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): June 1, 2000
CNL HOSPITALITY PROPERTIES, INC.
(Exact Name of Registrant as Specified in Charter)
<TABLE>
<CAPTION>
<S> <C>
Florida 333-67787 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)
</TABLE>
Registrant's telephone number, including area code: (407) 650-1000
<PAGE>
Item 2. Acquisition or Disposition of Assets.
Wyndham Portfolio. On June 1, 2000, the Company acquired two hotel
Properties. The Properties are a Wyndham Hotel located in Billerica,
Massachusetts, a suburb of Boston (the "Wyndham Billerica Property"), and a
Wyndham Hotel located in Denver, Colorado, in the Denver Tech Center (the
"Wyndham Denver Tech Center Property").
The Company acquired the Wyndham Billerica Property for $25,092,000
from PAH Billerica Realty Company, LLC and the Wyndham Denver Tech Center
Property for $18,353,000 from WII Denver Tech, LLC. In connection with the
purchase of the two Properties, the Company, as lessor, entered into two
separate, long-term lease agreements. The leases on both 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 is approximately 15 years.
o At the end of the initial lease term, the tenant will have three
consecutive renewal options of five years each.
o The leases require minimum rent payments to the Company of $2,509,200
per year for the Wyndham Billerica Property and $1,835,300 per year for
the Wyndham Denver Tech Center Property.
o Minimum rent payments will increase to $2,571,930 per year for the
Wyndham Billerica Property and $1,881,183 per year for the Wyndham
Denver Tech Center Property after the first lease year.
o In addition to minimum rent, for each calendar year, the leases require
percentage rent equal to 10% of the aggregate amount of all revenues
combined, for the Wyndham Billerica and the Wyndham Denver Tech Center
Properties, in excess of $13,683,000.
o A security deposit equal to $1,254,600 for the Wyndham Billerica
Property and $917,650 for the Wyndham Denver Tech Center Property has
been retained by the Company as security for the tenant's obligations
under the leases.
o Management fees payable to Wyndham International, Inc., for operation
of the Wyndham Billerica and Wyndham Denver Tech Center Properties are
subordinated to minimum rents due to the Company.
o The tenant of the Wyndham Billerica and Wyndham Denver Tech Center
Properties has established an FF&E Reserve. Deposits to the FF&E
Reserve are made monthly as follows: 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. 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.
In connection with the acquisition of these two Properties, the Company
may be required to make an additional payment (the "Earnout Amount") of up to
$2,471,500 if certain earnout provisions are achieved by June 1, 2003. After
June 1, 2003, the Company will no longer be obligated to make any payments under
the earnout provision. The Earnout Amount is equal to the difference between
earnings before interest, taxes, depreciation and amortization expense adjusted
by the earnout factor (7.33), and the initial purchase price. Rental income will
be adjusted upward in accordance with the lease agreements for any such amount
paid.
The federal income tax basis of the depreciable portion of the Wyndham
Billerica Property and the Wyndham Denver Tech Center Property is approximately
$21,500,000 and $14,700,000, respectively.
The Wyndham Billerica Property, which opened in May 1999, is a Wyndham
Hotel with a new prototype design located in Billerica, Massachusetts, a suburb
of Boston. The Wyndham Billerica Property has 210 guest rooms, including 14
suites, 4,346 square feet of meeting space, a 64-seat restaurant, a 33-seat
lounge, a library, an indoor pool and a fitness center and spa. The Property is
located within Technology Park, a 1.8 million square-foot commercial park. The
hotel is within a four-mile radius of approximately 3.7 million square feet of
office, light industrial, and research and development space. The Property is
accessible by a variety of local and interstate highways, and is less than 25
miles from Logan International Airport. The Billerica area is home to a number
of high-technology companies and serves as the world headquarters for a major
computer technology company. Billerica is approximately 26 miles from Boston and
its numerous historical sites, including The Freedom Trail, Paul Revere's House,
Old North Church, Faneuil Hall and the newly restored U.S.S. Constitution, the
U.S. Navy's oldest commissioned ship. Other lodging facilities located in
proximity to the Wyndham Billerica Property include a Courtyard by Marriott, a
Doubletree Hotel, a Homewood Suites, a Marriott, a Renaissance(R) Hotel and a
Wyndham Garden Hotel.
