May 09, 2018
First Quarter Net Income Available for Common Shareholders of
First Quarter Normalized FFO Available for Common Shareholders of
|
Three Months Ended | |||||||||||||
| 2018 | 2017 | ||||||||||||
| ($ in thousands, except per share and RevPAR data) | |||||||||||||
| Net income available for common shareholders | $ | 80,206 | $ | 25,843 | |||||||||
| Net income available for common shareholders per share | $ | 0.49 | $ | 0.16 | |||||||||
| Adjusted EBITDA (1) | $ | 202,956 | $ | 194,576 | |||||||||
| Normalized FFO available for common shareholders (1) | $ | 154,868 | $ | 148,807 | |||||||||
| Normalized FFO available for common shareholders per share (1) | $ | 0.94 | $ | 0.91 | |||||||||
Portfolio Performance | |||||||||||||
| Comparable hotel RevPAR | $ | 91.63 | $ | 89.85 | |||||||||
| Change in comparable hotel RevPAR | 2.0 | % | — | % | |||||||||
| RevPAR (all hotels) | $ | 89.91 | $ | 89.41 | |||||||||
| Change in RevPAR (all hotels) | 0.6 | % | — | % | |||||||||
| Coverage of HPT’s minimum returns and rents for hotels | 0.82x | 0.88x | |||||||||||
| Coverage of HPT's minimum rents for travel centers | 1.56x | 1.20x | |||||||||||
| (1) |
Reconciliations of net income determined in accordance with |
“HPT’s first quarter 2018 comparable hotel RevPAR grew by 2.0% compared
to the prior year period despite competition from new room supply and
the impact of our hotel renovations. We had 23 comparable hotels across
our portfolio under renovation for all or part of the first quarter of
2018 as part of cyclical renovation programs funded largely from FF&E
reserves. We remain cautiously optimistic regarding performance of our
hotels for the balance of 2018 due to the positive impact we expect to
realize from these renovations and the expected positive economic trends
in
Also, in April, we increased our quarterly dividend for the seventh consecutive year.
Our TA properties generated improved performance this quarter. Total
gross margin was up
Results for the Quarter Ended
- Net Income Available for Common Shareholders: Net income
available for common shareholders for the quarter ended
March 31, 2018 was$80.2 million , or$0.49 per diluted share, compared to net income available for common shareholders of$25.8 million , or$0.16 per diluted share, for the quarter endedMarch 31, 2017 . Net income available for common shareholders for the quarter endedMarch 31, 2018 includes$25.0 million , or$0.15 per diluted share, of net unrealized gains and losses on equity securities. Net income available for common shareholders for the quarter endedMarch 31, 2017 includes$19.6 million , or$0.12 per diluted share, of estimated business management incentive fee expense and was reduced by$9.9 million , or$0.06 per diluted share, for the amount by which the liquidation preference for HPT's 7.125% Series D cumulative redeemable preferred shares that were redeemed during the period exceeded the carrying value of those preferred shares as of the date of the redemption. The weighted average number of diluted common shares outstanding was 164.2 million and 164.1 million for the quarters endedMarch 31, 2018 and 2017, respectively. - Adjusted EBITDA: Adjusted EBITDA for the quarter ended
March 31, 2018 compared to the same period in 2017 increased 4.3% to$203.0 million . - Normalized FFO Available for Common Shareholders: Normalized
FFO available for common shareholders for the quarter ended
March 31, 2018 were$154.9 million , or$0.94 per diluted share, compared to Normalized FFO available for common shareholders of$148.8 million , or$0.91 per diluted share, for the quarter endedMarch 31, 2017 . Hotel RevPAR (comparable hotels): For the quarter endedMarch 31, 2018 compared to the same period in 2017 for HPT’s 303 hotels that were owned continuously sinceJanuary 1, 2017 : average daily rate, or ADR, increased 1.8% to$127.97 ; occupancy increased 0.1 percentage points to 71.6%; and revenue per available room, or RevPAR, increased 2.0% to$91.63 .Hotel RevPAR (all hotels): For the quarter endedMarch 31, 2018 compared to the same period in 2017 for HPT’s 323 hotels: ADR increased 1.8% to$127.89 ; occupancy decreased 0.9 percentage points to 70.3%; and RevPAR increased 0.6% to$89.91 .- Coverage of Minimum Returns and Rents: For the quarter ended
March 31, 2018 , 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 or rents due to HPT to (y) HPT’s minimum returns or rents due from hotels decreased to 0.82x from 0.88x for the quarter endedMarch 31, 2017 .
