NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today
announced its results of operations for the quarter and twelve months
ended December 31, 2005.
Results for the quarter ended December 31, 2005:
Net income was $48.2 million for the quarter ended December 31, 2005,
compared to $35.9 million for the same quarter last year. Net income
available for common shareholders was $46.3 million, or $0.64 per share,
for the quarter ended December 31, 2005, compared to $33.9 million, or
$0.51 per share, for the same quarter last year.
Funds from operations (FFO) for the quarter ended December 31, 2005,
were $65.5 million, or $0.91 per share. This compares to FFO for the
quarter ended December 31, 2004, of $57.4 million, or $0.85 per share.
The weighted average number of common shares outstanding totaled 71.9
million and 67.2 million for the quarters ended December 31, 2005 and
2004, respectively.
Results for the twelve months ended December 31, 2005:
Net income was $129.9 million for the twelve months ended December
31, 2005, compared to $127.1 million for the same period last year. Net
income available for common shareholders was $122.2 million, or $1.75
per share, for the twelve months ended December 31, 2005, compared to
$114.6 million, or $1.72 per share, for the same period last year.
Funds from operations (FFO) for the twelve months ended December 31,
2005, were $263.3 million, or $3.77 per share. This compares to FFO for
the twelve months ended December 31, 2004, of $233.9 million, or $3.52
per share.
The weighted average number of common shares outstanding totaled 69.9
million and 66.5 million for the twelve months ended December 31, 2005
and 2004, respectively.
Portfolio Performance:
Revenue per available room, or RevPAR, for the quarter ended December
31, 2005, versus the same quarter last year increased 11.6% to $64.82.
Average daily rate, or ADR, rose to $91.69, an 8.9% improvement, while
occupancy increased by 1.7 percentage points to 70.7% from the prior
year period.
RevPAR for the year ended December 31, 2005, versus the prior year
increased 9.2% to $65.51. ADR rose to $89.62, a 7.7% improvement, while
occupancy increased by 1.0 percentage point to 73.1% from the prior
year.
Financing Activities:
In October 2005, the credit ratings of HPT's senior unsecured debt
obligations were raised to "BBB" and "Baa2" from "BBB-" and "Baa3" by
Standard & Poor's Rating Services and Moody's Investors Service,
respectively.
On January 12, 2006, HPT announced its regular quarterly common share
dividend of $0.73 per common share ($2.92 per share per year). This
regular quarterly dividend will be paid to common shareholders of record
as of the close of business on January 27, 2006, and distributed on or
about February 16, 2006.
Investing Activities:
On November 1, 2005, HPT acquired a Country Inn & Suites by
Carlson(SM) hotel located in Brooklyn Center, Minnesota with 84
guestrooms from Carlson Hotels Worldwide, or Carlson, for $4.1 million.
This hotel was added to a combination management agreement with 11
former Prime Hotels(SM) which were rebranded to Carlson owned brands
during the second quarter of 2005 and are currently undergoing
renovations. The renovations are expected to be completed during the
second quarter of 2006 at a total cost of approximately $37 million.
Subsequent Events:
On January 6, 2006, HPT acquired the Harbor Court Complex in
Baltimore's Inner Harbor for $78 million. The Harbor Court Complex is a
mixed use development comprised of the 195 room Harbor Court Hotel, a
72,042 square foot office building and a 530 space parking garage.
Simultaneously with this purchase, HPT entered into an agreement with
InterContinental Hotels Group, or IHG, to manage the hotel under its
InterContinental Hotels and Resorts brand.
On January 25, 2006, HPT announced that it had agreed to purchase
nine hotels for $196.2 million. The hotels include five Crowne Plaza
Hotels, one full service Holiday Inn Select Hotel, two Staybridge Suites
Hotels and one Holiday Inn SunSpree Resort Hotel. The purchases were
effective January 20, 2006, except for the closing of the Holiday Inn
SunSpree Resort Hotel which was delayed pending certain third party
approvals. Simultaneously with this purchase, HPT entered into a long
term management agreement with IHG for eight of the hotels. HPT will
enter into a long term lease with IHG for the Holiday Inn SunSpree
Resort Hotel simultaneous with its purchase.
Conference Call:
On Thursday, February 9, 2006, at 1:00 p.m. Eastern Time, John
Murray, president and chief operating officer, and Mark Kleifges, chief
financial officer, will host a conference call to discuss the results
for the quarter ended December 31, 2005.
The conference call telephone number is (800) 818-5264. Participants
calling from outside the United States and Canada should dial (913)
981-4910. No pass code is necessary to access the call from either
number. Participants should dial in about 15 minutes prior to the
scheduled start of the call. A replay of the conference call will be
available through Wednesday, February 15, 2006. To hear the replay, dial
(719) 457-0820. The replay pass code is 1317540.
A live audio webcast of the conference call will also be available in
a listen only mode on the company's web site, which is located at www.hptreit.com.
Participants wanting to access the webcast should visit the company's
web site about five minutes before the call. The archived webcast will
be available for replay on HPT's web site for about one week after the
call.
