Nov 09, 2016
Third Quarter Net Income of
Normalized FFO of
Three Months Ended | Nine Months Ended | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
($ in thousands, except per share and RevPAR data) | |||||||||||||||||
| Net income available for common shareholders | $ | 46,646 | $ | 56,019 | $ | 144,426 | $ | 170,414 | |||||||||
| Net income available for common shareholders per share | $ | 0.30 | $ | 0.37 | $ | 0.94 | $ | 1.13 | |||||||||
Adjusted EBITDA (1) | $ | 210,514 | $ | 192,713 | $ | 613,825 | $ | 551,167 | |||||||||
| Normalized FFO available for common shareholders (1) | $ | 162,135 | $ | 149,692 | $ | 468,003 | $ | 422,580 | |||||||||
Normalized FFO available for common shareholders per share (1) | $ | 1.03 | $ | 0.99 | $ | 3.05 | $ | 2.80 | |||||||||
Portfolio Performance | |||||||||||||||||
| Comparable hotel RevPAR | $ | 101.77 | $ | 98.02 | $ | 98.37 | $ | 94.15 | |||||||||
| Comparable hotel RevPAR growth | 3.8% | — | 4.5% | — | |||||||||||||
| RevPAR (all hotels) | $ | 101.35 | $ | 97.95 | $ | 97.35 | $ | 94.33 | |||||||||
| RevPAR growth (all hotels) | 3.5% | — | 3.2% | — | |||||||||||||
| Coverage of HPT’s minimum returns and rents for hotels | 1.25x | 1.18x | 1.18x | 1.13x | |||||||||||||
| Coverage of HPT's minimum rents for travel centers | 1.78x | 1.74x | 1.59x | 1.79x | |||||||||||||
(1) Reconciliations of net income determined in accordance with
“We are pleased with the continued strong performance from our hotel and
travel center properties this quarter. HPT’s comparable hotel RevPAR
growth of 3.8% exceeded the industry for the 15th consecutive
quarter and aggregate coverage of our minimum returns and rents improved
compared to the same quarter last year. During the quarter, we also
raised
Results for the Three and Nine Months Ended
- Net Income Available for Common Shareholders: Net income
available for common shareholders for the quarter ended
September 30, 2016 was$46.6 million , or$0.30 per diluted share, compared to net income available for common shareholders of$56.0 million , or$0.37 per diluted share, for the quarter endedSeptember 30, 2015 . Net income available for common shareholders includes$25.0 million , or$0.16 per diluted share, and$8.6 million , or$0.06 per diluted share, of estimated business management incentive fee expense for the quarters endedSeptember 30, 2016 and 2015, respectively. The weighted average number of diluted common shares outstanding was 157.3 million and 151.4 million for the quarters endedSeptember 30, 2016 and 2015, respectively.
Net income available for common shareholders for the nine months endedSeptember 30, 2016 was$144.4 million , or$0.94 per diluted share, compared to net income available for common shareholders of$170.4 million , or$1.13 per diluted share, for the nine months endedSeptember 30, 2015 . Net income available for common shareholders for the nine months endedSeptember 30, 2016 includes$56.3 million , or$0.37 per diluted share, of estimated business management incentive fee expense. Net income available for common shareholders for the nine months endedSeptember 30, 2015 includes$17.4 million , or$0.12 per diluted share, of estimated business management incentive fee expense and an$11.0 million , or$0.07 per diluted share, gain on the sale of real estate. The weighted average number of diluted common shares outstanding was 153.4 million and 150.9 million for the nine months endedSeptember 30, 2016 and 2015, respectively.
- Adjusted EBITDA: Adjusted EBITDA for the quarter ended
September 30, 2016 compared to the same period in 2015 increased 9.2% to$210.5 million .
Adjusted EBITDA for the nine months endedSeptember 30, 2016 compared to the same period in 2015 increased 11.4% to$613.8 million .
