NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today
announced that it has purchased a 150-room Staybridge Suites hotel in
Parsippany, New Jersey for $21 million.
The Staybridge Suites Parsippany is a newly developed hotel located
just inside Morris Corporate Center, a large corporate office park along
Interstate 80. In addition to the 150 guest rooms, this hotel has
approximately 1,000 sq. ft. of meeting space, a library, business
center, fitness center and indoor pool.
Simultaneously with this purchase, HPT added this hotel to a long
term management contract with a subsidiary of InterContinental Hotels
Group, plc (LSE/NYSE: IHG) which includes 30 additional Staybridge
Suites hotels and the term of this contract was extended to 2031. HPT's
annual minimum incremental return for this hotel, which is guaranteed by
IHG, will be initially $1.7 million/year until April 2007 when it will
increase to $1.8 million/year. HPT may also receive a percentage of
gross revenue increases at this hotel starting in 2009 and the net cash
flow after payment of management fees to IHG.
The hotel has been purchased free and clear of all mortgage debt. HPT
has funded this transaction by drawing under its unsecured revolving
bank credit facility.
Hospitality Properties Trust is a REIT which owns 310 hotels located
in 38 states, Puerto Rico, and Canada. 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. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON
HPT'S CURRENT BELIEFS AND EXPECTATIONS, BUT, FOR VARIOUS REASONS, THEY
MAY NOT OCCUR. FOR EXAMPLE:
- THIS PRESS RELEASE STATES THAT PAYMENT TO HPT OF A MINIMUM
RETURN WILL BE GUARANTEED BY IHG. HOWEVER, THE IHG GUARANTY ALSO APPLIES
TO OTHER MANAGEMENT CONTRACTS AND LEASES WITH HPT AFFECTING ADDITIONAL
HOTELS, AND THIS GUARANTY IS LIMITED TO A MAXIMUM LIABILITY BY IHG.
ALTHOUGH THIS GUARANTY INCLUDES A COVENANT BY IHG TO MAINTAIN A CERTAIN
NET WORTH, THERE CAN BE NO ASSURANCE THAT IHG WILL BE ABLE TO MAINTAIN
ITS NET WORTH OR BE ABLE TO MAKE GUARANTY PAYMENTS. ALSO, HPT HAS AGREED
THAT THE IHG GUARANTY MAY BE RELEASED IF CERTAIN FINANCIAL PERFORMANCE
THRESHOLDS ARE ACHIEVED AND SUCH A RELEASE WILL REMAIN EFFECTIVE EVEN IF
SUBSEQUENT PERFORMANCE DECLINES.
- THE AMOUNT OF THE ACCRETION TO HPT'S CASH FLOW WHICH HPT MAY
REALIZE FROM THIS INVESTMENT WILL DEPEND UPON A NUMBER OF FACTORS,
INCLUDING THE FUTURE FINANCIAL OPERATING RESULTS REALIZED AT THIS HOTEL
BY IHG'S MANAGEMENT, HPT'S FUTURE CAPITAL COSTS INCURRED TO FUND THIS
TRANSACTION AND OTHERS. SOME OF THESE FACTORS DEPEND UPON CIRCUMSTANCES
BEYOND HPT'S CONTROL OR OVER WHICH HPT HAS ONLY LIMITED CONTROL OR
INFLUENCE. IF THE IMPACTS OF THESE FACTORS ARE OR BECOME DIFFERENT FROM
THOSE HPT NOW ANTICIPATES, SUCH AS CHANGES IN THE FINANCIAL PERFORMANCE
OF THE HOTEL, INCREASED CAPITAL COSTS, OR IF IHG'S GUARANTY BECOMES
EXHAUSTED OR UNCOLLECTABLE, THEN THIS TRANSACTION MAY NOT BE ACCRETIVE
BUT MAY REDUCE THE CASH FLOW AVAILABLE TO HPT TO FUND DISTRIBUTIONS TO
SHAREHOLDERS.
FOR THESE REASONS AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
A Maryland Real Estate Trust with transferable shares of beneficial interest listed on the New York Stock Exchange.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.
Hospitality Properties Trust
Timothy A. Bonang
617-796-8149
Manager of Investor Relations
www.hptreit.com