Fourth Quarter 1998 Activities 

During the fourth quarter of 1998 HPT completed the acquisition of 11 hotels with 2,059 rooms/suites for $141 million. All of these hotels are leased as part of pooled lease transactions with Marriott International, Inc. and Candlewood Hotel Corporation, respectively. During the past quarter HPT was also active in the capital markets, issuing 2.75 million common shares for $74 million, $115 million of Senior Notes due in 2005 and $150 million of Senior Notes due in 2009. 

1998 Full Year Acquisitions 

At the beginning of 1998, HPT owned 119 hotels with 16,542 rooms/suites. During 1998 HPT purchased an additional 51 hotels with 6,898 rooms/suites. HPT's hotels are located throughout the United States in 35 states. The 51 hotels purchased in 1998 cost a total of $606 million, bringing HPT's total hotel real estate investments, at cost, to over $1.8 billion. 

All of HPT's hotels are operated by major hotel brand owners under long term leases. At year end 1998, HPT owned 63 Courtyard by Marriott hotels, 31 Residence Inn by Marriott hotels, 31 Candlewood Suites hotels, 15 Summerfield Suites hotels, 14 Sumner Suites hotels, 12 full service Wyndham Hotels, two full service Marriott hotels and two TownePlace by Marriott hotels. The average age of HPT's hotels is only five years. And all of these hotels are leased in 10 pooled transactions with initial terms ending between 2008 and 2015. 

1998 Financing Activities 

During 1998 HPT sold 6.69 million common shares for gross proceeds of $208 million. At year-end 1998 HPT's equity market capitalization was approximately $1.2 billion. Total debt outstanding was only $415 million. During 1998 HPT paid all its previously outstanding secured mortgage debt and all of its properties are today unencumbered. 

During 1998, HPT entered a new $300 million unsecured revolving line of credit with a syndicate of 14 commercial banks. This line of credit matures in 2002 and it requires interest at LIBOR plus 1.125% per annum. No amount is outstanding under this credit facility and the entire $300 million is available for new investments in 1999. 

Also, during 1998 HPT completed three unsecured public debt offerings. In February HPT issued $150 million of unsecured Senior Notes due 2008. In November HPT issued $115 million of unsecured Senior Notes due in 2005. In December HPT issued $150 million of unsecured Senior Notes due in 2009. During 1998 HPT became the first and only hotel REIT whose unsecured debt is rated investment grade by both Moody's (Baa3) and Standard and Poor's (BBB-). 

Comments 

Commenting upon the fourth quarter and year end results, John Murray, President of HPT, issued the following statement: 

"From an operating point of view, 1998 was a very good year for HPT. During the past year we improved our diversification of tenants, brands and property locations. We increased our investment portfolio by about 50%, and we did so while maintaining a strong conservative capitalization. At year-end our $415 million of debt outstanding represents only about 28% of our market capitalization. Also, we have no short-term debt maturities. 

"Throughout 1998 our owned hotels continued to outperform all hotel industry averages. At the hotels owned by HPT which were open for at least one year at the beginning of 1998, the cash flow from operations realized by our tenants was 1.6 times our rents. We believe this cash flow coverage of rents is stronger than that of any other hotel REIT, and this rent coverage is a good indicator of the security of our rental income. 

"During 1998 HPT increased its quarterly dividend rate four times. At year end our quarterly dividend was $0.67 per share ($2.68 per share per annum). 

"HPT's management's only disappointment in 1998 has been the performance of our share price. Unfortunately, it appears to us that factors which affect some of our competitors have caused our share price to decline in tandem with other hotel REITs and real estate stocks generally. Unlike some of our competitors, HPT is not a paired share REIT and we do not structure our leases to capture substantially all of our hotels' operating cash flow. Similarly, HPT does not lease its hotels to tenants owned by our management. HPT's leases are designed, as best we can, to provide regular cash flow throughout the real estate cycle. We believe that our company is stronger today than it was at the beginning of 1998 and we are hopeful that the market may begin to recognize this strength. 

"At year end 1998 we announced a new transaction with Marriott International, Inc. under which we will buy and lease 17 hotels for over $200 million; 13 of these hotels remain to be acquired in 1999. Hopefully, this is only the first of several HPT growth opportunities for 1999." 

Hospitality Properties Trust is a REIT headquartered in Newton, MA which invests in hotels. This press release contains forward-looking statements, which involve risks and uncertainties. Although HPT believes its expectations are based upon reasonable assumptions, no assurance can be provided that anticipated results will occur.