<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 26, 1996
Commission File Number: 1-6828 Commission File Number: 1-7959
STARWOOD LODGING STARWOOD LODGING
TRUST CORPORATION
(Exact name of registrant as (Exact name of registrant as
specified in its charter) specified in its charter)
Maryland Maryland
(State or other jurisdiction (State or other jurisdiction
of incorporation or organization) of incorporation or organization)
52-0901263 52-1193298
(I.R.S. employer identification no.) (I.R.S. employer identification no.)
11835 W. Olympic Blvd., Suite 695 11835 W. Olympic Blvd., Suite 675
Los Angeles, California 90064 Los Angeles, California 90064
(Address of principal executive (Address of principal executive
offices, including zip code) offices, including zip code)
(310) 575-3900 (310) 575-3900
(Registrant's telephone number, (Registrant's telephone number,
including area code) including area code)
===============================================================================
<PAGE> 2
===============================================================================
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 26, 1996, Starwood Lodging Trust and Starwood Lodging
Corporation announced jointly that they completed the acquisition of the three
Doubletree Guest Suite hotels located in Irving, Texas; Ft. Lauderdale, Florida;
and Tampa, Florida.
A copy of the press release is filed as an exhibit to this report on
Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired. See Index to
Financial Statements (page F -1).
(b) Pro Forma Financial Information. See Index to Financial
Statements (page F -1).
EXHIBITS.
23.1 Independent accountants consent
99.1 Form of press release dated April 30, 1996
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
STARWOOD LODGING TRUST STARWOOD LODGING CORPORATION
By:______________________________ By:______________________________
Ronald C. Brown Alan M. Schnaid
Vice President and Corporate Controller
Chief Financial Officer Principal Accounting Officer
Date: May 3, 1996
<PAGE> 4
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STARWOOD LODGING TRUST AND STARWOOD LODGING
CORPORATION -- PRO FORMA
<S> <C>
Combined and Separate Balance Sheets at December 31, 1995............................................... F-2
Notes to the Pro Forma Balance Sheets................................................................... F-5
Combined and Separate Statements of Operations for the year ended December 31, 1995..................... F-6
Notes to Pro Forma Statements of Operations ............................................................ F-10
<CAPTION>
GUARANTEED HOTEL INVESTORS 1985, L.P.
<S> <C>
Report of Independent Public Accountants................................................................ F-14
Statement of Net Assets of Hotel Operations............................................................. F-15
Statement of Hotel Operating Revenue and Expenses for the year ended December 31, 1995.................. F-16
Statement of Hotel Cash Flows........................................................................... F-17
Notes to Financial Statements........................................................................... F-18
</TABLE>
F-1
<PAGE> 5
STARWOOD LODGING TRUST AND STARWOOD LODGING CORPORATION
UNAUDITED COMBINED PRO FORMA BALANCE SHEETS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Historical
Starwood Starwood
Lodging GHI Lodging
Combined Properties Combined
------------- ----------- -------------
(A) (B)
<S> <C> <C> <C>
ASSETS
Hotel assets held for sale - net................ $ 21,063,000 $ $ 21,063,000
Hotel assets - net.............................. 315,895,000 73,500,000 389,395,000
------------- ----------- -------------
336,958,000 73,500,000 410,458,000
Mortgage notes receivable, net.................. 79,261,000 79,261,000
Investments in joint ventures................... 2,858,000 2,858,000
------------- ----------- -------------
Total real estate investments............... 419,077,000 73,500,000 492,577,000
Cash and cash equivalents....................... 9,332,000 9,332,000
Accounts and interest receivable................ 9,595,000 9,595,000
Notes receivable, net........................... 1,796,000 1,796,000
Inventories, prepaid expenses and other assets.. 20,194,000 20,194,000
------------- ----------- -------------
$ 459,994,000 $73,500,000 $ 533,494,000
============= =========== =============
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Secured notes payable and revolving line of
credit........................................ $ 119,100,000 $73,500,000 $ 192,600,000
Mortgage and other notes payable................ 4,385,000 4,385,000
Accounts payable and other liabilities.......... 19,022,000 19,022,000
Dividends and distributions payable............. 9,284,000 9,284,000
------------- ----------- -------------
151,791,000 73,500,000 225,291,000
------------- ----------- -------------
Commitments and contingencies
MINORITY INTEREST............................... 92,735,000 92,735,000
------------- ----------- -------------
SHAREHOLDERS' EQUITY
Trust shares of beneficial interest,
$0.01 par value; authorized
30,000,000 shares; outstanding
13,825,000 shares............................. 138,000 138,000
Corporation common stock, $0.01 par
value; authorized 30,000,000 shares;
outstanding 13,825,000 shares................. 138,000 138,000
Additional paid-in capital...................... 434,107,000 434,107,000
Accumulated deficit............................. (218,915,000) (218,915,000)
------------- ----------- -------------
