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): November 21, 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
<PAGE>
Item 2. Acquisition or Disposition of Assets.
Little Lake Bryan Properties. On November 21, 2000, the Company
acquired two hotel Properties. The Properties are a Courtyard by Marriott and a
Fairfield Inn by Marriott, both located in Orlando, Florida, in the community of
Little Lake Bryan (the "Courtyard Little Lake Bryan Property" and the "Fairfield
Inn Little Lake Bryan Property") (collectively, the "Little Lake Bryan
Properties").
The Company acquired the Little Lake Bryan Properties for an aggregate
purchase price of $66,877,680 from Marriott International, Inc. In connection
with the purchase of the two Properties, the Company, as lessor, entered into
two separate, long-term lease agreements with the same unaffiliated lessee. The
general terms of the lease agreements are described in the section of the
Prospectus entitled " -- Description of Property Leases." The principal features
of the lease are as follows:
o The initial term of each lease is approximately 15 years.
o At the end of the initial term of each lease, the tenant will have two
consecutive renewal options of ten years each.
o The leases require minimum rent payments of $3,631,950 per year for the
Courtyard Little Lake Bryan Property and $3,123,750 per year for the
Fairfield Inn Little Lake Bryan Property.
o In addition to minimum rent, for each lease year after the second lease
year, each lease requires percentage rent equal to seven percent of
room revenues in excess of room revenues for the second lease year.
o A security deposit equal to $1,103,695 for the Courtyard Little Lake
Bryan Property and $954,079 for the Fairfield Inn Little Lake Bryan
Property has been retained by the Company as security for the tenant's
obligations under the leases.
o The tenant of the Courtyard Little Lake Bryan and Fairfield Inn Little
Lake Bryan Properties has established an FF&E Reserve. Deposits to the
FF&E Reserve for the Courtyard Little Lake Bryan Property are made
every four weeks 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. Deposits to the FF&E Reserve for
the Fairfield Inn Little Lake Bryan Property are made every four weeks
as follows: 4% of gross receipts for the first 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.
o Marriott International, Inc. has guaranteed the tenant's obligation to
pay minimum rent under each lease. The guarantee terminates on the
earlier of the end of the third lease year or at such time as the net
operating income from the applicable Property exceeds minimum rent due
under the lease by 25% for any trailing 12-month period. The aggregate
maximum amount of the guarantee is $6,755,700. Upon acquisition of the
SpringHill Suites(R)by Marriott(R)in Orlando, Florida (the "SpringHill
Suites Little Lake Bryan Property"), as described in "-- Pending
Investments," the maximum amount of the guarantee will increase to
$10,433,632 and the guarantee will also cover minimum rent payments for
the pending investment listed above. From such time, net operating
income from the Little Lake Bryan Properties will be pooled with the
SpringHill Suites Little Lake Bryan Property in determining whether the
three Properties' aggregate net operating income exceeds the aggregate
minimum rent due under the leases by 25%.
o In addition, the leases for the Little Lake Bryan Properties will
contain cross-default terms with respect to the leases for the Pooled
Properties, meaning that if the tenant to any of the Little Lake Bryan
Properties or the Pooled Properties defaults on its obligations under
its lease, the Company will have the ability to pursue its remedies
under the leases with respect to the Little Lake Bryan Properties and
the Pooled Properties, regardless of whether the tenant of any such
Property is in default under its lease.
The federal income tax basis of the depreciable portion of the
Courtyard Little Lake Bryan Property and the Fairfield Inn Little Lake Bryan
Property is approximately $30.5 million and $26.4 million, respectively.
<PAGE>
The Courtyard Little Lake Bryan Property, which opened in October 2000,
has 312 guest rooms, 3,500 square feet of meeting space, four executive board
rooms, a poolside bar and grill, a breakfast cafe, a fitness center, an
indoor/outdoor whirlpool and a beach entry indoor/outdoor swimming pool. The
Fairfield Inn Little Lake Bryan Property, which also opened in October 2000, has
388 guest rooms, a poolside bar and grill, a fitness center, a whirlpool and an
outdoor swimming pool. The hotel Properties are located close to SeaWorld(R)
Orlando. Central Florida is home to eight theme parks and the Orange County
Convention Center is one of the largest convention centers in the country. Other
lodging facilities located in proximity to the Courtyard Little Lake Bryan and
Fairfield Inn Little Lake Bryan Properties include a DoubleTree Guest Suites, a
Holiday Inn, a Homewood Suites and a Sheraton World Resort. 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>
Courtyard Little Lake Bryan Property Fairfield Inn Little Lake Bryan Property
--------------------------------------------------- ---------------------------------------------------
Average Average Revenue Average Average Revenue
Occupancy Daily Room per Available Occupancy Daily Room per Available
Year Rate Rate Room Rate Rate Room
------------ ------------- --------------- ---------------- ------------- --------------- ---------------
*2000 69.00% $91.07 $62.81 59.30% $70.41 $41.75
</TABLE>
* Data for 2000 represents the period October 16, 2000 through November
24, 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 in October 2000.
