Luxury Hospitality Daily News

< Previous news Next news >

Hospitality Properties Trust Agrees to Purchase 9 Hotels for $196.2 Million; Seven Hotels Are Being Purchased from FelCor Lodging Trust and Two from InterContinental Hotels Group

Hospitality Properties Trust Agrees to Purchase 9 Hotels for $196.2 Million; Seven Hotels Are Being Purchased from FelCor Lodging Trust and Two from InterContinental Hotels Group

Category: Worldwide
Article written by our desk on 2006-01-26

Hospitality Properties Trust (NYSE: HPT) today announced
that it has agreed to purchase nine (9) hotels for $196.2 million.

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:

No. of
Approx. sq. Food and
No. of ft. of Beverage
Location Hotel Keys Meeting Space Outlets
-------- ----- ------ ------------- --------
San Jose, CA Crowne Plaza 304 6,643 sq.ft. 2

Atlanta (Airport),
GA Crowne Plaza 378 14,882 sq.ft. 2

(Perimeter), GA Crowne Plaza 296 21,004 sq.ft. 2

Dallas, TX Crowne Plaza Suites 295 9,614 sq.ft. 2

Irvine, CA Crowne Plaza 335 7,476 sq.ft. 2

Houston, TX Holiday Inn Select 349 3,444 sq.ft. 2

Montego Bay, Holiday Inn
Jamaica SunSpree Resort 524 4,200 sq.ft. 11

Dallas, TX Staybridge Suites 114 460 sq.ft. 1

Las Colinas, TX Staybridge Suites 117 375 sq.ft. 1
------ -------------- ---------
Totals: 2,712 68,098 sq.ft. 25
meeting space

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

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,

You will also like to read...

< Previous news Next news >

Join us on Facebook Follow us on LinkedIn Follow us on Instragram Follow us on Youtube Rss news feed


Hello and welcome to Journal des Palaces

You are a communication or the PR manager?
Click here

You are an applicant?
Check out our questions and answers here!

You are a recruiter?
Check out our questions and answers here!