- Normalized FFO Available for Common Shareholders: Normalized
FFO available for common shareholders for the quarter ended
September 30, 2016 were$162.1 million , or$1.03 per diluted share, compared to Normalized FFO available for common shareholders of$149.7 million , or$0.99 per diluted share, for the quarter endedSeptember 30, 2015 .
Normalized FFO available for common shareholders for the nine months endedSeptember 30, 2016 were$468.0 million , or$3.05 per diluted share, compared to Normalized FFO available for common shareholders of$422.6 million , or$2.80 per diluted share, for the nine months endedSeptember 30, 2015 .
Hotel RevPAR (comparable hotels): For the quarter endedSeptember 30, 2016 compared to the same period in 2015 for HPT’s 293 hotels that were owned continuously sinceJuly 1, 2015 : average daily rate, or ADR, increased 3.3% to$126.58 ; occupancy increased 0.4 percentage points to 80.4%; and revenue per available room, or RevPAR, increased 3.8% to$101.77 .
For the nine months endedSeptember 30, 2016 compared to the same period in 2015 for HPT’s 291 hotels that were owned continuously sinceJanuary 1, 2015 : ADR increased 3.4% to$125.95 ; occupancy increased 0.8 percentage points to 78.1%; and RevPAR increased 4.5% to$98.37 .
Hotel RevPAR (all hotels): For the quarter endedSeptember 30, 2016 compared to the same period in 2015 for HPT’s 305 hotels: ADR increased 3.0% to$126.69 ; occupancy increased 0.4 percentage points to 80.0%; and RevPAR increased 3.5% to$101.35 .
For the nine months endedSeptember 30, 2016 compared to the same period in 2015 for HPT’s 305 hotels: ADR increased 3.1% to$125.94 ; occupancy increased 0.1 percentage points to 77.3%; and RevPAR increased 3.2% to$97.35 .
- Coverage of Minimum Returns and Rents: For the quarter ended
September 30, 2016 , the aggregate coverage ratio of (x) total hotel revenues minus all hotel expenses and FF&E reserve escrows which are not subordinated to minimum returns and minimum rent payments to HPT to (y) HPT’s minimum returns and rents due from hotels increased to 1.25x from 1.18x for the quarter endedSeptember 30, 2015 .
For the nine months endedSeptember 30, 2016 , the aggregate coverage ratio of (x) total hotel revenues minus all hotel expenses and FF&E reserve escrows which are not subordinated to minimum returns and minimum rent payments to HPT to (y) HPT’s minimum returns and rents due from hotels increased to 1.18x from 1.13x for the nine months endedSeptember 30, 2015 .
For the quarter endedSeptember 30, 2016 , the aggregate coverage ratio of (x) total travel center revenues less travel center expenses to (y) HPT’s minimum rent due from leased travel centers increased to 1.78x from 1.74x for the quarter endedSeptember 30, 2015 .
For the nine months endedSeptember 30, 2016 , the aggregate coverage ratio of (x) total travel center revenues less travel center expenses to (y) HPT’s minimum rent due from leased travel centers decreased to 1.59x from 1.79x for the nine months endedSeptember 30, 2015 .
As ofSeptember 30, 2016 , approximately 79% of HPT’s aggregate annual minimum returns and rents were secured by guarantees or security deposits from HPT’s managers and tenants pursuant to the terms of HPT’s operating agreements.
- Recent Property Acquisition Activities: On
September 30, 2016 , HPT acquired fromTravelCenters of America LLC (Nasdaq: TA), or TA, a newly developed travel center located inCaryville, TN for$16.6 million , excluding acquisition related costs. HPT added this TA branded travel center to its TA No. 2 lease.
As previously disclosed, inJuly 2016 , HPT entered into an agreement to acquire a full service hotel with 236 rooms located inMilpitas, CA for$52.0 million . The agreement was subsequently terminated and inOctober 2016 HPT entered into a new agreement to acquire this hotel for$46.0 million , excluding acquisition related costs. HPT currently expects to complete this acquisition during the fourth quarter of 2016. HPT plans to add this hotel to its management agreement withSonesta International Hotels Corporation , or Sonesta.
