NEWTON, Mass.-November 7, 2007-Hospitality Properties Trust (NYSE:
HPT) today announced its results of operations for the quarter and nine
months ended September 30, 2007.
Results for the quarter ended September 30, 2007:
Net income available for common shareholders was $142.4 million, or
$1.52 per share, for the quarter ended September 30, 2007, compared to
$34.6 million, or $0.47 per share, for the same quarter last year. Net
income available for common shareholders for the quarter ended September
30, 2007, includes a $95.7 million, or $1.02 per share, gain from the
sale of real estate.
Funds from operations (FFO) for the quarter ended September 30, 2007,
were $113.6 million, or $1.21 per share. This compares to FFO for the
quarter ended September 30, 2006, of $77.0 million, or $1.05 per share.
The weighted average number of common shares outstanding totaled 93.9
million and 73.6 million for the quarters ended September 30, 2007 and
2006, respectively.
Results for the nine months ended September 30, 2007:
Net income available for common shareholders was $228.2 million, or
$2.46 per share, for the nine months ended September 30, 2007, compared
to $101.4 million, or $1.40 per share, for the same period last year.
Net income available for common shareholders for the nine months ended
September 30, 2007, includes a $95.7 million, or $1.03 per share, gain
from the sale of real estate and $2.7 million, or $0.03 per share, of
costs associated with the spin off of TravelCenters of America LLC
(AMEX: TA), or TA, to HPT's shareholders on January 31, 2007.
Funds from operations (FFO) for the nine months ended September 30,
2007, were $323.6 million, or $3.49 per share. This compares to FFO for
the nine months ended September 30, 2006, of $232.1 million, or $3.20
per share.
The weighted average number of common shares outstanding totaled 92.8
million and 72.5 million for the nine months ended September 30, 2007
and 2006, respectively.
Hotel Portfolio Performance:
For the quarter ended September 30, 2007 compared to the same period
in 2006, revenue per available room, or RevPAR, increased by 6.3% to
$79.49, average daily rate, or ADR, increased 5.3% to $105.00 and
occupancy increased 0.7 percentage points to 75.7%.
For the nine months ended September 30, 2007 compared to the same
period in 2006, RevPAR increased by 5.2% to $78.48, ADR increased 6.3%
to $106.77 and occupancy declined 0.8 percentage points to 73.5%.
Investing Activities:
On July 26, 2007, HPT sold 18 Homestead Studio Suites hotels for
approximately $205 million and recognized a gain on sale of $95.7
million.
Financing Activities:
On September 24, 2007, HPT issued $350 million of 6.7% senior notes
due 2018 in a public offering. Net proceeds from this offering ($344.2
million after underwriting and other offering expenses) were used to
repay a portion of the borrowings outstanding under HPT's revolving
credit facility.
Conference Call:
On Wednesday, November 7, 2007, 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 third quarter and nine months ended September 30, 2007.
The conference call telephone number is (888) 259-8387. Participants
calling from outside the United States and Canada should dial (913)
312-1467. 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, November 13, 2007. To hear the replay, dial
(719) 457-0820. The replay pass code is 4521897.
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 Third Quarter 2007 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 292 hotels and 185 travel centers located in 44 states,
Puerto Rico and Canada. HPT is headquartered in Newton, Massachusetts.
Hospitality Properties Trust
CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM OPERATIONS
(in thousands, except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues:
Hotel operating revenues (1) $240,179 $230,412 $714,424 $665,867
Minimum rent (1) 87,669 28,934 222,819 86,300
FF&E reserve income (2) 5,785 5,242 16,993 15,505
Interest income 677 537 4,483 1,387
--------- --------- --------- ---------
Total revenues 334,310 265,125 958,719 769,059
--------- --------- --------- ---------
Expenses:
Hotel operating expenses (1) 174,533 168,906 519,242 485,720
Interest (including
amortization of deferred
financing costs of $956,
$675, $2,608 and $1,920,
respectively) 38,038 20,801 102,488 60,951
Depreciation and
amortization 57,647 35,681 160,470 104,782
General and administrative 11,270 6,227 29,445 19,408
TA spin off costs (3) -- -- 2,711 --
--------- --------- --------- ---------
Total expenses 281,488 231,615 814,356 670,861
--------- --------- --------- ---------
Income from continuing
operations 52,822 33,510 144,363 98,198
Discontinued operations (4):
Income from discontinued
operations 1,327 3,053 7,440 8,975
Gain on sale of real estate
used by discontinued
operations 95,711 -- 95,711 --
--------- --------- --------- ---------
97,038 3,053 103,151 8,975
--------- --------- --------- ---------
Net income 149,860 36,563 247,514 107,173
Preferred distributions (7,470) (1,914) (19,299) (5,742)
--------- --------- --------- ---------
Net income available for
common shareholders $142,390 $ 34,649 $228,215 $101,431
========= ========= ========= =========
Calculation of FFO (5):
Net income available for
common shareholders $142,390 $ 34,649 $228,215 $101,431
Add: FF&E deposits not in net
income (discontinued
operations) (2) -- 470 990 1,515
Depreciation and
amortization (continuing
operations) 57,647 35,681 160,470 104,782
Depreciation and
amortization
(discontinued
operations) (4) 129 754 1,636 2,453
TA spin off costs (3) -- -- 2,711 --
Deferred percentage rent
(continuing operations)
(6) 1,651 1,344 4,748 4,179
Deferred percentage rent
(discontinued
operations) (4) -- 87 -- 428
Deferred additional
returns (7) 7,723 3,975 20,516 17,318
Less: Gain on sale of real
estate (discontinued
operations) (4) (95,711) -- (95,711) --
Deferred percentage rent
(discontinued
operations) (4) (257) -- -- --
--------- --------- --------- ---------
Funds from operations ("FFO") $113,572 $ 76,960 $323,575 $232,106
========= ========= ========= =========
Weighted average common shares
outstanding 93,872 73,613 92,845 72,502
========= ========= ========= =========
Per common share amounts:
Income from continuing
operations available for
common shareholders $ 0.48 $ 0.43 $ 1.35 $ 1.28
Income from discontinued
operations available for
common shareholders $ 1.03 $ 0.04 $ 1.11 $ 0.12
Net income available for
common shareholders $ 1.52 $ 0.47 $ 2.46 $ 1.40
FFO (5) $ 1.21 $ 1.05 $ 3.49 $ 3.20
Common distributions
declared $ 0.77 $ 0.74 $ 2.29 $ 2.21
Hospitality Properties Trust
NOTES TO CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM
OPERATIONS
(in thousands, except per share data)
(1) At September 30, 2007, each of our 292 hotels are included in one of ten combinations of hotels of which 201 are leased to our taxable REIT subsidiaries and managed by independent hotel operating companies and 91 are leased to third parties. Our 185 travel centers are leased under two agreements. Our consolidated statement of income includes hotel operating revenues and expenses of managed hotels and rental income from our leased hotels and travel centers.
