NEWTON, Mass.--(BUSINESS WIRE)--
Hospitality Properties Trust (NYSE: HPT) today announced that it has
entered an agreement to rebrand twenty (20) hotels currently owned by
HPT to brands owned by Wyndham Hotel Group, a member of the Wyndham
Worldwide Corporation (NYSE: WYN). Four (4) of the hotels will be
branded as "Wyndham Hotels and Resorts" and sixteen (16) of the hotels
will be branded as "Hawthorn Suites by Wyndham" hotels. All twenty (20)
hotels will be managed by Wyndham Hotel Group under a long term contract.
Wyndham Hotel Group has agreed to pay HPT an owner's priority from the
operating results of these hotels of $770,000/month ($9,240,000/year).
The payment of these amounts to HPT is partially guaranteed by Wyndham
Hotel Group.
HPT has agreed to provide up to $75 million for refurbishment and
rebranding of these twenty (20) hotels to "Wyndham Hotels and Resorts"
and "Hawthorn Suites by Wyndham" brand standards. As these funds are
advanced, the amount of the HPT owner's priority will increase by 8% per
annum of the amounts funded. Other important terms of this agreement
include the following:
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There is one combined management contract for all twenty (20) hotels.
Accordingly, the owner's priority amount due to HPT and other
financial obligations are calculated and paid on a pooled or combined
basis.
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The management contract term will be twenty five (25) years, and
Wyndham Hotel Group will have two consecutive fifteen (15) year
renewal options. Renewal options may be exercised for all, but not
less than all, the managed hotels.
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The management contract requires that up to 5% of the hotels' gross
revenues, or a "FF&E Reserve", be escrowed for future periodic
refurbishments of the hotels.
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Management and branding fees due to Wyndham Hotel Group are
contractually subordinated to the owner's priority due to HPT and the
FF&E Reserve funding. After the owner's priority is paid to HPT, the
FF&E Reserve is funded and the management and branding fees are paid
to Wyndham Hotel Group, Wyndham Hotel Group may receive an incentive
management fee equal to 50% of the remaining cash flow from the
hotels' operations, and then the balance of the cash flow is available
to HPT.
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In addition to the $75 million which HPT has agreed to fund for the
refurbishment and rebranding of these hotels, Wyndham Hotel Group may
request additional amounts for working capital or for improvements
necessary to meet brand standards; and as such amounts are funded by
HPT, the owner's priority payments due to HPT will increase by a
formula percentage of the amounts funded.
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Because of its long term, the contract permits the sale of a certain
number of these hotels for which continued operation may become
non-economic as determined by Wyndham Hotel Group or HPT and provides
for the reduction of the owner's priority amount due to HPT according
to a formula percentage of the net sale proceeds received by HPT.
John Murray, President of HPT, made the following statement at the time
this transaction was announced:
"HPT is delighted to add Wyndham Hotel Group as one of its hotel
operator partners. The twenty (20) hotels which will be rebranded to
Wyndham Hotel Group brands are some of the hotels which HPT identified
to be sold or rebranded when HPT announced the re-alignment of its
contracts with InterContinental Hotels Group last July. HPT believes
that the refurbishment and rebranding of these twenty (20) hotels and
their management by Wyndham Hotel Group will result in improved
operating results at these hotels. Also, HPT expects it may in the
future add to its ownership of Wyndham Hotel Group branded hotels."
HPT expects the rebranding of the hotels discussed in this press release
to be completed during the third quarter of this calendar year, but the
completion of the refurbishment program may continue into 2013 or 2014.
A list of the locations of the twenty (20) hotels to be rebranded to
Wyndham Hotel Group brands is attached as Schedule A to this press
release.
Hospitality Properties Trust is a real estate investment trust
headquartered in Newton, Massachusetts which currently owns 290 hotels
and 185 travel centers located throughout the United States and in
Puerto Rico and Ontario, Canada.
