NEWTON, Mass., May 11, 2009 (BUSINESS WIRE) -- Hospitality Properties Trust (NYSE: HPT) today announced its operating
results for the quarter ended March 31, 2009.
Results for the Quarter Ended March 31, 2009:
HPT's net income available for common shareholders for the quarter ended
March 31, 2009 compared to the same period in 2008 were as follows:
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
|
|
|
|
2009
|
|
|
|
2008
|
|
|
|
|
|
|
(in thousands, except per share data)
|
Net income available for common shareholders
|
|
|
$
|
53,613
|
|
|
$
|
45,929
|
Net income available for common shareholders per share
|
|
|
$
|
0.57
|
|
|
$
|
0.49
|
Weighted average common shares outstanding
|
|
|
|
93,992
|
|
|
|
93,893
|
The results for the quarter ended March 31, 2009 include a gain on
extinguishment of debt of $26.6 million, or $0.28 per share, relating to
HPT's repurchase of $121.3 million face amount of its 3.8% convertible
senior notes for $87.5 million. The gain on extinguishment of debt is
net of unamortized issuance costs and the discount resulting from the
adoption, effective January 1, 2009, of FASB Staff Position APB 14-1,
"Accounting for Convertible Debt Instruments That May Be Settled in Cash
Upon Conversion (Including Partial Cash Settlement)", or FSP 14-1.
Both the 2009 and 2008 periods have been adjusted to reflect the
application of FSP 14-1 retrospectively and include non-cash interest
expense of $2.3 million, or $0.02 per share, and $2.4 million, or $0.03
per share, respectively.
During the 2009 period, TravelCenters of America LLC (NYSE Amex: TA), or
TA, exercised in full its option to defer up to $5 million of rent per
month under the previously announced rent deferral agreement, which
resulted in a $15 million, or $0.16 per share, reduction in net income
available for common shareholders. The results for the quarter ended
March 31, 2009 also reflect the non-accrual of $2.8 million, or $0.03
per share, of straight line rent under HPT's lease with TA for 145
travel centers.
HPT's funds from operations, or FFO, for the quarter ended March 31,
2009 compared to the same period in 2008 were as follows:
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(in thousands, except per share data)
|
Funds from operations (FFO)
|
|
|
$
|
89,581
|
|
|
$
|
108,547
|
FFO per share
|
|
|
$
|
0.95
|
|
|
$
|
1.16
|
Weighted average common shares outstanding
|
|
|
|
93,992
|
|
|
|
93,893
|
FFO for the quarter ended March 31, 2009 excludes the $26.6 million gain
on extinguishment of debt and was affected by TA's deferral of rent and
the non-accrual of straight line rent discussed above. Both the 2009 and
2008 periods include the non-cash interest expense resulting from the
adoption of FSP 14-1 discussed above.
See page 5 for a reconciliation of FFO to net income available to common
shareholders.
Hotel Portfolio Performance:
For the quarter ended March 31, 2009 compared to the same period last
year, HPT's hotels produced revenue per available room, or RevPAR,
average daily rate, or ADR, and occupancy as follows:
|
|
|
Quarter Ended March 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
RevPAR
|
|
|
$
|
61.35
|
|
|
|
$
|
76.73
|
|
|
|
-20.0
|
%
|
ADR
|
|
|
$
|
102.42
|
|
|
|
$
|
112.34
|
|
|
|
-8.8
|
%
|
Occupancy
|
|
|
|
59.9
|
%
|
|
|
|
68.3
|
%
|
|
|
-8.4pts
|
During the quarter ended March 31, 2009, all payments due under HPT's
hotel leases and management contracts were paid when due or within cure
periods permitted under these contracts, except the payment due on March
27, 2009 from Marriott International, Inc., or Marriott, for the
contract that concerns Marriott's management of 34 hotels (which HPT has
historically referred to as its Marriott No. 3 contract) and requires
minimum payment to HPT of approximately $44.2 million/year. Marriott's
payment to HPT for this management agreement was deficient in the amount
of approximately $838,000. HPT sent Marriott a notice regarding this
deficiency and Marriott failed to pay the deficiency amount within the
applicable ten day cure period. On April 9, 2009, HPT applied $838,000
of the $36.2 million security deposit it had for this contract to cover
the deficiency.
