HPT Purchases 2 Hotels for $63 Million
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HPT Purchases 2 Hotels for $63 Million
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Category: Worldwide -
This is a press release selected by our editorial committee and published online for free on 2006-04-10
Hospitality Properties Trust (NYSE: HPT) today announced
that it has purchased two hotels for $63 million.
The two purchased hotels are upscale Crowne Plaza Hotels in Miami
and Philadelphia. These hotels have 749 rooms/suites and over 23,000
sq.ft. of meeting space. In addition, each of these hotels have
exercise rooms/fitness centers, swimming pools, restaurants and
lounges. Property details are as follows:
Approx. sq. ft. No. of Food
of Meeting and Beverage
Location Hotel No. of Keys Space Outlets
----------------- ---------- ----------- --------------- -------------
Miami, FL Crowne
Plaza 304 5,300 sq.ft. 2
Philadelphia, PA Crowne
Plaza 445 18,000 sq.ft. 2
----------- --------------- -------------
Totals: 749 23,300 sq.ft. 4
meeting space
Both of these hotels were purchased from FelCor Lodging Trust
(NYSE: FCH). Simultaneously with this purchase, HPT added these two
hotels to a long term management contract with a subsidiary of
InterContinental Hotels Group, plc (LSE/NYSE: IHG). This contract
includes eight additional IHG branded hotels and has terms similar to
other contracts entered by HPT, including: an initial term of 25
years, plus two consecutive 15 year renewal options; escrowed reserves
for anticipated capital expenditures; subordination of management fees
to the payment of defined minimum returns to HPT; and a limited
guaranty from IHG for certain minimum returns to HPT. The eight hotel
transaction was closed earlier this year and the purchase of the two
hotels described herein was delayed until today while HPT completed
diligence.
In addition to the purchase price, HPT will invest $7.1 million in
these hotels during the three years following the closing to fund
capital improvements. HPT's annual minimum returns for these two
hotels, which are guaranteed by IHG, will be initially $5.04
million/year in 2006, increase to $5.6 million/year in 2007, $5.8
million/year in 2008 and approximately $6.0 million/year after the
full $7.1 million of planned hotel improvements are funded. HPT may
also receive additional non-guaranteed additional returns, a
percentage of gross revenue increases at these hotels starting in 2008
and the net cash flows after payment of management fees to IHG.
The hotels have been purchased free and clear of all mortgage
debt. HPT has funded this transaction by drawing under its unsecured
revolving bank credit facility.
HPT also announced today that its previously announced acquisition
of the 524 room Holiday Inn Sunspree Resort in Montego Bay, Jamaica
for $30 million is still expected to close later in 2006. This hotel
will be leased to IHG and the lease will be subject to cross
guarantees and combined renewal options with the 10 hotel management
agreement described above.
Hospitality Properties Trust is a REIT which upon completion of
these transactions will own 310 hotels located in 38 states, Puerto
Rico, Canada and Jamaica. HPT is headquartered in Newton,
Massachusetts.
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