Hospitality Properties Trust today closed its previously announced agreement to purchase hotels from InterContinental Hotels GroupOn December 17, 2004, HPT announced that it had entered an agreement to purchase 13 hotels from IHG for $450 million: $425 million to be paid at the time the hotels are purchased and $25 million to be paid during the next three years as capital projects are completed. Earlier today, HPT and IHG closed this transaction with regard to 12 of the 13 hotels. The purchase of one hotel, the historic restoration Stephen F. Austin InterContinental Hotel in Austin, Texas (189 rooms/suites for an allocated purchase price of $30 million) will be delayed until at least May 2005 at the request of IHG.
Simultaneously with HPT’s purchase of these hotels, HPT entered long term management agreements for 11 of the 12 hotels and a long term lease for one hotel, the InterContinental Hotel in San Juan, Puerto Rico. The lease and management contract for all 12 hotels are subject to cross guarantees and combined, all or none, renewal options. The Puerto Rico hotel transaction was structured as a sale and leaseback because that hotel includes a casino operation which is not appropriate for operation by an HPT taxable REIT subsidiary under applicable USA tax law. When the Austin, Texas InterContinental Hotel is purchased by HPT, it will be added to the management contracts for the hotels purchased today.
At the time of this announcement, John G. Murray, President of HPT, made the following statement:
“HPT believes InterContinental Hotels Group is one of the leading hotel operating companies in the world. Everyone at HPT is very pleased to expand our business relationships with IHG.
“The efficient closing of this transaction within two months after our contract was signed represents two important milestones for HPT:
“First, this transaction includes the first investments by HPT outside the United States. Besides the hotel in San Juan, Puerto Rico, two of the hotels purchased today are located in Ontario, Canada.
“Second, this is the first combination of hotels purchased by HPT which includes primarily full service and luxury hotels. This transaction evidences that HPT’s business strategy to invest in combinations of hotels may be applied to all segments of the hospitality industry.”