215,468,000 215,468,000
------------- ----------- -------------
$ 459,994,000 $73,500,000 $ 533,494,000
============= =========== =============
</TABLE>
F-2
<PAGE> 6
STARWOOD LODGING TRUST
UNAUDITED COMBINED PRO FORMA BALANCE SHEETS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
Starwood Starwood
Lodging GHI Lodging
Trust Properties Trust
------------- ----------- -------------
(A) (B)
<S> <C> <C> <C>
ASSETS
Hotel assets held for sale - net................ $ 20,547,000 $ $ 20,547,000
Hotel assets - net.............................. 221,063,000 73,500,000 294,563,000
------------- ----------- -------------
241,610,000 73,500,000 315,110,000
Mortgage notes receivable, net.................. 79,261,000 79,261,000
Mortgage Notes Receivable - Corporation......... 68,486,000 68,486,000
Investments in joint ventures................... 2,841,000 2,841,000
------------- ----------- -------------
Total real estate investments............... 392,198,000 73,500,000 465,698,000
Cash and cash equivalents....................... 710,000 710,000
Rent and interest receivable.................... 1,841,000 1,841,000
Notes receivable, net........................... 1,232,000 1,232,000
Notes receivable - Corporation.................. 17,978,000 17,978,000
Prepaid expenses and other assets............... 11,778,000 11,778,000
------------- ----------- -------------
$ 425,737,000 $73,500,000 $ 499,237,000
============= =========== =============
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Secured notes payable and revolving line of
credit........................................ $ 119,100,000 $73,500,000 $ 192,600,000
Mortgage and other notes payable................ 100,000 100,000
Accounts payable and other liabilities.......... 4,412,000 4,412,000
Dividends and distributions payable............. 9,284,000 9,284,000
------------- ----------- -------------
132,896,000 73,500,000 206,396,000
------------- ----------- -------------
Commitments and contingencies
MINORITY INTEREST............................... 88,113,000 88,113,000
------------- ----------- -------------
SHAREHOLDERS' EQUITY
Trust shares of beneficial interest,
$0.01 par value; authorized
3000,000 shares; outstanding
13,825,000 shares............................. 138,000 138,000
Additional paid-in capital...................... 354,619,000 354,619,000
Accumulated deficit............................. (150,029,000) (150,029,000)
------------- ----------- -------------
204,728,000 204,728,000
------------- ----------- -------------
$ 425,737,000 $73,500,000 $ 499,237,000
============= =========== =============
</TABLE>
F-3
<PAGE> 7
STARWOOD LODGING CORPORATION
UNAUDITED COMBINED PRO FORMA BALANCE SHEETS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
Starwood Starwood
Lodging GHI Lodging
Corporation Properties Corporation
------------ ---------- ------------
(A) (B)
<S> <C> <C> <C>
ASSETS
Hotel assets held for sale - net.................. $ 516,000 $ 516,000
Hotel assets - net................................ 94,832,000 94,832,000
------------ ---------- ------------
95,348,000 95,348,000
Investments in joint ventures..................... 17,000 17,000
------------ ---------- ------------
Total real estate investments................. 95,365,000 95,365,000
Cash and cash equivalents......................... 8,622,000 8,622,000
Accounts and interest receivable.................. 7,754,000 7,754,000
Notes receivable, net............................. 564,000 564,000
Inventories, prepaid expenses and other assets.... 8,416,000 8,416,000
------------ ---------- ------------
$120,721,000 $120,721,000
============ ========== ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Mortgage and other notes payable.................. $ 4,285,000 $ 4,285,000
Mortgage notes payable - Trust.................... 68,486,000 68,486,000
Notes payable - Trust............................. 17,978,000 17,978,000
Accounts payable and other liabilities............ 14,610,000 14,610,000
------------ ---------- ------------
105,359,000 105,359,000
------------ ---------- ------------
Commitments and contingencies
MINORITY INTEREST................................. 4,622,000 4,622,000
------------ ---------- ------------
SHAREHOLDERS' EQUITY
Corporation common stock, $0.01 par
value; authorized 30,000,000 shares;
outstanding 13,825,000 shares................... 138,000 138,000
Additional paid-in capital........................ 79,488,000 79,488,000
Accumulated deficit............................... (68,886,000) (68,886,000)
------------ ---------- ------------
10,740,000 10,740,000
------------ ---------- ------------
$120,721,000 $120,721,000
============ ========== ============
</TABLE>
F-4
<PAGE> 8
STARWOOD LODGING TRUST AND
STARWOOD LODGING CORPORATION
NOTES TO THE UNAUDITED COMBINED AND
SEPARATE PRO FORMA BALANCE SHEETS
AT DECEMBER 31, 1995
NOTE 1. BASIS OF PRESENTATION
(A) The Trust and the Corporation have unilateral control of SLT Realty
Limited Partnership ("Realty") and SLC Operating Limited Partnership
("Operating" and, together with Realty the "Partnerships"),
respectively, and therefore, the historical financial statements of
Realty and Operating are consolidated with those of the Trust and the
Corporation. Unless the context otherwise requires, all references
herein to the "Companies" refer to the Trust and the Corporation, and
all references to the "Trust" and the "Corporation" include the Trust
and the Corporation and those entities respectively owned or controlled
by the Trust or the Corporation, including Realty and Operating.
