NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today
announced its results of operations for the quarter and six months ended
June 30, 2006.
Results for the quarter ended June 30, 2006:
Net income was $35.4 million for the quarter ended June 30, 2006,
compared to $22.4 million for the same quarter last year. Net income
available for common shareholders was $33.5 million, or $0.47 per share,
for the quarter ended June 30, 2006, compared to $20.5 million, or
$0.30 per share, for the same quarter last year. Net income and net
income available for common shareholders for the quarter ended June 30,
2005, included a $7.3 million, or $0.11 per share, loss on asset
impairment.
Funds from operations (FFO) for the quarter ended June 30, 2006 were
$82.4 million, or $1.14 per share. This compares to FFO for the quarter
ended June 30, 2006 of $67.2 million, or $0.98 per share.
The weighted average number of common shares outstanding totaled 72.0
million and 68.4 million for the quarters ended June 30, 2006 and 2005,
respectively.
Results for the six months ended June 30, 2006:
Net income was $70.6 million for the six months ended June 30, 2006,
compared to $51.1 million for the same period last year. Net income
available for common shareholders was $66.8 million, or $0.93 per share,
for the six months ended June 30, 2006, compared to $47.3 million, or
$0.70 per share, for the same period last year. Net income and net
income available for common shareholders for the six months ended June
30, 2005, included a $7.3 million, or $0.11 per share, loss on asset
impairment.
Funds from operations (FFO) for the six months ended June 30, 2006
were $155.1 million, or $2.16 per share. This compares to FFO for the
six months ended June 30, 2005 of $128.1 million, or $1.89 per share.
The weighted average number of common shares outstanding totaled 71.9
million and 67.8 million for the six months ended June 30, 2006 and
2005, respectively.
Portfolio Performance:
For HPT's 308 hotels open during the 2006 and 2005 periods, revenue
per available room, or RevPAR, for the six months ended June 30, 2006,
versus the same period last year increased 12.0% to $72.92. Average
daily rate, or ADR, rose to $98.81 a 10.6% improvement, while occupancy
increased by 0.9 percentage points to 73.8% from the prior year period.
Financing Activities:
On June 15, 2006, HPT issued $275 million of 6.3% senior notes due
2016. Net proceeds from this offering of approximately $271.9 million
were used to reduce borrowings outstanding under HPT's revolving credit
facility.
On July 5, 2006, HPT raised its regular quarterly common share
dividend by $0.01 to $0.74 per common share ($2.96 per share per year).
This regular quarterly dividend will be paid to common shareholders of
record as of the close of business on July 14, 2006, and distributed on
or about August 17, 2006.
Investing Activities:
On April 6, 2006, HPT purchased two Crowne Plaza Hotels, one in
Miami, Florida and the other in Philadelphia, Pennsylvania, for $63
million. These hotels have 749 rooms/suites and over 23,000 square feet
of meeting space. Simultaneously with this purchase, HPT amended its
management agreement with IHG for the eight hotels acquired on January
25, 2006, by adding these hotels to that combination agreement.
On April 13, 2006, HPT purchased a newly developed 150 room
Staybridge Suites Hotel in Parsippany, New Jersey for $21 million.
Simultaneously with this transaction, HPT amended its management
agreement with IHG for 30 Staybridge Suites by adding this hotel to that
combination agreement.
Subsequent Event:
On July 26, 2006, HPT sold two million common shares of beneficial
interest at a price of $43.66 per share in a public offering. Net
proceeds from this sale of approximately $83.2 million after
underwriting and other offering expenses were used to repay borrowings
outstanding under HPT's revolving bank credit facility and for general
business purposes. On July 28, 2006, the underwriters of this offering
exercised an option to purchase an additional 300,000 common shares of
beneficial interest at a price of $43.66 to cover over allotments.
Conference Call:
On Wednesday, August 2, 2006, at 1:00 p.m. Eastern Time, John Murray,
president and chief operating officer, and Mark Kleifges, chief
financial officer, will host a conference call to discuss the results
for the quarter ended June 30, 2006.
The conference call telephone number is (800) 818-5264. Participants
calling from outside the United States and Canada should dial (913)
981-4910. No pass code is necessary to access the call from either
number. Participants should dial in about 15 minutes prior to the
scheduled start of the call. A replay of the conference call will be
available through Tuesday, August 8, 2006. To hear the replay, dial
(719) 457-0820. The replay pass code is 7364018.
A live audio webcast of the conference call will also be available in
a listen only mode on the company's web site, which is located at www.hptreit.com.
Participants wanting to access the webcast should visit the company's
web site about five minutes before the call. The archived webcast will
be available for replay on HPT's web site for about one week after the
call.
Supplemental Data:
A copy of HPT's Second Quarter 2006 Supplemental Operating and Financial Data is available for download at HPT's web site, www.hptreit.com.
Hospitality Properties Trust is a real estate investment trust, or
REIT, which owns 310 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 June Six Months Ended
30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues:
Hotel operating revenues
(1) $233,627 $181,059 $435,455 $326,106
Rental income 32,870 31,890 65,346 62,955
FF&E reserve income (2) 5,273 4,838 10,263 9,237
Interest income 428 294 850 530
--------- --------- --------- ---------
Total revenues 272,198 218,081 511,914 398,828
--------- --------- --------- ---------
Expenses:
Hotel operating expenses
(1) 172,625 132,344 316,814 232,769
Interest (including
amortization of deferred
financing costs of $635,
$945, $1,245 and $1,679,
respectively) 21,162 17,591 40,150 33,020
Depreciation and
amortization 35,848 31,639 70,800 62,462
General and administrative 7,186 6,796 13,540 12,160
Loss on asset impairment
(3) -- 7,300 -- 7,300
--------- --------- --------- ---------
Total expenses 236,821 195,670 441,304 347,711
--------- --------- --------- ---------
Net income 35,377 22,411 70,610 51,117
Preferred distributions (1,914) (1,914) (3,828) (3,828)
--------- --------- --------- ---------
Net income available for common
shareholders $33,463 $20,497 $66,782 $47,289
========= ========= ========= =========
Calculation of FFO (4):
Net income available for common
shareholders $33,463 $20,497 $66,782 $47,289
Add: FF&E deposits not in net
income (2) 533 498 1,045 997
Depreciation and
amortization 35,848 31,639 70,800 62,462
Loss on asset impairment
(3) -- 7,300 -- 7,300
Deferred percentage rent
(5) 1,528 967 3,176 1,887
Deferred hotel operating
income (6) 10,993 6,302 13,343 8,151
---------- -------- --------- ---------
Funds from operations ("FFO") $82,365 $67,203 $155,146 $128,086
========== ======== ========= =========
Weighted average common shares
outstanding 71,953 68,357 71,937 67,783
========== ======== ========= =========
Per common share amounts:
Net income available for
common shareholders $0.47 $0.30 $0.93 $0.70
FFO (4) $1.14 $0.98 $2.16 $1.89
Common distributions
declared $0.74 $0.72 $1.47 $1.44
Hospitality Properties Trust
NOTES TO CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM OPERATIONS
(amounts in thousands, except per share data)
(1) At June 30, 2006, each of our 310 hotels are included in one of
eleven combinations of hotels of which 201 are leased to one of our
taxable REIT subsidiaries and managed by independent hotel operating
companies 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.
(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 subsidiaries 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 FF&E
reserve income. 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) In June 2005, we authorized Carlson Hotels Worldwide, or Carlson,
to pursue the sale of our Prime Hotel(SM )in Atlanta, GA. In connection
with this decision we recorded a $7,300 loss on asset impairment in the
second quarter of 2005 to reduce the carrying value of the hotel to its
estimated net realizable value less cost to sell. We sold the hotel in
September 2005.
(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 loss on asset
impairment (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, 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 capital needs and operating performance.
(5) In calculating net income we recognize percentage rental income
received for the first, second and third quarters in the fourth quarter,
which is when all contingencies are met and the income is earned.
Although we defer recognition of this revenue until the fourth quarter
for purposes of calculating net income, we include the amount in the
calculation of FFO for each quarter of the year. The fourth quarter FFO
calculation excludes the amounts recognized during the first three
quarters.
(6) Our share of the operating results of our managed hotels in
excess of the minimum returns due to us are generally determined based
upon annual calculations. We recognize our share of income in excess of
our minimum returns in the fourth quarter, which is when all
contingencies are met and the income is earned. Although we defer
recognition of this income until the fourth quarter for purposes of
calculating net income, we include the estimated amount in the
calculation of FFO for each quarter of the year. The fourth quarter FFO
calculation excludes the amounts recognized during the first three
quarters.
Hospitality Properties Trust
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except share data)
June 30, December 31,
2006 2005
------------- --------------
(Unaudited)
ASSETS
Real estate properties, at cost:
Land $ 584,199 $ 537,389
Buildings, improvements and 3,392,018 3,089,304
equipment -----------------------------
3,976,217 3,626,693
Accumulated depreciation (650,790) (613,007)
-----------------------------
3,325,427 3,013,686
Cash and cash equivalents 16,880 18,568
Restricted cash (FF&E reserve escrow) 30,241 29,063
Other assets, net 50,341 53,290
----------------------------
$ 3,422,889 $ 3,114,607
=============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Revolving credit facility $ 85,000 $ 35,000
Senior notes, net of discounts 1,195,834 921,606
Mortgage payable 3,733 3,766
Security deposits 185,364 185,304
Accounts payable and other liabilities 129,089 108,595
Due to affiliate 3,175 2,967
Dividends payable 1,914 1,914
-----------------------------
Total liabilities 1,604,109 1,259,152
-----------------------------
Commitments and contingencies
Shareholders' equity:
Preferred shares of beneficial
interest, no par value,
100,000,000 shares authorized:
Series B preferred shares; 8 7/8%
cumulative redeemable; 3,450,000
shares issued and outstanding,
aggregate liquidation preference
$86,250 83,306 83,306
Common shares of beneficial interest;
$0.01 par value; 100,000,000 shares
authorized, 71,958,301 and
71,920,578, respectively issued and
outstanding 720 719
Additional paid-in capital 2,061,454 2,059,883
Cumulative net income 1,281,682 1,211,072
Cumulative preferred distributions (63,164) (59,336)
Cumulative common distributions (1,545,218) (1,440,189)
-----------------------------
Total shareholders' equity 1,818,780 1,855,455
-----------------------------
$ 3,422,889 $ 3,114,607
=============================
Hospitality Properties Trust
Timothy A. Bonang
617-796-8149
Manager of Investor Relations
www.hptreit.com