InOctober 2016 , HPT entered into an agreement to acquire a full service hotel with 101 rooms located inAddison, TX for a purchase price of$9.0 million , excluding acquisition related costs. HPT currently expects to complete this acquisition in the first quarter of 2017. HPT plans to add this Radisson branded hotel to its management agreement with Carlson Hotels Worldwide, or Carlson.
InNovember 2016 , HPT entered into an agreement to acquire a full service hotel with 483 rooms located inChicago, IL for a purchase price of$86.7 million , excluding acquisition related costs. HPT currently expects to complete this acquisition in the first quarter of 2017. HPT plans to add this Kimpton branded hotel to its management agreement with InterContinental Hotels Group, plc (LON: IHG; NYSE: IHG (ADRs)), or InterContinental.
Financing Activities:
In August 2016, HPT issued 12,650,000 common shares in a public offering at a price of $30.75 per share. The net proceeds from this offering of approximately $372.0 million after payment of the underwriters' discount and other offering expenses were used to repay amounts outstanding under HPT's revolving credit facility and for general business purposes.
In September 2016, HPT redeemed at par plus accrued interest all $300.0 million of its 5.625% senior notes due 2017 using cash on hand and borrowings under its revolving credit facility.
Tenants and Managers: As of
Marriott Agreements : As ofSeptember 30, 2016 , 122 of HPT’s hotels were operated by subsidiaries ofMarriott International, Inc. (Nasdaq: MAR), or Marriott, under three agreements. HPT’sMarriott No . 1 agreement includes 53 hotels, and provides for annual minimum return payments to HPT of$68.6 million as ofSeptember 30, 2016 (approximately$17.2 million per quarter). Because there is no guarantee or security deposit for this agreement, the minimum returns HPT receives under this agreement may be limited to available hotel cash flows after payment of operating expenses and funding of the FF&E reserve. During the three months endedSeptember 30, 2016 , HPT realized returns under itsMarriott No . 1 agreement of$21.5 million . HPT’sMarriott No . 234 agreement includes 68 hotels and requires annual minimum returns to HPT of$106.2 million as ofSeptember 30, 2016 (approximately$26.6 million per quarter). During the three months endedSeptember 30, 2016 , HPT realized returns under itsMarriott No . 234 agreement of$26.6 million . HPT’sMarriott No . 234 agreement is partially secured by a security deposit and a limited guarantee from Marriott; during the three months endedSeptember 30, 2016 , the available security deposit was replenished by$4.2 million from a share of hotel cash flows in excess of the minimum returns due to HPT for the period. AtSeptember 30, 2016 , the available security deposit from Marriott for theMarriott No . 234 agreement was$17.4 million and there was$30.7 million remaining under Marriott’s guaranty for up to 90% of the minimum returns due to HPT to cover future payment shortfalls after the available security deposit is depleted.HPT's Marriott No . 5 agreement includes one resort hotel inKauai, HI which is leased to Marriott on a full recourse basis. The contractual rent due to HPT for this hotel for the three months endedSeptember 30, 2016 of$2.5 million was paid to HPT. During the quarter endedSeptember 30, 2016 , Marriott notified HPT it does not intend to extend its lease for theKauai resort hotel when it expires onDecember 31, 2019 . HPT intends to have discussions with Marriott about the future of this hotel.InterContinental Agreement : As ofSeptember 30, 2016 , 94 of HPT’s hotels were operated by subsidiaries of InterContinental under one agreement requiring annual minimum returns and rents to HPT of$160.3 million (approximately$40.1 million per quarter). During the three months endedSeptember 30, 2016 , HPT realized returns and rents under its InterContinental agreement of$43.6 million . HPT’s InterContinental agreement is partially secured by a security deposit. During the three months endedSeptember 30, 2016 , the available security deposit was replenished by$7.0 million from a share of hotel cash flows in excess of the returns and rents due to HPT for the period. AtSeptember 30, 2016 , the available InterContinental security deposit which HPT held to pay future payment shortfalls was$71.0 million .- Other
Hotel Agreements : As ofSeptember 30, 2016 , HPT’s remaining 89 hotels are operated under five agreements: one management agreement with Sonesta (33 hotels), requiring annual minimum returns of$86.0 million as ofSeptember 30, 2016 (approximately$21.5 million per quarter); one management agreement with a subsidiary ofWyndham Worldwide Corporation (NYSE : WYN), or Wyndham (22 hotels), requiring annual minimum returns and rents of $28.2 million (approximately $7.1 million per quarter); one management agreement with a subsidiary ofHyatt Hotels Corporation (NYSE : H), or Hyatt (22 hotels), requiring annual minimum returns of$22.0 million as ofSeptember 30, 2016 (approximately$5.5 million per quarter); one management agreement with a subsidiary of Carlson (11 hotels), requiring annual minimum returns of$12.9 million as ofSeptember 30, 2016 (approximately$3.2 million per quarter); and one lease with a subsidiary ofMorgans Hotel Group Co. (Nasdaq: MHGC) (1 hotel) requiring annual minimum rent of$7.6 million as ofSeptember 30, 2016 (approximately$1.9 million per quarter). Minimum returns and rents due to HPT are partially guaranteed under the Wyndham, Hyatt and Carlson agreements. There is no guarantee or security deposit for the Sonesta agreement and the minimum returns HPT receives under that agreement are limited to available hotel cash flows after payment of operating expenses. The payments due to HPT under these agreements for the three months endedSeptember 30, 2016 were paid to HPT. - Travel Center Agreements: As of
September 30, 2016 , HPT’s 198 travel centers located along theU.S. Interstate Highway system were leased to TA under five lease agreements, which required aggregate annual minimum rents of$271.2 million (approximately$67.8 million per quarter). As ofSeptember 30, 2016 , all payments due to HPT from TA under these leases were current.
Conference Call:
On
A live audio webcast of the conference call will also be available in a listen only mode on HPT’s website, which is located at www.hptreit.com. Participants wanting to access the webcast should visit HPT’s website about five minutes before the call. The archived webcast will be available for replay on HPT’s website for about one week after the call. The transcription, recording and retransmission in any way of HPT’s third quarter conference call is strictly prohibited without the prior written consent of HPT.
Supplemental Data:
A copy of HPT’s Third Quarter 2016 Supplemental Operating and Financial Data is available for download at HPT’s website, www.hptreit.com. HPT’s website is not incorporated as part of this press release.
