Prime Hospitality Corp.
(NYSE: PDQ) announced today that it will convert 27 Sumner Suites hotels to
its AmeriSuites brand pursuant to an agreement with Sholodge, Inc. to acquire
the leasehold interests on the hotels. Prime will operate the hotels under
the lease agreements with Hospitality Properties Trust (“HPT”) and Sholodge.
Prime will also purchase two land sites from Sholodge to develop two
additional AmeriSuites hotels. The transaction is expected to close in
mid-April and is subject to certain due diligence items and approval by HPT.
Under the agreement, a subsidiary of Prime will assume Sholodge`s interest
in an existing lease for 20 hotels with HPT subject to HPT`s consent and enter
into new lease agreements on the seven remaining hotels. As part of the
transaction, Prime will also purchase land from Sholodge in Mt. Laurel, NJ and
in Sterling, VA near Dulles Airport. An affiliate of Sholodge will then
construct AmeriSuites hotels on these sites.
“This transaction will grow the size of our AmeriSuites chain by 30%” said
A.F. Petrocelli, chairman and chief executive officer of Prime. “We will be
adding AmeriSuites to new markets and strengthening our presence in existing
markets. The hotels are substantially identical in nature to our existing
AmeriSuites and conversion items are expected to be minimal. By leasing 27
hotels, we are also able to grow our brand without raising capital or adding
real estate. The transaction fits with our strategic initiative to transform
Prime from an owner/operator into a franchisor/manager of its brands. This
conversion is a significant step in developing AmeriSuites into a major player
in the industry.”
The hotels are located in 12 states primarily in the Southeast, Midwest
and Southwest regions of the country. The hotels were all recently
constructed by Sholodge with an average age of 2.8 years. Sholodge also has
prior experience developing AmeriSuites hotels as 15 current AmeriSuites were
constructed by Sholodge.
Prime intends to convert the hotels to AmeriSuites over the next several
months. The hotels will be operated by Prime as Sumner Suites until the
conversion process is complete.