NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today
announced its operating results for the quarter and nine months ended
September 30, 2008.
Results for the quarter and nine months ended September 30, 2008:
HPT's net income available for common shareholders for the three and
nine month periods ended September 30, 2008 compared to the same periods
in 2007 were as follows:
Nine Months
Quarter Ended Ended September
September 30, 30,
---------------- ----------------
2008 2007 2008 2007
------- -------- ------- --------
(in thousands, except per share
data)
Net income available for common
shareholders $32,915 $142,390 $56,652 $228,215
Net income available for common
shareholders per share $ 0.35 $ 1.52 $ 0.60 $ 2.46
Weighted average common shares
outstanding 93,954 93,872 93,930 92,845
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. During the quarter ended September 30,
2008, TravelCenters of America LLC (NYSE Alternext:TA), or TA, exercised
its option to defer up to $5 million of rent per month under the
previously announced rent deferral agreement, which resulted in a $15
million, or $0.16 per share, reduction in net income available for
common shareholders. The results for the quarter ended September 30,
2008 also reflect the non-accrual of $3.5 million, or $0.04 per share,
of straight line rent under HPT's lease with TA for 145 travel centers.
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 TA to HPT's shareholders on
January 31, 2007. The results for the nine months ended September 30,
2008 include the impact of the $15 million, or $0.16 per share, rent
deferral described above and a non-cash impairment charge of $53.2
million, or $0.57 per share, related to the write down of certain
intangible assets arising from HPT's January 2007 acquisition of
TravelCenters of America, Inc. to their estimated fair market value. The
year to date 2008 results also reflect the non-accrual of $7 million,
or $0.07 per share, of straight line rent for the quarters ended June
30, 2008 and September 30, 2008, related to HPT's lease with TA for 145
travel centers, and a non-cash charge of $19.6 million, or $0.21 per
share, to record a reserve for the straight line rent receivable
recorded in periods prior to April 1, 2008.
HPT's funds from operations, or FFO, for the three and nine month
periods ended September 30, 2008 compared to the same periods in 2007
were as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
---------------- -----------------
2008 2007 2008 2007
------- -------- -------- --------
(in thousands, except per share
data)
Funds from operations $99,758 $113,572 $308,153 $323,575
FFO per share $ 1.06 $ 1.21 $ 3.28 $ 3.49
Weighted average common shares
outstanding 93,954 93,872 93,930 92,845
FFO for the quarter ended September 30, 2008 was affected by TA's
deferral of rent and the non-accrual of straight line rent discussed
above.
FFO for the nine months ended September 30, 2008 was affected by TA's
deferral of rent, the non-accrual of straight line rent and the
non-cash charge to record a reserve for straight line rent discussed
above. See page 5 for a reconciliation of FFO to net income available to
common shareholders.
Hotel Portfolio Performance:
For the quarter and nine months ended September 30, 2008 compared to
the same periods last year, hotels owned by HPT produced revenue per
available room, or RevPAR, average daily rate, or ADR, and occupancy as
follows:
Quarter Ended September 30, Nine Months Ended September
30,
--------------------------- ---------------------------
2008 2007 Change 2008 2007 Change
-------- -------- -------- -------- -------- --------
RevPAR $ 79.92 $ 79.70 0.3% $ 79.80 $ 78.57 1.6%
ADR $106.99 $105.42 1.5% $109.76 $107.19 2.4%
Occupancy 74.7% 75.6% -0.9 pt 72.7% 73.3% -0.6 pt
Common Dividend:
On October 2, 2008, HPT announced a regular quarterly common dividend
of $0.77 per share payable to shareholders of record on October 15,
2008; this dividend will be paid on or about November 17, 2008.
Conference Call:
On Tuesday, November 11, 2008, at 11:00 a.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 and nine months ended September 30,
2008.
The conference call telephone number is (800) 811-8830. Participants
calling from outside the United States and Canada should dial (913)
312-1267. 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 18, 2008. To hear the replay, dial
(888) 203-1112. The replay pass code is 7613249.
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 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 290 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,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
Hotel operating revenues (1) $233,393 $240,179 $700,399 $714,424
Rental income (1)(2) 72,824 87,669 250,341 222,819
FF&E reserve income (3) 6,095 5,785 18,620 16,993
Interest income 271 677 1,177 4,483
--------- --------- --------- ---------
Total revenues 312,583 334,310 970,537 958,719
--------- --------- --------- ---------
Expenses:
Hotel operating expenses (1) 166,896 174,533 500,743 519,242
Interest (including
amortization of deferred
financing costs of $1,009,
$956, $3,056 and $2,608,
respectively) 36,529 38,038 110,626 102,488
Depreciation and
amortization 60,449 57,647 178,277 160,470
General and administrative 7,881 10,848 28,920 27,801
TA spin off costs (4) -- -- -- 2,711
Reserve for straight line
rent receivable (5) -- -- 19,613 --
Loss on asset impairment (6) -- -- 53,225 --
--------- --------- --------- ---------
Total expenses 271,755 281,066 891,404 812,712
--------- --------- --------- ---------
Income before gain on sale of
real estate and income taxes 40,828 53,244 79,133 146,007
Gain on sale of real
estate (7) -- -- 1,274 --
--------- --------- --------- ---------
Income before income taxes 40,828 53,244 80,407 146,007
Income tax expense (443) (422) (1,345) (1,644)
--------- --------- --------- ---------
Income from continuing
operations 40,385 52,822 79,062 144,363
Discontinued operations: (8)
Income from discontinued
operations -- 1,327 -- 7,440
Gain on sale of real
estate used by
discontinued operations -- 95,711 -- 95,711
--------- --------- --------- ---------
-- 97,038 -- 103,151
--------- --------- --------- ---------
Net income 40,385 149,860 79,062 247,514
Preferred distributions (7,470) (7,470) (22,410) (19,299)
--------- --------- --------- ---------
Net income available for common
shareholders $ 32,915 $142,390 $ 56,652 $228,215
========= ========= ========= =========
----------------------------------------------------------------------
Calculation of FFO (9):
Net income available for common
shareholders $ 32,915 $142,390 $ 56,652 $228,215
Add: FF&E deposits not in net
income (discontinued
operations) (3) -- -- -- 990
Depreciation and amortization
(continuing operations) 60,449 57,647 178,277 160,470
Depreciation and amortization
(discontinued operations)
(8) -- 129 -- 1,636
Deferred percentage rent
(continuing operations)
(10) 1,283 1,651 4,385 4,748
Deferred additional
returns (continuing
operations) (11) 5,111 7,723 16,888 20,516
Loss on asset impairment
(continuing operations)
(6) -- -- 53,225 --
TA spin off costs (continuing
operations) (4) -- -- -- 2,711
Less: Gain on sale of real
estate (continuing operations)
(7) -- -- (1,274) --
Gain on sale of real
estate (discontinued
operations) (8) -- (95,711) -- (95,711)
Deferred percentage rent
(discontinued operations)
(8) -- (257) -- --
--------- --------- --------- ---------
Funds from operations ("FFO") $ 99,758 $113,572 $308,153 $323,575
========= ========= ========= =========
Weighted average common shares
outstanding 93,954 93,872 93,930 92,845
========= ========= ========= =========
Per common share amounts:
Income from continuing
operations available for
common shareholders $ 0.35 $ 0.48 $ 0.60 $ 1.35
Income from discontinued
operations available for
common shareholders $ 0.00 $ 1.03 $ 0.00 $ 1.11
Net income available for
common shareholders $ 0.35 $ 1.52 $ 0.60 $ 2.46
FFO (9) $ 1.06 $ 1.21 $ 3.28 $ 3.49
Common distributions declared$ 0.77 $ 0.77 $ 2.31 $ 2.29
(1) At September 30, 2008, each of our 290 hotels are included in one
of eleven operating agreements of which 198 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) During the third quarter of 2008, TravelCenters of America LLC,
or TA, elected to defer $15,000, or $0.16 per share, of rent in
accordance with the previously announced rent deferral agreement. We
have not recognized the deferred rent as revenue due to uncertainties
regarding its payment by TA.
(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 September 30, 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 7). 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, TA, to our
shareholders on January 31, 2007.
(5) During the second quarter of 2008, we recorded a $19,613, or
$0.21 per share, non-cash reserve for the straight line rent receivable
relating to our lease with TA for 145 travel centers.
(6) During the second quarter of 2008, we recorded a $53,225, or
$0.57 per share, non-cash loss on asset impairment related to the write
down of certain intangible assets arising from our January 2007 TA
acquisition to their estimated fair value.
(7) 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. On
June 18, 2008, we sold our AmeriSuites hotel in Atlantic Beach, North
Carolina for $6,350 and recognized a gain on sale of $629.
(8) 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 these hotels which have been sold as
discontinued.
(9) 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 (loss) (see Note 3), deferred percentage rent (see Note 10) and
deferred additional returns (see Note 11) and exclude loss on asset
impairment (see Note 6) and TA spin off costs (see Note 4). 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 generally accepted accounting
principles, or 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.
(10) In calculating net income (loss) 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 these amounts
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.
(11) 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 (loss), 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 (loss), we include these amounts
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 December 31,
30,
2008 2007
------------ ------------
(Unaudited)
ASSETS
---------------------------------------------
Real estate properties, at cost:
Land $ 1,392,605 $ 1,377,520
Buildings, improvements and equipment 4,973,679 4,818,711
------------ ------------
6,366,284 6,196,231
Accumulated depreciation (1,004,065) (849,470)
------------ ------------
5,362,219 5,346,761
Cash and cash equivalents 9,301 23,401
Restricted cash (FF&E reserve escrow) 37,485 28,134
Other assets, net 186,570 281,011
------------ ------------
$ 5,595,575 $ 5,679,307
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------
Revolving credit facility $ 407,000 $ 158,000
Senior notes, net of discounts 1,693,487 1,842,756
Convertible senior notes 575,000 575,000
Mortgage payable 3,578 3,635
Security deposits 169,414 169,406
Accounts payable and other liabilities 102,322 134,705
Due to affiliate 11,806 4,617
Dividends payable 4,754 4,754
------------ ------------
Total liabilities 2,967,361 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;
93,982,385 and 93,892,719 shares issued
and outstanding, respectively 940 939
Additional paid-in capital 3,050,987 3,048,881
Accumulated other comprehensive loss (40) --
Cumulative net income 1,790,140 1,711,079
Cumulative preferred distributions (116,171) (93,761)
Cumulative common distributions (2,487,781) (2,270,843)
------------ ------------
Total shareholders' equity 2,628,214 2,786,434
------------ ------------
$ 5,595,575 $ 5,679,307
============ ============
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
Timothy A. Bonang
617-796-8232
Director of Investor Relations
or
Carlynn Finn
617-796-8232
Manager of Investor Relations
www.hptreit.com
© Business Wire , 2009 - 11/10/2008 04:33 PM