Nov 06, 2018
Third Quarter Net Income Available for Common Shareholders of
Third Quarter Normalized FFO Available for Common Shareholders of
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| ($ in thousands, except per share and RevPAR data) | |||||||||||||||||||
| Net income available for common shareholders | $ | 117,099 | $ | 85,728 | $ | 294,594 | $ | 172,270 | |||||||||||
| Net income available for common shareholders per share | $ | 0.71 | $ | 0.52 | $ | 1.79 | $ | 1.05 | |||||||||||
| Adjusted EBITDA (1) | $ | 225,676 | $ | 223,469 | $ | 655,530 | $ | 638,342 | |||||||||||
| Normalized FFO available for common shareholders (1) | $ | 174,653 | $ | 175,458 | $ | 505,714 | $ | 497,869 | |||||||||||
| Normalized FFO available for common shareholders per share (1) | $ | 1.06 | $ | 1.07 | $ | 3.08 | $ | 3.03 | |||||||||||
Portfolio Performance | |||||||||||||||||||
| Comparable hotel RevPAR | $ | 101.75 | $ | 102.28 | $ | 99.08 | $ | 98.07 | |||||||||||
| Change in comparable hotel RevPAR | (0.5 | %) | — | 1.0 | % | — | |||||||||||||
| RevPAR (all hotels) | $ | 100.29 | $ | 102.07 | $ | 98.00 | $ | 98.45 | |||||||||||
| Change in RevPAR (all hotels) | (1.7 | %) | — | (0.5 | %) | — | |||||||||||||
| Coverage of HPT’s minimum returns and rents for hotels | 1.08x | 1.18x | 1.04x | 1.11x | |||||||||||||||
| Coverage of HPT's minimum rents for travel centers | 1.68x | 1.73x | 1.64x | 1.51x | |||||||||||||||
(1) |
Reconciliations of net income determined in accordance with | |
“HPT’s third quarter 2018 comparable hotel RevPAR declined 0.5% compared
to the prior year period due to occupancy declines associated with
renovations, competition from supply growth and the negative impact from
hurricane related activity. Excluding our recently acquired hotels and
the sixteen comparable hotels that underwent renovation for all or part
of the third quarter 2018, RevPAR increased 0.4%. Additional returns for
the third quarter 2018, in excess of our minimum returns, totaled
Our TA properties' total gross margin increased by
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, 2018 was$117.1 million , or$0.71 per diluted share, compared to net income available for common shareholders of$85.7 million , or$0.52 per diluted share, for the quarter endedSeptember 30, 2017 . Net income available for common shareholders for the quarter endedSeptember 30, 2018 includes$43.5 million , or$0.26 per diluted share, of unrealized gains on equity securities. Net income available for common shareholders for the quarter endedSeptember 30, 2017 includes a$9.3 million , or$0.06 per diluted share, gain on sale of real estate. The weighted average number of diluted common shares outstanding was 164.3 million and 164.2 million for the quarters endedSeptember 30, 2018 and 2017, respectively.
Net income available for common shareholders for the nine months endedSeptember 30, 2018 was$294.6 million , or$1.79 per diluted share, compared to net income available for common shareholders of$172.3 million , or$1.05 per diluted share, for the nine months endedSeptember 30, 2017 . Net income available for common shareholders for the nine months endedSeptember 30, 2018 includes$89.3 million , or$0.54 per diluted share, of unrealized gains on equity securities. Net income available for common shareholders for the nine months endedSeptember 30, 2017 includes$38.2 million , or$0.23 per diluted share, of estimated business management incentive fee expense and a$9.3 million , or$0.06 per diluted share, gain on sale of real estate 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 for each of the nine months endedSeptember 30, 2018 and 2017.
- Adjusted EBITDA: Adjusted EBITDA for the quarter ended
September 30, 2018 compared to the same period in 2017 increased 1.0% to$225.7 million .