On April 24, 2009, HPT did not receive payments due under the Marriott
No. 3 contract or under a lease for 19 hotels from HPT to Barcelo
Crestline Corporation, or Crestline (which HPT has historically referred
to as its Marriott No. 4 contract). The hotels leased to Crestline are
managed by Marriott and the minimum payments due HPT are approximately
$28.5 million/year. At March 31, 2009, HPT held a $28.5 million security
deposit for this contract. HPT sent Marriott and Crestline default
notices under these contracts and both Marriott and Crestline failed to
pay their deficiency amounts within the applicable cure periods. On May
7, 2009, HPT applied $3.4 million and $2.2 million against the security
deposits it holds for the Marriott and Crestline contracts,
respectively, to cover the deficiencies. HPT is currently involved in
discussions with Marriott concerning these defaults. At this time, HPT
expects that Marriott will pay HPT the net cash flows from operations of
the hotels included in the defaulted contracts and that these payments
may constitute a large majority of the minimum payments due HPT under
the defaulted contracts during 2009. Moreover, HPT believes the security
deposits it holds from Marriott and from Crestline for these contracts
are in amounts which exceed the 2009 shortfall of the payments it
expects to receive compared to the minimum payments due to HPT under
these contracts. Other than applying the security deposits to pay the
differences between the net cash flows received from operations of these
hotels and the contractual minimum payments, HPT has not yet determined
what additional action, if any, it may take as a result of these
defaults.
As of May 11, 2009, all other payments due to HPT from its hotel
managers and tenants under its operating agreements are current.
Financing Activities:
During the first quarter of 2009, HPT repurchased $121.3 million face
amount of its 3.8% convertible senior notes at a total cost of $87.5
million, excluding accrued interest, using borrowings under its
revolving credit facility.
In April and May of 2009, HPT repurchased an aggregate of $57.2 million
original principal amount of various issues of its senior notes for
approximately $45.2 million, excluding accrued interest. HPT expects to
record a gain of approximately $11.7 million, net of unamortized
discount and deferred financing costs, on the early extinguishment of
this debt in the second quarter of 2009. HPT funded these purchases
using borrowings under its revolving credit facility.
Common Dividend:
On April 8, 2009, HPT announced that as a result of current conditions
in the capital markets, it had suspended its regular quarterly common
dividend for the remainder of 2009. HPT currently expects that it will
recognize substantial net income for financial reporting purposes in
2009, and expects that its dividends to common shareholders in 2009 will
be at least equal to the minimum amounts required in order for HPT to
remain a real estate investment trust for federal tax purposes. During
the fourth quarter of 2009, HPT expects to re-evaluate capital market
conditions and its own earnings in order to determine what amount of
common share dividends will be paid in 2009. At that time, HPT will also
determine if its common dividend will be paid in cash or a combination
of cash and common shares.
Conference Call:
On Tuesday, May 12, 2009, at 11:00 a.m. Eastern Time, John Murray,
President, and Mark Kleifges, Chief Financial Officer, will host a
conference call to discuss the results for the quarter ended March 31,
2009.
The conference call telephone number is (800) 289-0529. Participants
calling from outside the United States and Canada should dial (913)
312-1270. 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, May 19, 2009. To hear the replay, dial (719)
457-0820. The replay pass code is 4280642.
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 First Quarter 2009 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 289 hotels and 185 travel centers located in 44 states,
Puerto Rico and Canada. HPT is headquartered in Newton, Massachusetts.
