NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today
announced its results of operations for the quarter ended March 31,
2005, as follows:
Quarter Ended
March 31,
-----------------
2005 2004
-------- --------
Net income available for common shareholders $26,792 $23,054
Funds from operations ("FFO") $60,883 $57,023
Common distributions declared $48,386 $48,375
Per common share amounts:
Net income available for common shareholders $0.40 $0.36
Funds from operations ("FFO") $0.91 $0.89
Common distributions declared $0.72 $0.72
Weighted average common shares outstanding 67,203 64,416
Hospitality Properties Trust is a real estate investment trust, or
REIT, which owns 297 hotels located in 38 states, Puerto Rico and
Canada. HPT is headquartered in Newton, Massachusetts.
Hospitality Properties Trust
CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM OPERATIONS
(amounts in thousands, except per share data)
Quarter Ended March 31,
-----------------------
2005 2004
------------ ----------
Revenues:
Hotel operating revenues (1) $145,047 $116,073
Rental income 31,065 32,636
FF&E reserve income (2) 4,399 4,458
Interest income 236 144
------------ ----------
Total revenues 180,747 153,311
------------ ----------
Expenses:
Hotel operating expenses (1) 100,425 77,834
Interest (including amortization of
deferred financing costs of $734 and
$686, respectively) 15,429 12,839
Depreciation and amortization 30,823 28,696
General and administrative 5,364 4,400
------------ ----------
Total expenses 152,041 123,769
------------ ----------
Net income 28,706 29,542
Preferred distributions (1,914) (3,695)
Excess of liquidation preference over carrying
value of preferred shares (3) -- (2,793)
------------ ----------
Net income available for common shareholders $26,792 $23,054
============ ==========
Calculation of FFO (4):
Net income available for common shareholders $26,792 $23,054
Add: FF&E deposits not in net income (2) 499 430
Depreciation and amortization 30,823 28,696
Excess of liquidation preference over
carrying value of preferred shares (3) -- 2,793
Deferred percentage rent (5) 920 600
Deferred hotel operating income (6) 1,849 1,450
------------ ----------
Funds from operations ("FFO") $60,883 $57,023
============ ==========
Weighted average common shares outstanding 67,203 64,416
============ ==========
Per common share amounts:
Net income available for common
shareholders $0.40 $0.36
FFO (4) $0.91 $0.89
Common distributions declared $0.72 $0.72
See Notes on page 3.
Hospitality Properties Trust
NOTES TO CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM OPERATIONS
(amounts in thousands, except per share data)
(1) At March 31, 2005, each of our 297 hotels was included in one of
nine combinations of hotels of which 188 are leased to one of our
taxable REIT subsidiaries and managed by an independent hotel operating
company, and 109 are leased to third parties. Our consolidated statement
of income includes hotel operating revenues and expenses of managed
hotels and rental income from our leased hotels. The pro forma operating
results for all 188 of our managed hotels assuming acquisition of the
hotels and commencement of the management agreements as of January 1,
2004, are as follows (includes amounts for periods prior to our
ownership of some of these hotels and for periods when some of these
hotels were leased by us to third parties):
Pro forma
Quarter Ended March 31,
2005 2004
Hotel operating revenues $160,761 $152,968
Hotel operating expenses 119,298 117,818
Certain of our managed hotels had net operating results that were
less than the minimum returns due to us by $2,609 and $2,712 in the
first quarter of 2005 and 2004, respectively. These amounts are included
in our consolidated statement of income as a net reduction to hotel
operating expenses in each period because the minimum returns were
funded by our managers.
(2) Various percentages of total sales at most of our hotels are
escrowed as reserves for future renovations or refurbishment, or
FF&E Reserve escrows. We own the FF&E Reserve escrows for all
the hotels leased to our taxable REIT subsidiary and for most of the
hotels leased to third parties. We have a security and remainder
interest in the FF&E Reserve escrows for the remaining hotels leased
to third parties. When we own the FF&E Reserve escrows at hotels
leased to third parties we report payments into the escrow as additional
rent. When we have a security and remainder interest in the FF&E
Reserve escrows, deposits are not included in revenue but are included
in FFO. We do not report the amounts which are escrowed as FF&E
reserves for our managed hotels as FF&E reserve income in our
consolidated statement of income.
(3) On April 12, 2004, we redeemed all of our outstanding 9 1/2%
Series A Preferred Shares at their liquidation preference of $25 per
share, plus accumulated and unpaid dividends. We deducted the $2,793
excess of the liquidation preference of the redeemed shares over their
carrying amount from net income in determining net income available to
common shareholders in the calculation of earnings per share in the 2004
first quarter when the redemption was approved by our board of
trustees.
