The seven hotels, which are located in California, Connecticut, Massachusetts, Michigan, New Jersey and New York, were purchased from Candlewood Hotel Company Fund I, LLC and its subsidiaries, a joint venture between Candlewood Hotel Company, Inc. and MMBC Equity Member I, LLC in connection with a plan to wind up that joint venture.
Simultaneous with this purchase, Hospitality Properties Trust added these seven hotels to its existing lease for 57 Candlewood Suites hotels with Candlewood. When these hotels were added to this existing lease, the rent payable by Candlewood to Hospitality Properties Trust was increased by $6.5 million a year, plus a percentage of operating revenues at these hotels in excess of negotiated amounts. The combined lease for all 64 hotels remains secured by a cash security deposit and a guaranty from Candlewood.
Hospitality Properties Trust funded the purchase by using cash on hand and borrowings under its revolving bank credit facility. The locally based REIT owns 274 hotels located in 38 states.
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