Adjusted EBITDA for the nine months endedSeptember 30, 2018 compared to the same period in 2017 increased 2.7% to$655.5 million .
- Normalized FFO Available for Common Shareholders: Normalized
FFO available for common shareholders for the quarter ended
September 30, 2018 were$174.7 million , or$1.06 per diluted share, compared to Normalized FFO available for common shareholders of$175.5 million , or$1.07 per diluted share, for the quarter endedSeptember 30, 2017 .
Normalized FFO available for common shareholders for the nine months endedSeptember 30, 2018 were$505.7 million , or$3.08 per diluted share, compared to Normalized FFO available for common shareholders of$497.9 million , or$3.03 per diluted share, for the nine months endedSeptember 30, 2017 .
Hotel RevPAR (comparable hotels): For the quarter endedSeptember 30, 2018 compared to the same period in 2017 for HPT’s 307 hotels that were owned continuously sinceJuly 1, 2017 : average daily rate, or ADR, increased 1.8% to$130.79 ; occupancy decreased 1.8 percentage points to 77.8%; and revenue per available room, or RevPAR, decreased 0.5% to$101.75 .
For the nine months endedSeptember 30, 2018 compared to the same period in 2017 for HPT’s 303 hotels that were owned continuously sinceJanuary 1, 2017 : ADR increased 2.0% to$129.52 ; occupancy decreased 0.7 percentage points to 76.5%; and RevPAR increased 1.0% to$99.08 .
Hotel RevPAR (all hotels): For the quarter endedSeptember 30, 2018 compared to the same period in 2017 for HPT’s 325 hotels that were owned as ofSeptember 30, 2018 : ADR increased 1.5% to$130.42 ; occupancy decreased 2.5 percentage points to 76.9%; and RevPAR decreased 1.7% to$100.29 .
For the nine months endedSeptember 30, 2018 compared to the same period in 2017 for HPT’s 325 hotels that were owned as ofSeptember 30, 2018 : ADR increased 1.9% to$130.49 ; occupancy decreased 1.8 percentage points to 75.1%; and RevPAR decreased 0.5% to$98.00 .
- Coverage of Minimum Returns and Rents: For the quarter ended
September 30, 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 1.08x from 1.18x for the quarter endedSeptember 30, 2017 .
For the nine months endedSeptember 30, 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 1.04x from 1.11x for the nine months endedSeptember 30, 2017 .
For the quarter endedSeptember 30, 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 decreased to 1.68x from 1.73x for the quarter endedSeptember 30, 2017 .
For the nine months endedSeptember 30, 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 1.64x from 1.51x for the nine months endedSeptember 30, 2017 .
As ofSeptember 30, 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.
- Recent Property Acquisition Activities: In
October 2018 , HPT acquired a hotel with 164 suites located inScottsdale, AZ for a purchase price of$35.9 million , excluding acquisition related costs. HPT rebranded this hotel to the Sonesta Suites® brand and added it to its management agreement withSonesta International Hotels Corporation , or Sonesta.