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|
Quarter Ended March 31,
|
|
|
|
|
| 2009 |
|
|
| 2008 |
|
Revenues:
|
|
|
|
|
|
|
Hotel operating revenues (1) |
|
$
|
175,701
|
|
|
$
|
222,440
|
|
|
|
Rental income (1)(2) |
|
|
73,791
|
|
|
|
89,956
|
|
|
|
FF&E reserve income (3) |
|
|
4,803
|
|
|
|
6,183
|
|
|
|
Interest income
|
|
|
48
|
|
|
|
600
|
|
|
|
Total revenues
|
|
|
254,343
|
|
|
|
319,179
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Hotel operating expenses (1) |
|
|
111,454
|
|
|
|
156,376
|
|
|
|
Interest (including amortization of deferred financing costs and
debt discounts of $3,357 and $3,397, respectively) (4) |
|
|
36,541
|
|
|
|
39,926
|
|
|
|
Depreciation and amortization
|
|
|
61,848
|
|
|
|
58,251
|
|
|
|
General and administrative
|
|
|
9,599
|
|
|
|
11,444
|
|
|
|
Total expenses
|
|
|
219,442
|
|
|
|
265,997
|
|
|
|
|
|
|
|
|
Income before gain on early extinguishment of debt, gain on sale of
real estate and income taxes
|
|
|
34,901
|
|
|
|
53,182
|
|
|
|
Gain on extinguishment of debt (5) |
|
|
26,555
|
|
|
|
--
|
|
|
|
Gain on sale of real estate, net (6) |
|
|
--
|
|
|
|
645
|
|
Income before income taxes
|
|
|
61,456
|
|
|
|
53,827
|
|
|
|
Income tax expense
|
|
|
(373
|
)
|
|
|
(428
|
)
|
|
|
|
|
|
|
|
Net income
|
|
|
61,083
|
|
|
|
53,399
|
|
Preferred distributions
|
|
|
(7,470
|
)
|
|
|
(7,470
|
)
|
Net income available for common shareholders
|
|
$
|
53,613
|
|
|
$
|
45,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of FFO (7):
|
|
|
|
|
Net income available for common shareholders
|
|
$
|
53,613
|
|
|
$
|
45,929
|
|
Add:
|
|
Depreciation and amortization
|
|
|
61,848
|
|
|
|
58,251
|
|
|
|
Deferred percentage rent (8) |
|
|
675
|
|
|
|
1,552
|
|
|
|
Deferred additional returns (9) |
|
|
--
|
|
|
|
3,460
|
|
Less:
|
|
Gain on extinguishment of debt (5) |
|
|
(26,555
|
)
|
|
|
--
|
|
|
|
Gain on sale of real estate (6) |
|
|
--
|
|
|
|
(645
|
)
|
Funds from operations ("FFO")
|
|
$
|
89,581
|
|
|
$
|
108,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
93,992
|
|
|
|
93,893
|
|
|
|
|
|
|
|
|
Per common share amounts:
|
|
|
|
|
|
|
Net income available for common shareholders
|
|
$
|
0.57
|
|
|
$
|
0.49
|
|
|
|
FFO (7) |
|
$
|
0.95
|
|
|
$
|
1.16
|
|
Hospitality Properties Trust |
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET
|
(dollars in thousands, except share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
|
2008
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties, at cost:
|
|
|
|
|
|
|
|
Land
|
|
|
$
|
1,392,591
|
|
|
|
|
$
|
1,392,614
|
|
Buildings, improvements and equipment
|
|
|
|
5,033,509
|
|
|
|
|
|
5,015,270
|
|
|
|
|
|
6,426,100
|
|
|
|
|
|
6,407,884
|
|
Accumulated depreciation
|
|
|
|
(1,112,431
|
)
|
|
|
|
|
(1,060,203
|
)
|
|
|
|
|
5,313,669
|
|
|
|
|
|
5,347,681
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
11,796
|
|
|
|
|
|
22,450
|
|
Restricted cash (FF&E reserve escrow)
|
|
|
|
25,014
|
|
|
|
|
|
32,026
|
|
Other assets, net
|
|
|
|
204,455
|
|
|
|
|
|
170,580
|
|
|
|
|
$
|
5,554,934
|
|
|
|
|
$
|
5,572,737
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving credit facility
|
|
|
$
|
546,000
|
|
|
|
|
$
|
396,000
|
|
Senior notes, net of discounts
|
|
|
|
1,693,972
|
|
|
|
|
|
1,693,730
|
|
Convertible senior notes, net of discounts (4) |
|
|
|
432,274
|
|
|
|
|
|
545,772
|
|
Mortgage payable
|
|
|
|
3,537
|
|
|
|
|
|
3,558
|
|
Security deposits
|
|
|
|
169,402
|
|
|
|
|
|
169,406
|
|
Accounts payable and other liabilities