WARNING REGARDING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENT WITHIN THE MEANING
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER
SECURITIES LAWS. ALSO, WHENEVER HPT USES WORDS SUCH AS "BELIEVE",
"EXPECT", "ANTICIPATE," "INTEND", "PLAN", "ESTIMATE" OR SIMILAR
EXPRESSIONS, HPT IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD
LOOKING STATEMENTS ARE BASED UPON HPT'S CURRENT BELIEFS AND EXPECTATIONS
BUT THEY ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR VARIOUS
REASONS, INCLUDING SOME REASONS BEYOND HPT'S CONTROL. HPT'S ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN HPT'S FORWARD
LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
-
THIS PRESS RELEASE STATES THAT WYNDHAM HOTEL GROUP HAS AGREED TO PAY
HPT AN OWNER'S PRIORITY OF $770,000/MONTH ($9,240,000/YEAR) AND THAT
THE PAYMENT OF THESE AMOUNTS IS PARTIALLY GUARANTEED BY WYNDHAM HOTEL
GROUP. THE OWNER'S PRIORITY DUE TO HPT IS PAID FROM THE OPERATING CASH
FLOW OF THE MANAGED HOTELS; IF THE CASH FLOW IS INSUFFICIENT TO PAY
THE HOTELS' OPERATING EXPENSES THE OWNER'S PRIORITY MAY NOT BE PAID.
WYNDHAM HOTEL GROUP'S GUARANTEE IS LIMITED BY TIME TO OWNER'S PRIORITY
PAYMENTS DUE THROUGH 2019, AND IT IS LIMITED TO NET PAYMENTS FROM
WYNDHAM HOTEL GROUP OF $20 MILLION (AND SUBJECT TO A PAYMENT LIMIT OF
$10 MILLION). ACCORDINGLY, THE FULL AMOUNT OF THE OWNER'S PRIORITY IS
NOT GUARANTEED, THERE WILL BE NO GUARANTEE AFTER 2019 AND THERE IS NO
GUARANTEE OF PAYMENTS BY WYNDHAM HOTEL GROUP IN EXCESS OF $20 MILLION
(OR $10 MILLION PER YEAR). FOR THESE REASONS, THERE IS NO ASSURANCE
THAT HPT WILL RECEIVE THE OWNER'S PRIORITY OF $770,000/MONTH
($9,240,000/PER YEAR) DURING THE TERM OF THE CONTRACT DESCRIBED IN
THIS PRESS RELEASE.
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THIS PRESS RELEASE STATES THAT HPT HAS AGREED TO PROVIDE UP TO $75
MILLION FOR REFURBISHMENT AND REBRANDING OF ITS TWENTY (20) HOTELS TO
"WYNDHAM HOTELS AND RESORTS" AND "HAWTHORN SUITES BY WYNDHAM" BRAND
STANDARDS. AN IMPLICATION OF THIS STATEMENT MAY BE THAT THE
REFURBISHMENT AND REBRANDING OF THESE HOTELS CAN BE COMPLETED FOR $75
MILLION OR LESS. THE COST OF HOTEL REFURBISHMENTS AND REBRANDING IS
DIFFICULT TO ESTIMATE. AFTER A REFURBISHMENT PROJECT IS BEGUN,
UNANTICIPATED PROBLEMS AND COSTS MAY BE ENCOUNTERED. HPT CAN PROVIDE
NO ASSURANCE THAT THE COST NECESSARY TO COMPLETE THE REFURBISHMENT AND
REBRANDING OF THESE 20 HOTELS WILL NOT EXCEED $75 MILLION.
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THIS PRESS RELEASE STATES THAT HPT'S MANAGEMENT CONTRACT WITH WYNDHAM
HOTEL GROUP REQUIRES THAT UP TO 5% OF HOTEL GROSS REVENUES BE ESCROWED
FOR FUTURE PERIODIC REFURBISHMENTS OF THE HOTELS. THIS STATEMENT MAY
IMPLY THAT THE FF&E RESERVE WILL BE SUFFICIENT TO FUND APPROPRIATE
FUTURE REFURBISHMENTS. HOWEVER, DURING THE EXPECTED INITIAL RENOVATION
PERIOD THERE WILL BE NO FF&E RESERVE REQUIRED AND SUBSEQUENT TO THE
EXPECTED INITIAL RENOVATION PERIOD THE FF&E RESERVE WILL GRADUALLY
INCREASE TO 5% AFTER FIVE YEARS. ACCORDINGLY, THE FF&E RESERVE ESCROW
WILL BE LESS THAN 5% OF GROSS REVENUES FOR THE FIRST FIVE YEARS OF THE
MANAGEMENT CONTRACT. ALSO, HPT BELIEVES IT IS NOT POSSIBLE TO
ACCURATELY ESTIMATE THE COST OF FUTURE REFURBISHMENTS. ACCORDINGLY,
HPT MAY NEED TO SEPARATELY FUND REFURBISHMENTS IN THE FUTURE; AND,
ALTHOUGH THE MANAGEMENT CONTRACT PROVIDES THAT ANY SUCH FUNDING WILL
CAUSE THE OWNER'S PRIORITY DUE TO HPT TO INCREASE, THERE CAN BE NO
ASSURANCE THAT THE CASH FLOW FROM OPERATIONS OF THESE HOTELS WILL BE
SUFFICIENT TO PAY ANY INCREASED OWNER'S PRIORITY.
