NEWTON, Mass. -- April 8, 2009 -- (BUSINESS WIRE) -- Hospitality
Properties Trust (NYSE: HPT - News) today announced that it has
suspended its regular quarterly distributions to common shareholders for
the remainder of 2009.
The suspension of common share distributions is the result of current
conditions in the capital markets. HPT currently expects that it will
realize substantial net income for financial reporting purposes in 2009,
and HPT expects that its distributions to its common shareholders in
2009 will be at least equal to the minimum amounts required in order for
HPT to remain a real estate investment trust, or REIT, for federal tax
purposes. However, the severe current limitations on the availability of
capital to meet HPT's obligations which are senior to the interests of
HPT common shareholders, including debt maturities in 2010-12, have
caused HPT to suspend payment of common share distributions at this
time.
At present all of HPT's tenants and managers are current in their
financial obligations to HPT, except Marriott International, Inc. (NYSE:
MAR - News) has paid less than the minimum return due HPT for one of
its contracts for HPT owned hotels. HPT owns 125 hotels which are
operated by Marriott under five separate agreements. The minimum rents
and returns due HPT for these 125 hotels is approximately $161.6
million/year, or approximately $12.4 million each four week period
(Marriott pays HPT each four week fiscal reporting period on or before
the first business day of each period). One of HPT's five contracts for
HPT hotels operated by Marriott involves a combination of 34 Marriott
branded hotels which are leased to an HPT taxable REIT subsidiary and
managed by Marriott. The minimum return payment due HPT for these 34
hotels for the four week period beginning March 28, 2009, was
$3,389,601; but Marriott paid HPT only $2,552,000 on March 27, 2009
creating a shortfall of $837,601. HPT notified Marriott of this
shortfall on March 30, 2009, and Marriott has failed to pay the
shortfall amount within the 10 day cure period permitted by HPT's
contract with Marriott. HPT has a cash security deposit of approximately
$36.2 million which secures Marriott's obligations to HPT under this 34
hotel contract. HPT has had discussions with Marriott concerning
Marriott's failure to pay the $837,601 due on March 27, 2009, and those
discussions may continue. At this time, HPT expects to apply $837,601 of
the security deposit HPT holds to cover the shortfall in the payment
HPT received from Marriott, and HPT is considering what other available
actions it may take, if any. Accordingly, HPT expects that its financial
reporting under GAAP will reflect the payment of the full minimum
return due for this contract.
The obligations due HPT for the 91 additional hotels operated by
Marriott under four contracts are current at this time. These four
contracts are leases with Host Hotels and Resorts (NYSE: HST - News) (2
contracts), with Barceló-Crestline (1 contract) and directly with
Marriott (1 contract), and Marriott is the manager of these hotels
pursuant to management contracts with HPT's tenants. Obligations due HPT
under each of these four contracts are secured by security deposits
and/or guarantees which are separate from, and in addition to, the
security deposit which HPT has with respect to the contract where there
was a $837,601 shortfall in the minimum return due HPT. Obligations due
HPT from InterContinental Hotels Group, plc (131 hotels for $153.7
million/year minimum returns), Global Hyatt Corporation (22 hotels for
$21.8 million/year minimum returns), Carlson Hotels Worldwide (11 hotels
for $12.9 million/year minimum returns) and TravelCenters of America
LLC. (185 travel centers for minimum rent of $170.1 million/year, net of
$60 million rent deferral) are all also current at this time.
During the fourth quarter of 2009, HPT expects to re-evaluate capital
market conditions and HPT's own earnings and other circumstances in
order to determine what amount of common shares distributions will be
paid in 2009. At that time, HPT also will consider and announce how much
of its 2009 common share distributions will be paid in cash and whether
some or all of its 2009 common share distributions will be paid by
offering shareholders an option to receive cash or up to 90% of the 2009
distributions in common shares, as permitted by recently announced
Internal Revenue Service guidance. The determination of HPT's 2009
common share distributions may also be affected by differences between
HPT's income for financial reporting purposes and for federal income tax
purposes.
Simultaneously with the foregoing announcement, HPT announced that it
will pay its regular quarterly distributions on its outstanding Series C
Cumulative Redeemable Preferred Shares of $0.4375/share. These
preferred shares distributions will be paid on or about May 15, 2009, to
shareholders of record on May 1, 2009. HPT currently expects to
continue to pay regular quarterly distributions to its preferred
shareholders in cash at current rates.
Hospitality Properties trust is a real estate investment trust which
is headquartered in Newton, MA. HPT owns 289 hotels located throughout
the United States and in Puerto Rico and Ontario, Canada, as well as 185
travel centers located primarily along the U.S. Interstate Highway
System.
WARNING REGARDING FORWARD LOOKING STATEMENTS
THE FOREGOING PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 AND OTHER SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE
BASED UPON HPT'S CURRENT BELIEFS AND EXPECTATIONS. HOWEVER, THESE
FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS ARE NOT GUARANTEED TO
OCCUR AND THEY MAY NOT OCCUR FOR VARIOUS REASONS, SOME OF WHICH ARE
BEYOND HPT'S CONTROL. FOR EXAMPLE:
THIS PRESS RELEASE STATES THAT HPT HAS SUSPENDED ITS REGULAR
QUARTERLY DISTRIBUTIONS TO COMMON SHAREHOLDERS FOR THE REMAINDER OF
2009. AN IMPLICATION OF THIS STATEMENT MAY BE THAT HPT WILL RESUME ITS
REGULAR QUARTERLY DISTRIBUTIONS AFTER 2009. IN FACT, HPT MAY NOT RESUME
PAYING REGULAR QUARTERLY DISTRIBUTIONS AFTER 2009. CAPITAL MARKET
CONDITIONS MAY NOT IMPROVE OR HPT'S OWN FINANCIAL CIRCUMSTANCES MAY
CHANGE SO THAT HPT BECOMES UNABLE OR UNWILLING TO RESUME REGULAR
QUARTERLY DISTRIBUTIONS TO COMMON SHAREHOLDERS. ALSO, HPT'S HISTORICAL
RATE OF COMMON SHARE DISTRIBUTIONS MAY BE CHANGED BECAUSE OF CHANGES IN
HPT'S EARNINGS OR OTHER CIRCUMSTANCES.
THIS PRESS RELEASE STATES THAT HPT EXPECTS THAT IT WILL REALIZE
SUBSTANTIAL INCOME FOR FINANCIAL REPORTING PURPOSES AND THAT HPT'S
DISTRIBUTIONS TO ITS COMMON SHAREHOLDERS IN 2009 WILL BE AT LEAST EQUAL
TO THE MINIMUM AMOUNTS REQUIRED IN ORDER FOR HPT TO REMAIN A REIT FOR
FEDERAL TAX PURPOSES. AN IMPLICATION OF THIS STATEMENT MAY BE THAT HPT
WILL PAY SUBSTANTIAL DISTRIBUTIONS TO COMMON SHAREHOLDERS IN 2009. THESE
FORWARD LOOKING STATEMENTS ARE BASED UPON HPT'S ASSUMPTIONS ABOUT
CONTINUING PAYMENTS FROM HPT'S TENANTS AND MANAGERS. AS EXPLAINED BELOW,
THESE ASSUMPTIONS MAY PROVE INACCURATE; AND HPT'S TENANTS AND MANAGERS
MAY NOT PAY ALL OF THE AMOUNTS DUE TO HPT. MOREOVER, APPLICABLE TAX LAWS
MAY PERMIT HPT TO REMAIN A REIT AND PAY DISTRIBUTIONS LESS THAN IT HAS
HISTORICALLY PAID OR EVEN LESS THAN ITS 2009 INCOME FOR FINANCIAL
REPORTING PURPOSES. RECENT LAWS, SUCH AS THE DEFERRAL OF CAPITAL GAINS
PERMITTED BY THE 2009 ECONOMIC STIMULUS LAW, AND RECENT INTERNAL REVENUE
SERVICE ACTIONS, SUCH AS THE ANNOUNCEMENT WHICH PERMITS REIT QUALIFYING
DIVIDENDS TO BE PAID UP TO 90% IN SHARES, MAY PERMIT REITS LIKE HPT TO
RETAIN THEIR REIT TAX STATUS WITHOUT PAYING SUBSTANTIAL DISTRIBUTIONS.
MOREOVER, THE AMOUNT OF 2009 DISTRIBUTIONS WHICH HPT MAY BE REQUIRED TO
PAY IN ORDER TO RETAIN ITS REIT TAX STATUS IS CONSIDERABLY LESS THAN THE
TOTAL OF ITS HISTORICAL RATE OF QUARTERLY DISTRIBUTIONS FOR THE
REMAINDER OF 2009 WOULD HAVE BEEN. FOR THESE REASONS AND OTHERS, HPT
DOES NOT INTEND TO PROVIDE ANY ASSURANCE REGARDING THE AMOUNT OF ANY
FURTHER DISTRIBUTIONS WHICH HPT MAY PAY TO ITS COMMON SHAREHOLDERS IN
2009, IF ANY.
THIS PRESS RELEASE STATES THAT HPT INTENDS TO APPLY $837,601
FROM THE SECURITY DEPOSIT IT HOLDS TO COVER THE SHORTFALL IN THE PAYMENT
HPT RECEIVED FROM MARRIOTT AND THAT HPT EXPECTS THAT ITS FINANCIAL
REPORTING WILL REFLECT THE FULL MINIMUM RETURN DUE FROM MARRIOTT. THE
IMPLICATION OF THESE STATEMENTS MAY BE THAT HPT WILL NOT SUFFER ANY
ADVERSE CONSEQUENCES AS A RESULT OF MARRIOTT'S FAILURE TO PAY THE
MINIMUM RETURNS DUE HPT SO LONG AS SECURITY DEPOSIT AMOUNTS REMAIN
AVAILABLE TO SATISFY THESE OBLIGATIONS. IN FACT, THE SECURITY DEPOSITS
WHICH HPT HOLDS ARE NOT IN SEGREGATED CASH ACCOUNTS OR OTHERWISE
SEPARATE FROM HPT'S OTHER ASSETS AND LIABILITIES. ACCORDINGLY, ALTHOUGH
HPT MAY RECORD RECEIPT OF INCOME BY REDUCING ITS SECURITY DEPOSIT
LIABILITY, HPT WILL NOT RECEIVE ANY CASH PAYMENT. BECAUSE HPT WILL NOT
RECEIVE A CASH PAYMENT AND BECAUSE THE AMOUNT OF THE SECURITY DEPOSIT
AVAILABLE FOR FUTURE USE IS REDUCED WHEN HPT APPLIES A SECURITY DEPOSIT
TO COVER A PAYMENT SHORTFALL, MARRIOTT'S FAILURE TO PAY MINIMUM RETURNS
DUE HPT MAY HAVE ADVERSE CONSEQUENCES TO HPT.
THIS PRESS RELEASE STATES THAT THE AMOUNTS DUE HPT UNDER FOUR
CONTRACTS AFFECTING 91 HOTELS OWNED BY HPT THAT ARE OPERATED BY MARRIOTT
ARE CURRENT AND THAT THESE LEASE CONTRACTS ARE SECURED BY DEPOSITS
AND/OR GUARANTEES WHICH ARE SEPARATE AND IN ADDITION TO THE SECURITY
DEPOSIT HPT HAS WITH RESPECT TO THE CONTRACT FOR 34 HOTELS WHERE THERE
WAS A $837,601 SHORTFALL IN THE PAYMENT DUE HPT. THE IMPLICATIONS OF
THESE STATEMENTS MAY BE THAT AMOUNTS DUE HPT UNDER THESE FOUR CONTRACTS
FOR 91 HOTELS OPERATED BY MARRIOTT WILL REMAIN CURRENT. IN FACT,
OPERATING FINANCIAL RESULTS AT THESE 91 HOTELS HAVE EXPERIENCED MATERIAL
DECLINES DURING THE CURRENT GENERAL ECONOMIC RECESSION, AND HPT CAN
PROVIDE NO ASSURANCE THAT THE TENANTS UNDER THESE FOUR CONTRACTS WILL
CONTINUE TO PAY THE RENTS DUE HPT.
