Hospitality Properties Trust Announces 2008 First Quarter Results

May 6, 2008

NEWTON, Mass.-May 6, 2008-Hospitality Properties Trust (NYSE: HPT) today announced its results of operations for the quarter ended March 31, 2008.

Results for the quarter ended March 31, 2008:

Net income available for common shareholders was $48.3 million, or $0.51 per share, for the quarter ended March 31, 2008, compared to $39.0 million, or $0.43 per share, for the same quarter last year. Net income available for common shareholders for the quarter ended March 31, 2007, included $2.7 million, or $0.03 per share, of costs associated with the spin off of TravelCenters of America LLC (AMEX: TA) to HPT's shareholders on January 31, 2007.

Funds from operations (FFO) for the quarter ended March 31, 2008, were $110.9 million, or $1.18 per share. This compares to FFO for the quarter ended March 31, 2007, of $98.5 million, or $1.08 per share.

The weighted average number of common shares outstanding totaled 93.9 million and 90.8 million for the quarters ended March 31, 2008 and 2007, respectively.

Hotel Portfolio Performance:

For the quarter ended March 31, 2008 compared to the same quarter last year, hotels owned by HPT produced revenue per available room, or RevPAR, average daily rate, or ADR, and occupancy as follows:

                                              Quarter Ended March 31,
                                              ------------------------
                                               2008    2007    Change
                                              ------- ------- --------

RevPAR                                        $76.53  $74.78    2.3  %
ADR                                           112.21  108.22    3.7  %
Occupancy                                      68.2 %  69.1 % -0.9 pt

Portfolio Activities:

Effective January 1, 2008, HPT entered into a new lease for its Marriott Kauai Resort Beach Club hotel with a subsidiary of Marriott International Inc., or Marriott. This hotel was previously part of a 35 hotel portfolio leased to an HPT taxable REIT subsidiary and managed by Marriott, but it will now be subject to a separate lease which is guaranteed by Marriott. The rent payable to HPT under the lease is $5.5 million per annum subject to annual adjustment based upon changes in the Consumer Price Index. The lease agreement expires December 31, 2019, and Marriott has four renewal options of 15 years each. Pursuant to the lease agreement, HPT agreed to fund certain planned improvements to the hotel. The annual minimum rent payable to HPT under the lease will increase as improvements are funded.

On March 17, 2008, HPT acquired the land and certain improvements at its Petro travel center located in Sparks, Nevada for $42.5 million. HPT simultaneously leased them to TA and rent under its lease with TA for 40 Petro travel centers was increased by $3.9 million per annum. HPT funded the acquisition with cash on hand and borrowings under its revolving credit facility.

Financing Activities:

On March 3, 2008, HPT redeemed $150 million of its 7% senior notes using borrowings under its revolving credit facility.

Common Dividend:

On April 1, 2008, HPT announced a regular quarterly common dividend of $0.77 per share payable to shareholders of record on April 15, 2008; this dividend will be paid on or about May 15, 2008.

Conference Call:

On Tuesday, May 6, 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 quarter ended March 31, 2008.

The conference call telephone number is (866) 550-6338. Participants calling from outside the United States and Canada should dial (347) 284-6930. 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, May 13, 2008. To hear the replay, dial (719) 457-0820. The replay pass code is 4895300.

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 First Quarter 2008 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 March
                                                           31,
                                                   -------------------
                                                     2008      2007
                                                   --------- ---------
Revenues:
     Hotel operating revenues (1)                  $222,440  $224,471
     Rental income (1)                               89,956    57,610
     FF&E reserve income (2)                          6,183     5,439
     Interest income                                    600     3,148
                                                   --------- ---------
       Total revenues                               319,179   290,668
                                                   --------- ---------

Expenses:
     Hotel operating expenses (1)                   156,376   160,398
     Interest (including amortization of deferred
      financing costs of $1,040 and $739,
      respectively)                                  37,569    30,655
        Depreciation and amortization                58,251    48,318
     General and administrative                      11,444     7,793
     TA spin off costs (3)                               --     2,711
                                                   --------- ---------
       Total expenses                               263,640   249,875
                                                   --------- ---------

Income before gain on sale of real estate and
 income taxes                                        55,539    40,793
     Gain on sale of real estate (4)                    645        --
                                                   --------- ---------
Income before income taxes                           56,184    40,793
     Income tax expense                                (428)     (479)
                                                   --------- ---------

Income from continuing operations                    55,756    40,314
Income from discontinued operations (5)                  --     3,058

Net income                                           55,756    43,272
Preferred distributions                              (7,470)   (4,359)
                                                   --------- ---------
Net income available for common shareholders        $48,286   $39,013
                                                   ========= =========