The Wyndham Denver Tech Center Property, which opened in November 1999,
is a Wyndham Hotel with a new prototype design located in Denver, Colorado. The
Wyndham Denver Tech Center Property has 180 guest rooms, including 18 suites,
4,040 square feet of meeting space, a 64-seat restaurant, a 33-seat lounge, a
library, an indoor pool and a fitness center and spa. The Property is located
within the Denver Tech Center, a 12 million square-foot high-technology park
with approximately 1,000 companies and more than 30,000 employees. The Center is
currently under expansion and several major companies are acquiring additional
office space near the Center. Four other office parks are within seven miles of
the hotel, including Greenwood Plaza, Inverness Business Park, Waterview
Development and Meridian International Business Center. A fifth office park,
ParkRidge Corporate Center, is currently under construction. In total, more than
21 million square feet of office space is within a seven-mile radius of the
hotel. The Property is accessible by a variety of local and interstate highways,
and is approximately ten miles from downtown Denver and approximately 25 miles
from Denver International Airport. According to Hospitality Valuation Services
(HVS) data, Denver is known as a hub for cable operations and the
telecommunications industry. Several cable, satellite broadcast and telephone
companies, as well as investment firms, have facilities in the southern region
of Denver. Other lodging facilities located in proximity to the Wyndham Denver
Tech Center Property include a Hyatt Regency, a Marriott, an Embassy Suites, a
Sheraton Hotel, a Hilton and a Summerfield Suites. 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>
Wyndham Billerica Property Wyndham Denver Tech Center Property
------------------------------------------------------ -----------------------------------------------------
Average Average Revenue Average Average Revenue
Occupancy Daily Room per Available Occupancy Daily Room per Available
Year Rate Rate Room Rate Rate Room
-------------- -------------- -------------- ---------------- -------------- -------------- ----------------
*1999 60.25% $109.38 $65.89 31.17% $76.40 $23.76
**2000 65.79% 117.76 77.47 55.04% 84.23 46.36
</TABLE>
* Data for the Wyndham Billerica Property represents the period May 15,
1999 through December 31, 1999 and data for the Wyndham Denver Tech
Center Property represents the period November 15, 1999 through
December 31, 1999.
** Data for 2000 represents the period January 1, 2000 through March 31,
2000.
The Company believes that the results achieved by the Properties, as
shown in the table above, are not indicative of their long-term operating
potential, as the Properties had only been open since May and November 1999,
respectively.
Wyndham Brands. The brand, Wyndham Hotels & Resorts(R), is part of
Wyndham International, Inc.'s portfolio of lodging brands. According to
Wyndham's company overview, Wyndham International. Inc. is one of the world's
largest hospitality and lodging companies serving business and leisure travelers
with hotels and resorts located in major metropolitan business centers and
leading vacation markets in the United States, Canada, the Caribbean, Mexico and
Europe. According to Wyndham data, as of February 2, 2000, Wyndham
International, Inc. owns, leases, manages and franchises more than 300 hotels
totalling more than 70,000 guest rooms.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro forma financial information.
