| SILVER SPRING, MD � December 3, 1999 -- Sunburst Hospitality
Corporation (NYSE: SNB), one of the country�s leading hotel owners and
managers, announced the sale of its Comfort Inn hotel at the Dallas Fort
Worth Airport and an acquisition of a site for the development of a hotel
in Bedford, Massachusetts.
The sale of the 152 room Comfort Inn at the Dallas Fort Worth Airport
was the 11th limited service hotel sold by Sunburst this year, while the
Bedford, Massachusetts site will be the Company�s 22nd, newly-constructed,
mid-priced, extended stay hotel. The Company anticipates commencing
construction in Bedford in the Spring of 2000.
Don Landry, Sunburst�s CEO commented, �These recent events are additional
steps in our program to redeploy capital from mature hotels into fresh,
extended stay hotels. The mid-priced, extended stay niche remains
the most attractive opportunity in the hotel industry.�
Mr. Landry further reported that aggregate sales proceeds for the 11
hotels sold so far in 1999 amounted to $37 million and, on a combined basis,
the hotels were sold at a 9.6% cap rate. �In the short-term�, according
to Mr. Landry, �earnings estimates need to take into consideration the
fact that the sold hotels generated almost $4 million in EBITDA on a trailing
twelve month basis. Fourth quarter 1999 EBITDA will be approximately
$2 million lower than forecast in the beginning of the year due to the
impact of the hotel sales program and delays in opening certain new hotels.
In the longer term, continued ramp-up of newly opened extended stay hotels
will more than offset the impact of the sales program and should continue
to improve return on investment.�
Corporate Profile
Sunburst Hospitality Corporation (NYSE:SNB) began trading
on the New York Stock Exchange as an individual Company on October 16,
1997, as a result of a tax-free spin-off separating the franchise and real
estate businesses of Choice Hotels International, Inc. (NYSE: CHH). Sunburst
is a leading hotel owner and manager of nationally recognized full-service,
limited-service and extended stay hotels and operates in 27 states.
Donald J. Landry, vice chairman and CEO of Sunburst Hospitality
Corporation, joined the organization in 1992 as president of the Manor
Care Hotel Division, the Company's predecessor. With just 12 hotels and
$39.8 million in revenue, Landry and his management team capitalized on
the soft real estate market and grew the company to 88 hotels in the U.S.
that generated $204.1 million in revenue in 1998. Since 1992, gross margins
have increased from 27.6% to 35.4%.
Sunburst remains committed to developing and successfully
implementing strategies to enhance shareholder value, and it has a successful
record of managing ahead of industry cycles. Prior to the last industry
downturn in the late 1980s, the Company was able to liquidate a substantial
portion of its existing hotel portfolio. Then in 1992, Landry�s team began
opportunistically acquiring hotels at prices well below their replacement
cost. All of these hotels have benefited from a significant investment
of capital used to renovate and upgrade the properties. The hotels have
also benefited from the installation of professional management and aggressive
sales and marketing systems. In the past two years the Company has responded
to changing industry cycles by shifting its development strategy to the
new construction of mid-market, all-suite extended-stay MainStay Suites
hotels.
Sunburst�s principal strategies are i) develop mid-priced,
extended stay hotels, ii) selectively divest of mature hotels projected
to underperform, and iii) continue to grow the profits of the balance of
the hotel portfolio. The Company now operates 19 MainStay Suites® extended
stay hotels offering a mid-priced lodging alternative for guests who want
the space and amenities of an apartment with the services of a hotel. |
Sunburst Hospitality Corporation operates 11,351 rooms in 83 hotels
in 26 states. The Company�s hotels are operated under various brand
names including MainStay Suites®, Comfort Inns®, Quality Inns and
Suites®, Clarion® and Sleep Inns®.
The references to future development and future earnings are forward-looking
statements. |