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
Page
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of September 30, 2000 5
Pro Forma Consolidated Statement of Earnings for the nine months
ended September 30, 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
nine months ended September 30, 2000 and the year ended
December 31, 1999 8
<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,
$443,001,390 in gross offering proceeds from the sale of 44,300,139 shares of
common stock for the period from inception through September 30, 2000, and the
application of such funds to purchase 14 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 September 30, 2000,
to place deposits on one additional property, to redeem 140,450 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
$28,743,032 in gross offering proceeds from the sale of 2,874,303 additional
shares for the period October 1, 2000 through November 21, 2000, (iii) the
application of such funds to (a) pay offering expenses, acquisition fees and
miscellaneous acquisition expenses, all as reflected in the pro forma
adjustments described in the related notes, (b) to acquire certain shares of 8%
Class A Cumulative Preferred Stock and common stock of CNL Hotel Investors, Inc.
and (c) the purchase of three additional properties, as reflected in the pro
forma adjustments described in the related notes. The Unaudited Pro Forma
Consolidated Balance Sheet as of September 30, 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
September 30, 2000.
The Unaudited Pro Forma Consolidated Statements of Earnings for the
nine months ended September 30, 2000 and for the year ended December 31, 1999,
includes the historical operating results of the properties described in (i) and
(iii) 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 (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
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
<S> <C>
CNL Hospitality CNL Hotel
Properties, Inc. Investors, Inc.
and Subsidiaries Historical Pro Forma
ASSETS Historical (c) Adjustments Pro Forma
----------------- ---------------- --------------- ------------
Land, buildings and equipment on operating leases $ 278,813,679 $ 161,600,822 $92,768,704 (b)(c) $533,183,205
Investment in unconsolidated subsidiary 37,202,729 -- (37,202,729 )(c) --
Cash and cash equivalents 76,838,139 7,566,423 (67,154,933 )(a)(c) 17,249,629
Restricted cash 1,062,752 878,814 -- 1,941,566
Certificate of deposit 5,000,000 -- -- 5,000,000
Dividend receivable 1,150,602 -- (1,150,602 )(c) --
Receivables 482,452 84,748 -- 567,200
Prepaid expenses 691,500 38,390 -- 729,890
Loan costs 124,527 663,188 -- 787,715
Accrued rental income 149,643 400,553 -- 550,196
Other assets 6,969,135 -- (2,609,160 )(a)(b) 4,359,975
--------------- ----------------- ---------------- ---------------
$ 408,485,158 $ 171,232,938 $ (15,348,720 ) $564,369,376
--------------- ----------------- ---------------- ---------------
--------------- ----------------- ---------------= ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Note payable 9,684,609 87,224,210 -- 96,908,819
Accounts payable and accrued expenses 1,006,098 684,356 -- 1,690,454
Distribution payable 5,372,782 2,364,472 (1,150,602 )(c) 6,586,652
Due to related parties 1,281,404 356,860 -- 1,638,264
Security deposits 11,810,719 -- 2,476,236 (b) 14,286,955
Rents paid in advance 410,274 450,034 -- 860,308
-------------- ---------------- ----------------- ---------------
Total liabilities 29,565,886 91,079,932 1,325,634 121,971,452
Minority Interest -- -- 37,035,063 37,035,063
-------------- ---------------- ----------------- ---------------
Redeemable Preferred Stock:
Class A 8%: 50,886 share authorized; 48,337
issued and outstanding -- 47,802,692 (47,802,692 )(c) --
Class B 9.76%: 39,982 share authorized;
37,979 issued and outstanding -- 37,559,172 (37,559,172 )(c) --
-------------- ---------------- ----------------- ---------------
-- 85,361,864 (85,361,864 ) --
-------------- ---------------- ----------------- ---------------
Stockholders' equity:
Preferred stock, without par value.
