Hotel Online  Special Report

Hospitality Properties Trust Acquiring 13 Hotels for
$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 million.

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:

Location - Hotel
No. of keys
Approx. Meeting Space
San Juan, PR InterContinental 402 17,000 sq. ft.
Houston, TX InterContinental 485 50,000 sq. ft.
Austin, TX  InterContinental 189 6,000 sq. ft.
Toronto, ON InterContinental  210 6,500 sq. ft.
White Plains, NY Crowne Plaza 401 16,000 sq. ft.
Redondo Beach, CA Crowne Plaza  346 24,000 sq. ft.
Los Angeles, CA  Crowne Plaza 613 14,250 sq. ft.
Hilton Head, SC Crowne Plaza 340 18,000 sq. ft.
Atlanta (airport), GA Holiday Inn 190 2,500 sq. ft.
Memphis, TN Holiday Inn 243 7,500 sq. ft.
Anaheim, CA Holiday Inn 264 1,500 sq. ft.
Anaheim, CA Staybridge Suites 143 250 sq. ft.
Toronto, ON Staybridge Suites 120 375 sq. ft.

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.


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

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