Prime Hospitality Corp. (NYSE:PDQ), announced today that it has entered into an agreement with Hospitality Properties Trust (NYSE:HPT) for management of 24 AmeriSuites hotels and to manage and re-brand 12 additional hotels into the Prime Hotels & Resorts family under a combined contract.
The 24 AmeriSuites hotels encompass the hotels that Prime had defaulted on in lease payments to HPT on July 1, 2003. Prime has continued to manage these hotels throughout negotiations. The 12 hotels being converted to the Prime Hotels & Resorts brand were previously leased by Wyndham International, Inc. (AMEX:WBR) until default on April 1, 2003. Afterwards, HPT terminated Wyndham's occupancy and assigned management to a third party.
The management agreement covers all 36 hotels and will run for 15 years with Prime having two consecutive renewal options of 15 years each for all hotels. The 36 hotels contain 5,250 rooms and are located in 19 states. The agreement between Prime and HPT is effective on January 1, 2004 and February 1, 2004, for AmeriSuites and Prime Hotels & Resorts respectively. A listing of these hotels including locations, number of rooms and available meeting space is attached hereto.
As part of the agreement, HPT will receive an owner's priority return on $26 million/year plus a share of operating results from these hotels. Payment of royalty and management fees due to Prime will be subordinated to the priority return of HPT, and payment of the $26 million/year priority return will be guaranteed by Prime under a limited guarantee.
Also, as part of the agreement, HPT will provide $25 million during the first two years to pay for re-branding and other capital improvements, primarily for the 12 hotels converting to Prime Hotels & Resorts.
"The fact that we were not only able to maintain the management and brand affiliation of the 24 AmeriSuites, but add 12 Prime Hotels & Resorts franchises shows our commitment to our brands. In addition, we are pleased to continue our relationship with HPT and appreciate their significant investment in our brand strategy," said A.F. Petrocelli, Chairman & CEO of Prime. "With 15 Prime Hotels now scheduled for conversion next year along with the one currently open, we have begun to grow this new brand on a national scale."
Prime Hospitality Corp. is one of the nation's premiere lodging companies. Inclusive to this agreement, Prime owns, manages and franchises more than 260 hotels throughout North America.
LISTING OF 24 AMERISUITES HOTELS OWNED BY HPT:
Location No. of Suites Meeting Space
Tempe, AZ 125 1,600 sq.ft.
Tucson, AZ 122 1,600
Colorado Springs, CO 126 1,586
Orlando, FL 135 1,600
Tampa, FL 59 2,500
Atlanta, GA 135 1,600
Gwinnett, GA 125 1,586
Smyrna, GA 125 1,612
Fort Wayne, IN 122 1,222
Indianapolis, IN 135 1,586
Overland Park, KS 135 1,586
Utica, MI 124 1,600
Kansas City, MO 135 1,586
Mt. Laurel, NJ 125 1,600
Charlotte, NC 124 1,580
Pine Knoll Shores, NC 111 780
Columbus, OH 125 1,586
Hendersonville, TN 100 1,612
Austin, TX 122 1,586
Dallas, TX 125 1,600
El Paso, TX 113 1,586
San Antonio Riverwalk, TX 132 2,028
Chantilly, VA 124 1,200
Sterling, VA 135 1,600
24 hotels in 13 states 2,929 suites 38,022 sq.ft.
LISTING OF 12 HOTELS OWNED BY HPT WHICH WILL BE RE-BRANDED AS PRIME
HOTELS & RESORTS:
Location No. of rooms Meeting Space
Chandler, AZ 159 2,050 sq.ft.
North Phoenix, AZ 166 2,318
Phoenix Airport, AZ 210 2,895
San Diego, CA 180 4,095
Sunnyvale, CA 180 2,200
Atlanta, GA 143 2,200
Naperville, IL 143 2,292
Bloomington, MN 209 5,532
Nashville, TN 190 3,620
Salt Lake City, UT 381 15,000
Bothell, WA 166 4,095
Seattle, WA 204 4,227
12 hotels in 8 states 2,321 rooms 48,229 sq.ft.
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