NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today
announced its results of operations for the quarter and twelve months
ended December 31, 2006.
Results for the quarter ended December 31, 2006:
Net income available for common shareholders was $60.0 million, or
$0.79 per share, for the quarter ended December 31, 2006, compared to
$46.3 million, or $0.64 per share, for the same quarter last year.
Funds from operations (FFO) for the quarter ended December 31, 2006,
were $75.6 million, or $1.00 per share. This compares to FFO for the
quarter ended December 31, 2005, of $65.5 million, or $0.91 per share.
The weighted average number of common shares outstanding totaled 75.6
million and 71.9 million for the quarters ended December 31, 2006 and
2005, respectively.
Results for the twelve months ended December 31, 2006:
Net income available for common shareholders was $161.4 million, or
$2.20 per share, for the twelve months ended December 31, 2006, compared
to $122.2 million, or $1.75 per share, for the same period last year.
Net income available for common shareholders for the twelve months ended
December 31, 2005, included a $7.3 million, or $0.10 per share, loss on
asset impairment.
Funds from operations (FFO) for the twelve months ended December 31,
2006 were $307.7 million, or $4.20 per share. This compares to FFO for
the twelve months ended December 31, 2005, of $263.3 million, or $3.77
per share.
The weighted average number of common shares outstanding totaled 73.3
million and 69.9 million for the twelve months ended December 31, 2006
and 2005, respectively.
Portfolio Performance:
For the quarter ended December 31, 2006 compared to the same period
in 2005, revenue per available room, or RevPAR, increased by 5.0% to
$68.66, average daily rate, or ADR, increased 8.9% to $100.68 and
occupancy declined 3.5% to 68.2%.
For the full year 2006 compared to 2005, RevPAR increased 8.9% to
$71.78, ADR increased 9.7% to $99.00 and occupancy declined 0.7% to
72.5%.
Financing Activities for the quarter ended December 31, 2006:
On December 22, 2006, HPT sold twelve million common shares of
beneficial interest at a price of $47.51 per share in a public offering.
On January 5, 2007, HPT sold an additional 1.8 million common shares of
beneficial interest at a price of $47.51 pursuant to an over allotment
option granted to the underwriters. Net proceeds from both these sales
of approximately $627.2 million after underwriting and other offering
expenses were used to repay borrowings outstanding under HPT's revolving
bank credit facility and to partially fund the acquisition of
TravelCenters of America, Inc. described below.
Subsequent Events:
On January 4, 2007, HPT announced a regular quarterly common dividend
of $0.74 per share payable to shareholders of record on January 16,
2007; this dividend was paid on February 15, 2007.
On January 31, 2006, HPT completed its previously announced
acquisition of TravelCenters of America, Inc. or TravelCenters, for
approximately $1.9 billion. The purchase price was funded with the net
proceeds from the common share offering described above and $1.4 billion
of borrowings under a bridge loan arrangement. Simultaneously with this
acquisition, HPT retained substantially all of the TravelCenters real
estate and HPT capitalized and spun out to HPT shareholders a
subsidiary, TravelCenters of America LLC (AMEX: TA), which will lease
this real estate and continue the fuel services and hospitality business
of TravelCenters. The market value of the TA shares distributed was
$32.34 per TA share. Since one TA share was distributed to HPT
shareholders for every 10 HPT shares owned, the value distributed was
$3.23 per HPT share.
On February 16, 2007, HPT sold five million common shares of
beneficial interest at a price of $47.67 per share in a public offering.
Net proceeds from the sale of approximately $227.6 million after
underwriting and other offering expenses were used to repay a portion of
the borrowings outstanding under HPT's bridge loan arrangement. On
February 20, 2007, the underwriters exercised their option to purchase
an additional 750,000 common shares of beneficial interest from HPT to
cover overallotments. HPT expects this sale to be completed on February
23, 2007, but this sale is subject to closing conditions and no
assurance can be given that the sale will close as expected. HPT expects
to use the net proceeds from this sale of approximately $34.2 million
after underwriting and other offering expenses to repay a portion of the
borrowings outstanding under HPT's bridge loan arrangement.
On February 21, 2007, HPT sold 12 million shares of 7% Series C
cumulative redeemable preferred shares in a public offering. Net
proceeds from the offering of $290.3 million after underwriting and
other offering expenses were used to repay a portion of the amount
outstanding under HPT's bridge loan arrangement. The underwriters have
been granted a 30-day option to purchase up to an additional 1.8 million
preferred shares from HPT to cover overallotments, if any.
Conference Call:
On Thursday, February 22, 2007, at 11:00 a.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, 2006.
The conference call telephone number is (877) 704-5382. Participants
calling from outside the United States and Canada should dial (913)
312-1296. 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 28, 2007. To hear the replay, dial
(719) 457-0820. The replay pass code is 1416385.
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 2006 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 310 hotels and 146 travel centers located in 44 states,
Puerto Rico and Canada. HPT is headquartered in Newton, Massachusetts.
