent directors, except
for cause and upon the existence of a substantial affirmative vote, and filling
the vacancies created by such removal with their own nominees.

Amendment. In general, the Articles of Incorporation may be amended by the
affirmative vote of a majority of those outstanding shares of Common Stock
composing a quorum at a properly called shareholder meeting. However, the
Articles of Incorporation set forth certain circumstances, as previously
described, under which the affirmative vote of the holders of a majority of the
outstanding shares of the Common Stock is required to make certain amendments.
The Company's Bylaws may be amended by a majority of the Board of Directors or
by vote of the holders of a majority of the outstanding shares of Common Stock.

Directors and Officers Indemnification. The Company's Articles of
Incorporation provide for indemnification of directors to the full extent
permitted by Georgia law and, to the extent permitted by such law, eliminate or
limit the personal liability of directors to the Company and its shareholders
for monetary damages for certain breaches of fiduciary duty and the duty of
care. Such indemnification may be available for liabilities arising in
connection with this Offering. Insofar as indemnification for liabilities under
the Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable. Pursuant to its Articles of Incorporation, the Company may
indemnify its officers, employees, agents and other persons to the fullest
extent permitted by Georgia law. The Company's Bylaws obligate the Company,
under certain circumstances, to advance expenses to its directors and officers
in defending an action, suit or proceeding for which indemnification may be
sought. The Company has entered into Indemnification Agreements with certain of
its directors and officers. See "Management -- Indemnification Agreements."

The Company's Bylaws also provide that the Company shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company, or who, while a director,
officer, employee or agent, is or was serving as a director, officer, trustee,
general partner, employee or agent of one of the Company's subsidiaries or, at
the request of the Company, of any other organization, against any liability
asserted against such person or incurred by such person in any such capacity,
whether the Company would have the power to indemnify such person against such
liability under Georgia law. The Company intends to purchase and maintain
insurance on behalf of all of its directors and executive officers.

60
<PAGE> 62

Ability to Consider Other Constituencies. The Articles of Incorporation
permit the Board of Directors, in determining what is believed to be in the best
interest of the Company, to consider the interests of the employees, customers,
suppliers and creditors of the Company, the communities in which offices or
other establishments of the Company are located and all other factors the
directors consider pertinent, in addition to considering the effects of any
actions on the Company and its shareholders.

REGISTRATION RIGHTS

Suburban has granted to the persons who receive Common Stock in the
Corporate Organization certain "piggyback" registration rights. These
registration rights become effective six months after the effective date of the
Registration Statement of which this Prospectus is a part. Such registration
rights, with certain limitations, grant the holders thereof the right to have
such shares registered under any registration statement (other than the
Registration Statement of which this Prospectus is part) filed by the Company
relating to the issuance of Common Stock or securities substantially similar to
Common Stock. The Company will bear the expenses incident to its registration
requirements under the registration rights, except that such expenses shall not
include any underwriting discount or commission, Commission or state securities
registration fees or transfer taxes relating to such shares. Registration rights
may be granted to future sellers of extended stay facilities to the Company who
elect to receive Common Stock or other securities convertible into Common Stock
in lieu of cash.

OTHER MATTERS

Suburban has applied for quotation of the Common Stock on The Nasdaq Stock
Market upon notice of issuance, under the proposed symbol "SLAM."

The transfer agent and registrar for the Company's Common Stock is American
Stock Transfer and Trust Company, New York, New York.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the completion of the Offering, the Company will have outstanding
7,752,971 shares of Common Stock. The 3,000,000 shares of Common Stock sold in
the Offering will be freely tradable without restriction or further registration
under the Securities Act, except for any shares purchased by an "affiliate" of
the Company, which will be subject to the limitations of Rule 144 promulgated
under the Securities Act ("Rule 144"). The remaining 4,752,971 outstanding
shares of Common Stock (the "Restricted Securities") constitute restricted
securities under Rule 144.

The Company, its directors and executive officers and all recipients of
shares in the Corporate Organization have agreed with the Underwriters not to
sell any shares of Common Stock, except for shares purchased in the Offering or
acquired thereafter in the public market, for a period of 180 days following the
date of this Prospectus, without the prior written consent of Montgomery
Securities, which it may withhold in its sole discretion.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who holds shares of Restricted Securities as to
which a minimum of two years has elapsed since the later of the date of
acquisition from an issuer or from an affiliate of the issuer, and any person
who is an "affiliate" as that term is defined under the Securities Act, is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of (i) one percent of the then outstanding shares of the
Common Stock of the Company (approximately 77,500 shares immediately following
this Offering) or (ii) the average weekly trading volume of the Common Stock
during the four calendar weeks preceding a sale by such person. Sales under Rule
144 are also subject to certain manner-of-sale provisions, notice requirements
and the availability of current public information about the Company. Under Rule
144, however, a person who holds shares of Restricted Securities as to which a
minimum of three years has elapsed since their acquisition from the issuer or an
affiliate of the issuer and who is not, and for three months prior to the sale
of such shares has not been, an affiliate of the Company is free to sell such
shares without regard to the volume, manner-of-sale and certain other
limitations contained in Rule 144.

61
<PAGE> 63

On the closing date of the Offering, the Company will have options
outstanding to purchase 400,000 shares of its Common Stock and is authorized to
grant options to purchase an additional 350,000 shares under the Company's 1996
Plan. In addition, on such date, the Company will have options outstanding to
purchase an aggregate of 4,500 shares of its Common Stock and an aggregate of
3,000 shares of restricted stock outstanding under the Directors' Plan. The
Company expects to file a Registration Statement under the Securities Act after
the date of this Prospectus to register the shares of Common Stock that may be
issued upon the exercise of options granted under the 1996 Plan and the
Directors' Plan. Shares issued under the Company's stock option plans after the
effective date of such Registration Statement will be freely tradeable in the
open market, subject, in the case of sales by affiliates, to the volume, manner
of sale, notice and public information requirements of Rule 144. See
"Management -- 1996 Stock Incentive Plans."

The Company has granted certain "piggyback" registration rights to the
persons who receive Common Stock in the Corporate Organization. An aggregate of
approximately 4,750,000 shares of Common Stock is subject to such registration
rights. See "Principal Shareholders -- Registration Rights."

Prior to the Offering, there has been no public market for the Common
Stock, and no predictions can be made as to the effect, if any, that sales of
shares or the availability of shares for sale will have on the prevailing market
price of the Common Stock. Nevertheless, sales of substantial amounts of Common
Stock in the public market could have an adverse effect on prevailing market
prices.

62
<PAGE> 64

UNDERWRITING

The Underwriters named below, represented by Montgomery Securities, J.C.
Bradford & Co. and Legacy Securities Corp. (the "Representatives"), have
severally agreed, subject to the terms and conditions contained in the
Underwriting Agreement, to purchase from the Company the number of shares of
Common Stock indicated below opposite their respective names, at the initial
public offering price less the underwriting discount set forth on the cover page
of this Prospectus. The Underwriting Agreement provides that the obligations of
the Underwriters are subject to certain conditions precedent and that the
Underwriters are committed to purchase all of the shares of Common Stock if they
purchase any.

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITERS TO BE PURCHASED
- -------------------------------------------------------------------------- ----------------
<S> <C>
Montgomery Securities.....................................................
J.C. Bradford & Co........................................................
Legacy Securities Corp....................................................
----------------
Total........................................................... 3,000,000
================
</TABLE>

The Representatives have advised the Company that they propose initially to
offer the Common Stock to the public on the terms set forth on the cover page of
this Prospectus. The Underwriters may allow selected dealers a concession of not
more than $ per share, and the Underwriters may allow, and such dealers
may reallow, a concession of not more than $ per share to certain other
dealers. After the Offering, the offering price and other selling terms may be
changed by the Underwriters. The Common Stock is offered subject to receipt and
acceptance by the Representatives and to certain other conditions, including the
right to reject orders in whole or in part.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 450,000 additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the initial 3,000,000 shares to be purchased by
the Underwriters. To the extent that the Underwriters exercise this option, each
of the Underwriters will be committed, subject to certain conditions, to
purchase such additional shares in approximately the same proportion as set
forth in the above table. The Underwriters may purchase such shares only to
cover over-allotments made in connection with the Offering.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including civil liabilities under the
Securities Act, or will contribute to payments the Underwriters may be required
to make in respect thereof.

The Company and each of its directors and executive officers and all
recipients of shares in the Corporate Organization have agreed that (except for
shares purchased in the Offering or acquired thereafter in the public market),
for a period of 180 days from the date of this Prospectus, they will not,
directly or indirectly, offer to sell, sell, contract to sell or otherwise sell
or dispose of any shares of their Common Stock or options or warrants to acquire
shares of Common Stock without the prior written consent of Montgomery
Securities. The Company has agreed not to sell any shares of Common Stock for a
period of 180 days from the date of this Prospectus without the prior written
consent of Montgomery Securities, except that the Company may, without consent,
issue shares of Common Stock upon exercise of outstanding stock options and
warrants.