|
|
|
|
93,149
|
|
|
|
|
|
128,078
|
|
Due to affiliate
|
|
|
|
2,925
|
|
|
|
|
|
3,012
|
|
Dividends payable
|
|
|
|
4,754
|
|
|
|
|
|
4,754
|
|
Total liabilities
|
|
|
|
2,946,013
|
|
|
|
|
|
2,944,310
|
|
|
|
|
|
|
|
|
|
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 issued and outstanding, aggregate liquidation
preference $317,500
|
|
|
|
306,833
|
|
|
|
|
|
306,833
|
|
Common shares of beneficial interest, $0.01 par value; 150,000,000
shares authorized; 93,992,635 and 93,991,635 shares issued
and outstanding, respectively
|
|
|
|
940
|
|
|
|
|
|
940
|
|
Additional paid-in capital (4) |
|
|
|
3,093,691
|
|
|
|
|
|
3,093,827
|
|
Accumulated other comprehensive loss
|
|
|
|
(1,120
|
)
|
|
|
|
|
(511
|
)
|
Cumulative net income
|
|
|
|
1,888,904
|
|
|
|
|
|
1,827,821
|
|
Cumulative preferred distributions
|
|
|
|
(131,111
|
)
|
|
|
|
|
(123,641
|
)
|
Cumulative common distributions
|
|
|
|
(2,632,522
|
)
|
|
|
|
|
(2,560,148
|
)
|
Total shareholders' equity
|
|
|
|
2,608,921
|
|
|
|
|
|
2,628,427
|
|
|
|
|
$
|
5,554,934
|
|
|
|
|
$
|
5,572,737
|
|
See Notes on page 7 |
|
|
|
|
|
|
|
(1)
|
|
At March 31, 2009, each of our 289 hotels are included in one of
eleven operating agreements of which 197 are leased to one of our
taxable REIT subsidiaries and managed by independent hotel
operating companies and 92 are leased to third parties. Our 185
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)
|
|
During the three months ended March 31, 2009, TravelCenters of
America LLC, or TA, elected to defer $15,000, or $0.16 per share,
of rent under the previously announced rent deferral agreement. We
have not recognized the deferred rent as revenue due to
uncertainties regarding its payment by TA in the future.
|
|
(3)
|
|
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 all the FF&E escrows for our hotels.
We report deposits by our third party tenants into the escrow
accounts as FF&E reserve income. We do not report the amounts
which are escrowed as FF&E reserves for our managed hotels as FF&E
reserve income.
|
|
(4)
|
|
During the first quarter of 2009, we adopted FASB Staff Position
APB 14-1, "Accounting for Convertible Debt Instruments That May Be
Settled in Cash Upon Conversion (Including Partial Cash
Settlement)", or FSP 14-1. FSP 14-1 requires the issuer of certain
convertible debt instruments that may be settled in cash (or other
assets) on conversion to separately account for the liability
(debt) and equity (conversion option) components of the instrument
in a manner that reflects the issuer's non-convertible debt
borrowing rate. Our 3.8% convertible senior notes are within the
scope of FSP 14-1. Our financial statements for all periods
presented have been adjusted to reflect the application of this
standard retrospectively. The implementation of this standard
resulted in non-cash interest expense for the three months ended
March 31, 2009 and 2008 of $2,438, or $.02 per share, and $2,357,
or $0.03 per share, respectively. The unamortized note discount
was $21,396 and $29,228 at March 31, 2009 and December 31, 2008,
respectively, and the equity component was $43,622 and $43,770 at
March 31, 2009 and December 31, 2008, respectively.
|
|
(5)
|
|
During the first quarter of 2009, we recorded a $26,555, or $0.28
per share, gain on the extinguishment of debt relating to the
repurchase of our 3.8% convertible senior notes, net of
unamortized issuance costs and the discount resulting from the
adoption of FSP 14-1 (see note 4).