----------------------------------------------------------------------

Calculation of FFO (6):
Net income available for common shareholders        $48,286   $39,013
 Add: FF&E deposits not in net income (discontinued
  operations) (2)                                        --       498
      Depreciation and amortization (continuing
       operations)                                   58,251    48,318
      Depreciation and amortization (discontinued
       operations) (5)                                   --       753
      Deferred percentage rent (continuing
       operations) (7)                                1,552     1,485
      Deferred percentage rent (discontinued
       operations) (5)(7)                                --       185
      Deferred additional returns (continuing
       operations) (8)                                3,460     5,499
      TA spin off costs (continuing operations) (3)      --     2,711
Less: Gain on sale of real estate (continuing
 operations) (4)                                       (645)       --
                                                   --------- ---------
Funds from operations ("FFO")                      $110,904   $98,462
                                                   ========= =========


Weighted average common shares outstanding           93,893    90,760
                                                   ========= =========

Per common share amounts:
      Income from continuing operations available
       for common shareholders                        $0.51     $0.40
      Income from discontinued operations available
       for common shareholders                        $0.00     $0.03
      Net income available for common shareholders    $0.51     $0.43
      FFO (6)                                         $1.18     $1.08
      Common distributions declared                   $0.77     $0.76

(1) At March 31, 2008, each of our 291 hotels are included in one of eleven operating agreements of which 199 are leased to our taxable REIT subsidiaries and managed by independent hotel operating companies and 92 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 March 31, 2008, we own all the FF&E escrows for 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 5). 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.

(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 February 5, 2008, we sold our Park Plaza hotel in North Phoenix, Arizona for $8,000 and recognized a gain on sale of $645.

(5) Income from discontinued operations relates to the 18 Homestead Studio Suites hotels that we sold in July 2007. 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.

(6) We compute FFO as shown. Our calculation of FFO differs from the National Association of Real Estate Investment Trusts, or NAREIT, definition because we include FF&E deposits not included in net income (see Note 2), deferred percentage rent (see Note 7) and deferred additional returns (see Note 8) 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 flows 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.

(7) 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.

(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.

 

                     Hospitality Properties Trust
                      CONSOLIDATED BALANCE SHEET
              (dollars in thousands, except share data)

                                              March 31,   December 31,
                                                 2008         2007
                                             ------------ ------------
                                             (Unaudited)
ASSETS
--------------------------------------------

Real estate properties, at cost:
      Land                                   $ 1,392,359  $ 1,377,520
      Buildings, improvements and equipment    4,872,496    4,818,711
                                             ------------ ------------
                                               6,264,855    6,196,231
Accumulated depreciation                        (899,067)    (849,470)
                                             ------------ ------------
                                               5,365,788    5,346,761

Cash and cash equivalents                         29,487       23,401
Restricted cash (FF&E reserve escrow)             45,469       28,134
Other assets, net                                270,973      281,011
                                             ------------ ------------
                                             $ 5,711,717  $ 5,679,307
                                             ============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------------

Revolving credit facility                    $   396,000  $   158,000
Senior notes, net of discounts                 1,693,003    1,842,756
Convertible senior notes                         575,000      575,000
Mortgage payable                                   3,616        3,635
Security deposits                                169,406      169,406
Accounts payable and other liabilities           101,285      134,705
Due to affiliate                                   6,233        4,617
Dividends payable                                  4,754        4,754
                                             ------------ ------------
   Total liabilities                           2,949,297    2,892,873
                                             ------------ ------------

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 issued and outstanding,
      aggregate liquidation preference
      $317,500
                                                 306,833      306,833
   Common shares of beneficial interest;
    $0.01 par value; 150,000,000 shares
    authorized; 93,892,719 shares issued and
    outstanding                                      939          939
   Additional paid-in capital                  3,048,881    3,048,881
   Cumulative net income                       1,766,833    1,711,079
   Cumulative preferred distributions           (101,231)     (93,761)
   Cumulative common distributions            (2,343,141)  (2,270,843)
                                             ------------ ------------
    Total shareholders' equity                 2,762,420    2,786,434
                                             ------------ ------------
                                             $ 5,711,717  $ 5,679,307
                                             ============ ============

Hospitality Properties Trust
Timothy A. Bonang
617-796-8232
Manager of Investor Relations

Carlynn Finn
617-796-8232
Investor Relations Analyst
www.hptreit.com

Cautionary Language

The information appearing on SVC’s website includes statements which constitute forward looking statements. These forward looking statements are based upon SVC’s present intents, beliefs or expectations, but forward looking statements are not guaranteed to occur and may not occur. SVC’s actual results may differ materially from those contained in SVC’s forward looking statements. The information contained in SVC’s filings with the Securities and Exchange Commission, including under “Risk Factors" and “Warnings Concerning Forward Looking Statements” in SVC’s periodic reports and other filings, identifies important factors that could cause SVC’s actual results to differ materially from those stated in SVC’s forward looking statements. SVC’s filings with the SEC are available on the SEC’s website at www.sec.gov and are also accessible on SVC’s website at the following link: SEC Filings. You should not place undue reliance upon forward looking statements.

The documents provided in this archived section are provided for historical purposes only. The information contained in each document is accurate only as of the date each document was originally issued or such earlier date stated in those documents. Except as required by law, Service Properties Trust does not undertake any obligation to update any information contained in these documents. For current information about the company, please refer to our most recent public SEC Filings.

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