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Patriot American Hospitality, Inc. Announces Contract to Acquire the Buttes, a Luxury Conference Resort in Tempe, Arizona, for $63.6 Million
DALLAS, Sept. 19, 1997 - Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company (NYSE: PAH), whose shares are paired and trade as a single unit ("paired-shares"), today announced it has entered into a contract to acquire The Buttes, a premier conference resort with 353 rooms in Tempe, Ariz., for $63.6 million from SCP (BUTTES) Inc., a California corporation .
Under the terms of the acquisition, Patriot American also will receive approximately $3.5 million in cash account balances and working capital. Upon completion of this acquisition and the imminent acquisition of PAHRSI, an affiliated lessee of Patriot American, the Company will own and manage all five resorts developed and operated by Carefree Resorts, which also include The Boulders in Scottsdale; the Lodge at Ventana Canyon in Tucson; Carmel Valley Ranch in Carmel, Calif.; and, The Peaks Resort Spa in Telluride, Colo.
Phoenix-based Carefree Resorts developed The Buttes in 1986 and has managed it through and subsequent to Patriot American's acquisition of the company's assets in January 1997. According to Paul A. Nussbaum, chairman and chief executive officer of Patriot American, the acquisition of The Buttes represents the company's first application of the corollary advantage of the recently acquired paired-share structure. "Since we became a paired-share REIT in July, we have acquired real estate with the plan to lease those properties to our own operating company, which would then manage the properties," he said. "However, this is the first time we have proceeded with the acquisition of a property that we currently manage for a third-party owner. We believe that this acquisition provides us with a new template for growth, particularly in preparation for the Wyndham merger, wherein we will acquire approximately 45 third-party hotel management contracts."
Originally developed by Carefree Resorts and opened in 1986, The Buttes has enjoyed immediate and sustained success, attributable in large part to its location and quality management. Situated on 25 mountaintop acres of northwest Tempe, The Buttes is just two miles southeast of Phoenix Sky Harbor International Airport and two miles southwest of Arizona State University. The resort has flourished under Carefree's experienced management team, consistently outperforming its competitive set of six luxury Phoenix-area resorts as reported by Smith Travel Research in revenues per available room (RevPAR) and occupancy.
The Buttes is expected to generate RevPAR of $112.08 for 1997; RevPAR for the six months ended June 30, 1997, totaled $129.49. Patriot American's acquisition of The Buttes includes personal property as well as real property held in a leasehold estate, wherein The Buttes is on a ground lease with the City of Tempe as the lessor. The lease, which expires on September 30, 2044, has a single 15-year extension option that would extend the lease to September 30, 2059.
About The Buttes
With four lighted tennis courts, three restaurants and lounges, including the prominent "Top of the Rock" restaurant, and more than 30,000 square feet of indoor meeting space including a 140-seat amphitheater, the 9,000 square foot Kachina Ballroom and the 8,700 square-foot Hopi ballroom and exhibit hall, The Buttes maintains a competitive advantage due to its outstanding location and luxury amenities.
The property's distinctive design complements the natural setting and enhances the resort's appeal to high-end leisure and corporate travelers. The hotel was constructed on a valley landmark of two natural rock formations, which create the buttes for which the property is named. The steep walls of rock are actually built into the resort and form an interior wall of the main lobby. Cascading waterfalls descend the desert terrain both inside and out at the resort, and flow into a mountainside pool and hidden hillside spas.
Richard Holtzman, president of Carefree Resorts, said the Buttes represents an important property in the Carefree system, now owned by Patriot American. "I'm personally very pleased that Patriot American opted to acquire this property, given the impressive operational performance of the Buttes and its stature in Phoenix and its surrounding areas," Holtzman said. "Carefree Resorts has always taken great pride in managing the Buttes, which has become the conference resort destination of choice in Arizona, and we believe that with Patriot American's ownership and our continued management, the Buttes will continue to exceed our expectations." The company plans to invest approximately $5 million to renovate the resort's guest rooms and common areas.
About Patriot American Hospitality, Inc.
Based in Dallas, Texas, Patriot American Hospitality, Inc. (NYSE: PAH) is currently the nation's second-largest hotel real estate investment trust (REIT) with a portfolio currently comprised, including today's announcement, of 69 hotels and resorts with approximately 16,638 rooms and, paired together with Patriot American Hospitality Operating Company, is one of only two paired-share hotel REITS in the country.
Having increased the size of its rooms portfolio by approximately 36% since January, Patriot American Hospitality, Inc. is continuing to acquire full-service hotel properties throughout North America. The company is proceeding with its acquisition of Wyndham Hotel Corporation (NYSE: WYN) which will become Patriot's paired- operating company upon completion of the transaction, slated for November 1997, and which in total will create the nation's first fully integrated, branded paired-share REIT.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include competition for guests from other hotels, dependence upon business and commercial travelers and tourism, and the seasonality of the hotel industry.
SOURCE Patriot American Hospitality, Inc.
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