Newton, MA (August 5, 2002): Hospitality Properties Trust (NYSE:HPT) today announced its results of operations for the quarter ended June 30, 2002:
(amounts in thousands, except per share data)
Quarter Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Net income $35,490 $31,428 $68,821 $61,516
Net income available for common
shareholders $33,709 $29,647 $65,258 $57,953
Funds from operations ("FFO") $62,495 $57,393 $121,882 $113,391
Cash available for distribution
("CAD") $52,912 $47,094 $103,636 $93,771
Common distributions declared $45,034 $40,120 $89,436 $79,675
Per common share amounts:
Net income available for
common shareholders $0.54 $0.52 $1.04 $1.03
Funds from operations ("FFO") $1.00 $1.02 $1.95 $2.01
Cash available for
distribution ("CAD") $0.85 $0.83 $1.66 $1.66
Common distributions $0.72 $0.71 $1.43 $1.41
Weighted average common shares
outstanding 62,538 56,507 62,529 56,501
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 Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Revenues:
Rental income $ 62,082 $ 60,114 $120,429 $119,516
Hotel operating revenues (1) 20,310 2,783 38,449 2,783
FF&E reserve income (2) 5,669 7,145 10,935 13,554
Interest income 54 97 236 459
Total revenues 88,115 70,139 170,049 136,312
Expenses:
Hotel operating expenses (1) 13,229 1,855 24,398 1,855
Interest (including
amortization of
deferred financing
costs of $718, $604,
$1,323 and $1,207,
respectively) 11,066 10,520 21,113 20,706
Depreciation and
amortization 24,186 22,491 47,920 44,629
General and
administrative 4,144 3,845 7,797 7,606
Total expenses 52,625 38,711 101,228 74,796
Net income 35,490 31,428 68,821 61,516
Preferred distributions 1,781 1,781 3,563 3,563
Net income available
for common shareholders $ 33,709 $ 29,647 $ 65,258 $ 57,953
Net income available
for common shareholders $ 33,709 $ 29,647 $ 65,258 $ 57,953
Add: FF&E deposits not
in net income (2) 3,959 3,967 7,398 7,826
Depreciation and
amortization 24,186 22,491 47,920 44,629
Deferred percentage
rent (3) 641 1,288 1,306 2,983
Funds from
operations ("FFO") $ 62,495 $ 57,393 $121,882 $113,391
FFO $ 62,495 $ 57,393 $121,882 $113,391
Add: Non-cash expenses 1,099 949 2,084 1,896
Less: FF&E reserves
income (1) (2) 6,723 7,281 12,932 13,690
FF&E deposits not
in net income (2) 3,959 3,967 7,398 7,826
Cash available for
distribution ("CAD") $ 52,912 $ 47,094 $103,636 $ 93,771
Weighted average common
shares outstanding 62,538 56,507 62,529 56,501
Per common share amounts:
Net income available
for common shareholders $ 0.54 $ 0.52 $ 1.04 $ 1.03
FFO $ 1.00 $ 1.02 $ 1.95 $ 2.01
CAD $ 0.85 $ 0.83 $ 1.66 $ 1.66
Common distributions
declared $ 0.72 $ 0.71 $ 1.43 $ 1.41
(1) All of our hotels are leased to or operated by third-parties; HPT does not operate hotels. At various times during 2001, 16 of our hotels, containing 2,380 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 19 hotels from time to time over the next two years, but no later than June 30, 2004. The amounts in the following table include the net revenues over expenses and FF&E escrows of the ten hotels leased to our subsidiary tenant beginning June 15, 2001, for the 2001 periods and, of the 16 hotels leased to our subsidiary tenant for the entire period for the 2002 periods. During the quarter and six months ended June 30, 2002, $720 and $2,315, respectively, of hotel operating expenses were funded by Marriott and are reflected as a reduction in hotel operating expenses.
Quarter Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Hotel operating revenues $20,310 $ 2,783 $38,449 $ 2,783
Less: Hotel operating
expenses 13,229 1,855 24,398 1,855
Net payments by our manager
to our subsidiary tenant 7,081 928 14,051 928
Less: Payments made into
FF&E Reserve escrows 1,054 136 1,997 136
Net $ 6,027 $ 792 $12,054 $ 792
(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)
(33,759 rooms Second Quarter Year to Date
and 247 hotels) 2002 2001 Change 2002 2001 Change
Average Daily Rate
("ADR") $ 79.70 $ 88.21 -9.6% $ 80.60 $ 89.13 -9.6%
Occupancy 75.8% 76.0% -0.3% 72.6% 74.4% -2.4%
Revenue Per
Available Room
("RevPAR") $ 60.41 $ 67.04 -9.9% $ 58.52 $ 66.31 -11.7%
Excludes 4 properties containing 525 rooms, not open for a full year as of January 1, 2002.
(1) Includes data for the three and six months ended June 30, except for our 125 hotels (17,926 rooms) operated by Marriott which are for the 12 and 24 week periods ended June 14, 2002 and June 15, 2001, respectively.
Key Balance Sheet Statistics
June 30, 2002 December 31, 2001
Cash $ 487,000 $ 38,962,000
Real Estate, at cost $2,778,761,000 $2,629,153,000
Debt:
Floating rate -
Credit Facility, due 2005 $ 98,000,000 $ --
Fixed rate - 8.250%
Senior Notes, due 2005 (1) 115,000,000 115,000,000
Fixed rate - 7.000%
Senior Notes, due 2008 149,847,000 149,834,000
Fixed rate - 8.500%
Senior Notes, due 2009 150,000,000 150,000,000
Fixed rate - 9.125%
Senior Notes, due 2010 49,951,000 49,947,000
$ 562,798,000 $ 464,781,000
Book Equity:
9.5% Preferred
(3,000,000 shares
outstanding) $ 72,207,000 $ 72,207,000
Common (62,547,348 and
62,515,940 shares
outstanding) 1,509,756,000 1,532,312,000
$1,581,963,000 $1,604,519,000
(1) On July 18, 2002, these notes were prepaid with a portion of the proceeds from our issuance of $125,000,000 of 6.85% senior notes due 2012.