Tenants and Managers: As of
Marriott Agreements : As ofSeptember 30, 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$69.4 million as ofSeptember 30, 2018 (approximately$17.4 million per quarter). During the three months endedSeptember 30, 2018 , HPT realized returns under itsMarriott No . 1 agreement of$19.9 million , of which$2.6 million represents HPT's share of hotel cash flows in excess of the minimum returns due to HPT for the period. 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$107.1 million as ofSeptember 30, 2018 (approximately$26.8 million per quarter). During the three months endedSeptember 30, 2018 , HPT realized returns under itsMarriott No . 234 agreement of$26.8 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, 2018 , the available security deposit was replenished by$2.7 million from a share of hotel cash flows in excess of the minimum returns due to HPT during the period. As ofSeptember 30, 2018 , the available security deposit from Marriott for theMarriott No . 234 agreement was$33.7 million and there was$30.7 million available 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 endedSeptember 30, 2018 of$2.6 million was paid to HPT.InterContinental Agreement : As ofSeptember 30, 2018 , 100 of HPT’s hotels were operated by subsidiaries of InterContinental Hotels Group, plc (LON: IHG; NYSE: IHG (ADRs)), or InterContinental, under one agreement requiring annual minimum returns and rents to HPT of$190.5 million as ofSeptember 30, 2018 (approximately$47.6 million per quarter). During the three months endedSeptember 30, 2018 , HPT realized returns and rents under its InterContinental agreement of$54.3 million , of which$6.7 million represents HPT's share of hotel cash flows in excess of the minimum returns due to HPT for the period. HPT's InterContinental agreement is partially secured by a security deposit. As ofSeptember 30, 2018 , the available InterContinental security deposit which HPT held to pay future payment shortfalls remained at the contractually capped amount of$100.0 million .- Sonesta Agreement: As of
September 30, 2018 , 50 of HPT’s hotels were operated under a management agreement with Sonesta, requiring annual minimum returns of$123.2 million as ofSeptember 30, 2018 (approximately$30.8 million per quarter). During the three months endedSeptember 30, 2018 , HPT realized returns under its Sonesta agreement of$21.7 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
September 30, 2018 , 22 of HPT’s hotels were operated under a management agreement with a subsidiary ofWyndham Hotels & Resorts, Inc. (NYSE: WH), or Wyndham, requiring annual minimum returns of$27.7 million as ofSeptember 30, 2018 (approximately$6.9 million per quarter). 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 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 endedSeptember 30, 2018 , HPT realized returns under its Wyndham agreement of$5.9 million , which represents 85% of the minimum returns due for the period. HPT also leases 48 vacation units in one of the hotels to a subsidiary ofWyndham Destinations, Inc. (NYSE: WYND), or Destinations, which requires annual minimum rent of$1.4 million (approximately$0.4 million per quarter). The guarantee provided by Destinations with respect to the lease is unlimited. The contractual rent due to HPT under the lease for Destinations' 48 vacation units during the three months endedSeptember 30, 2018 was paid to HPT.
- Hyatt Agreement: As of
September 30, 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 ofSeptember 30, 2018 (approximately$5.5 million per quarter). During the three months endedSeptember 30, 2018 , HPT realized returns under its Hyatt agreement of$5.5 million . HPT’s Hyatt agreement is partially secured by a limited guaranty from Hyatt. During the three months endedSeptember 30, 2018 , the hotels under this agreement generated cash flows that were less than the minimum returns due to HPT, and Hyatt made$0.3 million of guaranty payments to cover the shortfall. As ofSeptember 30, 2018 , there was$23.5 million available under Hyatt's guaranty. - Radisson Agreement: As of
September 30, 2018 , nine of HPT’s hotels were operated under a management agreement with a subsidiary ofRadisson Hospitality, Inc. , or Radisson, requiring annual minimum returns of$18.9 million as ofSeptember 30, 2018 (approximately$4.7 million per quarter). During the three months endedSeptember 30, 2018 , HPT realized returns under its Radisson agreement of$4.7 million . HPT’s Radisson agreement is partially secured by a limited guaranty from Radisson. During the three months endedSeptember 30, 2018 , the available guaranty was replenished by$1.6 million from a share of hotel cash flows in excess of the minimum returns due to HPT during the period. As ofSeptember 30, 2018 , there was$43.6 million available under Radisson's guaranty. - Travel Center Agreements: As of
September 30, 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$288.2 million (approximately$72.1 million per quarter). As ofSeptember 30, 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 third quarter conference call is strictly prohibited without the prior written consent of HPT.
Supplemental Data:
A copy of HPT’s Third 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:
-
MR.
