NEWTON, Mass.--(BUSINESS WIRE)--Nov. 4, 2002 - Hospitality Properties Trust (NYSE:HPT) today announced its results of operations for the periods ended September 30, 2002:
(amounts in thousands, except per share data)
Quarter Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Net income before
extraordinary item $ 36,245 $ 33,274 $105,066 $ 94,790
Net income $ 34,645 $ 33,274 $103,466 $ 94,790
Net income available
for common
shareholders $ 32,864 $ 31,493 $ 98,122 $ 89,446
Funds from operations
("FFO") $ 63,248 $ 58,871 $185,130 $172,262
Cash available for
distribution ("CAD") $ 53,513 $ 49,309 $157,149 $143,080
Common distributions
declared $ 45,034 $ 44,386 $134,470 $124,060
Weighted average
common shares
outstanding 62,547 60,344 62,535 57,796
Per common share
amounts:
Net income available
for common
shareholders $ 0.53 $ 0.52 $ 1.57 $ 1.55
Funds from
operations ("FFO") $ 1.01 $ 0.98 $ 2.96 $ 2.98
Cash available for
distribution
("CAD") $ 0.86 $ 0.82 $ 2.51 $ 2.48
Common distributions $ 0.72 $ 0.71 $ 2.15 $ 2.12
Hospitality Properties Trust is a real estate investment trust, or REIT, headquartered in Newton, Massachusetts, which invests in hotels. HPT currently has investments of approximately $2.7 billion in 251 hotels located in 37 states.
Hospitality Properties Trust
CONSOLIDATED STATEMENT OF INCOME, FUNDS FROM OPERATIONS
AND CASH AVAILABLE FOR DISTRIBUTION
(amounts in thousands, except per share data)
Quarter Ended Nine Months Ended
Sept. 30, Sept. 30,
2002 2001 2002 2001
Revenues:
Rental income $62,544 $58,979 $182,973 $178,495
Hotel operating
revenues (1) 21,469 17,861 59,918 20,644
FF&E reserve
income (2) 5,773 6,126 16,708 19,680
Interest income 35 222 271 681
Total revenues 89,821 83,188 259,870 219,500
Expenses:
Hotel operating
expenses (1) 14,207 12,074 38,605 13,929
Interest (including
amortization of
deferred financing
costs of $683, $605,
$2,006 and $1,812,
respectively) 10,892 10,542 32,005 31,248
Depreciation and
amortization 24,258 23,396 72,178 68,025
General and
administrative 4,219 3,902 12,016 11,508
Total expenses 53,576 49,914 154,804 124,710
Net income before
extraordinary item 36,245 33,274 105,066 94,790
Extraordinary item -
loss on early
extinguishment
of debt 1,600 -- 1,600 --
Net income 34,645 33,274 103,466 94,790
Preferred
distributions 1,781 1,781 5,344 5,344
Net income
available for
common
shareholders $32,864 $31,493 $98,122 $89,446
Net income
available for
common
shareholders $32,864 $31,493 $98,122 $89,446
Add: FF&E deposits
not in net
income (2) 3,935 3,552 11,333 11,378
Depreciation
and
amortization 24,258 23,396 72,178 68,025
Deferred
percentage
rent (3) 591 430 1,897 3,413
Extraordinary
item 1,600 -- 1,600 --
Funds from
operations ("FFO") $63,248 $58,871 $185,130 $172,262
FFO $63,248 $58,871 $185,130 $172,262
Add: Non-cash
expenses 1,084 998 3,168 2,894
Less: FF&E reserve
income (1) (2) 6,884 7,008 19,816 20,698
FF&E deposits
not in net
income (2) 3,935 3,552 11,333 11,378
Cash available for
distribution ("CAD") $53,513 $49,309 $157,149 $143,080
Weighted average
common shares
outstanding 62,547 60,344 62,535 57,796
Per common share
amounts:
Net income available
for common
shareholders $0.53 $0.52 $1.57 $1.55
FFO $1.01 $0.98 $2.96 $2.98
CAD $0.86 $0.82 $2.51 $2.48
Common distributions
declared $0.72 $0.71 $2.15 $2.12