See Index to Pro Forma Financial Statements on page 3.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Page
----
<S> <C>
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of March 31, 2000 5
Pro Forma Consolidated Statement of Earnings for the quarter ended March 31, 2000 6
Pro Forma Consolidated Statement of Earnings for the year ended December 31, 1999 7
Notes to Pro Forma Consolidated Financial Statements for the quarter ended
March 31, 2000 and the year ended December 31, 1999 8
</TABLE>
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Consolidated Balance Sheet of CNL
Hospitality Properties, Inc. and subsidiaries (the "Company") gives effect to
(i) the receipt of an initial capital contribution of $200,000 from the Advisor,
$338,986,655 in gross offering proceeds from the sale of 33,900,805 shares of
common stock and the sale of warrants for the period from inception through
March 31, 2000, and the application of such funds to purchase three properties,
to acquire an 89 percent interest in a limited liability company which owns one
property, to invest in an unconsolidated subsidiary which owned seven properties
as of March 31, 2000, to place deposits on eight additional properties, to
redeem 27,490 shares of common stock pursuant to the Company's redemption plan,
and to pay offering expenses, acquisition fees and miscellaneous acquisition
expenses, (ii) the receipt of $31,398,095 in gross offering proceeds from the
sale of 3,139,810 additional shares for the period April 1, 2000 through June 1,
2000, (iii) the application of such funds to pay offering expenses, acquisition
fees and miscellaneous acquisition expenses, all as reflected in the pro forma
adjustments described in the related notes. The Unaudited Pro Forma Consolidated
Balance Sheet as of March 31, 2000, includes the transactions described in (i)
above, from its historical balance sheet, adjusted to give effect to the
transactions in (ii) and (iii) above as if they had occurred on March 31, 2000.
The Unaudited Pro Forma Consolidated Statements of Earnings for the
quarter ended March 31, 2000, includes the historical operating results of the
properties described in (i) above from the date of their acquisitions plus
operating results from (A) the later of (1) the date the property became
operational or (2) January 1, 1999, to (B) the earlier of (1) the date the
property was acquired by the Company or its unconsolidated subsidiary or (2) the
end of the pro forma period presented.
This pro forma consolidated financial information is presented for
informational purposes only and does not purport to be indicative of the
Company's financial results or condition if the various events and transactions
reflected therein had occurred on the dates, or been in effect during the
periods, indicated. This pro forma consolidated financial information should not
be viewed as indicative of the Company's financial results or conditions in the
future.
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
-------------- --------------- --------------
<S> <C>
Land, buildings and equipment on operating leases $ 111,449,355 $46,277,433 (a) $157,726,788
Investment in unconsolidated subsidiary 37,878,065 -- 37,878,065
Cash and cash equivalents 142,143,157 (17,167,823 )(a) 124,975,334
Restricted cash 409,538 -- 409,538
Certificate of deposit 5,000,000 -- 5,000,000
Receivables 427,240 -- 427,240
Prepaid expenses 23,247 -- 23,247
Dividends receivable 1,280,395 -- 1,280,395
Loan costs 43,859 -- 43,859
Accrued rental income 78,276 -- 78,276
Other assets 10,388,879 (985,069 )(a) 9,403,810
---------------- -------------- --------------
$309,122,011 $28,124,541 $337,246,552
================ ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Note payable $ 10,000,000 $ -- $10,000,000
Accounts payable and accrued expenses 892,783 (385,920 ) (a) 506,863
Distribution payable 174,178 -- 174,178
Due to related parties 506,490 (375,786 ) (a) 130,704
Security deposits 5,042,054 -- 5,042,054
Rents paid in advance 474,912 -- 474,912
---------------- -------------- --------------
Total liabilities 17,090,417 (761,706 ) 16,328,711
---------------- -------------- --------------
Stockholders' equity:
Preferred stock, without par value.
Authorized and unissued 3,000,000 shares -- -- --
Excess shares, $.01 par value per share.
Authorized and unissued 63,000,000 shares -- -- --
Common stock, $.01 par value per share.
60,000,000 authorized shares; issued and
outstanding 33,873,315 shares; issued and
outstanding 37,013,125 shares, as adjusted 338,733 31,398 (a) 370,131
Capital in excess of par value 299,660,797 28,854,849 (a) 328,515,646
Accumulated distributions in excess of
net earnings (5,043,063 ) -- (5,043,063 )
Minority interest distributions in excess of
contributions and accumulated earnings (2,924,873 ) -- (2,924,873 )
---------------- -------------- --------------
Total stockholders' equity 292,031,594 28,886,247 320,917,841
---------------- -------------- --------------
$309,122,011 $ 28,124,541 $337,246,552
================ ============== ==============
</TABLE>
See accompanying notes to unaudited pro
forma consolidated financial statements.
