| FAIRFIELD, N.J., March 23, 2000 - Prime Hospitality
Corp. (NYSE: PDQ) announced today that it will convert 27 Sumner Suites
hotels to its AmeriSuites brand pursuant to an agreement with Sholodge,
Inc. to acquire the leasehold interests on the hotels. Prime will operate
the hotels under the lease agreements with Hospitality Properties Trust
(“HPT”) and Sholodge. Prime will also purchase two land sites from Sholodge
to develop two additional AmeriSuites hotels. The transaction is expected
to close in mid-April and is subject to certain due diligence items and
approval by HPT. Under the agreement, a subsidiary of Prime will
assume Sholodge’s interest in an existing lease for 20 hotels with HPT
subject to HPT’s consent and enter into new lease agreements on the seven
remaining hotels. As part of the transaction, Prime will also purchase
land from Sholodge in Mt. Laurel, NJ and in Sterling, VA near Dulles Airport.
An affiliate of Sholodge will then construct AmeriSuites hotels on these
sites.
“This transaction will grow the size of our AmeriSuites chain by 30%”
said A.F. Petrocelli, chairman and chief executive officer of Prime. “We
will be adding AmeriSuites to new markets and strengthening our presence
in existing markets. The hotels are substantially identical in nature to
our existing AmeriSuites and conversion items are expected to be minimal.
By leasing 27 hotels, we are also able to grow our brand without raising
capital or adding real estate. The transaction fits with our strategic
initiative to transform Prime from an owner/operator into a franchisor/manager
of its brands. This conversion is a significant step in developing AmeriSuites
into a major player in the industry.”
The hotels are located in 12 states primarily in the Southeast, Midwest
and Southwest regions of the country. The hotels were all recently constructed
by Sholodge with an average age of 2.8 years. Sholodge also has prior experience
developing AmeriSuites hotels as 15 current AmeriSuites were constructed
by Sholodge. Prime intends to convert the hotels to AmeriSuites over
the next several months. The hotels will be operated by Prime as Sumner
Suites until the conversion process is complete.
 Prime
Hospitality Corp., one of the nation’s premiere lodging companies, owns,
manages, develops and franchises over 200 hotels throughout the United
States. The Company owns and operates two proprietary brands that compete
in different segments: AmeriSuites® (all-suites) and Wellesley Inns
Suites® (limited-service). Also within its portfolio are owned and/or
managed hotels operated under franchise agreements with national hotels
chains including Hilton, Radisson, Sheraton, Crowne Plaza, Holiday Inn
and Ramada.
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New Direction for ShoLodge
HENDERSONVILLE, Tenn. - March 23, 2000--ShoLodge, Inc.
(NASDAQ/NM: LODG) today announced the execution of an agreement with Prime
Hospitality Corp. (“Prime”) that contemplates a series of transactions
in which ShoLodge will (i) sell to Prime its leasehold interest in 20 Sumner
Suites hotels currently leased and operated by ShoLodge, (ii) sell its
interest in four Sumner Suites hotels currently owned and operated by ShoLodge,
which the new owner would then lease to Prime, (iii) lease to Prime its
remaining three Sumner Suites hotels currently owned and operated by ShoLodge
and (iv) sell to Prime two undeveloped hotel sites. In addition, the agreement
contemplates that Prime will engage ShoLodge to construct an AmeriSuites
hotel on each of the undeveloped sites being purchased from ShoLodge and
to provide other services to Prime in the future. The transaction is expected
to close in mid-April and is subject to certain due diligence items and
approval by the lessor.
ShoLodge expects to receive approximately $54 million
in cash at closing and future minimum annual rental payments of approximately
$3 million beginning at closing.
Commenting on the transaction, Leon Moore, Chief Executive
Officer of ShoLodge, said, “We believe the Sumner Suites product to be
one of the best mid-priced all-suite hotels in the industry. This transaction
gives us the opportunity to continue to apply our experience in the recent
development of the Sumner Suites brand and the earlier development of the
AmeriSuites brand, toward the development of mid-priced all-suite hotels
for ourselves and others, and to continue giving our attention to the established
Shoney’s Inn chain. We completed one hotel development for a third party
in December and are nearing completion of another hotel for the same party.
Another development is currently in progress, and we anticipate that several
additional hotel development contracts will be executed soon. These are
in addition to the two AmeriSuites hotels to be developed for Prime discussed
above.” |
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