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 October 23,
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 November 21, 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 November 21, 2000, will be reported in a
subsequent Supplement.
RECENT DEVELOPMENTS
On November 3, 2000, the Company acquired a TownePlace Suites(R) by
Marriott(R) located in Newark, California. The Newark Property, which opened in
September 2000, includes 127 guest suites, an outdoor swimming pool, an exercise
room and guest laundry facilities. The Property is located in Alameda County,
adjacent to Santa Clara County, which is considered to be the heart of Silicon
Valley.
On November 21, 2000, the Company acquired a Courtyard(R) by
Marriott(R) and a Fairfield Inn(R) by Marriott(R) both located in Orlando,
Florida, in the community of Little Lake Bryan. The Courtyard Little Lake Bryan
Property, which opened in October 2000, includes 312 guest rooms, 3,500 square
feet of meeting space, four executive board rooms, a poolside bar and grill, a
breakfast cafe, a fitness center, an indoor/outdoor whirlpool and a beach entry
indoor/outdoor swimming pool. The Fairfield Inn Little Lake Bryan Property,
which also opened in October 2000, includes 388 guest rooms, a poolside bar and
grill, a fitness center, a whirlpool and an outdoor swimming pool. The
Properties are located close to SeaWorld(R) Orlando. Central Florida is home to
eight theme parks and the Orange County Convention Center is one of the largest
convention centers in the country.
As of November 21, 2000, the Company owned interests in 25 Properties
and had commitments to acquire an additional five properties directly and an
interest in one property through a joint venture. All of the Properties owned by
the Company are leased on a long-term, triple-net basis and the hotels are all
operated as national hotel chains.
On November 1, 2000, the Board of Directors declared a distribution of
$0.0625 per Share to stockholders of record on November 1, representing an
annualized distribution rate of 7.50%.
THE OFFERINGS
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
$274,998,988. Following completion of the 1999 Offering, the Company commenced
this offering of up to 45,000,000 Shares. As of November 21, 2000, the Company
had received aggregate subscriptions for 47,174,442 Shares totalling
$471,744,422 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 November 21, 2000, net proceeds to the Company from its
offerings of Shares and capital
November 30, 2000 Prospectus Dated May 23, 2000
<PAGE>
contributions from the Advisor, after deduction of selling commissions,
marketing support and due diligence expense reimbursement fees and
organizational and offering expenses, totalled approximately $418,400,000. The
Company has used net offering proceeds to invest, directly or indirectly,
approximately $345,500,000 in 25 hotel Properties, to pay $1,769,000 as a
deposit on one additional hotel Property, to redeem 140,450 Shares of Common
Stock for $1,292,142 and to pay approximately $24,200,000 in acquisition fees
and certain acquisition expenses, leaving approximately $45,600,000 available to
invest in Properties and Mortgage Loans.
BUSINESS
Property Acquisitions
TownePlace Suites by Marriott located in Newark, California. On
November 3, 2000, the Company acquired a TownePlace Suites located in Newark,
California (the "Newark Property") for $13,600,000 from TownePlace Management
Corporation. 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 Prospectus under the heading " -- Description of Property
Leases." The principal features of the lease are as follows:
o The initial term of the lease expires in 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 $1,360,000 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 $418,462 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 maximum amount of
the guarantee is $1,360,000.
o The Newark Property is one of the Pooled Properties described in the
Prospectus Supplement dated October 23, 2000, under the heading " --
Palm Desert Portfolio."
The estimated federal income tax basis of the depreciable portion of
the Newark Property is approximately $11.4 million.
The Newark Property, which opened in September 2000, is a TownePlace
Suites by Marriott located in Newark, California. The Newark Property includes
127 guest suites, an outdoor swimming pool, an exercise room and guest laundry
facilities. The Property is located in Alameda County, adjacent to Santa Clara
County, which is considered to be the heart of the Silicon Valley. Other lodging
facilities located in proximity to the Newark Property
<PAGE>
include an Extended Stay America, a Homestead Village, two Residence Inn(R) by
Marriott(R) hotels and a Woodfin Suites. The average occupancy rate, the average
daily room rate and the revenue per available room for the period the hotel has
been operational is as follows:
Newark Property
---------------------------------------------------
Average Average Revenue
Occupancy Daily Room per Available
Year Rate Rate Room
------------ ------------- --------------- ----------------
*2000 92.10% $88.27 $81.27
* Data for the Newark Property represents the period September 1, 2000
through November 3, 2000.
The Company believes that the results achieved by the Property, as
shown in the table above, may or may not be indicative of its long-term
operating potential, as the Property opened in September 2000.
Little Lake Bryan Properties. On November 21, 2000, the Company
acquired two hotel Properties. The Properties are a Courtyard by Marriott and a
Fairfield Inn by Marriott, both located in Orlando, Florida, in the community of
Little Lake Bryan (the "Courtyard Little Lake Bryan Property" and the "Fairfield
Inn Little Lake Bryan Property") (collectively, the "Little Lake Bryan
Properties").
