Hospitality Properties Trust Closes Purchase of IHG Hotels

February 16, 2005

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

Cautionary Language

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The documents provided in this archived section are provided for historical purposes only. The information contained in each document is accurate only as of the date each document was originally issued or such earlier date stated in those documents. Except as required by law, Service Properties Trust does not undertake any obligation to update any information contained in these documents. For current information about the company, please refer to our most recent public SEC Filings.

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