HUMPHREY HOSPITALITY TRUST, INC. AND SUPERTEL HOSPITALITY, INC.
ANNOUNCE PLANS TO MERGE
Silver Spring, Maryland and Norfolk, Nebraska -- June 11, 1999 -- Humphrey
Hospitality Trust, Inc. (Nasdaq: HUMP) and Supertel Hospitality, Inc. (Nasdaq:
SPPR) announced today that they have entered into an Agreement and Plan of
Merger. Under the agreement, Humphrey Hospitality would exchange 1.30 shares of
Humphrey Hospitality common stock for each share of Supertel common stock. The
boards of both companies have approved the merger. The merger is subject to a
number of conditions, including approval by the shareholders of Humphrey
Hospitality and the stockholders of Supertel. Completion of the merger is
expected in September or October 1999.
The agreement provides for the stockholders of Supertel to receive a
pre-closing dividend of Supertel's earnings and profits, which Supertel
presently expects to be in the range of $4.50 to $4.80 per share. The special
dividend would be payable only if the merger occurs. Supertel has the right to
terminate the agreement if the dividend is less than $4.00 per share of Supertel
common stock.
Under the agreement, Humphrey Hospitality would acquire the hotel assets of
Supertel. The 63 hotels (containing 4,558 rooms) and one office building
acquired by Humphrey Hospitality under the merger will be leased to Humphrey
Hospitality Management. Humphrey Hospitality Management also leases and manages
26 Humphrey Hospitality hotels. Humphrey Hospitality currently pays a monthly
dividend of 7.5 cents (90 cents annually) per share of Humphrey Hospitality
common stock. After the merger, Humphrey Hospitality will own 89 hotels with
approximately 6,100 rooms in 19 states.
Humphrey Hospitality's board of directors will have seven members following
the merger. James I. Humphrey, George R. Whittemore and Jeffrey Zwerdling will
continue as members of Humphrey Hospitality's board of directors. The merger
agreement provides that Paul Schulte, Steve Borgmann, Loren Steele and Joseph
Caggiano, currently members of the Supertel board of directors, will become
members of the Humphrey Hospitality board of directors. Paul Schulte will serve
as Humphrey Hospitality's chairman of the board of directors and chief executive
officer and James I. Humphrey will serve as vice chairman, president and chief
operating officer following the merger.
"The combination of the two companies will produce one of the largest
limited-service lodging REITs," said James Humphrey, chairman and president of
Humphrey Hospitality. "With our hotels on the East Coast, and Supertel's in the
Midwest and Texas, there is a good geographic fit and the opportunity to
generate economies of scale in the management of our properties."
"We think our similar management philosophies make us very compatible,"
said Paul J. Schulte, president and chief executive officer of Supertel. "And we
believe that the REIT structure is in the best interest of our shareholders and
offers the greatest potential on a long-term basis."
Humphrey Hospitality is a real estate investment trust for federal income
tax purposes. Humphrey Hospitality, through a wholly-owned subsidiary, holds a
controlling partnership interest in a partnership that owns 26 existing limited
service hotels under the Hampton Inn, Holiday Inn Express, Comfort Inn, Days
Inn, Rodeway Inn, Best Western and Shoney's Inn names. The Humphrey Hospitality
properties are located primarily in the Mid-Atlantic and Florida. Humphrey
Hospitality Management is owned by James Humphrey, the chairman and president of
Humphrey Hospitality.
Supertel owns and operates limited service hotel properties under the Super
8, Comfort Inn and Wingate Inn names located primarily in the Midwest and Texas.
After the merger, Humphrey Hospitality's headquarters will remain in Silver
Spring, Maryland. Humphrey Hospitality Management will maintain hotel management
offices in Norfolk, Nebraska, and Silver Spring, Maryland.
Supertel Hospitality also reported its current operations outlook. "We
continue to experience pressure from rising wage rates," said Schulte. "In
addition, we are seeing slightly lower occupancy rates in some of our markets."
Supertel presently forecasts net income to be in the range of $0.30 to $0.34 per
share in the second quarter of 1999, compared with $0.35 in the year-ago period.
For the full year, the company expects net income to be in the range of $1.10 to
$1.15 per share in 1999.
A registration statement relating to the securities to be issued in the
merger will be filed with the Securities and Exchange Commission but has not yet
been filed or become effective. The securities may not be sold, nor may offers
to buy be accepted, prior to the time the registration statement becomes
effective. This press release shall not constitute an offer to sell or the
solicitation of any offer to buy, nor shall there be any sale of the securities
in any state in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
state.
Statements made in this press release that are forward-looking in nature
are intended to be forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934 and may involve risk and uncertainties.
These statements may differ materially from actual future events or results.
Readers are referred to documents filed by Supertel and Humphrey Hospitality
with the Securities and Exchange Commission, including their Annual Reports on
Form 10-K for the year ended December 31, 1998, which identifies significant
risk factors which could cause actual results to differ from those contained in
the forward-looking statements.
Contact: Troy M. Beatty, Chief Financial Officer of Supertel Hospitality,
Inc., 402-371-2520.
Contact: Randy P. Smith, Humphrey Hospitality
Trust, Inc., 301- 680-4343.