Hospitality Properties Trust Sells 18 Homestead Hotels For $205.35 Million
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Hospitality Properties Trust Sells 18 Homestead Hotels For $205.35 Million
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Category: North America & West Indies / Carribean islands
This is a press release selected by our editorial committee and published online for free on 2007-07-27
Hospitality Properties Trust (NYSE: HPT) today announced that it
has sold 18 Homestead Studio Suites hotels (2,399 rooms) for $205.35
million. HPT expects to recognize a gain on this sale of approximately
$95 million.
HPT purchased these 18 hotels in 1999 from Homestead Village, Inc.
(which was then a publicly owned company) for $145 million. The
expected gain reflects depreciation expense realized by HPT since
1999. Simultaneous with this purchase, these hotels were leased by HPT
to a subsidiary of that seller for minimum rent of $15,960,000/year
plus percentage rent based upon increases in gross revenues at the
hotels. In 2006, the percentage rent received by HPT for these hotels
was approximately $509,000.
In 2001, an entity affiliated with Blackstone Group (NYSE: BX)
purchased Homestead Village, Inc. and HPT's tenant for these hotels.
On June 11, 2007, Blackstone sold Homestead Village, Inc. and the
tenant entity together with a larger group of hotels to an affiliate
of the Lightstone Group, a privately owned entity. This sale resolves
outstanding disputes between HPT and Lightstone. Seventeen of these
hotels were purchased by an affiliate of Lightstone for approximately
$192.25 million. One hotel was purchased by HRPT Properties Trust
(NYSE: HRP) for approximately $13.1 million, and this one hotel will
be short term leased by an affiliate of Lightstone until that hotel
property may be redeveloped as part of a larger project including
adjacent property currently owned by HRPT Properties Trust.
HPT intends to use the net proceeds from the sale of these hotels
to reduce amounts outstanding under its revolving bank credit
agreement.
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