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
QUARTER ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------ -------------- --------------
<S> <C>
Revenues:
Rental income from
operating leases $ 2,725,894 $ 1,810,208 (1) $ 4,536,102
FF&E reserve income 159,237 132,163 (2) 291,400
Dividend income 1,769,209 -- 1,769,209
Interest and other income 926,817 (253,758 )(4) 673,059
-------------
---------------- ----------------
5,581,157 1,688,613 7,269,770
------------- ---------------- ----------------
Expenses:
Interest and loan cost amortization 8,110 -- 8,110
General operating and
administrative 295,070 -- 295,070
Professional services 45,337 -- 45,337
Asset management fees to
related party 126,422 109,699 (5) 236,121
Depreciation and amortization 916,641 642,929 (6) 1,559,570
------------- ---------------- ----------------
1,391,580 752,628 2,144,208
------------- ---------------- ----------------
Earnings Before Equity in Loss
of Unconsolidated Subsidiary
After Deduction of Preferred
Stock Dividends and Minority Interest 4,189,577 935,985 5,125,562
Equity in Loss of Unconsolidated
Subsidiary After Deduction of
Preferred Stock Dividends (119,803 ) -- (119,803 )
Minority Interest (124,690 ) -- (124,690 )
------------- ---------------- ----------------
Net Earnings $ 3,945,084 $ 935,985 $ 4,881,069
============= ================ ================
Earnings Per Share of Common Stock (8):
Basic $ 0.13 $ 0.16
============= ================
Diluted $ 0.12 $ 0.15
============= ================
Weighted Average Number of Shares of
Common Stock Outstanding (8):
Basic 31,200,726 31,200,726
============= ================
Diluted 38,622,874 38,622,874
============= ================
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------ -------------- --------------
<S> <C>
Revenues:
Rental income from
operating leases $ 3,910,639 $ 1,978,683 (1) $ 5,889,322
FF&E reserve income 320,356 149,150 (2) 469,506
Dividend income 2,753,506 461,106 (3) 3,214,612
Interest and other income 3,693,004 (730,735 )(4) 2,962,269
------------- ---------------- ----------------
10,677,505 1,858,204 12,535,709
------------- ---------------- ----------------
Expenses:
Interest and loan cost amortization 248,094 -- 248,094
General operating and
administrative 626,649 -- 626,649
Professional services 69,318 -- 69,318
Asset management fees to
related party 106,788 119,908 (5) 226,696
Depreciation and amortization 1,267,868 702,766 (6) 1,970,634
------------- ---------------- ----------------
2,318,717 822,674 3,141,391
------------- ---------------- ----------------
Earnings Before Equity in Loss
of Unconsolidated Subsidiary
After Deduction of Preferred
Stock Dividends and Minority Interest 8,358,788 1,035,530 9,394,318
Equity in Loss of Unconsolidated
Subsidiary After Deduction of
Preferred Stock Dividends (778,466 ) (144,635 )(7) (923,101 )
Minority Interest (64,334 ) -- (64,334 )
------------- ---------------- ----------------
Net Earnings $ 7,515,988 $ 890,895 $ 8,406,883
============= ================ ================
Earnings Per Share of Common Stock (8):
Basic $ 0.47 $ 0.53
============= ================
Diluted $ 0.45 $ 0.49
============= ================
Weighted Average Number of Shares of
Common Stock Outstanding (8):
Basic 15,890,212 15,918,577
============= ================
Diluted 21,437,859 21,466,224
============= ================
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $31,398,095 from the sale of 3,139,810
shares during the period April 1, 2000 through June 1, 2000, used (i)
to purchase two properties for $46,277,433 (which includes closing
costs of $434,450 and acquisition fees and costs of $2,397,983, which
had been recorded as other assets as of March 31, 2000), (ii) to pay
acquisition fees and costs of $1,412,914 ($114,197 of which was accrued
at March 31, 2000 and which had been capitalized as other assets) and
(iii) to pay selling commissions and offering expenses of $2,511,848
which have been netted against stockholders' equity (a total of
$647,509 of which was accrued as of March 31, 2000).