NOTE 2. ACQUIRED PROPERTY
(B) On April 26, 1996 the Companies completed the purchase of the 308-room
Doubletree Guest Suites located in Irving, Texas ("DFW Airport"), the
254-room Doubletree Guest Suites Located in Ft. Lauderdale, Florida
("Cypress Creek") and the 260-room Doubletree Guest Suites located in
Tampa, Florida ("Westshore") (collectively the "GHI Properties").
F-5
<PAGE> 9
STARWOOD LODGING TRUST AND
STARWOOD LODGING CORPORATION
PRO FORMA COMBINED AND
SEPARATE STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
Effective January 1, 1995, Starwood Lodging Trust (the "Trust") and
Starwood Lodging Corporation (the "Corporation" and collectively, "the
Companies") consummated the previously announced reorganization (the
"Reorganization") with Starwood Capital Group, L.P. and its affiliates
(collectively "Starwood Capital"). On July 6, 1995, the Trust and the
Corporation completed a public offering (the "Offering") of 11,787,500 paired
shares. Net proceeds from the Offering of approximately $245.7 million together
with proceeds from a financing facility and cash on hand were used as follows:
approximately $206.5 million was used to repay existing indebtedness, including
$10 million which was used by Realty to purchase the first trust deed on
Operating's Milwaukee hotel, and approximately $53.8 million was used for the
acquisition of the 462-room Sheraton Colony Square in Atlanta, Georgia and the
224-room Embassy Suites in Tempe, Arizona. On September 20, 1995, the Companies
acquired the 652-room Doral Inn in New York, New York for $43.3 million. On
October 31, 1995, the Companies acquired the 364-room Terrace Garden Inn and
180-room Lenox Inn for $27.9 million and $9 million, respectively. Both
properties are located in Atlanta, Georgia. On November 30, 1995, the Companies
acquired the 206-room Calverton Holiday Inn in Beltsville, Maryland, for $11.5
million.
Due to the impact of the Offering and the acquisitions of properties
acquired, the historical results of operations and earnings per share are not
indicative of future results of operations and earnings per share. The following
Unaudited Combined and Separate Pro Forma Statement of Operations for the year
ended December 31, 1995 gives effect to the Offering and the related
acquisitions of the Sheraton Colony Square in Atlanta, Georgia, the Embassy
Suites in Tempe, Arizona, the Omni Europa in Chapel Hill, North Carolina and the
GHI Properties as of the beginning of the year. Pro forma results include the
results of the other properties acquired in 1995 (the Doral Inn in New York, New
York - acquired on September 20, the Terrace Garden and Lenox Inn in Atlanta,
Georgia - acquired on October 31, and the Holiday Inn in Beltsville, Maryland -
acquired on November 30) from their respective dates of acquisition. The pro
forma information is based upon historical information and does not purport to
present what actual results would have been had such transactions, in fact,
occurred at the beginning of each period presented, or to project results for
any future period.
F-6
<PAGE> 10
STARWOOD LODGING TRUST AND STARWOOD LODGING CORPORATION
UNAUDITED COMBINED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
Starwood Starwood
Lodging Acquired Pro Forma Lodging
Combined Properties Adjustments Combined
------------ ----------- ------------- ------------
(A) (B)
<S> <C> <C> <C> <C>
REVENUE
Hotel.......................................... $121,250,000 $37,421,000 $ $158,671,000
Gaming......................................... 26,929,000 26,929,000
Interest from mortgage and other notes......... 10,905,000 10,905,000
Management fees and other income............... 1,966,000 1,966,000
Income from joint ventures and
rents from leased hotel properties........... 791,000 791,000
Loss on sales of hotel assets.................. (125,000) (125,000)
------------ ----------- ------------ ------------
161,716,000 37,421,000 199,137,000
------------ ----------- ------------ ------------
EXPENSES
Hotel operations............................... 85,017,000 26,321,000 (1,756,000) (E) 109,582,000
Gaming operations.............................. 24,242,000 24,242,000
Interest....................................... 13,138,000 (13,138,000) (F) 8,269,000
8,269,000 (F)
Depreciation and amortization.................. 15,469,000 8,026,000 23,495,000
Administrative and operating................... 5,712,000 10,000 (E) 5,722,000
------------ ----------- ------------ ------------
143,578,000 34,347,000 (6,615,000) 171,310,000
------------ ----------- ------------ ------------
Income (loss) from continuing operations
before minority interest..................... 18,138,000 $ 3,074,000 $ 6,615,000 27,827,000
=========== ============
Minority interest in Partnerships (G).......... 7,013,000 8,373,000
------------ ------------
Net income..................................... $ 11,125,000 $ 19,454,000
============ ============
Net income per paired share (H)................ $ 1.43 $ 1.41
============ ============
Weighted average number of paired
shares....................................... 7,771,000 13,798,000
============ ============
</TABLE>
See accompanying notes to the pro forma statements of operations.