Please see the following pages for a more detailed statement of HPT’s operating results and financial condition and for an explanation of HPT’s calculation of FFO available for common shareholders and Normalized FFO available for common shareholders, EBITDA and Adjusted EBITDA.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER HPT USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, "WILL", “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, HPT IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON HPT’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY HPT’S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
-
AS OF
SEPTEMBER 30, 2016 , APPROXIMATELY 79% OF HPT’S AGGREGATE ANNUAL MINIMUM RETURNS AND RENTS WERE SECURED BY GUARANTEES OR SECURITY DEPOSITS FROM HPT’S MANAGERS AND TENANTS. THIS MAY IMPLY THAT THESE MINIMUM RETURNS AND RENTS WILL BE PAID. IN FACT, CERTAIN OF THESE GUARANTEES AND SECURITY DEPOSITS ARE LIMITED IN AMOUNT AND DURATION, AND ALL THE GUARANTEES ARE SUBJECT TO THE GUARANTORS’ ABILITY AND WILLINGNESS TO PAY. THE BALANCE OF HPT’S ANNUAL MINIMUM RETURNS AND RENTS AS OFSEPTEMBER 30, 2016 WAS NOT GUARANTEED NOR DOES HPT HOLD A SECURITY DEPOSIT WITH RESPECT TO THOSE AMOUNTS. HPT CANNOT BE SURE WITH REGARD TO THE FUTURE PERFORMANCE OF HPT’S PROPERTIES, WHETHER SUCH PERFORMANCE WILL COVER HPT’S MINIMUM RETURNS AND RENTS, WHETHER THE GUARANTEES OR SECURITY DEPOSITS WILL BE ADEQUATE TO COVER FUTURE SHORTFALLS IN THE MINIMUM RETURNS OR RENTS DUE TO HPT, OR REGARDING HPT’S MANAGERS’, TENANTS’ OR GUARANTORS’ FUTURE ACTIONS IF AND WHEN THE GUARANTEES AND SECURITY DEPOSITS EXPIRE OR ARE DEPLETED OR THEIR ABILITY OR WILLINGNESS TO PAY MINIMUM RETURNS AND RENTS OWED TO HPT. MOREOVER, THE SECURITY DEPOSITS HELD BY HPT ARE NOT SEGREGATED FROM HPT’S OTHER ASSETS AND THE APPLICATION OF SECURITY DEPOSITS TO COVER PAYMENT SHORTFALLS WILL RESULT IN HPT RECORDING INCOME, BUTWILL NOT RESULT IN HPT RECEIVING ADDITIONAL CASH, - HPT HAS ENTERED INTO AGREEMENTS TO ACQUIRE THREE HOTELS FOR AN AGGREGATE PURCHASE PRICE OF $141.7 MILLION, AND HPT EXPECTS TO COMPLETE THESE TRANSACTIONS DURING THE FOURTH QUARTER OF 2016 AND FIRST QUARTER OF 2017 AND TO ADD THESE HOTELS TO ITS EXISTING MANAGEMENT AGREEMENTS WITH SONESTA, CARLSON AND INTERCONTINENTAL. THESE TRANSACTIONS ARE SUBJECT TO CONDITIONS. THESE CONDITIONS MAY NOT BE SATISFIED. AS A RESULT, THESE ACQUISITIONS AND THE EXPECTED MANAGEMENT ARRANGEMENTS MAY NOT OCCUR, MAY BE DELAYED OR THEIR TERMS MAY CHANGE, AND
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THIS PRESS RELEASE STATES THAT MARRIOTT HAS NOTIFIED HPT THAT IT DOES
NOT INTEND TO EXTEND ITS LEASE FOR HPT'S RESORT HOTEL ON
KAUAI, HAWAII WHEN THAT LEASE EXPIRES ONDECEMBER 31, 2019 AND THAT HPT INTENDS TO HAVE DISCUSSIONS WITH MARRIOTT ABOUT THE FUTURE OF THIS HOTEL. THESE STATEMENTS MAY IMPLY THAT MARRIOTT WILL NOT OPERATE THIS HOTEL IN THE FUTURE OR THAT HPT MAY RECEIVE LESS CASH FLOW FROM THIS HOTEL IN THE FUTURE. HPT'S DISCUSSIONS WITH MARRIOTT HAVE ONLY RECENTLY BEGUN. AT THIS TIME HPT CANNOT PREDICT HOW ITS DISCUSSIONS WITHMARRIOTT WILL IMPACT THE FUTURE OF THIS HOTEL. FOR EXAMPLE, THIS HOTEL MAY CONTINUE TO BE OPERATED BY MARRIOTT ON DIFFERENT CONTRACT TERMS THAN THE CURRENT LEASE, HPT MAY IDENTIFY A DIFFERENT OPERATOR FOR THIS HOTEL, OR THE CASH FLOW WHICH HPT RECEIVES FROM ITS OWNERSHIP OF THIS HOTEL MAY BE DIFFERENT THAN THE RENT HPT NOW RECEIVES. ALSO, ALTHOUGH THE CURRENT LEASE EXPIRES ONDECEMBER 31, 2019 , HPT ANDMARRIOTT MAY AGREE UPON A DIFFERENT TERMINATION DATE.
