Rule 424(b)(3)
No. 333-89691
CNL HOSPITALITY PROPERTIES, INC.
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated May 23, 2000 and the Prospectus Supplement dated December 12,
2000. Capitalized terms used in this Supplement have the same meaning as in the
Prospectus unless otherwise stated herein.
Information as to proposed properties for which the Company has
received initial commitments and as to the number and types of Properties
acquired by the Company is presented as of December 18, 2000, and all references
to commitments or Property acquisitions should be read in that context. Proposed
properties for which the Company receives initial commitments, as well as
property acquisitions that occur after December 18, 2000, will be reported in a
subsequent Supplement.
RECENT DEVELOPMENTS
On December 6, 2000, 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(R) by Marriott(R) on the
Property (the "Residence Inn SeaWorld Property"). 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. The estimated
completion date for construction is the first quarter of 2002.
On December 15, 2000, the Company acquired a SpringHill SuitesTM by
Marriott(R) located in Orlando, Florida, in the community of Little Lake Bryan.
The SpringHill Suites Little Lake Bryan Property, which opened in December 2000,
includes 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.
As of December 18, 2000, the Company owned interests in 27 Properties,
including one Property on which a hotel is being constructed. In addition, the
Company has commitments to acquire an additional four properties directly and an
interest in one property through a joint venture. All of the Properties owned by
the Company are or will be leased on a long-term, triple-net basis and the
hotels are all, or in the case of the hotel under construction will be, operated
as national hotel chains.
THE OFFERING
Upon completion of its Initial Offering on June 17, 1999, the Company
had received aggregate subscriptions for 15,007,264 Shares totalling
$150,072,637 in gross proceeds, including 7,264 Shares ($72,637) issued pursuant
to the Reinvestment Plan. Following the completion of the Initial Offering, the
Company commenced the 1999 Offering of up to 27,500,000 Shares. On September 14,
2000, the 1999 Offering closed upon receipt of subscriptions totalling
approximately $275,000,000. Following completion of the 1999 Offering, the
Company commenced this offering of up to 45,000,000 Shares. As of December 18,
2000, the Company had received aggregate subscriptions for 48,536,863 Shares
totalling $485,368,631 in gross proceeds, including 136,974 Shares ($1,369,740)
issued pursuant to the Reinvestment Plan from its Initial Offering, the 1999
Offering and this offering. As of December 18, 2000, net proceeds to the Company
from its offerings of Shares and capital contributions from the Advisor, after
deduction of selling commissions, marketing support and due diligence expense
reimbursement fees and organizational and offering expenses, totalled
approximately $431,000,000. As of December 18, 2000, the Company had invested,
directly or indirectly, approximately $349,300,000 of net offering
December 21, 2000 Prospectus Dated May 23, 2000
<PAGE>
proceeds and $68,160,000 in loan proceeds, described below in "Business -
Borrowing and in the Prospectus Supplement dated December 12, 2000 under the
heading "Business - Borrowing," in 27 hotel Properties, including one Property
on which a hotel is being constructed, to redeem 140,450 Shares of Common Stock
for $1,292,142 and to pay approximately $24,400,000 in acquisition fees and
certain acquisition expenses, leaving approximately $56,000,000 available to
invest in Properties and Mortgage Loans.
BUSINESS
PROPERTY ACQUISITIONS
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.
<PAGE>
PENDING INVESTMENTS
As of December 18, 2000, the Company had initial commitments to acquire
four additional hotel properties. The four properties are a Courtyard by
Marriott (in Overland Park, Kansas) and three SpringHill Suites by Marriott
hotels (one in each of Centreville, Virginia; Charlotte, North Carolina and
Raleigh/Durham, North Carolina). The acquisition of each of these properties is
subject to the fulfillment of certain conditions. There can be no assurance that
any or all of the conditions will be satisfied or, if satisfied, that one or
more of these properties will be acquired by the Company. If acquired, the
leases of these properties are expected to be entered into on substantially the
same terms described in the section of the Prospectus entitled " -- Description
of Property Leases." In order to acquire all of these properties, the Company
must obtain additional funds through the receipt of additional offering proceeds
and/or debt financing.