MURRAY STATES IN THIS PRESS RELEASE THAT HPT'S COMPARABLE HOTEL REVPAR, EXCLUDING RECENTLY ACQUIRED HOTELS AND HOTELS UNDERGOING RENOVATIONS, GREW DURING THE THIRD QUARTER OF 2018 COMPARED WITH THE PRIOR YEAR PERIOD, THAT COVERAGE OF HPT'S HOTEL MINIMUM RETURNS AND RENTS WAS 1.08TIMES , THAT TA PROPERTIES' GROSS MARGIN IMPROVED DURING THE THIRD QUARTER OF 2018 COMPARED WITH THE PRIOR YEAR PERIOD AND THAT COVERAGE OF HPT'S TRAVEL CENTER MINIMUM RENTS WAS 1.68TIMES . THESE STATEMENTS MAY IMPLY HOTEL REVPAR AT HPT'S COMPARABLE HOTELS THAT ARE NOT UNDER RENOVATION MAY CONTINUE TO GROW, TA PROPERTIES' GROSS MARGIN WILL CONTINUE TO INCREASE OR COVERAGE OF MINIMUM RETURNS AND RENTS WILL REMAIN ABOVE 1.0 TIMES FOR HPT'S HOTELS OR TRAVEL CENTERS. IN FACT, HOTEL REVPAR, EXCLUDING SUCH ITEMS, MAY NOT CONTINUE TO GROW AND MAY DECLINE. IN ADDITION, TA'S IMPROVED PROPERTY RESULTSMAY NOT CONTINUE AND ITS OPERATING RESULTS MAY DECLINE. IN ADDITION, COVERAGE OF HPT'S MINIMUM RETURNS AND RENTS MAY DECLINE IN FUTURE PERIODS.
-
AS OF
SEPTEMBER 30, 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 OFSEPTEMBER 30, 2018 WAS NOT SECURED BY GUARANTEES OR SECURITY DEPOSITS. -
WYNDHAM'S
$35.7 MILLION LIMITED GUARANTY WAS DEPLETED DURING THE YEAR ENDEDDECEMBER 31, 2017 AND CONTINUES TO BE DEPLETED. 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 EACH OF THE THREE AND NINE MONTHS ENDEDSEPTEMBER 30, 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
SONESTA AGREEMENTS . ACCORDINGLY, HPT MAY RECEIVE AMOUNTS THAT ARE LESS THAN THE CONTRACTUAL MINIMUM RETURNS STATED IN THESE AGREEMENTS.
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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
(amounts in thousands, except share data) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended |
Nine Months Ended | |||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Hotel operating revenues (1) | $ | 521,250 | $ | 495,550 | $ | 1,496,125 | $ | 1,392,995 | ||||||||||||
| Rental income (2) | 80,690 | 80,896 | 243,701 | 240,274 | ||||||||||||||||
| FF&E reserve income (3) | 1,213 | 1,142 | 3,911 | 3,524 | ||||||||||||||||
| Total revenues | 603,153 | 577,588 |
| 1,743,737 | 1,636,793 | |||||||||||||||
| Expenses: | ||||||||||||||||||||
| Hotel operating expenses (1) | 366,994 | 343,274 | 1,056,057 | 965,546 | ||||||||||||||||
| Depreciation and amortization | 101,007 | 98,205 | 300,308 | 286,811 | ||||||||||||||||
General and administrative (4) | 13,425 | 13,404 | 38,280 | 76,097 | ||||||||||||||||
Total expenses | 481,426 | 454,883 | 1,394,645 | 1,328,454 | ||||||||||||||||
| Gain on sale of real estate (5) | — | 9,348 | — | 9,348 | ||||||||||||||||
| Dividend income | 626 | 626 | 1,878 | 1,878 | ||||||||||||||||
| Unrealized gains on equity securities (6) | 43,453 | — | 89,348 | — | ||||||||||||||||
| Interest income | 478 | 211 | 1,093 | 590 | ||||||||||||||||
|
Interest expense (including amortization of debt issuance costs and
debt discounts and premiums of | (49,308 | ) | (46,574 | ) | (145,589 | ) | (135,329 | ) | ||||||||||||
| Loss on early extinguishment of debt (7) | — | — | (160 | ) | — | |||||||||||||||
| Income before income taxes and equity in earnings of an investee | 116,976 | 86,316 | 295,662 | 184,826 | ||||||||||||||||
| Income tax expense | (707 | ) | (619 | ) | (1,949 | ) | (1,761 | ) | ||||||||||||
| Equity in earnings of an investee | 830 | 31 | 881 | 533 | ||||||||||||||||
| Net income | 117,099 | 85,728 | 294,594 | 183,598 | ||||||||||||||||
| Preferred distributions | — | — | — | (1,435 | ) | |||||||||||||||
Excess of liquidation preference over carrying value of preferred shares redeemed (8) | — | — | — | (9,893 | ) | |||||||||||||||
| Net income available for common shareholders | $ | 117,099 | $ | 85,728 | $ | 294,594 | $ | 172,270 | ||||||||||||
| Weighted average common shares outstanding (basic) | 164,232 | 164,149 | 164,212 | 164,131 | ||||||||||||||||
| Weighted average common shares outstanding (diluted) | 164,274 | 164,188 | 164,242 | 164,168 | ||||||||||||||||
| Net income available for common shareholders per common share (basic and diluted) | $ | 0.71 | $ | 0.52 | $ | 1.79 | $ | 1.05 | ||||||||||||
RECONCILIATIONS OF FUNDS FROM OPERATIONS, | |||||||||||||||||||||||
NORMALIZED FUNDS FROM OPERATIONS, EBITDA AND ADJUSTED EBITDA | |||||||||||||||||||||||
(amounts in thousands, except share data) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| Calculation of FFO and Normalized FFO available for common shareholders: (9) | |||||||||||||||||||||||
| Net income available for common shareholders | $ | 117,099 | $ | 85,728 | $ | 294,594 | $ | 172,270 | |||||||||||||||
Add (Less): | Depreciation and amortization | 101,007 | 98,205 | 300,308 | 286,811 | ||||||||||||||||||
| Gain on sale of real estate (5) | — | (9,348 | ) | — | (9,348 | ) | |||||||||||||||||
FFO available for common shareholders | 218,106 | 174,585 | 594,902 | 449,733 | |||||||||||||||||||
Add (Less): | Estimated business management incentive fees (4) | — | 873 | — | 38,243 | ||||||||||||||||||
| Loss on early extinguishment of debt (7) | — | — | 160 | — | |||||||||||||||||||
| Excess of liquidation preference over carrying value of preferred shares redeemed (8) | — | — | — | 9,893 | |||||||||||||||||||
| Unrealized gains on equity securities (6) | (43,453 | ) | — | (89,348 | ) | — | |||||||||||||||||
| Normalized FFO available for common shareholders | $ | 174,653 | $ | 175,458 | $ | 505,714 | $ | 497,869 | |||||||||||||||
| Weighted average common shares outstanding (basic) | 164,232 | 164,149 | 164,212 | 164,131 | |||||||||||||||||||
| Weighted average common shares outstanding (diluted) | 164,274 | 164,188 | 164,242 | 164,168 | |||||||||||||||||||
| Basic and diluted per common share amounts: | |||||||||||||||||||||||
| FFO available for common shareholders | $ | 1.33 | $ | 1.06 | $ | 3.62 | $ | 2.74 | |||||||||||||||
| Normalized FFO available for common shareholders | $ | 1.06 | $ | 1.07 | $ | 3.08 | $ | 3.03 | |||||||||||||||
| Distributions declared per share | $ | 0.53 | $ | 0.52 | $ | 1.58 | $ | 1.55 | |||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Calculation of EBITDA and Adjusted EBITDA: (10) | |||||||||||||||||||||||
Net income | $ | 117,099 | $ | 85,728 | $ | 294,594 | $ | 183,598 | |||||||||||||||
Add: | Interest expense | 49,308 | 46,574 | 145,589 | 135,329 | ||||||||||||||||||
| Income tax expense | 707 | 619 | 1,949 | 1,761 | |||||||||||||||||||
| Depreciation and amortization | 101,007 | 98,205 | 300,308 | 286,811 | |||||||||||||||||||
EBITDA | 268,121 | 231,126 | 742,440 | 607,499 | |||||||||||||||||||