Authorized and unissued 3,000,000 shares -- 1 (1 )(c) --
Excess shares, $.01 par value per share.
Authorized and unissued 63,000,000 shares -- -- -- --
Common stock, $.01 par value per share.
150,000,000 authorized shares; issued and
outstanding 47,053,547 shares, as adjusted 441,792 948 27,795 (a)(c) 470,535
Capital in excess of par value 390,263,511 99,999 26,314,847 (a)(c) 416,678,357
Accumulated distributions in excess of
net earnings (9,096,245 ) (5,309,806 ) 5,309,806 (a)(c) (9,096,245)
Minority interest distributions in excess of
contributions and accumulated earnings (2,689,786 ) -- -- (2,689,786)
--------------- ---------------- ----------------- ---------------
Total stockholders' equity 378,919,272 (5,208,858 ) 31,652,447 405,362,861
--------------- ---------------- ----------------- ---------------
$ 408,485,158 $ 171,232,938 $ (15,348,720 ) $564,369,376
--------------- ----------------- ----------------- ---------------
--------------- ----------------- ----------------= ---------------
</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
NINE MONTHS ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
<S> <C>
CNL Hospitality CNL Hotel
Properties, Investors,
Inc. and Inc.
Subsidiaries Historical Pro Forma
Historical (c) Adjustments Pro Forma
---------------- -------------- --------------- -------------
Revenues:
Rental income from operating leases $ 11,816,801 $13,231,100 $ 6,946,972 (1) $ 31,994,873
FF&E reserve income 901,771 693,224 559,857 (2) 2,154,852
Dividend income 2,780,566 0 (2,780,566 )(7) 0
Interest and other income 5,312,997 432,574 (2,409,478 )(3) 3,336,093
--------------- ---------------- ---------------- --------------
20,812,135 14,356,898 2,316,785 37,485,818
--------------- ---------------- ---------------- --------------
Expenses:
Interest and loan cost amortization 26,155 5,017,193 -- 5,043,348
General operating and administrative 1,079,101 628,085 -- 1,707,186
Professional services 117,263 -- -- 117,263
Asset management fees to
related party 1,003,416 126,134 420,986 (4) 1,550,536
Depreciation and amortization 3,956,498 3,648,654 2,397,626 10,002,778
(5)(7)
--------------- ---------------- ---------------- --------------
6,182,433 9,420,066 2,818,612 18,421,111
--------------- ---------------- ---------------- --------------
Earnings Before Equity in Loss of
Unconsolidated Subsidiary After
Deduction of Preferred Stock
Dividends and Minority Interest 14,629,702 4,936,832 (501,827 ) 19,064,707
Equity in Loss of Unconsolidated
Subsidiary After Deduction of
Preferred Stock Dividends (386,627 ) -- 386,627 (7) --
Minority Interest (403,427 ) -- (2,312,412 )(7) (2,715,839 )
--------------- ---------------- ---------------- --------------
Net Earnings $ 13,839,648 $ 4,936,832 $ (2,427,612 ) $ 16,348,868
=============== ================ ================ ==============
Earnings Per Share of Common Stock (6):
Basic $ 0.38 $ 0.42
=============== ==============
Diluted $ 0.37 $ 0.42
=============== ==============
Weighted Average Number of Shares of
Common Stock Outstanding (6):
Basic 36,178,713 38,809,195
=============== ==============
Diluted 43,767,651 38,809,195
=============== ==============
</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>
<S> <C>
CNL
Hospitality CNL Hotel
Properties, Investors,
Inc. and Inc.
subsidiaries Historical Pro Forma
Historical (c) Adjustments Pro Forma
-------------- -------------- ---------------- --------------
Revenues:
Rental income from
operating leases $3,910,639 $ 12,452,195 $ 5,313,646 (1) $ 21,676,480
FF&E reserve income 320,356 343,264 430,181 (2) 1,093,801
Dividend income 2,753,506 -- (2,753,506 )(7) 0
Interest and other income 3,693,004 230,519 (1,929,878 )(3) 1,993,645
-------------- ---------------- ---------------- --------------
10,677,505 13,025,978 1,060,443 24,763,926
-------------- ---------------- ---------------- --------------
Expenses:
Interest and loan cost amortization 248,094 4,785,818 -- 5,033,912
General operating and
administrative 626,649 563,826 -- 1,190,475
Professional services 69,318 -- -- 69,318
Asset management fees to
related party 106,788 113,757 322,007 (4) 542,552
Depreciation and amortization 1,267,868 3,457,641 1,802,747 (5)(7) 6,528,256
-------------- ---------------- ---------------- --------------
2,318,717 8,921,042 2,124,754 13,364,513
-------------- ---------------- ---------------- --------------
Earnings Before Equity in Loss of
Unconsolidated Subsidiary After
Deduction of Preferred Stock
Dividends and Minority Interest 8,358,788 4,104,936 (1,064,311 ) 11,399,413
Equity in Loss of Unconsolidated
Subsidiary After Deduction of
Preferred Stock Dividends (778,466 ) -- 778,466 (7) --
Minority Interest (64,334 ) -- (1,922,752 )(7) (1,987,086 )
-------------- ---------------- ---------------- --------------
Net Earnings $7,515,988 $ 4,104,936 $ (2,208,597 ) $ 9,412,327
============== ================ ================ ==============
Earnings Per Share of Common Stock (6):
Basic $ 0.47 $ 0.59
============== ==============
Diluted $ 0.45 $ 0.59
============== ==============
Weighted Average Number of Shares of
Common Stock Outstanding (6):
Basic 15,890,212 15,890,212
============== ==============
Diluted 21,437,859 15,890,212
============== ==============
</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 NINE MONTHS ENDED SEPTEMBER 30, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $28,743,032 from the sale of 2,874,303
shares during the period October 1, 2000 through November 21, 2000,
used (i) to pay acquisition fees and costs of $1,293,436 ($96,112 of
which was accrued at September 30, 2000), and to pay selling
commissions and offering expenses of $2,200,443 which have been netted
against stockholders' equity (a total of $1,084,661 of which was
accrued as of September 30, 2000), leaving $25,249,153 for investments.
(b) Represents the use of $78,806,085 of cash and cash equivalents to
purchase seven properties for $85,185,054 (which includes closing costs
of $804,777 and acquisition fees and costs of $3,902,597, which had
been recorded as other assets as of September 30, 2000), net of
$2,476,236 received from the lessees for security deposits.
<TABLE>
<CAPTION>
<S> <C>
Acquisition
Fees and Costs
And Closing
Asset Value or Costs Allocated
Purchase Price To Investment Total
--------------------- ------------------ --------------
TownePlace Suites in Newark, CA $ 13,600,000 $ 227,928 $ 13,827,928
Courtyard Little Lake Bryan, FL 35,870,100 2,394,351 38,264,451
Fairfield Inn Little Lake Bryan, FL 31,007,580 2,085,095 33,092,675
-------------------- ----------------- ---------------
$ 80,477,680 $ 4,707,374 $85,185,054
==================== ================= ===============
</TABLE>
(c) In October 2000, Five Arrows, the Company and Hotel Investors entered
into an agreement with the following terms:
o Hotel Investors agreed to redeem 2,104 shares of both Class A
Preferred Stock and common stock of Hotel Investors held by Five
Arrows for $2,104,000;
o Hotel Investors agreed to redeem 1,653 shares of both Class B
Preferred Stock and common stock of Hotel Investors held by the
Company for $1,653,000;
o The Company purchased 7,563 shares of both the Class A Preferred
Stock and common stock of Hotel Investors from Five Arrows for
$11,395,000;
o The Company repurchased 65,285 shares of the Company's common
stock owned by Five Arrows for $620,207; o The remaining Class A
Preferred Stock owned by Five Arrows (38,670 shares) and the
Company (7,563 shares) were exchanged for an equivalent number of
shares of Class E Preferred Stock par value $0.01 ("Class E
Preferred Stock") of Hotel Investors;
o Five Arrows granted the following options (1) on or before January
31, 2001, the Company has the option to purchase 7,250 shares of
both Class E Preferred Stock and an equal number of shares of
common stock of Hotel Investors held by Five Arrows for $1,000 per
pair of Class E Preferred Stock and common stock of Hotel
Investors, and (2) provided that the Company purchased all of the
shares under the first option, the Company will have the option,
until June 30, 2001, to purchase 7,251 shares of both Class E
Preferred Stock and an equal number of shares of common stock of
Hotel Investors for $1,000 for each pair. If the Company elects
not to purchase the remaining shares under the first and/or second
options, Five Arrows will have the right, at certain defined
dates, to exchange its shares in Hotel Investors for common stock
of the Company at an exchange rate of 157.000609 shares of the
Company's common stock for each share of Class E Preferred Stock,
subject to adjustment in the event of stock dividends, stock
splits and certain other corporate actions by the Company;
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Balance Sheet - Continued:
o The Company has agreed to pay Five Arrows a fee for agreeing to
defer the conversion of its Class A Preferred Stock (prior to its
conversion to Class E Preferred Stock) to common stock of the
Company. These payments are equivalent to the difference between
any distributions received by Five Arrows from Hotel Investors and
the distributions that Five Arrows would have received from the
Company if Five Arrows had converted its Class A Preferred Stock
into the Company's common stock on June 30, 2000;
o Five Arrows has agreed to forfeit its priority cash distributions
from Hotel Investors; and
o Cash available for distributions of Hotel Investors is distributed
to 100 CNL Holdings, Inc. and affiliates' associates who each own
one share of Class C Preferred Stock in Hotel Investors, to
provide a quarterly, cumulative, compounded 8% return. All
remaining cash available for distributions is distributed pro rata
with respect to the interest in the common shares of Hotel
Investors.
Upon consummation of this transaction, the Company owned an
interest of approximately 53% and Five Arrows owns approximately
47% of Hotel Investors.
As of December 31, 1999, Hotel Investors owned the following
properties:
Date Placed
in Service
by the Company
------------------
Residence Inn in Las Vegas, NV February 25, 1999
Residence Inn in Plano, TX February 25, 1999
Marriott Suites in Dallas, TX February 25, 1999
Courtyard in Plano, TX February 25, 1999
Residence Inn in Phoenix, AZ June 16, 1999
Courtyard in Scottsdale, AZ June 16, 1999
Courtyard in Seattle, WA June 16, 1999
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 November 21, 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>
<S> <C>
Date Pro Forma
Date Placed Property became
in Service Operational as
by the Company Rental Property
------------------ ------------------
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
Residence Inn in Palm Desert, CA June 16, 2000 February 19, 1999
Courtyard in Palm Desert, CA June 16, 2000 September 1, 1999
Residence Inn in Merrifield ,VA July 28, 2000 June 24, 2000
SpringHill Suites in Gaithersburg, MD July 28, 2000 June 30, 2000
Courtyard in Alpharetta, GA August 22, 2000 January 7, 2000
</TABLE>
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Statements of Earnings - Continued:
<TABLE>
<CAPTION>
<S> <C>
Date Pro Forma
Date Placed Property became
in Service Operational as
by the Company Rental Property
------------------ ------------------
Residence Inn in Salt Lake City, UT August 22, 2000 August 11, 1999
TownePlace Suites in Tewksbury, MA August 22, 2000 July 15, 1999
TownePlace Suites in Mt. Laurel, NJ August 22, 2000 November 22, 1999
TownePlace Suites in Scarborough, ME August 22, 2000 June 25, 1999
TownePlace Suites in Newark, CA November 3, 2000 September 1, 2000
Courtyard in Orlando, FL November 21, 2000 October 16, 2000
Fairfield Inn in Orlando, FL November 21, 2000 October 16, 2000
</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 nine months ended September 30, 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
nine months ended September 30, 2000.
(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 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 became operational by the previous owners or (ii)
January 1, 1999, through (B) the earlier of (i) the actual date the Pro
Forma Properties were acquired or (ii) the end of the pro forma period
presented, as described in Note (1) above. 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
nine months ended September 30, 2000.
(4) Represents increase in asset management fees relating to the Pro Forma
Properties for the period commencing (A) the later of (i) the date the
Pro Forma Properties became operational by the previous owners or (ii)
January 1, 1999, through (B) the earlier of (i) the date the Pro Forma
Properties were acquired or (ii) the end of the pro forma period
presented, as described in Notes (1) above. Asset management fees are
equal to 0.60% per year of the Company's Real Estate Asset Value, as
defined in the Company's prospectus.
(5) 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.
(6) 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 nine months ended September 30, 2000.
(7) Represents certain elimination adjustments and pro forma adjustments
due to the consolidation of CNL Hotel Investors, Inc., consistent with
Note (c) above.
<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: December 1, 2000 By: /s/ Robert A. Bourne
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ROBERT A. BOURNE, President