The Company acquired the Little Lake Bryan Properties for an aggregate
purchase price of $66,877,680 from Marriott International, Inc. In connection
with the purchase of the two Properties, the Company, as lessor, entered into
two separate, long-term lease agreements with the same unaffiliated lessee. The
general terms of the lease agreements are described in the section of the
Prospectus entitled " -- Description of Property Leases." The principal features
of the lease are as follows:
o The initial term of each lease is approximately 15 years.
o At the end of the initial term of each lease, the tenant will have two
consecutive renewal options of ten years each.
o The leases require minimum rent payments of $3,631,950 per year for the
Courtyard Little Lake Bryan Property and $3,123,750 per year for the
Fairfield Inn Little Lake Bryan Property.
o In addition to minimum rent, for each lease year after the second lease
year, each lease requires percentage rent equal to seven percent of
room revenues in excess of room revenues for the second lease year.
o A security deposit equal to $1,103,695 for the Courtyard Little Lake
Bryan Property and $954,079 for the Fairfield Inn Little Lake Bryan
Property has been retained by the Company as security for the tenant's
obligations under the leases.
o The tenant of the Courtyard Little Lake Bryan and Fairfield Inn Little
Lake Bryan Properties has established an FF&E Reserve. Deposits to the
FF&E Reserve for the Courtyard Little Lake Bryan Property are made
every four weeks as follows: 3% of gross receipts for the first lease
year; 4% of gross receipts for the second lease year; and 5% of gross
receipts every lease year thereafter. Deposits to the FF&E Reserve for
the Fairfield Inn Little Lake Bryan Property are made every four weeks
as follows: 4% of gross receipts for the first lease year and 5% of
gross receipts every lease year thereafter. Funds in the FF&E Reserve
and all property purchased with funds from the FF&E Reserve shall be
paid, granted and assigned to the Company as additional rent.
o Marriott International, Inc. has guaranteed the tenant's obligation to
pay minimum rent under each lease. The guarantee terminates on the
earlier of the end of the third lease year or at such time as the net
operating income from the applicable Property exceeds minimum rent due
under the lease by 25% for any trailing 12-month period. The aggregate
maximum amount of the guarantee is $6,755,700. Upon acquisition of the
SpringHill Suites(R)by Marriott(R)in Orlando, Florida (the "SpringHill
Suites Little Lake Bryan Property"), as described in "-- Pending
Investments," the maximum amount of the guarantee will increase to
$10,433,632 and the guarantee will also cover minimum rent payments for
the pending investment listed above. From such time, net operating
income from the Little Lake Bryan Properties will be pooled with the
SpringHill Suites Little Lake Bryan Property in determining whether the
three Properties' aggregate net operating income exceeds the aggregate
minimum rent due under the leases by 25%.
o In addition, the leases for the Little Lake Bryan Properties will
contain cross-default terms with respect to the leases for the Pooled
Properties, meaning that if the tenant to any of the Little Lake Bryan
Properties or the Pooled Properties defaults on its obligations under
its lease, the Company will have the ability to pursue its remedies
under the leases with respect to the Little Lake Bryan Properties and
the Pooled Properties, regardless of whether the tenant of any such
Property is in default under its lease.
The federal income tax basis of the depreciable portion of the
Courtyard Little Lake Bryan Property and the Fairfield Inn Little Lake Bryan
Property is approximately $30.5 million and $26.4 million, respectively.
The Courtyard Little Lake Bryan Property, which opened in October 2000,
has 312 guest rooms, 3,500 square feet of meeting space, four executive board
rooms, a poolside bar and grill, a breakfast cafe, a fitness center, an
indoor/outdoor whirlpool and a beach entry indoor/outdoor swimming pool. The
Fairfield Inn Little Lake Bryan Property, which also opened in October 2000, has
388 guest rooms, a poolside bar and grill, a fitness center, a whirlpool and an
outdoor swimming pool. The hotel Properties are located close to SeaWorld(R)
Orlando. Central Florida is home to eight theme parks and the Orange County
Convention Center is one of the largest convention centers in the country. Other
lodging facilities located in proximity to the Courtyard Little Lake Bryan and
Fairfield Inn Little Lake Bryan Properties include a DoubleTree Guest Suites, a
Holiday Inn, a Homewood Suites and a Sheraton World Resort. The average
occupancy rate, the average daily room rate and the revenue per available room
for the periods the hotels have been operational are as follows:
<TABLE>
<CAPTION>
<S> <C>
Courtyard Little Lake Bryan Property Fairfield Inn Little Lake Bryan Property
--------------------------------------------------- ---------------------------------------------------
Average Average Revenue Average Average Revenue
Occupancy Daily Room per Available Occupancy Daily Room per Available
Year Rate Rate Room Rate Rate Room
------------ ------------- --------------- ---------------- ------------- --------------- ---------------
*2000 69.00% $91.07 $62.81 59.30% $70.41 $41.75
</TABLE>
* Data for 2000 represents the period October 16, 2000 through November
24, 2000.
The Company believes that the results achieved by the Properties, as
shown in the table above, may or may not be indicative of their long-term
operating potential, as the Properties opened in October 2000.
Pending Investments
As of November 21, 2000, the Company had initial commitments to acquire
five additional hotel properties. The five properties are a Courtyard by
Marriott (in Overland Park, Kansas) and four SpringHill Suites by Marriott
hotels (one in each of Centreville, Virginia; Charlotte, North Carolina;
Orlando, Florida 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 five 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
Property Purchase Lease Term and Minimum Annual
Price Renewal Options Rent Percentage Rent
SpringHill Suites by Marriott $36,779,320 15 years; two ten- 10% of the Company's total for each lease year after the
Orlando, FL year renewal options cost to purchase the property second lease year, 7% of
(the "SpringHill Suites Little revenues in excess of revenues
Lake Bryan Property") for the second lease year
Hotel under construction
Courtyard by Marriott $15,790,000 15 years; two ten- 10% of the Company's total for each lease year after the
Overland Park, KS (1) year renewal options cost to purchase the property second lease year, 7% of
(the "Courtyard Overland revenues in excess of revenues
Park Property") for the second lease year
Hotel under construction
SpringHill Suites by Marriott $11,414,000 15 years; two ten- 10% of the Company's total for each lease year after the
Centreville, VA (1) year renewal options cost to purchase the property second lease year, 7% of
(the "SpringHill Suites revenues in excess of revenues
Centreville Property") for the second lease year
Hotel under construction
SpringHill Suites by Marriott $11,773,000 15 years; two ten- 10% of the Company's total for each lease year after the
Charlotte, NC (1) year renewal options cost to purchase the property second lease year, 7% of
(the "SpringHill Suites revenues in excess of revenues
Charlotte Property") for the second lease year
Hotel under construction
SpringHill Suites by Marriott $8,822,000 15 years; two ten- 10% of the Company's total for each lease year after the
Raleigh/Durham, NC (1) year renewal options cost to purchase the property second lease year, 7% of
(the "SpringHill Suites revenues in excess of revenues
for the second lease year
</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
of 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 interests in the Desert Ridge Joint Venture.