<TABLE>
<CAPTION>
Acquisition
Fees and Costs
And Closing
Asset Value or Costs Allocated
Purchase Price To Investment Total
--------------------- ----------------- --------------
<S> <C>
Wyndham in Billerica, MA $ 25,092,000 $ 1,635,999 $26,727,999
Wyndham in Denver, CO 18,353,000 1,196,434 19,549,434
-------------------- ----------------- ---------------
$ 43,445,000 $ 2,832,433 $46,277,433
==================== ================= ===============
</TABLE>
Unaudited Pro Forma Consolidated Statements of Earnings:
(1) Represents adjustment to rental income from operating leases for the
properties acquired by the Company as of June 1, 2000 (the "Pro Forma
Properties"), for the period commencing (A) the later of (i) the date
the Pro Forma Property became operational by the previous owner or (ii)
January 1, 1999, to (B) the earlier of (i) the date the Pro Forma
Property was acquired by the Company or (ii) the end of the pro forma
period presented. The following presents the actual date the Pro Forma
Properties were acquired or placed in service by the Company as
compared to the date the Pro Forma Properties were treated as becoming
operational as a rental property for purposes of the Pro Forma
Consolidated Statements of Earnings.
<TABLE>
<CAPTION>
Date Pro Forma
Date Placed Property became
in Service Operational as
by the Company Rental Property
--------------------- --------------------
<S> <C>
Residence Inn in Mira Mesa, CA December 10, 1999 September 20, 1999
Courtyard in Philadelphia, PA November 20, 1999 November 20, 1999
Wyndham in Billerica, MA June 1, 2000 May 15, 1999
Wyndham in Denver, CO June 1, 2000 November 15, 1999
</TABLE>
Generally, the leases provide for the payment of percentage rent in
addition to base rental income. However, due to the fact that no
percentage rent was due under the leases for the Pro Forma Properties
during 1999 and the quarter ended March 31, 2000 that the Company held
the properties, no pro forma adjustment was made for percentage rental
income for the year ended December 31, 1999 and the quarter ended March
31, 2000.
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE QUARTER ENDED MARCH 31, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Statements of Earnings - Continued:
(2) Represents reserve funds which will be used for the replacement and
renewal of furniture, fixtures and equipment relating to the Pro Forma
Properties (the "FF&E Reserve"). The funds in the FF&E Reserve and all
property purchased with funds from the FF&E Reserve will be paid,
granted and assigned to the Company as additional rent. In connection
therewith, FF&E reserve income was earned at approximately three
percent of estimated annual gross revenues, per Pro Forma Property.
(3) Represents adjustment to dividend income earned on the Company's
$38,364,157 investment as of December 31, 1999, in the 9.76% Class B
cumulative preferred stock of the unconsolidated subsidiary, for the
period commencing (A) the later of (i) the date the properties owned by
the unconsolidated subsidiary became operational by the previous owner
or (ii) January 1, 1999, to (B) the earlier of (i) the date the
properties owned by the unconsolidated subsidiary were acquired or (ii)
the end of the pro forma period presented. The cash from the Company's
investment, along with loan proceeds and funds from an institutional
investor were used to purchase seven hotel properties which were
operational prior to the Company's investment in the unconsolidated
subsidiary. The following presents the actual date the unconsolidated
subsidiary properties were acquired or placed in service by the
unconsolidated subsidiary as compared to the date the unconsolidated
subsidiary's properties were treated as becoming operational for
purposes of the Pro Forma Consolidated Statements of Earnings:
<TABLE>
<CAPTION>
Pro Forma
Date Unconsolidated
Date Placed Subsidiary
in Service Properties became
by the Operational as
Unconsolidated Subsidiary Rental Property
--------------------------- --------------------
<S> <C>
Residence Inn Las Vegas, NV February 25, 1999 January 1, 1999
Residence Inn Plano, TX February 25, 1999 January 1, 1999
Marriott Suites Dallas, TX February 25, 1999 January 1, 1999
Courtyard Plano, TX February 25, 1999 January 1, 1999
Residence Inn Phoenix, AZ June 16, 1999 May 14, 1999
Courtyard Scottsdale, AZ June 16, 1999 May 21, 1999
Courtyard Seattle, WA June 16, 1999 May 22, 1999
</TABLE>
(4) Represents adjustment to interest income due to the decrease in the
amount of cash available for investment in interest bearing accounts
during the periods commencing (A) the later of (i) the dates the Pro
Forma Properties and the unconsolidated subsidiary's properties became
operational by the previous owners or (ii) January 1, 1999, through (B)
the earlier of (i) the actual date the Pro Forma Properties and the
unconsolidated subsidiary's properties were acquired or (ii) the end of
the pro forma period presented, as described in Note (1) and Note (3)
above for the year ended December 31, 1999. The estimated pro forma
adjustment is based upon the fact that interest income from interest
bearing accounts was earned at a rate of approximately four percent per
annum by the Company during the year ended December 31, 1999 and the
quarter ended March 31, 2000.