Leases. Set forth below are summarized terms expected to apply to the
leases for each of the four properties. More detailed information relating to a
property and its related lease will be provided at such time, if any, as the
property is acquired.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Estimated
Purchase Lease Term and Minimum Annual
Property Price Renewal Options Rent Percentage Rent
-------- ------------ --------------- ---------------- ---------------
Courtyard by Marriott $15,790,000 15 years; two 10% of the Company's total for each lease year after the second
Overland Park, KS (1) ten-year renewal cost to purchase the property lease year, 7% of revenues in excess
(the "Courtyard Overland Park options of revenues for the second lease year
Property")
Hotel under construction
SpringHill Suites by Marriott $11,414,000 15 years; two 10% of the Company's total for each lease year after the second
Centreville, VA (1) ten-year renewal cost to purchase the property lease year, 7% of revenues in excess
(the "SpringHill Suites options of revenues for the second lease year
Centreville Property")
Hotel under construction
SpringHill Suites by Marriott $11,773,000 15 years; two 10% of the Company's total for each lease year after the second
Charlotte, NC (1) ten-year renewal cost to purchase the property lease year, 7% of revenues in excess
(the "SpringHill Suites options of revenues for the second lease year
Charlotte Property")
Hotel under construction
SpringHill Suites by Marriott $8,822,000 15 years; two 10% of the Company's total for each lease year after the second
Raleigh/Durham, NC (1) ten-year renewal cost to purchase the property lease year, 7% of revenues in excess
(the "SpringHill Suites options of revenues for the second lease year
Raleigh/Durham Property")
Hotel under construction
</TABLE>
FOOTNOTES:
(1) The leases for the Courtyard Overland Park, the SpringHill Suites
Centreville, the SpringHill Suites Charlotte and the SpringHill Suites
Raleigh/Durham Properties are expected to be with the same unaffiliated
lessee.
<PAGE>
In addition to the above commitments, on August 28, 2000 the Company
entered into an agreement in principle to invest in a property in Phoenix,
Arizona (the "Desert Ridge Property"). The Desert Ridge Property is expected to
be owned by a Joint Venture (the "Desert Ridge Joint Venture") between the
Company, Marriott International, Inc. or an affiliate thereof, and a partnership
in which an Affiliate of the Advisor will be the general partner. The Company is
anticipated to have a 44% equity interest in the Desert Ridge Joint Venture, and
an equivalent interest in the Desert Ridge Joint Venture's profits and losses.
The overall cost of the Property (including acquisition of land, development and
construction) is estimated to be approximately $293,000,000. The Company expects
that the Desert Ridge Joint Venture will obtain permanent financing from a third
party lender for approximately 60% of this amount, with such financing to be
secured by a mortgage on the Desert Ridge Property. In addition, Marriott
International, Inc. or an affiliate thereof is expected to provide financing for
an additional 20% of the costs to the Desert Ridge Joint Venture, secured by
pledges of the co-venturers' equity contributions to the Desert Ridge Joint
Venture. In connection with the development of the Desert Ridge Property, the
Company anticipates that the Desert Ridge Joint Venture will pay Development
Fees to a wholly owned subsidiary of the Advisor that will act, along with an
affiliate of Marriott International, Inc., as co-developer of the Property. The
Property will be leased to a subsidiary of the Desert Ridge Joint Venture (which
will also be an indirect subsidiary of the Company and will make an election
after January 1, 2001 to be treated as a taxable REIT subsidiary under the Code)
and will be managed by Marriott International, Inc.
The Desert Ridge Property will be constructed on a 400 acre site as
part of a 5,700 acre master-planned development in the north Phoenix/Scottsdale,
Arizona area. The Property will be operated as a Marriott Resort & Spa and will
include 950 guest rooms (including 85 suites), approximately 77,000 square feet
of meeting and banquet facilities, a full service health spa, eating and
beverage facilities that seat 947 people, two 18-hole golf courses and 8 tennis
courts. The Desert Ridge Property is currently anticipated to open to the public
in January 2003.
BORROWING
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.
These Properties are described in the Prospectus Supplement dated December 12,
2000 under the heading " -- Property Acquisitions."
In addition, 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 proceeds
were used in connection with the land acquisition described above in " --
Property Acquisitions."