The remaining 20% of the costs are expected to be financed by 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
The following information should be read in conjunction with the " -
Borrowing" section beginning on page 71 of the Prospectus.
The Company has entered into a loan commitment with a bank to be used
by the Company to finance the acquisition of three hotel Properties. The loan
commitment 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
shall 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 is expected to incur loan fees of $300,000. As of November 21, 2000, the
closing for the $50,000,000 loan had not occurred.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
Page
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of September 30, 2000 9
Pro Forma Consolidated Statement of Earnings for the nine months
ended September 30, 2000 10
Pro Forma Consolidated Statement of Earnings for the year ended
December 31, 1999 11
Notes to Pro Forma Consolidated Financial Statements for the
nine months ended September 30, 2000 and the year ended
December 31, 1999 12
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Consolidated Balance Sheet of CNL
Hospitality Properties, Inc. and subsidiaries (the "Company") gives effect to
(i) the receipt of an initial capital contribution of $200,000 from the Advisor,
$443,001,390 in gross offering proceeds from the sale of 44,300,139 shares of
common stock for the period from inception through September 30, 2000, and the
application of such funds to purchase 14 properties, to acquire an 89 percent
interest in a limited liability company which owns one property, to invest in an
unconsolidated subsidiary which owned seven properties as of September 30, 2000,
to place deposits on one additional property, to redeem 140,450 shares of common
stock pursuant to the Company's redemption plan, and to pay offering expenses,
acquisition fees and miscellaneous acquisition expenses, (ii) the receipt of
$28,743,032 in gross offering proceeds from the sale of 2,874,303 additional
shares for the period October 1, 2000 through November 21, 2000, (iii) the
application of such funds to (a) pay offering expenses, acquisition fees and
miscellaneous acquisition expenses, all as reflected in the pro forma
adjustments described in the related notes, (b) to acquire certain shares of 8%
Class A Cumulative Preferred Stock and common stock of CNL Hotel Investors, Inc.
and (c) the purchase of three additional properties, as reflected in the pro
forma adjustments described in the related notes. The Unaudited Pro Forma
Consolidated Balance Sheet as of September 30, 2000, includes the transactions
described in (i) above, from its historical balance sheet, adjusted to give
effect to the transactions in (ii) and (iii) above as if they had occurred on
September 30, 2000.
The Unaudited Pro Forma Consolidated Statements of Earnings for the
nine months ended September 30, 2000 and for the year ended December 31, 1999,
includes the historical operating results of the properties described in (i) and
(iii) above from the date of their acquisitions plus operating results from (A)
the later of (1) the date the property became operational or (2) January 1,
1999, to (B) the earlier of (1) the date the property was acquired by the
Company or (2) the end of the pro forma period presented.
This pro forma consolidated financial information is presented for
informational purposes only and does not purport to be indicative of the
Company's financial results or condition if the various events and transactions
reflected therein had occurred on the dates, or been in effect during the
periods, indicated. This pro forma consolidated financial information should not
be viewed as indicative of the Company's financial results or conditions in the
future.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
CNL Hospitality CNL Hotel
Properties, Inc. Investors, Inc.
and Subsidiaries Historical Pro Forma
ASSETS Historical (c) Adjustments Pro Forma
----------------- ---------------- --------------- -------------
Land, buildings and equipment on operating leases $ 278,813,679 $ 161,600,822 $92,768,704 (b)(c) $533,183,205
Investment in unconsolidated subsidiary 37,202,729 -- (37,202,729 )(c) --
Cash and cash equivalents 76,838,139 7,566,423 (67,154,933 )(a)(c) 17,249,629
Restricted cash 1,062,752 878,814 -- 1,941,566
Certificate of deposit 5,000,000 -- -- 5,000,000
Dividend receivable 1,150,602 -- (1,150,602 )(c) --
Receivables 482,452 84,748 -- 567,200
Prepaid expenses 691,500 38,390 -- 729,890
Loan costs 124,527 663,188 -- 787,715
Accrued rental income 149,643 400,553 -- 550,196
Other assets 6,969,135 -- (2,609,160 )(a)(b) 4,359,975
----------------- ----------------- ---------------- ---------------
$ 408,485,158 $ 171,232,938 $ (15,348,720 ) $564,369,376
================= ================= ================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Note payable 9,684,609 87,224,210 -- 96,908,819
Accounts payable and accrued expenses 1,006,098 684,356 -- 1,690,454
Distribution payable 5,372,782 2,364,472 (1,150,602 )(c) 6,586,652
Due to related parties 1,281,404 356,860 -- 1,638,264
Security deposits 11,810,719 -- 2,476,236 (b) 14,286,955
Rents paid in advance 410,274 450,034 -- 860,308
---------------- ---------------- ----------------- ---------------
Total liabilities 29,565,886 91,079,932 1,325,634 121,971,452
Minority Interest -- -- 37,035,063 37,035,063
---------------- ---------------- ----------------- ---------------
Redeemable Preferred Stock:
Class A 8%: 50,886 share authorized; 48,337
issued and outstanding -- 47,802,692 (47,802,692 )(c) --
Class B 9.76%: 39,982 share authorized;
37,979 issued and outstanding -- 37,559,172 (37,559,172 )(c) --
---------------- ---------------- ----------------- ---------------
-- 85,361,864 (85,361,864 ) --
---------------- ---------------- ----------------- ---------------
Stockholders' equity:
Preferred stock, without par value.