(5) Represents increase in asset management fees relating to the Pro Forma
Properties and the investment in unconsolidated subsidiary for the
period commencing (A) the later of (i) the date the Pro Forma
Properties and the unconsolidated subsidiary's properties became
operational by the previous owners or (ii) January 1, 1999, through (B)
the earlier of (i) the date the Pro Forma Properties and the
unconsolidated subsidiary's
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE QUARTER ENDED MARCH 31, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Statements of Earnings - Continued:
(5) properties were acquired or (ii) the end of the pro forma period
presented, as described in Notes (1) and (3) above. Asset management
fees are equal to 0.60% per year of the Company's Real Estate Asset
Value, including the investment in the unconsolidated subsidiary, as
defined in the Company's prospectus.
(6) Represents incremental increase in depreciation expense of the building
and the furniture, fixture and equipment ("FF&E") portions of the Pro
Forma Properties accounted for as operating leases using the
straight-line method. The buildings and FF&E are depreciated over
useful lives of 40 and seven years, respectively.
(7) Represents adjustment to equity in loss of unconsolidated subsidiary
after deduction of preferred stock dividends for the period commencing
(A) the date the unconsolidated subsidiary's properties became
operational by the previous owner, through (B) the earlier of (i) the
date the properties were acquired by the unconsolidated subsidiary or
(ii) the end of the pro forma period presented, as described in Note
(3) above. The following represents the Company's share of pro forma
net earnings or loss after deduction of preferred stock dividends
declared for the pro forma period ending December 31, 1999:
Unconsolidated Subsidiary Pro Forma
Earnings Before Preferred Stock Dividends $ 4,769,743
8% Class A Cumulative Preferred Stock
Dividends (institutional investor) (3,431,011)
9.76% Class B Cumulative Preferred Stock
Dividends (the Company) (3,214,612)
8% Class C Cumulative Preferred Stock
Dividends (other investors) (8,000)
------------
Pro Forma Net Loss of Unconsolidated Subsidiary
After Preferred Stock Dividends $(1,883,880)
============
The Company's 49% Interest in the Pro Forma
Loss of the Unconsolidated Subsidiary $ (923,101)
============
(8) Historical earnings per share were calculated based upon the weighted
average number of shares of common stock outstanding during the year
ended December 31, 1999 and the quarter ended March 31, 2000.
As a result of the investment in the unconsolidated subsidiary being
treated in the Pro Forma Consolidated Statements of Earnings as
invested beginning on January 1, 1999 (the date the first property
became operational), the Company assumed additional shares of common
stock were sold and net offering proceeds were available for investment
on January 1, 1999. Due to the fact that approximately 817,000 of these
shares of common stock were actually sold subsequent to January 1,
1999, the weighted average number of shares outstanding for the pro
forma year ended December 31, 1999 was adjusted. Pro forma earnings per
share were calculated based upon the weighted average number of shares
of common stock outstanding, as adjusted, during the year ended
December 31, 1999 and the quarter ended March 31, 2000.
<PAGE>
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: June 15, 2000 By: /s/ Robert A. Bourne
---------------------------------
ROBERT A. BOURNE, President