(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. At September 30, 2007, we own the FF&E Reserve escrows for all our hotels. Through July 26, 2007, we had a security and remainder interest in the FF&E Reserve escrows for our former Homestead Studio Suites hotels (see Note 4). 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 had a security and remainder interest in the FF&E Reserve escrows of our Homestead Studio Suites hotels, deposits were not included in revenue but were 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) During the first quarter of 2007, we expensed $2,711 of costs in connection with the spin off of our former subsidiary, TravelCenters of America LLC, or TA, to our shareholders on January 31, 2007.
(4) On July 26, 2007, we sold 18 Homestead Studio Suites hotels for $205,350 and recognized a gain on sale of $95,711. We have reclassified our consolidated statement of income for all periods presented to show the results of operations of the hotels which have been sold as discontinued. Following is a summary of the operating results of these discontinued operations:
Quarter Ended Nine Months Ended
September 30, September 30,
--------------- -----------------
2007 2006 2007 2006
------- ------- -------- --------
Minimum rent $1,238 $3,990 $ 9,218 $11,970
Percentage rent (6) 267 -- 267 --
------- ------- -------- --------
Total revenue 1,505 3,990 9,485 11,970
Depreciation and amortization (129) (754) (1,636) (2,453)
General and administrative (49) (183) (409) (542)
------- ------- -------- --------
Income from discontinued
operations $1,327 $3,053 $ 7,440 $ 8,975
======= ======= ======== ========
(5) 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 6) and deferred additional returns (see Note 7) and exclude TA spin off costs (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 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 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.
(6) 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. As a result of the termination of the lease for our former Homestead Studio Suites hotels (see Note 4), all previously deferred percentage rental income was recognized in calculating net income in the 2007 third quarter.
(7) Our share of the operating results of our managed hotels in excess of the minimum returns due to us, or additional returns, are generally determined based upon annual calculations. In calculating net income, we recognize additional 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 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)
September 30, December 31,
2007 2006
------------- ------------
(Unaudited)
ASSETS
-------------------------------------------
Real estate properties, at cost:
Land $ 1,372,793 $ 584,199
Buildings, improvements and equipment 4,781,787 3,457,818
------------- ------------
6,154,580 4,042,017
Accumulated depreciation (802,273) (707,838)
------------- ------------
5,352,307 3,334,179
Cash and cash equivalents 3,532 553,256
Restricted cash (FF&E reserve escrow) 25,698 27,363
Other assets, net 265,618 42,665
------------- ------------
$ 5,647,155 $ 3,957,463
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------
Revolving credit facility $ 137,000 $ --
Senior notes, net of discounts 1,842,507 1,196,130
Convertible senior notes 575,000 -
Mortgage payable 3,647 3,700
Security deposits 169,406 185,366
Accounts payable and other liabilities 119,408 119,536
Due to affiliate 12,705 3,277
Dividends payable 4,754 1,914
------------- ------------
Total liabilities 2,864,427 1,509,923
------------- ------------
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
Series C preferred shares; 7%
cumulative redeemable; 12,700,000
shares and none issued and
outstanding, respectively, aggregate
liquidation preference $317,500
306,833 --
Common shares of beneficial interest;
$0.01 par value; 150,000,000 shares
authorized; 93,890,479 and 86,284,251
shares issued and outstanding,
respectively 939 863
Additional paid-in capital 3,048,864 2,703,687
Cumulative net income 1,627,625 1,380,111
Cumulative preferred distributions (86,291) (66,992)
Cumulative common distributions (2,198,548) (1,653,435)
------------- ------------
Total shareholders' equity 2,782,728 2,447,540
------------- ------------
$ 5,647,155 $ 3,957,463
============= ============
Hospitality Properties Trust
Timothy A. Bonang
617-796-8232
Manager of Investor Relations
Carlynn Finn
617-796-8232
Investor Relations Analyst
www.hptreit.com