F-7
<PAGE> 11
STARWOOD LODGING TRUST
UNAUDITED COMBINED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
Starwood Starwood
Lodging Acquired Pro Forma Lodging
Trust Properties Adjustments Trust
------------ ----------- ------------- ------------
(A) (B)
<S> <C> <C> <C> <C>
REVENUE
Rents from Corporation........................ $26,730,000 $ $ 11,836,000 (C) $38,566,000
Interest from Corporation..................... 4,761,000 544,000 (D) 5,305,000
Interest from mortgage and other notes ....... 10,792,000 10,792,000
Income from joint ventures and
rents from leased hotel properties ......... 791,000 791,000
Other income.................................. 1,074,000 1,074,000
Loss on sales of hotel assets ................ (125,000) (125,000)
----------- ----------- ------------ -----------
44,023,000 12,380,000 56,403,000
----------- ----------- ------------ -----------
EXPENSES
Interest - other ............................. 12,429,000 (12,429,000) (F) 8,142,000
8,142,000 (F)
Depreciation and amortization................. 8,977,000 4,127,000 13,104,000
Administrative and operating ................. 2,439,000 2,439,000
----------- ----------- ------------ -----------
23,845,000 4,127,000 (4,287,000) 23,685,000
----------- ----------- ------------ -----------
Income (loss) from continuing operations
before minority interest.................... 20,178,000 $(4,127,000) $ 16,667,000 32,718,000
=========== ============
Minority interest in Partnerships (G) ........ 7,314,000 9,845,000
----------- -----------
Net income.................................... $12,864,000 $22,873,000
=========== ===========
Net income per paired share (H) .............. $ 1.66 $ 1.66
=========== ===========
</TABLE>
See accompanying notes to the pro forma statements of operations.
F-8
<PAGE> 12
STARWOOD LODGING CORPORATION
UNAUDITED COMBINED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
Starwood Starwood
Lodging Acquired Pro Forma Lodging
Corporation Properties Adjustments Corporation
------------ ----------- ------------ ------------
(A) (B)
<S> <C> <C> <C> <C>
REVENUE
Hotel ........................................ $121,250,000 $37,421,000 $ $158,671,000
Gaming ....................................... 26,929,000 26,929,000
Interest from notes receivable................ 113,000 113,000
Management fees and other income.............. 892,000 892,000
------------ ----------- ------------ ------------
149,184,000 37,421,000 186,605,000
------------ ----------- ------------ ------------
EXPENSES
Hotel operations ............................. 85,017,000 26,321,000 (1,756,000) (E) 109,582,000
Gaming operations ............................ 24,242,000 24,242,000
Rent - Trust ................................. 26,730,000 11,836,000 (C) 38,566,000
Interest - Trust ............................. 4,761,000 544,000 (D) 5,305,000
Interest - other ............................. 709,000 (709,000) (F) 127,000
127,000 (F)
Depreciation and amortization................. 6,492,000 3,899,000 10,391,000
Administrative and operating ................. 3,273,000 10,000 (E) 3,283,000
------------ ----------- ------------ ------------
151,224,000 30,220,000 10,052,000 191,496,000
------------ ----------- ------------ ------------
Loss before minority interest ................ (2,040,000) $ 7,201,000 $(10,052,000) (4,891,000)
=========== ============
Minority interest in Partnerships (G) ........ (301,000) (1,472,000)
------------ ------------
Net loss ..................................... $ (1,739,000) $ (3,419,000)
============ ============
Net loss per paired share (H)................ ($0.22) $ (0.25)
============ ============
</TABLE>
See accompanying notes to the pro forma statements of operations.
F-9
<PAGE> 13
STARWOOD LODGING TRUST AND
STARWOOD LODGING CORPORATION
NOTES TO THE UNAUDITED COMBINED AND
SEPARATE PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
NOTE 1. BASIS OF PRESENTATION
The Trust and the Corporation have unilateral control of SLT Realty Limited
Partnership ("Realty") and SLC Operating Limited Partnership ("Operating" and,
together with Realty the "Partnerships"), respectively, and therefore, the
historical financial statements of Realty and Operating are consolidated with
those of the Trust and the Corporation. Unless the context otherwise requires,
all references herein to the "Companies" refer to the Trust and the Corporation,
and all references to the "Trust" and the "Corporation" include the Trust and
the Corporation and those entities respectively owned or controlled by the Trust
or the Corporation, including Realty and Operating.
NOTE 2. PRO FORMA ADJUSTMENTS
(A) Reflects the historical statements of operations of the Companies.
Operations for properties sold or pending sale are not considered
material to the pro forma presentation.
(B) Reflects the pro forma statements of operations (reflecting the
Companies' cost basis) of the properties acquired in connection with
the Offering. For additional information, please see pages F-1 through
F-140 (Financial Statements and Financial Statement Schedules) of the
Companies' Form S-2 as amended dated June 29, 1995. Reflects the pro
forma statements of operations (reflecting the Companies' cost basis)
of the GHI Properties.
Listed below are the effects each acquired hotel had on the Combined
Pro Forma Statement of Operations for the year ended December 31, 1995
(in thousands):
<TABLE>
<CAPTION>
Omni Sheraton Embassy
Chapel Colony Suites GHI
Hill(1) Square(1) Tempe(1) Properties Total
------- --------- -------- ---------- -------
<S> <C> <C> <C> <C> <C>
REVENUE
Hotel Revenues............................ $1,265 $9,557 $4,032 $22,567 $37,421
------ ------ ------ ------- -------
EXPENSES
Hotel Expenses............................ 887 7,127 2,271 16,036 26,321
Depreciation.............................. 163 2,073 1,229 4,561 8,026
------ ------ ------ ------- -------
1,050 9,200 3,500 20,597 34,347
------ ------ ------ ------- -------
Income before minority interest........... $ 215 $ 357 $ 532 $ 1,970 $ 3,074
====== ====== ====== ======= =======
</TABLE>
F-10
<PAGE> 14
(1) For additional information, please see pages F-1 through F-140
(Financial Statement Schedules) of the Companies' Form S-2 as amended
dated June 29, 1995
Additional information related to the GHI Properties is as follows:
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------
ADR Occupancy % REVPAR
------------------------ ------------------------ ------------------------
Hotel 1995 1994 1993 1995 1994 1993 1995 1994 1993
- ----- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DFW Airport $91 $91 $89 79% 68% 72% $72 $62 $64
Cypress Creek $77 $82 $81 72% 65% 75% $55 $53 $61
Westshore $84 $86 $82 64% 63% 70% $54 $54 $57
</TABLE>
(C) Reflects pro forma adjustment for rents on the following hotels and
land acquired by the Companies in 1995 and 1996. The hotel leases
between the Trust and the Corporation provide for annual base or
minimum rents plus contingent or percentage rents based on the gross
revenue of the properties and are accounted for as operating leases.
<TABLE>
<CAPTION>
Hotel Date Contributed/Acquired
------------------------------------------------- -------------------------
<S> <C>
Omni - Chapel Hill, NC........................... April 6, 1995
Colony Square - Atlanta, GA...................... July 24, 1995
Embassy Suites - Tempe, AZ....................... July 27, 1995
Doubletree Guest Suites - Irving, TX............. April 26, 1996
Doubletree Guest Suites - Ft. Lauderdale, FL..... April 26, 1996
Doubletree Guest Suites -Tampa, FL............... April 26, 1996
</TABLE>
(D) Reflects interest on the notes payable from the Corporation to the
Trust at 9.5% for the note secured by the leasehold interest in the
Doral property, prime plus 3% for notes secured by the Milwaukee
property and prime plus 2% for unsecured notes.
(E) The Corporation intends to operate all of the Companies' hotels and
terminate existing third party management contracts for all properties
at the earliest practicable date. Accordingly, certain costs directly
attributable to existing third party management contracts included in
the pro forma statements of operations have been eliminated. Such cost
savings are reflected in the pro forma statements of operations as if
such contracts had been canceled as of the beginning of the periods
presented. Listed below are the hotels on which third party management
contracts have been or are anticipated to be terminated and the related
management and other fees incurred in each period.
F-11
<PAGE> 15
<TABLE>
<CAPTION>
Fees Paid (1)
-------------
Year
Ended
12/31/95 Status
---------- ------------------
<S> <C> <C>
Hotel
- -----
Holiday Inn - Albany, GA.................. $ 9,000 Terminated
Best Western - Columbus, OH............... 33,000 Terminated
Best Western - Savannah, GA............... 21,000 Terminated
Radisson - Gainesville, FL................ 19,000 Terminated
Park Central - Dallas, TX................. 34,000 Terminated
Capitol Hill - Washington, DC............. 43,000 Cancelable in 1995
French Quarter - Lexington, KY............ 21,000 Terminated
Doubletree - Rancho Bernardo, CA.......... 67,000 Terminated
Colony Square - Atlanta, GA............... 139,000 Terminated
Omni - Chapel Hill, NC.................... 23,000 Terminated
Embassy Suites - Tempe, AZ................ 406,000 Terminated
GHI Properties............................ 941,000 Cancelable in 1996
----------
1,756,000
==========
</TABLE>
- ------------------
(1) Fees include base and incentive management fees as well as accounting
fee chargebacks and other corporate costs.
