notices of default to Prime Hospitality Corp. (NYSE: PDQ) because Prime failed to pay rent due to HPT on July 1, 2003.
HPT owns 24 AmeriSuites Hotels (2,929 keys) located in 14 states which are leased to a subsidiary of Prime. HPT also holds a guaranty for the lease obligation. The lease and the guaranty are secured by deposits totaling $42.1 million. In addition, Prime`s obligation to maintain these hotels is partially secured by a reserve account and in which there was approximately $4.2 million on deposit on May 31, 2003. The notices of default sent by HPT earlier today state that HPT intends to retain the security and guaranty deposits and to take control of the improvement reserve account.
The rent due to HPT from Prime, net of interest previously credited to Prime on the deposits, is $1,982,900/month.
Prime`s management and franchise arrangements for these 24 hotels are subordinated to the lease obligations to HPT. Accordingly, HPT has the right to install a new manager and to re-brand these hotels. HPT intends to meet with Prime in the near future and it has not determined whether to change the management of these hotels or their brand.
Hospitality Properties Trust is a real estate investment trust headquartered in Newton, Massachusetts, which owns 267 hotels located throughout the United States.