The Representatives have informed the Company that they do not intend to
confirm sales to accounts over which they exercise discretionary authority in
excess of five percent of the number of shares of Common Stock offered hereby.

63
<PAGE> 65

Prior to the Offering, there has been no public trading market for the
Common Stock. Consequently, the initial public offering price will be determined
by negotiation between the Company and the Representatives. Among the factors to
be considered in such negotiations will be the history of, and the prospects
for, the Company and the industry in which it competes, an assessment of the
Company's management, the Company's past and present operations, the prospects
for future earnings of the Company, the present state of the Company's
development, the general condition of the securities markets at the time of the
Offering and the market prices of and demand for publicly traded common stock of
comparable companies in recent periods.

In January 1996, Legacy Securities Corp. ("Legacy") agreed to provide
investment banking consulting services to the Company in connection with the
Offering and will receive a fee in the amount of $100,000 upon the closing of
the Offering for such services. In addition, Legacy Lodging LLC, an affiliate of
Legacy, is developing several Suburban Lodge facilities in Tennessee. One of
these facilities is under contract and will be acquired in connection with the
Corporation Organization on the same terms and conditions as the Affiliated
Facilities. The owners of Legacy Lodging LLC will receive an aggregate of
approximately 33,300 shares of Common Stock in connection with the merger. All
of these shares will be held in escrow until the Company obtains final zoning
approval on the site for such facility.

Legacy became a member of the National Association of Securities Dealers,
Inc. in 1994. Since 1994, Legacy has served as the Company's financial advisor
in connection with financing alternatives and has been reimbursed by the Company
for its out-of-pocket expenses.

EXPERTS

The combined financial statements of Suburban Lodges of America, Inc. and
Affiliated Entities as of December 31, 1995 and 1994 and for each of the three
years in the period ended December 31, 1995, the related combined financial
statement schedule, and the financial statements of Gulf Coast Associates, Ltd.
for the year ended December 31, 1995, all included in this Prospectus, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein, and have been so included in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Kilpatrick & Cody, Atlanta, Georgia, and for the
Underwriters by King & Spalding, Atlanta, Georgia.

ADDITIONAL INFORMATION

The Company has filed with the Commission in Washington, D.C. a
Registration Statement on Form S-1 (the "Registration Statement") under the
Securities Act with respect to the Common Stock offered hereby. As used herein,
the term "Registration Statement" means the initial Registration Statement and
any and all amendments thereto. This Prospectus omits certain information
contained in said Registration Statement as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits thereto. Statements herein
concerning the contents of any contract or other document are not necessarily
complete and in each instance reference is made to such contract or other
document filed with the Commission as an exhibit to the Registration Statement.
Each such statement is qualified in its entirety by such reference.

64
<PAGE> 66

AVAILABLE INFORMATION

As a result of the Offering, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and in accordance therewith will file reports and other information with the
Commission. Reports, registration statements, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
following regional offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and Seven World Trade Center, New York, New York
10048. Copies of such materials can be obtained at prescribed rates from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549.

65
<PAGE> 67

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Suburban Lodges of America, Inc. and Affiliated Entities
Combined Financial Statements:
Independent Auditors' Report..................................................... F-2
Combined Balance Sheets as of December 31, 1994 and 1995 and March 31, 1996
(unaudited)..................................................................... F-3
Combined Statements of Operations for the Years Ended December 31, 1993, 1994,
1995, and the Three Months Ended March 31, 1995 and 1996 (unaudited)............ F-4
Combined Statements of Common Stock, Deficit, and Partners' Capital (Deficit) for
the Years Ended December 31, 1993, 1994, and 1995, and the Three Months Ended
March 31, 1996 (unaudited)...................................................... F-5
Combined Statements of Cash Flows for the Years Ended December 31, 1993, 1994,
1995, and the Three Months Ended March 31, 1995 and 1996 (unaudited)............ F-6
Notes to Combined Financial Statements........................................... F-7
Combined Schedule of Real Estate Owned and Accumulated Depreciation.............. F-14
Gulf Coast Associates, Ltd. d/b/a Suburban Lodge of Forest Park (Gulf Coast) Financial
Statements:
Independent Auditors' Report........................................................ F-15
Balance Sheets as of December 31, 1995 and March 31, 1996 (unaudited)............... F-16
Statements of Operations for the Year Ended December 31, 1995 and the Three Months
Ended March 31, 1995 and 1996 (unaudited)........................................ F-17
Statements of Partners' Deficit for the Year Ended December 31, 1995 and the Three
Months Ended March 31, 1996 (unaudited).......................................... F-18
Statements of Cash Flows for the Year Ended December 31, 1995 and the Three Months
Ended March 31, 1995 and 1996 (unaudited)........................................ F-19
Notes to Financial Statements....................................................... F-20
</TABLE>

F-1
<PAGE> 68

INDEPENDENT AUDITORS' REPORT

Board of Directors
Suburban Lodges of America, Inc.
and Affiliated Entities:

We have audited the accompanying combined balance sheets of Suburban Lodges
of America, Inc. and Affiliated Entities ("Suburban Lodges") as of December 31,
1994 and 1995 and the related combined statements of operations, of common
stock, deficit, and partners' capital (deficit), and cash flows for each of the
three years in the period ended December 31, 1995. Our audits also included the
financial statement schedule included on page F-14 of this Prospectus. These
combined financial statements and the financial statement schedule are the
responsibility of Suburban Lodges' management. Our responsibility is to express
an opinion on these financial statements and the financial statement schedule
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Suburban
Lodges as of December 31, 1994 and 1995 and the combined results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
In addition, in our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.

Deloitte & Touche LLP

Atlanta, Georgia
March 17, 1996
(April 9, 1996 as to Note 10)

F-2
<PAGE> 69

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................. $ 467,203 $ 687,432 $ 767,163
Prepaid expenses and other assets..................... 89,692 180,116 440,587
Advances to affiliates................................ 5,000 30,000
Current deferred tax asset............................ 14,000 33,611 7,050
----------- ----------- -----------
Total current assets.......................... 570,895 906,159 1,244,800
DEFERRED EXPENSES -- net................................ 352,552 461,526 448,907
INVESTMENT IN FACILITIES -- at cost:
Land.................................................. 1,711,633 2,386,633 2,386,633
Buildings and improvements............................ 6,978,608 9,359,201 9,371,039
Equipment............................................. 805,837 888,162 909,773
Furniture and fixtures................................ 724,045 1,004,875 1,105,168
Construction-in-progress.............................. 52,361 1,988,674 3,449,530
----------- ----------- -----------
10,272,484 15,627,545 17,222,143
Less accumulated depreciation......................... 1,556,269 1,990,982 2,096,182
----------- ----------- -----------
Net investment in facilities.................. 8,716,215 13,636,563 15,125,961
----------- ----------- -----------
$ 9,639,662 $15,004,248 $16,819,668
========== ========== ==========
LIABILITIES AND TOTAL CAPITAL
CURRENT LIABILITIES:
Current portion of long-term debt and capital
leases............................................. $ 302,467 $ 640,413 $ 535,902
Current portion of notes payable to affiliates........ 1,099,021 1,052,511 1,052,511
Accounts payable, trade............................... 66,299 82,369 149,999
Construction accounts payable......................... 544,602 336,078
Accrued interest...................................... 47,575 137,228 131,125
Accrued expenses and other liabilities................ 145,071 322,678 430,899
----------- ----------- -----------
Total current liabilities..................... 1,660,433 2,779,801 2,636,514
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS............ 8,200,749 11,552,359 13,312,938
LONG-TERM NOTES PAYABLE TO AFFILIATES................... 470,000 572,398 612,397
----------- ----------- -----------
Total liabilities............................. 10,331,182 14,904,558 16,561,849
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock.......................................... 15 15 15
Additional paid-in capital............................ 999 999 999
Deficit............................................... (1,073,951) (1,561,685) (1,669,789)
Partners' and members' capital........................ 381,417 1,660,361 1,926,594
----------- ----------- -----------
Total capital (deficit)....................... (691,520) 99,690 257,819
----------- ----------- -----------
$ 9,639,662 $15,004,248 $16,819,668
========== ========== ==========
</TABLE>

See notes to combined financial statements.

