it creates "both", so to say. It really depends how do you open it:
a) If you open it through the Project manager it will be - WEB APPLICATION
b) If you open it through Visual Studio, you can open the SitefinityWebApp.csproj in which case it is going to be - WEB APPLICATION
c) If you open it through Visual Studio by clicking open website from the File menu, it will be WEB SITE
Hope this helps.
All the best,
the Telerik team
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