|
|
(6)
|
|
During the first quarter of 2008, we sold our Park Plaza hotel in
North Phoenix, Arizona for $8,000 and recognized a gain on sale of
$645.
|
|
(7)
|
|
We compute FFO as shown. Our calculation of FFO differs from the
National Association of Real Estate Investment Trusts, or NAREIT,
definition because we include acquisition costs, if any, deferred
percentage rent (see Note 8) and deferred additional returns (see
Note 9) and exclude gain on early extinguishment of debt (see Note
5). We consider FFO to be an appropriate measure of performance
for a REIT, along with net income and cash flows 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 generally accepted accounting principles, or 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.
|
|
(8)
|
|
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
these amounts 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.
|
|
(9)
|
|
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 these amounts 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.
|
WARNING REGARDING FORWARD LOOKING
STATEMENTS
THE FOREGOING PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND
OTHER SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON
HPT'S CURRENT BELIEFS AND EXPECTATIONS. HOWEVER, THESE FORWARD LOOKING
STATEMENTS AND THEIR IMPLICATIONS ARE NOT GUARANTEED TO OCCUR AND THEY
MAY NOT OCCUR FOR VARIOUS REASONS, SOME OF WHICH ARE BEYOND HPT'S
CONTROL. FOR EXAMPLE:
-
THIS PRESS RELEASE REFERS TO A RENT DEFERRAL AGREEMENT WHICH HPT HAS
ENTERED WITH TA. THE DESCRIPTION OF THIS ARRANGEMENT AS A DEFERRAL
AGREEMENT MAY IMPLY THAT RENT AMOUNTS WHICH ARE NOT PAID WILL BE LATER
PAID. IN FACT, TA HAS A SHORT HISTORY OF OPERATIONS AND TA HAS NOT
PRODUCED CONSISTENT OPERATING PROFITS. IF THE CURRENT GENERAL U.S.
RECESSION CONTINUES FOR AN EXTENDED PERIOD OR WORSENS, IF THE PRICE OF
DIESEL FUEL INCREASES SIGNIFICANTLY OR FOR VARIOUS OTHER REASONS, TA
MAY BECOME UNABLE TO PAY THE DEFERRED RENTS DUE HPT.
-
THIS PRESS RELEASE STATES THAT HPT EXPECTS THAT MARRIOTT WILL PAY HPT
THE NET CASH FLOWS FROM OPERATIONS OF THE HOTELS INCLUDED IN THE
DEFAULTED CONTRACTS. THIS EXPECTATION IS BASED UPON STATEMENTS MADE BY
MARRIOTT TO HPT. HOWEVER, MARRIOTT MAY BECOME UNABLE TO MAKE SUCH
PAYMENTS IF ITS OWN FINANCIAL CONDITION DETERIORATES OR MARRIOTT MAY
REFUSE TO MAKE THESE PAYMENTS FOR SOME OTHER REASON. HPT HAS CERTAIN
CONTRACTUAL RIGHTS TO RECEIVE THESE PAYMENTS BUT COMPANIES WHICH HAVE
DEFAULTED PAYMENT OBLIGATIONS OFTEN REFUSE TO MAKE ANY PAYMENTS, AND
HPT CAN PROVIDE NO ASSURANCE WITH REGARD TO MARRIOTT'S FUTURE ACTIONS
EXCEPT BASED UPON MARRIOTT'S RECENT STATEMENTS.
