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): December 6, 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.
Residence Inn by Marriott located in Orlando, Florida. On December 6,
2000, CNL Hotel RI-Orlando Ltd., a Florida limited partnership that is an
indirect, wholly owned subsidiary of the Company, acquired a parcel of land
located in Orlando, Florida, close to SeaWorld(R) Orlando, and entered into a
development services agreement to construct a Residence Inn by Marriott on the
Property (the "Residence Inn SeaWorld Property"). In this section, the term
"Company" includes CNL Hotel RI-Orlando Ltd. The Company acquired the land for
$3,400,000 from Marriott Vacation Club, Inc. The Company anticipates that the
cost of development of the Residence Inn SeaWorld Property will be approximately
$35,100,000. Once construction is completed, the Company intends to enter into a
long-term lease agreement relating to this Property. The general terms of the
lease agreement are described in the Prospectus under the heading " --
Description of Property Leases."
In connection with the acquisition of the Residence Inn SeaWorld
Property, CNL Hotel Development Company, a subsidiary of the Advisor, has
entered into a development services agreement with CNL Hotel RI-Orlando Ltd. As
the developer of the Property, CNL Hotel Development Company will have financial
and administrative control over the project and will act as CNL Hotel RI-Orlando
Ltd.'s agent in negotiations with architects, engineers and other service
providers to the project, as well as in dealings with governmental authorities
to obtain necessary permits and approvals. As compensation for its services
under this agreement, CNL Hotel Development Company will receive a Development
Fee equal to four percent of the cost of development of the Property.
On December 6, 2000, the Company entered into a revolving construction
line of credit with a bank to be used by the Company to fund the land
acquisition and the development of the Residence Inn SeaWorld Property along
with another Property. The construction line of credit provides that the Company
will be able to receive advances of up to $55,000,000 until November 8, 2003.
Interest expense on each advance will be payable monthly, with all unpaid
interest and principal due no later than three years from the date of the
advance. Advances under the construction line of credit will bear interest at a
rate per annum equal to 275 basis points above LIBOR. The loan will be secured
by mortgages on the Residence Inn Buckhead (Lenox Park), the Residence Inn
Gwinnett Place, the Residence Inn SeaWorld and the other Property to be acquired
and developed with proceeds from the loan. In connection with the construction
line of credit, the Company incurred a commitment fee, legal fees and closing
costs of $275,000. As of December 18, 2000, the Company had obtained one advance
totalling $3,400,000 relating to the construction line of credit.
The Residence Inn SeaWorld Property, which is scheduled to open in the
first quarter of 2002, is located in Orlando, Florida. Once constructed, the
Residence Inn SeaWorld Property is expected to include 350 guest rooms, 1,125
square feet of meeting space, an outdoor swimming pool, an exercise room, a spa,
a sport court, a game room, sand volleyball and picnic areas. Other lodging
facilities located in proximity to the Residence Inn SeaWorld Property, in
addition to the Courtyard Little Lake Bryan and Fairfield Inn Little Lake Bryan
Properties, include a Sheraton World Resort, a Doubletree Guest Suites and a
Homewood Suites. In addition, there are currently over seven hotels under
construction in this area.
SpringHill Suites Little Lake Bryan Property. On December 15, 2000, the
Company acquired a SpringHill Suites by Marriott located in Orlando, Florida, in
the community of Little Lake Bryan (the "SpringHill Suites Little Lake Bryan
Property") for $36,779,320 from Marriott International, Inc. The Company, as
lessor, has entered into a long-term lease agreement relating to this Property.
The general terms of the lease agreement 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 the lease is approximately 15 years.
o At the end of the initial lease term, the tenant will have two
consecutive renewal options of ten years each.
o The lease requires minimum rent payments of $3,861,829 per year.
o In addition to minimum rent, for each lease year after the second lease
year, the 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 $1,131,671 has been retained by the Company
as security for the tenant's obligations under the lease.
o The tenant has established an FF&E Reserve. Deposits to the FF&E
Reserve are made every four weeks as follows: 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.
o Marriott International, Inc. has guaranteed the tenant's obligation to
pay minimum rent under the 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 hotel exceeds minimum rent due under the
lease by 25% for any trailing 12-month period. The aggregate maximum
amount of the guarantee was $6,755,700. Upon acquisition of the
SpringHill Suites Little Lake Bryan Property on December 15, 2000, the
maximum amount of the guarantee increased to $10,500,000 and the
guarantee covers minimum rent payments for the Courtyard Little Lake
Bryan, Fairfield Inn Little Lake Bryan and SpringHill Suites Little
Lake Bryan Properties. The Courtyard Little Lake Bryan and the
Fairfield Inn Little Lake Bryan Properties are described in the
Prospectus Supplement dated December 12, 2000, under the heading "--
Property Acquisitions." Net operating income from these three
Properties will be pooled 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 these three Properties contain
cross-default terms with respect to the leases for the Pooled
Properties, meaning that if the tenant to any of these three 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 these three Properties and the Pooled
Properties, regardless of whether the tenant of any such Property is in
default under its lease.
The estimated federal income tax basis of the depreciable portion of
the SpringHill Suites Little Lake Bryan Property is approximately $31.3 million.
On December 6, 2000, the Company obtained a loan from a bank to be used
by the Company to finance the acquisition of three hotel Properties. The loan
provides that the Company will be able to borrow up to $50,000,000 which will be
secured by the three applicable Properties. Borrowings under the loan will bear
interest at a fixed rate of 8.335% per annum. Interest expense will be payable
monthly, with all unpaid interest and principal due no later than seven years
from the date of the loan. In connection with the loan, the Company incurred
loan fees of $300,000. As of December 18, 2000, the Company had borrowed
$32,260,000 which was used to refinance a portion of the purchase of the
Courtyard Little Lake Bryan and Fairfield Inn Little Lake Bryan Properties.
The SpringHill Suites Little Lake Bryan Property, which opened in
December 2000, has 400 guest suites, 750 square feet of meeting space, a
poolside bar and grill, a fitness center, a children's interactive splash zone,
a whirlpool, an outdoor swimming pool and a sundry shop. The Property is located
at the entrance to Lake Buena Vista and is close to Orlando's entertainment
attractions. 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 SpringHill Suites Little Lake
Bryan Property, in addition to the Courtyard Little Lake Bryan and the Fairfield
Inn Little Lake Bryan Properties, include a Doubletree Guest Suites, a Homewood
Suites and a Sheraton World Resort. In addition, there are currently over seven
hotels under construction in this area.
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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: December 21, 2000 By: /s/ Robert A. Bourne
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ROBERT A. BOURNE, President
