Hilton Hotels, CNL Buy Five Properties

BEVERLY HILLS, CA— Hilton Hotels Corp. said that the partnership it formed with CNL Hospitality Properties in December 2002 has completed the purchase of five additional hotels. The five properties are: the 437-room Hilton Rye Town in Rye Brook, NY; the 630-room Doubletree Crystal City and 267-suite Embassy Suites Crystal City both in Arlington, VA; the 257-suite Embassy Suites Santa Clara in Santa Clara, CA and the 174-suite Embassy Suites Orlando Airport in Orlando, FL. All five properties will retain their current branding and will be managed by Hilton Hotels or a 100% owned affiliate of Hilton. According to the companies, Hilton contributed the Hilton Rye Town and CNL contributed the Doubletree Crystal City to the partnership. The entity purchased all three Embassy Suites properties from Strategic Hotel Capital. Total consideration for all five hotels is approximately $249 million. The partnership financed a portion of the purchase price with a $145 million, 7-year first mortgage loan at a fixed rate of 5.95%. Late last year, the Hilton-CNL partnership acquired the 500-room Doubletree at Lincoln Centre in Dallas, and the 428-room Sheraton El Conquistador Resort and Country Club in Tucson, AZ for a total consideration of approximately $121 million. The Tucson property has been converted to the Hilton brand, and the Dallas property is in the process of being converted to a Hilton. Including anticipated refurbishment costs, the total capitalization of the partnership— including all seven hotels— is estimated at approximately $402 million. Hilton will generate net proceeds of approximately $30 million from the entire transaction, based on Hiltons investment in the partnership, contribution of the Hilton Rye Town to the partnership, and proceeds received from the acquisition financing. Hilton said it will use the $30 million net proceeds to reduce debt. CNL owns a majority interest in the partnership.