<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) April 22, 1998
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American General Hospitality Corporation
----------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Maryland 1-11903 75-2648842
----------------- ----------- ----------------
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
5605 MacArthur Boulevard, Suite 1200, Irving, Texas 75038
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(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code (972) 550-6800
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(Former Name or Former Address, If Changed Since Last Report.)
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ITEM 5. OTHER EVENTS.
American General Hospitality Corporation, a Maryland corporation (the
"Registrant"), is filing this Current Report on Form 8-K in connection with the
Registrant's issuance of a press release on April 22, 1998, a copy of which is
attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) EXHIBITS.
Exhibit Description
- ------- -----------
99.1 Press Release dated April 22, 1998.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN GENERAL HOSPITALITY CORPORATION
(Registrant)
Date: April 27, 1998
By: /s/ Kenneth E. Barr
--------------------------------
Name: Kenneth E. Barr
Title: Executive Vice President, Chief
Financial Officer (Principal
Financial Officer), Secretary and
Treasurer
3
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EXHIBIT INDEX
Exhibit Description
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99.1 Press Release dated April 22, 1998.
4
<PAGE>
EXHIBIT 99.1
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AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
Steven D. Jorns Kenneth E. Barr Leslie Hunziker Claire Koeneman
President & CEO CFO General Inquiries Analyst Inquiries
(972) 550-6801 (972) 550-6804 (312) 266-7800 (312) 266-7800
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FOR IMMEDIATE RELEASE
Wednesday, April 22, 1998
AMERICAN GENERAL HOSPITALITY CORPORATION
FUNDS FROM OPERATIONS INCREASES 58%
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EXCEEDS ANALYST EXPECTATIONS
FIRST QUARTER HIGHLIGHTS
------------------------
. FFO PER SHARE INCREASES 58.3 PERCENT TO $0.76
. REVPAR INCREASES 9.0 PERCENT
. CLOSED ON $542 MILLION IN ACQUISITIONS
. EXPANDS UNSECURED CREDIT FACILITIES TO $600 MILLION
. ANNOUNCES MERGER WITH CAPSTAR HOTEL COMPANY
DALLAS, APRIL 22, 1998 -- AMERICAN GENERAL HOSPITALITY CORPORATION (NYSE: AGT),
a hotel real estate investment trust, today reported triple-digit growth in
funds from operations (FFO), up 200 percent before merger costs, for its first
quarter ended March 31, 1998.
<PAGE>
SUMMARY FINANCIAL HIGHLIGHTS
----------------------------
<TABLE>
<CAPTION>
First Quarter
---------------------------------------------
1998 1997 Change
---------------------------------------------
<S> <C> <C> <C>
Revenues $32,778 $9,903 231.0%
FFO/1/ $19,996 $6,675 199.6%
FFO per diluted share/OP unit(1) $ 0.76 $ 0.48 58.3%
</TABLE>
"The company continues to produce solid operating results which are fueled by
the successful implementation of our strategies to improve financial performance
through effective product, brand and operational repositioning," said Steven D.
Jorns, President and Chief Executive Officer. "These results are also a
function of strategically acquiring, below replacement cost, full-service hotels
in robust markets that possess strong upside potential," continued Jorns.
- ------------
/1/ Before merger costs
<PAGE>
OPERATIONAL HIGHLIGHTS
----------------------
ALL HOTELS
- ----------
<TABLE>
<CAPTION>
First Quarter
- ---------------------------------------------------------------------------------------------------
1998 REVPAR Occupancy Occupancy ADR ADR
vs. 1997 1998 vs. 1997 1998 vs. 1997
- ------------------ ------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
+9.0% 70.6% 1.3% $95.97 +7.6%
</TABLE>
In total, the 53 hotels owned at the end of the first quarter produced revenue
per available room (REVPAR) for the first quarter of $67.73, an increase of 9.0
percent. "The REVPAR growth the company has been successful in achieving is
comprised of a balanced improvement in occupancy and average daily rate (ADR),"
stated Jorns. ADR rose 7.6 percent to $95.97 for the three months, while
occupancy increased to 70.6 percent in the first quarter from 69.7 percent in
last year's first quarter. These results were achieved in light of the fact
that 10 of the company's hotels were in some stage of repositioning. If the
impact of the 10 hotels under repositioning was removed, the stabilized
portfolio achieved a 10.9 percent increase in REVPAR to $68.27, a 2.5 percent
increase in occupancy to 71.8 percent and an 8.1 percent increase in ADR.
