New Management Brand for 15 Extended Stay Hotels

All 15 of the hotels are currently operated as "Summerfield Suites by Wyndham." This past April, Wyndham International, Inc. defaulted its rent due HPT and HPT assigned interim management of these hotels to Candlewood Hotel Company. Under the new agreement, 14 of the 15 hotels will be branded as "Staybridge Suites" hotels. "Staybridge Suites" is a trademark brand of IHG. One hotel may be branded under a different IHG trademark or sold.

HPT says that the management agreement between its company and IHG will have many of the features typical of HPT leases and management contracts. HPT will receive an "owner's priority" return of $20 million a year and IHG will provide a $20 million security deposit to secure the "owner's priority" payment. As part of its agreement with IHG, HPT has agreed to fund $20 million for deferred maintenance and rebranding costs and thereafter a capital expenditure reserve escrow equal to 5% of the hotels' gross sales will be required. The management contract for these 15 hotels will be combined with the existing contract for 16 Staybridge Suites hotels now owned by HPT and managed by IHG. The term of this combination agreement for 31 hotels expires in 2023, and IHG has extension options totaling 25 years thereafter.

The transition of the 15 hotels to the Staybridge Suites brand and to IHG management is expected to occur next month. Hospitality Properties Trust is a REIT which owns 274 hotels located throughout the US.