DALLAS, March 23, 1998 - In its first acquisition of an upper-upscale, all-suite product, Patriot American Hospitality, Inc. and Wyndham International, Inc. (the "Companies"), whose shares are paired andtrade as a single unit (NYSE: PAH), today announced the signing of a definitive agreement to acquire Summerfield Hotel Corporation ("Summerfield") through merger for approximately $170 million in cash and a combination of approximately 4.59 million operating partnership units and Patriot American paired shares. The final transaction price is subject to adjustment based on Patriot American's stock price through the end of 1998, as well as certain adjustment mechanisms that may result in increased consideration payable by Patriot American in 2000 and 2001, if certain performance criteria for Summerfield's portfolio are satisfied. Patriot American and Wyndham International expect to complete the acquisition in this year's second quarter.
In a separate transaction arranged by the Companies, affiliates of Summerfield sold 15 properties to Hospitality Properties Trust (NYSE: HPT). Upon completion of the merger, the 15 properties sold to HPT will be leased to Wyndham International. In total, Patriot American will own four Summerfield Suites(R) properties and lease or manage 33 Summerfield Suites(R) and Sierra Suites(R). The total portfolio is composed of 28 Summerfield Suites(R), representing 3,528 suites; eight Sierra Suites(R), representing 792 suites; and, one Sunrise Suites hotel representing 96 suites. Additionally, the portfolio includes one franchised Summerfield Suites(R) hotel representing 265 suites.
According to Paul A. Nussbaum, chairman and chief executive officer
of Patriot American, the merger with
Summerfield Suites(R) will position Patriot American and Wyndham International as a leader in the upscale all-suites segment of the lodging industry, and underscores the Companies' commitment to providing its customers product lines in all upscale lodging segments.
"Through this transaction, we add to our portfolio another upscale brand with extraordinary growth potential through selective development and conversions of existing properties. Located primarily in major metropolitan suburban markets, Summerfield Suites(R) have distinguished themselves as one of the leading upscale all-suite hotel products, posting 80 percent occupancy at an average daily rate (ADR) of $117, compared to the 76.9 percent occupancy and $104.45 ADR reported by the upscale all-suite sector overall, in 1997. We believe that our acquisition of this company will be immediately accretive in 1998. We also are pleased to integrate another 'best of class' management company into Wyndham International."
Upon completion of the transaction, Summerfield's management will continue
operations as the All-Suites
Division of Wyndham International. Rolf E. Ruhfus, chairman and chief executive officer of Summerfield, will be nominated to the board of Wyndham International and, together with B. Anthony Isaac, president of Summerfield Suites(R), who will be named president of the newly created All-Suites Division of Wyndham International, will continue to lead Summerfield Suites(R) and Sierra Suites(R).
According to James D. Carreker, chairman and chief executive officer of Wyndham International, the addition of Summerfield's management team to Wyndham International exemplifies the Companies' commitment to excellence in operations and brand development. "Summerfield was founded by the same professionals who developed the highly successful Residence Inn concept and, since Summerfield's founding in 1988, their management team has effectively created an entirely new version of the upscale all-suites concept which is without peer in the industry.
In just 10 years, Summerfield's growth has been extraordinary, as evidenced not just by the size of the portfolio we will acquire, but by the number of pipeline development projects to be added to Wyndham International's management operations. We are excited to welcome the Summerfield team to Wyndham International, and look forward to impressive performance by the Summerfield Suites(R) and Sierra Suites(R) properties in 1998 and beyond," he said.
For the Summerfield team, this transaction means greater opportunity to expand the distribution of Summerfield Suites(R) and Sierra Suites(R) Hotels through the capital strength of Patriot American. According to Mr. Ruhfus, "The capital strength of Patriot American and this transaction provides us with a great opportunity to aggressively grow our two brands. Our proven development team can increase its pace immediately. In addition, we can begin our entry into overseas markets. My partners and I will continue to own nine Summerfield managed properties and are committed to fund 12 new hotels currently under development. Summerfield's current pipeline of hotels in development or under construction includes 9 Summerfield Suites(R) hotels representing 1,212 suites, and 12 Sierra Suites(R) representing 1,422 suites.