Supplemental Data:
A copy of HPT's Fourth Quarter 2005 Supplemental Operating and Financial Data is available for download at HPT's web site, www.hptreit.com.
Hospitality Properties Trust is a real estate investment trust, or
REIT, which owns 307 hotels located in 38 states, Puerto Rico and
Canada. HPT is headquartered in Newton, Massachusetts.
WARNING REGARDING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND THE
FEDERAL SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON
HPT'S CURRENT BELIEFS AND EXPECTATIONS, BUT, FOR VARIOUS REASONS, THEY
MAY NOT OCCUR. FOR EXAMPLE:
- THIS PRESS RELEASE STATES THAT HPT'S PURCHASE OF THE HOLIDAY INN
SUNSPREE RESORT IN JAMAICA HAS BEEN DELAYED PENDING THIRD PARTY
APPROVALS. IN FACT, CIRCUMSTANCES MAY DELAY THIS PURCHASE FOR AN
EXTENDED PERIOD OR PREVENT IT FROM OCCURRING.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO RELEASE
PUBLICLY THE RESULT OF ANY REVISION TO THESE FORWARD LOOKING STATEMENTS
THAT MAY BE MADE TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE
HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
Hospitality Properties Trust
CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM OPERATIONS
(amounts in thousands, except per share data)
Quarter Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues:
Hotel operating
revenues (1) $172,056 $119,342 $682,541 $498,122
Minimum rent 31,955 30,343 126,829 125,669
Percentage rent 3,902 2,803 3,902 2,803
FF&E reserve income (2) 5,567 4,147 19,767 18,147
Interest income 417 199 1,373 627
--------- --------- --------- ---------
Total revenues 213,897 156,834 834,412 645,368
--------- --------- --------- ---------
Expenses:
Hotel operating
expenses (1) 109,201 74,602 476,858 333,818
Interest (including
amortization of deferred
financing costs of $609,
$686, $2,894 and $2,744,
respectively) 16,187 12,618 65,263 50,393
Depreciation and
amortization 34,868 28,725 131,792 114,883
General and administrative 5,440 5,033 23,296 19,386
Loss on asset
impairment (3) -- -- 7,300 --
--------- --------- --------- ---------
Total expenses 165,696 120,978 704,509 518,480
Income before gain on sale of
real estate 48,201 35,856 129,903 126,888
Gain on sale of real
estate -- -- -- 203
--------- --------- --------- ---------
Net income 48,201 35,856 129,903 127,091
Preferred distributions (1,914) (1,914) (7,656) (9,674)
Excess of liquidation
preference over carrying value
of preferred shares (4) -- -- -- (2,793)
--------- --------- --------- ---------
Net income available for common
shareholders $46,287 $33,942 $122,247 $114,624
========= ========= ========= =========
Calculation of FFO (5):
Net income available for common
shareholders $46,287 $33,942 $122,247 $114,624
Add: FF&E deposits not in net
income (2) 454 421 1,941 1,767
Depreciation and
amortization 34,868 28,725 131,792 114,883
Loss on asset
impairment (3) -- -- 7,300 --
Excess of liquidation
preference over carrying
value of preferred
shares (4) -- -- -- 2,793
Less:
Gain on sale of real
estate -- -- -- (203)
Deferred percentage
rent (6) (3,008) (2,167) -- --
Deferred hotel operating
income (7) (13,079) (3,546) -- --
--------- --------- --------- ---------
Funds from operations ("FFO") $65,522 $57,375 $263,280 $233,864
========= ========= ========= =========
Weighted average common shares
outstanding 71,921 67,203 69,866 66,503
========= ========= ========= =========
Per common share amounts:
Net income available for
common shareholders $0.64 $0.51 $1.75 $1.72
FFO (5) $0.91 $0.85 $3.77 $3.52
Common distributions
declared $0.73 $0.72 $2.90 $2.88
See Notes on page 5.
Hospitality Properties Trust
NOTES TO CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM OPERATIONS
(amounts in thousands, except per share data)
(1) At December 31, 2005, each of our 298 hotels were included in one
of ten combinations of hotels of which 189 were leased to one of our
taxable REIT subsidiaries and managed by independent hotel operating
companies and 109 are leased to third parties. Our consolidated
statement of income includes hotel operating revenues and expenses of
managed hotels and rental income from our leased hotels.
(2) Various percentages of total sales at most of our hotels are
escrowed as reserves for future renovations or refurbishment, or
FF&E Reserve escrows. We own the FF&E Reserve escrows for all
the hotels leased to our taxable REIT subsidiaries and for most of the
hotels leased to third parties. We have a security and remainder
interest in the FF&E Reserve escrows for the remaining hotels leased
to third parties. When we own the FF&E Reserve escrows at hotels
leased to third parties we report payments into the escrow as additional
rent. When we have a security and remainder interest in the FF&E
Reserve escrows, deposits are not included in revenue but are included
in FFO. We do not report the amounts which are escrowed as FF&E
reserves for our managed hotels as FF&E reserve income in our
consolidated statement of income.