For the quarter endedMarch 31, 2018 , 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 1.56x from 1.20x for the quarter endedMarch 31, 2017 .
As ofMarch 31, 2018 , approximately 74% 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.
- Financing Activities: In
February 2018 , HPT issued$400.0 million principal amount of 4.375% senior notes due 2030 in an underwritten public offering. The proceeds from this offering of$386.5 million after discounts and offering expenses were used to repay amounts outstanding under HPT's revolving credit facility and for general business purposes.
Tenants and Managers: As of
Marriott Agreements : As ofMarch 31, 2018 , 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$69.2 million as ofMarch 31, 2018 (approximately$17.3 million per quarter). During the three months endedMarch 31, 2018 , HPT realized returns under itsMarriott No . 1 agreement of$16.1 million . Because there is no guarantee or security deposit for this agreement, the minimum returns HPT receives under this agreement are limited to available hotel cash flows after payment of operating expenses and funding of a FF&E reserve. HPT’sMarriott No . 234 agreement includes 68 hotels and requires annual minimum returns to HPT of$106.9 million as ofMarch 31, 2018 (approximately$26.7 million per quarter). During the three months endedMarch 31, 2018 , HPT realized returns under itsMarriott No . 234 agreement of$26.7 million . HPT’sMarriott No . 234 agreement is partially secured by a security deposit and a limited guarantee from Marriott; during the three months endedMarch 31, 2018 , HPT reduced the available security deposit by$0.9 million to cover shortfalls in hotel cash flows available to pay the minimum returns due to HPT during the period. AtMarch 31, 2018 , the available security deposit from Marriott for theMarriott No . 234 agreement was$25.1 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 if and 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 endedMarch 31, 2018 of$2.6 million was paid to HPT.InterContinental Agreement : As ofMarch 31, 2018 , 99 of HPT’s hotels were operated by subsidiaries of InterContinental Hotels Group, plc, or InterContinental, under one agreement requiring annual minimum returns and rents to HPT of$189.3 million (approximately$47.3 million per quarter). During the three months endedMarch 31, 2018 , HPT realized returns and rents under its InterContinental agreement of$47.3 million . During the three months endedMarch 31, 2018 , HPT reduced the available security deposit by$5.9 million to cover shortfalls in hotel cash flows available to pay the minimum returns and rents due to HPT for the period. As ofMarch 31, 2018 , the available InterContinental security deposit which HPT held to pay future payment shortfalls was$94.1 million .- Sonesta Agreement: As of
March 31, 2018 , 49 of HPT’s hotels were operated under a management agreement withSonesta International Hotels Corporation , or Sonesta, requiring annual minimum returns of$110.4 million as ofMarch 31, 2018 (approximately$27.6 million per quarter). During the three months endedMarch 31, 2018 , HPT realized returns under its Sonesta agreement of$12.0 million . Because there is no guarantee or security deposit for this agreement, the minimum returns HPT receives under this agreement are limited to available hotel cash flows after payment of operating expenses including management and related fees. - Wyndham Agreement: As of
March 31, 2018 , 22 of HPT’s hotels were operated under a management agreement with a hotel subsidiary ofWyndham Worldwide Corporation (NYSE: WYN), or Wyndham, requiring annual minimum returns of$27.6 million as ofMarch 31, 2018 (approximately$6.9 million per quarter). HPT also leases 48 vacation units in one of the hotels toWyndham Vacation Resorts , Inc., a different subsidiary of Wyndham, which requires annual minimum rent of$1.4 million (approximately$0.4 million per quarter). The guarantee provided by Wyndham with respect to the lease is unlimited. The guarantee provided by Wyndham with respect to the management agreement was limited to$35.7 million and was depleted during 2017. HPT's agreement with the Wyndham hotel subsidiary provides that if the hotels' cash flows available after payment of hotel operating expenses are less than the minimum returns due to HPT and if the guaranty is depleted, to avoid default Wyndham is required to pay HPT the greater of the available hotel cash flows after payment of hotel operating expenses and 85% of the contractual minimum amount due. During the three months endedMarch 31, 2018 , HPT realized returns under its Wyndham agreement of$5.9 million , which represents 85% of the minimum returns due for the period. The contractual rent due to HPT under the lease for Wyndham's 48 vacation units during the three months endedMarch 31, 2018 was paid to HPT. - Morgans Agreement: As of
March 31, 2018 , HPT leased one hotel to a subsidiary ofMorgans Hotel Group Co. , or Morgans, requiring annual minimum rent to HPT of$7.6 million as ofMarch 31, 2018 (approximately$1.9 million per quarter). During the three months endedMarch 31, 2018 , all contractual rent due to HPT under the Morgans lease was paid to HPT.
InDecember 2016 , HPT advised Morgans that the closing of its merger withSBE Entertainment Group, LLC , or SBE, without HPT's consent was in violation of the Morgans agreement, and HPT began a litigation inCalifornia for unlawful detainer against Morgans and SBE. While HPT pursued this litigation, it was engaged in discussions with Morgans and SBE regarding this hotel. OnMarch 14, 2018 , HPT entered into a settlement agreement with Morgans and SBE. Pursuant to that settlement agreement, onMay 8, 2018 , the Morgans lease was terminated and Morgans surrendered possession of the hotel to HPT. The contractual rent due to HPT under the Morgans lease throughMay 8, 2018 was paid to HPT. HPT rebranded this hotel to theRoyal Sonesta ® brand and added it to its management agreement with Sonesta.
- Hyatt Agreement: As of
March 31, 2018 , 22 of HPT’s hotels were operated under a management agreement with a subsidiary ofHyatt Hotels Corporation (NYSE: H), or Hyatt, requiring annual minimum returns of$22.0 million as ofMarch 31, 2018 (approximately$5.5 million per quarter). During the three months endedMarch 31, 2018 , HPT realized returns under its Hyatt agreement of$5.5 million . HPT’s Hyatt agreement is partially secured by a limited guarantee from Hyatt. During the three months endedMarch 31, 2018 , HPT replenished the available guarantee by$0.4 million from a share of hotel cash flows in excess of the minimum returns due to HPT. AtMarch 31, 2018 , there was$21.5 million remaining under Hyatt's guaranty. - Radisson Agreement: As of
March 31, 2018 , eight of HPT’s hotels were operated under a management agreement with a subsidiary ofRadisson Hotel Group (formerly Carlson Hotels Worldwide), or Radisson, requiring annual minimum returns of$12.9 million as ofMarch 31, 2018 (approximately$3.2 million per quarter). During the three months endedMarch 31, 2018 , HPT realized returns under its Radisson agreement of$3.2 million . HPT’s Radisson agreement is partially secured by a limited guarantee from Radisson. During the three months endedMarch 31, 2018 , HPT replenished the available guarantee by$0.9 million from a share of hotel cash flows in excess of the minimum returns due to HPT. AtMarch 31, 2018 , there was$34.3 million remaining under Radisson's guaranty. - Travel Center Agreements: As of
March 31, 2018 , HPT’s 199 travel centers located along theU.S. Interstate Highway system were leased toTravelCenters of America LLC (Nasdaq: TA), or TA, under five lease agreements, which require aggregate annual minimum rents of$285.5 million (approximately$71.4 million per quarter). As ofMarch 31, 2018 , all payments due to HPT from TA under these leases were current.
Conference Call:
At
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 first quarter conference call is strictly prohibited without the prior written consent of HPT.
Supplemental Data:
A copy of HPT’s First Quarter 2018 Supplemental Operating and Financial Data is available for download at HPT’s website, which is located at www.hptreit.com. HPT’s website is not incorporated as part of this press release.
Please see the pages attached hereto 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 and a reconciliation of those amounts to amounts determined in accordance with GAAP.
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
MARCH 31, 2018 , APPROXIMATELY 74% 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’ ABILITIES AND WILLINGNESS TO PAY. HPT CANNOT BE SURE OF THE FUTURE FINANCIAL PERFORMANCE OF HPT’S PROPERTIES AND 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 WHICH THEY GUARANTY OR SECURE, OR REGARDING HPT’S MANAGERS’, TENANTS’ OR GUARANTORS’ FUTURE ACTIONS IF AND WHEN THE GUARANTEES AND SECURITY DEPOSITS EXPIRE OR ARE DEPLETED OR THEIR ABILITIES OR WILLINGNESS TO PAY MINIMUM RETURNS AND RENTS OWED TO HPT. MOREOVER, THE SECURITY DEPOSITS HPT HOLDS ARE NOT SEGREGATED FROM HPT’S OTHER ASSETS AND THE APPLICATION OF SECURITY DEPOSITS TO COVER PAYMENT SHORTFALLS WILL RESULT IN HPT RECORDING INCOME, BUT WILL NOT RESULT IN HPT RECEIVING ADDITIONAL CASH. THE BALANCE OF HPT’S ANNUAL MINIMUM RETURNS AND RENTS AS OFMARCH 31, 2018 WAS NOT SECURED BY GUARANTEES OR SECURITY DEPOSITS. -
WYNDHAM'S
$35.7 MILLION LIMITED GUARANTY WAS DEPLETED DURING THE YEAR ENDEDDECEMBER 31, 2017 . HPT DOES NOT HOLD A SECURITY DEPOSIT WITH RESPECT TO AMOUNTS DUE UNDER THE WYNDHAM AGREEMENT. WYNDHAM HAS PAID 85% OF THE MINIMUM RETURNS DUE TO HPT FOR THE THREE MONTHS ENDEDMARCH 31, 2018 . HPT CAN PROVIDE NO ASSURANCE AS TO WHETHER WYNDHAM WILL CONTINUE TO PAY AT LEAST THE GREATER OF AVAILABLE HOTEL CASH FLOWS AFTER PAYMENT OF HOTEL OPERATING EXPENSES AND 85% OF THE MINIMUM RETURNS DUE TO HPT OR IF WYNDHAM WILL DEFAULT ON ITS PAYMENTS.
- HPT HAS NO GUARANTEES OR SECURITY DEPOSITS FOR THE MINIMUM RETURNS DUE TO HPT FROM HPT'S MARRIOTT NO. 1 OR HPT'S SONESTA HOTEL AGREEMENTS. ACCORDINGLY, WHEN HPT RECEIVES THE CONTRACTUAL AMOUNTS DUE TO HPT UNDER THESE CONTRACTS, SUCH AMOUNTS MAY BE LESS THAN THE MINIMUM RETURNS STATED IN THOSE MANAGEMENT CONTRACTS. AND
-
MR.
MURRAY STATES IN THIS PRESS RELEASE THAT HPT'S COMPARABLE HOTEL REVPAR GREW DURING THE FIRST QUARTER OF 2018 COMPARED WITH THE PRIOR YEAR PERIOD, THAT TA'S PROPERTY RESULTS WERE IMPROVED DURING THE FIRST QUARTER AND THAT COVERAGE OF HPT'S MINIMUM RENTS WAS 1.56X. THESE STATEMENTS MAY IMPLY HOTEL REVPAR MAY CONTINUE TO GROW, TA'S PROPERTY RESULTS WILL CONTINUE TO IMPROVE OR COVERAGE OF MINIMUM RETURNS AND RENTS WILL REMAIN ABOVE 1.0X FOR HPT'S TRAVEL CENTERS. IN FACT, COVERAGE OF HPT'S MINIMUM RETURNS AND RENTS MAY DECLINE IN FUTURE PERIODS IF REVPAR AT HPT'S HOTELS OR TA'S OPERATING RESULTS DECLINE. MOREOVER, TA'S RESULTS INCLUDED CERTAIN TAX CREDITS RELATED TO 2017 AND OTHER UNIQUE ITEMS THAT MAY NOT OCCUR AGAIN. -
MR. MURRAY NOTES HPT'S CAUTIOUS OPTIMISM THAT RECENT HOTEL RENOVATIONS
AT CERTAIN OF HPT'S COMPARABLE HOTELS AND THE EXPECTED POSITIVE
ECONOMIC TRENDS IN
THE UNITED STATES WILL POSITIVELY IMPACT HPT'S PERFORMANCE FOR THE BALANCE OF 2018. HOWEVER, THESE RENOVATIONS MAY FAIL TO HAVE THE POSITIVE IMPACT HPT EXPECTS OR ANY POSITIVE IMPACT THEY MAY HAVE MAY BE OFFSET BY OTHER NEGATIVE FACTORS. FURTHER, THE EXPECTED POSITIVE ECONOMIC TRENDS INTHE UNITED STATES MAY NOT OCCUR.