THE INFORMATION CONTAINED IN HPT’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN HPT’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM HPT’S FORWARD LOOKING STATEMENTS. HPT’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, HPT DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
(amounts in thousands, except per share data) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
|
Three Months Ended |
Nine Months Ended | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Revenues: | ||||||||||||||||||
| Hotel operating revenues (1) | $ | 464,173 | $ | 437,171 | $ | 1,332,586 | $ | 1,243,744 | ||||||||||
| Rental income (2) | 78,278 | 73,747 | 231,830 | 207,561 | ||||||||||||||
| FF&E reserve income (3) | 1,065 | 968 | 3,517 | 3,159 | ||||||||||||||
| Total revenues | 543,516 | 511,886 | 1,567,933 | 1,454,464 | ||||||||||||||
| Expenses: | ||||||||||||||||||
| Hotel operating expenses (1) | 322,012 | 308,603 | 923,239 | 870,689 | ||||||||||||||
| Depreciation and amortization | 90,139 | 84,261 | 266,192 | 243,812 | ||||||||||||||
| General and administrative (4) | 37,739 | 19,831 | 91,127 | 53,820 | ||||||||||||||
| Acquisition related costs (5) | 156 | 851 | 885 | 1,986 | ||||||||||||||
| Total expenses | 450,046 | 413,546 | 1,281,443 | 1,170,307 | ||||||||||||||
| Operating income | 93,470 | 98,340 | 286,490 | 284,157 | ||||||||||||||
| Dividend income | 626 | — | 1,375 | — | ||||||||||||||
| Interest income | 89 | 11 | 227 | 32 | ||||||||||||||
Interest expense (including amortization of debt issuance costs | (41,280 | ) | (36,628 | ) | (124,564 | ) | (107,918 | ) | ||||||||||
| Loss on early extinguishment of debt (6) | (158 | ) | — | (228 | ) | — | ||||||||||||
Income before income taxes, equity in earnings (losses) of an | 52,747 | 61,723 | 163,300 | 176,271 | ||||||||||||||
| Income tax expense | (948 | ) | (514 | ) | (3,483 | ) | (1,445 | ) | ||||||||||
| Equity in earnings (losses) of an investee | 13 | (24 | ) | 107 | 71 | |||||||||||||
| Income before gain on sale of real estate | 51,812 | 61,185 | 159,924 | 174,897 | ||||||||||||||
| Gain on sale of real estate (7) | — | — | — | 11,015 | ||||||||||||||
| Net income | 51,812 | 61,185 | 159,924 | 185,912 | ||||||||||||||
| Preferred distributions | (5,166 | ) | (5,166 | ) | (15,498 | ) | (15,498 | ) | ||||||||||
| Net income available for common shareholders | $ | 46,646 | $ | 56,019 | $ | 144,426 | $ | 170,414 | ||||||||||
| Weighted average common shares outstanding (basic) | 157,217 | 151,359 | 153,357 | 150,476 | ||||||||||||||
| Weighted average common shares outstanding (diluted) | 157,263 | 151,386 | 153,390 | 150,863 | ||||||||||||||
| Net income available for common shareholders per common share: | ||||||||||||||||||
| Basic and diluted | $ | 0.30 | $ | 0.37 | $ | 0.94 | $ | 1.13 | ||||||||||
RECONCILIATIONS OF FUNDS FROM OPERATIONS, | ||||||||||||||||||||
NORMALIZED FUNDS FROM OPERATIONS, EBITDA AND ADJUSTED EBITDA | ||||||||||||||||||||
(amounts in thousands, except per share data) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Calculation of Funds from Operations (FFO) and Normalized FFO
available | ||||||||||||||||||||
| Net income available for common shareholders | $ | 46,646 | $ | 56,019 | $ | 144,426 | $ | 170,414 | ||||||||||||
Add (Less): | Depreciation and amortization | 90,139 | 84,261 | 266,192 | 243,812 | |||||||||||||||
| Gain on sale of real estate (7) | — | — | — | (11,015 | ) | |||||||||||||||
| FFO available for common shareholders | 136,785 | 140,280 | 410,618 | 403,211 | ||||||||||||||||
Add: | Acquisition related costs (5) | 156 | 851 | 885 | 1,986 | |||||||||||||||
| Estimated business management incentive fees (4) | 25,036 | 8,561 | 56,272 | 17,383 | ||||||||||||||||
| Loss on early extinguishment of debt (6) | 158 | — | 228 | — | ||||||||||||||||
| Normalized FFO available for common shareholders | $ | 162,135 | $ | 149,692 | $ | 468,003 | $ | 422,580 | ||||||||||||
| Weighted average common shares outstanding (basic) | 157,217 | 151,359 | 153,357 | 150,476 | ||||||||||||||||
| Weighted average common shares outstanding (diluted) | 157,263 | 151,386 | 153,390 | 150,863 | ||||||||||||||||
| Basic and diluted per common share amounts: | ||||||||||||||||||||
| FFO available for common shareholders (basic) | $ | 0.87 | $ | 0.93 | $ | 2.68 | $ | 2.68 | ||||||||||||
| FFO available for common shareholders (diluted) | $ | 0.87 | $ | 0.93 | $ | 2.68 | $ | 2.67 | ||||||||||||
| Normalized FFO available for common shareholders (basic) | $ | 1.03 | $ | 0.99 | $ | 3.05 | $ | 2.81 | ||||||||||||
| Normalized FFO available for common shareholders (diluted) | $ | 1.03 | $ | 0.99 | $ | 3.05 | $ | 2.80 | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
| Calculation of EBITDA and Adjusted EBITDA: (9) | ||||||||||||||||||||
| Net income | $ | 51,812 | $ | 61,185 | $ | 159,924 | $ | 185,912 | ||||||||||||
Add: | Interest expense | 41,280 | 36,628 | 124,564 | 107,918 | |||||||||||||||
| Income tax expense | 948 | 514 | 3,483 | 1,445 | ||||||||||||||||
| Depreciation and amortization | 90,139 | 84,261 | 266,192 | 243,812 | ||||||||||||||||
| EBITDA | 184,179 | 182,588 | 554,163 | 539,087 | ||||||||||||||||
Add (less): | Acquisition related costs (5) | 156 | 851 | 885 | 1,986 | |||||||||||||||
| General and administrative expense paid in common shares (10) | 985 | 713 | 2,277 | 3,726 | ||||||||||||||||
| Estimated business management incentive fees (4) | 25,036 | 8,561 | 56,272 | 17,383 | ||||||||||||||||
| Loss on early extinguishment of debt (6) | 158 | — | 228 | — | ||||||||||||||||
| Gain on sale of real estate (7) | — | — | — | (11,015 | ) | |||||||||||||||
| Adjusted EBITDA | $ | 210,514 | $ | 192,713 | $ | 613,825 | $ | 551,167 | ||||||||||||
(1) At
(2) Rental income includes
(3) Various percentages of total sales at certain of HPT’s hotels are escrowed as reserves for future renovations or refurbishment, or FF&E reserve escrows. HPT owns all the FF&E reserve escrows for its hotels. HPT reports deposits by its tenants into the escrow accounts under its three hotel leases as FF&E reserve income. HPT does not report the amounts which are escrowed as FF&E reserves for its managed hotels as FF&E reserve income.
(4) Incentive fees under HPT’s business management agreement are payable
after the end of each calendar year, are calculated based on common
share total return, as defined, and are included in general and
administrative expense in HPT’s condensed consolidated statements of
income. In calculating net income in accordance with GAAP, HPT
recognizes estimated business management incentive fee expense, if any,
each quarter. Although HPT recognizes this expense, if any, each quarter
for purposes of calculating net income, HPT does not include these
amounts in the calculation of Normalized FFO available for common
shareholders or Adjusted EBITDA until the fourth quarter, which is when
the actual incentive fee expense amount for the year, if any, is
determined. HPT recorded estimated business management incentive fees of
(5) Represents costs associated with HPT’s acquisition activities.
