HPT Completes $145 Million Purchase, Lease Of Hotels

NEWTON, MA— Hospitality Properties Trust has acquired 21 Candlewood Suites hotels representing 2,593 suites, for $145 million. These hotels were simultaneously leased back to a subsidiary of Candlewood Hotel Company, Inc. for rent of $16 million/year, plus percentage rent equal to 10% of increases in gross revenues at the hotels after 2002. Under terms of the transaction, HPT retained a cash security deposit equal to one years minimum rent of $16 million. In addition, the lease requires a capital expenditure reserve escrow equal to 5% of gross hotel revenues and the rent is guaranteed by the brand owner and franchisor, CNDL. Also, the 21 hotels purchased have been added to a combination or pooled lease for 36 Candlewood hotels which HPT currently owns creating one lease for all 57 hotels, and the combined lease term has been extended through 2018 plus all or none renewal options thereafter. The 57 hotels included in the combined lease from HPT to CNDL are geographically diversified in 27 states. The average age of the 21 hotels which HPT purchased today is only three years, and the average age of the combined lease pool of 57 hotels is only 3.6 years.