- THIS PRESS RELEASE STATES THAT ALL OF THE FINANCIAL OBLIGATIONS
DUE HPT FOR HPT'S HOTELS OPERATED BY INTERCONTINENTAL HOTEL GROUP, PLC,
GLOBAL HYATT CORPORATION AND CARLSON HOTELS WORLDWIDE AND FOR HPT'S
TRAVEL CENTERS LEASED TO TRAVELCENTERS OF AMERICA LLC ARE CURRENT AT
THIS TIME. AN IMPLICATION OF THIS STATEMENT MAY BE THAT THESE TENANTS
AND MANAGERS WILL REMAIN CURRENT IN THEIR OBLIGATIONS TO HPT. IN FACT,
HPT'S TENANTS AND MANAGERS MAY BE UNABLE OR UNWILLING TO PAY THE AMOUNTS
DUE HPT. HPT'S LARGEST TENANT, TRAVELCENTERS OF AMERICA LLC, OR TA, HAS
HISTORICALLY EXPERIENCED LOSSES AND HPT ENTERED A RENT DEFERRAL
AGREEMENT WITH TA IN AUGUST 2008; HPT BELIEVES TA'S FINANCIAL
CIRCUMSTANCES HAVE IMPROVED SINCE THAT AGREEMENT WAS ENTERED, BUT NO
ASSURANCE IS INTENDED OR CAN BE PROVIDED THAT TA'S CIRCUMSTANCES WILL
NOT DETERIORATE, ESPECIALLY IF THE PRICE OF PETROLEUM PRODUCTS
MATERIALLY INCREASES. THE HOTELS THAT HPT OWNS THAT ARE OPERATED BY
BRAND OWNERS OTHER THAN MARRIOTT ARE EXPERIENCING MATERIAL DECLINES IN
FINANCIAL RESULTS DURING THE CURRENT GENERAL ECONOMIC RECESSION AND HPT
CAN PROVIDE NO ASSURANCES THAT THESE HOTEL OPERATORS WILL CONTINUE TO
PAY THEIR OBLIGATIONS TO HPT, ESPECIALLY IF OPERATING CONDITIONS IN THE
HOTEL INDUSTRY DO NOT IMPROVE OR BECOME WORSE.
THIS PRESS RELEASE STATES THAT DURING THE FOURTH QUARTER OF
2009 HPT WILL RE-EVALUATE CAPITAL MARKET CONDITIONS AND ITS OWN EARNINGS
AND OTHER CIRCUMSTANCES, DETERMINE THE AMOUNT OF ITS 2009 COMMON SHARES
DISTRIBUTIONS AND THEN CONSIDER AND ANNOUNCE WHETHER IT WILL PAY
DISTRIBUTIONS IN CASH OR IF IT WILL PAY UP TO 90% OF ANY DISTRIBUTIONS
IN ITS SHARES. CAPITAL MARKET CONDITIONS ARE BEYOND HPT'S CONTROL. AS
NOTED ABOVE, SOME OR ALL OF HPT'S TENANTS AND MANAGERS MAY BE UNABLE OR
UNWILLING TO CONTINUE PAYING SOME OR ALL OF THE AMOUNTS DUE TO HPT
DURING 2009. ACCORDINGLY, DESPITE THE IMPLICATIONS IN THIS PRESS RELEASE
THAT HPT WILL PAY SUBSTANTIAL DISTRIBUTIONS TO COMMON SHAREHOLDERS
DURING THE FOURTH QUARTER OF 2009, THERE CAN BE NO ASSURANCE THAT, IN
FACT, ANY DISTRIBUTIONS WILL BE PAID TO COMMON SHAREHOLDERS, OR THE
AMOUNT THAT WILL BE PAID IN CASH.
THIS PRESS RELEASE STATES THAT HPT EXPECTS TO CONTINUE TO PAY
REGULAR QUARTERLY DISTRIBUTIONS TO ITS PREFERRED SHAREHOLDERS IN CASH AT
CURRENT RATES. IN FACT, HPT MAY NOT CONTINUE TO PAY DISTRIBUTIONS TO
ITS PREFERRED SHAREHOLDERS IN CASH AT CURRENT RATES. IF CAPITAL MARKET
CONDITIONS BECOME WORSE OR IF ADDITIONAL HPT TENANTS AND MANAGERS DO NOT
CONTINUE TO PAY AMOUNTS DUE TO HPT, HPT MAY DETERMINE TO STOP OR DEFER
PAYING ITS PREFERRED DISTRIBUTIONS. ALTHOUGH HPT DOES NOT NOW ANTICIPATE
CIRCUMSTANCES WILL OCCUR WHICH WOULD CAUSE HPT TO STOP PAYING ITS
PREFERRED DISTRIBUTIONS, THE OCCURRENCE OF SUCH CIRCUMSTANCES WILL BE
LARGELY BEYOND HPT'S CONTROL.
FOR THESE REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE
UNDUE RELIANCE UPON THE FORWARD LOOKING STATEMENTS IN THIS PRESS
RELEASE.
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.
Contact:
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