HPT, NH Hoteles Strike Multinational Deal

NEWTON, MA-Locally based lodging REIT Hospitality Properties Trust on Wednesday said it announced that it has entered a letter of intent and an exclusive negotiating period for hotel investments with NH Hoteles SA. The $325-million arrangement with Madrid-based NHH focuses on properties in Latin America, Europe and the USA.

Under the agreement, which will take the REIT out of the US and its territories for the first time, HPT will purchase five Latin American hotels totaling 804 keys from NHH for about $70 million. These hotels will be managed by NHH under long-term contracts for 20 years plus renewal options, according to a release.

Further, HPT will provide a 170-million euro loan—approximately $222 million—to NHH, which will be secured by first mortgages on four European hotels totaling 1,203 keys. The loan will be a recourse obligation of NH Hoteles, have a seven-year term and require interest at a floating rate not less than 10%, the release states. In certain circumstances, HPT will have the option to take ownership of these hotels by cancelling the loan and paying the difference between the loan amount and the agreed values of these hotels.

In addition, HPT and NHH will form a joint venture to acquire a 242-key hotel in New York City currently owned by NHH and a European partner. HPT expects to provide up to $80 million to retire the ownership of NHH's current partner and fund a major refurbishment of the property. Once the refurbishment is done, NHH and Sonesta International Hotels Inc. will jointly brand and manage this hotel.

“NH Hoteles is one of the leading hotel management companies in the world,” says John Murray, president of HPT, in a statement. “NH Hoteles operates approximately 400 hotels in Europe and Latin America, and it is simultaneously today announcing a strategic investment by HNA Group of China into NH Hoteles. HPT began its discussions with NH Hoteles almost one year ago and HPT hopes that, when the transaction outlined in the letter of intent announced today is implemented, it will be the beginning of a long term strategic relationship between our companies, especially in North and South America and possibly elsewhere.”