$450 million from InterContinental Hotels Group;
Includes 4 InterContinental Hotels
|NEWTON, Mass. - Dec. 17, 2004 -- Hospitality Properties Trust (NYSE:
HPT) today announced that it has agreed to purchase 13 hotels for $450
The 13 hotels to be purchased include four (4) full service luxury InterContinental
Hotels, four (4) full service upscale Crowne Plaza Hotels, three (3) full
service Holiday Inn Hotels and two (2) upscale, extended stay, all suites
Staybridge Suites Hotels. These hotels have 3,946 rooms/suites and approximately
164,000 sq.ft. of meeting rooms. In addition, all of these hotels have
exercise rooms/fitness centers and swimming pools; and the full service
hotels have a total of 22 restaurants and 17 bars/lounge areas. These 13
hotels are located as follows:
All 13 of these hotels are being purchased from InterContinental Hotels Group, plc (LSE/NYSE: IHG). Simultaneously with this purchase, HPT will enter a long term management contract for 12 of these hotels with subsidiaries of IHG. Because of tax law issues affecting the InterContinental Hotel in Puerto Rico, it will be leased to a separate subsidiary of IHG, but this lease and the management contract for the 12 hotels will be subject to cross guarantees and combined renewal options. The management contract and the lease will have terms similar to other contracts entered by HPT including: initial terms of 25 years, plus two consecutive 15 year renewal options; escrowed reserves for anticipated capital expenditures; subordination of certain IHG fees to the payment of a portion of the owner's priority returns to HPT; and a limited guaranty from IHG for the rent and minimum amounts of owner's priority returns to HPT.
The $450 million purchase price includes $25 million which will be paid to IHG during the three years following the closing in connection with certain improvements to the 13 hotels. HPT's owner's priority payments, which are partially guaranteed by IHG, will be initially $37.75 million/year in 2005, increase to $40.73 million/year in 2006 and then increase to about $42 million/year after the full $450 million purchase price is paid. In addition, HPT will receive a percentage of gross revenue increases at these hotels starting in 2007 and the cash flow remaining after payment of base and incentive management fees to IHG at the managed hotels.
The agreement announced today represents the first time HPT has agreed to purchase hotels located outside the United States. The income realized by HPT from its investment in the Puerto Rico hotel and the two hotels in Ontario, Canada will be reduced by taxes in those jurisdictions which generally do not provide the full tax benefits available to REITs in the USA. To reduce the risks to HPT which may arise from changes in currency exchange rates, the purchase prices and the owner's returns for the two Canadian hotels were set and will be paid in U.S. dollars.
The transactions contemplated by the agreement announced today are subject to conditions and contingencies typical of large, multi-jurisdictional real estate and hotel transactions. Nonetheless, HPT expects these transactions will close during the first calendar quarter of 2005.
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND THE FEDERAL SECURITIES LAWS.
Hospitality Properties Trust
Timothy Bonang/John Murray/Mark Kleifges
|Also See:||HPT Completes Purchase of 12 Candlewood Hotels for $90 Million and a New Management Agreement with InterContinental Hotels Group / January 2004|
|Holiday Inn Express Franchisees Endorse $20+ million Bathroom Makeover; Proprietary Showerheads, Curved Shower Rods, Upgraded Towels and New Line of Bath Amenities / October 2004|