Hospitality Properties Trust Agrees to Purchase 9 Hotels for $196.2 Million

January 25, 2006

NEWTON, Mass. -- Hospitality Properties Trust (NYSE: HPT) today announced that it has agreed to purchase nine (9) hotels for $196.2 million.

The 9 hotels to be purchased include five (5) upscale Crowne Plaza Hotels, one (1) full service Holiday Inn Select Hotel, two (2) upscale, extended stay Staybridge Suites Hotels and one (1) Holiday Inn SunSpree Resort Hotel. These hotels have 2,712 rooms/suites and over 68,000 sq.ft. of meeting space. In addition, all of these hotels have exercise rooms/fitness centers and swimming pools and a total of 12 restaurants and 13 bars/lounge areas. These nine (9) hotels are located as follows:

                                                              No. of
                                                Approx. sq.   Food and
                                       No. of     ft. of      Beverage
   Location            Hotel            Keys   Meeting Space  Outlets
   --------            -----           ------  -------------  --------
San Jose, CA       Crowne Plaza          304    6,643 sq.ft.     2

Atlanta (Airport), 
 GA                Crowne Plaza          378   14,882 sq.ft.     2    

Atlanta                            
 (Perimeter), GA   Crowne Plaza          296   21,004 sq.ft.     2

Dallas, TX         Crowne Plaza Suites   295    9,614 sq.ft.     2

Irvine, CA         Crowne Plaza          335    7,476 sq.ft.     2

Houston, TX        Holiday Inn Select    349    3,444 sq.ft.     2

Montego Bay,       Holiday Inn           
 Jamaica           SunSpree Resort       524    4,200 sq.ft.    11   

Dallas, TX         Staybridge Suites     114      460 sq.ft.     1

Las Colinas, TX    Staybridge Suites     117      375 sq.ft.     1
                                       ------ -------------- ---------
Totals:                                2,712   68,098 sq.ft.    25
                                               meeting space

Seven of these hotels are being purchased from FelCor Lodging Trust (NYSE: FCH) and two are being purchased from InterContinental Hotels Group, plc (LSE/NYSE: IHG). Simultaneously with this purchase, HPT will enter a long term management contract for eight (8) of these hotels with a subsidiary of IHG. Because of tax law issues affecting the Holiday Inn SunSpree Resort in Jamaica, it will be leased to a separate subsidiary of IHG, but this lease and the management contract for the eight (8) hotels will be subject to cross guarantees and combined renewal options. The management contract and the lease will have terms similar to other contracts entered by HPT including: initial terms of 25 years, plus two consecutive 15 year renewal options; escrowed reserves for anticipated capital expenditures; subordination of IHG management fees to the payment of defined owner's priority returns to HPT; and a limited guaranty from IHG for the rent and certain priority returns to HPT.

In addition to the purchase price, HPT will invest $25.1 million in these hotels during the three years following the closing to fund capital improvements. HPT's annual owner's priority payments, which are guaranteed by IHG, will be initially $15.8 million/year in 2006, increase to $17.8 million/year in 2007, $18.7 million/year in 2008 and approximately $19.0 million/year after the full $25.1 million of planned hotel improvements are funded. HPT may also receive additional non-guaranteed priority payments, a percentage of gross revenue increases at these hotels starting in 2008 and the cash flow remaining after payment of management fees to IHG at the managed hotels.

The agreement announced today represents the first time HPT has agreed to purchase a hotel located in Jamaica. Jamaica and most other countries generally do not provide the full tax benefits available to real estate investment trusts, or REITs, in the USA. Nonetheless, HPT expects it may reduce its taxes due in Jamaica through 2015 as a result of certain tax concessions granted by the Government of Jamaica to promote investment in its tourism industry. Also, to reduce the risks to HPT which may arise from changes in currency exchange rates, the purchase price and the rent for the Jamaica hotel were set and will be paid in U.S. dollars.

The hotels will be purchased free and clear of all mortgage debt. HPT expects to fund this transaction by drawing under its unsecured revolving bank credit facility.

The transactions announced were effective Friday, January 20, 2006, except for the Jamaican resort which will be delayed pending certain third party approvals, such as Jamaican tax and regulatory approval.

Hospitality Properties Trust is a REIT which upon completion of this transaction will own 308 hotels located in 38 states, Puerto Rico, Canada and Jamaica. 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 THE LEASE FOR THE HOLIDAY INN SUNSPREE RESORT AND THE MANAGEMENT CONTRACTS FOR THE NINE (9) OTHER HOTELS ARE SUBJECT TO CROSS GUARANTEES AND COMBINED RENEWAL OPTIONS. WHENEVER SEPARATE CONTRACTS ARE ENTERED FOR SEPARATE PROPERTIES, ESPECIALLY PROPERTIES LOCATED IN DIFFERENT LEGAL JURISDICTIONS, THE MAKING OF SUPPORT PAYMENTS BETWEEN PROPERTY OPERATIONS MAY NOT BE LEGALLY ENFORCEABLE. FOR THIS REASON, HPT CANNOT ASSURE INVESTORS THAT ITS COMBINATION REQUIREMENTS WILL BE RESPECTED IN ALL CIRCUMSTANCES.