13 IPO HOTELS
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<TABLE>
<CAPTION>
First Quarter
- -----------------------------------------------------------------------------------------------------
1998 REVPAR Occupancy Occupancy ADR ADR
vs. 1997 1998 vs. 1997 1998 vs. 1997
- ------------------ ------------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
+24.6% 71.6% +11.2% $90.89 +12.1%
</TABLE>
The 13 hotels acquired at the time of the company's initial public offering
posted remarkable operating results which far exceed industry averages. REVPAR
increased 24.6 percent to $65.04; occupancy increased 11.2 percent to 71.6
percent; and ADR increased 12.1 percent to $90.89. Ten of the 13 initial hotels
have benefitted from the company's brand, product and operational repositioning
strategies that convert underperforming assets into market leaders. "This
exemplifies the company's commitment to create value for its shareholders and we
expect that these hotels, as well as others completing repositioning programs,
will continue to post strong results during 1998," stated Jorns. Notable REVPAR
leaders of the 13 IPO hotels include the Wyndham San Jose Airport Hotel with a
72.2 percent REVPAR increase; the Holiday Inn Select San Diego with a 41.0
percent increase; the Crowne Plaza San Jose with a 38.9 percent increase; the
Wyndham Albuquerque Airport Hotel with a 35.1 percent increase; and the
Courtyard by Marriott Secaucus with a 24.3 percent increase.
<PAGE>
Hotels Under Renovation
- -----------------------
<TABLE>
<CAPTION>
First Quarter
- ----------------------------------------------------------------------------------------------------
1998 REVPAR Occupancy Occupancy ADR ADR
vs. 1997 1998 vs. 1997 1998 vs. 1997
- ------------------ ------------------- ------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
1.3% 65.3% (4.1)% $100.24 5.7%
</TABLE>
The 10 hotels which were in some stage of repositioning during the quarter still
produced a 1.3 percent increase in REVPAR despite rooms out of service and the
related renovation disruption. The growth in REVPAR during
renovation/repositioning is a direct result of the company's ability to
strategically time the renovation process during periods of lower demand in
order to minimize the impact on operations. The 10 hotels were able to increase
ADR by 5.7 percent in spite of a 4.1 percent decrease in occupancy. "We feel
that the hotels which are undergoing renovation/repositioning programs will
produce significant growth such as we have demonstrated with the 13 IPO hotels
that is balanced between ADR and occupancy once they complete the process", said
Jorns.
ACQUIRED 26 HOTELS IN THE FIRST QUARTER
---------------------------------------
During the first quarter of 1998, the company acquired interests in 26
additional hotels, the Potomac Partners Portfolio, the Holiday Inn O'Hare
International Airport, the FSA Portfolio and the Prime Hospitality Portfolio,
with purchase prices aggregating approximately $542 million. With these
acquisitions, the company nearly doubled the size of its hotel portfolio, gained
entry into several robust markets and strengthened its position in others.
These hotels reflect the company's strategies of acquiring properties in
locations with positive lodging fundamentals and expanding its geographic
diversity. Furthermore, the majority of the properties are appropriate
candidates to benefit from the company's proven product, operational and brand
repositioning strategies. The company has budgeted approximately $98.2 million
to be invested in these properties during 1998, 1999 and 2000.
Potomac Partners Portfolio
- --------------------------
<TABLE>
<CAPTION>
First Quarter
- -----------------------------------------------------------------------------------------------------
1998 REVPAR Occupancy Occupancy ADR ADR
vs. 1997 1998 vs. 1997 1998 vs. 1997
- ------------------ ------------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
10.9% 57.9% +4.6% $84.50 +6.0%
</TABLE>
<PAGE>
The 4 Potomac hotels, purchased January 22, 1998, also produced strong results
for the quarter. REVPAR increased to $48.93, a 10.9 percent increase quarter
over quarter. Occupancy increased 4.6 percent to 57.9 percent and ADR increased
6.0 percent to $84.50. The strong performance was led by the Holiday Inn
Annapolis, which posted a REVPAR increase of 21.6 percent.
HOLIDAY INN O'HARE INTERNATIONAL AIRPORT
- ----------------------------------------
<TABLE>
<CAPTION>
First Quarter
- -----------------------------------------------------------------------------------------------------
1998 REVPAR Occupancy Occupancy ADR ADR
vs. 1997 1998 vs. 1997 1998 vs. 1997
- ------------------ ------------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
+6.9% 73.3% (5.4)% $100.27 +13.0%
</TABLE>
The Holiday Inn O'Hare International Airport hotel, acquired February 3, 1998,
is a 507-room hotel and convention facility in Rosemont, IL. This property
posted a 6.9 percent increase in REVPAR to $73.48, a 13.0 percent increase in
ADR to $100.27, and a slight decrease in occupancy of 5.4 percent to 73.3
percent. The company plans to invest approximately $7 million to renovate the
existing guest rooms and approximately $19 million for the addition of 253 guest
rooms.
FSA PORTFOLIO
- -------------
<TABLE>
<CAPTION>
First Quarter
- -----------------------------------------------------------------------------------------------------
1998 REVPAR Occupancy Occupancy ADR ADR
vs. 1997 1998 vs. 1997 1998 vs. 1997
- ------------------ ------------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
+9.3% 77.0% +3.2% $95.79 +5.8%
</TABLE>
The 13 FSA hotels, acquired on February 13, 1998, generated a 9.3 percent
increase in REVPAR to $73.73 in spite of weather-related issues affecting the
performance of the seven FSA Florida properties. ADR increased 5.8 percent to
$95.79, and occupancy increased 3.2 percent to 77.0 percent. The FSA hotels
provide the company with properties that were purchased below replacement cost
and are in markets with high barriers to entry. The company plans to invest
approximately $33 million to further upgrade and reposition the hotels.
<PAGE>
Prime Hospitality Portfolio
<TABLE>
<CAPTION>
First Quarter
- -----------------------------------------------------------------------------------------------------
1998 REVPAR Occupancy Occupancy ADR ADR
vs. 1997 1998 vs. 1997 1998 vs. 1997
- ------------------ ------------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
(0.6)% 68.0% (3.3)% $101.53 +2.8%
</TABLE>
The 8 Prime hotels, acquired on January 8, 1998, represent the company's first
unaffiliated lessee relationship. The eight hotels in this portfolio did not
achieve the operating results that were anticipated with REVPAR declining 0.6
percent quarter over quarter, primarily due to the two Las Vegas hotels; the
Crowne Plaza Las Vegas and the St. Tropez Suites Las Vegas. If the two Las
Vegas hotels were excluded from the operating results of the Prime Portfolio,
REVPAR would reflect an increase of 7.9 percent, ADR would have increased by 8.2
percent and occupancy would have decreased slightly by 0.2 percent.
Florida
- -------
<TABLE>
<CAPTION>
First Quarter
- -----------------------------------------------------------------------------------------------------
1998 REVPAR Occupancy Occupancy ADR ADR
vs. 1997 1998 vs. 1997 1998 vs. 1997
- ------------------ ------------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
+4.8% 76.3% (3.7)% $104.21 +8.8%
</TABLE>
In spite of the fact that Florida experienced its second wettest February since
1895 interspersed with several tornadoes throughout the state, the 11 properties
the company owns in Florida were able to produce a 4.8 percent increase in
REVPAR for the quarter. While the Clearwater Beach, Ft. Lauderdale and Tampa
area hotels produced favorable REVPAR results, the Key Largo market experienced
large declines in REVPAR for the quarter as a result of significant rainfall and
a tornado touchdown creating national news. The news story coupled with the
heavy rains resulted in canceled and postponed reservations in the Key Largo
hotels. As a result of this extraordinary event, these hotels, the Westin
Resort Key Largo and the Howard Johnson Resort Key Largo, posted a 12.3 percent
and a 16.4 percent decline in REVPAR, respectively.
EXPANDS UNSECURED CREDIT FACILITIES TO $600 MILLION
---------------------------------------------------
On February 13, 1998, the company replaced its $300 million credit facility with
two unsecured credit facilities in the aggregate amount of $600 million. The
new credit facilities were used to fund the FSA acquisition and will be used in
the future principally to fund the company's hotel
<PAGE>
acquisition and renovation programs. The unsecured nature of the facility allows
the company great balance sheet flexibility and permits it to close transactions
without the cost or delay of recording mortgages and the related additional
legal expenses typically associated with secured facilities. In addition, the
terms of the new facility are improved by, among other things, reducing its
interest rate to a variable rate starting at LIBOR plus 140 basis points. "We
are gratified that our bankers have upgraded the facility to an unsecured
status, reflecting their confidence in our proven ability to successfully
implement our business strategy," said Jorns.
American General Hospitality's banking syndicate is led by Societe Generale,
Southwest Agency, Bank One, Texas, N.A., Bank of Nova Scotia and Wells Fargo
Bank, National Association.
ANNOUNCES MERGER WITH CAPSTAR HOTEL COMPANY
-------------------------------------------
On March 15, 1998, American General Hospitality Corporation and CapStar Hotel
Company entered into a definitive agreement pursuant to which the parties
agreed, subject to stockholder approval and other conditions and covenants, to
merge as equals. When completed, the merged companies will operate as a REIT
and a C-Corporation. The REIT, MeriStar Hospitality Corporation, will own 110
hotels with 27,739 rooms in 30 states and Canada, and have an approximate $3
billion total market capitalization. MeriStar Hospitality will have a
relationship with the C-Corporation, MeriStar Hotels and Resorts, Inc., a hotel
operations and management business to be spun off from CapStar, forming one of
the largest independent hotel management companies in the nation with 201 hotels
containing 42,441 guest rooms in 32 states, the District of Columbia, the U.S.
Virgin Islands and Canada.
"This is a significant step to further strengthen our company, fuel additional
growth and create new rewards for our shareholders," commented Jorns. "We are
proud of everything American General Hospitality has accomplished to date, and
we are excited about our future opportunities".
American General Hospitality Corporation is a publicly traded real estate
investment trust (REIT) with a portfolio of 66 hotels, owned and pending
acquisitions, in 22 states containing more than 15,100 guest rooms. Operating
in major markets, the company is focused on creating shareholder value through
acquisitions, and product, operational and brand repositioning.
Note: Statements in this press release which are not strictly historical are
"forward-looking" statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Forward-
looking statements involve known and unknown risks, which may cause the
company's actual results in the future to differ materially from expected
results. These risks include, among others, competition within the lodging and
contract service industries; the relationship between supply and demand for
hotel rooms and vacation ownership resorts; the effects of economic conditions;
issues associated with the acquisition and renovation of existing hotels and the
development of new hotels; operating risks; the historical cyclicality of the
lodging industry; risks associated with the dependence on franchisors of the
company's lodging properties; and the
<PAGE>
availability of capital to finance planned growth, as described in the company's
filings with the Securities and Exchange Commission.
FOR MORE INFORMATION ON AMERICAN GENERAL HOSPITALITY CORPORATION, VIA FACSIMILE
AT NO COST, SIMPLY DIAL 1-800-PRO-INFO AND ENTER THE COMPANY TICKER AGT.
-TABLES FOLLOW-
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AMERICAN GENERAL HOSPITALITY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FIRST QUARTER ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Revenues
Participating Lease revenue.................. $31,248,960 $ 9,508,365
Office building rental income................ 817,693
Interest income.............................. 710,874 394,713
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Total revenue........................... 32,777,527 9,903,078
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Expenses
Depreciation................................. 8,603,977 1,931,390
Amortization................................. 442,253 197,214
Real estate and personal property taxes and
property insurance.......................... 3,187,435 1,250,117
Office building operating expenses........... 370,090
General and administrative................... 757,246 502,391
Ground lease expense......................... 626,745 314,462
Amortization of unearned officers'
compensation................................ 52,988 22,187
Merger costs................................. 2,100,000
Interest expense............................. 7,344,834 942,000
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Total expenses.......................... 23,485,568 5,159,761
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Income before minority interest................... 9,291,959 4,743,317
Minority interest................................. 1,197,190 689,836
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Net income applicable to common stockholders...... $ 8,094,769 $ 4,053,481
=========== ===========
Income before minority interest and merger costs.. $11,391,959 $ 4,743,317
Minority interest................................. 1,467,757 689,836
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Income applicable to common stockholders
before merger costs.............................. $ 9,924,202 $ 4,053,481
=========== ===========
Income per basic common share before merger costs. $ 0.44 $ 0.34
=========== ===========
Net income per basic common share................. $ 0.35 $ 0.34
=========== ===========
Weighted average number of basic shares of Common
Stock outstanding................................ 22,807,034 11,815,600
=========== ===========
Income per diluted common share before merger
costs............................................ $ 0.43 $ 0.34
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Net income per diluted common share............... $ 0.35 $ 0.34
=========== ===========
Weighted average number of diluted shares
of Common Stock outstanding...................... 23,032,863 11,916,503
=========== ===========
FUNDS FROM OPERATIONS (FFO) CALCULATION:
Income before minority interest and merger costs.. $11,391,959 $ 4,743,317
Depreciation...................................... 8,603,977 1,931,390
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FFO before merger costs........................... $19,995,936 $ 6,674,707
=========== ===========
Income before minority interest................... $ 9,291,959 $ 4,743,317
Depreciation...................................... 8,603,977 1,931,390
----------- -----------
FFO............................................... $17,895,936 $ 6,674,707
=========== ===========
FFO per basic common share/OP unit before merger
costs............................................ $ 0.76 $ 0.49
=========== ===========
FFO per basic common share/OP unit................ $ 0.68 $ 0.49
=========== ===========
Weighted average number of basic shares of Common
Stock and OP units outstanding................... 26,186,895 13,712,596
=========== ===========
FFO per diluted common share/OP unit before
merger costs..................................... $ 0.76 $ 0.48
=========== ===========
FFO per diluted common share/OP unit.............. $ 0.68 $ 0.48
=========== ===========
Weighted average number of basic shares of Common
Stock and OP units outstanding................... 26,412,725 13,813,499
=========== ===========
Dividends/distributions declared per share/OP unit $ 0.4275 $ 0.4075
</TABLE>