(4) We compute FFO as shown. Our calculation of FFO differs from the
NAREIT definition because we include FF&E deposits not included in
net income (see note 2), deferred percentage rent (see note 5) and
deferred hotel operating income (see note 6) and exclude the excess of
liquidation preference over carrying value of redeemed preferred shares
(see note 3). We consider FFO to be an appropriate measure of
performance for a REIT, along with net income and cash flow from
operating, investing and financing activities. We believe that FFO
provides useful information to investors because by excluding the
effects of certain historical costs, such as depreciation expense and
losses on early extinguishment of debt, it may facilitate comparison of
current operating performance among REITs. FFO does not represent cash
generated by operating activities in accordance with GAAP and should not
be considered an alternative to net income or cash flow from operating
activities as a measure of financial performance or liquidity. FFO is
among the important factors considered by our board of trustees when
determining the amount of distributions to shareholders. Other important
factors include, but are not limited to, requirements to maintain our
status as a REIT, limitations in our revolving bank credit facility and
public debt covenants, the availability of debt and equity capital to us
and our expectation of our future performance.
(5) In calculating net income we recognize percentage rental income
received for the first, second and third quarters in the fourth quarter
when all contingencies are met and the income is earned. Although we
defer recognition of this revenue for purposes of calculating net
income, we include these amounts in the calculation of FFO during the
first three quarters of the year.
(6) Our rights to share in the operating results of our managed
hotels in excess of the minimum returns due to us are generally
determined based upon annual calculations. Our managed hotels generated
net operating results that were $1,849 and $1,450, in the first quarter
of 2005 and 2004, respectively, more than the minimum returns due to us.
We recognize income in excess of our minimum returns in the fourth
quarter when all contingencies are met and the income is earned.
Although we defer recognition of this revenue for purposes of
calculating net income, we include these amounts in the calculation of
FFO during the first three quarters of the year.
Hospitality Properties Trust
Key Balance Sheet Data
(in thousands)
----------------------------------------------------------------------
March 31, 2005 December 31, 2004
---------------- -----------------
Cash $2,750 $15,894
================ =================
Restricted cash (FF&E Reserve
escrow) $39,810 $38,511
================ =================
Real estate, at cost $3,569,977 $3,180,990
================ =================
Debt, net of discounts
Floating rate (4.2% at March
31, 2005) - Credit
Facility, due 2005 $175,000 $72,000
Fixed rate - 7.00% Senior
Notes, due 2008 149,921 149,914
Fixed rate - 9.125% Senior
Notes, due 2010 49,968 49,966
Fixed rate - 8.3% Mortgage
payable, due 2011 3,810 3,826
Fixed rate - 6.85% Senior
Notes, due 2012 124,352 124,330
Fixed rate - 6.75% Senior
Notes, due 2013 297,547 297,469
Fixed rate - 5.125% Senior
Notes, due 2015 299,451 --
---------------- -----------------
Total Debt $1,100,049 $697,505
================ =================
Equity
8.875% Series B Preferred
(3,450,000 shares
outstanding) 83,306 83,306
Common (67,203,228 shares
outstanding) 1,629,359 1,602,567
---------------- -----------------
Total Equity $1,712,665 $1,685,873
================ =================
======================================================================
Additional Data
(in thousands except percentages)
----------------------------------------------------------------------
March 31, 2005 December 31, 2004
---------------- -----------------
Leverage Ratios
---------------------------------
Total Debt / Total Assets 35.8% 25.9%
Total Debt / Real Estate, at cost 30.8% 21.9%
Total Debt / Total Book
Capitalization 39.1% 29.3%
Total Debt / Total Market
Capitalization (1) 28.2% 18.0%
Variable Rate Debt / Total Book
Capitalization 6.2% 3.0%
Three Months Three Months
Ended Ended
March 31, 2005 March 31, 2004
---------------- -----------------
Cash Flow Data
Cash flow provided by (used in):
Operating activities $38,058 $54,763
Investing activities $(400,950) $(2,402)
Financing activities $349,748 $(49,074)
(1) Market capitalization is the book value of our debt plus the
market value of equity based upon the closing price of our common and
preferred shares ($40.38 per common share and $26.73 per preferred share
on March 31, 2005, and $46.00 per common share and $27.00 per preferred
share on December 31, 2004).