Pro Forma administrative and operating expenses reflect (i) increases
in operating expenses resulting principally from additional corporate
office personnel and (ii) decreases in operating expenses resulting
form a decrease in director's and officers' liability insurance. Such
cost adjustments are reflected in the pro forma statements of
operations as follows:
<TABLE>
<CAPTION>
Administrative
and
Operating
Expenses
--------------
Year
Ended
12/31/95
--------------
<S> <C>
Additional personnel costs and corporate travel........ $ 97,000
Decrease in directors' and officers' liability insurance (87,000)
--------
$ 10,000
========
</TABLE>
(F) Reflects the elimination of historical and pro forma interest expense
related to the debt repaid from the proceeds of the Offering and the
addition of interest expense on pro forma amounts outstanding
calculated as follows:
F-12
<PAGE> 16
<TABLE>
<CAPTION>
Year Ended 12/31/95
-------------------------------------
Trust Corp Combined
--------- ------- ---------
<S> <C> <C>
Interest on GSI note........................................................ 97,000 97,000
Interest expense on amount outstanding under line of credit
(subsequent to offering).................................................. 2,120,000 2,120,000
Interest expense relating to acquisition of the GHI Properties(1)........... 5,329,000 5,329,000
Interest expense relating to additional draw down on line (2)............... 531,000 531,000
Other....................................................................... 162,000 30,000 192,000
--------- ------- ---------
Total Interest Expense - pro forma.......................................... 8,142,000 127,000 8,269,000
========= ======= =========
</TABLE>
(1) Assumes draw down to acquire properties on January 1, 1995
(2) Assumes draw down of $9.8 million on January 1, 1995 to reflect actual draw
down in 3rd quarter
(G) Net income (loss) per paired share has been computed using the weighted
average number of paired shares and equivalent paired shares
outstanding. All paired share information has been adjusted to reflect
a one-for-six reverse split effective June 12, 1995.
(H) Reflects Starwood Capital's minority interest in the income of the
Partnerships.
F-13
<PAGE> 17
Arthur Andersen LLP
To the Partners of
Guaranteed Hotel Investors 1985, L.P.:
We have audited the accompanying statement of net assets of Hotel operations of
GUARANTEED HOTEL INVESTORS 1985, L.P. (a Delaware Limited Partnership) as of
December 31, 1995, and the related statements of Hotel operating revenue and
expenses and Hotel cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statements have been prepared for inclusion in Form 8-K of SLT
Realty Limited Partnership (SLT) pursuant to the Purchase Agreement as described
in Note 1 between Guaranteed Hotel Investors 1985, L.P. (GHI) and SLT dated
October 27, 1995, and are not intended to be a complete presentation of GHI's
assets and liabilities or results of its operations or its cash flows.
In our opinion, the statements referred to above present fairly, in all material
respects, the net assets of Hotel operations of GHI as of December 31, 1995, and
the results of the Hotel operations and the Hotel cash flows for the year then
ended, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Phoenix, Arizona,
March 25, 1996.
F-14
<PAGE> 18
GUARANTEED HOTEL INVESTORS 1985, L.P.
STATEMENT OF NET ASSETS OF HOTEL OPERATIONS
AS OF DECEMBER 31, 1995
(NOTE 1)
<TABLE>
<S> <C>
CURRENT ASSETS:
Accounts receivable $ 718,454
Other receivables 10,303
Prepaid expenses 280,832
-----------
Total current assets 1,009,589
-----------
PROPERTY AND EQUIPMENT, at historical cost:
Land 5,396,153
Buildings and improvements 41,350,548
Furniture and equipment 7,810,114
-----------
54,556,815
Less- Accumulated depreciation (9,013,099)
-----------
45,543,716
Operating stock 337,148
-----------
45,880,864
-----------
OTHER ASSETS 94,641
-----------
Total assets 46,985,094
-----------
CURRENT LIABILITIES:
Accounts payable 1,262,754
Accrued liabilities 281,956
Advance deposits 56,303
Property taxes payable 508,630
Capital lease obligations 111,689
-----------
Total current liabilities 2,221,332
-----------
NET ASSETS $44,763,762
===========
</TABLE>
The accompanying notes are an integral part of this Statement.
F-15
<PAGE> 19
GUARANTEED HOTEL INVESTORS 1985, L.P.
STATEMENT OF HOTEL OPERATING REVENUE AND EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
(NOTE 1)
<TABLE>
<S> <C>
REVENUE:
Room $18,286,393
Food and beverage 2,711,330
Other revenue 1,568,904
-----------
Total revenue 22,566,627
-----------
EXPENSES:
Property operating costs and expenses 7,172,670
General and administrative 2,803,639
Advertising and promotion 2,154,145
Utilities 1,191,628
Repairs and maintenance 1,058,664
Property taxes and insurance 1,476,854
Depreciation and amortization 2,473,779
Loss on disposition of property 62,709
Interest expense and other 115,322
-----------
Total expenses 18,509,410
-----------
EXCESS OF REVENUE OVER EXPENSES $ 4,057,217
===========
</TABLE>
The accompanying notes are an integral part of this Statement.