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,
------------------- ---------------------
2006 2005 2006 2005
--------- --------- ----------- ---------
Revenues:
Hotel operating revenues
(1) $213,457 $172,056 $ 879,324 $682,541
Minimum rent 33,151 31,955 131,421 126,829
Percentage rent 5,697 3,902 5,697 3,902
FF&E reserve income (2) 4,794 5,567 20,299 19,767
Interest income 1,287 417 2,674 1,373
--------- --------- ----------- ---------
Total revenues 258,386 213,897 1,039,415 834,412
--------- --------- ----------- ---------
Expenses:
Hotel operating expenses
(1) 132,614 109,201 618,334 476,858
Interest (including
amortization of deferred
financing costs of $664,
$609, $2,584 and $2,894,
respectively) 20,500 16,187 81,451 65,263
Depreciation and
amortization 37,169 34,868 144,404 131,792
General and administrative 6,237 5,440 26,187 23,296
Loss on asset impairment
(3) -- -- -- 7,300
--------- --------- ----------- ---------
Total expenses 196,520 165,696 870,376 704,509
--------- --------- ----------- ---------
Net income 61,866 48,201 169,039 129,903
Preferred distributions (1,914) (1,914) (7,656) (7,656)
--------- --------- ----------- ---------
Net income available for
common shareholders $ 59,952 $ 46,287 $ 161,383 $122,247
========= ========= =========== =========
Calculation of FFO (4):
Net income available for
common shareholders $ 59,952 $ 46,287 $ 161,383 $122,247
Add: FF&E deposits not in
net income (2) 427 454 1,942 1,941
Depreciation and
amortization 37,169 34,868 144,404 131,792
Loss on asset impairment
(3) -- -- -- 7,300
Less: Deferred percentage
rent (5) (4,607) (3,008) -- --
Deferred additional
returns (6) (17,318) (13,079) -- --
--------- --------- ----------- ---------
Funds from operations
("FFO") $ 75,623 $ 65,522 $ 307,729 $263,280
========= ========= =========== =========
Weighted average common
shares outstanding 75,587 71,921 73,279 69,866
========= ========= =========== =========
Per common share amounts:
Net income available for
common shareholders $ 0.79 $ 0.64 $ 2.20 $ 1.75
FFO (4) $ 1.00 $ 0.91 $ 4.20 $ 3.77
Common distributions
declared $ 0.74 $ 0.73 $ 2.95 $ 2.90
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, 2006, each of our 310 hotels are included in one
of eleven combinations of hotels of which 201 are 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) We recorded a $7,300 loss on asset impairment in the second
quarter of 2005 to reduce the carrying value of our Prime Hotel(SM) in
Atlanta, GA to its net realizable value less cost to sell. We sold the
hotel in September 2005.
(4) 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 5) and
deferred additional returns (see note 6) and exclude loss on asset
impairment (see note 3). 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, 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.
(5) 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 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 $1,090 and $894
in the fourth quarter of 2006 and 2005, respectively.
(6) Our share of the operating results of our managed hotels in
excess of the minimum returns due to us, or additional returns, are
generally determined based upon annual calculations. In calculating net
income we recognize additional 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 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.
Additional returns included in FFO were $2,711 and $489 in the fourth
quarter of 2006 and 2005, respectively.
Hospitality Properties Trust
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except share data)
December 31, December 31,
2006 2005
------------ ------------
(audited)
ASSETS
--------------------------------------------
Real estate properties, at cost:
Land $ 584,199 $ 537,389
Buildings, improvements and equipment 3,457,818 3,089,304
------------ ------------
4,042,017 3,626,693
Accumulated depreciation (707,838) (613,007)
------------ ------------
3,334,179 3,013,686
Cash and cash equivalents 553,256 18,568
Restricted cash (FF&E reserve escrow) 27,363 29,063
Other assets, net 42,665 53,290
------------ ------------
$ 3,957,463 $ 3,114,607
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------------
Revolving credit facility $ - $ 35,000
Senior notes, net of discounts 1,196,130 921,606
Mortgage payable 3,700 3,766
Security deposits 185,366 185,304
Accounts payable and other liabilities 119,536 108,595
Due to affiliate 3,277 2,967
Dividends payable 1,914 1,914
------------ ------------
Total liabilities 1,509,923 1,259,152
------------ ------------
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, 86,284,251 and 71,920,578
issued and outstanding, respectively 863 719
Additional paid-in capital 2,703,687 2,059,883
Cumulative net income 1,380,111 1,211,072
Cumulative preferred distributions (66,992) (59,336)
Cumulative common distributions (1,653,435) (1,440,189)
------------ ------------
Total shareholders' equity 2,447,540 1,855,455
------------ ------------
$ 3,957,463 $ 3,114,607
============ ============
Hospitality Properties Trust
Timothy A. Bonang
617-796-8149
Manager of Investor Relations
www.hptreit.com