(1) All of our hotels are leased to or operated by third-parties; HPT does not operate hotels. At various times during 2001 and 2002, 18 of our hotels, containing 2,602 rooms, began to be operated by Marriott International under a long-term management contract; most of these hotels were previously leased to Marriott. These hotels are now leased to a 100% subsidiary of ours, as allowed by the REIT Modernization Act which became effective in 2001. Although our long-term management contract with Marriott includes security features which are similar to those under our leases, after a property begins to be operated under a management contract rather than under a lease, our consolidated revenues include hotel sales rather than rental income and our expenses include hotel operating expenses. We have agreed to this new arrangement for a total of 35 hotels, containing 5,382 rooms and expect it to begin for the remaining 17 hotels from time to time prior to June 30, 2004. The amounts in the following table include the net revenues over expenses and FF&E escrows of the ten hotels which began to be leased to our subsidiary tenant June 15, 2001, 6 hotels which began to be leased to our subsidiary tenant September 7, 2001, and two hotels which began to be leased to our subsidiary tenant September 6, 2002. During the quarter and nine months ended September 30, 2002, $859 and $3,174, respectively, and in the 2001 periods $687 of hotel operating expenses were funded by Marriott and are reflected as a reduction in hotel operating expenses.
Quarter Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Hotel operating revenues $21,469 $17,861 $59,918 $20,644
Less: Hotel operating
expenses 14,207 12,074 38,605 13,929
Net payments by our
manager to our
subsidiary tenant 7,262 5,787 21,313 6,715
Less: Payments made
into FF&E Reserve
escrows 1,111 882 3,108 1,018
Net $ 6,151 $ 4,905 $18,205 $ 5,697
(2) Some of the HPT leases provide that FF&E Reserve escrows are owned by HPT. Other leases provide that FF&E Reserve escrows are owned by the tenant and HPT has a security and remainder interest in the escrow account. When HPT owns the escrow, generally accepted accounting principles require that payments into the escrow be reported as additional rent. When HPT has a security and remainder interest in the escrow account, deposits are not included in revenue but are included in FFO. CAD excludes all FF&E Reserves.
(3) HPT recognizes percentage rental income received for the first, second and third quarters in the fourth quarter. Although recognition of revenue is deferred for purposes of calculating net income, the calculations of FFO and CAD include amounts received with respect to the periods shown.
Hospitality Properties Trust
Key Property Statistics (1)
Third Quarter Year to Date
2002 2001 Change 2002 2001 Change
(33,759 rooms
and 247 hotels)
Average Daily
Rate ("ADR") $78.59 $84.30 -6.8% $79.90 $87.44 -8.6%
Occupancy 75.6% 75.2% +0.5% 73.6% 74.7% -1.5%
Revenue Per
Available
Room
("RevPAR") $59.41 $63.39 -6.3% $58.81 $65.32 -10.0%
Excludes 4 properties containing 525 rooms, not open for a full year
as of January 1, 2002.
(1) Includes data for the three and nine months ended September 30, except for our 125 hotels (17,926 rooms) operated by Marriott which are for the 12 and 36 week periods ended September 6, 2002 and September 7, 2001, respectively.
Key Balance Sheet Statistics
(amounts in thousands)
Sept. 30, Dec. 31,
2002 2001
Cash $ 503 $ 38,962
Real Estate, at cost $2,783,021 $2,629,153
Debt:
Floating rate - Credit
Facility, due 2005 $ 83,000 $ --
Fixed rate - 8.250%
Senior Notes, due 2005 -- 115,000
Fixed rate - 7.000% Senior
Notes, due 2008, net of
discount 149,854 149,834
Fixed rate - 8.500% Senior
Notes, due 2009 150,000 150,000
Fixed rate - 9.125% Senior
Notes, due 2010, net of discount 49,952 49,947
Fixed rate - 6.850% Senior
Notes, due 2012, net of discount 124,128 --
$ 556,934 $ 464,781
Book Equity:
9.5% Preferred (3,000 shares
outstanding) $ 72,207 $ 72,207
Common (62,547 and 62,516
shares outstanding) 1,497,586 1,532,312
$1,569,793 $1,604,519