-
THIS PRESS RELEASE STATES THAT HPT EXPECTS THAT THE NET CASH FLOWS
FROM OPERATIONS OF THE HOTELS INCLUDED IN THE DEFAULTED CONTRACTS MAY
CONSTITUTE A LARGE MAJORITY OF THE MINIMUM PAYMENTS DUE HPT UNDER THE
DEFAULTED CONTRACTS DURING 2009. THIS EXPECTATION IS BASED UPON CASH
FLOW PROJECTIONS PREPARED BY MARRIOTT AND REVIEWED BY HPT. BOTH
MARRIOTT'S AND HPT'S HISTORICAL PROJECTIONS OF HOTEL CASH FLOWS HAVE
OFTEN BEEN PROVED INACCURATE. IF THE CURRENT ECONOMIC RECESSION IN THE
U.S. CONTINUES TO WORSEN, IF THE TRAVEL INDUSTRY SUFFERS A SERIOUS
DECLINE BECAUSE OF SWINE FLU CONCERNS OR FOR OTHER REASONS, THE ACTUAL
CASH FLOWS FROM THESE HOTELS MAY BE LESS THAN THE AMOUNTS PROJECTED
AND MAY BE LOWER BY A MATERIAL AMOUNT.
-
THIS PRESS RELEASE STATES THAT HPT IS HOLDING AND HAS APPLIED OR MAY
APPLY SECURITY DEPOSITS TO COVER THE SHORTFALL OF THE PAYMENTS IT HAS
RECEIVED OR EXPECTS TO RECEIVE UNDER THE DEFAULTED CONTRACTS COMPARED
TO THE MINIMUM PAYMENTS DUE HPT UNDER THESE CONTRACTS. THE SECURITY
DEPOSITS WHICH HPT IS HOLDING ARE IN FIXED AMOUNTS: APPROXIMATELY
$36.2 MILLION FOR THE MARRIOTT NO. 3 CONTRACT AND APPROXIMATELY $28.5
MILLION FOR THE MARRIOTT NO. 4 CONTRACT PRIOR TO APPLICATION OF ANY
PAYMENT SHORTFALLS. AS DISCUSSED ABOVE, THERE CAN BE NO ASSURANCE
REGARDING THE AMOUNTS OF PAYMENTS HPT MAY RECEIVE UNDER THE DEFAULTED
CONTRACTS AND THE SHORTFALLS MAY EXCEED THE AMOUNTS OF THE SECURITY
DEPOSITS HPT HOLDS. MOREOVER, THESE SECURITY DEPOSITS ARE NOT ESCROWED
OR OTHERWISE SEGREGATED FROM HPT'S OTHER ASSETS AND LIABILITIES;
ACCORDINGLY, WHEN HPT APPLIES THESE SECURITY DEPOSITS TO COVER MINIMUM
PAYMENTS DUE IT WILL RECORD INCOME BUT IT WILL NOT RECEIVE CASH FLOW.
-
THIS PRESS RELEASE STATES THAT HPT HAS SUSPENDED ITS REGULAR QUARTERLY
DISTRIBUTIONS TO COMMON SHAREHOLDERS FOR THE REMAINDER OF 2009. AN
IMPLICATION OF THIS STATEMENT MAY BE THAT HPT WILL RESUME ITS REGULAR
QUARTERLY DISTRIBUTIONS AFTER 2009. IN FACT, HPT MAY NOT RESUME PAYING
REGULAR QUARTERLY DISTRIBUTIONS AFTER 2009. CAPITAL MARKET CONDITIONS
MAY NOT IMPROVE OR HPT'S OWN FINANCIAL CIRCUMSTANCES MAY CHANGE SO
THAT HPT BECOMES UNABLE OR UNWILLING TO RESUME REGULAR QUARTERLY
DISTRIBUTIONS TO COMMON SHAREHOLDERS. ALSO, HPT'S HISTORICAL RATE OF
COMMON SHARE DISTRIBUTIONS MAY BE CHANGED BECAUSE OF CHANGES IN HPT'S
EARNINGS OR OTHER CIRCUMSTANCES.
-
THIS PRESS RELEASE STATES THAT HPT EXPECTS THAT IT WILL REALIZE
SUBSTANTIAL INCOME FOR FINANCIAL REPORTING PURPOSES AND THAT HPT'S
DISTRIBUTIONS TO ITS COMMON SHAREHOLDERS IN 2009 WILL BE AT LEAST
EQUAL TO THE MINIMUM AMOUNTS REQUIRED IN ORDER FOR HPT TO REMAIN A
REIT FOR FEDERAL TAX PURPOSES. AN IMPLICATION OF THIS STATEMENT MAY BE
THAT HPT WILL PAY SUBSTANTIAL DISTRIBUTIONS TO COMMON SHAREHOLDERS IN
2009. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON HPT'S
ASSUMPTIONS ABOUT CONTINUING PAYMENTS FROM HPT'S TENANTS AND MANAGERS.
AS EXPLAINED BELOW, THESE ASSUMPTIONS MAY PROVE INACCURATE; AND HPT'S
TENANTS AND MANAGERS MAY NOT PAY ALL OF THE AMOUNTS DUE TO HPT.
MOREOVER, APPLICABLE TAX LAWS MAY PERMIT HPT TO REMAIN A REIT AND PAY
DISTRIBUTIONS LESS THAN IT HAS HISTORICALLY PAID OR EVEN LESS THAN ITS
2009 INCOME FOR FINANCIAL REPORTING PURPOSES. RECENT INTERNAL REVENUE
SERVICE ACTIONS, SUCH AS THE DEFERRAL OF GAINS ARISING FROM THE
EXTINGUISHMENT OF DEBT, AND THE ANNOUNCEMENT WHICH PERMITS REIT
QUALIFYING DIVIDENDS TO BE PAID UP TO 90% IN SHARES, MAY PERMIT REITS
LIKE HPT TO RETAIN THEIR REIT TAX STATUS WITHOUT PAYING SUBSTANTIAL
CASH DISTRIBUTIONS. MOREOVER, THE AMOUNT OF 2009 DISTRIBUTIONS WHICH
HPT MAY BE REQUIRED TO PAY IN ORDER TO RETAIN ITS REIT TAX STATUS IS
CONSIDERABLY LESS THAN THE TOTAL OF ITS HISTORICAL RATE OF QUARTERLY
DISTRIBUTIONS FOR THE REMAINDER OF 2009 WOULD HAVE BEEN. FOR THESE
REASONS AND OTHERS, HPT DOES NOT INTEND TO PROVIDE ANY ASSURANCE
REGARDING THE AMOUNT OF ANY FURTHER DISTRIBUTIONS WHICH HPT MAY PAY TO
ITS COMMON SHAREHOLDERS IN 2009, IF ANY.
-
THIS PRESS RELEASE STATES THAT DURING THE FOURTH QUARTER OF 2009 HPT
WILL RE-EVALUATE CAPITAL MARKET CONDITIONS AND ITS OWN EARNINGS AND
OTHER CIRCUMSTANCES, DETERMINE THE AMOUNT OF ITS 2009 COMMON SHARES
DISTRIBUTIONS AND THEN CONSIDER AND ANNOUNCE WHETHER IT WILL PAY
DISTRIBUTIONS IN CASH OR IF IT WILL PAY UP TO 90% OF ANY DISTRIBUTIONS
IN ITS SHARES. CAPITAL MARKET CONDITIONS ARE BEYOND HPT'S CONTROL. AS
NOTED ABOVE, SOME OR ALL OF HPT'S TENANTS AND MANAGERS MAY BE UNABLE
OR UNWILLING TO CONTINUE PAYING SOME OR ALL OF THE AMOUNTS DUE TO HPT
DURING 2009. ACCORDINGLY, DESPITE THE IMPLICATIONS IN THIS PRESS
RELEASE THAT HPT WILL PAY SUBSTANTIAL DISTRIBUTIONS TO COMMON
SHAREHOLDERS DURING THE FOURTH QUARTER OF 2009, THERE CAN BE NO
ASSURANCE THAT, IN FACT, ANY DISTRIBUTIONS WILL BE PAID TO COMMON
SHAREHOLDERS, OR THAT THE AMOUNT WILL BE PAID IN CASH.
FOR THESE REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE
UNDUE RELIANCE UPON THE FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE.
SOURCE: Hospitality Properties Trust
Hospitality Properties Trust
Timothy A. Bonang, 617-796-8232
Director of Investor Relations
or
Carlynn Finn, 617-796-8232
Manager of Investor Relations
www.hptreit.com
Copyright Business Wire 2009