NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today closed
its previously announced agreement to purchase hotels from
InterContinental Hotels Group plc (LSE/NYSE: IHG).
On December 17, 2004, HPT announced that it had entered an agreement
to purchase 13 hotels from IHG for $450 million: $425 million to be paid
at the time the hotels are purchased and $25 million to be paid during
the next three years as capital projects are completed. Earlier today,
HPT and IHG closed this transaction with regard to 12 of the 13 hotels.
The purchase of one hotel, the historic restoration Stephen F. Austin
InterContinental Hotel in Austin, Texas (189 rooms/suites for an
allocated purchase price of $30 million) will be delayed until at least
May 2005 at the request of IHG.
Simultaneously with HPT's purchase of these hotels, HPT entered long
term management agreements for 11 of the 12 hotels and a long term lease
for one hotel, the InterContinental Hotel in San Juan, Puerto Rico. The
lease and management contract for all 12 hotels are subject to cross
guarantees and combined, all or none, renewal options. The Puerto Rico
hotel transaction was structured as a sale and leaseback because that
hotel includes a casino operation which is not appropriate for operation
by an HPT taxable REIT subsidiary under applicable USA tax law. When
the Austin, Texas InterContinental Hotel is purchased by HPT, it will be
added to the management contracts for the hotels purchased today.
At the time of this announcement, John G. Murray, President of HPT, made the following statement:
"HPT believes InterContinental Hotels Group is one of the leading
hotel operating companies in the world. Everyone at HPT is very pleased
to expand our business relationships with IHG.
"The efficient closing of this transaction within two months after
our contract was signed represents two important milestones for HPT:
"First, this transaction includes the first investments by HPT
outside the United States. Besides the hotel in San Juan, Puerto Rico,
two of the hotels purchased today are located in Ontario, Canada.
"Second, this is the first combination of hotels purchased by HPT
which includes primarily full service and luxury hotels. This
transaction evidences that HPT's business strategy to invest in
combinations of hotels may be applied to all segments of the hospitality
industry."
A description of the hotels affected by this transaction is attached hereto.
Hospitality Properties Trust is a real estate investment trust
headquartered in Newton, Massachusetts, which owns 297 hotels located
throughout the United States, Puerto Rico and Canada.
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 STATEMENTS ARE BASED UPON HPT'S CURRENT
BELIEFS AND EXPECTATIONS, BUT THEY MAY NOT OCCUR. FOR EXAMPLE:
- THIS PRESS RELEASE STATES THAT $25 MILLION WILL BE PAID BY HPT
AS CAPITAL PROJECTS ARE COMPLETED AT THE HOTELS HPT PURCHASES. THE
IMPLICATION OF THIS STATEMENT MAY BE THAT THIS AMOUNT WILL BE SUFFICIENT
TO FUND CAPITAL REQUIREMENTS AT THESE HOTELS. IT IS DIFFICULT TO
ACCURATELY ESTIMATE HOTEL CAPITAL REQUIREMENTS. THIS IS ESPECIALLY SO AT
FULL SERVICE LUXURY AND UPSCALE HOTELS LIKE THE INTERCONTINENTAL AND
CROWNE PLAZA HOTELS WHICH HPT HAS PURCHASED AND AGREED TO PURCHASE. THE
MANAGEMENT CONTRACTS BETWEEN HPT AND IHG REQUIRE THAT, IN ADDITION TO
THE $25 MILLION PAYMENT FROM HPT, AN INCREASING PERCENTAGE OF GROSS
REVENUES AT THESE HOTELS WILL BE ESCROWED FOR FUTURE CAPITAL
EXPENDITURES STARTING IN 2007. HOWEVER, THE $25 MILLION AND THESE
PERCENTAGE ESCROWS MAY BE INADEQUATE TO PROPERLY MAINTAIN THESE HOTELS.
- THIS PRESS RELEASE STATES THAT HPT'S PURCHASE OF THE
INTERCONTINENTAL HOTEL IN AUSTIN, TEXAS HAS BEEN DELAYED UNTIL AT LEAST
MAY 2005. IN FACT, CHANGED CIRCUMSTANCES MAY FURTHER DELAY THIS PURCHASE
OR PREVENT ITS OCCURRING.
- THIS PRESS RELEASE STATES THAT THIS TRANSACTION IS HPT'S FIRST
INVESTMENT OUTSIDE THE UNITED STATES. THE IMPLICATION OF THIS STATEMENT
IS THAT HPT MAY MAKE ADDITIONAL INVESTMENTS OUTSIDE THE UNITED STATES.
INVESTMENTS OUTSIDE THE UNITED STATES INVOLVE MULTIPLE RISKS AND TAX
CONSIDERATIONS WHICH ARE DIFFERENT FROM INVESTMENTS WITHIN THE UNITED
STATES. FOR THESE REASONS, AMONG OTHERS, HPT MAY BE UNABLE OR UNWILLING
TO MAKE FURTHER INVESTMENTS OUTSIDE THE UNITED STATES.
- THIS PRESS RELEASE STATES THAT THE TRANSACTION ANNOUNCED TODAY
IS HPT'S FIRST INVESTMENT IN A COMBINATION OF HOTELS WHICH PRIMARILY
INCLUDES FULL SERVICE AND LUXURY HOTELS. THE IMPLICATION OF THIS
STATEMENT IS THAT HPT MAY MAKE ADDITIONAL INVESTMENTS IN FULL SERVICE
AND LUXURY HOTELS. HPT MAY BE UNABLE OR UNWILLING TO EXPAND ITS
INVESTMENTS IN FULL SERVICE AND LUXURY HOTELS.
INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS
Attachment to HPT Press Release dated
February 16, 2005
The 13 hotels purchased and to be purchased by HPT include 3,946
rooms/suites and approximately 164,000 sq.ft. of meeting space, as
follows:
No. of
rooms/ Approximate
Location Hotel suites Meeting Space
-------- ----- ------ -------------
San Juan, PR InterContinental 402 17,000 sq.ft.
Houston, TX InterContinental 485 50,000 sq.ft
Austin, TX(a) InterContinental 189 6,000 sq.ft.
Toronto, ON InterContinental 210 6,500 sq.ft.
White Plains, NY Crowne Plaza 401 16,000 sq.ft.
Redondo Beach,CA Crowne Plaza 346 24,000 sq.ft.
Los Angeles, CA Crowne Plaza 613 14,250 sq.ft.
Hilton Head, SC Crowne Plaza 340 18,000 sq.ft.
Atlanta, GA(airport) Holiday Inn 190 2,500 sq.ft.
Memphis, TN Holiday Inn 243 7,500 sq.ft.
Anaheim, CA Holiday Inn 264 1,500 sq.ft.
Anaheim, CA Staybridge Suites 143 250 sq.ft.
Toronto, ON Staybridge Suites 120 375 sq.ft.
------------ ---------------
Totals: 3,946/rooms 163,875 sq.ft.
suites of meeting space
(a) The purchase of the Austin hotel for $30 million has been delayed.
In addition to the rooms and meeting space described above, all of
these hotels have exercise rooms/fitness centers and swimming pools; and
the full service hotels (i.e., the InterContinental, Crowne Plaza and
Holiday Inn hotels) have a total of 22 restaurants and 17 bars/lounge
areas.
Hospitality Properties Trust
Timothy A. Bonang
617-796-8149
Manager of Investor Relations
www.hptreit.com