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BETHESDA, MD-Crestline Capital Corp. recently reported third-quarter earnings that were substantially below comparative results for the same period a year ago. For the period ended September 30, Crestline earned $17.6 million, down 38% from $28.2 million the third quarter of 2000. Results for both quarters are earnings before interest expense, taxes, depreciation and amortization and other non-cash items. In a statement, Crestline says that results for the third quarter were significantly affected by the January 2001 sale of the Host Marriott full-service hotel leases, which had generated over $120 million in after-tax proceeds. In fact, that sale has lower results for all three quarters of 2001.

“Overall, the third quarter was a very weak quarter for our hotel business,” president and chief executive Bruce Wardinski says in a statement, perhaps expressing the sentiment of the entire lodging industry in the aftermath of the September 11 terrorist attacks. Oddly, though, Wardinski says, “The one bright spot in the quarter was the performance of our senior-living communities.” However, Crestline jettisoned most of its senior living portfolio when it sold its portfolio of 31 senior assisted living properties to Newton, MA-based Senior Housing Properties Trust for $600 million in debt and equity financing. That deal is expected to close early next year. Crestline was spun-off from another Bethesda, MD-based company, Host Marriott Corp., in December 1998. At that time, Host Marriott became a hotel REIT, and laws required that hotel REITS lease the properties they owned to other companies. Crestline became the lessee.

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