Newton, MA (April 28, 2003): Hospitality Properties Trust (NYSE: HPT) today announced that it has terminated Wyndham International’s (AMEX: WBR) occupancy and operations of 15 Summerfield hotels and that it is negotiating with WBR and other parties concerning the operations of an additional 12 Wyndham hotels.
HPT has two leases with WBR subsidiaries: one lease includes 15 Summerfield by Wyndham hotels located in eight states; the second lease includes 12 Wyndham hotels located in eight states. On April 1, 2003, WBR failed to pay rent due HPT under these leases. The monthly rents are approximately $2.1 million/mo. for 15 Summerfield hotels and $1.5 million/mo. for the 12 Wyndham hotels.
On April 2, 2003, HPT declared WBR in default of its lease obligations. Simultaneously, HPT exercised its rights to retain certain collateral security it held for the WBR lease obligations, including security deposits of $33 million (which were not escrowed) and capital replacement reserves totaling about $7 million (which were previously escrowed).
Earlier today HPT terminated WBR’s occupancy of the 15 Summerfield hotels. Starting today these 15 hotels are being operated for HPT’s account under a management agreement by Candlewood Hotel Company (OTC: CNDL). CNDL leases other hotels from HPT, but that separate lease is not affected by today’s developments.
Commenting on the selection of CNDL to assume the operations of the 15 Summerfield hotels, John G. Murray, president of HPT, made the following statement:
“Jack DeBoer, the CEO of Candlewood, is generally regarded as the originator of the extended stay hotel concept. Mr. DeBoer was one of the founders of the Summerfield hotel business before the brand and operations were sold to WBR. Hospitality Properties Trust believes that Mr. DeBoer and his team are the ideal managers capable of stabilizing and improving operations at these hotels.”
HPT and WBR are currently negotiating concerning continuation of the Summerfield brand affiliation for these 15 hotels at least for a transitional period. The new management contract between HPT and CNDL is terminable upon 30 days notice. HPT stated that it has not yet decided whether the best long-term affiliation for these hotels is with the Summerfield brand and CNDL management or with an alterative brand or manager. HPT has determined that its interests may be served by stabilizing these hotels and thereafter reconsidering these issues.
With regard to the lease for the 12 Wyndham hotels which WBR defaulted on April 1, 2003, HPT and WBR have discussed terms for WBR’s continued occupancy of these hotels, but no agreement has been achieved. Accordingly, HPT has begun discussions with a stand-by manager for these hotels. HPT has not yet decided whether to retain the Wyndham brand or to re-brand these 12 hotels.
Hospitality Properties Trust is a real estate investment trust which owns 251 hotels located throughout the United States.
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 PRESENT BELIEFS AND EXPECTATIONS, BUT THEY ARE NOT GUARANTEED TO OCCUR. FOR EXAMPLE, MR. MURRAY’S STATEMENT THAT CNDL MANAGEMENT WILL BE CAPABLE TO STABILIZE AND IMPROVE OPERATIONS AT THE 15 SUMMERFIELD HOTELS MAY NOT OCCUR. THE OPERATIONS OF THESE HOTELS MAY NOT IMPROVE AND MAY DETERIORATE. THESE UNEXPECTED RESULTS MAY OCCUR BECAUSE UNFORESEEN TRANSITION PROBLEMS DISRUPT HOTEL OPERATIONS, BECAUSE MARKET CONDITIONS DETERIORATE OR FOR OTHER REASONS. SIMILARLY, HPT MAY BE UNABLE TO REACH AGREEMENTS FOR THE FUTURE LONG TERM MANAGEMENT OR BRANDING OF THE 27 HOTELS DISCUSSED IN THIS PRESS RELEASE. A CHANGE IN THE MANAGEMENT OR BRAND OF HOTELS MAY CAUSE THE FINANCIAL RESULTS OF THE HOTELS’ OPERATIONS TO DECLINE. HPT EXPECTS THAT THE FINANCIAL RESULTS WHICH IT REALIZES FROM OPERATIONS OF THE 27 HOTELS DISCUSSED IN THIS PRESS RELEASE WILL BE LESS THAN THE RENT HPT PREVIOUSLY RECEIVED FROM WBR FOR THESE HOTELS, AT LEAST FOR THE NEXT SEVERAL MONTHS AND PERHAPS THEREAFTER. THE TERMINATION OF WBR’S OPERATIONS OF THE 27 HOTELS DISCUSSED IN THIS PRESS RELEASE MAY RESULT IN DISPUTES OR LITIGATION BETWEEN HPT AND WBR; AND LITIGATION MAY BE EXPENSIVE OR HAVE UNEXPECTED OUTCOMES. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS CONTAINED IN THIS PRESS RELEASE.