(3) In June 2005, we authorized Carlson Hotels Worldwide, or Carlson,
to pursue the sale of our Prime Hotel(SM)in Atlanta, GA. In connection
with this decision, we recorded a $7,300 loss on asset impairment in the
second quarter of 2005 to reduce the carrying value of the hotel to its
estimated net realizable value less the cost to sell. We sold the hotel
on September 30, 2005, for $3,227.
(4) On April 12, 2004, we redeemed all of our outstanding 9 1/2%
Series A Preferred Shares at their liquidation preference of $25 per
share, plus accumulated and unpaid dividends. We deducted the $2,793
excess of the liquidation preference of the redeemed shares over their
carrying amount from net income in determining net income available to
common shareholders in the calculation of earnings per share in the 2004
first quarter, which was when the redemption was approved by our board
of trustees.
(5) We compute FFO as shown. Our calculation of FFO differs from the
NAREIT definition because we include FF&E deposits not included in
net income (see note 2), deferred percentage rent (see note 6) and
deferred hotel operating income (see note 7) and exclude loss on asset
impairment (see note 3) and the excess of liquidation preference over
carrying value of redeemed preferred shares (see note 4). We consider
FFO to be an appropriate measure of performance for a REIT, along with
net income and cash flow from operating, investing and financing
activities. We believe that FFO provides useful information to investors
because by excluding the effects of certain historical costs, such as
depreciation expense, impairment charges and losses on early
extinguishment of debt, it may facilitate comparison of current
operating performance among REITs. FFO does not represent cash generated
by operating activities in accordance with GAAP and should not be
considered an alternative to net income or cash flow from operating
activities as a measure of financial performance or liquidity. FFO is
among the important factors considered by our board of trustees when
determining the amount of distributions to shareholders. Other important
factors include, but are not limited to, requirements to maintain our
status as a REIT, limitations in our revolving bank credit facility and
public debt covenants, the availability of debt and equity capital to us
and our expectation of our future capital needs and operating
performance.
(6) In calculating net income we recognize percentage rental income
received for the first, second and third quarters in the fourth quarter,
which is when all contingencies are met and the income is earned.
Although we defer recognition of this revenue until the fourth quarter
for purposes of calculating net income, we include the estimated amount
in the calculation of FFO for each quarter of the year. The fourth
quarter FFO calculation excludes the amounts recognized during the first
three quarters. Percentage rental income included in FFO was $894 and
$637 in the fourth quarter of 2005 and 2004, respectively.
(7) Our share of the operating results of our managed hotels in
excess of the minimum returns due to us is generally determined based
upon annual calculations. Typically the net operating results of our
hotels are strongest during the second and third quarters of the year,
which are the most active periods for business and leisure travel. We
recognize our share of income in excess of our minimum returns in the
fourth quarter, which is when all contingencies are met and the income
is earned. Although we defer recognition of this income until the fourth
quarter for purposes of calculating net income, we include the
estimated amount in the calculation of FFO for each quarter of the year.
The fourth quarter FFO calculation excludes the amounts recognized
during the first three quarters. Hotel operating profits in excess of
the minimum returns due to us included in FFO were $489 in the fourth
quarter of 2005 and our share of these operating profits declined by
$2,149 during the fourth quarter of 2004 as the operating results of
certain of our managed hotels were less than the minimum returns due to
us for the quarter.
Hospitality Properties Trust
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except share data)
December 31, December 31,
2005 2004
----------- -----------
(audited)
ASSETS
-----------------------------------------------
Real estate properties, at cost:
Land $537,389 $460,748
Buildings, improvements and equipment 3,089,304 2,720,242
----------- -----------
3,626,693 3,180,990
Accumulated depreciation (613,007) (556,517)
----------- -----------
3,013,686 2,624,473
Cash and cash equivalents 18,568 15,894
Restricted cash (FF&E reserve escrow) 29,063 38,511
Other assets, net 53,290 10,547
----------- -----------
$3,114,607 $2,689,425
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
-----------------------------------------------
Revolving credit facility $35,000 $72,000
Senior notes, net of discounts 921,606 621,679
Mortgage payable 3,766 3,826
Security deposits 185,304 175,304
Accounts payable and other liabilities 108,595 77,782
Due to affiliate 2,967 2,661
Dividends payable 1,914 50,300
----------- -----------
Total liabilities 1,259,152 1,003,552
----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred shares of beneficial interest; no
par value; 100,000,000 shares authorized:
Series B preferred shares; 8 7/8% cumulative
redeemable; 3,450,000 shares issued and
outstanding, aggregate liquidation
preference $86,250 83,306 83,306
Common shares of beneficial interest; $0.01
par value; 100,000,000 shares authorized,
71,920,578 and 67,203,228 issued and
outstanding, respectively 719 672
Additional paid-in capital 2,059,883 1,859,936
Cumulative net income 1,211,072 1,081,169
Cumulative preferred distributions (59,336) (51,680)
Cumulative common distributions (1,440,189) (1,287,530)
----------- -----------
Total shareholders' equity 1,855,455 1,685,873
----------- -----------
$3,114,607 $2,689,425
=========== ===========
Hospitality Properties Trust Timothy A. Bonang
617-796-8149
Manager of Investor Relations
www.hptreit.com