Add (Less): | General and administrative expense paid in common shares (11) | 1,008 | 818 | 2,278 | 1,948 | ||||||||||||||||||
| Estimated business management incentive fees (4) | — | 873 | — | 38,243 | |||||||||||||||||||
| Loss on early extinguishment of debt (7) | — | — | 160 | — | |||||||||||||||||||
| Gain on sale of real estate (5) | — | (9,348 | ) | — | (9,348 | ) | |||||||||||||||||
| Unrealized gains on equity securities (6) | (43,453 | ) | — | (89,348 | ) | — | |||||||||||||||||
Adjusted EBITDA | $ | 225,676 | $ | 223,469 | $ | 655,530 | $ | 638,342 | |||||||||||||||
| (1) |
As of | ||
| (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) |
HPT recorded a | ||
| (6) |
Unrealized gains on equity securities represent the adjustment
required to adjust the carrying value of HPT's investments in | ||
| (7) |
HPT recorded a loss of | ||
| (8) |
In | ||
| (9) |
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 | ||
| (10) | 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 and net income available for common shareholders. 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 or net income available for common shareholders as indicators of operating performance or as measures of HPT’s liquidity. These measures should be considered in conjunction with net income and net income available for common shareholders 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. | ||
| (11) | 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 | $ | 1,673,113 | $ | 1,668,797 | ||||||
| Buildings, improvements and equipment | 7,964,429 | 7,758,862 | ||||||||
| Total real estate properties, gross | 9,637,542 | 9,427,659 | ||||||||
| Accumulated depreciation | (2,998,741 | ) | (2,784,478 | ) | ||||||
| Total real estate properties, net | 6,638,801 | 6,643,181 | ||||||||
| Cash and cash equivalents | 19,849 | 24,139 | ||||||||
| Restricted cash | 65,644 | 73,357 | ||||||||
| Due from related persons | 88,164 | 78,513 | ||||||||
| Other assets, net | 439,095 | 331,195 | ||||||||
| Total assets | $ | 7,251,553 | $ | 7,150,385 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Unsecured revolving credit facility | $ | 143,000 | $ | 398,000 | ||||||
| Unsecured term loan, net | 397,143 | 399,086 | ||||||||
| Senior unsecured notes, net | 3,596,275 | 3,203,962 | ||||||||
| Security deposits | 133,770 | 126,078 | ||||||||
| Accounts payable and other liabilities | 178,321 | 184,788 | ||||||||
| Due to related persons | 10,473 | 83,049 | ||||||||
| Total liabilities | 4,458,982 | 4,394,963 | ||||||||
| Commitments and contingencies | ||||||||||
| Shareholders’ equity: | ||||||||||
|
Common shares of beneficial interest, | 1,644 | 1,643 | ||||||||
| Additional paid in capital | 4,544,449 | 4,542,307 | ||||||||
| Cumulative net income | 3,684,167 | 3,310,017 | ||||||||
| Cumulative other comprehensive income (loss) | (108 | ) | 79,358 | |||||||
| Cumulative preferred distributions | (343,412 | ) | (343,412 | ) | ||||||
| Cumulative common distributions | (5,094,169 | ) | (4,834,491 | ) | ||||||
| Total shareholders’ equity | 2,792,571 | 2,755,422 | ||||||||
| Total liabilities and shareholders’ equity | $ | 7,251,553 | $ | 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/20181106005199/en/
Senior
Director, Investor Relations
Source: