NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today
announced its results of operations for the quarter and six months ended
June 30, 2007.
Results for the quarter ended June 30, 2007:
Net income available for common shareholders was $46.8 million, or
$0.50 per share, for the quarter ended June 30, 2007, compared to $33.5
million, or $0.47 per share, for the same quarter last year.
Funds from operations (FFO) for the quarter ended June 30, 2007, were
$111.5 million, or $1.19 per share. This compares to FFO for the
quarter ended June 30, 2006, of $82.4 million, or $1.14 per share.
The weighted average number of common shares outstanding totaled 93.9
million and 72.0 million for the quarters ended June 30, 2007 and 2006,
respectively.
Results for the six months ended June 30, 2007:
Net income available for common shareholders was $85.8 million, or
$0.93 per share, for the six months ended June 30, 2007, compared to
$66.8 million, or $0.93 per share, for the same period last year. Net
income available for common shareholders for the six months ended June
30, 2007, includes $2.7 million, or $0.03 per share, of costs associated
with the spin off of TravelCenters of America LLC (AMEX: TA), or TA, to
HPT's shareholders on January 31, 2007.
Funds from operations (FFO) for the six months ended June 30, 2007,
were $210.0 million, or $2.27 per share. This compares to FFO for the
six months ended June 30, 2006, of $155.1 million, or $2.16 per share.
The weighted average number of common shares outstanding totaled 92.3
million and 71.9 million for the six months ended June 30, 2007 and
2006, respectively.
Hotel Portfolio Performance:
For the quarter ended June 30, 2007 compared to the same period in
2006, revenue per available room, or RevPAR, increased by 4.4% to
$78.89, average daily rate, or ADR, increased 6.1% to $105.05 and
occupancy declined 1.2 percentage points to 75.1%.
For the six months ended June 30, 2007 compared to the same period in
2006, RevPAR increased by 4.4% to $76.12, ADR increased 6.5% to $105.28
and occupancy declined 1.5 percentage points to 72.3%.
Investing Activities:
On May 30, 2007, HPT acquired 40 travel centers from Petro Stopping
Centers Holdings, L.P. for approximately $655 million including closing
costs. The purchase was funded with borrowings under HPT's revolving
credit facility. Simultaneous with this acquisition, the sites were
leased to TA for an initial minimum rent of $62.2 million per year.
Subsequent Event:
On July 26, 2007, HPT sold 18 Homestead Studio Suites hotels for
approximately $205 million. Net proceeds from this sale were used to
reduce amounts outstanding under HPT's revolving credit facility. HPT
expects to recognize a gain on this sale of approximately $95 million in
the 2007 third quarter.
Conference Call:
On Wednesday, August 1, 2007, 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 second quarter and six months ended June 30, 2007.
The conference call telephone number is (800) 810-0924. Participants
calling from outside the United States and Canada should dial (913)
981-4900. 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 Tuesday, August 7, 2007. To hear the replay, dial
(719) 457-0820. The replay pass code is 3942994.
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 Second Quarter 2007 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 292 hotels and 186 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
(in thousands, except per share data)
(Unaudited)
Quarter Ended June Six Months Ended
30, June 30,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues:
Hotel operating revenues (1) $249,774 $233,627 $474,245 $435,455
Rental income (1) 81,530 32,870 143,130 65,346
FF&E reserve income (2) 5,769 5,273 11,208 10,263
Interest income 658 428 3,806 850
--------- --------- --------- ---------
Total revenues 337,731 272,198 632,389 511,914
--------- --------- --------- ---------
Expenses:
Hotel operating expenses (1) 184,311 172,625 344,709 316,814
Interest (including
amortization of deferred
financing costs of $913,
$635, $1,652 and $1,245,
respectively) 33,795 21,162 64,450 40,150
Depreciation and
amortization 55,259 35,848 104,330 70,800
General and administrative 10,084 7,186 18,535 13,540
TA spin off costs (3) -- -- 2,711 --
--------- --------- --------- ---------
Total expenses 283,449 236,821 534,735 441,304
--------- --------- --------- ---------
Net income 54,282 35,377 97,654 70,610
Preferred distributions (7,470) (1,914) (11,829) (3,828)
--------- --------- --------- ---------
Net income available for common
shareholders $ 46,812 $ 33,463 $ 85,825 $ 66,782
========= ========= ========= =========
Calculation of FFO (4):
Net income available for common
shareholders $ 46,812 $ 33,463 $ 85,825 $ 66,782
Add: FF&E deposits not in net
income (2) 492 533 990 1,045
Depreciation and amortization 55,259 35,848 104,330 70,800
TA spin off costs (3) -- -- 2,711 --
Deferred percentage rent (5) 1,684 1,528 3,354 3,176
Deferred additional returns
(6) 7,294 10,993 12,793 13,343
--------- --------- --------- ---------
Funds from operations ("FFO") $111,541 $ 82,365 $210,003 $155,146
========= ========= ========= =========
Weighted average common shares
outstanding 93,868 71,953 92,323 71,937
========= ========= ========= =========
Per common share amounts:
Net income available for
common shareholders $ 0.50 $ 0.47 $ 0.93 $ 0.93
FFO (4) $ 1.19 $ 1.14 $ 2.27 $ 2.16
Common distributions declared$ 0.76 $ 0.74 $ 1.52 $ 1.47
NOTES TO CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM
OPERATIONS
(in thousands, except per share data)
(1) At June 30, 2007, each of our 310 hotels are included in one of
eleven combinations of hotels of which 201 are leased to our taxable
REIT subsidiaries and managed by independent hotel operating companies
and 109 are leased to third parties. Our 186 travel centers are leased
under two agreements. Our consolidated statement of income includes
hotel operating revenues and expenses of managed hotels and rental
income from our leased hotels and travel centers.
(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) During the first quarter of 2007, we expensed $2,711 of costs in
connection with the spin off of our former subsidiary, TravelCenters of
America LLC, or TA, to our shareholders on January 31, 2007.
(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 TA spin off costs
(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 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 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.
(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.
Hospitality Properties Trust
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except share data)
June 30, December
31,
2007 2006
------------ ------------
(Unaudited) (Audited)
ASSETS
--------------------------------------------
Real estate properties, at cost:
Land $ 1,399,743 $ 584,199
Buildings, improvements and equipment 4,859,610 3,457,818
------------ ------------
6,259,353 4,042,017
Accumulated depreciation (776,165) (707,838)
------------ ------------
5,483,188 3,334,179
Cash and cash equivalents 11,535 553,256
Restricted cash (FF&E reserve escrow) 30,684 27,363
Other assets, net 264,606 42,665
------------ ------------
$ 5,790,013 $ 3,957,463
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------------
Revolving credit facility $ 658,000 $ -
Senior notes, net of discounts 1,495,330 1,196,130
Convertible senior notes 575,000 -
Mortgage payable 3,664 3,700
Security deposits 185,366 185,366
Accounts payable and other liabilities 153,320 119,536
Due to affiliate 3,074 3,277
Dividends payable 4,754 1,914
------------ ------------
Total liabilities 3,078,508 1,509,923
------------ ------------
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
Series C preferred shares; 7% cumulative
redeemable;
12,700,000 shares and none issued and
outstanding,
respectively, aggregate liquidation
preference $317,500 306,833 -
Common shares of beneficial interest;
$0.01 par value; 150,000,000 shares
authorized; 93,869,429 and 86,284,251
shares issued and outstanding,
respectively 939 863
Additional paid-in capital 3,048,690 2,703,687
Cumulative net income 1,477,765 1,380,111
Cumulative preferred distributions (78,821) (66,992)
Cumulative common distributions (2,127,207) (1,653,435)
------------ ------------
Total shareholders' equity 2,711,505 2,447,540
------------ ------------
$ 5,790,013 $ 3,957,463
============ ============
A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the New York Stock Exchange.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.
Hospitality Properties Trust
Timothy A. Bonang
617-796-8149
www.hptreit.com
Manager of Investor Relations