======================================================================
Hospitality Properties Trust
Hotel Revenue Data
No. of Quarter Ended March 31,
Lease/ No. of Rooms/ ---------------------------
Management Agreement Hotels Suites 2005(1) 2004(1) Change
--------------------------- ------ ------- -------- -------- ---------
ADR
---------------------------
Host (no. 1) 53 7,610 $108.13 $99.87 8.3%
Host (no. 2) 18 2,178 96.35 93.92 2.6%
Marriott 35 5,382 99.03 94.09 5.3%
Barcelo Crestline 19 2,756 105.69 95.00 11.3%
InterContinental (no. 1) 30 3,694 94.58 88.55 6.8%
InterContinental (no. 2) 76 9,220 59.24 55.65 6.5%
InterContinental (no. 3)(2) 12 3,757 117.40 113.66 3.3%
Hyatt (3) (4) 24 2,929 74.54 68.30 9.1%
Carlson (3) (4) 12 2,321 81.73 83.07 -1.6%
Homestead 18 2,399 57.61 49.41 16.6%
------ ------- -------- -------- ---------
Total/Average (2) (3) 297 42,246 $87.84 $82.99 5.8%
OCCUPANCY
---------------------------
Host (no. 1) 53 7,610 66.4% 68.0% -1.6 pt
Host (no. 2) 18 2,178 78.2% 74.8% 3.4 pt
Marriott 35 5,382 73.7% 72.0% 1.7 pt
Barcelo Crestline 19 2,756 69.7% 72.3% -2.6 pt
InterContinental (no. 1) 30 3,694 74.0% 72.1% 1.9 pt
InterContinental (no. 2) 76 9,220 72.4% 65.2% 7.2 pt
InterContinental (no. 3)(2) 12 3,757 70.8% 69.2% 1.6 pt
Hyatt (3) (4) 24 2,929 65.2% 60.8% 4.4 pt
Carlson (3) (4) 12 2,321 51.7% 68.2% -16.5 pt
Homestead 18 2,399 77.5% 78.2% -0.7 pt
------ ------- -------- -------- ---------
Total/Average (2) (3) 297 42,246 70.3% 69.0% 1.3 pt
RevPAR
---------------------------
Host (no. 1) 53 7,610 $71.80 $67.91 5.7%
Host (no. 2) 18 2,178 75.35 70.25 7.3%
Marriott 35 5,382 72.99 67.74 7.7%
Barcelo Crestline 19 2,756 73.67 68.69 7.3%
InterContinental (no. 1) 30 3,694 69.99 63.84 9.6%
InterContinental (no. 2) 76 9,220 42.89 36.28 18.2%
InterContinental (no. 3)(2) 12 3,757 83.12 78.65 5.7%
Hyatt (3) (4) 24 2,929 48.60 41.53 17.0%
Carlson (3) (4) 12 2,321 42.25 56.65 -25.4%
Homestead 18 2,399 44.65 38.64 15.6%
------ ------- -------- -------- ---------
Total/Average (2) (3) 297 42,246 $61.75 $57.26 7.8%
(1) Includes data for the calendar periods indicated, except for our Courtyard by Marriott®, Residence Inn by Marriott®, Marriott Hotels Resorts and Suites®, TownePlace Suites by Marriott®, and SpringHill Suites by Marriott® branded hotels, which include data for comparable fiscal periods.
(2) Includes data for periods prior to our ownership of some hotels.
(3) Includes data for periods some hotels were not operated by the current manager.
(4) On April 4, 2005, we entered new management agreements with
subsidiaries of Hyatt Corporation, or Hyatt, and Carlson Hotels
Worldwide, or Carlson, which replaced the management agreement we had
with Prime Hospitality Corporation. The new management agreements divide
the previous management agreement we had with Prime into two management
agreements; one with Hyatt for 24 limited service AmeriSuites® and one with Carlson for the 12 Prime Hotels(SM), which are expected to be rebranded with Carlson brands, including Radisson® Hotels and Resorts, Country Inn & Suites(SM), and Park Plaza(SM) Hotels & Resorts, by year end 2005.
Hospitality Properties Trust
Return/Rent Coverage Data(1)
Lease/Management Agreement Quarter ended Year ended Year ended
03/31/05 3/31/05 12/31/04
----------------------------- --------------- ----------- ------------
Host (no. 1) 1.2x 1.3x 1.3x
Host (no. 2) 0.9x 1.0x 1.0x
Marriott 0.8x 0.9x 0.9x
Barcelo Crestline 1.0x 0.9x 0.9x
InterContinental (no. 1) 0.8x 0.8x 0.8x
InterContinental (no. 2) 0.9x 0.9x 0.8x
InterContinental (no. 3) 1.3x 1.1x 1.0x
Hyatt (2) 1.0x 1.0x 0.9x
Carlson (2) 1.5x 1.2x 1.4x
Homestead 1.4x 1.3x 1.2x
--------------- ----------- ------------
Range (all agreements) 0.8x-1.5x 0.8x-1.3x 0.8x-1.4x
(1) We define coverage as combined total hotel sales minus all
expenses which are not subordinated to minimum payments to us and the
required FF&E Reserve contributions (which data is provided to us by
our tenants or operators), divided by the return payments or minimum
rent due to us. For some combinations, amounts have been calculated
using data for periods prior to our ownership of some hotels and prior
to commencement of current management agreements.
(2) On April 4, 2005, we entered new management agreements with
subsidiaries of Hyatt and Carlson, which replaced the management
agreement we had with Prime. The new management agreements divide the
previous management agreement we had with Prime into two management
agreements; one with Hyatt for 24 limited service AmeriSuites® and one with Carlson for the 12 Prime Hotels(SM), which are expected to be rebranded with Carlson brands, including Radisson® Hotels and Resorts, Country Inn & Suites(SM), and Park Plaza(SM) Hotels & Resorts, by year end 2005.
Hospitality Properties Trust
Timothy A. Bonang
617-964-8389
www.hptreit.com