SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): August 22, 2000
CNL HOSPITALITY PROPERTIES, INC.
(Exact Name of Registrant as Specified in Charter)
Florida 0-24097 59-3396369
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
450 South Orange Avenue 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 650-1000
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Item 2. Acquisition or Disposition of Assets.
Courtyard(R) by Marriott(R) located in Alpharetta, Georgia, Residence
Inn(R) by Marriott(R) located in Salt Lake City, Utah and three TownePlace
Suites(R) by Marriott(R) Properties located in Mount Laurel, New Jersey,
Scarborough, Maine and Tewksbury, Massachusetts. On August 22, 2000, the Company
purchased five Properties for an aggregate purchase price of approximately $52
million. The Properties are a Courtyard by Marriott located in Alpharetta,
Georgia (the "Alpharetta Property"), a Residence Inn by Marriott located in Salt
Lake City, Utah, in the community of Cottonwood (the "Cottonwood Property") and
three TownePlace Suites Properties located in each of Mount Laurel, New Jersey
(the "Mount Laurel Property"), Scarborough, Maine (the "Scarborough Property")
and Tewksbury, Massachusetts (the "Tewksbury Property").
The Company acquired the Alpharetta Property for $13,877,000 from
Courtyard Management Corporation, the Cottonwood Property for $14,573,000 from
Residence Inn by Marriott, Inc. and the Mount Laurel, Scarborough and Tewksbury
Properties for $7,711,000, $7,160,000 and $9,050,000, respectively, from
TownePlace Management Corporation. In connection with the purchase of the five
Properties, the Company, as lessor, entered into five separate, long-term lease
agreements. The tenant of the Properties is the same unaffiliated lessee. The
leases on all five Properties are cross-defaulted. The general terms of the
lease agreements are described in the section of the Prospectus entitled
"Business -- Description of Property Leases." The principal features of the
leases are as follows:
o The initial term of each lease expires in approximately 15 years.
o At the end of the initial lease term, the tenant will have two
consecutive renewal options of ten years.
o The leases require minimum rent payments as follows:
Minimum
Property Location Annual Rent
------------------------- ------------------- ---------------
Alpharetta Property Alpharetta, GA $1,387,700
Cottonwood Property Salt Lake City, UT 1,457,300
Mount Laurel Property Mount Laurel, NJ 771,100
Scarborough Property Scarborough, ME 716,000
Tewksbury Property Tewksbury, MA 905,000
o A security deposit for each of the Properties has been retained by the
Company as security for the tenant's obligations under the leases as
follows:
Alpharetta Property $693,850
Cottonwood Property 728,650
Mount Laurel Property 385,550
Scarborough Property 358,000
Tewksbury Property 452,500
o The tenant of the five Properties has established an FF&E Reserve for
each Property which will be used for the replacement and renewal of
furniture, fixtures and equipment relating to the hotel Properties.
Deposits to the FF&E Reserve are made once every four weeks as follows:
(i) for the Alpharetta Property, 3% of gross receipts for the first
lease year; 4% of gross receipts for the second lease year; and 5% of
gross receipts every lease year thereafter, (ii) for the Cottonwood
Property, 2% of gross receipts for the first lease year; 4% of gross
receipts for the second lease year; and 5% of gross receipts every
lease year thereafter and (iii) for the Mount Laurel, Scarborough and
Tewksbury Properties, 4% of gross receipts for the first lease year; 5%
of gross receipts for the second lease year; and 6% of gross receipts
every lease year thereafter. Funds in the FF&E Reserve and all property
purchased with funds from the FF&E Reserve shall be paid, granted and
assigned to the Company as additional rent.
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o Marriott International, Inc. has entered into an agreement with the
tenant in which Marriott International, Inc. has agreed to advance and
loan to the tenant any amounts needed to pay minimum rent under the
leases (the "Liquidity Facility Agreement"). The Liquidity Facility
Agreement terminates on the earlier of the end of the fourth lease year
or at such time as the net operating income from the Properties exceeds
minimum rent due under the leases by 25% for any trailing 12-month
period. The maximum amount of the liquidity facility is $5,237,100.
Upon acquisition of the Courtyard Overland Park Property and the three
SpringHill Suites(R)by Marriott(R)Properties located in Centreville,
Virginia, and Charlotte and Raleigh, North Carolina, as described in
the section of the Prospectus entitled "Business -- Pending
Investments," the maximum amount of the liquidity facility will
increase to $10,017,000 and the agreement will cover minimum rent
payments for the pending investments listed above, in addition to these
five Properties. From this time, net operating income from all nine
properties will be pooled in determining whether the properties'
aggregate net operating income exceeds the aggregate minimum rent due
under the leases by 25%. The tenant has assigned its rights to receive
advances under the Liquidity Facility Agreement to the lessor.
