NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today
announced its results of operations for the quarter and twelve months
ended December 31, 2007.
Results for the quarter ended December 31, 2007:
Net income available for common shareholders was $76.0 million, or
$0.81 per share, for the quarter ended December 31, 2007, compared to
$60.0 million, or $0.79 per share, for the same quarter last year. Net
income available for common shareholders for the three months ended
December 31, 2007, includes a $1.3 million, or $0.01 loss per share on
asset impairment.
Funds from operations (FFO) for the quarter ended December 31, 2007,
were $108.2 million, or $1.15 per share. This compares to FFO for the
quarter ended December 31, 2006, of $75.6 million, or $1.00 per share.
The weighted average number of common shares outstanding totaled 93.9
million and 75.6 million for the quarters ended December 31, 2007 and
2006, respectively.
Results for the twelve months ended December 31, 2007:
Net income available for common shareholders was $304.2 million, or
$3.27 per share, for the twelve months ended December 31, 2007, compared
to $161.4 million, or $2.20 per share, for the same period last year.
Net income available for common shareholders for the twelve months ended
December 31, 2007 includes: (i) a $95.7 million, or $1.03 per share,
gain from the sale of real estate; (ii) $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; and
(iii) a $1.3 million, or $0.01 per share, loss on asset impairment.
FFO for the twelve months ended December 31, 2007, were $431.8
million, or $4.64 per share. This compares to FFO for the twelve months
ended December 31, 2006, of $307.7 million, or $4.20 per share.
The weighted average number of common shares outstanding totaled 93.1
million and 73.3 million for the twelve months ended December 31, 2007
and 2006, respectively.
Hotel Portfolio Performance:
For the quarter and year ended December 31, 2007 compared to the
quarter and year ended December 31, 2006 hotels owned by HPT produced
revenue per available room, or RevPAR, average daily rate, or ADR, and
occupancy as follows:
3 Months Ended 12 Months Ended
December 31, December 31,
-------------------- ---------------------
2006 2007 Change 2006 2007 Change
------ ------ ------ ------ ------ -------
RevPAR 70.25 74.64 6.2% 73.36 77.38 5.5%
ADR 102.85 108.33 5.3% 101.04 107.18 6.1%
Occupancy 68.3% 68.9% 0.6 pt 72.6% 72.2% -0.4 pt
Common Dividend:
On January 3, 2008, HPT announced a regular quarterly common dividend
of $0.77 per share payable to shareholders of record on January 14,
2008; this dividend will be paid on or about February 15, 2008.
Conference Call:
On Wednesday, February 13, 2008, at 1:00 p.m. Eastern Time, John
Murray, President and Chief Operating Officer, and Mark Kleifges,
Treasurer and Chief Financial Officer, will host a conference call to
discuss the results for the fourth quarter and twelve months ended
December 31, 2007.
The conference call telephone number is (888) 228-5287. Participants
calling from outside the United States and Canada should dial (913)
312-0650. 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 Wednesday, February 20, 2008. To hear the replay, dial
(719) 457-0820. The replay pass code is 8431243.
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 Fourth 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 291 hotels and 185 travel centers located in 44 states,
Puerto Rico and Canada. HPT is headquartered in Newton, Massachusetts.
A Maryland Real Estate Investment Trust with transferable shares of
beneficial interest listed on the New York Stock Exchange. No
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
Hospitality Properties Trust
CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM OPERATIONS
(in thousands, except per share data)
(Unaudited)
Quarter Ended Twelve Months Ended
December 31, December 31,
------------------- -----------------------
2007 2006 2007 2006
------- ------- --------- ---------
Revenues:
Hotel operating revenues
(1) $227,031 $213,457 $ 941,455 $ 879,324
Minimum rent (1) 87,945 29,161 310,764 115,461
Percentage rent (2) 6,055 5,188 6,055 5,188
FF&E reserve income (3) 5,293 4,794 22,286 20,299
Interest income 436 1,287 4,919 2,674
--------- --------- ----------- -----------
Total revenues 326,760 253,887 1,285,479 1,022,946
--------- --------- ----------- -----------
Expenses:
Hotel operating expenses
(1) 137,758 132,614 657,000 618,334
Interest (including
amortization of
deferred financing
costs of $1,051, $659,
$3,659 and $2,579,
respectively) 38,029 20,500 140,517 81,451
Depreciation and
amortization 56,218 36,416 216,688 141,198
General and
administrative 9,421 5,868 37,223 25,090
TA spin off costs (4) -- -- 2,711 --
Loss on asset impairment
(5) 1,332 -- 1,332 --
--------- --------- ----------- -----------
Total expenses 242,758 195,398 1,055,471 866,073
--------- --------- ----------- -----------
Income before income taxes 84,002 58,489 230,008 156,873
Income tax expense (548) (186) (2,191) (372)
--------- --------- ----------- -----------
Income from continuing
operations 83,454 58,303 227,817 156,501
Discontinued operations
(6):
Income from discontinued
operations -- 3,563 7,440 12,538
Gain on sale of real
estate used by
discontinued operations -- -- 95,711 --
--------- --------- ----------- -----------
-- 3,563 103,151 12,538
--------- --------- ----------- -----------
Net income 83,454 61,866 330,968 169,039
Preferred distributions (7,470) (1,914) (26,769) (7,656)
--------- --------- ----------- -----------
Net income available for
common shareholders $ 75,984 $ 59,952 $ 304,199 $ 161,383
========= ========= =========== ===========
Calculation of FFO (7):
Net income available for
common shareholders $ 75,984 $ 59,952 $ 304,199 $ 161,383
Add: FF&E deposits not
in net income
(discontinued
operations) (3) -- 427 990 1,942
Depreciation and
amortization
(continuing operations) 56,218 36,416 216,688 141,198
Depreciation and
amortization
(discontinued
operations) (6) -- 753 1,636 3,206
TA spin off costs (4) -- -- 2,711 --
Loss on asset impairment
(5) 1,332 -- 1,332 --
Less: Gain on sale of
real estate
(discontinued
operations) (6) -- -- (95,711) --
Deferred percentage rent
previously recognized
in FFO (continuing
operations) (2) (4,748) (4,179) -- --
Deferred percentage rent
previously recognized
in FFO (discontinued
operations) (5) -- (428) -- --
Deferred additional
returns previously
recognized in FFO
(continuing operations)
(8) (20,516) (17,318) -- --
--------- --------- ----------- -----------
Funds from operations
("FFO") $108,270 $ 75,623 $ 431,845 $ 307,729
========= ========= =========== ===========
Weighted average common
shares outstanding 93,891 75,587 93,109 73,279
========= ========= =========== ===========
Per common share amounts:
Income from continuing
operations available
for common shareholders $ 0.81 $ 0.75 $ 2.16 $ 2.03
Income from discontinued
operations available
for common shareholders $ 0.00 $ 0.04 $ 1.11 $ 0.17
Net income available for
common shareholders $ 0.81 $ 0.79 $ 3.27 $ 2.20
FFO (7) $ 1.15 $ 1.00 $ 4.64 $ 4.20
Common distributions
declared $ 0.77 $ 0.74 $ 3.06 $ 2.95
----------------------------------------------------------------------
See Notes on page 5
(1) At December 31, 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) 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.
(3) 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 December 31, 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 6). 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. 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.
(4) 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.
(5) In December 2007, we authorized Global Hyatt Corporation to
pursue the sale of our AmeriSuites hotel in Atlantic Beach, NC. In
connection with this decision we recorded a $1,332, or $.01 loss per
share on asset impairment.
(6) 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 Twelve Months Ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
-------- ------- ------- -------
Minimum rent $ -- $ 3,990 $ 9,218 $ 15,960
Percentage rent (2) -- 510 267 509
--------- --------- --------- ---------
Total revenue -- 4,500 9,485 16,469
Depreciation and amortization -- (754) (1,636) (3,206)
General and administrative -- (183) (409) (725)
--------- --------- --------- ---------
--
Income from discontinued
operations $ -- $ 3,563 $ 7,440 $ 12,538
========= ========= ========= =========
(7) 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 3), deferred percentage rent (see Note 2) and
deferred additional returns (see Note 8) and exclude TA spin off costs
(see Note 4) and loss on asset impairment (see note 5). 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.
(8) 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.
Additional returns included in FFO were $3,665 and $2,711 in the fourth
quarter of 2007 and 2006, respectively.
Hospitality Properties Trust
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except share data)
December 31, December 31,
2007 2006
------------ ------------
(Unaudited)
ASSETS
--------------------------------------------
Real estate properties, at cost:
Land $ 1,377,520 $ 582,562
Buildings, improvements and equipment 4,818,711 3,436,219
------------ ------------
6,196,231 4,018,781
Accumulated depreciation (849,470) (702,513)
------------ ------------
5,346,761 3,316,268
Cash and cash equivalents 23,401 553,256
Restricted cash (FF&E reserve escrow) 28,134 27,363
Other assets, net 281,011 60,576
------------ ------------
$ 5,679,307 $ 3,957,463
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------------
Revolving credit facility $ 158,000 $ --
Senior notes, net of discounts 1,842,756 1,196,130
Convertible senior notes 575,000 -
Mortgage payable 3,635 3,700
Security deposits 169,406 185,366
Accounts payable and other liabilities 134,705 119,536
Due to affiliate 4,617 3,277
Dividends payable 4,754 1,914
------------ ------------
Total liabilities 2,892,873 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; 93,892,719 and 86,284,251
shares issued and outstanding,
respectively 939 863
Additional paid-in capital 3,048,881 2,703,687
Cumulative net income 1,711,079 1,380,111
Cumulative preferred distributions (93,761) (66,992)
Cumulative common distributions (2,270,843) (1,653,435)
------------ ------------
Total shareholders' equity 2,786,434 2,447,540
------------ ------------
$ 5,679,307 $ 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