Seven Hotels Are Being Purchased from FelCor Lodging Trust and
Two from InterContinental Hotels Group
|NEWTON, Mass - Jan. 25, 2006 -- Hospitality Properties Trust (NYSE:
HPT) today announced that it has agreed to purchase nine (9) hotels for
The 9 hotels to be purchased include five (5) upscale Crowne Plaza Hotels,
one (1) full service Holiday Inn Select Hotel, two (2) upscale, extended
stay Staybridge Suites Hotels and one (1) Holiday Inn SunSpree Resort Hotel.
These hotels have 2,712 rooms/suites and over 68,000 sq.ft. of meeting
space. In addition, all of these hotels have exercise rooms/fitness centers
and swimming pools and a total of 12 restaurants and 13 bars/lounge areas.
These nine (9) hotels are located as follows:
Seven of these hotels are being purchased from FelCor Lodging Trust (NYSE: FCH) and two are being purchased from InterContinental Hotels Group, plc (LSE/NYSE: IHG).
Simultaneously with this purchase, HPT will enter a long term management contract for eight (8) of these hotels with a subsidiary of IHG.
Because of tax law issues affecting the Holiday Inn SunSpree Resort in Jamaica, it will be leased to a separate subsidiary of IHG, but this lease and the management contract for the eight (8) 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 IHG management fees to the payment of defined owner's priority returns to HPT; and a limited guaranty from IHG for the rent and certain priority returns to HPT.
In addition to the purchase price, HPT will invest $25.1 million in these hotels during the three years following the closing to fund capital improvements. HPT's annual owner's priority payments, which are guaranteed by IHG, will be initially $15.8 million/year in 2006, increase to $17.8 million/year in 2007, $18.7 million/year in 2008 and approximately $19.0 million/year after the full $25.1 million of planned hotel improvements are funded. HPT may also receive additional non-guaranteed priority payments, a percentage of gross revenue increases at these hotels starting in 2008 and the cash flow remaining after payment of management fees to IHG at the managed hotels.
The agreement announced today represents the first time HPT has agreed to purchase a hotel located in Jamaica. Jamaica and most other countries generally do not provide the full tax benefits available to real estate investment trusts, or REITs, in the USA. Nonetheless, HPT expects it may reduce its taxes due in Jamaica through 2015 as a result of certain tax concessions granted by the Government of Jamaica to promote investment in its tourism industry. Also, to reduce the risks to HPT which may arise from changes in currency exchange rates, the purchase price and the rent for the Jamaica hotel were set and will be paid in U.S. dollars.
The hotels will be purchased free and clear of all mortgage debt. HPT expects to fund this transaction by drawing under its unsecured revolving bank credit facility.
The transactions announced were effective Friday, January 20, 2006, except for the Jamaican resort which will be delayed pending certain third party approvals, such as Jamaican tax and regulatory approval.
Hospitality Properties Trust is a REIT which upon completion of this transaction will own 308 hotels located in 38 states, Puerto Rico, Canada and Jamaica. HPT is headquartered in Newton, Massachusetts.
WARNING REGARDING FORWARD LOOKING STATEMENTS
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
|Also See:||FelCor Identifies 38 Hotels for Sale, Expects Proceeds of Between $500 million and $550 million; The New FelCor Will Own 90 Hotels / January 2006|