The estimated federal income tax basis of the depreciable portion of
the five Properties is as follows:
Alpharetta Property $12,280,000
Cottonwood Property 12,896,000
Mount Laurel Property 6,824,000
Scarborough Property 6,336,000
Tewksbury Property 8,009,000
The Alpharetta Property, which opened in January 2000, is a Courtyard
by Marriott located in Alpharetta, Georgia. The Alpharetta Property includes 153
guest rooms, two meeting rooms with approximately 1,100 square feet, an indoor
pool and spa, an exercise room and a restaurant and lounge. The property is
located approximately 26 miles north of downtown Atlanta. Other lodging
facilities located in proximity to the Alpharetta Property include an
AmeriSuites, a Hampton Inn & Suites, a Residence Inn by Marriott, a SpringHill
Suites by Marriott and a Sumner Suites.
The Cottonwood Property, which opened in August 1999, is a Residence
Inn by Marriott located in Salt Lake City, Utah, in the community of Cottonwood.
The Cottonwood Property includes 144 guest rooms, a 690 square foot meeting
room, an outdoor pool and spa, a SportCourt(R) and an exercise room. Other
lodging facilities located in proximity to the Cottonwood Property include a
Candlewood Suites, a Homewood Suites and a Residence Inn by Marriott.
The Mount Laurel Property, which opened in November 1999, is a
TownePlace Suites by Marriott located in Mount Laurel, New Jersey. The Mount
Laurel Property includes 95 guest rooms, an outdoor swimming pool and an
exercise room. The property is located within 15 miles of downtown Philadelphia,
Pennsylvania. Other lodging facilities located in proximity to the Mount Laurel
Property include a Courtyard by Marriott and a Fairfield Inn(R) by Marriott(R).
The Scarborough Property, which opened in June 1999, is a TownePlace
Suites by Marriott located in Scarborough, Maine, which is a suburb of Portland.
The Scarborough Property includes 95 guest rooms, an outdoor swimming pool and
an exercise room. Other lodging facilities located in proximity to the
Scarborough Property include an AmeriSuites, a Comfort Inn, a Fairfield Inn by
Marriott, a Hampton Inn, a Residence Inn by Marriott and another TownePlace
Suites by Marriott.
The Tewksbury Property, which opened in July 1999, is a TownePlace
Suites by Marriott located in Tewksbury, Massachusetts. The Tewksbury Property
includes 95 guest rooms, an outdoor swimming pool and an exercise room. The
property is located approximately 25 miles northwest of downtown Boston. Other
lodging facilities located in proximity to the Tewksbury Property include a
Hawthorn Suites, a Homewood Suites, a Residence Inn by Marriott and another
TownePlace Suites by Marriott.
<PAGE>
The average occupancy rate, the average daily room rate and the revenue
per available room for the periods the hotels have been operational are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Revenue
Average Average per
Occupancy Daily Available
Property Location Year Rate Room Rate Room
------------------------- ------------------- ----------- ------------- -------------- ------------
Alpharetta Property Alpharetta, GA **2000 50.60% $96.83 $54.72
Cottonwood Property Salt Lake City, UT *1999 29.20% $85.10 $27.00
**2000 70.70% 90.97 66.90
Mount Laurel Property Mount Laurel, NJ *1999 26.10% $55.65 $15.04
**2000 68.60% 67.72 48.13
Scarborough Property Scarborough, ME *1999 65.70% $70.38 $47.44
**2000 64.20% 62.13 41.22
Tewksbury Property Tewksbury, MA *1999 72.60% $83.16 $62.60
**2000 83.00% 84.58 72.64
</TABLE>
* Data for the Cottonwood Property represents the period August 11, 1999
through December 31, 1999, data for the Mount Laurel Property
represents the period November 22, 1999 through December 31, 1999, data
for the Scarborough Property represents the period June 25, 1999
through December 31, 1999 and data for the Tewksbury Property
represents the period July 15, 1999 through December 31, 1999.
** Data for the Alpharetta Property represents the period January 7, 2000
through August 11, 2000 and data for the Cottonwood, Mount Laurel,
Scarborough and Tewksbury Properties represents the period January 1,
2000 through August 11, 2000.
The Company believes that the results achieved by the Properties, as
shown in the table above, may or may not be indicative of their long-term
operating potential, as the Properties opened between June 1999 and January
2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf by
the undersigned thereunto duly authorized.
CNL HOSPITALITY PROPERTIES, INC.
Dated: September 5, 2000 By: /s/ Robert A. Bourne
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ROBERT A. BOURNE, President