  • THIS PRESS RELEASE STATES THAT PAYMENT TO HPT OF RENT AND A PORTION OF ITS OWNER'S PRIORITY RETURNS WILL BE GUARANTEED BY IHG. HOWEVER, THE IHG GUARANTY ALSO APPLIES TO OTHER MANAGEMENT CONTRACTS WITH HPT AFFECTING AN ADDITIONAL 120 HOTELS, AND THIS GUARANTY IS LIMITED TO A MAXIMUM LIABILITY BY IHG OF $125 MILLION. 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 CASH FLOWS FROM THE AFFECTED HOTELS EXCEED CERTAIN AMOUNTS AND THIS RELEASE WILL BE EFFECTIVE EVEN IF CASH FLOWS SUBSEQUENTLY DECLINE.

  • THIS PRESS RELEASE STATES THAT $25.1 MILLION WILL BE INVESTED BY HPT FOR CERTAIN CAPITAL IMPROVEMENTS TO THE PURCHASED HOTELS AND THAT THE LEASE AND MANAGEMENT CONTRACTS BETWEEN HPT AND IHG WILL REQUIRE ESCROWED RESERVES FOR ANTICIPATED CAPITAL EXPENDITURES THEREAFTER. IT IS DIFFICULT TO ACCURATELY ANTICIPATE HOTEL CAPITAL REQUIREMENTS. THIS IS ESPECIALLY SO AT FULL SERVICE AND UPSCALE HOTELS OF THE TYPES WHICH HPT HAS AGREED TO PURCHASE. IF ESCROWED AMOUNTS ARE INSUFFICIENT TO MAINTAIN THESE HOTELS, HPT MAY HAVE TO INVEST ADDITIONAL AMOUNTS IN ORDER TO ACHIEVE AND MAINTAIN THE FUTURE FINANCIAL PERFORMANCE REALIZED AT THESE HOTELS. HPT MAY NOT HAVE THE NECESSARY FUNDS TO INVEST AND ITS ABILITY TO MAINTAIN THE SUCCESSFUL FINANCIAL PERFORMANCE OF THESE HOTELS IS NOT ASSURED.

  • 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 THESE HOTELS BY IHG'S MANAGEMENT, HPT'S CAPITAL COSTS INCURRED TO FUND THIS TRANSACTION, TAXES PAYABLE IN JAMAICA 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 HOTELS, INCREASED CAPITAL COSTS, HIGHER TAX RATES 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.

  • THIS PRESS RELEASE STATES THAT HPT'S PURCHASE OF THE HOLIDAY INN SUNSPREE RESORT IN JAMAICA HAS BEEN DELAYED PENDING THIRD PARTY APPROVALS. IN FACT, CIRCUMSTANCES MAY DELAY THIS PURCHASE FOR AN EXTENDED PERIOD OR PREVENT IT OCCURRING. SHOULD THE PURCHASE OF THIS HOTEL NOT CLOSE, HPT'S ANNUAL PRIORITY PAYMENTS STATED IN THIS PRESS RELEASE WOULD BE DECREASED BY $2.6 MILLION/YEAR IN 2006, $3.1 MILLION/YEAR IN 2007 AND $3.4 MILLION/YEAR THEREAFTER.

  • THIS PRESS RELEASE STATES THE PURCHASE PRICE AND THE RENT FOR THE HOLIDAY INN SUNSPREE RESORT IN JAMAICA HAVE BEEN SET AND WILL BE PAID IN U.S. DOLLARS IN ORDER TO REDUCE THE RISKS TO HPT FROM CHANGES IN CURRENCY EXCHANGE RATES. HOWEVER, HPT'S INVESTMENT IN JAMAICA AND THE RESULTS OF OPERATIONS AT THIS HOTEL WILL BE AFFECTED BY CHANGES IN CURRENCY EXCHANGE RATES. THE AMOUNTS EARNED AT THIS HOTEL AND AVAILABLE CASH FLOW TO PAY RENT IN U.S. DOLLARS WILL BE DETERMINED BASED UPON CURRENCY EXCHANGE RATES IN EFFECT FROM TIME TO TIME.

  • THE FOREGOING PRESS RELEASE STATES THAT HPT EXPECTS ITS TAXES DUE IN JAMAICA MAY BE REDUCED BY REASON OF CERTAIN TAX CONCESSIONS GRANTED BY THE JAMAICAN GOVERNMENT. THAT GOVERNMENT HAS NOT YET CONFIRMED THAT THIS TAX CONCESSION WILL BE GRANTED. THIS TAX CONCESSION MAY NOT BE GRANTED, GOVERNMENT POLICIES SOMETIMES CHANGE AND HPT CAN PROVIDE NO ASSURANCE THAT ANY TAX REDUCTIONS FOR INCOME IT EARNS IN JAMAICA WILL BE AVAILABLE.

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
617-964-8389
Manager of Investor Relations
www.hptreit.com

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