The new growth in both brands also will offer our management team significant opportunities for career growth in a much wider arena." According to Mr. Isaac, "While we've enjoyed good growth of the Summerfield and Sierra concepts, capital constraints have precluded us from realizing the maximum potential we believe both brands offer. Because Patriot American and Wyndham International understand what it takes to increase brand distribution, and have the financial strength to fund an aggressive growth strategy, we believe that our products and Patriot/Wyndham's growth philosophy would be very complementary. We are very excited to become the All-Suites Division of Wyndham International and look forward to enhancing the Companies' efforts to become a world-class hotel company," he said.
Mr. Carreker said that while some analysts have suggested that the all-suite sector is overbuilt and thus, more vulnerable to decreases in customer demand, the Summerfield Suites(R) chain is unparalleled by virtue of its target customer as well as the markets in which the hotels are located. "The all-suite concept has focused on a rapidly growing travel market: those who stay away from home for five or more consecutive nights. Industry research indicates that approximately 35 percent of these travelers are on temporary assignments, another 30 percent of the travelers are attending training classes, and the remaining 35 percent are relocating or taking extended vacations. Summerfield Suites(R) Hotels are marketed primarily to the 30 percent who are attending training programs, a unique and essentially under-served category of travelers who prefer the upscale atmosphere offered by Summerfield Suites(R) Hotels. Because of its upscale amenities, more luxurious public areas and the metropolitan locations of Summerfield Suites(R) Hotels, this upper upscale product is more competitive with Embassy Suites, Marriott and Hyatt than with Residence Inns, for example, and we expect that through an accelerated brand distribution program, Summerfield Suites(R) Hotels will become the standard by which the other all-suite products are measured in the very near future."
According to Michael Silverman, vice president of finance for Patriot American and the leader of the Companies' transaction team, with higher revenues per available room (RevPAR) than its competitive set, the addition of Summerfield Suites(R) group to the Companies' portfolio is expected to positively impact the Companies' internal growth potential in 1998. "The total set of upper upscale and upscale extended stay and all-suite hotel chains, including Summerfield Suites(R), Residence Inns, Embassy Suites and DoubleTree Guest Suites, among others, reported revenue per available room (RevPAR) of $80.36. For its comparable hotels, Summerfield Suites(R) realized a substantially higher RevPAR totaling $94.49.
Through the continued leadership of Tony Isaac and his team, we expect this portfolio to continue to outperform its competitive set and therefore, to contribute meaningfully to Patriot American's operating highlights in 1998."
About Summerfield Suites(R) and Sierra Suites(R)
Based in Wichita, Kansas, Summerfield Hotel Corporation was founded by the same executives who previously had pioneered the Residence Inn extended-stay all-suite hotel concept, later sold to Marriott Corporation in 1987. Shortly after the sale of the Residence Inn business to Marriott, Summerfield Hotel Corporation was formed to develop, own and manage an additional chain of upscale all-suite hotels in major metropolitan markets. The Summerfield Suites(R) Hotel is an improved all-suite hotel offering guests separate living and sleeping areas, full kitchens, enhanced work areas, a complimentary breakfast and an evening social hour. Private voice mail, video players, on- site convenience stores and "room service" contracted from area restaurants also are featured. In addition, Summerfield Suites(R) Hotels offer "signature" two-bedroom, two-bathroom suites designed for equal-status business travelers in training classes or attending meetings, and for families on weekend excursions.
In 1996, Summerfield Hotel Corporation introduced Sierra Suites(R) Hotels, a new brand of mid-priced, all-suite hotels under the direction of Rob Mossburg, executive vice president and general manager. Positioned at the highest end of the mid-priced segment, the Sierra Suites(R) Division opened its first properties in Atlanta and Phoenix. Since then, additional Sierra Suites(R) Hotels have been opened in Scottsdale, Arizona; Chantilly, Virginia; and Pleasanton, California. Within the next several months, six Sierra Suites(R) hotels will open in Boston, Orlando, Piscataway, and Seattle.
About Patriot American Hospitality, Inc. and Wyndham International, Inc.