F-16
<PAGE> 20
GUARANTEED HOTEL INVESTORS 1985, L.P.
STATEMENT OF HOTEL CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
(NOTE 1)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Excess of revenues over expenses $ 4,057,217
Adjustments to net income-
Depreciation and amortization 2,473,779
Loss on disposition of property 62,709
Change in assets and liabilities-
Decrease in accounts receivable 27,469
Decrease in prepaids 479,840
Increase in other receivables (10,303)
Increase in accounts payable 85,524
Increase in accrued expenses 281,956
Increase in advance deposits 56,303
Decrease in property taxes payable (152,518)
-----------
Net cash provided by operating activities 7,361,976
-----------
CASH FLOWS FOR INVESTING ACTIVITIES:
Additions or improvement of property (1,095,827)
-----------
CASH FLOWS FOR FINANCING ACTIVITIES:
Payments of principal on capital lease obligations (184,888)
Cash transferred to partnership (6,081,261)
-----------
Net cash used for financing activities (6,266,149)
-----------
NET CHANGE IN CASH AND CASH EQUIVALENTS -
-----------
CASH AND CASH EQUIVALENTS, beginning and end of year $ -
===========
SUPPLEMENTAL DISCLOSURE:
Cash paid during the year for interest $ 45,800
===========
</TABLE>
The accompanying notes are an integral part of this Statement.
F-17
<PAGE> 21
GUARANTEED HOTEL INVESTORS 1985, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) ORGANIZATION AND BASIS OF PRESENTATION:
On October 27, 1995, SLT Realty Limited Partnership (SLT), a Delaware limited
partnership, entered into an agreement (the Purchase Agreement) with Guaranteed
Hotel Investors 1985, L.P. (GHI or the Partnership), a Delaware limited
partnership, to purchase substantially all of the operating hotel property
assets of GHI which represent three hotels located in Fort Lauderdale, Florida;
Tampa, Florida; and Irving, Texas (together the Hotels or Hotel Properties).
The accompanying financial statements reflect only the Hotel operations of GHI
including all normal assets, except cash, and liabilities related to the Hotel
operations. The buyer, under the Purchase Agreement, will primarily acquire only
the Hotel real properties and certain related assets (see Note 6). Pursuant to
the Purchase Agreement, certain assets and liabilities, such as cash,
receivables, and payables, will not be sold. Also, the accompanying financial
statements do not include any purchase accounting adjustments which may be
caused by the closing of the Purchase Agreement.
The Partnership's assets and liabilities not involved in the hotel operations
have been excluded.
Each hotel property includes a restaurant; one of the hotels operates the
restaurant within the hotel, whereas the other two hotels lease their respective
restaurants to third party operators. During 1995, the Hotels were managed by
Doubletree Partners, an affiliate of Doubletree Hotels Corporation, and were
operated as Doubletree Guest Suites which provide guest rooms and group meeting
room facilities. Management, accounting and data processing fees paid by GHI to
Doubletree Partners for the year ended December 31, 1995 approximated $940,000.
(2) SIGNIFICANT ACCOUNTING POLICIES:
FINANCIAL STATEMENTS
The accompanying financial statements are prepared on the accrual basis of
accounting and include only those assets, excluding cash, and liabilities and
those revenues and expenses that relate to the Hotel operations of GHI;
therefore, they are not intended to represent the overall financial position or
results of operations of GHI. The preparation
F-18
<PAGE> 22
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
DEPRECIATION
Depreciation on buildings, building improvements, furniture and equipment is
provided using the straight-line method based upon the following estimated
useful lives:
<TABLE>
<S> <C>
Buildings and improvements 5-34 years
Furniture and equipment 2-15 years
</TABLE>
(3) CAPITAL LEASE OBLIGATIONS:
The Hotels lease telephone systems from various telephone vendors which expire
in 1996. The obligations under capital lease at December 31, 1995, totaled
approximately $112,000. Future minimum lease payments under capital lease for
1996 total $120,000, including interest of $8,000.
For the year ended December 31, 1995, amortization expense and accumulated
amortization for equipment under capital leases was $47,000 and $824,000,
respectively.
(4) INCOME TAXES:
GHI is not directly subject to income taxes; therefore, no income tax provision
has been allocated to the Hotel operations.
(5) CONTINGENCY:
During 1994, Doubletree Partners spent $1,425,000 for purposes of management
assumption, brand conversion, and renovation of the Hotels in connection with
the management agreements between Doubletree Partners and GHI. The management
agreements provide that if GHI sells the Hotels during years one through five of
the agreements and Doubletree Partners is not retained by the new owners as
manager of the Hotels, all of the $1,425,000 is to be reimbursed to Doubletree
Partners as a sale termination fee. In connection with the proposed sale of the
Hotels, SLT has agreed to assume this contingent liability.
(6) SUBSEQUENT EVENT - INVESTOR APPROVAL OF SALE OF HOTELS:
GHI entered into an agreement on October 27, 1995, to sell, subject to the
consent of GHI's investors and the satisfactory completion of due diligence by
SLT, fee simple title to the Hotels and certain other assets used in the
operations of the Hotels, as specified in
F-19
<PAGE> 23
the Purchase Agreement, for a cash payment of $73,250,000. On March 15, 1996, a
majority of GHI's investors approved the sale of the Hotels to SLT.
The purchase price was based upon bids received on behalf of the Partnership by
an independent investment banking firm from unaffiliated third parties. SLT was
awarded the bid conditional on all requirements outlined in the Purchase
Agreement.
In addition to the Hotel Properties, title to other assets will pass to SLT at
the close of the sale, including:
Equipment, trade fixtures, inventory, supplies, furnishings and other
items of tangible personal property situated on or about or used in
connection with Hotel Properties.
Motor vehicles used in connection with the Hotel Properties.
To the extent assignable, governmental licenses and permits pertaining
to the current ownership.
Deposits in the form of cash or receivables, including, without
limitation, credit card receivables, held by GHI as of the Closing Date
(a date within 15 days after satisfaction or waiver of all of the
requirements set forth in the Purchase Agreement, but in no event later
than April 30, 1996) with respect to the rental of guest rooms and
meeting rooms and food service for periods of time from and after the
Closing Date.
F-20
<PAGE> 1
EXHIBIT 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion
in this Form 8-K of our report dated March 25, 1996 on the Hotel operations
financial statements of GHI Hotel Investors 1985, L.P. It should be noted that
we have not audited any financial statements of GHI Hotel Investors 1985, L.P.
or the Hotel operations subsequent to December 31, 1995, or performed any audit
procedures subsequent to the date of our report.
Arthur Andersen LLP
April 26, 1996,
Phoenix, Arizona
<PAGE> 1
FOR IMMEDIATE RELEASE
CONTACTS: STANDARD CONTACTS
STARWOOD LODGING COMPLETES ACQUISITION OF THREE DOUBLETREE ALL-SUITE HOTELS
LOS ANGELES, California (April 30, 1996) -- Starwood Lodging Trust (the
"Trust"), a real estate investment trust, and Starwood Lodging Corporation (the
"Corporation"), a hotel management and operating company, whose shares are
paired and trade together on the New York Stock Exchange (NYSE:HOT), today
announced they have completed the previously announced acquisition of a
portfolio of three Doubletree Guest Suites hotels for $73.25 million. The
properties contain a total of 822 two-room suites, and are located in Irving,
Texas (DFW Airport), Ft. Lauderdale, Florida (Cypress Creek) and Tampa, Florida
(Westshore/International Airport). The aggregate purchase price equates to
$89,000 per room, or approximately 75 percent of estimated replacement cost.
The Doubletree at DFW Airport is located two miles south of DFW Airport
and contains 308 suites, 6,000 square feet of meeting space and three food and
beverage outlets. The Doubletree Cypress Creek is located approximately fifteen
miles north of downtown Ft. Lauderdale and contains 254 suites, 12,000 square
feet of meeting space and a 120-seat restaurant. The Doubletree Westshore is
located five miles west of downtown Tampa and two miles south of Tampa
International Airport, and contains 260 suites, 6,000 square feet of meeting
space and a restaurant and lounge.
Steven R. Goldman, Senior Vice President of Starwood Lodging
Corporation, stated, "We are pleased to add three high quality, all-suite
properties to Starwood Lodging's hotel portfolio. Hotel demand in Dallas
continues to grow, and DFW airport is now among the top performing airport
markets in the country. The Ft. Lauderdale and Tampa markets have rebounded well
from the recession of several years ago. With this acquisition, Starwood Lodging
now has interests in full service hotels in four major airport markets including
San Francisco and Philadelphia. We believe that this helps to diversify our
overall portfolio; moreover, the all-suite product has great appeal to a broad
customer base and is well positioned to take advantage of improving conditions
throughout the hotel industry."
Including the three Doubletree hotels and additional properties under
contract, the Trust and the Corporation will have acquired interests in
seventeen full-service hotels aggregating approximately 5,700 rooms at a total
acquisition cost of approximately $400 million since the completion of their
$271 million public offering in July 1995.
The Trust, which conducts all of its business as general partner of SLT
Realty Limited Partnership, is the only hotel REIT whose shares are paired with
a hotel operating company, the Corporation. With this purchase, the Trust will
own equity and mortgage interests in 57 hotels containing 13,600 rooms located
in 24 states and the District of Columbia. The equity portfolio will include 32
franchise locations, such as Embassy Suites, Marriott, Sheraton, Radisson,
Holiday Inn, Doubletree, Days Inn and Best Western, as well as 14 independent
properties.
<PAGE> 2
The Corporation, which conducts substantially all of its business as
managing general partner of SLC Operating Limited Partnership, leases properties
from the Trust and operates them directly or through third-party management
companies.
# # #