F-3
<PAGE> 70

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------ -----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE:
Room revenue.................... $2,892,779 $3,903,533 $4,431,164 $ 980,454 $1,366,141
Other facility revenue.......... 222,861 290,150 295,758 70,152 86,322
Franchise and other revenue..... 247,071 151,001 460,425 92,059 216,860
---------- ---------- ---------- ---------- ----------
Total revenue.............. 3,362,711 4,344,684 5,187,347 1,142,665 1,669,323
---------- ---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Facility operating expenses..... 1,364,377 1,768,162 2,072,389 515,955 652,581
Corporate operating expenses.... 428,641 736,886 882,615 169,809 274,022
Related party consulting fees... 17,000 3,000 6,000
Depreciation and amortization... 371,706 415,604 459,665 104,287 116,250
---------- ---------- ---------- ---------- ----------
Total costs and expenses... 2,164,724 2,920,652 3,431,669 793,051 1,048,853
---------- ---------- ---------- ---------- ----------
OPERATING INCOME..................... 1,197,987 1,424,032 1,755,678 349,614 620,470
INTEREST EXPENSE..................... 724,526 936,465 1,098,117 225,384 286,280
---------- ---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAX BENEFIT AND
EXTRAORDINARY INCOME............... 473,461 487,567 657,561 124,230 334,190
INCOME TAX (EXPENSE)
BENEFIT............................ 14,000 19,611 (26,561)
EXTRAORDINARY INCOME................. 130,180
---------- ---------- ---------- ---------- ----------
NET INCOME........................... $ 473,461 $ 631,747 $ 677,172 $ 124,230 $ 307,629
========= ========= ========= ========= =========
</TABLE>

See notes to combined financial statements.

F-4
<PAGE> 71

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

COMBINED STATEMENTS OF COMMON STOCK, DEFICIT,
AND PARTNERS' CAPITAL (DEFICIT)

<TABLE>
<CAPTION>
ADDITIONAL PARTNERS'
COMMON PAID-IN CAPITAL TOTAL
STOCK CAPITAL DEFICIT (DEFICIT) CAPITAL
------ ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992............... $ 10 $999 $ (180,259) $ (444,015) $(623,265)
Net income............................. (233,988) 707,449 473,461
Contributions from partners............ 150,000 150,000
Stock issuance......................... 4 4
Distribution to partners............... (512,012) (512,012)
------ ---------- ----------- ---------- ---------
BALANCE, DECEMBER 31, 1993............... 14 999 (414,247) (98,578) (511,812)
Net income (loss)...................... (659,704) 1,291,451 631,747
Stock issuance......................... 1 1
Distribution to partners............... (811,456) (811,456)
------ ---------- ----------- ---------- ---------
BALANCE, DECEMBER 31, 1994............... 15 999 (1,073,951) 381,417 (691,520)
Net income............................. (487,734) 1,164,906 677,172
Contributions from partners............ 863,000 863,000
Distribution to partners............... (748,962) (748,962)
------ ---------- ----------- ---------- ---------
BALANCE, DECEMBER 31, 1995............... 15 999 (1,561,685) 1,660,361 99,690
Net income (unaudited)................. (108,104) 415,733 307,629
Distributions to partners
(unaudited)......................... (149,500) (149,500)
------ ---------- ----------- ---------- ---------
BALANCE, MARCH 31, 1996 (unaudited)...... $ 15 $999 $(1,669,789) $1,926,594 $ 257,819
====== ======= ========== ========= =========
</TABLE>

See notes to combined financial statements.

F-5
<PAGE> 72

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------- -----------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income................................. $ 473,461 $ 631,747 $ 677,172 $ 124,230 $ 307,629
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............ 371,706 415,604 459,665 104,287 116,250
Extraordinary gain on extinguishment of
debt................................... (130,180)
Loss on disposal of fixed asset.......... 18,279
Changes in assets and liabilities:
Prepaid expenses and other assets...... 977 (318) (90,424) 907 (260,471)
Advances to affiliates................. (5,000) (25,000)
Current deferred tax asset............. (14,000) (19,611) 26,561
Accounts payable, trade................ 17,310 (4,416) 16,070 5,231 67,630
Accrued expenses....................... 11,627 15,983 177,607 39,774 108,221
Accrued interest....................... 4,261 (4,084) 89,653 20,152 (6,103)
----------- ----------- ----------- --------- -----------
Net cash provided by operating
activities...................... 879,342 928,615 1,305,132 294,581 334,717
INVESTING ACTIVITIES:
Purchase of land........................... (380,813) (500,000) (675,000)
Construction accounts payable.............. 544,602 (208,524)
Expenditures for building and
improvements............................. (1,446,958) (65,951) (4,292,464) (320,883) (1,471,126)
Purchase of furniture, fixtures, and
equipment................................ (521,066) (85,019) (368,543) (20,399) (121,904)
----------- ----------- ----------- --------- -----------
Net cash used in investing
activities...................... (2,348,837) (650,970) (4,791,405) (341,282) (1,801,554)
FINANCING ACTIVITIES:
Additions to loan closing costs............ (42,101) (141,429) (141,545)
Proceeds from issuance of long-term debt... 1,771,533 5,941,357 3,976,803 327,709 1,742,203
Principal payments on long-term debt....... (113,879) (5,850,924) (275,538) (67,837) (79,844)
Advances from affiliates................... 511,936 678,785 123,763 11,886
Payments on advances from affiliates....... (177,107) (34,700) (67,875) 40,000
Contributions from partners................ 150,000 863,000
Proceeds from stock issuance............... 4 1
Distributions to partners.................. (512,012) (811,456) (748,962) (138,430) (149,500)
Payments on capital lease obligations...... (27,748) (19,940) (23,144) (5,411) (6,291)
----------- ----------- ----------- --------- -----------
Net cash provided by (used in)
financing activities............ 1,560,626 (238,306) 3,706,502 127,917 1,546,568
----------- ----------- ----------- --------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS.... 91,131 39,339 220,229 81,216 79,731
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD................................... 336,733 427,864 467,203 467,203 687,432
----------- ----------- ----------- --------- -----------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD................................... $ 427,864 $ 467,203 $ 687,432 $ 548,419 $ 767,163
============ ============ ============ ========== ============
</TABLE>

See notes to combined financial statements.

F-6
<PAGE> 73

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)

1. ORGANIZATION, BASIS OF PRESENTATION, AND PROPOSED INITIAL PUBLIC OFFERING

Proposed Initial Public Offering -- Suburban Lodges of America, Inc.
expects to file its registration statement with the Securities and Exchange
Commission pursuant to which Suburban Lodges of America, Inc. expects to offer
3,000,000 shares of its common stock to the public (the "Offering") (see Note
11).

Basis of Presentation -- The combined financial statements include the
accounts of seven existing facilities ("Existing Facilities"), one facility
under construction ("Construction Facility"), and five corporate entities
("Corporate Entities") collectively, the "Company."

As of December 31, 1995, the above entities included:

EXISTING FACILITIES:
SLA Associates -- Norcross, L.P.
SLA Associates -- Fulton Industrial, L.P.
Mableton Associates, L.P.
SLA Associates -- Oxmoor, L.P.
SLA Associates -- White Horse, L.P.
SLA Associates -- Matthews, L.P.
HSL of Conyers, LLC
CONSTRUCTION FACILITIES:
SLA Associates -- Douglasville, L.P.
CORPORATE ENTITIES:
Suburban Lodges of America, Inc.
Suburban Management, Inc.
Suburban Franchise Systems, Inc.
Suburban Construction, Inc.
SLA Development, Inc.

All of the above entities are under common ownership and/or control by
virtue of the level of ownership of David Krischer and the officers, directors
and affiliates of Suburban Lodges and general partnership interests held by Mr.
Krischer and his affiliates. Therefore, the combination of the above entities is
accounted for as if it were a pooling of interests using the historical cost
basis of the assets. All intercompany transactions and accounts have been
eliminated in combination.

The accompanying, unaudited interim combined financial statements reflect,
in the opinion of management, all adjustments necessary for a fair presentation
of the interim financial statements. All such adjustments are of a normal and
recurring nature.

The facilities are located in the Southeast with five located in the
Atlanta, Georgia metropolitan area. Therefore, adverse events or conditions
which affect those areas particularly (such as natural disasters or adverse
changes in local economic conditions) could have a more pronounced negative
impact on the operations of Suburban Lodges.

Nature of Operations -- Suburban Lodges develops, constructs, owns and
operates extended stay lodging facilities. Additionally, Suburban Lodges
franchises the right to own and operate Suburban Lodge facilities to third
parties. Third-party development, construction and management services are
available to such third-party franchisees on a fee basis.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition -- Room and other facility revenue is recognized as
earned.

F-7
<PAGE> 74

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)

Franchise Revenue -- Franchisees are required to pay an initial franchise
fee of the greater of $25,000 or $190 per guest room. Initial franchise fees are
recognized as revenue when the franchisee has commenced operations.
Additionally, franchisees are required to pay an ongoing royalty of 3% of gross
revenues and may be required to pay either advertising/marketing fees or
reservation/referral fees. Such ongoing fees are recognized as revenue when
earned.

Four franchises were operating as of December 31, 1994. Two franchises
opened for business in 1995 bringing the total number of franchises in operation
to six. As of December 31, 1995, there were seven franchises under construction.

Income Taxes -- Income taxes have been provided for the Corporate Entities
which are subject to federal and state taxes under the provision of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." No
provision has been made for federal and state income taxes on the Existing
Facilities and Development Facilities because each partner's or member's
proportionate share of the partnership's or limited liability company's income
or loss is passed through to be included on the individual tax returns of the
partners or members (as the case may be).

The Corporate Entities file a consolidated income tax return.

Investments in Facilities -- The facilities are stated at cost. Costs
directly associated with the construction of the facilities are capitalized
until the related project is substantially complete and ready for its intended
use. Additions to facilities for the year ended December 31, 1993, 1994 and 1995
and for the three month period ended March 31, 1995 and 1996 included $33,700,
$0, $76,437 and $0 and $61,651, respectively, of interest on funds borrowed to
finance construction. Depreciation is computed using the straight-line method
for buildings and the double declining balance method for equipment and fixtures
based on the following estimated useful lives:

<TABLE>
<S> <C>
Buildings.......................................................... 40 years
Equipment.......................................................... 7 years
Furniture and fixtures............................................. 7 years
</TABLE>

Maintenance and repairs are charged to operations as incurred; major
renewals and betterments are capitalized. Upon the sale or disposition of a
fixed asset, the asset and related accumulated depreciation are removed from the
accounts, and the gain or loss is included in operations.

Suburban Lodges has adopted Statement of Financial Accounting Standards
121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to Be Disposed Of" ("SFAS 121") as of January 1, 1996. In management's opinion,
the adoption of SFAS 121 in 1996 did not have a material affect on the financial
condition or operations of Suburban Lodges. Facilities are evaluated annually
and written down to net realizable value when management believes that the
undepreciated cost cannot be recovered through future cash flows.

Cash and Cash Equivalents -- Cash and cash equivalents include highly
liquid investments with maturities of three months or less.

Deferred Expenses -- Deferred expenses primarily consist of deferred loan
costs and costs relating to initial operations. Amortization is computed using
the straight-line method over the estimated lives of the assets as follows:

<TABLE>
<S> <C>
Loan costs...................................................... 4 - 25 years
Organization costs.............................................. 4 - 5 years
</TABLE>

F-8
<PAGE> 75

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)

Accumulated amortization is $53,782, $81,356 and $91,356 at December 31,
1994 and 1995 and March 31, 1996, respectively.

Pre-opening costs are expensed as incurred.

Supplemental Cash Flow Information -- Included in the combined statements
of cash flows are cash payments for interest (net of amount capitalized) of
$720,265, $940,549 and $1,008,464 for the years ended December 31, 1993, 1994
and 1995, respectively and $205,232 and $292,383 for the three month periods
ended March 31, 1995 and 1996, respectively. There were no cash payments for
income taxes for the years ended December 31, 1993, 1994 or 1995 or the three
month period ended March 31, 1996.

On June 8, 1993, Mableton Associates, L.P. issued a mortgage loan of
$935,000 and three loans from investors in the amount of $165,000 to purchase a
facility. The Company capitalized $1,100,000, representing the purchase price.

During 1995, Suburban Lodges entered into a capital lease and capitalized
the related asset and recorded the capital lease obligation of $11,435.

Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

3. LONG-TERM DEBT

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1994 1995 1996
---------- ----------- -----------
<S> <C> <C> <C>
Mortgage notes payable with interest rates ranging from
8.5% to 10.75%, maturities ranging from 1999 to 2018,
and collateralized by the facilities. The majority of
the notes are guaranteed by various partners of
Suburban Lodges........................................ $8,454,599 $12,155,866 $13,818,225
Capital lease obligations (Note 4)....................... 48,617 36,906 30,615
---------- ----------- -----------
8,503,216 12,192,772 13,848,840
Less current portion..................................... (302,467) (640,413) (535,902)
---------- ----------- -----------
Total.......................................... $8,200,749 $11,552,359 $13,312,938
========= ========== ==========
</TABLE>

Aggregate annual principal payments for long-term debt at December 31,
1995, exclusive of capital leases (see Note 4), are as follows:

<TABLE>
<S> <C>
1996............................................................ $ 624,622
1997............................................................ 690,456
1998............................................................ 718,048
1999............................................................ 2,011,885
2000............................................................ 753,146
Thereafter...................................................... 7,357,709
-----------
Total................................................. $12,155,866
==========
</TABLE>

F-9
<PAGE> 76

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)

In 1994, SLA Associates -- Norcross L.P. and SLA Associates -- Oxmoor L.P.
refinanced certain mortgage loans for an amount which was $130,180 less than the
carrying value and recognized extraordinary gain on the transactions.

4. CAPITAL LEASES

Certain equipment is leased under capital lease agreements expiring at
varying times through 1997. Capitalized lease assets are amortized over the
shorter of the useful life of the related asset or the lease term. The balance
of capital lease assets and related accumulated amortization at December 31,
1995 are as follows:

<TABLE>
<S> <C>
Equipment..................................................... $ 133,493
Less accumulated amortization................................. (101,150)
---------
Total............................................... $ 32,343
=========
</TABLE>

Future minimum lease payments under the capital leases and the net present
value of the future minimum lease payments are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
<S> <C>
1996............................................................ $20,638
1997............................................................ 14,572
1998............................................................ 3,140
1999............................................................ 3,140
2000............................................................ 2,458
-------
Total minimum lease commitments....................... 43,948
Less amounts representing interest at rates ranging from 12% to
13.25%........................................................ (7,042)
-------
Present value of future minimum lease commitments............... $36,906
=======
</TABLE>

5. LEASES

Suburban Lodges leases satellite television equipment under operating
leases expiring through August 1998. Satellite television rental expense was
$35,050, $40,659 and $43,851 for the years ended December 31, 1993, 1994 and
1995, respectively and $13,297 and $10,599 for the three months ended March 31,
1995 and 1996, respectively.

Minimum future rental payments under non cancelable operating leases having
remaining terms in excess of one year as of December 31, 1995, for each year and
in the aggregate, are as follows:

6. NOTES PAYABLE TO AFFILIATES

On January 1, 1993, SLA Associates-White Horse, L.P. ("White Horse") issued
an unsecured note bearing interest at 10% for $450,000 payable to a limited
partner of White Horse. Principal and interest is to be repaid from operating
cash flows on an annual basis. All unpaid amounts are due and payable no later
than

F-10
<PAGE> 77

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)

January 1, 2003. The amount outstanding at December 31, 1994 and 1995 and as of
March 31, 1996 was $450,000.

Mableton issued unsecured notes for $10,000 in 1993 and $5,000 in 1994
bearing interest at 12% per annum payable to an affiliate. Mableton replaced and
extended these notes by issuing another note of $15,000 in 1995. Mableton issued
additional notes for $17,399 in 1995. Interest on the unpaid balance is payable
annually and the entire principal balance is due two years from the date of
issuance. As of December 31, 1994 and 1995 and March 31, 1996, amounts
outstanding under these notes were $15,000, $32,399 and $32,399, respectively.

On May 24, 1993, Mableton issued an unsecured note to a limited partner for
$105,000 which is due on May 24, 1997 and bears interest at 10%. In accordance
with the terms of the note agreement, the interest rate increased to prime plus
4% (12.5%) as of January 1, 1995. Mableton also issued three unsecured notes
aggregating $50,000 on May 20, 1993 to certain individuals due on May 20, 1995
and subsequently extended to March 10, 1996 and bearing interest at 12%.
Interest on the unpaid balances is payable annually and the entire balance is
due two years from the date of issuance. Such notes are personally guaranteed by
David Krischer. As of December 31, 1994 and 1995 and March 31, 1996, amounts
outstanding under these notes were $110,000, $53,125 and $23,125, respectively.

During the inception of the Company, various partnership investors
contributed capital as required by the organization. These notes accrue interest
at prime plus 2% and are payable upon demand. Such funds were used for working
capital. As of December 31, 1994 and 1995 and March 31, 1996, amounts
outstanding under these notes were $382,321, $394,385 and $394,385,
respectively.

Pursuant to an agreement with SLA Associates-Matthews, L.P. ("Matthews"),
three limited partners loaned funds in 1994 and 1995 to Matthews bearing
interest at 10% payable on demand. Such funds were used for the construction of
Matthews. As of December 31, 1994 and 1995 and March 31, 1996, amounts
outstanding on these three notes were $600,000, $675,000 and $675,000,
respectively.

During 1995 and the three months ended March 31, 1996, HSL of Conyers, LLC
("Conyers") received $20,000 and $40,000, respectively, in member loans from its
members. These funds were used for the construction of Conyers. Pursuant to the
operating agreement with Conyers, these member loans accrue interest at prime
plus 2%, and are payable on demand. The principal balance outstanding on the
loans was $20,000 at December 31, 1995 and $60,000 at March 31, 1996.

7. RELATED PARTY TRANSACTIONS

From time to time, the Company made loans to an officer of the Company. The
balance outstanding under these loans was $5,000 and $30,000 at December 31,
1995 and March 31, 1996, respectively.

The Company paid consulting fees to a firm owned by an officer of the
Company. Total payments were $17,000 for the year ended December 31, 1995 and
$3,000 and $6,000 for the quarters ended March 31, 1995 and March 31, 1996,
respectively.

8. INCOME TAXES

Income taxes have been provided for the Corporate Entities which are
subject to federal and state taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." No
provision has been made for federal and state income taxes on the Existing
Facilities and Development Facilities because each partner's and member's
proportionate share of the partnership's or limited liability company's income
or loss is passed through to be included on the individual tax returns of the
partners or members (as the case may be).

F-11
<PAGE> 78

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)

The components of the provision for income tax were as follows at December
31:

<TABLE>
<CAPTION>
1993 1994 1995
------- -------- --------
<S> <C> <C> <C>
Current income tax expense (benefit).................... $ 6,921 $(19,844) $ 12,870
Deferred income tax expense (benefit)................... (6,921) 5,844 (32,481)
------- -------- --------
Total expense (benefit)....................... $ -- $(14,000) $(19,611)
======= ======== ========
</TABLE>

The components of the deferred tax asset were as follows at December 31:

<TABLE>
<CAPTION>
1994 1995
-------- -------
<S> <C> <C>
Net operating loss carryforward................................... $ 46,481 $33,611
Valuation allowance............................................... (32,481)
-------- -------
Net deferred tax asset.................................. $ 14,000 $33,611
======== =======
</TABLE>

Suburban Lodges had net operating loss carryforwards of approximately
$172,000 and $238,000 at December 31, 1995 and 1994, respectively. Such
carryforwards expire over ten years. Utilization of the net operating loss
carryforwards will be limited in accordance with Internal Revenue Service
regulations due to the corporate reorganization and initial public offering.

The following is a reconciliation of the statutory rate to the effective
rate of Suburban Lodges at:

<TABLE>
<CAPTION>
DECEMBER 31, THREE MONTHS
------------------------- ENDED
1993 1994 1995 MARCH 31, 1996
----- ----- ----- --------------
<S> <C> <C> <C> <C>
Statutory federal rate......................... 34.0% 34.0% 34.0% 34.0%
Statutory state rate........................... 4.5 4.5 4.5 4.5
Effect of income not subject to tax............ (37.0) (42.6) (36.8) (31.3)
Change in valuation allowance.................. (1.5) 1.2 (4.2) --
----- ----- ----- ------
Effective tax rate............................. -- (2.9)% (2.5)% 7.2%
===== ===== ===== ===========
</TABLE>

9. CAPITAL

Suburban Lodges has 1,481 shares of common stock outstanding having a par
value of $0.01 outstanding at December 31, 1995 and March 31, 1996. Authorized
shares are 10,000. The equity accounts also include the capital accounts of the
merging partnerships in the amount of $1,660,361 at December 31, 1995 and
$1,926,594 at March 31, 1996. The balances of shareholders' deficit and
partners' capital will be reclassified to additional paid-in capital in
conjunction with the proposed initial public offering and concurrent Corporate
Organization.

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires companies to disclose the
estimated fair value of both assets and liabilities recognized and not
recognized in the statement of financial position, subject to certain
exceptions. For certain instruments, including cash and cash equivalents,
accounts payable and accrued expenses, it has been assumed that the carrying
amount approximates fair value due to their short-term maturity.

The carrying amount of long-term debt approximates fair value because most
interest notes are variable and fixed notes were not significantly different
than notes available to Suburban Lodges at December 31, 1995 and 1994 for debt
with similar terms and remaining maturities.

F-12
<PAGE> 79

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)

The fair value of notes payable to affiliates cannot be readily determined
due to their related party nature.

11. SUBSEQUENT EVENTS

Prior to or simultaneous with the completion of a public offering, Suburban
Lodges of America, Inc. and its subsidiaries will acquire from the Affiliated
Entities (those in which Messrs. Krischer, Kuse, or McGovern and certain
officers of the Company have interests) seven of the Existing Facilities and two
of the Construction Facilities for 999,487 shares of stock (see note 1).
Additionally, two Construction Facilities (Knoxville-Kingston Pike and
Greenville-Wade Hampton) will be acquired for cash of $2,500,000 from Affiliated
Entities. A minority interest in the Conyers property will be acquired for
$385,000 and a $100,000 development fee will be paid with respect to the Conyers
Facility. The acquisition of the seven Existing Facilities and two of the
Construction Facilities have been accounted for in a manner similar to a pooling
of interests on the basis of common ownership and control. The two Construction
Facilities acquired for cash have been recorded as a purchase on the basis of
the cash price paid to the Affiliated Entities. The acquisition of the minority
interest will be recorded as a distribution to redeem the interests.

The Company will acquire one Existing Facility (Forest Park) for $3,800,000
in cash from a Third-Party Seller. The Company will also acquire from third
party sellers two Construction Facilities and two Development Facilities for
approximately $8,900,000. Such purchase price will be paid by delivery of
$900,000 in cash, 163,556 shares of Common Stock and the assumption of
approximately $5.6 million of debt secured by the Third-Party Facilities. All
Facilities acquired from Third Party Sellers will be recorded at the acquisition
cost of the Facility.

After the transaction, the Company will have acquired eight Existing
Facilities, six Construction Facilities and four Development Facilities.

The Third Party Facilities, with the exception of the Forest Park facility,
are either under construction or in the development stage and have no operating
results as of December 31, 1995 and through the filing date of the proposed
initial public offering of common stock. Financial statements for the Forest
Park facility are included elsewhere as indicated on the Table of Contents at
page F-1.

In conjunction with the Corporate Organization, Suburban Lodges of America,
Inc. will effect a stock split of approximately 2,421-for-1 to increase the
number of outstanding shares to 3,586,932. Authorized shares will be
100,000,000.

On April 9, 1996, the Company obtained a commitment for a $50 million Line
of Credit with PNC Bank, Kentucky, Inc. ("PNC"); however, $25 million of the
Line of Credit is subject to obtaining commitments from other lenders, and there
can be no assurance that such commitments will be obtained. The Line of Credit
matures two years from the date of closing and will bear interest, at the
borrower's option, at (i) the higher of PNC's prime rate plus three-quarters of
one percent or the Federal Funds rate plus one and one quarter percent or (ii)
the Euro-Rate plus two and one quarter percent. The Line of Credit is secured by
substantially all the assets of the Company. The Line of Credit restricts, among
other things, the incurrence of indebtedness, the sale of assets, the incurrence
of liens, the concentration of facility locations and the payment of cash
dividends. In addition, the Company is required to satisfy, among other things,
certain financial performance criteria, including minimum net worth levels and
minimum levels of earnings before interest, taxes, depreciation and
amortization.

F-13
<PAGE> 80

SUBURBAN LODGES OF AMERICA, INC. AND AFFILIATED ENTITIES

COMBINED SCHEDULE OF REAL ESTATE OWNED AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>

COST CAPITALIZED GROSS AMOUNTS AT WHICH
SUBSEQUENT CARRIED AT CLOSE OF
INITIAL COSTS TO ACQUISITION PERIOD
------------------------- ------------------- -------------------------
BUILDINGS & BUILDINGS & BUILDINGS &
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS
- ------------------------------ ------------ ---------- ------------ ---- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Oxmoor AL..................... $ 2,262,024 $ 365,819 $ 1,771,414 -- $ 365,819 $ 1,771,414
Norcross GA................... 1,798,663 335,000 1,550,314 -- 335,000 1,550,314
Fulton Industrial GA.......... 1,549,261 130,000 1,175,579 -- 130,000 1,175,579
Mableton GA................... 990,360 75,000 800,000 -- 75,000 800,000
Greenville SC................. 2,073,358 305,814 1,681,301 -- 305,814 1,681,301
Properties under
Development................. 1,537,723 675,000 1,988,674 -- 675,000 1,988,674
Matthews NC................... 3,175,000 500,000 2,380,593 -- 500,000 2,380,593
------------ ---------- ------------ ------ ---------- ------------
Total................. $13,386,389 $2,386,633 $11,347,875 $ $2,386,633 $11,347,875
=========== ========= =========== =========== ========= ===========

<CAPTION>
LIFE UPON
WHICH
DEPRECIATION
ACCUMULATED NET BOOK IN LATEST
DEPRECIATION VALUE INCOME
BUILDINGS & BUILDINGS & DATE OF STATEMENT IS
DESCRIPTION TOTAL IMPROVEMENTS IMPROVEMENTS ACQUISITION COMPUTED
- ------------------------------ ----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Oxmoor AL..................... $ 2,137,233 $ (243,568) $ 1,527,846 05/16/89 40
Norcross GA................... 1,885,314 (253,099) 1,297,215 09/07/88 40
Fulton Industrial GA.......... 1,305,579 (208,192) 967,387 04/25/88 40
Mableton GA................... 875,000 (50,833) 749,167 06/03/93 40
Greenville SC................. 1,987,115 (140,110) 1,541,191 03/02/92 40
Properties under
Development................. 2,663,674 -- 1,988,674
Matthews NC................... 2,880,593 (24,575) 2,356,018 12/20/94 40
----------- ------------ ------------
Total................. $13,734,508 $ (920,377) $10,427,498
========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
RECONCILIATION OF GROSS CARRYING AMOUNT OF REAL ESTATE: RECONCILIATION OF ACCUMULATED DEPRECIATION:
- ------------------------------------------------------- ----------------------------------------------------------------
<S> <C>
Balance, December 31, 1992..............$ 5,328,126 <C> <C>
Acquisitions, 1993...................... 2,862,115 Balance, December 31, 1992.............................. $367,566
----------- Depreciation Expense, 1993.............................. 179,308
Balance, December 31, 1993.............. 8,190,241 --------
Acquisitions, 1994...................... 556,357 Balance, December 31, 1993.............................. 546,874
----------- Depreciation Expense, 1994.............................. 174,464
Balance, December 31, 1994.............. 8,746,598 --------
Acquisitions, 1995...................... 4,987,910 Balance, December 31, 1994.............................. 721,338
----------- Depreciation expense, 1995.............................. 199,039
Balance, December 31, 1995..............$13,734,508 --------
============ Balance, December 31, 1995.............................. $920,377
=========
</TABLE>
F-14
<PAGE> 81

INDEPENDENT AUDITORS' REPORT

Board of Directors
Suburban Lodges of America, Inc.:

We have audited the accompanying balance sheet of Gulf Coast Associates
Ltd. d/b/a Suburban Lodge of Forest Park ("Gulf Coast") as of December 31, 1995
and the related statements of operations, changes in partners' deficit, and cash
flows for the year then ended. These financial statements are the responsibility
of Gulf Coast's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Gulf Coast as of December
31, 1995 and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

Deloitte & Touche LLP

Atlanta, Georgia
March 26, 1996

F-15
<PAGE> 82
GULF COAST ASSOCIATES, LTD.
D/B/A SUBURBAN LODGE OF FOREST PARK

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash.............................................................. $ 154,083 $ 161,601
Prepaid expenses and other assets................................. 5,848 13,588
---------- ----------
Total current assets...................................... 159,931 175,189
INVESTMENT IN FACILITY -- at cost:
Land.............................................................. 471,395 471,395
Buildings and improvements........................................ 2,231,274 2,231,274
Equipment......................................................... 124,706 124,706
Furniture and fixtures............................................ 314,264 317,760
---------- ----------
3,141,639 3,145,135
Less accumulated depreciation....................................... 593,175 625,175
---------- ----------
Net investment in facility................................ 2,548,464 2,519,960
OTHER ASSETS........................................................ 8,843 6,843
---------- ----------
$2,717,238 $2,701,992
========= =========
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES:
Mortgage payable.................................................. $2,733,655 $2,727,753
Accrued investment advisory fees.................................. 197,800 197,800
Accounts payable and accrued expenses............................. 43,718 47,192
Amounts payable to Suburban Management, Inc....................... 55,685 24,013
---------- ----------
Total current liabilities................................. 3,030,858 2,996,758
LONG-TERM LIABILITIES:
Notes payable to affiliate........................................ 442,144 447,940
---------- ----------
Total long-term liabilities............................... 442,144 447,940
PARTNERS' DEFICIT................................................... (755,764) (742,706)
---------- ----------
$2,717,238 $2,701,992
========= =========
</TABLE>

See notes to financial statements.

F-16
<PAGE> 83

GULF COAST ASSOCIATES, LTD.
D/B/A SUBURBAN LODGE OF FOREST PARK

STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
FOR THE YEAR FOR THREE MONTHS
ENDED ENDED MARCH 31,
DECEMBER 31, --------------------
1995 1995 1996
------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C>
REVENUE:
Room revenue............................................. $851,071 $201,905 $241,717
Other.................................................... 49,178 11,844 24,450
------------ -------- --------
Total revenue.................................... 900,249 213,749 266,167
EXPENSES:
Property operating costs................................. 294,615 81,359 84,926
Depreciation and amortization............................ 128,185 32,000 34,000
Management and incentive fee............................. 79,253 10,723 13,308
Administrative fees...................................... 3,221 -- --
Franchise costs.......................................... 27,327 6,434 7,985
Advertising and promotion................................ 6,787 1,722 1,136
Repairs and maintenance.................................. 43,403 6,526 10,530
Real estate and personal property taxes and insurance.... 40,071 13,537 12,459
------------ -------- --------
Total expenses................................... 622,862 152,301 164,344
------------ -------- --------
OPERATING INCOME........................................... 277,387 61,448 101,823
INTEREST EXPENSE........................................... 306,644 75,724 76,265
------------ -------- --------
NET INCOME (LOSS).......................................... $(29,257) $(14,276) $ 25,558
========== ======== ========
</TABLE>

See notes to financial statements.

F-17
<PAGE> 84

GULF COAST ASSOCIATES, LTD.
D/B/A SUBURBAN LODGE OF FOREST PARK

STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE THREE MONTH PERIOD ENDED MARCH 31,
1996

<TABLE>
<S> <C>
PARTNERS' DEFICIT, DECEMBER 31, 1994............................................. $(706,497)
Net loss......................................................................... (29,257)
Distribution..................................................................... (20,010)
---------
PARTNERS' DEFICIT, DECEMBER 31, 1995............................................. (755,764)
---------
Net income (unaudited)........................................................... 25,558
Distribution (unaudited)......................................................... (12,500)
---------
PARTNERS' DEFICIT, MARCH 31, 1996 (unaudited).................................... $(742,706)
=========
</TABLE>

See notes to financial statements.

F-18
<PAGE> 85

GULF COAST ASSOCIATES, LTD
D/B/A SUBURBAN LODGE OF FOREST PARK

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE THREE MONTHS
ENDED ENDED MARCH 31,
DECEMBER 31, -------------------------
1995 1995 1996
------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)......................................... $(29,257) $(14,726) $25,558
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 128,185 32,000 34,000
Changes in assets and liabilities:
Accounts receivable and other.......................... (3,637) (7,656) (7,740)
Accounts payable and accrual........................... 13,026 10,300 3,474
Related party accounts payable......................... 22,344 464 (31,672)
Increase in accrued interest........................... 27,822 5,796 5,796
Other, net............................................. 2,031 (419) --
------------ ----------- -----------
Net cash provided by operating activities......... 160,514 25,759 29,416
------------ ----------- -----------
INVESTING ACTIVITIES:
Property additions........................................ (37,077) (25,317) (3,496)
------------ ----------- -----------
Net cash used in investing activities............. (37,077) (25,317) (3,496)
------------ ----------- -----------
FINANCING ACTIVITIES:
Distributions to partners................................. (20,010) (10,005) (12,500)
Debt repayments........................................... -- (5,344) (5,902)
------------ ----------- -----------
Net cash used in financing activities............. (20,010) (15,349) (18,402)
------------ ----------- -----------
NET CHANGE IN CASH.......................................... 103,427 (14,907) 7,518
BEGINNING CASH BALANCE...................................... 50,656 50,656 154,083
------------ ----------- -----------
ENDING CASH BALANCE......................................... $154,083 $35,749 $161,601
========== ========= =========
</TABLE>

See notes to financial statements.

F-19
<PAGE> 86

GULF COAST ASSOCIATES, LTD.
D/B/A SUBURBAN LODGES OF FOREST PARK

NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED.)

1. BASIS OF PRESENTATION

The accompanying financial statements include the operations of Gulf Coast
Associates, Ltd. ("Gulf Coast") which is a limited partnership that owns the
Forest Park Suburban Lodge Facility. The accompanying unaudited interim
financial statements reflect, in the opinion of management, all adjustments
necessary for a fair presentation of the interim financial statements. All such
adjustments are of a normal and recurring nature.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition -- Revenue is recognized as earned.

Investments in Facilities -- The facilities are stated at cost.
Depreciation is computed using a straight-line method based on the following
estimated useful lives:

<TABLE>
<S> <C>
Buildings....................................................... 40 years
Equipment....................................................... 7 years
Furniture and fixtures.......................................... 7 years
</TABLE>

Gulf Coast has not adopted Statement of Financial Accounting Standards 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of" ("SFAS 121"). In management's opinion, the adoption of SFAS 121 in
1996 will not have a material affect on the financial condition or operations of
Gulf Coast. Facilities are evaluated annually and written down to net realizable
value when management believes that the undepreciated cost cannot be recovered
through operations.

Cash Flows -- Included in the statement of cash flows are cash payments for
interest of $255,732, for the year ended December 31, 1995 and $69,928 and
$70,469 for the three months ended March 31, 1995 and 1996, respectively.

Income Taxes -- No provision has been made for federal and state taxes
because each partner's proportionate share of the partnership's income or loss
is passed through to be included on the individual tax returns of the partners.

3. MORTGAGES PAYABLE

Gulf Coast has a mortgage payable to SLA Associates -- Forest Park Ltd. The
note, dated July 1990, in the original amount of $3,050,000, bears interest at
10.25% and is payable in monthly installments of $25,091. The note comes due on
April 1, 1996; however, the maturity date has been extended to December 30,
1996. The balance outstanding at December 31, 1995 and March 31, 1996 is
$2,733,655 and $2,727,753, respectively. The note is secured by all of the land,
buildings, and equipment of Gulf Coast.

F-20
<PAGE> 87

GULF COAST ASSOCIATES, LTD.
SUBURBAN LODGES OF FOREST PARK

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED.)

4. NOTES PAYABLE TO AFFILIATE

Gulf Coast has a note payable to Vanmark Investments, Inc. in the amount of
$289,793 plus accrued interest of $152,351 and $158,147 at December 31, 1995 and
March 31, 1996, respectively. The note is payable from excess cash flow, as
defined, and is subordinated to partner distributions. Interest is accrued at
the rate of 8.0% for 1995.

5. RELATED PARTY TRANSACTIONS

David Krischer, the principal shareholder of Suburban Lodges of America,
Inc., is a 50% owner of SLA Associates -- Forest Park which holds the mortgage
on the facility.

Franchise costs represent the annual expense for franchise royalties and
the services under the terms of the franchise agreement with Suburban Franchise
Systems, Inc. expiring on December 31, 1999. Suburban Franchise Systems, Inc. is
a wholly owned subsidiary of Suburban Lodges. David Krischer owns 67.5% of
Suburban Lodges. Such franchise agreement gives the Forest Park facility the
rights to use the Suburban Lodge(R) System. Fees are computed based upon
approximately 3% of the Forest Park facility's total revenues.

Additionally, the Gulf Coast has contracted with Suburban Management, Inc.,
a wholly owned subsidiary of Suburban Lodges of America, Inc., to provide
facility management services for 5% of gross revenues.

6. LEASES

The Forest Park facility leases satellite television equipment under an
operating lease expiring in 1997.

Minimum future rental payments under noncancelable leases having remaining
terms in excess of one year as of December 31, 1995 for each year and in the
aggregate, are as follows:

<TABLE>
<S> <C>
1996....................................................................... $ 9,072
1997....................................................................... 7,560
-------
Total............................................................ $16,632
=======
</TABLE>

Satellite television rental expense was $8,970 the year ended December 31,
1995 and $3,158 and $2,242 for the three months ended March 31, 1996 and 1995.

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires companies to disclose the
estimated fair value of both assets and liabilities recognized and not
recognized in the statement of financial position, subject to certain
exceptions. For certain instruments, including cash and cash equivalents,
current mortgage payable, accounts payable and accrued expenses, it has been
assumed that the carrying amount approximates fair value due to their short-term
maturity.

The fair value of notes payable to affiliate cannot be readily determined
due to their related party nature.

8. SUBSEQUENT EVENTS

Gulf Coast has agreed to sell to Suburban Lodges of America, Inc. the
Forest Park Facility (consisting of land, building, and related equipment) for
$3,800,000 in cash. Gulf Coast will retain its other assets and liabilities.
Such transaction is expected to occur in connection with Suburban Lodges of
America, Inc.'s Corporate Organization and Initial Public Offering of Common
Stock.

F-21
<PAGE> 88
INSIDE BACK COVER

This page includes photos of the exterior of the Charlotte (Matthews),
North Carolina facility, the Birmingham (Oxmoor), Alabama facility, and the
Greenville (Mauldin Road), South Carolina facility. It also includes a photo
of a front desk and guest check-in and Suburban Lodge guest room.
<PAGE> 89

- ------------------------------------------------------
- ------------------------------------------------------

No dealer, salesperson or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus in connection with the offer made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or by any Underwriter. This Prospectus does not constitute an
offer to sell or the solicitation of any offer to buy any security other than
the securities to which it relates or an offer to sell or the solicitation of an
offer to buy any securities offered hereby by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to any person whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, in any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof or that the information contained herein is correct as of any
date subsequent to the date hereof.

----------------------------

TABLE OF CONTENTS

----------------------------

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 9
Corporate Organization................ 16
Use of Proceeds....................... 17
Dividend Policy....................... 17
Capitalization........................ 18
Dilution.............................. 19
Selected Combined Historical Financial
Data................................ 20
Pro Forma Combined Statements of
Operations.......................... 22
Pro Forma Combined Balance Sheet...... 26
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 29
Business.............................. 34
Management............................ 47
Certain Transactions.................. 53
Principal Shareholders................ 55
Description of Capital Stock.......... 55
Shares Eligible for Future Sale....... 61
Underwriting.......................... 63
Experts............................... 64
Legal Matters......................... 64
Additional Information................ 64
Available Information................. 65
Index to Financial Statements......... F-1
</TABLE>

Until , 1996 (25 days after the date of this Prospectus), all dealers
effecting transactions in the Common Stock, whether or not participating in this
distribution, may be required to deliver a Prospectus. This is in addition to
the obligation of dealers to deliver a Prospectus when acting as Underwriters
and with respect to their unsold allotments or subscriptions.

- ------------------------------------------------------
- ------------------------------------------------------

3,000,000 SHARES

[SUBURBAN LODGE LOGO]

SUBURBAN LODGES OF
AMERICA, INC.

COMMON STOCK

------------------------

PROSPECTUS

------------------------

MONTGOMERY SECURITIES

J.C. BRADFORD & CO.

LEGACY SECURITIES CORP.
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 90

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below is the approximate amount of the fees and expenses (other
than underwriting commissions and discounts) payable by the Registrant in
connection with the issuance and distribution of the shares of Common Stock.

<TABLE>
<S> <C>
Securities and Exchange Commission, Registration Fee..................... $ 19,034
NASD Filing Fee.......................................................... 6,020
Nasdaq National Market listing fee....................................... 36,882
Printing and Mailing..................................................... 150,000**
Accounting Fees and Expenses............................................. 475,000**
Blue Sky Fees and Expenses............................................... 30,000
Counsel Fees and Expenses................................................ 400,000**
Investment banking fees.................................................. 100,000
Miscellaneous............................................................ 133,064**
----------
Total.......................................................... $1,350,000
=========
</TABLE>

- ---------------

* To be supplied by amendment.
** Estimate

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The underwriting agreement provides for indemnification by the Underwriters
of the Company and by the Company of the Underwriters, for certain liabilities,
including liabilities arising under the Securities Act of 1933 (the "Securities
Act"), and affords certain rights of contribution with respect thereto.

As provided under Georgia law, the Company's Amended and Restated Articles
of Incorporation provide that a director shall not be personally liable to the
Company or its shareholders for monetary damages for breach of duty of care or
any other duty owed to the Company as a director, except that such provisions
shall not limit the liability of a director (a) for any appropriation, in
violation of his duties, of any business opportunity of the Company; (b) for
acts or omissions which involve intentional misconduct or a knowing violation of
law; (c) for unlawful corporate distributions or (d) for any transactions from
which the director receives an improper benefit.

Under Article V of the Company's Bylaws, the Registrant is required to
indemnify its directors and officers to the fullest extent permitted by Georgia
law. The Georgia Business Corporation Code provides that a corporation may
indemnify its directors, officers and agents against judgments, fines,
penalties, amounts paid in settlement and expenses, including attorneys' fees,
resulting from various types of legal actions or proceedings if the actions of
the party being indemnified meet the standards of conduct specified therein.
Determinations concerning whether the applicable standard of conduct has been
met can be made by (a) a majority of the disinterested directors; (b) a majority
of a committee of disinterested directors or (c) independent legal counsel. No
indemnification may be made to or on behalf of a corporate director, officer,
employee or agent (i) in connection with a proceeding by or in right of the
Company in which such person was adjudged liable to the Company or (ii) in
connection with any other proceeding in which said person was adjudged liable on
the basis that personal benefit was improperly received by him.

II-1
<PAGE> 91

and officers liability insurance policy and (iii) to advance certain expenses
incurred by an Indemnified Party. The Indemnity Agreements provide limitations
on the Indemnified Party's rights to indemnification in certain circumstances.

The Company's directors and officers are insured against losses arising
from any claim against them as such for wrongful acts or omissions, subject to
certain limitations.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The Registrant was incorporated in 1987. Simultaneously with the closing of
the Offering, an aggregate of 1,163,039 shares of Common Stock will be issued in
connection with the merger or acquisition of 16 partnerships and limited
liability companies into the Registrant, in reliance upon the exemption
contained in Section 4(2) of the Securities Act. In exchange therefor, the
Registrant acquired all of the outstanding partnership interests and units in
the limited liability companies which own eight existing Suburban Lodge
facilities, five Suburban Lodge facilities in various stages of construction,
and three Suburban Lodge facilities in various states of development. These
acquired Suburban Lodge facilities have an aggregate appraised value of
$68,650,000.

During the past three years, the following persons were issued Common Stock
of the Registrant in reliance upon the exemption contained in Section 4(2) of
the 1933 Act, in the number of shares, on the date and for the consideration
referenced below:

<TABLE>
<CAPTION>
NAME NO. SHARES DATE OF ISSUANCE CONSIDERATION
-------------------------------------------- ---------- ---------------- -----------------
<S> <C> <C> <C>
Dan Berman.................................. 59.26 10/1/94 Services rendered
Seth Christian.............................. 59.26 10/1/93 Services rendered
G. Hunter Hilliard.......................... 29.63 10/1/93 Services rendered
HS III Associates, L.P...................... 222.22 9/1/93 Services rendered
Michael McGovern............................ 111.11 9/1/93 Services rendered
</TABLE>

Simultaneous with the closing of the Offering, an aggregate of 3,000 shares
of restricted Common Stock will be issued to the Registrant's non-employee
directors in reliance upon the exemption contained in Section 4(2) of the 1933
Act.

II-2
<PAGE> 92

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- -----------------------------------------------------------------------------------
<C> <C> <S>
*1.1 -- Form of Underwriting Agreement
*3.1 -- Amended and Restated Articles of Incorporation of the Registrant
*3.2 -- Amended and Restated Bylaws of the Registrant
*4.1 -- Form of Common Stock Certificate of the Registrant
*5.1 -- Opinion of Kilpatrick & Cody
*10.1 -- Form of Acquisition Agreement and Plan of Merger (with exhibits and accompanying
schedule)
*10.2 -- Purchase and Sale Agreement by and among Suburban Holdings, LP and Gulf Coast
Associates, Ltd.
*10.3 -- Purchase and Sale Agreement by and between Suburban Holdings, LP and Omnicorp
Resources, Inc.
*10.4 -- Form of Agreement and Consent of Partners of each of the Affiliated Entities and
Third Party Sellers
*10.5 -- Suburban Lodges of America, Inc. Stock Option and Incentive Award Plan
*10.6 -- Suburban Lodges of America, Inc. Non-Employee Directors' Stock Option and Fee Plan
*10.7 -- Form of Indemnification Agreement between Suburban Lodges of America, Inc. and its
directors and officers
*10.8 -- Registration Rights Agreement among Suburban Lodges of America, Inc. and Certain
Shareholders
*10.9 -- Form of Franchise Agreement
*10.10 -- Form of Development and Design/Build Agreement
*10.11 -- Form of Management Agreement
*10.12 -- Management Agreement between Suburban Management, Inc. and Gulf Coast Associates,
Ltd.
*10.13 -- Consulting Agreement with Legacy Securities Corp.
*10.14 -- Acknowledgment and Agreement between Suburban Lodges of America, Inc. and Young
Consulting, Inc. re. Company's proprietary computer software
*10.15 -- Suburban Lodge 401(k) Savings Plan
*10.16 -- Rights Agreement
*10.17 -- Commitment Letter for the Line of Credit
*21.1 -- Subsidiaries of the Registrant
*23.1 -- Consent of Kilpatrick & Cody
23.2 -- Consent of Deloitte & Touche, LLP
*24.1 -- Powers of Attorney (see Signature Page)
*99.1 -- Consent of Michael McGovern
*99.2 -- Consent of James R. Kuse
*99.3 -- Consent of John W. Spiegel
</TABLE>

- ---------------

* Previously filed

II-3
<PAGE> 93

(b) Index to Financial Statements

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Suburban Lodges of America, Inc. and Affiliated Entities
Combined Financial Statements:
Independent Auditors' Report..................................................... F-2
Combined Balance Sheets as of December 31, 1994 and 1995 and March 31, 1996
(unaudited)..................................................................... F-3
Combined Statements of Operations for the Years Ended December 31, 1993, 1994,
and 1995, and the Three Months Ended March 31, 1995 and 1996 (unaudited)........ F-4
Combined Statements of Common Stock, Deficit, and Partners' Capital (Deficit) for
the Years Ended December 31, 1993, 1994, and 1995, and the Three Months Ended
March 31, 1996 (unaudited)...................................................... F-5
Combined Statements of Cash Flows for the Years Ended December 31, 1993, 1994,
and 1995, and the Three Months Ended March 31, 1995 and 1996 (unaudited)........ F-6
Notes to Combined Financial Statements........................................... F-7
Combined Schedule of Real Estate Owned and Accumulated Depreciation.............. F-14
Gulf Coast Associates, Ltd. d/b/a Suburban Lodge of Forest Park (Gulf Coast) Financial
Statements:
Independent Auditors' Report........................................................ F-15
Balance Sheets as of December 31, 1995 and March 31, 1996 (unaudited)............... F-16
Statement of Operations for the Year Ended December 31, 1995 and the Three Months
Ended March 31, 1995 and 1996 (unaudited)........................................ F-17
Statements of Partners Deficit for the Year Ended December 31, 1995 and the Three
Months Ended March 31, 1995 and 1996 (unaudited)................................. F-18
Statements of Cash Flows for the Year Ended December 31, 1995 and the Three Months
Ended March 31, 1995 and 1996 (unaudited)........................................ F-19
Notes to Financial Statements....................................................... F-20
</TABLE>

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide the Underwriters at
the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question as to whether such indemnification by it
is against public policy as expressed in the Securities Act, and will be
governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 94

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of
Atlanta, State of Georgia, on the 22nd day of May, 1996.

SUBURBAN LODGES OF AMERICA, INC.

By: /s/ DAVID E. KRISCHER
------------------------------------
David E. Krischer
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on the 22nd day
of May, 1996, in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE POSITION
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ DAVID E. KRISCHER Chairman of the Board, Chief Executive
- --------------------------------------------- Officer, President and Director (Principal
David E. Krischer Executive Officer)

* Vice President -- Franchising and Director
- ---------------------------------------------
Dan J. Berman

* Vice President and Chief Financial Officer
- --------------------------------------------- (Principal Financial and Accounting Officer)
Terry J. Feldman

* /s/ DAVID E. KRISCHER
- ---------------------------------------------
David E. Krischer,
Pursuant to power of attorney previously
filed
</TABLE>

II-5
<PAGE> 95

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------------------------------------------------------------------
<C> <C> <S>
*1.1 -- Form of Underwriting Agreement
*3.1 -- Amended and Restated Articles of Incorporation of the Registrant
*3.2 -- Amended and Restated Bylaws of the Registrant
*4.1 -- Form of Common Stock Certificate of the Registrant
*5.1 -- Opinion of Kilpatrick & Cody
*10.1 -- Form of Acquisition Agreement and Plan of Merger (with accompanying schedule)
*10.2 -- Purchase and Sale Agreement by and among Suburban Holdings, LP and Gulf Coast
Associates, Ltd.
*10.3 -- Purchase and Sale Agreement by and between Suburban Holdings, LP and Omnicorp
Resources, Inc.
*10.4 -- Form of Agreement and Consent of Partners of each of the Affiliated Entities and
Third Party Sellers
*10.5 -- Suburban Lodges of America, Inc. Stock Option and Incentive Award Plan
*10.6 -- Suburban Lodges of America, Inc. Non-Employee Directors' Stock Option and Fee Plan
*10.7 -- Form of Indemnification Agreement between Suburban Lodges of America, Inc. and its
directors and officers
*10.8 -- Registration Rights Agreement among Suburban Lodges of America, Inc. and Certain
Shareholders
*10.9 -- Form of Franchise Agreement
*10.10 -- Form of Development and Design/Build Agreement
*10.11 -- Form of Management Agreement
*10.12 -- Management Agreement between Suburban Management, Inc. and Gulf Coast Associates,
Ltd.
*10.13 -- Consulting Agreement with Legacy Securities Corp.
*10.14 -- Acknowledgment and Agreement between Suburban Lodges of America, Inc. and Young
Consulting, Inc. re. Company's proprietary computer software
*10.15 -- Suburban Lodge 401(k) Savings Plan
*10.16 -- Rights Agreement
*10.17 -- Commitment Letter for the Line of Credit
*21.1 -- Subsidiaries of the Registrant
*23.1 -- Consent of Kilpatrick & Cody
23.2 -- Consent of Deloitte & Touche, LLP
*24.1 -- Powers of Attorney (see Signature Page)
*99.1 -- Consent of Michael McGovern
*99.2 -- Consent of James R. Kuse
*99.3 -- Consent of John W. Spiegel
</TABLE>

- ---------------

* Previously filed

<PAGE> 1

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in Amendment No. 3 to Registration Statement No.
333-2876 of Suburban Lodges of America, Inc. on Form S-1 of our report on the
combined financial statements and the combined financial statement schedule of
Suburban Lodges of America, Inc. and Affiliated Entities dated March 17, 1996
(April 9, 1996 as to Note 11), appearing in the Prospectus, which is part of
this Registration Statement and to the reference to us under the headings
"Selected Financial Information" and "Experts" in such Prospectus.

Deloitte & Touche LLP

Atlanta, Georgia

May 22, 1996

<PAGE> 2

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in Amendment No. 3 to Registration Statement No.
333-2876 of Suburban Lodges of America, Inc. on Form S-1 of our report on the
financial statements of Gulf Coast Associates, Ltd. d/b/a Suburban Lodge of
Forest Park dated March 26, 1996, appearing in the Prospectus, which is part of
this Registration Statement and to the reference to us under the headings
"Selected Financial Information" and "Experts" in such Prospectus.

Deloitte & Touche LLP

Atlanta, Georgia

May 22, 1996