Authorized and unissued 3,000,000 shares -- 1 (1 )(c) --
Excess shares, $.01 par value per share.
Authorized and unissued 63,000,000 shares -- -- -- --
Common stock, $.01 par value per share.
150,000,000 authorized shares; issued and
outstanding 47,053,547 shares, as adjusted 441,792 948 27,795 (a)(c) 470,535
Capital in excess of par value 390,263,511 99,999 26,314,847 (a)(c) 416,678,357
Accumulated distributions in excess of
net earnings (9,096,245 ) (5,309,806 ) 5,309,806 (a)(c) (9,096,245)
Minority interest distributions in excess of
contributions and accumulated earnings (2,689,786 ) -- -- (2,689,7860
Total stockholders' equity 378,919,272 (5,208,858 ) 31,652,447 405,362,861
---------------- ---------------- ----------------- ---------------
$ 408,485,158 $ 171,232,938 $ (15,348,720 ) $564,369,376
================ ================ ================= ===============
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
<S> <C>
CNL Hospitality CNL Hotel
Properties, Investors,
Inc. and Inc.
Subsidiaries Historical Pro Forma
Historical (c) Adjustments Pro Forma
---------------- -------------- --------------- -------------
Revenues:
Rental income from operating leases $ 11,816,801 $13,231,100 $ 6,946,972 (1) $ 31,994,873
FF&E reserve income 901,771 693,224 559,857 (2) 2,154,852
Dividend income 2,780,566 0 (2,780,566 )(7) 0
Interest and other income 5,312,997 432,574 (2,409,478 )(3) 3,336,093
--------------- ---------------- ---------------- --------------
20,812,135 14,356,898 2,316,785 37,485,818
--------------- ---------------- ---------------- --------------
Expenses:
Interest and loan cost amortization 26,155 5,017,193 -- 5,043,348
General operating and administrative 1,079,101 628,085 -- 1,707,186
Professional services 117,263 -- -- 117,263
Asset management fees to
related party 1,003,416 126,134 420,986 (4) 1,550,536
Depreciation and amortization 3,956,498 3,648,654 2,397,626 10,002,778
(5)(7)
--------------- ---------------- ---------------- --------------
6,182,433 9,420,066 2,818,612 18,421,111
--------------- ---------------- ---------------- --------------
Earnings Before Equity in Loss of
Unconsolidated Subsidiary After
Deduction of Preferred Stock
Dividends and Minority Interest 14,629,702 4,936,832 (501,827 ) 19,064,707
Equity in Loss of Unconsolidated
Subsidiary After Deduction of
Preferred Stock Dividends (386,627 ) -- 386,627 (7) --
Minority Interest (403,427 ) -- (2,312,412 )(7) (2,715,839 )
--------------- ---------------- ---------------- --------------
Net Earnings $ 13,839,648 $ 4,936,832 $ (2,427,612 ) $ 16,348,868
=============== ================ ================ ==============
Earnings Per Share of Common Stock (6):
Basic $ 0.38 $ 0.42
=============== ==============
Diluted $ 0.37 $ 0.42
=============== ==============
Weighted Average Number of Shares of
Common Stock Outstanding (6):
Basic 36,178,713 38,809,195
=============== ==============
Diluted 43,767,651 38,809,195
=============== ==============
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
CNL
Hospitality CNL Hotel
Properties, Investors,
Inc. and Inc.
subsidiaries Historical Pro Forma
Historical (c) Adjustments Pro Forma
-------------- -------------- ---------------- --------------
Revenues:
Rental income from $ 5,313,646 $ 21,676,480
operating leases $3,910,639 $ 12,452,195 (1)
FF&E reserve income 320,356 343,264 430,181 (2) 1,093,801
Dividend income 2,753,506 -- (2,753,506 )(7) 0
Interest and other income 3,693,004 230,519 (1,929,878 )(3) 1,993,645
-------------- ---------------- ---------------- --------------
10,677,505 13,025,978 1,060,443 24,763,926
-------------- ---------------- ---------------- --------------
Expenses:
Interest and loan cost amortization 248,094 4,785,818 -- 5,033,912
General operating and
administrative 626,649 563,826 -- 1,190,475
Professional services 69,318 -- -- 69,318
Asset management fees to
related party 106,788 113,757 322,007 (4) 542,552
Depreciation and amortization 1,267,868 3,457,641 1,802,747 (5)(7) 6,528,256
-------------- ---------------- ---------------- --------------
2,318,717 8,921,042 2,124,754 13,364,513
-------------- ---------------- ---------------- --------------
Earnings Before Equity in Loss of
Unconsolidated Subsidiary After
Deduction of Preferred Stock
Dividends and Minority Interest 8,358,788 4,104,936 (1,064,311 ) 11,399,413
Equity in Loss of Unconsolidated
Subsidiary After Deduction of
Preferred Stock Dividends (778,466 ) -- 778,466 (7) --
Minority Interest (64,334 ) -- (1,922,752 )(7) (1,987,086 )
-------------- ---------------- ---------------- --------------
Net Earnings $7,515,988 $ 4,104,936 $ (2,208,597 ) $ 9,412,327
============== ================ ================ ==============
Earnings Per Share of Common Stock (6):
Basic $ 0.47 $ 0.59
============== ==============
Diluted $ 0.45 $ 0.59
============== ==============
Weighted Average Number of Shares of
Common Stock Outstanding (6):
Basic 15,890,212 15,890,212
============== ==============
Diluted 21,437,859 15,890,212
============== ==============
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $28,743,032 from the sale of 2,874,303
shares during the period October 1, 2000 through November 21, 2000,
used (i) to pay acquisition fees and costs of $1,293,436 ($96,112 of
which was accrued at September 30, 2000), and to pay selling
commissions and offering expenses of $2,200,443 which have been netted
against stockholders' equity (a total of $1,084,661 of which was
accrued as of September 30, 2000), leaving $25,249,153 for investments.
(b) Represents the use of $78,806,085 of cash and cash equivalents to
purchase seven properties for $85,185,054 (which includes closing costs
of $804,777 and acquisition fees and costs of $3,902,597, which had
been recorded as other assets as of September 30, 2000), net of
$2,476,236 received from the lessees for security deposits.
<TABLE>
<CAPTION>
<S> <C>
Acquisition
Fees and Costs
And Closing
Asset Value or Costs Allocated
Purchase Price To Investment Total
--------------------- ---------------- ---------------
TownePlace Suites in Newark, CA $ 13,600,000 $ 227,928 $ 13,827,928
Courtyard Little Lake Bryan, FL 35,870,100 2,394,351 38,264,451
Fairfield Inn Little Lake Bryan, FL 31,007,580 2,085,095 33,092,675
-------------------- ----------------- ---------------
$ 80,477,680 $ 4,707,374 $85,185,054
==================== ================= ===============
</TABLE>
(c) In October 2000, Five Arrows, the Company and Hotel Investors entered
into an agreement with the following terms:
o Hotel Investors agreed to redeem 2,104 shares of both Class A
Preferred Stock and common stock of Hotel Investors held by Five
Arrows for $2,104,000;
o Hotel Investors agreed to redeem 1,653 shares of both Class B
Preferred Stock and common stock of Hotel Investors held by the
Company for $1,653,000;
o The Company purchased 7,563 shares of both the Class A Preferred
Stock and common stock of Hotel Investors from Five Arrows for
$11,395,000;
o The Company repurchased 65,285 shares of the Company's common
stock owned by Five Arrows for $620,207;
o The remaining Class A Preferred Stock owned by Five Arrows (38,670
shares) and the Company (7,563 shares) were exchanged for an
equivalent number of shares of Class E Preferred Stock par value
$0.01 ("Class E Preferred Stock") of Hotel Investors;
o Five Arrows granted the following options (1) on or before January
31, 2001, the Company has the option to purchase 7,250 shares of
both Class E Preferred Stock and an equal number of shares of
common stock of Hotel Investors held by Five Arrows for $1,000 per
pair of Class E Preferred Stock and common stock of Hotel
Investors, and (2) provided that the Company purchased all of the
shares under the first option, the Company will have the option,
until June 30, 2001, to purchase 7,251 shares of both Class E
Preferred Stock and an equal number of shares of common stock of
Hotel Investors for $1,000 for each pair. If the Company elects
not to purchase the remaining shares under the first and/or second
options, Five Arrows will have the right, at certain defined
dates, to exchange its shares in Hotel Investors for common stock
of the Company at an exchange rate of 157.000609 shares of the
Company's common stock for each share of Class E Preferred Stock,
subject to adjustment in the event of stock dividends, stock
splits and certain other corporate actions by the Company;
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Balance Sheet - Continued:
o The Company has agreed to pay Five Arrows a fee for agreeing to
defer the conversion of its Class A Preferred Stock (prior to its
conversion to Class E Preferred Stock) to common stock of the
Company. These payments are equivalent to the difference between
any distributions received by Five Arrows from Hotel Investors and
the distributions that Five Arrows would have received from the
Company if Five Arrows had converted its Class A Preferred Stock
into the Company's common stock on June 30, 2000;
o Five Arrows has agreed to forfeit its priority cash distributions
from Hotel Investors; and
o Cash available for distributions of Hotel Investors is distributed
to 100 CNL Holdings, Inc. and affiliates' associates who each own
one share of Class C Preferred Stock in Hotel Investors, to
provide a quarterly, cumulative, compounded 8% return. All
remaining cash available for distributions is distributed pro rata
with respect to the interest in the common shares of Hotel
Investors.
Upon consummation of this transaction, the Company owned an
interest of approximately 53% and Five Arrows owns approximately
47% of Hotel Investors.
As of December 31, 1999, Hotel Investors owned the following
properties:
Date Placed
in Service
by the Company
Residence Inn in Las Vegas, NV February 25, 1999
Residence Inn in Plano, TX February 25, 1999
Marriott Suites in Dallas, TX February 25, 1999
Courtyard in Plano, TX February 25, 1999
Residence Inn in Phoenix, AZ June 16, 1999
Courtyard in Scottsdale, AZ June 16, 1999
Courtyard in Seattle, WA June 16, 1999
Unaudited Pro Forma Consolidated Statements of Earnings:
(1) Represents adjustment to rental income from operating leases for the
properties acquired by the Company as of November 21, 2000 (the "Pro
Forma Properties") for the period commencing (A) the later of (i) the
date the Pro Forma Property became operational by the previous owner or
(ii) January 1, 1999, to (B) the earlier of (i) the date the Pro Forma
Property was acquired by the Company or (ii) the end of the pro forma
period presented. The following presents the actual date the Pro Forma
Properties were acquired or placed in service by the Company as
compared to the date the Pro Forma Properties were treated as becoming
operational as a rental property for purposes of the Pro Forma
Consolidated Statements of Earnings.
