Interstate Hotels & Resorts (NYSE: IHR), the nation`s largest independent hotel management company, today announced that under the terms of its management agreement with Winston Hotels (NYSE: WXH), a real estate investment trust, Interstate will cease operating 33 hotels owned by Winston, effective July 1, 2003.
On July 1, 2002, Interstate assigned the leases of 47 hotels for $17 million to a subsidiary of Winston under a provision of the REIT Modernization Act that allows REITs to own their hotels` leases. Interstate recorded a gain of $7.2 million on the transaction.
As part of the agreement, Interstate currently operates 33 of Winston`s properties. After one year, Winston has the option to terminate the management contracts and has notified Interstate of its intention to do so.
“We have enjoyed our relationship with Winston and continue on good terms with the company and its management,” said John Emery, Interstate president and chief operating officer.
In connection with concluding the Winston management contracts, Interstate expects to incur one-time charges of approximately $0.2 million of cash expenses for lease and personnel-related costs, and $0.7 million for the write-off of related tangible and intangible assets. The majority of these charges will be recorded in the 2003 third quarter. The cancellation of the contracts is expected to have minimal impact on Interstate`s continuing net income, reducing the company`s continuing net income by approximately $0.1 million annually, and will have no impact on Interstate`s earnings per share 2003 guidance.
Interstate Hotels & Resorts operates approximately 400 hospitality properties with nearly 86,000 rooms in 44 states, the District of Columbia, Canada and Russia, including 55 properties managed by Flagstone Hospitality Management, a subsidiary of Interstate Hotels & Resorts. BridgeStreet Corporate Housing Worldwide, an Interstate Hotels & Resorts subsidiary, is one of the world`s largest corporate housing providers, offering upscale, fully furnished corporate housing throughout the United States, Canada, the United Kingdom, France and 39 additional countries through its network partners.
For more information about Interstate Hotels & Resorts, visit the company`s Web site: www.ihrco.com .