Moody’s Revises HPT Outlook To Negative

NEW YORK— Moody’s Investors Service here has confirmed the Baa3 senior unsecured debt and Ba1 preferred stock ratings of Hospitality Properties Trust (HPT), and concurrently changed the rating outlook on the Newton, MA-based hotel REIT to negative. It was noted the revision of HPT’s ratings outlook to negative from stable reflects a decline in the REIT’s rent revenues due to operator defaults as well as continued weak performance of its other assets. In Moody’s opinion, the REIT’s financial cushion has been weakened by two recent operator defaults: specifically, rent-payment defaults by certain of HPT’s lessees (constituting subsidiaries of Wyndham International and Prime Hospitality Corp., due to their inability to generate sufficient cash flow to cover rent. As a result, HPT has terminated Wyndham’s occupancy and operations and has executed short-term management contracts with replacement operators. Additionally, the REIT is currently in discussions with Prime Hospitality. All told, rent payments from the two operators accounted for 24.3% of the REIT’s total rent roll as of Mar. 31, 2003. In the wake of Moody’s revised outlook, said to be affecting approximately $600 million in securities, the following HPT ratings were confirmed: senior unsecured debt at Baa3; senior unsecured shelf at (P)Baa3; preferred stock at Ba1; preferred stock shelf at (P)Ba1; and subordinated debt shelf at (P)Ba1.