<TABLE>
<CAPTION>
<S> <C>
Date Pro Forma
Date Placed Property became
in Service Operational as
by the Company Rental Property
Residence Inn in Mira Mesa, CA December 10, 1999 September 20, 1999
Courtyard in Philadelphia, PA November 20, 1999 November 20, 1999
Wyndham in Billerica, MA June 1, 2000 May 15, 1999
Wyndham in Denver, CO June 1, 2000 November 15, 1999
Residence Inn in Palm Desert, CA June 16, 2000 February 19, 1999
Courtyard in Palm Desert, CA June 16, 2000 September 1, 1999
Residence Inn in Merrifield ,VA July 28, 2000 June 24, 2000
SpringHill Suites in Gaithersburg, MD July 28, 2000 June 30, 2000
Courtyard in Alpharetta, GA August 22, 2000 January 7, 2000
</TABLE>
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Statements of Earnings - Continued:
<TABLE>
<CAPTION>
<S> <C>
Date Pro Forma
Date Placed Property became
in Service Operational as
by the Company Rental Property
Residence Inn in Salt Lake City, UT August 22, 2000 August 11, 1999
TownePlace Suites in Tewksbury, MA August 22, 2000 July 15, 1999
TownePlace Suites in Mt. Laurel, NJ August 22, 2000 November 22, 1999
TownePlace Suites in Scarborough, ME August 22, 2000 June 25, 1999
TownePlace Suites in Newark, CA November 3, 2000 September 1, 2000
Courtyard in Orlando, FL November 21, 2000 October 16, 2000
Fairfield Inn in Orlando, FL November 21, 2000 October 16, 2000
</TABLE>
Generally, the leases provide for the payment of percentage rent in
addition to base rental income. However, due to the fact that no
percentage rent was due under the leases for the Pro Forma Properties
during 1999 and the nine months ended September 30, 2000 that the
Company held the properties, no pro forma adjustment was made for
percentage rental income for the year ended December 31, 1999 and the
nine months ended September 30, 2000.
(2) Represents reserve funds which will be used for the replacement and
renewal of furniture, fixtures and equipment relating to the Pro Forma
Properties (the "FF&E Reserve"). The funds in the FF&E Reserve and all
property purchased with funds from the FF&E Reserve will be paid,
granted and assigned to the Company as additional rent. In connection
therewith, FF&E reserve income was earned at approximately three
percent of estimated annual gross revenues per Pro Forma Property.
(3) Represents adjustment to interest income due to the decrease in the
amount of cash available for investment in interest bearing accounts
during the periods commencing (A) the later of (i) the dates the Pro
Forma Properties became operational by the previous owners or (ii)
January 1, 1999, through (B) the earlier of (i) the actual date the Pro
Forma Properties were acquired or (ii) the end of the pro forma period
presented, as described in Note (1) above. The estimated pro forma
adjustment is based upon the fact that interest income from interest
bearing accounts was earned at a rate of approximately four percent per
annum by the Company during the year ended December 31, 1999 and the
nine months ended September 30, 2000.
(4) Represents increase in asset management fees relating to the Pro Forma
Properties for the period commencing (A) the later of (i) the date the
Pro Forma Properties became operational by the previous owners or (ii)
January 1, 1999, through (B) the earlier of (i) the date the Pro Forma
Properties were acquired or (ii) the end of the pro forma period
presented, as described in Notes (1) above. Asset management fees are
equal to 0.60% per year of the Company's Real Estate Asset Value, as
defined in the Company's prospectus.
(5) Represents incremental increase in depreciation expense of the building
and the furniture, fixture and equipment ("FF&E") portions of the Pro
Forma Properties accounted for as operating leases using the
straight-line method. The buildings and FF&E are depreciated over
useful lives of 40 and seven years, respectively.
(6) Historical earnings per share were calculated based upon the weighted
average number of shares of common stock outstanding during the year
ended December 31, 1999 and the nine months ended September 30, 2000.
(7) Represents certain elimination adjustments and pro forma adjustments
due to the consolidation of CNL Hotel Investors, Inc., consistent with
Note (c) above.
<PAGE>
CNL HOSPITALITY PROPERTIES, INC.
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
BEFORE DIVIDENDS PAID DEDUCTION
PROPERTIES ACQUIRED FROM INCEPTION
THROUGH NOVEMBER 21, 2000
For the Year Ended December 31, 1999 (Unaudited)
The following schedule presents unaudited estimated taxable operating
results before dividends paid deduction of each Property acquired, directly or
indirectly, by the Company from inception through November 21, 2000. The
statement presents unaudited estimated taxable operating results for each
Property that was operational as if the Property (i) had been acquired the
earlier of (a) the actual date acquired by the Company or (b) January 1, 1999,
and (ii) had been operational during the period January 1, 1999 through December
31, 1999. The schedule should be read in light of the accompanying footnotes.
These estimates do not purport to present actual or expected operations
of the Company for any period in the future. The estimates were prepared on the
basis described in the accompanying notes which should be read in conjunction
herewith.
<TABLE>
<CAPTION>
<S> <C>
Residence Inn by Marriott Residence Inn by Residence Inn by Marriott Suites
Buckhead (Lenox Park) (1) Marriott Gwinnett Place (1) Marriott Mira Mesa(2) Market Center (3)
--------------------------- ----------------------------- ----------------------- -----------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental Income (9) $1,668,185 $1,220,977 $1,542,300 $1,807,078
FF&E Reserve Income (10) 166,584 127,865 32,000 62,225
Asset Management Fees (11) (94,388 ) (69,085 ) (93,232 ) (105,172 )
Interest Expense (12) -- -- -- (711,278 )
General and Administrative
Expenses (13) (132,144 ) (96,719 ) (123,384 ) (144,567 )
------------- --------------- --------------- ---------------
Estimated Cash Available from
Operations 1,608,237 1,183,038 1,357,684 908,286
Depreciation and Amortization
Expense (14) (15) (569,033 ) (425,414 ) (409,488 ) (570,141 )
------------- --------------- --------------- ---------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $1,039,204 $ 757,624 $ 948,196 $ 338,145
============= =============== =============== ===============
See Footnotes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Residence Inn by Residence Inn by Courtyard by Marriott Courtyard by Marriott
Marriott Hughes Center(3) Marriott Dallas Plano(3) Scottsdale Downtown (3) Lake Union (3)
--------------------------- ---------------------- -------------------- ----------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental Income (9) $1,813,855 $640,305 $1,074,940 $1,962,054
FF&E Reserve Income (10) 64,075 20,281 15,063 56,341
Asset Management Fees (11) (105,566 ) (37,265 ) (62,562 ) (114,192 )
Interest Expense (12) (702,854 ) (233,572 ) (437,834 ) (767,372 )
General and Administrative
Expenses (13) (145,108 ) (51,225 ) (85,996 ) (156,964 )
---------------- --------------- -------------- -------------
Estimated Cash Available from
Operations 924,402 338,524 503,611 979,867
Depreciation and Amortization
Expense (14) (15) (512,475 ) (199,805 ) (245,727 ) (588,284 )
---------------- --------------- -------------- -------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $ 411,927 $ 138,719 $257,884 $ 391,583
================ =============== ============== =============
</TABLE>
See Footnotes
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Residence Inn by Marriott Courtyard by Marriott Courtyard by Marriott Wyndham
Phoenix Airport (3) Legacy Park (3) Philadelphia Downtown (4) Billerica (5)
--------------------------- ------------------------ ---------------------------- --------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental Income (9) $1,170,161 $695,691 $ 5,785,000 $2,509,200
FF&E Reserve Income (10) 16,650 19,607 161,674 64,190
Asset Management Fees (11) (68,103 ) (40,489 ) (309,060 ) (150,552 )
Interest Expense (12) (430,112 ) (268,351 ) (2,694,250 ) --
General and Administrative
Expenses (13) (93,614 ) (55,655 ) (462,800 ) (513,520 )
--------------- -------------- -------------- --------------
Estimated Cash Available from
Operations 594,982 350,803 2,480,564 1,909,318
Depreciation and Amortization
Expense (14) (15) (366,949 ) (218,342 ) (1,804,256 ) (787,694 )
--------------- -------------- -------------- --------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $ 228,033 $132,461 $ 676,308 $1,121,624
=============== ============== ============== ==============
</TABLE>
See Footnotes
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SpringHill Suites
Wyndham Residence Inn by Marriott Courtyard by Marriott by Marriott
Denver Tech Center (5) Palm Desert (6) Palm Desert (6) Gaithersburg (2)
------------------------ ---------------------- ------------------ ------------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental Income (9) $1,835,300 $1,674,000 $1,351,000 $1,521,460
FF&E Reserve Income (10) 41,540 144,660 142,470 40,150
Asset Management Fees (11) (110,118 ) (100,440 ) (81,060 ) (91,288 )
Interest Expense (12) -- -- -- --
General and Administrative
Expenses (13) (146,824 ) (133,920 ) (108,080 ) (121,717 )
---------------- -------------- ------------- ---------------
Estimated Cash Available from
Operations 1,619,898 1,584,300 1,304,330 1,348,605
Depreciation and Amortization
Expense (14) (15) (600,411 ) (528,205 ) (486,897 ) (674,838 )
---------------- -------------- ------------- ---------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $1,019,487 $1,056,095 $817,433 $673,767
================ ============== ============= ===============
</TABLE>
See Footnotes
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TownePlace Suites
Residence Inn by Marriott Courtyard by Marriott by Marriott Residence Inn by Marriott
Merrifield (2) Alpharetta (7) Tewksbury (7) Cottonwood (7)
--------------------------- ------------------------- --------------------- -------------------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental Income (9) $1,830,000 $1,387,700 $905,000 $1,457,300
FF&E Reserve Income (10) 46,210 41,520 22,010 37,870
Asset Management Fees (11) (109,800 ) (83,262 ) (54,300 ) (87,438 )
Interest Expense (12) -- -- -- --
General and Administrative
Expenses (13) (146,400 ) (111,016 ) (72,400 ) (116,584 )
-------------- ------------- ---------------- ---------------
Estimated Cash Available from
Operations 1,620,010 1,234,942 800,310 1,291,148
Depreciation and Amortization
Expense (14) (15) (538,707 ) (471,691 ) (283,944 ) (502,722 )
-------------- ------------- ---------------- ---------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $1,081,303 $ 763,251 $516,366 $ 788,426
============== ============= ================ ===============
</TABLE>
See Footnotes
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TownePlace Suites TownePlace Suites TownePlace Suites
by Marriott by Marriott by Marriott Courtyard by Marriott
Mt. Laurel (7) Scarborough (7) Newark (2) Little Lake Bryan (8)
--------------------- ------------------ ----------------- --------------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental Income (9) $771,100 $716,000 $1,360,000 $3,631,950
FF&E Reserve Income (10) 19,350 18,120 32,150 330,650
Asset Management Fees (11) (46,266 ) (42,960 ) (81,600 ) (217,917 )
Interest Expense (12) -- -- -- (1,442,372 )
General and Administrative
Expenses (13) (61,688 ) (57,280 ) (108,800 ) (290,556 )
--------------- ------------- --------------- ---------------
Estimated Cash Available from
Operations 682,496 633,880 1,201,750 2,011,755
Depreciation and Amortization
Expense (14) (15) (248,671 ) (240,198 ) (435,590 ) (1,183,895 )
--------------- ------------- --------------- ---------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $433,825 $393,682 $ 766,160 $ 827,860
=============== ============= =============== ===============
</TABLE>
See Footnotes
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Fairfield Inn by Marriott
Little Lake Bryan (8) Total
---------------------------- --------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental Income (9) $3,123,750 $43,454,306
FF&E Reserve Income (10) 315,250 2,038,505
Asset Management Fees (11) (187,425 ) (2,543,540 )
Interest Expense (12) (1,246,499 ) (8,934,494 )
General and Administrative
Expenses (13) (249,900 ) (3,786,861 )
--------------- ----------------
Estimated Cash Available from
Operations 1,755,176 30,227,916
Depreciation and Amortization
Expense (14) (15) (1,023,407 ) (13,916,784 )
--------------- ----------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $731,769 $16,311,132
=============== ================
</TABLE>
See Footnotes
<PAGE>
FOOTNOTES:
(1) The lessee of the Buckhead (Lenox Park) and Gwinett Place Properties is
the same unaffiliated lessee.
(2) The lessee of the Mira Mesa, Gaithersburg, Merrifield and Newark
Properties is the same unaffiliated lessee.
(3) In February 1999, the Company formed a jointly owned real estate
investment trust, CNL Hotel Investors, Inc. ("CHI") with Five Arrows
Realty Securities II, L.L.C. to acquire seven hotel Properties. The
Company had a 49% ownership interest in CHI. However, in October 2000,
the Company entered into an agreement whereby the Company's ownership
interest in CHI increased to 53%. The seven hotel Properties are the
Legacy Park, Market Center, Hughes Center, Dallas Plano, Scottsdale
Downtown, Lake Union and Phoenix Airport Properties. The lessee of
these seven hotel Properties is the same unaffiliated lessee. For
purposes of this table, the balances presented represent the 53%
interest owned by the Company.
(4) In November 1999, the Company acquired an 89% interest in CNL
Philadelphia Annex, LLC (formerly known as Courtyard Annex, L.L.C.) to
own and lease one hotel Property. The hotel Property is the
Philadelphia Downtown Property. For purposes of this table, the
balances presented represent the 89% interest owned by the Company.
(5) The lessee of the Wyndham Billerica and the Wyndham Denver Tech Center
Properties is the same unaffiliated lessee.
(6) The lessee of the Residence Inn Palm Desert and the Courtyard Palm
Desert Properties is the same unaffiliated lessee.
(7) The lessee of the Alpharetta, Tewksbury, Cottonwood, Mt. Laurel and
Scarborough Properties are the same unaffiliated lessee.
(8) The lessee of the Courtyard Little Lake Bryan and the Fairfield Inn
Little Lake Bryan Properties are the same unaffiliated lessee.
(9) Rental income does not include percentage rents, which will become due
if specified levels of gross receipts are achieved.
(10) Reserve funds will be used for the replacement and renewal of
furniture, fixtures and equipment related to the Properties ("FF&E
Reserve"). The funds in the FF&E Reserve and all property purchased
with the funds from the FF&E Reserve will be paid, granted and assigned
to the Company as additional rent. FF&E Reserve income earned is
estimated at three percent of projected hotel gross receipts. In
connection therewith, FF&E Reserve income will be earned at 1% of gross
revenues for the lease years one through four and has been estimated
based on projected gross revenues.
(11) The Properties are managed pursuant to an advisory agreement between
the Company and CNL Hospitality Corp. (the "Advisor"), pursuant to
which the Advisor receives monthly asset management fees in an amount
equal to one-twelfth of .60% of the Company's Real Estate Asset Value
as of the end of the preceding month as defined in such agreement. See
"Management Compensation."
(12) Estimated at 7.625% per annum based on the bank's base rate as of
February 24, 1999 and June 21, 1999, assuming $88 million was borrowed
to acquire the Legacy Park, Market Center, Hughes Center, Dallas Plano,
Scottsdale Downtown, Lake Union and Phoenix Airport Properties. For
purposes of this table, the amounts presented represent the 53%
interest owned by the Company. Estimated at 8.29% per annum based on
the bank's rate as of November 9, 2000, assuming $32.5 million was
borrowed against the Philadelphia Downtown Property. Estimated at
8.335% per annum based on the bank's rate as of November 17, 2000,
assuming $32.3 million was borrowed to acquire the Courtyard Little
Lake Bryan and the Fairfield Inn Little Lake Bryan Properties.
(13) Estimated at 8% of gross rental income, based on the previous
experience of Affiliates of the Advisor with another public REIT.
Amount does not include soliciting dealer servicing fee due to the fact
that the Company did not incur such fee for the year ended December 31,
1999.
(14) The estimated federal tax basis of the depreciable portion of the
Properties and the number of years the assets have been depreciated on
the straight-line method is as follows (the balances are presented at
the Company's 53% interest in CHI and the 89% interest in CNL
Philadelphia Annex, LLC):
<TABLE>
<CAPTION>
<S> <C>
Furniture and
Buildings Fixtures
(39 years) (5-15 years)
-------------- -----------------
Buckhead (Lenox Park) Property $13,459,000 $1,235,000
Gwinett Place Property 10,017,000 1,114,000
Legacy Park Property 5,414,000 508,000
Market Center Property 14,885,000 1,273,000
Hughes Center Property 14,839,000 882,000
Dallas Plano Property 5,087,000 438,000
Scottsdale Downtown Property 8,399,000 584,000
Lake Union Property 14,601,000 916,000
Phoenix Airport Property 9,546,000 685,000
Philadelphia Downtown Property 47,237,000 4,367,000
Mira Mesa Property 12,924,000 1,701,000
Wyndham Billerica Property 19,336,000 2,130,000
Wyndham Denver Tech Center Property 12,702,000 1,980,000
Residence Inn Palm Desert Property 13,385,000 1,295,000
Courtyard Palm Desert Property 10,604,000 1,505,000
Merrifield Property 15,500,000 2,011,000
Gaithersburg Property 11,931,000 1,683,000
Alpharetta Property 10,913,000 1,392,000
Tewksbury Property 7,983,000 591,000
Cottonwood Property 11,655,000 1,479,000
Mt. Laurel Property 6,389,000 623,000
Scarborough Property 6,111,000 612,000
Newark Property 10,166,000 1,270,000
Courtyard Little Lake Bryan Property 27,001,000 3,562,000
Fairfield Inn Little Lake Bryan Property 23,341,000 3,079,000
</TABLE>
(15) A loan origination fee of $758,000 from the issuance of promissory
notes, to facilitate the acquisition of the seven CHI hotel Properties,
is being amortized under the effective interest method over the term of
the loans. For purposes of this table, the amounts presented represent
the 53% interest owned by the Company.