THE INFORMATION CONTAINED IN HPT’S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, OR THE
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.
(end)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (amounts in thousands, except share data) (Unaudited) | |||||||||||
|
Three Months Ended | |||||||||||
| 2018 | 2017 | ||||||||||
| Revenues: | |||||||||||
| Hotel operating revenues (1) | $ | 445,276 | $ | 408,236 | |||||||
| Rental income (2) | 81,993 | 79,139 | |||||||||
| FF&E reserve income (3) | 1,364 | 1,227 | |||||||||
| Total revenues | 528,633 | 488,602 | |||||||||
| Expenses: | |||||||||||
| Hotel operating expenses (1) | 314,982 | 282,723 | |||||||||
| Depreciation and amortization | 99,617 | 93,451 | |||||||||
| General and administrative (4) | 11,734 | 32,346 | |||||||||
| Total expenses | 426,333 | 408,520 | |||||||||
| Operating income | 102,300 | 80,082 | |||||||||
| Dividend income | 626 | 626 | |||||||||
| Unrealized gains and losses on equity securities, net (5) | 24,955 | — | |||||||||
| Interest income | 292 | 257 | |||||||||
|
Interest expense (including amortization of debt issuance costs and
debt discounts and premiums of | (47,540 | ) | (43,566 | ) | |||||||
| Income before income taxes and equity in earnings of an investee | 80,633 | 37,399 | |||||||||
| Income tax expense | (471 | ) | (356 | ) | |||||||
| Equity in earnings of an investee | 44 | 128 | |||||||||
| Net income | 80,206 | 37,171 | |||||||||
| Preferred distributions | — | (1,435 | ) | ||||||||
| Excess of liquidation preference over carrying value of preferred shares redeemed (6) | — | (9,893 | ) | ||||||||
| Net income available for common shareholders | $ | 80,206 | $ | 25,843 | |||||||
| Weighted average common shares outstanding (basic) | 164,199 | 164,120 | |||||||||
| Weighted average common shares outstanding (diluted) | 164,219 | 164,149 | |||||||||
| Net income available for common shareholders per common share (basic and diluted) | $ | 0.49 | $ | 0.16 | |||||||
See Notes on pages 10 and 11
RECONCILIATIONS OF FUNDS FROM OPERATIONS, NORMALIZED FUNDS FROM OPERATIONS, EBITDA AND ADJUSTED EBITDA (amounts in thousands, except share data) (Unaudited) | |||||||||||
|
Three Months Ended | |||||||||||
| 2018 | 2017 | ||||||||||
Calculation of Funds from Operations (FFO) and Normalized FFO
available for common | |||||||||||
| Net income available for common shareholders | $ | 80,206 | $ | 25,843 | |||||||
| Add: Depreciation and amortization | 99,617 | 93,451 | |||||||||
| FFO available for common shareholders | 179,823 | 119,294 | |||||||||
| Add (less): Estimated business management incentive fees (4) | — | 19,620 | |||||||||
| Excess of liquidation preference over carrying value of preferred shares redeemed (6) | — | 9,893 | |||||||||
| Unrealized gains and losses on equity securities, net (5) | (24,955 | ) | — | ||||||||
| Normalized FFO available for common shareholders | $ | 154,868 | $ | 148,807 | |||||||
| Weighted average common shares outstanding (basic) | 164,199 | 164,120 | |||||||||
| Weighted average common shares outstanding (diluted) | 164,219 | 164,149 | |||||||||
| Basic and diluted per common share amounts: | |||||||||||
| FFO available for common shareholders | $ | 1.10 | $ | 0.73 | |||||||
| Normalized FFO available for common shareholders | $ | 0.94 | $ | 0.91 | |||||||
| Distributions declared per share | $ | 0.52 | $ | 0.51 | |||||||
|
Three Months Ended | |||||||||||
| 2018 | 2017 | ||||||||||
| Calculation of EBITDA and Adjusted EBITDA: (8) | |||||||||||
| Net income | $ | 80,206 | $ | 37,171 | |||||||
| Add: Interest expense | 47,540 | 43,566 | |||||||||
| Income tax expense | 471 | 356 | |||||||||
| Depreciation and amortization | 99,617 | 93,451 | |||||||||
| EBITDA | 227,834 | 174,544 | |||||||||
| Add (less): General and administrative expense paid in common shares (9) | 77 | 412 | |||||||||
| Estimated business management incentive fees (4) | — | 19,620 | |||||||||
| Unrealized gains and losses on equity securities, net (5) | (24,955 | ) | — | ||||||||
| Adjusted EBITDA | $ | 202,956 | $ | 194,576 | |||||||
See Notes on pages 10 and 11
| (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 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 with | |
| (5) |
Unrealized gains and losses on equity securities, net represent the
adjustment required to adjust the carrying value of HPT's
investments in | |
| (6) |
In | |
| (7) |
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 | |
| (8) | 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 be payable when all contingencies for determining such fees are known 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 alternatives to net income, net income available for common shareholders or operating income as indicators of operating performance or as measures 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. | |
| (9) | Amounts represent the equity compensation for HPT’s trustees, its officers and certain other employees of HPT’s manager. |
CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share data) (Unaudited) | ||||||||||||
| 2018 | 2017 | |||||||||||
| ASSETS | ||||||||||||
| Real estate properties: | ||||||||||||
| Land | $ | 1,668,664 | $ | 1,668,797 | ||||||||
| Buildings, improvements and equipment | 7,794,387 | 7,758,862 | ||||||||||
| Total real estate properties, gross | 9,463,051 | 9,427,659 | ||||||||||
| Accumulated depreciation | (2,859,877 | ) | (2,784,478 | ) | ||||||||
| Total real estate properties, net | 6,603,174 | 6,643,181 | ||||||||||
| Cash and cash equivalents | 16,832 | 24,139 | ||||||||||
| Restricted cash | 59,533 | 73,357 | ||||||||||
| Due from related persons | 82,213 | 78,513 | ||||||||||
| Other assets, net | 359,122 | 331,195 | ||||||||||
| Total assets | $ | 7,120,874 | $ | 7,150,385 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Unsecured revolving credit facility | $ | 86,000 | $ | 398,000 | ||||||||
| Unsecured term loan, net | 399,252 | 399,086 | ||||||||||
| Senior unsecured notes, net | 3,592,291 | 3,203,962 | ||||||||||
| Security deposits | 119,356 | 126,078 | ||||||||||
| Accounts payable and other liabilities | 164,971 | 184,788 | ||||||||||
| Due to related persons | 9,030 | 83,049 | ||||||||||
| Total liabilities | 4,370,900 | 4,394,963 | ||||||||||
| Commitments and contingencies | ||||||||||||
| Shareholders’ equity: | ||||||||||||
|
Common shares of beneficial interest, | 1,643 | 1,643 | ||||||||||
| Additional paid in capital | 4,542,206 | 4,542,307 | ||||||||||
| Cumulative net income | 3,468,938 | 3,310,017 | ||||||||||
| Cumulative other comprehensive income | 550 | 79,358 | ||||||||||
| Cumulative preferred distributions | (343,412 | ) | (343,412 | ) | ||||||||
| Cumulative common distributions | (4,919,951 | ) | (4,834,491 | ) | ||||||||
| Total shareholders’ equity | 2,749,974 | 2,755,422 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 7,120,874 | $ | 7,150,385 | ||||||||
A
No shareholder,
Trustee or officer is personally liable for any act or obligation of the
Trust.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180509005343/en/
Senior
Director, Investor Relations
Source: