SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ]Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CNL Hospitality Properties, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ]Fee paid previously with preliminary materials.
[ ]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, of
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PROXY CNL HOSPITALITY PROPERTIES, INC.
The undersigned hereby appoints James M. Seneff, Jr. and Robert A. Bourne,
and each of them, as proxies, with full power of substitution in each, to vote
all shares of common stock of CNL Hospitality Properties, Inc. (the "Company")
which the undersigned is entitled to vote, at the Annual Meeting of Stockholders
of the Company to be held on May 23, 2000, at 10:00 a.m., local time, and any
adjournment thereof, on all matters set forth in the Notice of Annual Meeting
and Proxy Statement, dated April 6, 2000, a copy of which has been received by
the undersigned, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING ITEMS:
1. Election of Seven Directors
-------------------------------------------------------
Nominees: FOR ALL WITHHELD FOR ALL FOR ALL NOMINEES, EXCEPT VOTE
WITHHELD FOR:
Charles Adams Write that nominee's name above)
Robert A. Bourne
Lawrence A. Dustin
John A. Griswold
Matthew W. Kaplan
Craig M. McAllaster
James M. Seneff, Jr.
2. Proposal to Amend the Amended and Restated Articles of Incorporation to
increase the number of Authorized Shares
(See Proxy Statement page 10)
FOR AGAINST ABSTAIN
3. Proposal to Amend the Amended and Restated Articles of Incorporation to
permit the Company (i) to make loans to wholly owned subsidiaries and (ii)
to make mortgage loans to joint ventures with unaffiliated third parties in
compliance with other restrictions in the Amended and Restated Articles of
Incorporation (See Proxy Statement page 12)
FOR AGAINST ABSTAIN
4. Other Matters:
Grant authority upon such other matters as may come before the Meeting as
they determine to be in the best interest of the Company
FOR AGAINST ABSTAIN
(PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE, AND
RETURN IN ENCLOSED ENVELOPE)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IF YOU SIGN, DATE AND MAIL YOUR PROXY WITHOUT INDICATING HOW YOU WANT TO
VOTE, YOUR PROXY WILL BE COUNTED AS A VOTE "FOR" THE MATTERS STATED. IF
YOU FAIL TO RETURN YOUR PROXY, YOUR PROXY WILL NOT BE COUNTED. EACH
STOCKHOLDER IS URGED TO SUBMIT A SIGNED AND DATED PROXY.
Dated:________________, 2000
======================
Signature(s) of Stockholder(s)
IMPORTANT: Please mark this
Proxy, date it, sign it
exactly as your name(s)
appear(s) and return it in the
enclosed postage paid
envelope. Joint owners should
each sign personally.
Trustees and others signing in
a representative or fiduciary
capacity should indicate their
full titles in such capacity.
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
450 South Orange Avenue
Orlando, Florida 32801
April 6, 2000
To our Stockholders:
You are cordially invited to attend the annual meeting of stockholders
of CNL Hospitality Properties, Inc. (the "Company") on May 23, 2000 at 10:00
a.m. at 450 South Orange Avenue, Orlando, Florida. The directors and officers of
the Company look forward to greeting you personally. Enclosed for your review
are the proxy, proxy statement, notice of meeting for the annual meeting of
stockholders and annual report.
The Company experienced a year of tremendous growth in 1999. A
favorable market environment combined with our conservative investment
philosophy and strong management team contributed to the successful results.
During 1999, the Company received over $245 million in gross proceeds through
its public offerings of shares of common stock, increased the number of hotel
properties in its portfolio from two to 11 and added six new states, increasing
its presence to seven states. We believe the Company is extremely
well-positioned to participate in the expected continued growth in the hotel
real estate market. Following the successful completion of its initial public
offering of common stock in June 1999, the Company commenced an offering of up
to $275,000,000 (27,500,000 shares) of its common stock, which we anticipate
will be completed in the second quarter of 2000. A third offering of up to
$450,000,000 (45,000,000 shares) is expected to commence immediately following
the completion of the Company's current offering. The net proceeds of these
offerings will be invested in triple-net leased properties and mortgage loans.
We believe that the raising of additional capital by the Company
through its current offering and its planned third offering will provide the
following benefits:
Additional diversification: Additional capital received by the
Company will be used to invest in additional properties and
mortgage loans, providing the Company with increased
diversification by hotel brand, tenant and geographic
concentration.
Cost efficiencies: The expansion of the Company will allow
further economies of scale of general and administrative
expenses of the Company.
Market capitalization: Additional capital will provide the
Company with a larger market capitalization if the Board of
Directors determines to list the shares of common stock on a
national securities exchange. We believe that it is important
to continue to grow the Company to a larger equity capital
base, which we believe will provide more visibility in the
event the Board determines that listing is the appropriate
course of action.
In an effort to prepare for the Company's anticipated future growth,
the Board of Directors is asking for your approval of two important proposals
contained in this year's annual proxy, in addition to the election of the Board
of Directors:
o approval to amend the Company's Amended and Restated Articles of
Incorporation ("Articles") to increase the number of authorized equity shares
from 126,000,000 shares to 216,000,000 shares; and
o approval to amend the Articles to permit the Company (i) to make
loans to wholly owned subsidiaries and (ii) to make mortgage loans to joint
ventures with unaffiliated third parties in compliance with other restrictions
in the Articles.
As we prepare for the exciting year ahead, the Board of Directors
unanimously recommends that you vote to approve the three proposals presented in
this year's proxy statement. Your vote counts. Please complete and return the
attached ballot today. Thank you for your attention to this matter.
Sincerely,
/s/ James M. Seneff, Jr. /s/ Robert A. Bourne
- ------------------------------ ---------------------
James M. Seneff, Jr. Robert A. Bourne
Chairman of the Board and Vice Chairman and
Chief Executive Officer President
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
450 South Orange Avenue
Orlando, Florida 32801
Notice of Annual Meeting of Stockholders
To Be Held May 23, 2000
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of CNL
HOSPITALITY PROPERTIES, INC. (the "Company") will be held at 10:00 a.m. local
time, on May 23, 2000, at 450 South Orange Avenue, Orlando, Florida, for the
following purposes:
1. To elect seven directors.
2. To approve an amendment to the Company's Amended and Restated
Articles of Incorporation (the "Articles") increasing the
number of authorized equity shares from 126,000,000 shares
(consisting of 60,000,000 Common Shares, 3,000,000 Preferred
Shares and 63,000,000 Excess Shares) to 216,000,000 shares
(consisting of 150,000,000 Common Shares, 3,000,000 Preferred
Shares and 63,000,000 Excess Shares).
3. To approve amendments to the Company's Articles to permit the
Company (i) to make loans to wholly owned subsidiaries and
(ii) to make mortgage loans to joint ventures with
unaffiliated third parties in compliance with other
restrictions in the Articles.
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on February 25,
2000 will be entitled to notice of and to vote at the annual
meeting or at any adjournment thereof.
Stockholders are cordially invited to attend the meeting in person.
WHETHER OR NOT YOU NOW PLAN TO ATTEND THE MEETING, YOU ARE ASKED TO COMPLETE,
DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY FOR WHICH A POSTAGE PAID RETURN
ENVELOPE IS PROVIDED. IT IS IMPORTANT THAT YOUR SHARES BE VOTED. IF YOU DECIDE
TO ATTEND THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors,
/s/ Lynn E. Rose
----------------------
Lynn E. Rose
Secretary
April 6, 2000
Orlando, Florida
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
450 South Orange Avenue
Orlando, Florida 32801
PROXY STATEMENT
This proxy statement is furnished by the Board of Directors of CNL
Hospitality Properties, Inc. (the "Company") in connection with the solicitation
by the Board of Directors of proxies to be voted at the annual meeting of
stockholders to be held at 10:00 a.m., local time, on May 23, 2000, at the
Company's offices, and at any adjournment thereof, for the purposes set forth in
the accompanying notice of such meeting. All stockholders of record at the close
of business on February 25, 2000 will be entitled to vote.
Any proxy, if received in time, properly signed and not revoked, will be
voted at such meeting in accordance with the directions of the stockholder. If
no directions are specified, the proxy will be voted FOR each proposal set forth
in this proxy statement. Any stockholder giving a proxy has the power to revoke
it at any time before it is exercised. A proxy may be revoked (1) by delivery of
a written statement to the Secretary of the Company stating that the proxy is
revoked, (2) by presentation at the annual meeting of a subsequent proxy
executed by the person executing the prior proxy, or (3) by attendance at the
annual meeting and voting in person.
Votes cast in person or by proxy at the annual meeting will be tabulated
and a determination will be made as to whether or not a quorum is present. The
Company will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence or absence of a quorum, but as unvoted
for purposes of determining the approval of any matter submitted to the
stockholders. If a broker submits a proxy indicating that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to such matter.
Solicitation of proxies will be primarily by mail. However, directors and
officers of the Company also may solicit proxies by telephone or telegram or in
person. All of the expenses of preparing, assembling, printing and mailing the
materials used in the solicitation of proxies will be paid by the Company.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting materials, at the expense of the Company,
to the beneficial owners of shares held of record by such persons. In addition,
the Company has engaged D.F. King, a professional proxy solicitation firm, to
aid in the solicitation of proxies at a fee of approximately $5,000, plus
reimbursement of reasonable out-of-pocket costs and expenses. The Company has
agreed to indemnify D.F. King against certain liabilities that it may incur
arising out of the services it provides in connection with the annual meeting of
stockholders. It is anticipated that this proxy statement and the enclosed proxy
first will be mailed to stockholders on or about April 6, 2000.
As of February 25, 2000, 31,878,255 shares of common stock of the Company
were outstanding. Each share of common stock entitles the holder thereof to one
vote on each of the matters to be voted upon at the annual meeting. As of the
record date, officers and directors of the Company had the power to vote
approximately 4.8% of the outstanding shares of common stock.
<PAGE>
-20-
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PROPOSAL I: Election of Directors.............................................................. 3
Executive Compensation............................................................. 9
PROPOSAL II: Amendment to the Company's Amended and Restated Articles
of Incorporation to Increase the Number of Authorized Shares................... 10
PROPOSAL III: Amendments to the Company's Amended and Restated Articles
of Incorporation to Permit the Company (i) to Make Loans to
Wholly Owned Subsidiaries and (ii) to Make Mortgage Loans
to Joint Ventures with Unaffiliated Third Parties in Compliance
with Other Restrictions in the Amended and Restated
Articles of Incorporation........................................................ 12
SECURITY OWNERSHIP............................................................................................ 14
CERTAIN TRANSACTIONS.......................................................................................... 16
INDEPENDENT AUDITORS.......................................................................................... 18
OTHER MATTERS................................................................................................. 18
PROPOSALS FOR NEXT ANNUAL MEETING............................................................................. 18
ANNUAL REPORT................................................................................................. 18
</TABLE>
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
Nominees
The persons named below have been nominated by the Board of Directors for
election as directors to serve until the next annual meeting of stockholders or
until their successors shall have been elected and qualified. Messrs. Bourne and
Seneff have been directors since June 1996. Messrs. Adams, Dustin, Griswold,
Kaplan and McAllaster have served as directors since early 1999. The table below
sets forth each nominee's name, age, principal occupation or employment during
at least the last five years, and directorships in other public corporations.
The Company's officers and directors have advised the Company that they
intend to vote their shares of common stock for the election of each of the
nominees. Proxies will be voted FOR the election of the following nominees
unless authority is withheld.
Name and Age Background
Charles E. Adams, 37 Mr. Adams is the President and a
founding principal with Celebration
Associates, Inc., a real estate advisory
and development firm with offices in
Celebration, Florida and Charlotte,
North Carolina. Celebration Associates
specializes in large-scale
master-planned communities, seniors'
housing and specialty commercial
developments. Mr. Adams joined The Walt
Disney Company in 1990 and from 1996
until May 1997 served as Vice President
of community business development for
The Celebration Company and Walt Disney
Imagineering. He was responsible for
Celebration Education, Celebration
Network, Celebration Health, and
Celebration Foundation, as well as new
business development, strategic
alliances, retail sales and leasing,
commercial sales and leasing, and the
development of Little Lake Bryan and
Celebration. Previously, Mr. Adams was
responsible for the initial residential,
amenity, sales and marketing, consumer
research and master planning efforts for
Celebration. Additionally, Mr. Adams
participated in the planning for
residential development at EuroDisney in
Paris, France. He was a founding member
of the Celebration School Board of
Trustees and served as President and
founding member of the Celebration
Foundation Board of Directors. Mr. Adams
is a founding member of the Health Magic
Steering Committee and council member on
the Recreation Development Council for
the Urban Land Institute. Before joining
The Walt Disney Company in 1990, Mr.
Adams worked with Trammell Crow
Residential developing luxury apartment
communities in the Orlando and
Jacksonville, Florida areas. Mr. Adams
received a B.A. from Northeast Louisiana
University in 1984 and a M.B.A from
Harvard Graduate School of Business in
1989.
Robert A. Bourne, 52 Mr. Bourne is the Vice Chairman of the
Board of Directors of the Company. In
addition, he serves as a director and
President of CNL Hospitality Corp., the
advisor to the Company, and CNL Hotel
Investors, Inc., a real estate
investment trust in which the Company
owns an interest. Mr. Bourne is also the
President and Treasurer of CNL Financial
Group, Inc. (formerly CNL Group, Inc.);
a director and President of CNL Health
Care Properties, Inc., a public,
unlisted real estate investment trust;
as well as, a director and President of
CNL Health Care Corp., its advisor. Mr.
Bourne also serves as a director of
CNLBank. He has served as a director
since 1992, Vice Chairman of the Board
since February 1996, Secretary and
Treasurer from February 1996 through
1997, and President from July 1992
through February 1996, of Commercial Net
Lease Realty Inc., a public real estate
investment trust listed on the New York
Stock Exchange. Mr. Bourne has served as
a director since inception in 1994,
President from 1994 through February
1999, Treasurer from February 1999
through August 1999, and Vice Chairman
of the Board since February 1999 of CNL
American Properties Fund, Inc., a
public, unlisted real state investment
trust. He also served as a director and
held various positions for CNL Fund
Advisors, Inc., the advisor to CNL
American Properties Fund, Inc. prior to
its merger with such company from 1994
through August 1999. Mr. Bourne also
serves as a director, President and
Treasurer for various affiliates of CNL
Financial Group, Inc., including CNL
Investment Company, CNL Securities
Corp., the managing dealer for the
Company's public offering of common
stock, and CNL Institutional Advisors,
Inc., a registered investment advisor
for pension plans. Since joining CNL
Securities Corp. in 1979, Mr. Bourne has
participated as a general partner or
co-venturer in over 100 real estate
ventures involved in the financing,
acquisition, construction, and leasing
of restaurants, office buildings,
apartment complexes, hotels, and other
real estate. Mr. Bourne began his career
as a certified public accountant
employed by Coopers & Lybrand, Certified
Public Accountants, from 1971 through
1978, where he attained the position of
tax manager in 1975. Mr. Bourne
graduated from Florida State University
in 1970 where he received a B.A. in
Accounting, with honors.
Lawrence A. Dustin, 54 Mr. Dustin is President of the lodging
division of Travel Services
International, Inc., a specialized
distributor of leisure travel products
and services. Mr. Dustin was a principal
of BBT, an advisory company specializing
in hotel operations, marketing and
development, from September 1998 to
August 1999. Mr. Dustin has over 30
years of experience in the hospitality
industry. From 1994 to September 1998,
Mr. Dustin served as Senior Vice
President of lodging of Universal
Studios Recreation Group, where he was
responsible for matters related to hotel
development, marketing, operations and
management. Mr. Dustin supervised the
overall process of developing the five
highly themed hotels and related
recreational amenities within Universal
Studios Escape and provided guidance for
hotel projects in Universal City,
California, Japan, and Singapore. From
1989 to 1994, Mr. Dustin served as a
shareholder, Chief Executive Officer,
and director of AspenCrest Hospitality,
Inc., a professional services firm which
helped hotel owners enhance both the
operating performance and asset value of
their properties. From 1969 to 1989, Mr.
Dustin held various positions in the
hotel industry, including 14 years in
management with Westin Hotels & Resorts.
Mr. Dustin received a B.A. from Michigan
State University in 1968.
John A. Griswold, 51 Mr. Griswold serves as President of
Tishman Hotel Corporation, an operating
unit of Tishman Realty & Construction
Co., Inc., founded in 1898. Tishman
Hotel Corporation is a hotel developer,
owner and operator, and has provided
such services for more than 85 hotels,
totaling more than 30,000 rooms. Mr.
Griswold joined Tishman Hotel
Corporation in 1985. From 1981 to 1985,
Mr. Griswold served as general manager
of the Buena Vista Palace Hotel in The
Walt Disney World Village. From 1978 to
1981, he served as Vice President and
general manager of the Homestead Resort,
a luxury condominium resort in Glen
Arbor, Michigan. Mr. Griswold served as
an operations manager for The Walt
Disney Company from 1971 to 1978. He was
responsible for operational, financial
and future planning for multi-unit
dining facilities in Walt Disney World
Village and Lake Buena Vista Country
Club. He is a member of the board of
directors of the Florida Hotel & Motel
Association, Orlando/Orange County
Convention & Visitors Bureau, Inc. and
the First Orlando Foundation. Mr.
Griswold received a B.S. from the School
of Hotel Administration at Cornell
University in Ithaca, New York.
Matthew W. Kaplan, 37 Mr. Kaplan is a managing director of
Rothschild Realty Inc. where he has
served since 1992, and where he is
responsible for securities investment
activities including acting as portfolio
manager of Five Arrows Realty Securities
LLC, a $900 million private investment
fund. Mr. Kaplan has been a director a
WNY Group, Inc., a private corporation,
since 1999. Mr. Kaplan also serves as a
director of CNL Hospitality Corp., the
advisor to the Company, and CNL Hotel
Investors, Inc., a real estate
investment trust in which the Company
owns an interest. From 1990 to 1992, Mr.
Kaplan served in the corporate finance
department of Rothschild Inc., an
affiliate of Rothschild Realty Inc. Mr.
Kaplan served as a director of
Ambassador Apartments Inc. from August
1996 through May 1998 and is a member of
the Urban Land Institute. Mr. Kaplan
received a B.A. with honors from
Washington University in 1984 and a
M.B.A. from the Wharton School of
Finance and Commerce at the University
of Pennsylvania in 1988.
Craig M. McAllaster, 48 Dr. McAllaster has served as director of
the executive MBA program at the Roy E.
Crummer Graduate School of Business at
Rollins College since 1994. Besides his
duties as director, he is on the
management faculty and serves as
executive director of the international
consulting practicum programs at the
Crummer School. Prior to Rollins
College, Dr. McAllaster was on the
faculty at the School of Industrial and
Labor Relations and the Johnson Graduate
School of Management, both at Cornell
University and the University of Central
Florida. Dr. McAllaster spent over ten
years in the consumer services and
electronics industry in management,
organizational and executive development
positions. He is a consultant to many
domestic and international companies in
the areas of strategy and leadership.
Dr. McAllaster received a B.S. from the
University of Arizona in 1973, a M.S.
from Alfred University in 1981 and a
M.A. and Doctorate from Columbia
University in 1987.
James M. Seneff, Jr., 53 Mr. Seneff is Chairman of the Board of
Directors and Chief Executive Officer of
the Company. In addition, he is a
director, Chairman of the Board and
Chief Executive Officer of CNL
Hospitality Corp., the advisor to the
Company, and CNL Hotel Investors, Inc.,
a real estate investment trust in which
the Company owns an interest. Mr. Seneff
is a principal stockholder of CNL
Holdings, Inc., the parent company of
CNL Financial Group, Inc. (formerly CNL
Group, Inc.), a diversified real estate
company, and has served as a director,
Chairman of the Board and Chief
Executive Officer of CNL Financial
Group, Inc. since its formation in 1980.
CNL Financial Group, Inc. is the parent
company, either directly or indirectly
through subsidiaries, of CNL Real Estate
Services, Inc., CNL Hospitality Corp.,
CNL Capital Markets, Inc., CNL
Investment Company and CNL Securities
Corp., the managing dealer for the
Company's public offering of common
stock. He also serves as a director,
Chairman of the Board and Chief
Executive Officer of CNL Health Care
Properties, Inc., a public, unlisted
real estate investment trust, as well as
CNL Health Care Corp., its advisor.
Since 1992, Mr. Seneff has served as
Chairman of the Board and Chief
Executive Officer of Commercial Net
Lease Realty, Inc., a public real estate
investment trust that is listed on the
New York Stock Exchange. In addition, he
has served as a director and Chairman of
the Board since inception in 1994, and
served as Chief Executive Officer from
1994 through August 1999, of CNL
American Properties Fund, Inc., a
public, unlisted real estate investment
trust. He also served as a director,
Chairman of the Board and Chief
Executive Officer of CNL Fund Advisors,
Inc, the advisor to CNL American
Properties Fund, Inc. until it merged
with such company in September 1999. Mr.
Seneff has also served as a director,
Chairman of the Board and Chief
Executive Officer of CNL Securities
Corp., since 1979; CNL Investment
Company, since 1990; and CNL
Institutional Advisors, a registered
investment advisor for pension plans,
since 1990. Mr. Seneff formerly served
as a director of First Union National
Bank of Florida, N.A., and currently
serves as the Chairman of the Board of
CNLBank. Since 1971, Mr. Seneff has been
active in the acquisition, development,
and management of real estate projects
and, directly or through an affiliated
entity, has served as a general partner
or co-venturer in over 100 real estate
ventures. These ventures have involved
the financing, acquisition,
construction, and leasing of
restaurants, office buildings, apartment
complexes, hotels, and other real
estate. Mr. Seneff served on the Florida
State Commission on Ethics and is a
former member and past Chairman of the
State of Florida Investment Council,
which recommends to the Florida Board of
Administration investments for various
Florida employee retirement funds. The
Florida Board of Administration is
Florida's principal investment advisory
and money management agency and oversees
the investment of more than $60 billion
of retirement funds. Mr. Seneff received
his degree in Business Administration
from Florida State University in 1968.
In the event that any nominee(s) should be unable to accept the office of
director, which is not anticipated, it is intended that the persons named in the
proxy will vote FOR the election of such other person in the place of such
nominee(s) for the office of director as the Board of Directors may recommend.
The affirmative vote of a majority of the shares of common stock present in
person or represented by proxy and entitled to vote is required for the election
of directors.
A majority of the Company's directors are required to be independent, as
that term is defined in the Company's Articles of Incorporation. Messrs. Adams,
Dustin, Griswold and McAllaster are independent directors.
Compensation of Directors
During the year ended December 31, 1999, each independent director earned
approximately $6,000 for serving on the Board of Directors. In addition, each
independent director receives $750 per Board meeting attended ($375 for each
telephonic meeting in which the director participated), including committee
meetings. The Company has not, and in the future will not, pay any compensation
to the directors of the Company who also serve as officers and directors of CNL
Hospitality Corp., the Company's advisor (the "Advisor").
The Board of Directors met five times during the year ended December 31,
1999. Each current member of the Board of Directors attended at least 75 percent
of the total meetings of the Board of Directors and of any committee on which he
served.
Committees of the Board of Directors
The Company has a standing Audit Committee, the members of which are
selected by the Board of Directors each year. The Audit Committee makes
recommendations to the Board of Directors as to the independent accountants of
the Company and reviews with such accounting firm the scope of the audit and the
results of the audit upon its completion. During 1999, the Audit Committee was
comprised of Messrs. Griswold, Adams and McAllaster. The Audit Committee met
once during the year ended December 31, 1999.
The Company does not have a compensation or nominating committee.
Executive Officers
The executive officers of the Company are as follows:
Name Age Position
James M. Seneff, Jr. 53 Chief Executive Officer and Chairman of
the Board
Robert A. Bourne 52 President and Vice Chairman
Charles A. Muller 41 Chief Operating Officer and Executive
Vice President
Jeanne A. Wall 41 Executive Vice President
Lynn E. Rose 51 Secretary and Treasurer
C. Brian Strickland 37 Vice President of Finance and
Administration
Charles A. Muller. Chief Operating Officer and Executive Vice President.
Mr. Muller joined CNL Financial Group, Inc. (formerly CNL Group, Inc.) in
October 1996 and is responsible for the planning and implementation of CNL's
interest in hotel industry investments, including acquisitions, development,
project analysis and due diligence. He currently serves as the Chief Operating
Officer and Executive Vice President of CNL Hospitality Corp., the Advisor, and
Executive Vice President of CNL Hotel Development Company. Mr. Muller joined CNL
following more than 15 years of broad- based hotel industry experience with
firms such as Tishman Hotel Corporation, Wyndham Hotels & Resorts, Pannell Kerr
Forster and AIRCOA Hospitality Services. Mr. Muller's background includes
responsibility for market review and valuation efforts, property acquisitions
and development, capital improvement planning, hotel operations and project
management for renovations and new construction. Mr. Muller served on the former
Market, Finance and Investment Analysis Committee of the American Hotel & Motel
Association and is a founding member of the Lodging Industry Investment Council.
He holds a bachelor's degree in Hotel Administration from Cornell University.
Jeanne A. Wall. Executive Vice President. Ms. Wall serves also as Executive
Vice President and director of CNL Hospitality Corp., the Advisor. In addition,
Ms. Wall serves as Executive Vice President of CNL Health Care Properties, Inc.,
a public, unlisted real estate investment trust, and CNL Health Care Corp., its
advisor. She also serves as a director for CNLBank. Ms. Wall serves as Executive
Vice President of CNL Financial Group, Inc. (formerly CNL Group, Inc.). Ms. Wall
has served as Chief Operating Officer of CNL Investment Company and of CNL
Securities Corp. since 1994 and has served as Executive Vice President of CNL
Investment Company since January 1991. In 1984, Ms. Wall joined CNL Securities
Corp. and in 1985, became Vice President. In 1987, she became a Senior Vice
President and in July 1997, became Executive Vice President of CNL Securities
Corp. In this capacity, Ms. Wall serves as national marketing and sales director
and oversees the national marketing plan for the CNL investment programs. In
addition, Ms. Wall oversees product development, communications and investor
services for programs offered through participating brokers. Ms. Wall also
served as Senior Vice President of CNL Institutional Advisors Inc., a registered
investment advisor, from 1990 to 1993. Ms. Wall served as Vice President of
Commercial Net Lease Realty, Inc., a public real estate investment trust listed
on the New York Stock Exchange, from 1992 through 1997, and served as Vice
President of CNL Realty Advisors, Inc. from its inception in 1991 through 1997.
Ms. Wall also served as Executive Vice President of CNL American Properties
Fund, Inc., a public, unlisted real estate investment trust, from 1994 through
August 1999, and as Executive Vice President of CNL Fund Advisors, Inc., its
advisor, from 1994 through August 1999, at which time it merged with CNL
American Properties Fund, Inc. Ms. Wall currently serves as a trustee on the
Board of the Investment Program Association, is a member of the Corporate
Advisory Council for the International Association for Financial Planning and is
a member of the International Women's Forum. In addition, she previously served
on the Direct Participation Program committee for the National Association of
Securities Dealers, Inc. Ms. Wall holds a B.A. in Business Administration from
Linfield College and is a registered principal of CNL Securities Corp.
Lynn E. Rose. Secretary and Treasurer. Ms. Rose also serves as Secretary,
Treasurer and a director of CNL Hospitality Corp., the Advisor. Ms. Rose is
Secretary and Treasurer of CNL Health Care Properties, Inc., a public, unlisted
real estate investment trust, and serves as Secretary of its subsidiaries. In
addition, she serves as Secretary, Treasurer and a director of CNL Health Care
Corp., its advisor. Ms. Rose served as Secretary of CNL American Properties
Fund, Inc., a public, unlisted real estate investment trust, from 1994 through
August 1999, and served as Treasurer from 1994 through February 1998. She also
served as Treasurer of CNL Fund Advisors, Inc. from 1994 through July 1998, and
served as Secretary and a director from 1994 through August 1999, at which time
it merged with CNL American Properties Fund, Inc. Ms. Rose served as Secretary
and Treasurer of Commercial Net Lease Realty, Inc., a public real estate
investment trust listed on the New York Stock Exchange, from 1992 to February
1996, and as Secretary and a director of CNL Realty Advisors, Inc., its advisor,
from its inception in 1991 through 1997. She also served as Treasurer of CNL
Realty Advisors, Inc. from 1991 through February 1996. Ms. Rose, a certified
public accountant, has served as Secretary of CNL Financial Group, Inc.
(formerly CNL Group, Inc.) since 1987, served as Controller from 1987 to 1993
and has served as Chief Financial Officer since 1993. She also serves as
Secretary of the subsidiaries of CNL Financial Group Inc. and holds various
other offices in the subsidiaries. In addition, she serves as Secretary for
approximately 50 additional corporations affiliated with CNL Financial Group,
Inc. and it subsidiaries. Ms. Rose has served as Chief Financial Officer and
Secretary of CNL Securities Corp. since July 1994. Ms. Rose oversees the tax and
legal compliance for over 375 corporations, partnerships and joint ventures, and
the accounting and financial reporting for over 200 entities. Prior to joining
CNL, Ms. Rose was a partner with Robert A. Bourne in the accounting firm of
Bourne & Rose, P.A., Certified Public Accountants. Ms. Rose holds a B.A. in
Sociology from the University of Central Florida. She was licensed as a
certified public accountant in 1979.
C. Brian Strickland. Vice President of Finance and Administration. Mr.
Strickland also currently serves as Senior Vice President of Finance and
Administration of CNL Hospitality Corp., the Advisor, and CNL Hotel Development
Company. Mr. Strickland supervises the companies' financial reporting, financial
control and accounting functions as well as forecasting, budgeting and cash
management activities. He is also responsible for regulatory compliance, equity
and debt financing activities and insurance for the companies. Mr. Strickland
joined CNL Hospitality Corp. in April 1998 with an extensive accounting
background. Prior to joining CNL, he served as Vice President of Taxation with
Patriot American Hospitality, Inc., where he was responsible for implementation
of tax planning strategies on corporate mergers and acquisitions and where he
performed or assisted in strategic processes in the REIT industry. From 1989 to
1997, Mr. Strickland served as a director of tax and asset management for
Wyndham Hotels & Resorts where he was integrally involved in structuring
acquisitive transactions, including the consolidation and initial public
offering of Wyndham Hotel Corporation and its subsequent merger with Patriot
American Hospitality, Inc. In his capacity as director of asset management, he
was instrumental in the development and opening of a hotel and casino in San
Juan, Puerto Rico. Prior to 1989, Mr. Strickland was senior tax accountant for
Trammell Crow Company where he provided tax-consulting services to regional
development offices. From 1986 to 1988, Mr. Strickland was tax accountant for
Ernst & Whinney where he was a member of the real estate practice group. Mr.
Strickland is a certified public accountant and holds a bachelor's degree in
accounting.
The backgrounds of Messrs. Seneff and Bourne are described at "ELECTION OF
DIRECTORS."
<PAGE>
EXECUTIVE COMPENSATION
Annual Compensation
No annual or long-term compensation was paid by the Company to the Chief
Executive Officer for services rendered in all capacities to the Company during
the years ended December 31, 1999, 1998 and 1997. In addition, no executive
officer of the Company received an annual salary or bonus from the Company
during the year ended December 31, 1999. The Company's executive officers also
are employees and executive officers of the Advisor or its affiliates and
receive compensation from CNL Financial Group, Inc. (formerly CNL Group, Inc.)
and its affiliates in part for services in such capacities. See "Certain
Transactions" for a description of the fees payable and expenses reimbursed to
the Advisor.
<PAGE>
PROPOSAL II
APPROVAL OF AN AMENDMENT TO THE COMPANY'S AMENDED
AND RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES
The Board of Directors of the Company has unanimously approved and directed
that there be submitted to stockholders for their approval an amendment to
Article VII of the Company's Amended and Restated Articles of Incorporation, as
amended, Section 7.1, which would increase the number of shares that the Company
is authorized to issue from 126,000,000 to 216,000,000 (the "Share Increase
Amendment"). At February 25, 2000, the Company had 31,878,255 shares of common
stock outstanding.
The text of the proposed amendment is set forth below (the new text is
double underlined, deleted text is struck through):
RESOLVED, that Section 7.1 of Article VII of the Company's Amended and
Restated Articles of Incorporation be amended to read as follows:
SECTION 7.1 Authorized Shares. The beneficial interest in the Company shall
be divided into Equity Shares. The total number of Equity Shares which the
Company is authorized to issue is two hundred sixteen one hundred twenty six
million (216 126 ,000,000) shares of beneficial interest, consisting of one
hundred fifty sixty million (150 60 ,000,000) Common Shares (as defined and
described in Section 7.2(b) (ii) hereof), three million (3,000,000) Preferred
Shares (as defined in Section 7.3 hereof) and sixty-three million (63,000,000)
Excess Shares (as defined in Section 7.7 hereof). All Shares shall be fully paid
and nonassessable when issued. Shares may be issued for such consideration as
the Directors determine or, if issued as a result of a Share dividend or Share
split, without any consideration.
The Company will not be able to sell all 45,000,000 shares in its proposed
third offering unless additional shares are authorized. In the event that no
more shares are authorized, the Company will be permitted to sell only
20,000,000 shares in its proposed third offering, preventing the Company from
raising all of the capital the Board believes is advisable to increase the size
of the Company's property portfolio. In addition, the Board of Directors
believes that authorization of additional shares of Common Stock is essential
for the Company to take advantage of certain business and investment
opportunities, if and as they become available, that require the issuance of
additional shares of common stock. The Company anticipates that it may engage in
additional equity financing, through either public or private offerings of its
securities for cash, issuance of such securities in exchange for assets, or a
combination of the foregoing, although it currently is not involved in any
negotiations and has not entered into any arrangements relating to any of these
capital transactions, other than its planned third offering. In addition, the
Company may need additional common shares in the future for its distribution
reinvestment plan. In order to permit the Company greater flexibility to issue
additional shares of common stock from time to time in order to raise capital in
public or private stock offerings, consummate future acquisitions of properties,
or authorize issuances pursuant to the Company's distribution reinvestment plan,
as well as for other similar purposes, the Board of Directors considers it
advisable that the Company be in a position to issue 90,000,000 additional
shares without the requirement of stockholder approval.
The Share Increase Amendment will not change any other aspect of Article
VII. Holders of the capital stock of the Company, however, will not have the
right to approve the issuance of additional shares of common stock up to the
amount of authorized shares. However, management anticipates that any
transaction by which the Company would issue shares in order to become
self-administered would be submitted to the stockholders for approval. In
addition, holders of the capital stock of the Company do not have any preemptive
rights to subscribe for or purchase any shares of capital stock of the Company,
which means that current stockholders do not have a prior right to purchase any
new issue of common stock of the Company in order to maintain their
proportionate ownership. Consequently, the issuance of additional shares of
capital stock may dilute the interest of a current stockholder if additional
shares are issued at less than fair market value and the stockholder does not
purchase or is not offered the opportunity to purchase additional shares.
The existence of a large number of authorized but unissued shares could
have the effect of hindering or frustrating a takeover of the Company. The
availability for issuance of additional shares of common stock would provide the
Board of Directors with flexibility in responding to a merger or acquisition bid
by placing blocks of shares with persons friendly to the Company, or by taking
other steps to prevent an acquisition of the Company under circumstances which
the Board of Directors does not believe to be in the Company's best interest.
The Company is not aware of any entity which intends to propose a merger with,
or seek to gain control of, the Company.
Approval of the Share Increase Amendment requires the affirmative vote of a
majority of the outstanding shares of the Company's Common Stock entitled to
vote thereon. The Company's officers and directors have advised the Company that
they intend to vote their shares of Common Stock for the Share Increase
Amendment.
The Share Increase Amendment, if approved by stockholders, will become
effective on the date the Share Increase Amendment is filed with the Maryland
Department of Assessments and Taxation. It is anticipated that the appropriate
filing to effect the Share Increase Amendment will be made soon after the annual
meeting as practicable.
The Board of Directors unanimously recommends that stockholders vote FOR
the Share Increase Amendment. Proxies will be voted for the Share Increase
Amendment unless stockholders designate otherwise.
<PAGE>
PROPOSAL III:
APPROVAL OF AMENDMENTS TO THE COMPANY'S
AMENDED AND RESTATED ARTICLES OF INCORPORATION
TO PERMIT THE COMPANY (I) TO MAKE LOANS TO WHOLLY OWNED
SUBSIDIARIES AND (II) TO MAKE MORTGAGE LOANS TO JOINT VENTURES
WITH UNAFFILIATED THIRD PARTIES IN COMPLIANCE WITH OTHER
RESTRICITIONS IN THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION
The Articles contain a number of provisions that limit the Company's
ability to enter into transactions with affiliated parties. Section 6.4(ii)
states that the Company will not make any loans to Affiliates. Affiliates are
defined to include: (i) any person or entity directly or indirectly through one
or more intermediaries controlling, controlled by, or under common control with
another person or entity; (ii) any person or entity, directly or indirectly
owning, controlling, or holding with power to vote ten percent (10%) or more of
the outstanding voting securities of another person or entity; (iii) any
officer, director, partner or trustee of such person or entity; (iv) any person
ten percent (10%) or more of whose outstanding voting securities are directly or
indirectly owned, controlled or held with power to vote, by such other person;
and (v) if such other person or entity is an officer, director, partner or
trustee of a person or entity, the person or entity for which such person or
entity acts in any such capacity.
The Board of Directors believes that this provision is more restrictive
than is necessary to protect the interests of stockholders. For example, Section
6.4(ii) currently prohibits the Company from making a loan to a wholly owned
subsidiary, such as CNL Hospitality Properties, LP, which is the operating
entity through which the Company owns its properties and conducts its business.
Additionally, the current provisions prohibit the Company from making a loan to
a joint venture in which the Company owns an interest of as little as 10% and in
which the remaining interest is held by an unaffiliated third party. Because the
Board of Directors believes that Section 6.4(ii), as currently in effect,
precludes business transactions that are potentially advantageous to the Company
and that do not present undue risk of conflicts of interest with the Sponsor (as
such term is defined in the Articles), the Directors, the Advisor and Affiliates
of those persons, the Board has unanimously recommends that an amendment to
Section 6.4(ii) of Article VI of the Articles be submitted to stockholders for
approval.
The Company believes that the proposed change is consistent with the
requirements of the Statement of Policy Regarding Real Estate Investment Trusts
adopted by the North American Securities Administrators Association (NASAA).
These guidelines are applicable to REITs, which make offerings that are not
exempt from registration under state securities laws.
The proposed amendment would allow the Company (i) to make loans to wholly
owned subsidiaries and (ii) to make mortgage loans to joint ventures with
unaffiliated third parties in compliance with Section 5.4(iii) of the Company's
Articles (which requires the Company to obtain an independent appraisal of the
value of the underlying property). The Company would not be permitted to make
loans to Affiliates in any other cases. The amendment as set forth below and
approved by the Board of Directors makes no other changes to the existing text
of Section 6.4(ii).
The ability to make loans to certain Affiliates increases the risk that the
Company will make loans that are inadequately secured, that are to borrowers
that do not meet the Company's usual standards of creditworthiness, or that are
made on terms more favorable to the borrower than would be the case in a loan to
an unaffiliated party. The Company believes that these risks are mitigated by
the protections provided by other sections of the Articles. For example, Section
5.4(iii) of the Articles requires an independent appraisal of the property
underlying a mortgage loan involving the Advisor, Directors and Affiliates. In
addition, Section 9.5 requires that any transaction with Affiliates be ratified
by a majority of the independent directors not affiliated with a person who is
party to the transaction and further requires that the transaction be fair and
reasonable to the Company and its stockholders and that the terms of such
transaction be at least as favorable as the terms of any comparable transaction
made on an arms-length basis and known to the Directors.
The text of the proposed amendment is set forth below (the new text is
double underlined, deleted text is struck through):
RESOLVED, that Section 6.4(ii) of Article VI of the Company's Amended and
Restated Articles of Incorporation, as amended, be amended to
read as follows:
<PAGE>
Section 6.4 Other Transactions
(ii) The Company will shall not make any loans to Affiliates, except (A)
to wholly owned subsidiaries of the Company, or (B) mortgage loans
to Joint Ventures (and joint ventures of wholly owned subsidiaries
of the Company) in which no co-venturer is the Sponsor, the
Advisor, the Directors or any Affiliate of those persons or of the
Company (other than a wholly owned subsidiary of the Company) as
provided under Section 5.4 (iii). Any loans to the Company by the
Advisor or its Affiliates must be approved by a majority of the
Directors (including a majority of Independent Directors) not
otherwise interested in such transaction as fair, competitive, and
commercially reasonable, and no less favorable to the Company than
comparable loans between unaffiliated parties.
In connection with the above-described amendment to Section 6.4(ii), the
Board of Directors unanimously recommends an amendment to section 5.4(xviii) of
the Articles, which prohibits the Company from making loans to the Advisor and
its Affiliates. Because certain mortgage loans to Affiliates and loans to wholly
owned subsidiaries would be permitted by the revised Section 6.4(ii), retaining
section 5.4(xviii) in its current form would be inconsistent with the amended
Section 6.4(ii). The Board of Directors has unanimously recommended that an
amendment to Section 5.4(xviii) of Article V of the Articles, which excepts
transactions made subject to Section 6.4(ii), be submitted to stockholders for
approval. The amendment as approved by the Board of Directors makes no other
changes to the existing text of Section 5.4.
The text of the proposed amendment to Section 5.4(xviii) of the Articles is
set forth below (the new text is double underlined, deleted
text is struck through):
RESOLVED, that Section 5.4(xviii) of Article V of the Company's Amended
and Restated Articles of Incorporation, as amended, be amended
to read as follows:
Section 5.4 Investment Limitation. In addition to the other investment
restrictions imposed by the Directors from time to time, consistent with the
Company's objective of qualifying as a REIT, the following shall apply to the
Company's investments:
(xviii) The Company shall not make loans to the Advisor or its Affiliates,
except as provided under Section 6.4(ii).
Approval of these amendments requires the affirmative vote of a majority of
the outstanding shares of the Company's Common Stock entitled to be voted
thereon. The Company's officers and directors have advised the Company that they
intend to vote their shares of Common Stock for these amendments.
These amendments, if approved by the stockholders, will become effective on
the date the amendments are filed with the Maryland Department of Assessments
and Taxation. It is anticipated that the appropriate filing to effect these
amendments will be made as soon after the annual meeting as is practicable.
The Board of Directors unanimously recommends that stockholders vote these
amendments. Proxies will be voted for these amendments unless stockholders
designate otherwise.
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of February 25, 2000, the number and
percentage of outstanding shares beneficially owned by all persons known by the
Company to own beneficially more than five percent of the Company's common
stock, by each director and nominee, and by all officers and directors as a
group, based upon information furnished to the Company by such stockholders,
officers and directors.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Shares
Charles E. Adams 0 --
One Peach Lane
Ft. Mill, SC 29716
Robert A. Bourne 0 --
450 South Orange Avenue
Orlando, FL 32801
Lawrence A. Dustin 0 --
2120 Walnut Hill Lane, Suite 100
Irving, TX 75038
John A. Griswold 0 --
1200 EPCOT Resorts Blvd.
Lake Buena Vista, FL 32830
Matthew W. Kaplan 1,499,960 (1) 4.7%
1251 Avenue of the Americas
51st Floor
New York, NY 10020
Craig M. McAllaster 0 --
1000 Holt Avenue - 2722
Winter Park, FL 32789-4499
Charles A. Muller 500 (2) (3)
450 South Orange Avenue
Orlando, FL 32801
James M. Seneff, Jr. 20,000 (4) (3)
450 South Orange Avenue
Orlando, FL 32801
All directors and executive 1,520,460 4.8%
officers as a group (11 persons)
(1) Represents shares held by Five Arrows Securities Realty II, LLC, a Delaware
limited liability company in which Rothschild Realty Investors II, LLC, the
managing member, has appointed Mr. Kaplan, among others, as a manager of
Five Arrows Realty Securities II, LLC.
Mr. Kaplan disclaims beneficial ownership of such shares.
(2) Represents shares held by Mr. Muller as an individual.
(3) Less than one percent.
(4) Represents shares held by the Advisor, of which Mr. Seneff is a director.
Mr. Seneff and his wife share beneficial ownership of the Advisor through
their ownership of CNL Financial Group, Inc. (formerly CNL Group, Inc.)
through its parent company, CNL Holdings, Inc. The Advisor is a majority
owned subsidiary of CNL Financial Group, Inc. (formerly CNL Group, Inc.).
Compliance With Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities (collectively, the
"Reporting Persons"), to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the Securities and Exchange Commission (the "SEC").
Reporting Persons are required by the SEC regulation to furnish the Company with
copies of all Forms 3, 4 and 5 that they file.
Based solely upon a review of Section 16(a) reports furnished to the Company for
1999, written representations that no other reports were required and other
information known to the Company, the Company believes that the Reporting
Persons complied with all filing requirements for 1999, except that Messrs.
Kaplan, Dustin and Griswold did not timely file statements of beneficial
ownership on Form 3 and Mr. Kaplan did not timely file a statement of changes in
beneficial ownership on Form 4 relating to one transaction. In addition, Mr.
Strickland did not timely file a statement of beneficial ownership on Form 3 in
1998.
<PAGE>
CERTAIN TRANSACTIONS
All of the executive officers of the Company are executive officers of the
Advisor, a majority owned subsidiary of CNL Financial Group, Inc. (formerly CNL
Group, Inc.), of which Messrs. Seneff and Bourne are affiliates. In addition,
Messrs. Seneff and Bourne, Ms. Rose and Ms. Wall are executive officers of CNL
Securities Corp., the managing dealer of the Company's offering of shares of
common stock, and a wholly owned subsidiary of CNL Financial Group, Inc. Messrs.
Seneff and Bourne are directors of the Company, the Advisor and CNL Securities
Corp., and Ms. Rose is a director of the Advisor. Mr. Kaplan is a director of
the Company and the Advisor. Administration of the day-to-day operations of the
Company is provided by the Advisor, pursuant to the terms of an advisory
agreement. The Advisor also serves as the Company's consultant in connection
with policy decisions to be made by the Company's Board of Directors, manages
the Company's properties and renders such other services as the Board of
Directors deems appropriate. The Advisor also bears the expense of providing the
executive personnel and office space to the Company. The Advisor is at all times
subject to the supervision of the Board of Directors of the Company and has only
such functions and authority as the Company may delegate to it as the Company's
agent.
CNL Securities Corp. is entitled to receive selling commissions amounting
to 7.5% of the total amount raised from the sale of shares of common stock for
services in connection with the offering of shares, a substantial portion of
which may be paid as commissions to other broker-dealers. For the year ended
December 31, 1999, the Company incurred $17,320,448 of such fees, of which
approximately $16,164,488 was paid by CNL Securities Corp. as commissions to
other broker-dealers.
In addition, CNL Securities Corp. is entitled to receive a marketing
support and due diligence expense reimbursement fee equal to 0.5% of the total
amount raised from the sale of shares, a portion of which may be reallowed to
other broker-dealers. For the year ended December 31, 1999, the Company incurred
$1,154,697 of such fees, the majority of which were reallowed to other
broker-dealers and from which all bona fide due diligence expenses were paid.
In addition, in connection with its current offering of common stock, the
Company has agreed to issue and sell soliciting dealer warrants ("Soliciting
Dealer Warrants") to CNL Securities Corp. The price for each warrant will be
$0.0008 and one warrant will be issued for every 25 shares sold by the managing
dealer. All or a portion of the Soliciting Dealer Warrants may be reallowed to
soliciting dealers with prior written approval from, and in the sole discretion
of, the managing dealer, except where prohibited by either federal or state
securities laws. The holder of a Soliciting Dealer Warrant will be entitled to
purchase one share of common stock from the Company at a price of $12.00 during
the five year period commencing the date the current offering began. No
Soliciting Dealer Warrants, however, will be exercisable until one year from the
date of issuance. As of February 25, 2000, CNL Securities Corp. has been issued
approximately 479,000 Soliciting Dealer Warrants.
The Advisor is entitled to receive acquisition fees for services in
identifying the properties and structuring the terms of the acquisition and
leases of the properties and structuring the terms of the mortgage loans equal
to 4.5% of gross proceeds, loan proceeds from permanent financing and amounts
outstanding on the line of credit, if any, at the time of listing, but excluding
that portion of the permanent financing used to finance Secured Equipment
Leases. For the year ended December 31, 1999, the Company incurred $10,956,455
of such fees.
The Company and the Advisor have entered into an advisory agreement
pursuant to which the Advisor will receive a monthly asset management fee of
one-twelfth of 0.60% of the Company's real estate asset value and the
outstanding principal balance of any Mortgage Loans as of the end of the
preceding month. The management fee, which will not exceed fees which are
competitive for similar services in the same geographic area, may or may not be
taken, in whole or in part as to any year, in the sole discretion of the
Advisor. All or any portion of the management fee not taken as to any fiscal
year shall be deferred without interest and may be taken in such other fiscal
year as the Advisor shall determine. During the year ended December 31, 1999,
the Company incurred $106,788 of such fees.
The Company incurs operating expenses which, in general, are those expenses
relating to administration of the Company on an ongoing basis. Pursuant to the
advisory agreement described above, the Advisor is required to reimburse the
Company the amount by which the total operating expenses paid or incurred by the
Company exceed in any four consecutive fiscal quarters, the greater of two
percent of average invested assets or 25 percent of net income (the "Expense
Cap"). For the year ended December 31, 1999, the Company's operating expenses
did not exceed the Expense Cap.
The Advisor and its affiliates provide accounting and administrative
services to the Company (including accounting and administrative services in
connection with the offering of shares) on a day-to-day basis. For the year
ended December 31, 1999, the Company incurred a total of $4,206,709 for these
services, $3,854,739 of such costs representing stock issuance costs, $124
representing acquisition related costs and $351,846 representing general
operating and administrative expenses, including costs related to preparing and
distributing reports required by the Securities and Exchange Commission.
All amounts paid by the Company to affiliates of the Company are believed
by the Company to be fair and comparable to amounts that would be paid for
similar services provided by unaffiliated third parties.
During 1999, the Company opened three bank accounts in a bank in which
certain officers and directors of the Company serve as directors, and in which
an affiliate of the Advisor is stockholder. The amount deposited with this bank
was $15,275,629 at December 31, 1999.
<PAGE>
INDEPENDENT AUDITORS
Upon recommendation of and approval by the Board of Directors, including
the independent directors, PricewaterhouseCoopers LLP has been selected to act
as independent certified public accountants for the Company during the current
fiscal year.
A representative of PricewaterhouseCoopers LLP will be present at the
annual meeting and will be provided with the opportunity to make a statement if
desired. Such representative will also be available to respond to appropriate
questions.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
annual meeting other than those stated above. If any other business should come
before the annual meeting, the person(s) named in the enclosed proxy will vote
thereon as he or they determine to be in the best interests of the Company.
PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholder proposal to be considered for inclusion in the Company's
proxy statement and form of proxy for the annual meeting of stockholders to be
held in 2001 must be received at the Company's office at 450 South Orange
Avenue, Orlando, Florida 32801, no later than December 6, 2000.
Notwithstanding the aforementioned deadline, under the Company's Bylaws, a
stockholder must follow certain other procedures to nominate persons for
election as directors or to propose other business to be considered at an annual
meeting of stockholders. These procedures provide that stockholders desiring to
make nominations for directors and/or to bring a proper subject before a meeting
must do so by notice timely received by the Secretary of the Company. With
respect to proposals for the 2001 annual meeting, the Secretary of the Company
must receive notice of any such proposal no earlier than February 22, 2001, and
no later than March 24, 2001.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1999, accompanies this proxy statement.
By Order of the Board of Directors,
Lynn E. Rose
Secretary
April 6, 2000
Orlando, Florida
<PAGE>
CNL Hospitality Properties, Inc. Please Vote Flyer
SEND IN YOUR PROXY
Please Vote
Your Vote Counts...
The date of the CNL Hospitality Properties, Inc. annual stockholder meeting is
rapidly approaching. We encourage you to cast your vote promptly, so that we can
avoid the time and expense of re-soliciting your vote.
Help Save Costs...
Re-soliciting stockholders adds unnecessary costs to CNL Hospitality Properties,
Inc. Help us minimize operational expenses.
Send in Your Proxy Today...
Please review the proxy card located in this stockholder package. Simply cast
your vote, sign and detach the proxy and return it in the postage-paid envelope
provided.
Thank You!
If you have any questions, please call D.F. King & Co., Inc., which is assisting
CNL with this proxy, at 1-800-848-3402. We appreciate your participation and
support.
CNL Hospitality Properties, Inc.
CNL Center at City Commons
450 South Orange Avenue
Orlando, FL 32801-3336
(407) 650-1000 (800) 522-3863
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CNL Hospitality Properties, Inc. Proxy Card Graphics
Front side of card:
Your Vote is Important!
Please take a minute to sign, date and return your proxy card.
CNL Hospitality Properties Inc.
CNL Center at City Commons
450 South Orange Avenue
Orlando, FL 32801-3336
(407) 650-1000 (800) 522-3863
Back side of card:
The date of the CNL Hospitality Properties, Inc. annual shareholder meeting is
quickly approaching...and we need your help!
You should have recently received your CNL Hospitality Properties, Inc. annual
report, proxy statement and proxy card. Please take a few minutes to sign, date
and return the proxy card. Please note: ALL parties must sign the proxy card in
order for it to be valid.
If you have already cast your vote, thank you for your prompt attention to this
important matter. We appreciate your participation!
Management cannot vote your shares for you and it is important that your shares
are represented.
Please vote. Every Vote Counts! Thank You!