(6) HPT recorded losses of
(7) HPT recorded an
(8) HPT calculates FFO available for common shareholders and Normalized
FFO available for common shareholders as shown above. FFO available for
common shareholders is calculated on the basis defined by
(9) HPT calculates EBITDA and Adjusted EBITDA as shown above. HPT considers EBITDA and Adjusted EBITDA to be appropriate supplemental measures of its operating performance, along with net income, net income available for common shareholders and operating income. HPT believes that EBITDA and Adjusted EBITDA provide useful information to investors because by excluding the effects of certain historical amounts, such as interest, depreciation and amortization expense, EBITDA and Adjusted EBITDA may facilitate a comparison of current operating performance with HPT’s past operating performance. In calculating Adjusted EBITDA, HPT includes business management incentive fees only in the fourth quarter versus the quarter when they are recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of HPT’s core operating performance and the uncertainty as to whether any such business management incentive fees will ultimately be payable when all contingencies for determining any such fees are determined at the end of the calendar year. EBITDA and Adjusted EBITDA do not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders or operating income as an indicator of operating performance or as a measure of HPT’s liquidity. These measures should be considered in conjunction with net income, net income available for common shareholders and operating income as presented in HPT’s condensed consolidated statements of income. Other real estate companies and REITs may calculate EBITDA and Adjusted EBITDA differently than HPT does.
(10) Amounts represent the portion of business management fees that were
payable in HPT’s common shares as well as equity based compensation for
HPT’s trustees, its officers and certain other employees of HPT’s
manager. Beginning
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(amounts in thousands, except share data) | ||||||||||
(Unaudited) | ||||||||||
| 2016 | 2015 | |||||||||
| ASSETS | ||||||||||
| Real estate properties: | ||||||||||
| Land | $ | 1,550,174 | $ | 1,529,004 | ||||||
| Buildings, improvements and equipment | 7,047,370 | 6,732,768 | ||||||||
| Total real estate properties, gross | 8,597,544 | 8,261,772 | ||||||||
| Accumulated depreciation | (2,436,327 | ) | (2,217,135 | ) | ||||||
| Total real estate properties, net | 6,161,217 | 6,044,637 | ||||||||
| Cash and cash equivalents | 9,534 | 13,682 | ||||||||
| Restricted cash (FF&E reserve escrow) | 60,606 | 51,211 | ||||||||
| Due from related persons | 62,949 | 50,987 | ||||||||
| Other assets, net | 291,826 | 234,280 | ||||||||
| Total assets | $ | 6,586,132 | $ | 6,394,797 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Unsecured revolving credit facility | $ | 150,000 | $ | 465,000 | ||||||
| Unsecured term loan, net | 398,254 | 397,756 | ||||||||
| Senior unsecured notes, net | 2,564,476 | 2,403,439 | ||||||||
| Convertible senior unsecured notes | 8,478 | 8,478 | ||||||||
| Security deposits | 88,524 | 53,579 | ||||||||
| Accounts payable and other liabilities | 155,433 | 179,783 | ||||||||
| Due to related persons | 64,303 | 69,514 | ||||||||
| Dividends payable | 5,166 | 5,166 | ||||||||
| Total liabilities | 3,434,634 | 3,582,715 | ||||||||
| Commitments and contingencies | ||||||||||
| Shareholders’ equity: | ||||||||||
Preferred shares of beneficial interest, no par value; 100,000,000 shares authorized: | ||||||||||
Series D preferred shares; 7 1/8% cumulative redeemable;
11,600,000 shares | 280,107 | 280,107 | ||||||||
Common shares of beneficial interest, | 1,643 | 1,515 | ||||||||
| Additional paid in capital | 4,539,704 | 4,165,911 | ||||||||
| Cumulative net income | 3,041,581 | 2,881,657 | ||||||||
| Cumulative other comprehensive income (loss) | 35,904 | (15,523 | ) | |||||||
| Cumulative preferred distributions | (336,811 | ) | (321,313 | ) | ||||||
| Cumulative common distributions | (4,410,630 | ) | (4,180,272 | ) | ||||||
| Total shareholders’ equity | 3,151,498 | 2,812,082 | ||||||||
| Total liabilities and shareholders’ equity | $ | 6,586,132 | $ | 6,394,797 | ||||||
A
No shareholder,
Trustee or officer is personally liable for any act or obligation of the
Trust.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161109005458/en/
Senior
Director, Investor Relations
Source: