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 22, 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 22, 2000, will be reported in a
subsequent Supplement.
RECENT DEVELOPMENTS
On December 6, 2000, the Company, through subsidiaries, acquired a
parcel of land located in Orlando, Florida, close to SeaWorld(R) Orlando, and
entered into a development services agreement with a subsidiary of the Advisor
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. Construction is expected to be completed in 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,
which is one of the largest convention centers in the country.
On December 21, 2000, the Company, through subsidiaries, acquired a 44%
interest in Desert Ridge Resort Partners, LLC, a joint venture (the "Joint
Venture") with an affiliate of Marriott International, Inc. and a partnership in
which an Affiliate of the Advisor is the general partner. The Joint Venture
invested in Desert Ridge Resort, LLC, a single purpose limited liability company
that owns a property in Phoenix, Arizona (the "Desert Ridge Property"). The
Company made an initial capital contribution of $8.8 million of its anticipated
$25 million investment in the Joint Venture. The total cost of the Property
(including acquisition of land, development and construction) is estimated to be
approximately $298 million.
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 is
expected to 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 eight
tennis courts. The Desert Ridge Property is currently anticipated to open to the
public in January 2003.
In addition, on December 22, 2000, the Company, through subsidiaries,
acquired a parcel of land located in Weston, Florida and entered into a
development services agreement with a subsidiary of the Advisor to construct a
Courtyard(R) by Marriott(R) on the Property (the "Courtyard Weston Property").
Once constructed, the Courtyard Weston is expected to include 174 guest rooms,
two meeting rooms and two conference room suites, an outdoor swimming pool, an
exercise room , a spa, a 76-seat restaurant and a lounge/library/bar area.
Construction is expected to be completed in the first quarter of 2002.
On January 1, 2001, the Board of Directors declared a distribution of
$0.06354 per Share to stockholders of record on January 1, 2001, representing an
annualized distribution rate of 7.625%.
January 4, 2001 Prospectus Dated May 23, 2000
<PAGE>
As of December 22, 2000, the Company owned interests in 29 Properties,
including three Properties on which hotels are being constructed. In addition,
the Company has commitments to acquire an additional four properties. 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 hotels 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 22,
2000, the Company had received aggregate subscriptions for 48,732,959 Shares
totalling $487,329,590 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 22, 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 $434,000,000. As of December 22, 2000, the Company had invested,
directly or indirectly, approximately $357,400,000 of net offering proceeds and
$87,642,000 in loan proceeds, described below in "Business - Borrowing" and in
the Prospectus Supplement dated December 12, 2000 under the heading "Business -
Borrowing," in 29 hotel Properties, including three Properties on which hotels
are being constructed. In addition, as of December 22, 2000, the Company had
used net offering proceeds 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 $50,900,000 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. The Property will be leased to a subsidiary of the Company which
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.
Marriott International, Inc. will enter into an agreement with the
tenant in which Marriott International, Inc. will advance and loan to the tenant
any amounts needed to pay minimum rent under the lease (the "Liquidity Facility
Agreement"). The Liquidity Facility Agreement will terminate on the earlier of
the end of the third lease year or at such time as the net operating income from
the Property exceeds minimum rent due under the lease by 25% for any trailing
12-month period. The maximum amount of the liquidity facility will be
$3,850,000.
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, which has been approved by the Board of Directors, equal to four percent of
the cost of development of the Property with incentive provisions that would
permit CNL Hotel Development Company to receive up to an additional one percent
if certain construction cost savings are achieved.
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 and the
Courtyard Weston Property, described below. 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
Courtyard Weston Properties. 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 22, 2000, the Company had obtained two advances totalling
$5,142,000 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. In addition to the
Company's Courtyard Little Lake Bryan, Fairfield Inn Little Lake Bryan and
SpringHill Suites Little Lake Bryan Properties, other lodging facilities located
in proximity to the Residence Inn SeaWorld Property 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%.
<PAGE>
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 22, 2000, the Company had borrowed
$50,000,000 which was used to refinance a portion of the purchase of the
Courtyard Little Lake Bryan, Fairfield Inn Little Lake Bryan and SpringHill
Suites 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, which is one of the largest convention centers in the
country. In addition to the Company's Courtyard Little Lake Bryan, Fairfield Inn
Little Lake Bryan and Residence Inn SeaWorld Properties, other lodging
facilities located in proximity to the SpringHill Suites Little Lake Bryan
Property 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.
Desert Ridge Marriott Resort & Spa located in Phoenix, Arizona. On
December 21, 2000, the Company, through subsidiaries, acquired a 44% interest in
Desert Ridge Resort Partners, LLC, a joint venture (the "Joint Venture") with an
affiliate of Marriott International, Inc. and a partnership in which an
Affiliate of the Advisor is the general partner. The Joint Venture invested in
Desert Ridge Resort, LLC, a single purpose limited liability company (the
"Resort Owner") that owns the proposed Desert Ridge Resort & Spa in Phoenix,
Arizona. (the "Desert Ridge Property"). The Company made an initial capital
contribution of $8.8 million of its anticipated $25 million investment in the
Joint Venture. The total cost of the Property (including acquisition of land,
development and construction) is estimated to be approximately $298 million. On
December 14, 2000, the Resort Owner obtained permanent financing from a third
party lender for $179 million of this amount, secured by a mortgage on the
Desert Ridge Property. The notes will have a term of seven years with interest
expense payable quarterly in arrears commencing on March 2, 2001. Interest with
respect to $109 million of the notes will be payable at a rate of 9.49% per
annum, while interest with respect to $70 million of the notes will be payable
at a floating rate equal to 185 basis points above three-month LIBOR. All unpaid
interest and principal will be due at maturity. In connection with the issuance
of the notes, the Resort Owner incurred fees of $5,370,000. In addition,
Marriott International, Inc. or an affiliate thereof will provide financing for
an additional 19% 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, which have been approved by the Board of Directors, 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 Development Fees to
the Affiliate of the Advisor are anticipated to equal approximately 1.8% of the
total project costs for the purchase and development of the Property, and will
be borne by the co-venturers in proportion to their ownership interest in the
Desert Ridge Joint Venture. 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.
<PAGE>
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 is
expected to 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.
Courtyard by Marriott located in Weston, Florida. On December 22, 2000,
CNL Hotel C-Orlando Ltd., a Florida limited partnership that is an indirect,
wholly owned subsidiary of the Company, acquired a parcel of land located in
Weston, Florida and entered into a development services agreement to construct a
Courtyard by Marriott on the Property (the "Courtyard Weston Property"). In this
section, the term "Company" includes CNL Hotel C-Orlando Ltd. The Company
acquired the land for $1,742,000 from Marriott International, Inc. The Company
anticipates that the cost of development of the Courtyard Weston Property will
be approximately $14,800,000. The Property will be leased to a subsidiary of the
Company which 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.
Marriott International, Inc. will enter into an agreement with the
tenant in which Marriott International, Inc. will advance and loan to the tenant
any amounts needed to pay minimum rent under the lease (the "Liquidity Facility
Agreement"). The Liquidity Facility Agreement will terminate on the earlier of
the end of the third lease year or at such time as the net operating income from
the Property exceeds minimum rent due under the lease by 25% for any trailing
12-month period. The maximum amount of the liquidity facility will be
$1,650,000.
In connection with the acquisition of the Courtyard Weston Property,
CNL Hotel Development Company, a subsidiary of the Advisor, has entered into a
development services agreement with CNL Hotel C-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 C-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, which has been approved by the Board of Directors, equal to four percent of
the cost of development of the Courtyard Weston Property with incentive
provisions that would permit CNL Hotel Development Company to receive up to an
additional one percent if certain construction cost savings are achieved.
The Company has entered into a revolving construction line of credit
relating to the Courtyard Weston Property as described above relating to the
Residence Inn SeaWorld Property.
The Courtyard Weston Property, which is scheduled to open in the first
quarter of 2002, is located in Weston, Florida. Once constructed, the Courtyard
Weston is expected to include 174 guest rooms, two meeting rooms and two
conference room suites, an outdoor swimming pool, an exercise room , a spa, a
76-seat restaurant and a lounge/library/bar area. There are currently no other
lodging facilities located in proximity to the Courtyard Weston Property;
however, three other hotel properties are planned and are expected to begin
construction soon.
Western International Portfolio.
The following information updates and replaces the last paragraph
beginning on page 3 of the Prospectus Supplement dated December 12, 2000.
In return for their respective investments, Five Arrows received a 51%
common stock interest and the Company received a 49% common stock interest in
Hotel Investors. Five Arrows received 48,337 shares of Hotel Investors' 8% Class
A cumulative, preferred stock ("Class A Preferred Stock"), and the Company
received 37,979 shares of Hotel Investors' 9.76% Class B cumulative, preferred
stock ("Class B Preferred Stock"). In October 2000, Five Arrows, the Company and
Hotel Investors entered into an agreement under which Hotel Investors agreed to
redeem 2,104 shares of Class A Preferred Stock and an equivalent number of
shares of common stock of Hotel Investors held by Five Arrows for $2,104,000. In
addition, the Company purchased 7,563 shares of both Class A Preferred Stock and
common stock of Hotel Investors from Five Arrows for $11,395,000. Hotel
Investors agreed to redeem 1,653 shares of Class B Preferred Stock and an
aggregate of 10,115 shares of common stock of Hotel Investors held by the
Company for $1,653,000. Five Arrows' remaining 38,670 shares of Class A
Preferred Stock and the Company's 7,563 shares of Class A Preferred Stock were
exchanged for an equivalent number of shares of Class E Preferred Stock, par
value $0.01 ("Class E Preferred Stock"), of Hotel Investors. Upon the
consummation of this transaction, the Company owned an interest of approximately
53% and Five Arrows owned an interest of approximately 47%, in the common stock
of Hotel Investors. Pursuant to this agreement, the Company repurchased 65,285
Shares held by Five Arrows for an aggregate price of $620,207. Additionally,
Five Arrows granted the Company the following options: (1) on or before January
31, 2001, the Company had the option to purchase 7,250 shares of 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 had the option, until June 30, 2001,
to purchase 7,251 shares of 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 elected not to purchase the remaining shares under the first and/or
second options, Five Arrows would have had 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. On
December 22, 2000, the Company exercised the two options described above and as
a result, the Company now owns an interest of approximately 72% and Five Arrows
owns an interest of approximately 28%, in the common stock of Hotel Investors.
PENDING INVESTMENTS
As of December 22, 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 Lease Term and Minimum Annual
Property Purchase 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 lease year, 7% of revenues in excess
(the "Courtyard Overland options property of revenues for the second lease year
Park 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 lease year, 7% of revenues in excess
(the "SpringHill Suites options property 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 lease year, 7% of revenues in excess
(the "SpringHill Suites options property 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 lease year, 7% of revenues in excess
(the "SpringHill Suites options property 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>
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 22, 2000, the Company had borrowed
$50,000,000 which was used to refinance a portion of the purchase of 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"
and the SpringHill Suites Little Lake Bryan Property is described above in " -
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 and Courtyard
Weston Properties. 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 Courtyard Weston Properties.
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 22,
2000, the Company had obtained two advances totalling $5,142,000 relating to the
construction line of credit. The proceeds were used in connection with the land
acquisitions described above in " -- Property Acquisitions."