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THIS PRESS RELEASE STATES THAT MANAGEMENT AND BRANDING FEES DUE TO
WYNDHAM HOTEL GROUP ARE CONTRACTUALLY SUBORDINATED TO THE OWNER'S
PRIORITY DUE TO HPT AND FF&E RESERVE FUNDING. AN IMPLICATION OF THIS
STATEMENT MAY BE THAT HPT'S OWNER'S PRIORITY AND THE FF&E RESERVE
FUNDING WILL BE PAID. HOWEVER, HPT'S OWNER'S PRIORITY AND THE FF&E
RESERVE FUNDING ARE THEMSELVES CONTRACTUALLY SUBORDINATED TO OTHER
OPERATING EXPENSES OF THE HOTELS SUCH AS EMPLOYEE COSTS, SUPPLIES,
REAL ESTATE TAXES, INSURANCE, ETC. THE AMOUNTS NECESSARY TO PAY ALL OF
THE HOTELS' OPERATING EXPENSES, INCLUDING THOSE OPERATING EXPENSES
WHICH ARE SENIOR TO THE OWNER'S PRIORITY AND FF&E RESERVE FUNDING ARE
DERIVED FROM THE HOTELS' OPERATIONS AND THERE CAN BE NO ASSURANCE THAT
THE HOTELS' OPERATIONS WILL PRODUCE THE CASH FLOWS TO MEET ALL THE
HOTELS' OPERATING EXPENSES OR ANY OF THEM.
-
THIS PRESS RELEASE STATES THAT THE BALANCE OF THE CASH FLOWS FROM THE
HOTELS' OPERATIONS AFTER PAYING ALL OF THE HOTELS' OPERATING EXPENSES
INCLUDING INCENTIVE FEES TO WYNDHAM HOTEL GROUP WILL BE AVAILABLE TO
HPT. AS NOTED ABOVE AND BELOW, THERE CAN BE NO ASSURANCE THAT THE
HOTELS' OPERATIONS WILL PRODUCE SUFFICIENT CASH FLOWS TO PAY ALL OF
THE HOTELS' OPERATING EXPENSES; AND, ACCORDINGLY, THERE MAY BE NO
ADDITIONAL CASH FLOWS AVAILABLE TO HPT.
-
THIS PRESS RELEASE STATES THAT HPT BELIEVES THAT THE REFURBISHMENTS
AND REBRANDING OF THESE TWENTY (20) HOTELS AND THEIR MANAGEMENT BY
WYNDHAM HOTEL GROUP WILL RESULT IN IMPROVED OPERATING RESULTS AT THESE
HOTELS. FINANCIAL RESULTS AT HOTELS ARE DEPENDENT UPON MANY FACTORS,
INCLUDING THE LOCATIONS OF THE HOTELS, COMPETITIVE CONDITIONS AT THOSE
LOCATIONS, THE QUALITY OF THE HOTELS' PHYSICAL CHARACTERISITCS AND
OPERATIONS. FOR LARGE COMBINATIONS OF HOTELS IN DIVERSE LOCATIONS SUCH
AS THE TWENTY (20) HPT OWNED HOTELS TO BE OPERATED BY WYNDHAM HOTEL
GROUP, THE OPERATING RESULTS OFTEN REFLECT GENERAL ECONOMIC
CONDITIONS. SOME OF THESE FACTORS, SUCH AS COMPETITIVE CIRCUMSTANCES
AND ECONOMIC CONDITIONS GENERALLY, ARE BEYOND HPT'S CONTROL. ALSO, THE
MANAGEMENT CONTRACT WHICH HPT HAS ENTERED WITH WYNDHAM HOTEL GROUP
GRANTS WYNDHAM HOTEL GROUP CONSIDERABLE DISCRETION TO OPERATE THE
HOTELS. FOR THESE REASONS, HPT CAN PROVIDE NO ASSURANCE THAT THE
FUTURE OPERATIONS OF THESE HOTELS WILL IMPROVE THE OPERATING RESULTS
REALIZED AT THESE HOTELS.
-
THIS PRESS RELEASE STATES THAT HPT EXPECTS IT MAY IN THE FUTURE ADD TO
ITS OWNERSHIP OF WYNDHAM HOTEL GROUP BRANDED HOTELS. HPT AND WYNDHAM
HOTEL GROUP HAVE HAD PRELIMINARY DISCUSSIONS ABOUT ADDITIONAL HOTELS
WHICH MAY BE ACQUIRED BY HPT THAT ARE, OR MAY BE, BRANDED AND MANAGED
BY WYNDHAM HOTEL GROUP. TO DATE, NO AGREEMENTS HAVE BEEN ACHIEVED FOR
HPT TO ACQUIRE ADDITIONAL WYNDHAM HOTEL GROUP BRANDED HOTELS.
ACHIEVING SUCH AGREEMENTS IN THE FUTURE WILL DEPEND UPON IDENTIFYING
SUCH HOTELS, AGREEING UPON PURCHASE PRICES WITH THE HOTELS' OWNERS AND
AGREEING UPON CONTRACT TERMS BETWEEN HPT AND WYNDHAM HOTEL GROUP,
AMONG OTHER MATTERS. THERE CAN BE NO ASSURANCE THAT HPT WILL EXPAND
ITS OWNERSHIP OF WYNDHAM HOTEL GROUP BRANDED HOTELS.
THE INFORMATION CONTAINED IN HPT'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER "RISK FACTORS" IN HPT'S
PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT
FACTORS THAT COULD CAUSE HPT'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE STATED IN HPT'S FORWARD LOOKING STATEMENTS. HPT'S FILINGS WITH THE
SEC ARE AVAILABLE ON THE SEC'S WEBSTIE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON HPT'S FORWARD LOOKING
STATEMENTS.
EXCEPT AS REQUIRED BY LAW, HPT DOES NOT INTEND TO UPDATE OR CHANGE ANY
FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS
OR OTHERWISE.
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SCHEDULE A
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Brand
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Location
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Guest Rooms
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Other
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Wyndham Hotels
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Houston (West Energy
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344
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2 food & beverage
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and Resorts
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Corridor), TX
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outlets and 9,000 sq.ft. of
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meeting space
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Wyndham Hotels
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Irvine (Orange County
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335
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2 food & beverage
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and Resorts
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Airport), CA
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outlets and 7,500 sq.ft. of
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meeting space
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Wyndham Hotels
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Dallas (near the Galleria), TX
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295
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2 food & beverage
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and Resorts
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outlets and 10,300 sq.ft.
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of meeting space
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Wyndham Hotels
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Atlanta (Perimeter area), GA
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296
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2 food & beverage
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and Resorts
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outlets and 12,000 sq.ft.
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of meeting space
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_______
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Subtotal:
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1,270
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8 food & beverage
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outlets and 38,300 sq.ft.
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of meeting space
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Hawthorn Suites by Wyndham
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Dallas (near the Galleria), TX
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114
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Hawthorn Suites by Wyndham
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Denver (Denver Tech Center), CO
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129
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Hawthorn Suites by Wyndham
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Hartford-Meriden, CT
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122
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Hawthorn Suites by Wyndham
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Orlando, FL
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120
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Hawthorn Suites by Wyndham
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Chicago-Hoffman Estates, IL
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120
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Hawthorn Suites by Wyndham
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Chicago-Schaumburg, IL
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120
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Hawthorn Suites by Wyndham
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Northbrook-Wheeling, IL
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141
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Hawthorn Suites by Wyndham
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East Louisville, KY
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76
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Hawthorn Suites by Wyndham
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Detroit-Auburn Hills, MI
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108
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Hawthorn Suites by Wyndham
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Detroit-Farmington Hills, MI
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123
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Hawthorn Suites by Wyndham
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Charlotte, NC
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79
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Hawthorn Suites by Wyndham
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Greensboro, NC
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120
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Hawthorn Suites by Wyndham
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Raleigh, NC
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79
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Hawthorn Suites by Wyndham
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Omaha, NE
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129
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Hawthorn Suites by Wyndham
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Cincinnati-Blue Ash, OH
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76
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Hawthorn Suites by Wyndham
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Salt Lake City-Ft. Union, UT
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97
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_____
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Subtotal:
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1,753
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TOTAL:
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3,023
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8 food & beverage
|
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Rooms
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outlets and 38,300 sq.ft.
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of meeting space
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A Maryland Real Estate Investment 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, 617-796-8232
Vice
President, Investor Relations
or
Carlynn Finn, 617-796-8232
Senior
Manager, Investor Relations
www.hptreit.com