Based in Dallas, Texas, Patriot American Hospitality, Inc. (NYSE: PAH)
is currently the nation's second-largest hotel real estate investment trust
(REIT) with a portfolio currently comprised of 230 owned, managed, leased
or franchised hotels and resorts with more than 60,000 rooms. Paired with
Wyndham International, Patriot American is one of only two paired-share
hotel REITs in the country. Wyndham International, comprised of the Luxury
Hotel Division, the Wyndham Hotel Group, the Management Services Group
and the Asset Management Group, leases, manages and franchises primarily
upscale hotel and resort properties represented by its proprietary brands,
including Wyndham Hotels, Wyndham Resorts, Wyndham Garden Hotels, Wyndham
Grand Heritage, Grand Bay Hotels and Resorts, and ClubHouse Inns, and provides
management services for third-party owned hotels and resorts.
|Summerfield Suites - Addison||SF||132||Addison, TX||Lease|
|Summerfield Suites - Buckhead||SF||88||Atlanta, GA||Lease|
|Summerfield Suites - Atlanta Perimeter||SF||122||Atlanta, GA||Lease|
|Summerfield Suites - Belmont||SF||132||Belmont, CA||Lease|
|Summerfield Suites - Burlington||SF||151||Burlington, MS||Managed|
|Summerfield Suites - Charlotte||SF||135||Charlotte, NC||Managed|
|Summerfield Suites - Chatsworth||SF||114||Chatsworth CA||Lease|
|Summerfield Suites - Chicago Downtown||SF||120||Chicago, IL||Managed|
|Summerfield Suites - Denver||SF||136||Denver, CO||Owned|
|Summerfield Suites - Dulles||SF||112||Dulles, VA||Lease|
|Summerfield Suites - El Segundo||SF||122||El Segundo, CA||Lease|
|Summerfield Suites - Hanover||SF||136||Hanover, NJ||Owned|
|Summerfield Suites - Las Colinas||SF||148||Irving, TX||Lease|
|Summerfield Suites - Malvern||SF||120||Malvern, PA||Lease|
|Summerfield Suites - Morristown||SF||133||Morristown, NJ||Owned|
|Summerfield Suites - Mount Laurel||SF||116||Mount Laurel, NJ||Lease|
|Summerfield Suites - Orlando International||SF||146||Orlando, FL||Lease|
|Summerfield Suites - Orlando||SF||150||Orlando, FL||Lease|
|Summerfield Suites - Princeton||SF||124||Princeton, NJ||Lease|
|Summerfield Suites - San Bruno||SF||92||San Bruno, CA||Lease|
|Summerfield Suites - San Jose||SF||114||San Jose, CA||Lease|
|Summerfield Suites - Schaumburg||SF||112||Schaumburg, IL||Lease|
|Summerfield Suites - Somerset||SF||140||Somerset, NJ||Lease|
|Summerfield Suites - St. Louis||SF||106||St. Louis, MO||Lease|
|Summerfield Suites - Sunnyvale||SF||138||Sunnyvale, CA||Lease|
|Summerfield Suites - Torrance||SF||144||Torrance, CA||Lease|
|Summerfield Suites - Waltham||SF||136||Waltham, MA||Owned|
|Summerfield Suites - Embassy Square||SF||265||Washington, DC||Franchise|
|Summerfield Suites - West Hollywood||SF||109||West Hollywood, CA||Lease|
|sub - total||3,793|
|Sierra Suites - Atlanta Cumberland||SS||89||Atlanta, GA||Lease|
|Sierra Suites - Atlanta Brookhaven||SS||92||Atlanta, GA||Managed|
|Sierra Suites - Atlanta Perimeter||SS||101||Atlanta, GA||Managed|
|Sierra Suites - Chantilly||SS||89||Chantilly, VA||Managed|
|Sierra Suites - Phoenix Camelback||SS||113||Phoenix, AZ||Lease|
|Sierra Suites - MetroCenter||SS||89||Phoenix, AZ||Managed|
|Sierra Suites - Pleasanton||SS||113||Pleasanton, CA||Managed|
|Sierra Suites - Scottsdale||SS||107||Scottsdale, AZ||Managed|
|Sunrise Suites - Tinton Falls||SN||96||Tinton Falls, NJ||Lease|
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include competition for guests from other hotels, dependence upon business and commercial travelers and tourism, the seasonality of the hotel industry, availability of equity or debt financing at terms and conditions favorable to the Companies, and the status of proposed tax legislation regarding the paired-share structure.