Summerfield HPT Lease Company, L.P., a subsidiary of Wyndham International, Inc. (AMEX:WBR), announced today that the conversion of 15 Summerfield Suites(R) by Wyndham properties owned by Hospitality Properties Trust (HPT) to another brand will not impact future EBITDA. This conversion is a result of a strategic business decision on the part of the subsidiary due to the extraordinarily high cost of the lease structured at the peak of the hotel market.
Under the terms of the original sale/leaseback transaction with HPT, the 15 properties could not deliver positive EBITDA and required a greater rent payment than cash generated. The subsidiary could not continue to operate under the existing terms. The potential royalty fees from the loss of the properties would have only contributed 0.1 percent of future company revenues on an annual basis.
The Summerfield Suites by Wyndham brand, which enjoys a 15 to 25 percent RevPAR premium over its competitors, is consistently ranked as one of the top upscale extended-stay hotel brands in the United States. Wyndham International, Inc. will continue to grow its extended-stay brand through new management and franchise agreements.
A similar business decision was made by GHALP Partnership, L.P., a Wyndham International subsidiary, to terminate another deficit-operating lease with HPT, which included 12 Wyndham Hotel(R) and Wyndham Garden Hotel(R) properties. The financial impact to both subsidiaries has been greatly improved, increasing their cash flow on an annualized basis by approximately $14.3 million and resulting in a $150 million non-cash write-off of the leases` remaining book value.
Wyndham International, Inc. offers upscale and luxury hotel and resort accommodations through proprietary lodging brands and a management services division. Based in Dallas, Wyndham International owns, leases, manages and franchises hotels and resorts in the United States, Canada, Mexico, the Caribbean and Europe. For more information, visit www.wyndham.com. For reservations, call 800-Wyndham.
This press release contains certain forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including projections about future operating results. The Company`s results, expectations and objectives could differ materially from those set forth in the forward-looking statements. Certain factors that might cause a difference include, but are not limited to, risks associated with the availability of equity or debt financing at terms and conditions favorable to Wyndham; risks associated with the course of litigation; Wyndham`s ability to effect sales of assets on favorable terms and conditions; Wyndham`s ability to integrate acquisitions into its operations and management; risks associated with the hotel industry and real estate markets in general; competition within the lodging industry; the impact of general economic conditions; the impact of terrorist activity or war, threats of terrorist activity or war and responses thereto on the economy in general and the travel and hotel industries in particular; risks associated with debt financing; and other risks and uncertainties set forth in the company`s annual, quarterly and current reports, and proxy statements.